A cat may look at a king.
— English proverb
So, in an apparent effort to raise its rank in the Most Recognized Polling Firm in America Sweepstakes, Harris Poll recently published a survey of 27,278 individuals across this fine land to determine America’s 100 most- and least-loved corporations. Bloomberg Business subsequently took time out of its busy day to gleefully report that Goldman Sachs, investment bank and über squid of the global financial markets, finished dead last:
People hate Goldman Sachs more than oil spills and the Koch brothers.Well, far be it for me to rain on Bloomberg’s and Harris Poll’s parade, but I am here to tell you children, with complete confidence, that Goldman Sachs just doesn’t care what you think.
Now this does not mean there isn’t some poor (relatively) underpaid slob scurrying around Goldman Sachs’ Public Relations Department pulling out his or her hair, fretting that you and your Aunt Millie in Rochester think poorly of his or her employer. After all, big corporations like Goldman Sachs have to employ people like that whose job it is to care, if only for appearances’ sake. Generally conveying to the public at large that you don’t give a fuck tends not to play well and can introduce all sorts of petty annoyances and frictions in the conduct of one’s business, so spending a few otherwise forgettable millions on PR can work out to be a good investment.1 This is common knowledge.
But deep in the bowels of Goldman’s money spinning machine and high in the corridors of the executive suite at its West Street headquarters, you may safely assume the people who matter do not give a flying fuck in a rolling donut that you don’t like them. Sorry to be harsh, but there it is.
Now I realize such indifference to negative public opinion may strike you as odd, given that our culture’s highest aspiration seems to be getting Kim Kardashian to “like” your Facebook post gushing over her latest dress, so I am happy to take a few hours from my Saturday morning to explain.
First of all, of course, there is the fact that Goldman Sachs does not sell soda pop. The Bloomberg article ventures:
A bad reputation can affect a company’s bottom line. Harris Poll says 36 percent of adults have decided not to support a business because of something questionable they learned about its conduct. And more than half of consumers now do some research on the businesses they’ve either heard about or are about to spend money on. The findings suggest that companies aren’t as immune from moral blunders—be it expired meat or toxic mortgages—as they once might have been. “The American public strongly believes reputation matters and acts on that belief,” said Carol Gstalder, Harris Poll’s reputation and public relations practice leader.
How, pray tell, do you and your Aunt Millie intend to act on your disgust with Goldman? Do you intend to boycott their supermarkets, buy your cell phone from another manufacturer, or drive a mile out of your way to get gas from a less despicable energy company? Oh, I know: you’ll refuse to invest in their mutual funds or use their mobile trading app to make $9.99 option trades, right? Fat lot of harm that’ll do Lloyd Blankfein: Goldman isn’t in any of those businesses. Goldman Sachs operates in wholesale finance—buying and selling securities and other financial instruments across global markets on behalf of itself and institutional clients, advising on mergers and acquisitions for corporations and private equity firms, and underwriting securities for issuers who want to raise money from institutional investors.2 They wouldn’t recognize you or your Aunt Millie if they ran you over in a Wegman’s parking lot. You—America’s vaunted consumers, Harris Poll’s respondents—are not Goldman Sachs’ clients. Your principled pocketbook wields no power over them.
Furthermore, among Goldman Sachs’ real clients—hedge funds, large institutional investors, corporations, and private equity firms—I would suggest that the Squid’s slightly salty reputation in society at large may actually act to attract and retain the wholesale business it seeks to conduct. For one thing, many of these clients either have or are not unfamiliar with slightly disreputable public reputations themselves, and they understand that the criteria which the hoi polloi use to judge large, powerful organizations harshly are, in many if not most respects, completely beside the point. Goldman Sachs is where it is—and, frankly, recognizable to Harris Poll’s respondents—because it is and has been extremely successful at what it does. Clients who can choose tend to work with powerful, successful firms who can serve their needs effectively, whether it is raising capital, buying or selling a company, or helping them trade their investment portfolio. Success breeds success in investment banking, and choosy clients want to work with a winner. To hell with its reputation.
There is more. Goldman Sachs’ clients also understand that the markets and services in which it operates are tough, unforgiving, sharp-elbowed places. Having a bad reputation—scary, ruthless, willing to throw your weight around—is exactly the kind of banker many (most?) clients want at their side. This is the very same sort of thinking that compels common folk like us to hire flesh-eating lawyers when we get into a legal dispute, notwithstanding the fact lawyers’ reputation for probity has ranked somewhat beneath pond scum for, oh, approximately forever. Nobody wants to bring Mother Theresa to a knife fight.
Lastly, you may be surprised to learn Goldman’s appeal even extends to those institutional customers who take the position of counterparties with the Squid, rather than as clients. These are firms which trade with Goldman as principal or which purchase its structured products like CDOs and other nasty items and whose interests, you would correctly surmise, are not at all aligned with those of the Great Blue Beast. But they still do business with Goldman because it is the axe (best source of opportunities) in certain areas, because it is extremely well connected in the markets, and because it comes up with some nifty investment products that investors want to own or trade. Even during the height of the Financial Crisis, when Goldman’s public reputation for probity was in tatters over the Abacus trades and suchlike, intrepid reporters could find almost no-one in the markets who would admit they would not trade with Lloyd’s cephalopods. Goldman’s reported financial results since have demonstrated beyond doubt that it remains one of the leading trading houses in the world, notwithstanding (because of?) its fearsome reputation.
So much for consumer boycotts.
Bloomberg also advances the notion that Goldman’s naughty public reputation might degrade its ability to attract and retain bright young squids-to-be. This is more plausible, since I think we can all agree little Muffy and Bif do not want—other things being equal—to spend Christmas vacation watching Aunt Millie’s upper lip wrinkle in disgust whenever they mention their summer internship at 200 West Street. A firm’s public reputation does matter to potential new recruits, simply because it is one of the very few things most young aspirants actually know about a firm or the business it conducts before they actually start to work there.3 (I’m sorry, children: most of you graduate college without a clue.) Surely a scarlet letter from the Department of Public Opinion will scare away some of the Best and Brightest young snowflakes from the Squid’s gaping maw?
Well, let’s take a look at the data, helpfully released five days later on that very same Bloomberg Business website wherein the poll piece appeared, no doubt courtesy of the follicly-challenged Goldman PR factotum we speculated on earlier:
Goldman Sachs Group Inc. hired just 3 percent of more than 267,000 job applicants last year, as the firm told investors it’s still the top destination for bankers.and
Fortune magazine named the New York-based bank one of the 100 best companies to work for, a citation Goldman Sachs has received every year since the list began in 1984, according to [CEO Lloyd] Blankfein’s presentation.Huh. So, not so bad then.
Sure, there may be a few eager young beavers sporting brilliance, drive, and impeccable credentials who decline to investigate career paths to filthy lucre at the Squid, but I doubt anyone will notice. As I have banged on about repeatedly in these pages before, investment banks do not really need the Best and Brightest. (Whoever they are supposed to be. Also, who judges?) We just need smart-enough, driven, ambitious grinders in sufficient quantities to lubricate our millstones with their blood and a significantly smaller number thereof who discover or develop a talent and taste for the business to stay on and lead the troops. Let the will-o-the-wisp starfuckers—those pathetic creatures who follow every social trend pointing to the conventionally agreed upon “best” college/job/spouse/mobile dating app—enjoy their indentured servitude at Facebook, Google, and Uber. Goldman Sachs and its competitors will have plenty of talented youngsters to choose from.
Besides, as Lloyd’s PR rep pointed out, they don’t need that many:
The firm said in May 2013 that it had 17,000 applicants for 350 spots in a summer analyst program in its investment-banking division.
So let’s recap. Goldman Sachs is ranked dead last in reputation among the 100 best-known companies in America by people who do not buy its products or services and, more likely than not, don’t even know what it does. But Goldman Sachs is also ranked among the top 100 best employers for people who do add value to the firm by joining it and slaving in its salt mines. That looks like a pretty comfortable calculus to me. This is not what keeps Lloyd Blankfein up at night.
However, there is a third force at work in Lloyd’s world that does nag at his equanimity. A force which relies almost exclusively on the aggregated opinions of individuals who have little or no insight or knowledge to back them up. A force which makes enormous efforts to shape public opinion to advance their collective agendas and personal careers. A force which, while it understands that public opinion can be empty of reasoned judgment, easily swayed and manipulated by emotional appeals, and incapable of other than fickle attention, also knows that it can be shaped into a powerful force for change, good or bad. A force which empowers bureaucrats to harry and constrain banks like Goldman with the power of law.
This force, of course, comprises the politicians, who have languished at the bottom of public opinion polls themselves—below lawyers and pond scum—for longer than forever.
You can bet Senator Warren and her kind enjoyed that Harris Poll.
Disclosure: I do not now nor have I ever worked at Goldman Sachs, I have no financial interest, direct or indirect, in the firm or any of its securities, and I don’t really even have any friends there. Frequent readers of this jeremiad emporium will remember that I am of the firm and repeatedly expressed opinion that, while Goldman Sachs is amazingly successful and powerful as a firm, its members and employees are often underwhelming on an individual basis. I marvel—and, as a competitor bested by Goldman bankers many more times than I care to remember or relate, chafe—at its success and can only regret that I have not had such a powerful platform from which to ply my trade during my career. So, as much as it can be, you may take this defense as a disinterested one.
Akane Otani, America’s Most Loved and Most Hated Companies (Bloomberg Business, February 5, 2015)
Michael J. Moore, Goldman Sachs Hired 3% of 267,000 Job Applicants Last Year (Bloomberg Business, February 10, 2015)
The Fish Stinks from the Head (July 30, 2009) – Goldman Sachs’ culture and success
1 In the good old days, Goldman did not agree with this sentiment. In the good old days, they employed Lucas van Praag. I miss the old bugger.
2 Yes, it’s true that Goldman Sachs does offer wealth management and retail brokerage services to rich individuals and families, also, so they do have a presence in retail financial services. (It is not large in the context of Goldman’s revenues.) But I venture to guess that individuals and families with tens if not hundreds of millions of dollars under management with the Squid do not have quite the same consumer preferences as the rest of us poor slobs. If your Aunt Millie is loaded, maybe she will prove me wrong.
3 You can take my word for it that the reasons Goldman’s clients and counterparties do business with the firm are the same reasons the much smaller number of lateral hires and later-stage career recruits want to join it. Almost everybody wants to work for a winner, too.
© 2015 The Epicurean Dealmaker. All rights reserved.