The Partnership The Making of Goldman Sachs

by Ellis, Charles D.

• ISBN13: 9781594201899
• ISBN10: 1594201897
• Format: Hardcover
• Copyright: 2008-10-07
• Publisher: Penguin Press HC, The

Summary

With unparalleled access to the firm’s enigmatic leadership, The Partnershipchronicles the brilliant, men who built one of the world’s largest investment banks. Goldman Sachs is the most profitable and powerful investment bank in the world today. Fifty years ago it was a marginal family firm with limited prospects. How did it ascend to leadership in Europe, Asia, North and South America; make many, many partners fabulous fortunes; and become the leader in IPOs, M&A, FX, bond dealing, stockbrokerage, derivatives, hedge funds, private equity, and real estate? As a strategy consultant to Goldman Sachs for more than thirty years, Charles D. Ellis developed close relationships with many of the firm’s past and present leaders around the world. In The Partnershiphe probes deeply into the most important chapters in the firm’s history, revealing the key events and decisions that tell the colorful, character-driven story of how Goldman Sachs became what it is today. Ellis tells the illuminating stories of the great personalities who sowed the seeds of Goldman Sachs’s success: from Sidney Weinberg, a junior high school drop out with a flair for markets; to Gus Levy, who brought a ferocious intensity to every minute of every workday; to John Whitehead, who wrote the core values that defined a culture of teamwork in serving clients; to the unpretentious John Weinberg, who was the quintessential relationship banker of his era; to Robert Rubin and Hank Paulson, who both became secretary of the treasury; to Governor Jon Corzine; and finally to current CEO and chairman of Goldman Sachs, Lloyd Blankfein. Starting as a sole proprietorship dealing in commercial paper in the mid-nineteenth century, Goldman Sachs became an innovative underwriter; struggled to survive the crash and Depression, and came out of World War II to complete what was then the single most important transaction in Wall Street’s history: Ford Motor Company’s IPO. Goldman Sachs overcame a full set of dramatic perils: Penn Central’s bankruptcy, Robert Maxwell’s abusive frauds, and insider trading scandals. Ellis demonstrates how the firm’s core values, intensive recruiting, entrepreneurial creativity, and disciplined risk taking—incorporating technology and hard work—laid the foundations, multiplied the firm’s resources and profits, and magnified its power until it became today’s Goldman Sachs: one of the most successful business organizations in the world.

Author Biography

Charles D. Ellis is a consultant to large institutional investors and government agencies. For thirty years he was managing partner of Greenwich Associates, an international business strategy consulting firm he founded that serves virtually all the leading financial service organizations around the world. Ellis earned his M.B.A. from Harvard University and his Ph.D. from New York University. He has taught investment management courses at Harvard and Yale, and is the author of twelve books. Ellis has served on the boards of Harvard Business School and Phillips Exeter Academy and is currently chairman of the Whitehead Institute for Biomedical Research, a trustee of the Robert Wood Johnson Foundation, a director of Vanguard, and a trustee and chair of the investment committee at Yale University.

Table of Contents

Introduction	p. xiii
Beginnings	p. 1
Disaster: Goldman Sachs Trading Corporation	p. 17
The Long Road Back	p. 30
Ford: The Largest IPO	p. 53
Transition Years	p. 63
Gus Levy	p. 73
The Wreck of the Penn Central	p. 96
Getting Great at Selling	p. 116
Block Trading: The Risky Business That Roared	p. 132
Revolution in Investment Banking	p. 253
Principles	p. 183
The Two Johns	p. 192
Bonds: The Early Years	p. 215
Figuring Out Private Client Services	p. 232
J. Aron: Ugly Duckling	p. 250
Tender Defense, a Magic Carpet	p. 269
The Uses and Abuses of Research	p. 283
John Weinberg	p. 297
Innocents Abroad	p. 320
Breaking and Entering	p. 345
How BP Almost Became a Dry Hole	p. 356
Changing the Guard	p. 373
Transformation	p. 399
False Starts in Investment Management	p. 415
Robert Maxwell, the Client from Hell	p. 437
Making Arbitrage a Business	p. 463
J'Accuse	p. 481
Building a Global Business	p. 512
Steve Quit!	p. 533
Collecting the Best	p. 552
Jon Corzine	p. 566
Long-Term Capital Management	p. 582
Coup	p. 606
Getting Investment Management Right	p. 615
Paulson's Disciplines	p. 636
Lloyd Blankfein, Risk Manager	p. 665
Afterword	p. 679
Acknowledgments	p. 687
Notes	p. 689
Index	p. 711
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