The WetFeet Insider Guide to Goldman Sachs

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The Goldman Sachs Group ISBN: 1-58207-262-0

Each WetFeet Insider Guide represents hundreds of hours of careful research and writing. We start with a review of the public information available. (Our writers are also experts in reading between the lines.) We augment this information with dozens of indepth interviews of people who actually work for each company or industry we cover. And, although we keep the identity of the rank-and-file employees anonymous to encourage candor, we also interview the company’s recruiting staff extensively, to make sure that we give you, the reader, accurate information about recruiting, process, compensation, hiring targets, and so on. (WetFeet retains all editorial control of the product.) We also regularly survey our members and customers to learn about their experiences in the recruiting process. Finally, each Insider Guide goes through an editorial review and fact-checking process to make sure that the information and writing live up to our exacting standards before it goes out the door. Are we perfect? No—but we do believe that you’ll find our content to be the highestquality content of its type available on the Web or in print. (Please see our guarantee below.) We also are eager to hear about your experiences on the recruiting front, and your feedback (both positive and negative) about our products and our process. Thank you for your interest. The WetFeet Guarantee You’ve got enough to worry about with your job search. So, if you don’t like this Insider Guide, send it back within 30 days of purchase and we’ll refund your money. Call us for details or e-mail us comments at 1-800-926-4JOB or [email protected]. Photocopying Is Prohibited Copyright© 2002 WetFeet, Inc. All rights reserved. This publication is protected by the copyright laws of the United States of America. No copying in any form is permitted. It may not be reproduced, distributed, stored in a retrieval system, or transmitted in any form or by any means, in part or in whole, without the express written permission of WetFeet, Inc.

The Goldman Sachs Group

Table of Contents Quick TOC Cheat Sheet Th e Fi r m

Goldman at a Glance 1 3

On the Job

21

T h e Wo r k p l a c e

29

Getting Hired

41

Fo r Yo u r R e f e r e n c e

49

The Firm Overview The Bottom Line Competitive Strategy Industry Position More Industry Rankings A Quick History Lesson Organization of the Firm Real Deals What’s Hot

4 6 6 8 10 12 14 18 19

On the Job Investment Banking Associate Salesperson Trader Analyst

22 24 26 28

The Workplace Lifestyle & Hours Culture Workplace Diversity Compensation & Civic Involvement Travel & Vacations Career Path Training Insider Scoop & Watch Outs!

30 30 32 33 34 35 37 38

Getting Hired The Recruiting Process The Interviewer’s Checklist Interviewing Tips Grilling Your Interviewer

42 44 45 47

For Your Reference Recommended Reading For Further Study The Numbers & Key People Recruiting Contacts & Major Offices

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50 53 54 55

S H E E T

Headquarters The Goldman Sachs Group, Inc. 85 Broad Street New York, NY 10004 Phone: 212-902-1000 Fax: 212-902-3000 Website: www.gs.com

C H E A T

The Goldman Cheat Sheet

Primary Competitors Credit Suisse First Boston, Deutsche Banc Alex. Brown, JP Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley Dean Witter, Salomon Smith Barney Key Differentiating Factors > Until 1999, Goldman was the last major private partnership on Wall Street. > Formidable across most sectors, Goldman is consistently at or near the top in IPO underwriting and M&A. > It’s known for its unusually strong (some would say cultlike) corporate culture, which emphasizes teamwork, hard work, and discretion (some would say secretiveness—which we encountered in abundance while writing this guide). In the Recruiter’s Words > The best source of information for students is the Goldman Sachs website, www.gs.com. In the Interview > Make sure you do your homework. You should understand Goldman’s business, history, and philosophy, and know which area of the firm you want to work in and why. > As an insider says, Don’t be afraid to say you don’t know something. > Be sure to talk up experiences you’ve had working as part of a team in your work life, your personal life, or your academic life.

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S H E E T C H E A T

What Insiders Say > “There’s good access to superiors. It’s a pretty horizontal firm.” > “A lot of times Goldman’s way is the best, but a lot of times it’s not.” > “True Goldmanites have little to complain about. Once you’re part of the collective, you’re happy, and success breeds success.” > “There’s always more work than you can do.” > “Money has to be something you are excited about. You don’t necessarily have to be materialistic; it’s more that you use money as a batting average. People get off on using wealth to compare themselves to others.” > “It’s the best of both worlds: You have the freedom to be entrepreneurial, but you’ve also got the big name on the business card.” The > > >

Career Ladder Undergraduates enter as analysts. MBAs enter as associates. Midcareer hires enter at different levels based on their experience.

Personnel Highlights Number of professionals, worldwide, 2001:

22,677

Number of professionals, U.S., 2001:

11,177

Estimated number of hires, undergrads, U.S. (2002–2003):

**

Estimated number of hires, MBAs, U.S. (2002–2003):

**

Source: Goldman Sachs, count for exempt employees ** Goldman does not release this information.

Compensation Estimated starting salary, undergrads:

$40,000, plus $5,000 signing bonus and $10,000 year-end bonus (possibly stock)

Estimated starting salary, MBAs:

$75,000, plus $25,000 signing bonus and $35,000 year-end bonus

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(possibly stock)

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Note: Compensation numbers are estimates; Goldman does not release this information.

The Firm “[Goldman colleagues] need to be willing to network and do well with all that they’re given or assigned to do. Goldman can be a very inclusive environment once you have proven yourself, but until you have, it can be somewhat insidious.”

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T H E

F I R M

Overview Ah, the good old days. Do you remember them? Goldmanites do—barely. Back in 2000, Goldman, and all its neighbors on the Street, were padding their coffers with monopoly money won through tech, media, and telecom IPOs and M&A— all Goldman strengths. That was before serial corporate fraud revelations crippled investor confidence and left I-bank analysts hyperventilating daily on CSPAN in the crosshairs of federal committees. Marry this with an already sluggish recovery from the burst tech bubble, and September 11, and you’re left with the worst I-banking recession in decades, perhaps ever. Or, as one Goldman insider puts it, There’s a lot of ‘downside risk.’ That’s a euphemism for ‘all hell breaking loose.’ Is the current pall just a glitch in the matrix, or the zeitgeist of a troubled time? As always, it depends on whom you ask. On the bright side, Goldman has managed to stay clear of the thrashings absorbed by Salomon and Merrill. Goldman’s official take with regard to its own business is cautious, yet positive. After all, even as everyone has gotten badly hurt, Goldman has outperformed rivals, buttressed by a 33 percent increase in M&A advising. Its earnings, though down from a year ago, still beat most forecasts, and no major downsizing is projected for the remainder of 2002. Still, everyone is feeling the heat, and Goldman has taken steps to send an unequivocal message. Chairman Hank Paulson went out on a limb to condemn corporate fraud in a much-publicized speech at the National Press Club. In February, the firm announced it is separating its researchers from its I-banking division, putting them under new supervisors, and also prohibited its analysts from owning stock in companies they cover. Net income over the first half of 2002 was down 2 percent on the same period last year, and net sales were down 3 percent. More emblematically, Goldman closed its Menlo Park office in 2002. In retrospect, says an insider, it’s amazing they opened the office in the first place, when there’s one just up the road in San Francisco.

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Nearly three years after going public, the firm seems to have done a good job in retaining its culture. At the very least, it’s as secretive as ever, as we learned in our attempts to gather information for this guide. It really doesn’t have anything to hide, but at the same time it doesn’t like talking to the press, says an insider.

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Indeed, in its 2001 annual report, Goldman cites maintaining its culture as it grows as a public company as its single most critical task. Goldman credits its success to its culture—based on teamwork, professional excellence, commitment to the client, integrity, and entrepreneurship—and believes that the firm must continue to inculcate that culture to remain successful. The firm continues to hire the best. A person really needs to be at the top of their game to succeed at Goldman, says an insider. They need to be willing to network and do well with all that they’re given or assigned to do. Goldman can be a very inclusive environment once you have proven yourself, but until you have, it can be somewhat insidious. The most notable change that came with going public was a new attitude about the bottom line. The firm watches its dollars carefully, particularly in the current market. Other things have remained constant. If you go to work for Goldman, you won’t have much time to see friends or loved ones, but you will be working with some of the brightest and most respected bankers, who will train you to be as successful as they are in the client-enriching, long-term greedy business. The firm guards its reputation for strict ethical standards (and vigorously defended its actions this year when the SEC questioned it about inappropriate trading of an about-to-be-retired 30-year bond). According to one insider, the attitude at Goldman is, Why would we want to do things any other way? We are Goldman—they should be doing it our way. MBAs seem to agree: In the 2002 survey of U.S. business school students by the consulting firm Universum, which asked where they wanted to work after graduation, Goldman came in third (behind consulting firms McKinsey & Co. and Boston Consulting Group), up from fourth place in 2001. However you slice it, when you talk about Goldman, you end up talking about prestige. One insider says, Ever notice that Goldman doesn’t advertise? No TV commercials, no billboards. You won’t find the Goldman Sachs logo on the outside of any of its offices. Another insider says, It’s nothing anyone talks about, but it’s there. It’s built into the culture.

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The Bottom Line If you want to be with the best in the business, your resume is golden, and you don’t mind marching in step with like-minded colleagues, Goldman Sachs could be just right for you. Goldman is more straitlaced and rule-bound than most of its competitors, but it’s a good fit for people who like working as part of a team. As one insider puts it, The firm is what should be promoted, not the individual. It’s not cutthroat. It’s not a star system. Goldman attracts the best candidates because of its stellar reputation. While it’s known as a good place to work, Goldman will push you every bit as hard as, if not harder than, other Wall Street firms. As one insider says, Don’t be attached to weekends. Expect lots of competition—as in 8,000-plus resumes besides your own—for both undergraduate- and MBA-level positions.

Competitive Strategy At bottom, Goldman’s competitive strategy is really quite simple: maintain its reputation for excellence and continue doing big deals for big clients. How does it do that, you wonder? It hires people who are able to provide the best advice and execution in order to maintain that reputation. Recruiting is an essential part of the firm’s competitive strategy.

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Goldman’s stated goal is to be the preeminent global investment banking and securities firm. Let’s set that goal aside a minute (what firm doesn’t want to be preeminent?). Goldman is perennially a dominant player in IPOs and M&A, with particular strengths in telecommunications, financial services, energy, technology, and health care. A dearth of new share issues and merger activity in 2002 has hurt Goldman and exposed its weaknesses in other areas. But the firm is convinced that if it sticks with its principles, it will weather current conditions. Goldman’s 2001 annual report says the company’s most important task is managing growth—preserving its culture now that it’s public. One tenet of its culture is integrity. As competitors Morgan Stanley (under investigation), Merrill (fined), and Salomon (under investigation) founder, Goldman seems to have emerged unscathed. Though Goldman’s overall numbers have been reduced with the bear market, it has done well relative to its competitors in some areas. For example, it was

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T H E F I R M

the number one merger advisor worldwide in 2001, having advised on eight of the ten biggest deals of the year. It was also number one in global IPO underwriting and common stock offerings in 2001. As for the future, it remains bullish, and expects to continue to capitalize on trends like globalization, deregulation, consolidation, and market-driven reform. Goldman continues to globalize. It is building an emerging European equity business despite the global slowdown. The firm already has a strong business in Israel, Japan, Latin America, and Europe, and has managed IPOs in India, China, and other developing nations, positioning itself in growing markets with tech-hungry populations. Goldman’s response to market fluctuation has been diversification. The firm has dramatically expanded its Asset Management and Securities Services business. In 2001, assets under management increased 19 percent, with $67 billion in new client assets. The purchase of Epoch Partners in 2001 gives it access to individual investors through a large brokerage network, something competitors like Morgan Stanley (through Dean Witter) and UBS Warburg (through Paine Webber) already have in place. Goldman also continues to improve its online business to focus on ultra-affluent individuals—those worth $25 million or more. And its co-manager role in the 2002 stock offering for Alamosa PCS Holdings might signal Goldman intent’s to secure future M&A deals in the wireless space. Goldman continues to rely on its trading operations. In mid-2001, trading (equities trading, fixed-income, currencies and commodities) accounted for 44 percent of the firm’s revenue. In the second quarter of 2002, trading accounted for approximately 40 percent of revenue, or about $1.55 billion. While the flurry of negatives—the tech bust, corporate fraud scandals and 9-11 —has forced Goldman to react, the firm anticipates an eventual rebound. According to Prudential analyst David Trone, Goldman expects short-term sluggishness, with a good chance of accelerating growth in the fourth quarter. That may not be the sexiest prognosis, but in this market, it’s at least something to shoot for.

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Industry Position Goldman has gone head-to-head in the league tables with Merrill Lynch, Salomon Smith Barney, Morgan Stanley Dean Witter, Deutsche Banc Alex. Brown, Lehman Brothers, JP Morgan Chase, and (particularly in the technology field) Credit Suisse First Boston.

Goldman Sachs’ First-Half 2001 Industry Rankings in Major Categories

Category US Debt & Equity

2002 Rank

2001 Rank

Amount ($M)

2002 %

Market Leader

7

7

103,900

6.8

Citigroup/ Salomon SB

US Long-Term

9

6

36,400

5.8

Straight Debt US Domestic Bonds

Citigroup/ Salomon SB

9

7

12,700

4.8

Citigroup/ Salomon SB

US High Grade

9

6

11,600

3.2

Corporate Debt US Mortgage-Backed

Salomon SB 5

7

36,100

10.9

Securities US Asset-Backed

UBS Warburg

9

14

8,900

4.0

Securities US Equity & Equity

Citigroup/

JP Morgan Chase

3

2

16,200

14.3

Citigroup/ Salomon SB

US Common Stock

3

1

8,500

12.6

Citigroup/ Salomon SB

US IPOs

6

4

700

4.3

Citigroup/ Salomon SB

8

US Follow-On Offerings

1

1

7,800

15.1

--

Global Bonds

7

5

21,700

7.4

JP Morgan Chase

Global Debt & Equity

8

6

135,100

6.1

Citigroup/ Salomon SB

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T H E

Category Global Long-Term

2002 Rank

2001 Rank

Amount ($M)

2002 %

Market Leader

9

6

55,700

4.8

Citigroup/

Straight Debt Global High Grade

F I R M

Goldman Sachs’ First-Half 2001 Industry Rankings in Major Categories

Salomon SB 11

7

24,000

Corporate Debt

3.2

Citigroup/ Salomon SB

Source: Q1/Q2 2001 versus Q1/Q2 2002. Investment Dealers’ Digest, 7/08/02

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More Industry Rankings Research Rankings We’ve pulled most of the following information from Institutional Investor’s annual research rankings. Even if you’re not interested in joining the firm’s research department, you should probably pay attention, because research is critical to both investment banking and the sales and trading functions. In fact, according to a July 2000 Fortune magazine article, researchers can double the average return of analysts in their sector, and at the very highest levels can make in the range of $20 million per year, though controversy over biased research may cause firms to change these relationships (or the SEC may force a change). The 2001 All-America Research Team In this survey of equity analysts, Goldman Sachs placed seventh. That’s the third year in a row it’s dropped—from second in 1998, fourth in 1999, and fifth in 2000. Goldman’s 36 analysts trailed Salomon’s 55, CSFB’s 52, Merrill’s 51, Morgan Stanley’s 48, Lehman Brothers’ 42, and Bear Stearns’s 37. Source: Institutional Investor, www.iimagazine.com.

The 2002 All-Europe Research Team Goldman Sachs ranked seventh, the same as in 2001. Source: Institutional Investor, www.iimagazine.com.

The 2002 All-Japan Research Team Goldman placed third, up from fourth in 2001. Source: Institutional Investor, www.iimagazine.com.

The 2002 Latin America Research Team Goldman Sachs fell from third to ninth in 2001. Source: Institutional Investor, www.iimagazine.com.

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Euromoney Poll of Polls Each year Euromoney ranks the world’s biggest and best providers of financial services. In 2001, Goldman Sachs ranked third, trailing only Deutsche Bank and Citigroup/Salomon Smith Barney. Source: Euromoney, January 2001, www.euromoney.com.

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Source: Universum Communications

T H E

Universum European Graduate Survey Swedish company Universum polled 6,800 European business students on their ideal company to work for after graduation. Goldman Sachs ranked third behind consulting firms McKinsey & Co. and Boston Consulting Group.

Fortune 100 Best Companies to Work For Goldman placed 19th—tops among I-banks.

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F I R M T H E

A Quick History Lesson In 1869, European immigrant Marcus Goldman founded a small enterprise to provide an alternative to expensive bank credit. Each day, he made the rounds of local businesses in his frock coat and high silk hat. He purchased promissory notes in the morning, stuffed them in the headband of his hat for safekeeping, and sold them in the afternoon to New York’s commercial banks. This came to be known as the commercial paper business, and the firm prospered. Even cheap credit can be highly lucrative. Goldman’s partnership structure was established in 1882, when Samuel Sachs, Marcus Goldman’s son-in-law, was brought into the family business. The firm began building a network of regional offices in the United States, and it established relationships with European banks to support its clients’ financing needs overseas and to expand its own network of financial resources. (And you thought globalization was a recent phenomenon.) In 1896, Goldman Sachs became a member of the New York Stock Exchange. Beginning more than 100 years ago, investment banks fueled the industrialization of the U.S. with capital that most individuals and small banks could get nowhere else. (It helped that many of these I-banks were run by self-made men who came to America to make their own fortunes. They understood investments, and were significantly more creative with investment capital than most commercial bankers.) Goldman played its part in the process with such classic deals as the initial public offering for Sears, Roebuck & Company.

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Like most firms on the Street, Goldman slumped during the Great Depression. Its subsequent comeback is often attributed to Sidney Weinberg, who earned the nickname Mr. Wall Street in the years after he was named senior partner in 1930. Weinberg (who began his Goldman career as a janitor) masterminded Goldman’s resurgence at least in part by sitting on the boards of 35 different corporations. Wall Street is a tightly knit community where favors aren’t forgotten and friendships last a long time, and Goldman’s competitive edge is still due in part to the Weinberg legacy. But boardroom bonding only carries you so far. You also need to be very smart about money to survive in this business, and Goldman traditionally has been. In the 1950s, the bank played a lead role in establishing the municipal bond market and was the first bank to establish a separate group of bankers dedicated to working with institutional investors. Twenty years later, Goldman anticipated two of the hottest trends, M&A and real estate, and formed the first

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Goldman announced its intention to go public in 1998, but temporarily put those plans on hold when markets pulled back following financial crises in Russia and Asia that year. In 1999, Goldman Sachs became the last major private partnership on Wall Street to go public, selling about 11 percent of the firm and raising $3.66 billion in the process.

T H E

official mergers and acquisitions and real estate departments on the Street. In 1970—earlier than most—Goldman opened an office in London; the firm now has 41 international offices in 23 countries.

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Organization of the Firm View from the Top Goldman Sachs is a public company that trades under the ticker GS. Henry M. Hank Paulson, Jr. is the firm’s CEO and chairman. Paulson sits at the head of the management committee, which consists of 17 senior Goldman executives and the firm’s general counsel. The firm’s various divisions all report to the management committee.

View from the Middle The heart of the Goldman empire is located at 85 Broad Street, just off Wall Street. Other firms may be abandoning the cheerless warren of 19th-Century streets and alleys that make up Manhattan’s financial district for the glittering precincts of midtown, or even for suburban Connecticut or New Jersey, but as long as Goldman and other big players stay downtown, that’s where the pulse will be. The firm also has offices in the other major financial centers—London, Hong Kong, and Tokyo—as well as in 43 other locations in the U.S. and abroad. The firm divides itself into two segments: global capital markets, and asset management and securities services. From there, there are ten divisions, each reporting to the management committee: investment banking, equities, fixed income (which includes currency and commodities), investment management, merchant banking, global investment research, strategic relationship management, technology and operations, finance, and resources. The first four areas account for the bulk of MBA and undergraduate hiring on the banking side. Investment research supports bankers and clients, providing them with information about the markets and the economy.

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Technology and operations, finance, and resources offer important technical and administrative support and help run the day-to-day activities of the firm. Most MBAs aren’t in line to join information technology and finance, but the departments do recruit and hire a lot of undergraduates. All of the major divisions are further divided into departments and/or desks with responsibilities for specific products, clients, or functions. The major banking areas are discussed below.

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Investment Banking Division The investment banking division helps corporations, governments, and financial institutions plan and execute financial strategies in the capital markets. Goldman offers clients a full range of advisory, structuring, and underwriting services, including debt and equity financing, mergers and acquisitions, and project financing. Product groups specialize in one type of financial instrument or transaction; industry groups maintain relationships with companies in one particular industry. Goldman also engages in merchant banking, making direct investments using its own capital. The investment banking division includes the following groups: > > > > > > > > > > > > > > >

Communications, media, and entertainment Corporate finance Energy and power Equity capital markets Financial institutions Health care High technology Investment banking services Leveraged finance Mergers and acquisitions Principal investment area (merchant banking) Real estate Real estate principal investment area Risk markets group Special execution

Equities Division Goldman’s largest division originates, distributes, and trades equities and equity-based derivatives on all world markets. The institutional sales department focuses primarily on selling equities to large institutional investors. As part of its sales efforts, the department advises clients on market developments and helps them design and implement investment strategies. The equity capital markets department is something of a hybrid, combining investment banking with sales and trading. It connects issuers of new equities with buyers through such mechanisms as IPOs, privatizations, and convertible debt offerings. The equities division also includes private client services, which

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provides investment services and portfolio management for wealthy individual investors. The division includes the following: > > > > > > >

Institutional sales Trading Private client services Equities arbitrage Global securities services Equities management Equity capital markets

Fixed Income, Currency, and Commodities Division The fixed income division and the currency and commodities division occupy one unit, which advises clients in the marketing and trading of fixed income and derivative securities. Most employees work in sales, trading, and research, and as a new team member you’ll most likely be working on a sales or trading desk for government, agency, or corporate securities. The currency and commodities side provides trading, hedging, and advisory services to corporations, governments, and institutions so they can manage currency and commodity risk. With currency and commodities operations in New York, London, Tokyo, and Singapore, Goldman has solid worldwide market coverage. The fixed income, currency, and commodities division includes:

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> > > > > > > > > > > > > >

Capital markets Corporate securities Dealer sales Futures services Government securities High-yield securities Industry resource groups Money market instruments Mortgage- and asset-backed securities Municipal securities Currency and commodities strategies Energy Foreign exchange Metals

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T H E F I R M

Asset Management and Securities Services Goldman divides asset management and securities services into asset management, securities services (including prime brokerage, financing services and securities lending, and the matched book business), and commissions (including agency transactions for clients on stock and future exchanges and revenue from income and gains from merchant banking funds). One of Goldman’s relatively new groups, Asset Management has grown by leaps and bounds. Goldman has structured its mutual funds to perform reliably but not remarkably, sticking to conservative stocks and avoiding high-flying companies that could potentially tank and hurt the firm’s reputation. The strategy, meant to guarantee stable returns for its investors and to avoid negative press attention, hasn’t allowed its mutual fund managers or marketers to give the funds any unique angles. As the group evolves, signs are that Goldman is offering more room to take risks. Goldman increased assets under management by 14 percent between 1999 and 2000, and 19 percent from 2000 to 2001. The firm sees huge upside in the high-net-worth market and wants its share.

View from the Bottom Whether you’re in I-banking, sales, or trading, you’ll work closely with others throughout the firm. Most deals involve both senior- and junior-level people, but junior staffers (analysts and associates) do most of the heavy lifting. Unlike their counterparts in the consulting world, Goldman associates and analysts might have a dozen things cooking at once, all of which demand immediate attention. Complainers need not apply. As one insider says, When you start, there aren’t a lot of tangible metrics by which you can be evaluated. You rely on perception of your work ethic.

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Real Deals > Goldman was co-lead manager of Prudential Financial’s December 2001 IPO, the third-largest of 2001 and the ninth-largest ever. > Goldman advised Pharmacia in Pfizer’s $60 million July 2002 acquisition of the company. The deal strengthened Goldman’s position as the top M&A firm. > Goldman acquired Walter N. Frank, a specialist firm on the floor of the New York Stock Exchange, which matches sellers with buyers. Terms of the deal were not disclosed. > Bayer AG sold its 30 percent stake in Agfa-Gevaert, a Belgian imaging technologies company, to Goldman. > Goldman sold 60 percent of its shares of South Korea’s Kookmin Bank. The $633.6 million sale was three times the amount Goldman originally paid. > Goldman was hired by Hollywood Casino to advise it in an attempted sale. The gaming company dumped its previous advisors, Banc of America and Bear Stearns, in favor of Goldman. > Goldman co-managed Alamosa PCS’s $70 million IPO in November 2001, along with Bear Stearns, William Blair and Wachovia. The deal might signal that Goldman is looking for a foothold in wireless M&A. > Clinical diagnostic company IGEN hired Goldman in July 2002 to advise in a licensing conflict with Roche Holdings. Goldman and Lehman Brothers will look into ways for IGEN to increase market share in the $22 billion market. > Goldman was hired by drug manufacturer ICN as a financial advisor for its current strategic review.

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Goldman Joins S&P 500 Goldman’s inclusion in the S&P 500 should boost its share price, mostly because of the many S&P 500 mutual funds tied directly to the index.

T H E

What’s Hot

A New Epoch In June 2001, Goldman bought Epoch Partners, giving it access to 10 million retail investors with accounts at Schwab and TD Waterhouse. Historically, Goldman hasn’t gone after these investors, so this marks a shift in strategy, with Goldman expanding its distribution channels en masse without a merger. Goldman: A Good Place to Work Goldman placed 19th in Fortune’s most recent 100 Best Companies to Work For—tops among I-banks.

Do-Gooding Goldman Sachs Relief Fund On September 13, 2001, Goldman created this fund and began matching employee contributions. Over $11 million was raised, and Goldman allocated the money based on suggestions submitted by employees. Community TeamWorks Goldman gives employees one day off each year to work with nonprofits. In 2001, 18,000 Goldman employees participated. Diversity Program It’s no secret that there are not a lot of women or ethnic minorities at the management level in investment banking. Goldman is working to promote diversity in the forms of mentoring, training, and affinity groups. There’s an emphasis on diversity. … Their efforts are definitely top-tier, says an insider.

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On the Job “There are many opportunities to get hands-on practical learning on all types of transactions— and to teach others about the work.”

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J O B T H E O N

Investment Banking Associate Investment banking performs a number of functions, from structuring new financial instruments for clients to orchestrating project financings and jumbo mergers and acquisitions. To handle this range, the investment banking division divides its activities among a number of desks and departments. Depending on which area of the division you join, your day-to-day responsibilities may vary significantly, but might include the following: > Corporate finance focuses on advising clients about financial strategies > M&A works with clients to plan and implement mergers, acquisitions, and a variety of similar transactions > Capital markets structures new types of instruments and coordinates debt offerings > Principal investing makes direct investments with the bank’s capital > Individual industry and product groups provide specialized expertise about particular markets and products One insider says, There are many opportunities to get hands-on practical learning on all types of transactions—and to teach others about the work. Despite the differences in focus, there are some common themes. The most important is client service—you can expect to be called in from your weekend, your vacation, or just about anywhere at a moment’s notice if the client (or the partner) needs your assistance. A heavy emphasis on quantitative skills is another constant. I-banking hours tend to be longer than hours elsewhere in the firm, and the work doesn’t revolve around market activities as it does in sales and trading. Rather, the day (and night) is devoted to specific projects, and you’ll always be working on several at a time. Responsibilities include:

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> Meeting with client company managers and being on call to answer questions at any hour > Reviewing business plans and getting under the sheets with clients > Performing valuation analyses > Developing financing strategies to provide low-cost capital > Proposing and negotiating deals > Arguing with lawyers > Preparing offering prospectuses and developing intimate relationships (but never too intimate—remember, this is Goldman) with wordprocessing personnel

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10:15 11:30

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J O B

8:00 8:15

Subway to the office with take-out breakfast (bagel and black coffee). Check news sources: online reports, news headlines, and treasury screens. Check and respond to voice mail. Check with senior people for latest changes to one of the firm’s biggest mergers. Lawyers still haven’t even touched it. There is no light at the end of this tunnel. Conference call with client and VP. They have good questions for which you don’t yet have answers. Be as careful and polite as possible. Someone last week caught serious hell for being brusque with a client. Change financial model based on conference call, including details of previous year’s operating costs. Edit another document for Italian client. Hazard a guess as to what the lira may do in the coming months and how to make all the estimated figures reflect possible currency volatility. Hand in document edits to the head of word processing. Spend a moment chatting and being sympathetic about the word-processing workload. (If you’re nice to people here, they’re nice to you. If you’re not, they’re still nice, but they’ll take twice as long to finish your project.) Get lunch at the deli downstairs with fellow associate. Contemplate ordering something really sinful with garlic and onions. Nah . . . too many hours ahead working with too many other people. Meet with staffing coordinator to discuss a new deal. Imagine a far, far better world in which you are the coordinator and hand out piles and piles of work to overtaxed associates. Pick up Italian client’s document from word processing. Stifle a groan. Just walking upstairs, you see mistakes you should have caught earlier. Back, forth, forth, back, to lots of offices for final reviews and changes on Italian deal. Fax document to client in Italy. Create graphs for food-processor deal. Compare them to a stack of other kitchen-appliance materials. Nope . . . better do them again. Fax food-processor graphs to senior banker at home. Think about all the wonderful things ordinary people with ordinary jobs are putting into their food processors right now. Order take-out Chinese. Again. The food-processor fax comes back marked up with a sea of illegible scribbles. Make best guesses as to what they all mean and finalize changes to graphs. Edit prospectus and submit to word processing. Call Charge ’n’ Ride.

T H E

7:15 7:30

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A Day in the Life of an Investment Banking Associate

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J O B

Salesperson Salespeople work in the fixed income and equities areas. Their principal focus is selling issues of stocks, bonds, or other financial instruments, such as derivatives. Salespeople usually specialize in a specific group or industry and help manage portfolios for institutions, companies, or high-net-worth families and individuals. Sales is also the link between the clients, research analysts, and traders. Here you’ll monitor developments in the markets, keep clients posted on key stocks or bonds, and advise them on how to manage their holdings. A sales job at Goldman involves frequent company presentations, road shows, and industry conferences. Salespeople organize themselves into teams. Here, Goldman doesn’t try to micromanage; individuals form their own teams, and assign tasks and responsibilities. According to an insider, Teams function as little firms. Each team is very independent in how they run their business. For example, one person may be responsible for drumming up new business, while the rest of the team takes care of clients. This is really a sales and marketing position, so you need a sales-oriented personality along with client-service skills and trading acumen to do well here. Insiders tell us that it helps to approach sales, and building a client base, as if you were starting your own business. Most salespeople are MBAs. Undergrads typically come on as analysts supporting the different desks. Sales responsibilities include:

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> Selling, selling, selling those stocks, bonds, and derivatives. According to one sales insider, Most of the day is cold calling. It’s literally just finding rich people and getting meetings with them. > Working closely with research analysts and traders to evaluate economic, industry, and company news > Assisting and advising clients in developing and executing investment strategies > Building and maintaining relationships with accounts, either institutions or high-net-worth individuals—in other words, spending a lot of time on the phone schmoozing, and on the Internet, researching > Attending company presentations and research conferences, usually with clients > Wining and dining clients (they’re eating and drinking; you’re still working)

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7:00

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J O B

6:00

Rise and shine! Being in California means getting started early to be in the office during market hours. Take advantage of quality train time to read Goldman economist John Youngdahl’s economic reports. (No report, not even Youngdahl’s, is all that enthralling before the sun’s even up. But it’s gotta get read.) Arrive at the office. First couple hours at the office are mostly absorbing as much information as you can. Study the ax sheet to learn top Goldman trading priorities. Read The Wall Street Journal and leaf through The New York Times and The Financial Times. Listen to trader John Turbo Tormondsen discuss developments and strategies on the hoot box intercom system. Take notes. Begin calling top clients to discuss the market. Office becomes deathly still—everyone is listening to government economic statistics. Hoot call from Goldman economists offering interpretations of statistics. Mad rush to phones to beat competitors to your clients—you want to be the first to share those economic reports. Discuss trading options with Boston-based mutual fund client. Client needs figures. Connect research analyst to client on a conference call, and let them hash out details. Call traders, discuss latest offerings. Agree to help client unload securities so that he can purchase your suggested offering. Negotiate back and forth between trader and client. Lunch delivered to your desk. Too busy to eat. Lunch gets cold and unappetizing. Decide to eat later at good but overpriced Goldman cafeteria. Back to client; more pricing discussions. Call trader to execute order. Discuss strategies with clients. Make dinner plans. First two places don’t have a table until nine. Never a good idea to make these clients wait that late to eat. Probably too trendy and loud to do any serious talking anyway. Wrap up day. Reconcile orders. Try to figure out impact of government stats on the market. Go online, researching new clients. Dinner with clients. Goes better than expected. They’re actually receptive to some of the new offerings. Watch some television through half-closed eyes. Go to bed.

T H E

5:00

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A Day in the Life of a Sales Associate

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Trader Traders work in both the fixed income and equities areas. Duties vary, but traders typically have responsibility for a specific set of companies, industries, or financial instruments. They trade orders, make markets, manage risk, and commit capital. Traders can do this on behalf of clients or for the firm’s proprietary trading accounts. They talk constantly to sales as well as investment banking and their well-staffed research department. You don’t have to go look for outside sources for information, says one insider. Any information you need on financials is under the same roof—we have an expert in everything. Nearly all the equities trading jobs are in New York, London, or Tokyo. Fixedincome traders can be found in a few more locations, but not in large numbers. We’re really flat in our organization—we don’t have layers and layers, says one trader. Traders are tied to the stock and bond markets. They need to know exactly what’s going on with their company, industry, or market, and to respond immediately to major news and other external events—anything from a quarterly earnings release to a rise in the prime rate to something more unexpected, such as the announcement of a blockbuster merger, a dramatic hike in raw materials prices, or a new government regulation. As online trading obviates the need for human intermediaries in simple transactions, trading will increasingly belong to people who understand more complicated securities. If you see your future in trading, be sure to familiarize yourself with finance and complex security transactions. And get some experience in sales or research as a backup plan in case traders become extinct.

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One insider likens the trading experience to preparing a case study for your strategy class—if at the start of the class discussion you were given a new page that completely changed the information in the case. Based on what you know about the industry you cover, you’ll be called upon to predict what will happen with the stocks in that industry. Responsibilities include: > Keeping current with the movements and trends in the market (WetFeet translation: keeping yourself glued to your computer screen all day) > Speaking with research analysts and economists to get a better under standing of the market > Advising salespeople, clients, and research analysts on market activity

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O N T H E J O B

> Making markets by indicating the prices at which you would bid for or offer securities > Executing trades for clients; committing capital for large blocks when necessary > Developing and maintaining Goldman security inventory levels > Performing valuation analyses of derivatives, convertibles, and baskets of stocks

A Day in the Life of a Trading Associate 5:00 5:30 6:30 7:00 7:30 8:00 8:30 9:15 9:45 10:30

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10:00

Crawl out of bed. Slowly and not very happily. Read The Wall Street Journal, check home computer for developments. Taxi to work. Beginning to feel much better about being up and about. Check overseas markets online. London is quiet. No surprises in Tokyo. Sit in on the first trading desk call. Sit in on second call with research. Hear about new developments in several companies that matter. Jot down hasty notes for later. Go on the hoot to discuss developments and trading priorities with salespeople. Sit at your screen studying the market. Make trades for your own account. Talk with clients by phone. One wants to sell a $500 million portfolio of midcap exposure. Not a great idea right now. Persuade him to fol low another strategy. Discuss offerings with salespeople. Keep watching those markets. Sluggish today. Too much movement makes things really hectic, but much more exciting. Lunch delivered to your desk; try unsuccessfully to keep your tie away from your food. Execute order for client. Grab a free Snapple from the ice bucket. Still slow. . . . Work on some proprietary trading for the firm. Closing bell. Wrap up the day. Dinner with salesperson. There’s such a thing as too much work. Halfway through penne with squid sauce, you reach that point. Try to find something else to talk about. Without much success. Hit the sack. Squid and Snapple talk long into the night.

Copyright 2002 WetFeet, Inc.™

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J O B

Analyst Goldman hires undergraduates primarily as analysts for its investment banking and sales and trading areas. Most analysts work on a number of projects simultaneously for senior-level people in the firm. Depending on which area of the firm you join, your assignments may include the following: > > > > > > >

Relaying orders among dealers, clients, and traders Researching new financial products and market trends Reviewing financial statements of issuing companies Developing valuation and other financial models Tracking private clients’ portfolios Preparing presentation materials Finding profiles of companies similar to those involved in current deals and using them in analyzing the deals

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The Workplace “It’s a general sentiment that if we were paid on an hourly basis, it would be below minimum wage.”

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W O R K P L A C E T H E

Lifestyle and Hours Expect long days, hard work, and some unpredictability, although the experience differs somewhat from division to division. Investment bankers grind away all hours of the day and night, while a seemingly endless series of deadlines punctuate their lives. It’s common for them to work 90-hour-plus weeks. In M&A, staffers can log 105 hours in a week. One insider says, It’s a general sentiment that if we were paid on an hourly basis, it would be below minimum wage. Weekend work is the rule, not the exception. One insider says, I count on spending at least 15 hours a day at the office, and [until recently] I always used to go in at least one day per weekend, often two. You may find yourself yearning for the relatively calm groves of academe, where all you had to do was grind out a 25-page paper in a single night to earn a passing grade. In the words of one exhausted investment-banking insider, The lifestyle sucks. The workload in other areas of the firm can be lighter, though still significant. An insider in private client services reports averaging about 60 hours per week. In the sales and trading area, your daily activities are dictated by market events (Mexico devalues, the Fed cuts interest rates) and client requests. While the hours are shorter, the pace tends to be faster and the pressure greater; expect to spend some evenings and weekends entertaining clients.

Culture

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If Goldman Sachs were a Hollywood leading man, it would be the strong, silent type—so confident of its superiority to its competitors that it refrains from boasting. Goldman employees live by (or are trained to live by) the 14 Goldman principles, which can be found on the company’s website (www.gs.com). They emphasize the firm’s reputation, attention to client needs, high ethical standards, and teamwork. Insiders repeatedly cite Goldman’s obsession with quality, devotion to the firm’s reputation and image, and strong focus on teamwork. At the same time, some suggest there’s an underlying hubris at Goldman. One insider says that not having the right pedigree can hurt you at the firm. People here are very bright, but unfortunately they can also be quite arrogant as well.

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W O R K P L A C E

Goldman is famous for taking teamwork so seriously that it frowns on people using the first-person singular in discussing workplace efforts and accomplishments, preferring that employees, from the bottom levels to the upper echelons, use the first-person plural instead. One insider says, The ‘we’ thing goes all the way through, even if you’re competing with other people internally. And another reports, You really see everybody getting down and doing the work, and that creates a positive environment. By contrast, one summer intern was disappointed by the firm’s concept of teamwork: I sat with different groups during the summer, but I can’t say that I sat with different teams—groups of people working together to accomplish a specific goal or objective.

T H E

It’s very subtle here; no one would admit to the arrogance that underlies the organization. Goldman is trying to do more to diversify its workforce, and some senior managers are on board, but you also get a sense that this hasn’t trickled down to the rest of the organization yet.

Employees at Goldman take on a lot of responsibility right from the start. One insider says, People get ahead, maybe further ahead than where they should be, but that’s what Goldman wants. Another insider says, Sometimes I get more responsibility than I want, but this is an apprenticeship-type business—you learn by doing, and this is a great place to do it. Another insider says, It’s up or out. There’s a track, and if you’re not on it, you could be gone. Goldmanites say the firm likes to hire people who are not just intelligent and aggressive, but who also have broad interests and refined tastes. Goldman is full of very smart, intellectually curious people—people who can talk about everything from art and history to philosophy and current events. And if you don’t have the right talent or the right fit? You can expect some pretty nasty verbal hazing if you don’t cut it, socially or professionally, from the get-go. One insider describes the firm as having a learn by fire environment. Another insider recalls her surprise at realizing she would have to pay to get a Goldman T-shirt: The attitude is, ‘We’re so special, of course you have to pay for the Goldman logo, even if you’re an employee.’ The review process, which allows people from all levels to comment on each other, can be harsh. Fitting in is especially important at Goldman Sachs. The firm does an impressive job of recruiting people who subscribe willingly to the Goldman way, but if you’re one of the occasional new hires who doesn’t quite fit in, you may end up wishing you never said yes to that Goldman offer.

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Workplace Diversity Goldman is plenty diverse at the lower levels—particularly in terms of its international pool of employees. Diversity is valued and encouraged, says one insider. You name the metric, and it’s encouraged. By the time you get to the senior levels, however, the picture is mostly white and male, as with almost all other large banks. Insiders report that the firm is addressing diversity issues, using training seminars and firmwide e-mail reports. One insider says, Attracting women and minorities is a major initiative in HR. During 2001, the firm conducted month-long programs for all of its employees that highlighted issues and cultures of its various employee groups, including Hispanic, African American, Asian, women, and gay and lesbian employees, with speaker programs, art exhibitions, receptions, food, and other events. In May 2001, the firm hired Laura Liswood to lead the firm’s training and career development programs and to support diversity within the firm.

Opportunities for Women Although Goldman professes to be a meritocracy without a glass ceiling for women, the ratio at the top levels is about one female for every 20 males. This may be due in part to the demands of the investment-banking lifestyle, which make it difficult for anyone who wants a rich family life to rise to the top. Like every other company on Wall Street, Goldman is trying to bring more women on board through focused recruiting efforts. There are plenty of female vice presidents at the firm, but according to one insider, The female dropout rate is horrendous, and the lack of role models can make it tough for women who do rise through the ranks. Goldman offers maternity leave, a day-care center, and part-time work possibilities. Very few employees work from home.

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W O R K P L A C E

Goldman Sachs is quiet on how much it pays, but the firm is known to pay on par with the rest of the Street. We expect that starting packages will stay relatively consistent with what they were in 2001, though they might dip a bit due to the current environment. Roughly, MBAs start at a $75,000 base with a $25,000 signing bonus and a $35,000 year-end bonus (first-full-year bonuses can go as high as twice your base salary, depending on your department and the firm’s overall performance, but bonuses are by no means guaranteed and vary greatly from year to year). Undergrads can expect about $40,000 to start, plus a $5,000 signing bonus and a $10,000 year-end bonus. Some employees have been receiving stock in addition to or in lieu of a bonus. For senior members of the firm, compensation figures can be huge, as in $10 million or more per year.

T H E

Compensation

Civic Involvement Goldman’s community service department encourages employees to become active in volunteer activities. Goldman Sachs employees from around the world participate in The Community TeamWorks volunteer program through such activities as distributing food to the hungry, improving living conditions for those in need, and mentoring at-risk youth. To get additional information on the activities of various offices, see www.gs.com/recruiting/teamsol/ctw_main.html.

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W O R K P L A C E T H E

Travel Travel varies greatly depending on your job. I-bankers may spend a few days a week on the road, while bond traders may never leave their monitors. Global bankers have perhaps the most punishing travel schedules of all. When Goldman president and co-COO John Thornton was Asian markets chief, he apportioned his work time thusly: 50 percent in Asia, 35 to 40 percent in Europe, and 10 to 15 percent in the U.S. Most bankers’ lives are less exotic and revolve more around the home office, though it’s not unusual to travel on very short notice for a day or two a week. According to one investment banker, a typical trip might have you flying to L.A. on Sunday night for an all-day meeting Monday and then catching a red-eye back to New York that evening. Oh, and you’ll be expected to pull your full weight at the office on Tuesday morning. A wealth management insider says, Once you have your business, how you manage it is up to you and your clients.

Vacations Yeah, right. Associates have three weeks off a year, but most people aren’t able to take all that time, and some can take hardly any. Even if you do get a break, you’ll probably be checking voice mail twice every day. There’s always a chance that you might get called back early to help deal with a crisis. However, one insider says, People will cover for one another. If someone has a vacation planned, you let people know and you go, and people will do what they can to protect that time and cover for it.

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Copyright 2002 WetFeet, Inc.™

W O R K P L A C E

Opportunities for Undergraduates New BAs and BSs come on board as analysts, most often in the equities, fixed income, investment banking, and research divisions. Goldman employees categorize analysts by the number of years they’ve worked at the firm. Specific duties vary by division, but the standard job description includes a chunk of industry and market training up front and getting sponsored for National Association of Securities Dealers tests. Analysts also get some supervised handson work, and then gradually increasing levels of responsibility.

T H E

Career Path

All the fun comes to an end two years later (or occasionally three), when you’ll probably be pushed out of the nest and into business school or another career. Goldman reportedly doesn’t provide support for business school tuition. Exceptional analysts may be invited to move directly into an associate position. All analysts are supposed to plan their career development with their managers, and the review process requires you to choose 10 to 15 people to review your performance. An outside agency processes the reviews and gives you three numbered rankings: one for your peer level, one for your division, and one for the company as a whole. The evaluations are supposedly used in measuring your bonus. There’s no predetermined path to success, says one insider, and no one way is better than another. Opportunities for MBAs Each year, Goldman hires associates from top business schools. How many depends on the market’s recent performance and the firm’s expected growth. MBAs are recruited for career positions in every division, but the bulk join investment banking, fixed income, or equity. Goldman has four levels of professionals: analysts, associates, vice presidents, and managing directors. The simplicity of its structure, however, won’t shorten your trip up the corporate ladder. MBAs often remain associates for four years before being promoted to vice president; from there, VPs toil an additional six years or more before they become candidates for managing director. These tenure tracks are not set in stone. Advancement can be swift for those who bring in the bucks. Within the past few years, Goldman has promoted to managing director both a 27-year-old (who didn’t even have an MBA) and a 29year-old, and the firm has reportedly been trying to promote younger people faster to keep its stars from leaving. But very few make it to the top; the firm has only a limited number of MDs. The rest remain VPs or take their Goldman experience to a firm that offers a better title.

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W O R K P L A C E T H E

International Opportunities Goldman encourages employees at all levels to pursue international opportunities. Firm policy states that you have to be at the firm for 18 months before you make an internal move either domestically or internationally (unless they ask you to move). Goldman and other banks are doing more to cater to younger employees’ wishes to work abroad to keep them from defecting. Naturally, language proficiency and international finance skills are essential for landing positions abroad. Insiders tell us that if you want to work overseas, you can do so, usually after a few years in New York. London sales and trading slots are the most common destination. An insider says, You can literally work wherever you want in the world. The firm doesn’t look at location change as griping . . . it makes business sense for them to make people happy. The firm is busy staffing up its overseas offices, particularly in Asia. If you do decide to go abroad, the Relocation and International Assignment Group will help you with housing and other moving logistics.

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W O R K P L A C E

Training is an important part of the Goldman experience, for helping new employees learn the necessary skills for their chosen divisions and for immersing eager young hires in the Goldman way. The depth, length, and content of the training program vary significantly according to where you end up working. Regardless of your division, however, you can expect training to be intense: I think of it as a brainwashing period, says one insider. It’s also a great opportunity to network internally before being dropped in the middle of a behemoth bureaucracy. We hold receptions, speakers programs, and social events, says a recruiter, who says the events are designed to help new hires build their personal and professional networks.

T H E

Training

Training for Undergraduates Undergraduates usually go through a skills training program lasting from one to several weeks. It includes lectures, workshops, and case studies, and is followed by a good measure of on-the-job training. The idea is to give you enough information to hit the ground running, and then have you increase your pace over the next several months until you’re working at full speed. Training for MBAs New associates take part in a weeklong Worldwide Associate Orientation in New York, which introduces them to the firm’s business activities and philosophy, to each other, and to senior managers from around the globe. After that, additional training, both on the job and through formal instruction, depends on each employee’s background and experience. Most new associates take part in comprehensive training programs meant to fill in any holes from business school. The program in the fixed income area lasts for four months and includes an intensive bond math seminar (oh boy). In equities, the focus shifts to lots of multiples, plus research and valuation techniques. On-the-job training is emphasized in all areas, and associates are usually encouraged to take on as much responsibility as they can handle. For midlevel hires, They try to acclimate you to the company . . . because you lack the networking that [homegrown] people have, says one insider. [Midlevel hires] spend months with what they call their ‘class’ before it gets divided up into different functions and areas.

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Insider Scoop: What Employees Really Like

T H E

Big Bucks. One of the major draws for people considering working on Wall Street is the opportunity down the line for huge salaries and bonuses (which often dwarf base salaries). Even after the IPO—and the end of the partnership structure that made many Goldmanites wealthy over the years—Goldman, like other firms on the Street, remains a place that pays exceedingly well. Best of Both Worlds. One one side, the job is entrepreneurial. An insider says, You have the freedom to team up however you want. On the other hand, you’ve got the big name on the business card backing you up. No I in Team. Teamwork is a key virtue at Goldman Sachs. As an insider says, Whenever you have a problem, people will always help you out. The firm emphasizes teamwork even if your work is largely solitary, as can be the case in areas like private client services. According to one insider, It’s a strong culture. . . . But it seems to work. It focuses on making lots of people with big egos work well together, and by and large it succeeds. Another insider says, If you’re really into . . . team projects; then it’s a great place to be. Resume Gold. Goldman has always had a reputation for hiring only the best and the brightest. Its name on your resume will open other doors with the same gilding as Goldman’s, and you won’t have to go very far or search hard for those doors. As an insider says, By your second year as an analyst, you start to get lots of offers from hedge funds and other places. The Best of Everything. On the Street, Goldman is known for being among the best at almost everything it does. The people seem to be a little bit smarter and snappier than people elsewhere, says an insider. Another insider who used to work at the firm says, Everybody there is a go-getter—bright and fun.

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Then, of course, there’s Goldman’s business leadership position. The flow of deals and transactions here is equal to that at any of the major banks, and better than most, an insider says. This creates a cycle. We get people who want to work for a market leader and, as a result, they bring in even more deals. And there’s the firm’s recruiting, which is renowned for its superior results. As an insider says, There were little things: At Goldman during the interview process they have someone meet you at the door and walk you from place to place throughout the day. It seemed like a smart operation, the kind of place that I’d like to be associated with. Copyright 2002 WetFeet, Inc.™

W O R K P L A C E

Indentured Servitude. Insiders say that in most business areas, the weekend without a visit to the office or the vacation without an emergency call is exceptional. Personal needs have little bearing on the demands put on employees, especially those at junior levels. Don’t kid yourself, says an insider. You shouldn’t really expect to manage your life—it’s not your own. If you can’t commit yourself thoroughly to your job, you won’t do well at Goldman. As an ex-Goldmanite says, The guy next to me really cared about his job. I could never wake up in the morning and read bond-math literature while I was brushing my teeth. It’s standard practice to listen to Bloomberg or CNN while you dress.

T H E

Insider Scoop: Watch Outs!

Get Used to Rejection. Many jobs at Goldman are sales jobs. And salespeople, Goldman or not, get told where they can stick it, all the time. You expect it, but it’s still rough. Especially here, where most people are used to having things their way, says one insider. Diversity—But Only for the First Two Years. Goldman, like other I-banks, tends to be highly homogenous at the higher levels of its workforce. There’s a pretty good mix of people at the lower levels, one insider tells us. But they haven’t grown many women to senior positions. They have really been trying to address this problem, but I’m not sure they have the answer to it yet. Another insider says, The lifestyle is very unforgiving for people with families, whether they’re men or women. To its credit, the firm is making a conscious effort to diversify its workforce, both with internal programs and through recruiting. Testing, Testing. At least one insider complains of constant put-downs of new hires, which she says can continue until you fight back and show them you’re not going to take it. She was happy that she did so, but wishes, as do others, that this form of hazing didn’t exist. Work Hard, Keep a Low Profile.The Goldman way is drummed into everyone’s head from day one, and the firm doesn’t tolerate people blowing their own horns too loudly. One employee advises, Be prepared to work pretty damn hard and keep your head low for the first few years. You’d better not have a huge ego, or, at least, don’t expose it too much too early! End of the Line for the Gravy Train. With the Goldman IPO, no longer do junior employees have the chance to make partner and take an equity stake in the firm and a cut of the firm’s annual profits. Now you’ll have to make the big money through your bonus check.

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Getting Hired “You feel like you’re under a microscope—like they’re weighing every word that comes out of your mouth, every hand gesture you make.”

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H I R E D G E T T I N G

The Recruiting Process Goldman seeks to hire team players who are bright, confident—but not cocky—and creative (within the firm’s rather rigid boundaries). The firm usually begins both the undergraduate and MBA hiring processes with a round of intensive on-campus interviewing at top schools around the country. One insider says, Get in front of people. Make sure they have your name and your resume. Another insider says, If there’s a Goldman office nearby, call someone there and invite him to lunch. Goldman people are always willing to put their recruiting hats on. The interviews continue with at least one trip to the office where you’re most likely to be working. (At least one is right. One insider reports having to travel to New York three times for follow-up interviews; another made five trips.) The average candidate interviews with ten to 20 people before getting a job offer. While a candidate’s academic background is critical, it’s only one yardstick by which Goldman measures new job candidates. You’ll also need a strong interest in finance, the ability to work easily and well with others, and a gift for dealing with clients. It’s not enough to be smart and aggressive at Goldman; you need to be polished as well. The recruiting process can be long and intense; interviewers will study you carefully for evidence of your intelligence, poise, and ability to fit into the refined, team-oriented Goldman culture. During the process, according to an insider, You feel like you’re under a microscope—like they’re weighing every word that comes out of your mouth, every hand gesture you make. Another insider says she was interviewed by 14 Goldman employees, And I was on the low end! Any person you interview with can disqualify you from the process. Goldman will conduct a rigorous background check on you, which includes contacting all of your references. One insider says he has seen a few people who had received offers but who then failed the background checks.

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Students interviewed for WetFeet’s 2001 Student Recruitment Report were largely impressed by the firm, though a few were turned off by the attitude of some folks they met. One commented that Goldman’s was very much a behavioraltype interview. They weren’t as concerned about your knowledge of the industry or investment banking; it was more related to how you would fit in with their organization or culture. Another says, The Goldman name is phenomenal. But I’m not that impressed by the attitude of the employees I’ve met.

Copyright 2002 WetFeet, Inc.™

H I R E D

Special Information for Undergraduates Goldman hires a significant number of college graduates, primarily in the investment banking and equities divisions. Interviewers have their own pet questions, but they’re usually looking for maturity, a fit with the Goldman culture, attention to detail, and an understanding of what Goldman is all about. Insiders report that candidates may be asked mini case questions, so make sure you can talk about the impact of the latest economic trends on business and the markets.

G E T T I N G

Once you are hired, Goldman provides support. The firm’s New Hires Network is a website that new hires can access once they accept an offer up through their orientation and training. New hires can use it to get information about training dates, division events, benefits, relocation, immigration, and other HR issues, and as a way to contact their recruiters or trainers to ask questions or help prepare for their first few months at Goldman Sachs.

Outside of banking, sales, and trading, Goldman recruits heavily and hires a large number of undergraduates in information technology, finance, and global operations. The firm has a seemingly insatiable need for systems types, and it offers summer and co-op internship programs for programmers and telecommunications analysts. These positions are open to students working toward an undergraduate degree in related majors. Special Information for MBAs At the MBA level, Goldman is looking for people who will make meaningful, long-term contributions to the firm. Successful candidates are both analytical and personable. Emphasis on previous financial or quantitative experience varies by department, but as one insider says, We don’t see a whole lot of fine-arts types here. Goldman job seekers need to like sales and, even more important, teams. They must also enjoy interviews (or at least seem as if they do), since the lucky few who get hired frequently endure 20 or more. (One candidate tells us he had to survive 25 hours of interviews—and in the end, he didn’t get the job.) The process is apparently more civilized—but also more competitive—than anywhere else on the Street. Expect to find yourself up against not only former Goldman analysts looking to return to the company, but also analysts from other firms hoping to trade up after business school. Special Information for Advanced Degree Candidates Goldman recruits advanced-degree candidates. We seek recruits with advanced degrees ranging from business to law, economics, technology, mathematics, and other areas of study, says a recruiter.

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H I R E D G E T T I N G

Summer Opportunities Like most other investment banks, Goldman hires both graduate and undergraduate students for summer internship positions. These positions span all the areas where you might work full-time, and they give you the chance to try out the job and meet the people—while Goldman tries you out, too. Summer internship experiences can vary depending on the area in which you work. Investment banking interns take on immediate responsibility, and they work on the same projects they would be assigned as regular hires. Those in sales and trading, meanwhile, undergo a rigorous training program (which by some accounts makes business school seem like a picnic). They’re also expected to make a good impression and schmooze the adults at work and during the various after-hours activities. A word of warning: An internship doesn’t guarantee you a job. Goldman won’t divulge the actual numbers, but of the many called, very few are apparently chosen.

The Interviewer’s Checklist Since the interview gauntlet involves so many people in so many different locales, it’s hard to precisely define a Goldman interviewing style. However, we hear the firm strongly emphasizes soft qualities such as integrity, team orientation, fit with the culture, and willingness to work hard. Insiders also tell us that among the various people you’ll meet are a couple of key players— barometers—who can give you a thumbs-up or thumbs-down. Here are a few things your interviewers will be looking for:

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> > > > > > > > > >

Ability to work in a team High energy and enthusiasm Stamina Intellectual ability Communication skills Strong interpersonal skills Creativity Confidence Superior analytical skills Commitment to finance and client service

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H I R E D

> Check out www.gs.com/recruiting/things/checklist.html, where Goldman offers a checklist of questions. Answer these questions for yourself before you interview. > Insiders tell us that Goldman places a lot of emphasis on how candidates fit with the organization. Look carefully at the 14 principles on the Goldman website (www.gs.com), and think about how they might be reflected in company life. Try to think of examples from work and school that demonstrate your commitment to teamwork, superior quality, dedication to the client, and ethical standards, and look for a chance in the interview to describe those experiences (without being obnoxious about it). > We hear again and again that you need to check your ego at the door. It’s not that people at Goldman don’t have big egos. Rather, they are willing to keep their heads down until they’ve earned a few stripes. And they recognize the firm’s emphasis on teamwork. If you’ve got an attitude, or even a tinge of one every now and again, don’t let it fill the interview room. Your interviewer will not be impressed. > Know what’s going on in the markets. If you don’t follow market events, your interviewer will question your commitment to the industry. > Dress conservatively. Goldman is a button-down type of firm. One insider says, Definitely wear a dark suit. No suspenders, no cufflinks, and nothing too bright. Your interviewer may like your stylish Italian suit, silk shirt, and Gucci loafers (and wish he could wear the same), but he may also question whether you’d fit with the Goldman culture. > We understand that Goldman frequently uses case studies in the interview process. Before you go into the interview room, you may want to brush up on your valuation techniques, and ask one of your investment banker friends to toss a few case questions your way for practice. > Many questions may clearly have right answers and may seem unfair. One insider says, I knew what [the interviewer] wanted me to say, but I really didn’t want to say it. Make your peace with this and other mind games; veterans of the Goldman interview process concur that unfair tactics do crop up, particularly in the first or second round. > Goldman insiders hold their firm in very high regard, and they’re determined to keep its reputation golden. No one is impressed by clever ways to cut corners or push the boundaries of ethical behavior, no matter how much money they might bring in. If you find your interviewer testing your approach to handling problems, play it safe and play by the rules.

G E T T I N G

Interviewing Tips

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H I R E D G E T T I N G

> Know why you’re right for Goldman Sachs and why Goldman Sachs is the right firm for you. At a minimum, you’ll need to be able to demonstrate that you understand how Goldman differs from the other players on the Street. More specifically, you should be able to explain why the particular division or department to which you’re applying is a better home for you than any other similar job in the industry. > Do your homework on the firm. You don’t want to blather on, but the more you know, the more interested you’ll sound, and the more you’ll impress your interviewer. > Goldman may seem more structured than some of the other firms in the industry. However, insiders tell us that the firm also values people with a maverick or entrepreneurial bent. In particular, the sales departments (especially private client services) like people who want to build their own business franchise with their own accounts. > Pay attention to details. Many reasons for failing to pass the interview process are justifiable. Spelling or formatting errors on your resume or cover letter are not among them. > Be prepared to be peppered with questions in your interviews and to have to answer similar questions repeatedly. An insider says, I don’t think the answers matter that much. They just want to hear your logic. They’re trying to determine how quick your thinking is. > Honesty is a key trait in the eyes of Goldman interviewers. If you’re not sure about something, don’t even try to talk about it, says an insider. > Goldman values varied experiences. People who know about things other than finance are more likely to have the level of refinement the firm looks for in employees, so don’t shy away from discussing non-finance experiences in your background. As an insider says, They want people with broad interests. It’s not like some other firms, where they want to hear you say, ‘I’ve wanted to be an investment banker since I was five years old.’

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H I R E D

Here are a few sample questions you may want to ask your interviewer. Remember, however, that the best questions are those that cover your own concerns and situations. We strongly encourage you to spend time preparing a few questions of your own. We’ve grouped our questions according to our sense of relative risk. Those in the Rare section are meant to be boring and innocuous, while those in the Well-Done section will help you put the fire to your interviewer’s feet. But beware—they may also turn you to toast!

G E T T I N G

Grilling Your Interviewer

Rare > What’s a typical career path in your division? > What lessons have you taken from the market over the last couple of years? > What would my role be on a typical transaction in (real estate/corporate finance/equities arbitrage/capital markets)? > How much contact will I have with senior people in the department? Medium > What does Goldman tell a prospective client about the differences between the firm and its competitors? > How does Goldman plan to improve in the league tables against its key competitors in M&A? IPOs? High-yield debt? > How much interaction is there between the different divisions in Goldman, and how do they coordinate efforts for specific clients? > What is Goldman’s competitive strategy with respect to other I-banks and the big international banks? > Has the culture at Goldman been affected by the end of the partnership structure? > What is Goldman doing to strengthen itself for the end of the bear market? Well Done > What has changed at Goldman since it went public? > Goldman is often mentioned as a takeover target for both insurance companies and money managers. What measures is the firm taking to prevent this from happening—or is it quietly encouraging the right suitors? > What major corporate acquisitions does Goldman plan to make in the near future? > How does Goldman maintain and control employee commitment to its 14 principles? (Do your traders really curse less?) > What is Goldman doing to increase the diversity of its partner group and create opportunities for women and minorities?

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For Your Reference

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R E F E R E N C E Y O U R F O R

Recommended Reading Goldman Sachs Voted Best Investment Bank in Asia Goldman earned top honors among Asian investment banks in the Reuters Institutional Investor Asia Equities 2002 Survey. The poll, conducted jointly by Institutional Investor and Reuters, gathered the opinions of professionals from 253 buy-side firms, 210 sell-side analysts and 205 oft-quoted Asian companies. Goldman also managed to nab first place for sell-side research. Source: Reuters, 5/29/02.

Goldman Sachs Simplifies Stock Rating System Goldman followed the lead of fellow I-banks Morgan Stanley, Prudential, and Lehman Brothers in revamping its rating system. The firm will begin using the new ratings in the fourth quarter, and also plans to establish an investment research policy committee. Source: Reuters, 7/9/02.

Should You Trust Wall Street’s New Ratings? Scrambling under regulatory pressure and damaged reputations in the wake of corporate fraud scandals, brokerage heavyweights have tweaked their stock rating systems. Goldman has adopted a three-tier system, as have Morgan Stanley, Merrill Lynch, JP Morgan Chase, CSFB, and others. Goldman’s Outperform, In line, and Underperform classifications will be put into practice in Q4 2002. Source: The Wall Street Journal, 7/17/2002.

IPO rout hits Goldman, other banks, for $90 million in fees Goldman postponed two high-profile IPOs in one day, underlining how badly the I-banking industry has been hurt of late. Goldman says it plans to complete the IPOs of Merck & Co.’s Medco Health Solutions unit and St. Paul Co.’s Platinum Underwriters Holdings when market conditions allow. Each offering was worth $1 billion, and Goldman had expected to reap $90 million from the sales.

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Source: Reuters, 7/11/02.

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F O R Y O U R R E F E R E N C E

Suddenly, Goldman Gives Cold Shoulder to Beleaguered Tyco In an unusual move, Goldman abruptly stopped issuing advice to investors on industrial conglomerate Tyco. Typically, investment banks stop issuing advice if they are advising a company, or when the company is delisted. To note a distinction, Goldman listed Tyco as not rated, meaning it is not providing advice, but might still issue research. That is different from downgrading a stock, or giving it a not covered, which means a stock is simply not followed. Goldman analyst Jack Kelly, who covered Tyco, cited a recent letter from the House Committee on Energy and Commerce to the SEC, requesting additional information about a past SEC study of Tyco’s books. The move, made at a moment when regulators are zeroing in on the integrity of stock analysts’ research ratings, comes after Goldman had earned some $50 million advising Tyco in an abandoned plan to split into different businesses, and the IPO of its finance division, CIT. Source: The Wall Street Journal, 7/17/02.

S&P Shake-Up Is Global Issue Goldman is one of seven U.S. companies that joined the S&P 500 recently, replacing seven foreign companies. This should mean boosted revenues for Goldman, mostly because of the many S&P 500 mutual funds tied directly to the index. Source: The Wall Street Journal, 7/10/02.

So Far, Volatile Year for Debt, Equity With this year’s decline in equity deals, Goldman has slumped from its customary perch atop the equity league tables, all the way down to fourth. Citigroup/Salomon SB, CSFB, and Merrill Lynch, in that order, have all crept ahead of GS. The article cites Goldman’s perennial strength in large carve-outs and technology, and the fact that this market has not been hospitable to that strategy. A Goldman spokesperson points out that the firm does not gauge performance on a short-term basis, and that there are deals in the pipeline. Source: Investment Dealer’s Digest, 6/24/02.

Hollywood Casino Snubs BofA, Bear Plagued with internal lawsuits, Hollywood Casino dumped the two banks that know it best in favor of Goldman. With two family members and an investor launching lawsuits back and forth, Hollywood settled on Goldman because of their impartiality and white-shoe pedigree. Goldman is now seeking a buyer for the gaming corporation. Source: Investment Dealer’s Digest, 7/8/02.

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R E F E R E N C E Y O U R

Goldman’s Foray into Hoi Polloi Goldman made an uncharacteristic move by agreeing to co-manage on a relatively small deal, the $70 million IPO for Alamosa PCS Holdings Inc. Historically, Goldman has declined to participate when they were not co-leaders, even in much larger deals. Goldman’s co-managers in the Alamosa IPO— Bear Stearns, William Blair, and Wachovia—hardly enjoy Goldman’s level of prestige. Might this signify an attempt to gain a foothold in the quickly consolidating wireless sector?

F O R

Source: Investment Dealer’s Digest, 11/19/01.

Goldman Chief Urges Reform in Corporations Hank Paulson, who normally eschews public appearances, spoke at the National Press Club, taking on corporate execs and others who comprise much of Goldman’s client base. The article calls it rare for a Wall Street executive to take on corporate America so directly. In the speech, Paulson blasted corporate insiders who sell just before the share price declines as giving a black eye to the entire business community. Source: The New York Times, 6/6/02.

Goldman Revamps Compensation Scheme for Wealth Management Goldman’s Private Wealth Management group implemented a fee-based structure in 2001. The firm eliminated its discretionary payout. Brokers with larger accounts will make more, brokers with smaller accounts will get less, while payouts for mid-sized accounts should remain unchanged. According to a recruiting firm, Goldman’s average payout is 36 percent, low for a business in which brokers usually get at least 40 percent. Source: Wall Street Letter, 6/25/01.

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Going Public Challenges Goldman’s Venerable Culture Dated, but interesting nevertheless, this article says Goldman was in cost-saving mode a year after its IPO. The firm traditionally treated its former partners to perks such as free office space and secretaries, but stopped this practice to minimize unnecessary expenditures. Although Goldman showed strong earnings for its first post-IPO year, Goldman’s public status forced it to modify its distinctive culture of high-intensity teamwork and client focus. Henry M. Paulson, Jr., the firm’s CEO and chairman, said broad ownership helped the firm’s culture because 9.1 percent of the stock was distributed among 15,000 Goldman employees. The firm claimed that its employee turnover rate, though higher than in the past, was only half the industry average. The firm maintained its partnership compensation pool and partnership elections every other year to retain its top employees. However, it lost a number of its private client brokers, which some attribute to a shift from a commission-based compensation structure to a salary-and-bonus structure. Source: Randall Smith, The Wall Street Journal, 5/1/00.

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Y O U R R E F E R E N C E

Two books about Goldman provide a history and perspective on investment banking; both would be good read if you’re serious about the firm. Goldman Sachs: The Culture of Success (1999) was written by Lisa Endlich, a former vice president at the firm, and gives the firm’s history by an insider, though critics suggest it isn’t as critical as it might be. Nils Lindskoog never worked at Goldman, but his book Long Term Greedy: The Triumph of Goldman Sachs (1998), looks at how the firm strengthened its position during the 1980s.

F O R

For Further Study

Investment Dealers’ Digest tracks the I-banking world. Check it out before your interviews for an update on how Goldman’s doing . The Wall Street Journal covers the markets. If you’re going into banking, it’d be a good idea to start reading the newspaper that takes its name from the Street.

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R E F E R E N C E Y O U R F O R

The Numbers Financial Highlights ($ and share amounts in millions, except per share amounts) 2001*

2000*

Total Revenues

31,138

33,000

Net Revenues

15,811

16,590

312,218

284,410

22,677

22,627

Total Assets Total Employees

As of 5/31/02

As of 8/31/01

Total Revenue

6,234

7,360

Operating Income

3,284

4,466

563

468

Net Income

* Goldman’s fiscal year ends in November, and its second quarter ends in May. Sources: The Goldman Sachs Group Form 10-Q, WetFeet research and analysis.

Key People Henry M. Paulson, Jr., Chairman and Chief Executive Officer Robert J. Hurst, Vice Chairman John A. Thain, President and Co-Chief Operating Officer John L. Thornton, President and Co-Chief Operating Officer

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Y O U R R E F E R E N C E

Goldman has a lot of power in the recruiting world. As a result, the firm tends to focus its on-campus efforts on top-ten graduate and undergraduate schools. The firm also recruits at Howard University and Spellman College, and it hires from other sources. If you don’t have the opportunity to interview on campus, or if you want to speak to someone at Goldman directly, you can find the right contact (in the U.S. and abroad) in the recruiting section of Goldman’s website (www.gs.com/recruiting). Division recruiters for the Americas, and links to pages with divisional recruiters in Europe and Asia-Pacific, are at www.gs.com/recruiting/firm/americas.html.

F O R

Recruiting Contacts

Major Offices In addition to its New York headquarters, Goldman has established offices around the globe. For an updated list of worldwide offices, see the Goldman website at www.gs.com/about/office-loc-continents.html.

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Copyright 2002 WetFeet, Inc.™

Who We Are WetFeet is the trusted destination for job seekers to research companies and industries, and manage their careers. WetFeet Insider Guides provide you with inside information for a successful job search. At WetFeet, we do the work for you and present our results in an informative, credible, and entertaining way. Think of us as your own private research company whose primary mission is to assist you in making more informed career decisions. WetFeet was founded in 1994 by Stanford MBAs Gary Alpert and Steve Pollock. While exploring our next career moves, we needed products like WetFeet Insider Guides to help us through the research and interviewing game. But they didn’t exist. So we started writing. Today, WetFeet serves more than a million job candidates each month by helping them nail their interviews, avoid ill-fated career decisions, and add thousands of dollars to their compensation packages. The quality of our work and knowledge of the job-seeking world have also allowed us to develop an extensive corporate and university membership. In addition, WetFeet’s services include two award-winning websites (WetFeet.com and InternshipPrograms.com), Web-based recruiting technologies, consulting services, and our exclusive research studies, such as the annual WetFeet Student Recruitment Survey. Our team members, who come from diverse backgrounds, share a passion about the job-search process and a commitment to delivering the highest quality products and customer service. WetFeet is headquartered in San Francisco. You can visit us any time at www.wetfeet.com, by calling 1-800-926-4JOB (or 415-284-7900 from outside the U.S.), or by sending an e-mail to [email protected]. We would love to hear from you, whether you have a job success story, information about a company, new product ideas, or a suggestion for improvement. Thank you for your support!

About Our Name

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One of the most frequent questions we receive is, So, what’s the story behind your name? The short story is that the inspiration for our name comes from a popular business school case study about L.L. Bean, the successful mail-order company. Leon Leonwood Bean got his start because he quite simply, and very literally, had a case of wet feet. Every time he went hunting in the Maine woods, his shoes leaked, and he returned with soaked feet. So, one day, he decided to make a better hunting shoe. And he did. And he told his friends, and they lined up to buy their own pairs of Bean boots. And L.L. Bean, the company, was born . . . all because a man who had wet feet decided to make boots. The lesson we took from the Bean case? Lots of people get wet feet, but entrepreneurs make boots. And that’s exactly what we’re doing at WetFeet.