Lloyd Blankfein

Lloyd Blankfein Advice For Entrepreneurs The Economy And Being Resilient

An interview with the CEO of Goldman Sachs, Lloyd Blankfein. In this interview, Lloyd discusses his beginnings and what he would tell his younger self on how to succeed. Lloyd also gives advice to entrepreneurs on building reliance and his perspective of the economy.

Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?

Lloyd Blankfein Advice For Entrepreneurs The Economy And Being Resilient

Video Segments:

0:00 Introduction

2:43 Your beginnings?

6:48 How to deal with the ups and downs?

9:49 Betting the farm?

14:00 Where are we in the economy?

17:36 Hiring talent?

20:33 Why is it important for small businesses to connect to congress?

22:31 Advice to young?

24:00 Lighting round?

Transcript

So I knew I was going to interview you today Lloyd and I’m on my computer screen you get these free Microsoft pictures and the picture that I had I thought was perfect it was this rolling green hill. That was a farm. And I like where I grew up. This is like where you grew up right through did not get to that. But it was exactly why there were all these people in this room because you were the farmer you created this ecosystem. You made the soil right. You figure out how to make it rain and then you figured out the magic which is that you have the seeds that have this grit and intense. So it’s a big group I wish that I wish I deserved the credit. But I think this is a self generated group. I think you have a lot to do with the I got to meet Lloyd Blankfein in almost ten years ago now and LaGuardia was the anchor college for 10000 small businesses. And two things that I learned. One is the power of great ideas and the second is what happens when places like community colleges partnered with an incredible company like Goldman Sachs. And I want to say thank you thank you for that. Thank you for what happened for bringing community colleges into this and also for sale in some ways that it is a connection that is is meant to happen. And you saw us so you know I loved it and I love the job you did.

And I said as we were walking out because I had been running around there I got here and I said oh you’re going on with Gail and I said in my interview Hershey because I could do that because you’ve done such a spectacular job and I have to say you introduced me to that great institution LaGuardia which I just wasn’t familiar. Obviously I grew up in New York. Yes it is. Even though it’s in Queens and I grew up in Brooklyn I don’t like to stand in our way. But I learned a lot about what gets accomplished there and I’d say to this day I mentioned this to you before I always I don’t mean you know I go I peer at places but I’ve never done I never speak at graduations except in my life. One right on the graduation I ever spoke at college was LaGuardia. It’s great. I love it. So you know now that you know that LaGuardia has almost 700 businesses that have gone through and we had six days later so beginnings are important and I wanna ask you a little bit about your beginnings so people who are here in this audience are from all different walks of life and all parts of the country and I know that you grew up not just in Brooklyn but in public housing in Brooklyn. So can you talk a little bit about your journey. How are you. How are you guys here. If Goldman was always tidy or plans. Well no Goldman wasn’t always part I had no idea what Goldman was.

Even when I got to school I didn’t know what Goldman was in fact life is so funny because I never joined Goldman when I at some point I’ll just skip ahead and then I’ll go back. I interviewed a number of firms. Goldman didn’t hire me and a lot of fact a lot of firms didn’t hire me. I got a job at a small commodity trading firm which was acquired by Goldman. That’s how I got in. After I’d been turned down you just you know you have to be you know you have to be flexible. But of course then having rejected me just made me appreciate their wisdom more the more that’s to me at the time. But no I didn’t plan to do that I grew up as a you know I grew up in Brooklyn. For those from New York I grew up in the Linden Projects in East New York Brooklyn Thomas Jefferson High School and I would say I was. It was a it wasn’t bait in that I would go to college. And people around me. Some did went to college some didn’t. I had an older sister she didn’t go to college my parents my parents didn’t and I always wanted to go away to college and go away to college. And so I applied to the state university system the City University system and I did a went to a college night and I can’t remember was it probably wasn’t it my high school because lot of kids go to college for my high school and but I did go to somebody and there was a guy there from Harvard. I’m not kidding. And this shows the randomness and kindnesses and things happen. And he said you should apply to Harvard and I did. And I didn’t know any I mean now.

And of course I’ve moved on them. You know my kids only stand over them and torture them. You have to do this and dad eyes ninety five drafts gave me an application. And I wrote it out like you were like filling out your you know the immigration form when you come in from the airport. You asked the question I wrote the answer and I gave it my application and I didn’t get into my. And get into every school I got in there and so that was a good thing and I’m grateful to them somebody somebody 100 years earlier gave some money to the school set up financial aid for people blah blah blah. Never know the name of that person that person never knew my name and like a lot of people here you benefit from a lot of people you’ll never meet and things you do will benefit a lot of people you’ll never meet. That’s right and that’s life. But you could still be you could. I know I have a good sense of where I’m from. And that being said I don’t I can’t revel in it because life’s been pretty kind to me. I did go to fancy schools I did go to I went to law school. He worked in a fancy law firm and got a job at Goldman Sachs which a pretty fancy company.

And so I’m not saying this is like Abe Lincoln walking miles every day just to return a library book or that because net net net I’ve had many more advantages and disadvantages but I did grow up you know in a in a in a household where you know dad worked nights at the post office and didn’t always have a job. Before that didn’t have a job for time and I know what it is to be nervous and pretty pretty anxious about whether you’re going to be able to support your family and I lived in a chat room with my grandmother and know somebody you know baby my sister’s kids slept in the living room and all that kind of stuff which a lot of people here go through. So I’m not a stranger to it even though I can’t say it was the better. You know it wasn’t the biggest part of my life but it may have been the better part of my life. It’s great to know that you came from there when you know these business owners around us. And one of the things that’s really clear is that they face uncertainty all the time. And so I want you to talk a little bit. I mean you’ve been at Goldman for 36 years now. So your employment has not been so uncertain. That’s what I mean I can’t I can’t worry about that. But yet although it does come with certain words it does come with me. So that’s what I want to talk about. How do you maintain a sense of resilience and dealing with the vagaries of the book. It’s different. And I don’t want to and look I don’t know I never walked in other people’s shoes.

People don’t walk in mine a there’s a lot of anxiety in the job there’s performing well people criticizing you legacy you know and probably you people didn’t see this but a time for time I have to testify in front of people who think that you just you know you know you have to sell them dead not nice things about you. They said nice things about me constantly I’m always in I don’t read the papers by the way other than limit and I don’t want it that because you make yourself crazy because you have to do what you think is right. By the way they say nice things about me too. And it goes and you just can’t take either side too much but I’ll tell you that since I graduated from school and started working I had a lot of like I had a lot of times where I really it was really terrible it was bad I thought you know I felt anxious about what my legacy would be whether you know whether the shareholders would like it whether your employees went with you. There was time we were facing kind of existential risks when there was so much risk people didn’t know whether the financial system would survive and were a big part of it. But I will tell you what I haven’t had since I was a kid and in failing school I never had to worry whether I would be able to afford my apartment whether my kids could go to school whether they were going to get what they never had that risk and that risk is what a lot of small business people face that I have and and believe me I know the difference.

Between having that kind of anxiety and worrying about your legacy while you’re on your weekends and your summer home I mean it is I know the difference between those two things and I have a lot of appreciation for the courage of people who kind of have a stable life but their ambitions exceeded them exceed their position and they put themselves at risk. I take risk on the markets guy I’d wager in the in the markets we buy and sell things take a lot of risk. But if things go badly in that job I come back the next day and never occurs to me that I won’t. I don’t I’m not risking everything and I’m not risking my family’s happiness and that kind of success for a big play and a lot of people in small businesses take that risk and I appreciate the difference. You have said that said that you that that being connected is really having the vision to create this has given you a sense of the courage that small business owners have. It’s sort of like they bet the fire right. Sometimes every day. No I. People come up to me and they say these very appreciative things. You know look I’m in the papers and I’m on and I talk on TV and it’s a big company and they talk to me in a very deferential appreciative way and I really say it’s like you know I work at a company I just work there I’m at Goldman and I’m not Saks. I’m not a founder and I have a big safety net. And so but you have a deep appreciation for what people have done who’ve taken extra respect goes to the core of their stable of their stable lives. And so I think that’s very important takes a lot of a lot of courage to do that and people make makes better.

I mean in your lives and I’ve gone through periods of time where are the people might not have done as well and I stood fast and I’m saying your reputation is made that way and the most important reputation you have is the one with yourself. Because you know if you do these things it instills courage and courage and a lot of things so you know I you know I appreciate it. Also I now say you know another thing one of the things why I’ve always loved this you know love this progun why we spar. You know I get drove it is look if you’re in any industry obviously you want to make a good living for yourself. But if you pick a field you must like you have some appreciation for the content of what you do if you work for a pharmaceutical company. You must want to make be involved in a process that makes drugs that can cure people. If you go into construction you must have some appreciation for buildings and the kind of way you can change a neighborhood or the landscape you know et cetera et cetera et cetera. If you’re in finance like we are we pick winners and losers we finance companies that otherwise might not get financing. Grow up and become businesses and employ hundreds of thousands of people. We take risk away from big companies who have to hedge our currencies or interest rates or things on a very grand scale. But sometimes the grand scale is not a human scale. And a lot of times in our life we’re dealing with institutions we’re dealing big companies and it’s not a human scale.

But we believe in it we believe in the capitalist system. We believe in philanthropy and writing checks but at the end of the day if it’s a philanthropy. Every year they need another check. But the economic system is for profit. You spend the money and then you invest it and you have something left over and that allows you to grow and you hire other people may buy products from other people and their businesses grow and it’s a very virtuous thing I believe in it but at the cop at the level at which Goldman Sachs operates you don’t get to live it. So you do something like this. And again it’s not just writing a check it’s not even just lending people money because people lend everyone needs financing but it’s investing in education. I know a lot of people Goldman Sachs became mentors and advisers. But everyone loves that because it’s one thing to advise you know what you know 200 billion dollar market cap company. But it’s another thing to to advise a caterer which is a family business that has maybe 12 employees that wants to figure out whether it makes sense to invest in a new truck or a refrigerator and how long does it take to get paid back and is it sensible. And it’s nice to do to practice what we do on a human scale. And so you know and so that’s what we like now I know a lot of you have aspirations to leave behind your human scale and become a hard to believe that you know I know that we have Mike Mike Bloomberg speak here yet.

Yes well there’s somebody who started on a very low scale and now he has achieved escape velocity obviously. And so I know small is the new big I always say that you know I always say compliment small business people but I’ve never met a small business person that really really wanted to stay small which is good. Right. So all of these businesses are investing in themselves and in their business year a great steady of the economy where in this economy it always goes in cycles do a little evaluation of where we are. Well I think look let me just say regardless of where it is things evolve are you going to be in your business a long time and over the course of your careers you’re going to see highs and lows of multiple cycles. So you always have to be in the in the contingency planning business. If it’s good it’s going to get bad if it’s bad it doesn’t stay bad and you’re going to always have to make your plans like good things going wrong. Can I survive. You don’t want it once you get to a point of stability and safety. You don’t really want to be taking. Like I said existential risk. Like I’m betting everything again because you know you don’t want to live that way. And of course you reach different periods of your life where even if you’re willing to do it your family around you doesn’t really want to live that way. So I would say and I think this is the most moral.

I think we’re in a period right now where the kind of consensus is that things are going to go very well in the new in the near term at least interest rates while high are low relative to the growth we’re seeing. Energy prices are fairly low and more stimulus has been added to the economy and I know Wilbur Ross spoke a little bit earlier and I think they can take credit at the federal level for having done some things that were business friendly for sure but even small business friendly like the past gurus like deregulating certain things. I know a lot of the regulatory red tape problems are more local and national. But I think they’ve made some you know some the Dunant. And then I’m sure that that’s not a political statement just you know it’s true. And so I think the consensus is I say and I’ll say that again is that things should go well for a period of over a period of time. Low inflation so rates don’t have to go up fast. The risk is and there’s always a risk side is that things get a little go a little too we’ll get a little hot and the Fed fulfilling its obligations tries to forestall runaway inflation by raising interest rates faster than anybody thinks. And if they do that that will cause that would be a little bit jarring the people may cause people to seize up and the delicate balance that the Federal Reserve has to do is kind of get interest rates up while they are simultaneously saying Wow not too fast now. Don’t worry you know slow and if the market gets a little upset they start to say well we can wait a little longer for the next.

In other words it’s a delicate thing to try to ease out of this period where they are really really kind of have easy money policy and that’s what we’ve had and still have. And but you can’t do that forever. And so that the slate of hand that has to happen now how do we normalize get interest rates back to a level where the rates money isn’t so cheap relative to how much you can invest and return on that investment how you get that in a way that doesn’t trigger too much of a rate you know too much with a with a cure doesn’t kill the patient. And that’s the exercise that’s taking place now. And chances are my base case is that it works. The risk is that it doesn’t. So if it works. All of these folks here these owners these business owners really want to grow and to grow. You have to hire talent. Talk a little bit about how you think about talent what you look for when you hire. Well I would say when we survey people and we analyze this and we try to figure out what do we do the three categories that people and small businesses and by the way large businesses you know kind of say access to capital red tape which I know is regulation and how do we get the right people talent. You said talent and getting the right people. And by the way that’s a little bit of function and if you dig deep lower people qualify you know part of it is just the right people on the it. There’s a way of answering your question. Part of it is are people well-trained.

Do people graduate school have they come from LaGuardia Kennedy College for example then there’d be no question but the question is are and that’s something that government has to say you know you can’t go along forever and haven’t an underperforming educational system and still have the United States be an economic engine. It just won’t work that way. So again access to financing which means community banks have to be bumped up and of course tack lower tax and other thing red tape or regulation you can’t have excessive regulation that means you have to spend a third of your time filling out forms and talent which is an educational thing. Now for me what I look for talent you know obviously smart can learn. But more than people knowing what their job is I look for people who can grow because anybody who could take us life is not a snapshot it’s a video. The question is Will somebody if somebody doesn’t know something they could learn it. But if they didn’t know it. Are they going to be able to evolve with the business learn more grow be more leverage for me take responses off of you. So the most important thing I always say I really like this person this person looks like a person could grow. Now how do you check that in their life that they shall grow. Have they done things with the risks they take and how do they Powertech what have they learned or are they still photograph. This is what they can do that it can operate that machine.

But if you ever replace that machine they’re worthless or if the world moves on they are worthless so they’ll never learn another thing again and never growing never help you. So I think that’s also tell you the truth. And this is very important in your business. But important in mind. I kind of like people who don’t bring you their problems because I got plenty of my own to go around and I don’t need to feel like that and that’s not to say people will have you know they’ll also be a sign waving people’s lives and people will go through health issues and divorces issues have kids problems of course. But if people are going to come in with a ton of baggage I’d rather look at the next person. OK. So you’re bringing. Goldman Sachs is being know I think almost everybody in this room to the Hill tomorrow why is it important for small businesses to get connected with Congress. Well I think it’s good. It’s good visuals in both ways. I think it’s good for people to petition their government. And there’s no doubt in my mind you know legislators going appeal to in one place or another and I’m sure you go to meetings and civic associations things like that. But this is a critical mass as small business people and you know everybody knows the Kushayb backbone. But how about there’s nothing like a good revival meeting to show people the force and strength of things and politics politics being local and people getting elected locally it’s not bad for you to go to your district and see the weight of it. And again they’ll be telling you stuff but you’ll be telling them stuff about what you want and you can ask for their help.

And I think once you get used to it this is a little bit. You know I had to learn this at Goldman Sachs you know I come and all of a sudden where you know we’re fortunate we’re factor in the world. Sometimes people like it some people don’t but nobody thinks we’re not influential. And so we engage our government and so people are cruel. Oh my goodness you lobby of course we lobby. We have our voice will say look we don’t vote on the legislation but we have an obligation to tell them what we think the effect of something would be or what we’d like them to do. And I think you should too. And by the way for many of you this will be the first time you’re walking through the halls of Congress. I hope you get used to it. I think this is this is what this is what this is about. So in a way we’re showing you for us. But let me just say in a way this is part of the small business program educational process. Yes I think you should take account of your own of your own mass your own mass. Ok now I’m going to ask you my favorite question What would this wise thoughtful CEO of Goldman Sachs tell the 22 year old Lloyd Blankfein that you learned from your experience. Now I think I’d be doomed to repeat every mistake I ever made if not exactly Asimus then you’re going to here’s what I would say. I would say oh instead of being so wired instead of being so tight instead of worrying about everything ease up enjoy things more.

In fact you’d be more effective in your biz. You’d be just like you’d be more effective in any sport racket sport if you didn’t hold the club so tight with the racket so tight. Ease up. And of course I could say that because things worked out that as I say let me tell my own self. What are you worried about you’d be sitting here with Güneş front a 22 year old doing pretty well as CEO of Goldman Sachs. So ease up. But guess what. I didn’t know that then. So if you so you know there’s this whole you know youth is way you know let me tell you if when I was young I was insecure when I’m secure. I’m not young. That’s all you’re telling me if you’re telling me I could go back and be as accomplished and as confident as I am today I’ll take it but I don’t think that’s a ok. All right so we are going to a lightning rod. This means you have to answer me in like 30 seconds a little bit OK here go to person for advice. I don’t have to go to person. She comes to me. That’s my wife who’s always who always means well as always well intended often is right but never. But the advice is never welcome. Or something ghostly that Alaka is that your most memorable career moment so funny or not so funny. Well one of the most memorable one was the one that I was not very well prepared for which was the whole financial crisis was prepared for that. You know you train for a marathon.

You don’t train for a marathon by practicing with marathons your intent. You know you run 10 miles and then the marathon is the big push. So I prepared for a lot of crises but that one went a little bit further than what my preparation was for say that was the that was that moment. One thing you couldn’t live with those you know I probably couldn’t live without being current with the papers and knowing knowing current events. I just I’m I am I’m still addicted to that most interesting person you’ve met recently. Oh there’s so many. Oh that’s hopping all five Kalgan. OK over the next three words your children would use to describe you painting you only gave me three words. That was pretty cool. Hey I like that in a moment. OK. OK. Here is my total softball your favorite thing about Goldman Sachs’s 10000 small business program. Well my favorite thing is 10000 small business people. It really is. I have to say look my idea of a great life. You know in a kind of metaphorical way what I would think you know I think talk show hosts have a great life. You sit on a stage some producer somewhere brings in interesting people they talk to you for 10 minutes and everybody’s interesting for ten minutes after 10 minutes they slide down the couch and another part. I like talking to people about what they do and what their business is especially when their passion and originals. And that’s what people here are. I’ve met people with the coolest nicknames for their business in the store and they know and they’re great at it.

And here is the revelation that I’ve had could do anything you know life is kind of random. I didn’t have to be I could have you know I end I told you how quirky it was and it up there is you know people hide it you know it’s like cards if you play 10 hands you have to hope you have good luck if you play 100000 hands. It’s not luck at all over the large numbers. Everybody gets good hands and bad hands in the same proportion. It’s how you play it. And I think that you know I you know I believe in both of those things I believe that some parts of it are luck because you don’t get a lot of chances to start a business but it but you get a lot but you can steer yourself to where you want to go and I think it’s important to believe him. Good luck. It’s important to believe in bad luck. I believe in bad luck if you don’t believe in luck then you could think that everything we have is because I deserve it. And if you think that you can give people who are poor and don’t have stuff they deserve that. And that makes people greedy and selfish. So I think it’s a good thing to believe in hard work and to believe that you have a lot of control over stuff. But if you believe you have such total control that everything that comes your way or doesn’t is what you deserve. I think it’s unfortunate makes things that makes people miserable. Chief Lloyd Blankfein is an extraordinary man human being.

He created this program he nurtured. He believes in it. Believe me he’s like a proud papa. All six thousand seven hundred and fifty two small businesses join me and.

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