John Waldron has just been named the next president and COO of Goldman Sachs. We spoke to John in April 2018, after Goldman Sachs came top in our Ideal Employer survey.
This is what John said.
How has working in M&A at GS changed during your career?
The M&A market has changed a lot. Principally it’s become a lot more global. The consolidation of various players means that the industry has become very cross-border in nature, with M&A activity involving many companies not domiciled in the U.S. M&A advisory bankers have to understand a global world, challenges, issues, geopolitics, culture and regulatory structure, so it’s more complicated now. It was a U.S.-dominated business when I started.
There is more activism and active shareholders generally, so when you think about giving advice to companies, you have to think long and hard about shareholder reactions, which makes it more complex. On the other end of the spectrum, there are more passive investors hugging indexes such as ETFs, so the dynamics are different and more complex.
What would you tell your younger self?
Speaking to my younger self, I’d recommend spending more time understanding the world, more time traveling around and studying the non-U.S. part of the globe. I spend a lot more time thinking about that today than I did when I was 25 years old.
How do the expectations of young people going into banking now differ from the expectations you had when you were younger?
Most young people today have an expectation to move faster and work on things that are more relevant more quickly so that they get more value out of their experience. When I was starting, I did what I was told and assumed it would add up to something, and I didn’t ask a lot of questions. I didn’t assume every little thing I had to do would be meaningful – I trusted that it would add up to success.
Today young people want to work on things that will find their way into a meeting or discussion with clients that really matters. They don’t want to work on things that will end up on the shop room floor. They have more desire to have an impact and substantive interactions at an early stage of their careers.
They demonstrate more intellectual curiosity than we showed, to be honest. Whether it’s due to technology, I can’t put my finger on it, but the younger people that we hire and I spend time with are extremely intellectually curious, they ask a lot of questions, and they want to know answers. They care about a lot of things, with a much broader focus. I was narrower, just focused on what was in front of me and getting it done, rather than the context of how it would be used over time.
That’s a good thing – it’s a more impressive group compared to me and my peers at that time.
What do you to relax?
I have six children, so most of the time not spent at Goldman Sachs or with clients or other responsibilities associated with my job, such as philanthropic activity, I spend with my children. My relaxation is embedded in hanging out with my kids. With my older kids, it’s sports or cultural activities; with my younger kids, it’s throwing the football in the park or taking them to a playdate. Aside from spending time with my family, I don’t have time for much else, but I do love to ski, golf and be outdoors.
How long does it commonly take to make vice president in IBD at Goldman Sachs now? What differentiates people who get promoted quickly?
Typically it would be six or seven years to make vice president in the IBD, if you’re talking about starting as an analyst out of undergraduate school. If you joined as an associate out of business school, it would be more like three or four years.
Mastery of the analytics is a baseline element – the raw ability to understand analytics, execute on them and be able to communicate them. That’s fundamental. For someone to end up at a VP level, they’d need experience running projects, working on transactions, meeting with clients and explaining a solution or a judgment.
[Investment banking associates who get promoted to VP] marry strong analytical capabilities with great people skills – the ability to interact with clients at a high level. Lots of people have one or the other. Whatever the weaker side is, you have to develop that before moving forward. People who have developed both earlier in their career at a high level may be promoted sooner. You have to communicate analytical insights in a way that clients absorb well and be someone a client wants to work with.
Would you say that Goldman's policies to cut working hours have changed the way juniors work?
The protected Saturday policy that we put in place two years ago, essentially saying that Saturday is a day off unless there is an extreme exception, is one thing we’ve done that’s had a material positive impact, partially because it reduced the hours, but more because it changed behavior. It forced the senior people to be more organized and deliberate on the work that had to be done for the following week. If there was a deliverable due the following Tuesday, without this policy, the time of juniors was not as focused. The senior banker would give them the outline of what he or she wants them to do on Friday, and they’d work the entire weekend, the senior bankers would look on Monday and be ready for the Tuesday meeting. This new policy forces the senior bankers to think about the outline earlier in the week, which has had a cascading effect on behavior, and that’s a good thing.
We’ve also developed a lot of tech tools to create a more efficient workflow- we automated mechanical processes that we tended to do manually and designated the more rote parts of those processes to be automated. We try to get juniors to spend more time on things that matter and are value-added for clients, versus process elements that could be automated. That’s an important piece, and we’re still working through it.
Third, we try to create more mobility, which is one of the major assets of our firm. It’s broad, there are lots of products, lots of geographies, an enormous reach, and lots of businesses. What would make you stay at Goldman Sachs longer? People get restless and want to try new things, so we want to give [employees] the ability to move around so they have options to deploy their skills and do different things. We want to give people a chance to take advantage of other opportunities within the bank before maybe doing something else down the road.
How would you say the automation of the investment banking division is likely to affect jobs in M&A in future?
I’m less inclined to predict that it will fundamentally change headcount – I don’t think it will be a job destroyer. Automation will allow us to be sharper with the advice we give and spend more time on value-added components. For clients wanting a comparison on how stocks trade, a spreadsheet used to be the valued-added piece, but most people could pull that off on an iPhone today. The ability to create that analytic would’ve taken 10 or 20 hours years ago, but now you can do it in less than an hour.
What does it mean? Investment bankers’ jobs are not just about producing spreadsheets. As that kind of thing gets automated, it ends up that people are spending more time on strategy and higher-level responsibilities.
What do you enjoy most about your role? And what could you do without?
What I enjoy most is undoubtedly the people I get to work with, who are enormously talented and very diverse up and down the organization. I can’t imagine a place where I would get to interact with so many people with experience in so many areas who are masters of their trade. Our young people have tons of energy and are intellectually curious – there’s an opportunity to shape and mold them and keep them here. That’s exciting.
I could do without bureaucracy. Committee meetings take a lot of time and energy, and some of that is unavoidable. There’s also the residue of the financial crisis, and there are lots of regulatory requirements with regulators paying extra attention to things that needed to be focused on. I hope legislators try to find ways to skinny that down to as we try to be more growth-minded now.
(This article was first published in April 2018)
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