Forbes Magazine had an article on Goldman Sachs in their January 29, 2007 edition.
If you haven't heard, Goldman earned $9.5 billion in net income in 2006, and paid a whopping $16.5 billion in bonuses to its employees!
Their success can provide lessons to us:
1. Leverage your strengths to feed off each other. Goldman operates in three areas: trading (68% of profits), asset management (17%), and investment banking (15%).
Even though trading provides the bulk of their profits, the company values all the parts. They believe that meshing them forms a "perpetual money machine", which is the key to growth.
For example, they might help set up a business, invest in it with the money they manage for others(as well as their own trading funds), and snag the business's CEO as a private banking client.
2. "Long-term Greedy" - Goldman is always looking to form long-term relationships, which may payoff years down the road. For example, Like a university, Goldman keeps in touch with its alumni, and gets them to be ambassadors for the company.
For example, when Goldman was interested in growing their business in China, they worked with John Thorton, their retired co-president who was now teaching at a university in Beijing. He is now on the board of ICBC bank. Goldman ended up taking a 6% stake in the bank and taking it public on the Shangai and Hong Kong exchanges.
Other famous Alumni include: the White House Chief of Staff (Josua Bolten), the Governor of New Jersey (Jon Corzine), Governor of Banca d'Italia (Mario Draghi), Jim "Mad Money" Cramer, Sears' Edward Lampert, and the current Secretary of the Treasury (Henry Paulson), as well as Clinton's Treasury Secretary (Robert Rubin).
3. Live on the Edge - Goldman's biggest margins are made with exotic new financial techniques and instruments. They have invested heavily in technology and "brainiacs". The company employs compliance lawyers to keep its people well-informed about the legal edge, so that they will not shy away from pushing the boundry.
Thursday, 15 February 2007
Subscribe to:
Post Comments (Atom)
0 comments:
Post a Comment