Stop Trying to Fit In: Former Goldman Sachs CEO Lloyd Blankfein

0:00A CNBC original podcast. Early in his career, Lloyd Blankfein was constantly judging the room and himself. Who shall I be this time? How shall I sound this time? He grew up in public housing in Brooklyn and arrived at Harvard feeling like an outsider. Then came the decision that would shape the way he carried himself for the rest of his career.

0:22Lloyd Blankfein:Somebody put his hand on my shoulder and said, Lloyd, you may think you're changing, but everybody knows exactly who you are. And so I decided I might as well go with it because I'm not fooling anybody anyway. For the future Goldman Sachs CEO, that meant stopping the performance and becoming more comfortable with who he was. I think what surprised most in the world, whether people acknowledge it or not, is, you know, authenticity. But as he rose through the firm, Blankfein also had to learn another lesson. To be a good teammate, you have to not only take criticism, but you have to be a little softer when you give it.

0:51These are Lloyd Blankfein's executive decisions.

0:59Did you feel growing up and in your early years, whether it was at Harvard, Harvard Law School, Jay Aaron, did you feel like an outsider?

1:08Lloyd Blankfein:Well, I did. I wasn't a lot like my classmates. I came from public housing and I went to Harvard and I had roommates that had gone to private school. Yes, I was an outsider. I was a striver. And in my experience, when I meet other people who are in senior positions all over, if you unpack their stories, they're kind of that way too. I think it's helpful in some ways. But from a very early age, you didn't let that become an issue. You didn't let that become something that kept you down. Actually, I think reading Streetwise, you used it to drive you on. Is that the case? It did. And it gives you perspective.

1:47Lloyd Blankfein:It also gives you – delivers you a higher EQ, emotional quotient about people because you learn to read the room better because you're always very conscious less about what you're communicating and really what the other person wants to have. You become a little bit more of a pleaser and that helps you. That helps you in circle. I'm sure everything has a good side and a bad side. I'm sure it's burdensome in some ways and helpful in other ways. But I can't help myself. This is – I go into a room and I'm thinking, how are they – how am I being perceived? Conscious, you may not hear it as much as other people do.

2:22Lloyd Blankfein:I have a kind of an outer borough, New York City kind of an accent. I once said, who shall I be this time? How shall I sound this time? And somebody put his hand on my shoulder and said, Lloyd, you may think you're changing, but everybody knows exactly who you are. And so I decided I might as well go with it because I'm not fooling anybody anyway. Yeah. Let me talk a little bit about your earliest role models. And I think they maybe came from your family. You've got this amazing grandmother who you were living with at one stage as well. You've got your father who's worked in the post office, but a really hardworking guy and really helped drive you.

2:56And you've got your mom, your sister as well, who is, I think, eight years older than you? Nine years old, yes. Nine years older and was just a phenomenal person in bringing you up as well. Were these the early mentors?

3:05Lloyd Blankfein:You know, I hate to say it because it was such a good lead-in, but not really. From very early on, I really just wanted to get out of the neighborhood, get out of the context that I was in, go. And for me, the symbol was to go to an out-of-town school to get accepted. It would mean, in my case, having to get a scholarship and go to an out-of-town school. And my parents, who I really, really appreciated, had a much tougher life. You know, the blue collar, blue collar people, workers, laborers. You know, my dad didn't have a lot of opportunity. So I appreciated them, but they really weren't that much of a role model for me because I was trying to get into a different role.

3:45Lloyd Blankfein:You know, you watch television, you see how other people live. You know, I didn't know anybody who lived in a real house as opposed to an apartment in an apartment complex. but I aspire to all these things that you saw. So it was you that drove yourself, not anyone particular in your early childhood or your developing years. I felt that way. I can't think of anybody who I aspire to be. I didn't know anybody growing up whose father went to work in a suit or wore a tie. I didn't have that stuff so I always tried. I mean, I didn't affect that stuff. I just wanted to leave where I was. I find that phenomenal.

4:25I've conducted 22, 23 executive decisions interviews now. People come from all kinds of backgrounds. One from a slum in Casablanca, another one from rural Kentucky, where he was working in a garage at 13 and found it really tough. But they all had a mentor who said to him, no, you can go and do this as well. So for you to get to Harvard and then Harvard Law School purely on the back of your own drive, that is quite an incredible thing.

4:50Lloyd Blankfein:Well, I'm here. So if I didn't have that, I wouldn't be talking. There'd be somebody else in this chair talking to you. I was always driven that way. Yes, I was. But I mean, it wasn't like, I mean, I think I had a perspective on it. I think I had a sense of humor. I think if it didn't work out, I would have adjusted to it. But I kept, I was encouraged by incremental success. And so I did well in school. And I mean, I had people who helped me along the way. My high school didn't have a college office that would prepare you to apply to colleges. I went to a different high school just to go to their college night.

5:24Lloyd Blankfein:And there was somebody manning a booth who was representing Harvard. And he gave me an application. He chatted with me. And I filled it out. I filled it out like you'd filled out a landing form when you were coming into a country. These were meant to be essays. And I just wrote it off my head. But I give the university a lot of credit because they found me. You know, it's not done by statistics. They read your application. They give you an interview. And lucky they saw something. When did you decide you wanted to go to Harvard? It doesn't get more blue blood as opposed to blue collar. Oh, I decided why I wanted to go to Harvard when I got into Harvard.

6:01Lloyd Blankfein:I never saw it before. I just applied to all the brand name schools that I could. So it was a bunch of Ivy League schools. And then the state school of New York. The Yale that turned you down amongst others? Yes, of course. I didn't get into all of them. To this day, I still have some admiration for them because they were smart enough. They turned me down. But I thought I would end up in a state school, which wouldn't have been so bad. And then freakishly, I got into a couple of these Ivy League schools and that was a big moment and there was a lot of apprehension associated with it. I hadn't met anybody who'd gone to a school like that.

6:35Lloyd Blankfein:And when I went there, I'm sure my roommates and friends that I subsequently became friends thought I was a Martian. there's someone from someplace far away but it worked out. But you yourself felt like you were trying to fit in. You were buying Lacoste t-shirts to fit in. You were trying to buy the right suit, the right sports jacket to fit in as well. And then when you're going to friends' homes, you're like, wow, this is phenomenal. I didn't know people live like this. But when you brought them back, you felt very self-conscious, didn't you? I did. And then I felt embarrassed with my friends.

7:07Lloyd Blankfein:And then later in life, I felt embarrassed about having been embarrassed because that was terrible because I felt, you know, was I being fair to my family and those feelings? And now I decided that I'm not going to be so hard on myself. And it's just a kind of a normal thing. Right. I'm going to spin forward now. You've got your undergraduate degree at Harvard. You've done really well in Harvard Law School. You've moved on to a great company a little bit further down the line, Donovan Leisure. You're a successful, hardworking lawyer looking at kind of fairly dull areas, tax and what have you, and looking at the nuances of tax, but you've made it.

7:47Why on earth did you look to throw all that away and becoming a trade or a salesman at a small brokerage?

7:56Lloyd Blankfein:Well, I was working at that job, but I didn't love the job. And for me, it was a chore. And so I said, and again, I was living in New York. New York is a very finance-oriented town. So I started applying for other jobs and those were jobs in finance. I started interviewing at this small commodity trading firm called J. Aaron. And then during this elongated interview process, Goldman acquired them. And that was lost on me. I didn't even observe that. And it didn't really matter for a few years because it operated separately for a long time. But I joined this company. They gave me a job and it turns out in hindsight, I found this afterwards, they hired 20 people in the hopes that they'll have two at the end.

8:38Lloyd Blankfein:And it was a trading environment and, you know, rough and tumbling. People were screaming at each other, waving their hands. And it was sort of like, believe me, that was an environment that I'd grown up in. And so I was quite comfortable with. So you felt actually that your Brooklyn background, you'd kind of, I can do it. This is way better than law just sitting there looking at complicated tax judgments as well. Yeah, I wasn't as analytic as that. In hindsight, yes. At the time, I just said, this seems, you know, this seems pretty good. And frankly, the hours were shorter. I mean the one good thing about being a lawyer in those days is that there's almost – the hours were so long and sometimes there was a lot of drudgery associated with what you had to do that almost any other job after that would be lighter and merrier and would be a better lifestyle for a young associate trying to climb the law firm ladder.

9:25Lloyd Blankfein:And so when I went there, it looked better in a lot of different ways. I didn't know if I'd be good at it. And it turned out it suited my personality.

9:38You were 36 years at Goldman's, J.A.R.A.R.A.R.A. And it seems to me that you spent at least the first half of that career trying to justify the J.A.R.A.R.A.R.A.R.A.R.A. to what was a very kind of very well established investment banking operation at Goldman Sachs. You guys were always pushing against a glass ceiling or the Goldman's guys were on a better floor and you guys were in a different building and you had to convince Goldman that actually this was the way forward to become a bigger operation.

10:04Lloyd Blankfein:Well, there was a bit of a culture difference between the firm Jay Aaron that I joined, the relatively small commodity trading firm, which consisted of a lot of people who were streety. Not all of them had been to university. And it was people who had kind of worked their way. A good entry-level job at J. Aaron was to be the driver for one of the co-senior partners of the firm. So that shows you what kind of career path was in that firm, whereas Goldman Sachs was a very, very establishment kind of firm where people had gone – graduated from all the Ivy League schools and that was kind of the entry requirement to get a job at Goldman.

10:41Lloyd Blankfein:So there was a little bit of upstairs, downstairs about Goldman Sachs and J. Aaron. And of course, I already had a chip on my shoulder and that kind of really reinforced it. And so, yes, there was a little bit of trying to prove that we were good. And frankly, it didn't hurt us. Some of these things that you think of as burdens and disadvantages in the long run turn out to be advantages because we worked harder, took a little less for granted. We're much more curious about learning about stuff because we didn't think we knew everything. Were you successful sometimes in spite of yourself? A little bit later on, you had to take on 360 degree performance reviews.

11:19And time and time again, people say that you were very combative. You didn't always listen to them. You talked over. Sounds a bit like myself at work to be fair. But you talked over them. Were you successful in spite of yourself sometimes?

11:32Lloyd Blankfein:I put in a review, this is a 360, like all 20 different people. Some report to you. Some are over you, comment on you. and somehow they all came up with 20 synonyms for this guy really needs to change his behavior. Tough. I know people who are in very, very high senior places and I think, boy, that person must have been voted most likely to succeed in kindergarten and every year since then. And there are some people who are later bloomers and who never thought themselves. And I was sort of in that latter category. In my life, I've met some very, very accomplished, very, very smart people, but people throw the word genius around very, very easily.

12:10Lloyd Blankfein:I've met people who've worked hard, who've done well, who had lucky opportunities and give them credit. They took advantage of those opportunities, but they weren't geniuses. They just applied themselves. They had their ears open. They had curiosity about the environment around them and they saw things and they went through little doors that other people wouldn't have seen. That's a point to make that a lot of these opportunities are more accessible than you think. If you think that someone can only get to this spot because he's brilliant and genius and had this charmed life at every stage, you kind of give up.

12:43Lloyd Blankfein:And so part of this thing, an objective is that my career is not only relatable, but accessible. Statistically, not a lot of people are going to get those kind of breaks, but you can go pretty far in this world taking advantage of opportunities and working hard. My own career in the city started very early on. I had a great role model, man. You probably know Jeremy Isaacs. Sure. Who went on to Lehman's, of course. And he was a great role model. And I still speak to Jeremy and get advice of him to this day. Who was the best of the best that you listened to and used as a role model when you were at Goldman's J.R.M.?

13:20Lloyd Blankfein:Yes. You know, and it's funny. Little things make very important impressions. So going back to my law firm days when I first went to, as I said earlier, I never knew anybody who wore a suit. I went to the first boss I had in my law firm. This is the most useful thing from policy. He told me how to dress better. I didn't know that you put little tabs on your collars to keep your collar down. I was waiting. He told me to buy a few Hermes ties at one point as well. He told me to buy these ties and not those ties. Save your money. No, don't buy 10 of those ties. Buy one or two of these. People take an interest in small ways and those are the things that establish a good bond between people.

14:00Lloyd Blankfein:I'm sure he taught me things related to the law. I probably would have learned those anyway. I want to go to 1991. Robert Maxwell's ringing you up, one of the most important businessmen in the world. I want your advice, Lloyd, as well. You got a little bit flattered by him. Everyone got flattered by him. A couple of months later, he's passed. Maybe he fell off his bow. No one knows. But he was a crook. It turns out that Robert Maxwell was a crook. What did you learn from that relationship? You know, I learned, well, first of all, you're exactly right. I was kind of seduced. But even if somebody told me I was seduced, I'd have been flattered that he took the time to try to seduce me.

14:35Lloyd Blankfein:At that point, I was a fairly junior person in the foreign exchange world. He was transacting himself. But a lot of people did in those days involved in global markets, you know, because, you know, currencies were very volatile and decisions about currencies were quite consequential to business. and there was nothing that he did with me that was illegal or should necessarily have raised a big flag but I realized that I was an unwitting instrument on his effort to take money from his public company and move it to his private companies because he would do currency transactions and he'd give the back office payment terms that involved moving the money to a different source which he was entitled to do.

15:17Lloyd Blankfein:He was the CEO of both entities and he was authorized to do it but And when this all came out, I realized, my God, I was so flattered by him, by the fact that he was calling me and that I was giving advice to the great man, that I realized that as you grow up and you're in a position of influence or the ability to help people, you have to have a certain kind of reserve. Because you can't allow yourself to be flattered in that way. You can't allow yourself to be manipulated and used. and the temptation, by the way, even among well-intended people who don't have fraud in their scope, might get you to do things that you don't want to do.

15:57Lloyd Blankfein:And if you're a natural pleaser and so impressed by your own magnificence because these people want to befriend you, you'll do things that you shouldn't do. And so you learn in life, and I understand very senior people very often, especially in a banking world where you make credit decisions and you can finance someone or not finance them and it's really existential for their lives, you have to have a certain kind of remoteness. And you can't be very, very good friends and always want to please the people you do business with because you have to make, again, decisions that are in the best interest of the company and the greater world and not necessarily in their interest.

16:38Goldman slowly realized, got more and more partners on board, that you just needed more capital. You love the culture. It was culture versus capital at one point. That was how it's framed by a lot of the partners. But you needed more capital. So you decided to IPO a portion of the company as well. That made you a stunningly rich man, didn't it? I think, some in the region,$90 million?

16:57Lloyd Blankfein:Well, maybe you have different thresholds for what's stunning. It certainly made me a lot wealthier, but I wasn't stunned by it at the time. So the process to end the formal partnership and become a listed company as well, that was very interesting. Yes. So let me say, Goldman Sachs really prized its culture as a private partnership and it really made a difference. Everyone was an owner of it. Everyone felt – and owners are different than employees because you feel entitled to information. You feel entitled to have influence. If the senior partner wants to do something, he really has to socialize and listen to comments because you're dealing with your fellow owners.

17:36Lloyd Blankfein:That makes sometimes processes are slower, but it makes the organization much more stable and I think better in the long run. So people were very reluctant to give that up. We thought it was a special advantage of the firm and to this day I believe it was. It was partly the opportunity to do more stuff with more capital, but having survived some of those earlier crises, partnership is another thing also. So it's impermanent capital compared to a corporation, which is permanent capital. You keep your balance sheet. You keep your capital. People can transact shares and get out of their position and leave the company.

18:13Lloyd Blankfein:But the capital stays in the company. But what is fascinating about that moment? It was too dangerous to remain a private partnership for the activity. And a lot of partners walked. And I think this tells a lot about you, if I may say so. I think you were suddenly wealthy, by the way. And I think you knew it because you knew where you came from. You've never forgot East New York and Brooklyn as well. But a lot of the partners thought, I can do other things here. And a lot of them did. And they went into politics you talk about, into all kinds of other things. I think one of them went into coaching.

18:39Lloyd Blankfein:They bought sports teams. Sports teams. You stayed. So I think that does tell a lot about you and what drives you as well. Can you just expand on that? Well, yeah. I mean, that's the answer. I just am wired. I like what I was doing. People also left. Partly people left because they wanted really to defend their wealth that they had acquired. and they could. Look, we all suffer. We all go to work every day, and boss does something that annoys us, and guess what? You go home, you complain to your spouse, and then you come in the next day, and you sort things out. But when you're well-to-do, and you sort of get irritated at your boss, the next day you go in, and you quit, because you can.

19:21Lloyd Blankfein:Keeping people at that point was a little bit different. People had leapfrogged in wealth. People had previous notions of what was wealthy and somehow they leap way beyond that and so some people decided to leave. They were probably making the right decision for themselves. It wouldn't have been the right decision for me. What would I have done for the next 30 years? By the way, in old Goldman, it was always figured that people would stay, be a partner of the firm and then leave when you still had more gas in the tank, more chapters left, if I mix a metaphor, more chapters left to perform. But that's how with your public speaking as well, you never want to speak too long.

19:57You want to leave them wanting more.

19:58Lloyd Blankfein:Yes, always leave them wanting more and you make the opportunity for someone else. But people usually left the firm in their middle 50s and then they did something else and every once in a while somebody would stay too long like me. When you became partner of the firm, the person that inducted you into the partnership would sit there and say, this is your expectations of you. This is what you have to do. This is your new role and your new station and a set of responsibilities, a role model for others. And he'd say, you know, the expectation is you should to organize your life. So if and when they write an obituary about you, no more than three or four paragraphs are about Goldman.