Goldman Sachs董事长谈金融业为何以不同方式采用AI｜a16z

Anybody who's investing, you're doing 2 things: You're trying to make money for yourselves and your clients, and so you're trying to get out there and take risk. You're also trying to be a risk manager, and you have to do both.

I think it was your quote that it's like, “You're so good at predicting the future. Tell me what's going to happen next.”

Once the present turns into the past, everybody's a genius. Most of what we do with respect to risk is not so much predicting. It's a lot of contingency planning.

We are on the precipice of some of the largest IPOs ever. What are risks that you think are underappreciated?

Before this technological age—not just AI, but in general—could you have had a mistake that could cost billions of dollars? Not really. But now a piece of software could go out and do 70,000 transactions.

The leverage in these things is itself a big problem—not because it's smarter than us and it's going to turn us into pets, but because we don't have the ability to test whether it's right or not.

Your tweet, by the way, about the White House Correspondents' Dinner was amazing. I think, for the good of the timeline, we need you back on Twitter more often.

You would think that you see something and you're activated to tweet about it. For me, it's, “Oh, gee, I haven't tweeted for a long time. Let me find something to tweet about.” Also, being in the risk-management business, I always know that everybody keeps doing that and eventually you get canceled because you do something—you step over some invisible line that nobody knew about.

So I realized that, from a risk-reward point of view, it's all ego and no real value other than that. But I was saying, when you retire, you grasp at straws. Why not? I mean, it was like 10 million views later or something.

Yeah, it was amazing.

I remember when I was doing it—what's his name from Twitter?—and I got this. I said, “When I retired, no—unrestrained. No, I am freed from the restraints that I had,” because I started—I did this at Goldman, and I realized that I was playing a dangerous game because I was being snarky with the president, and I had all those back-and-forths.

To whom?

With Bernie Sanders and Elizabeth Warren.

The other thing I was curious to ask you: You're obviously famous for being calm under pressure and a risk manager, but it was reported that during the active-shooter incident, you leaned over to the person next to you like you were going to say, “Are you going to finish that salad?” Was that real?

No, that was—yeah, that was real. But I would tell you, it wasn't like I was hungry. Everybody was—I always tried, in moments of crisis like that, to be disarming. Everybody was ducking down, and by the way, it was very sensible to duck down under the desk. We realized we were pretty close up.

It wasn't that thoughtful on my part. It was like being in a movie, and I was enjoying watching it. You had all these guys who were in tuxedos, and suddenly they had pistols in their hands. There were guys in full tactical gear, and they all ran in. They were on the stage with their guns facing outward, of course, because that's where the threat would have come from.

Then, suddenly, a guy tugged on my leg and said, “You really should get down.” I said, “You're really right.” I said, “This is like when I get into an airplane. This is another time that I'm glad I'm short.”

I was watching it, and then I saw what everybody was doing. I didn't see a lot of panic. I didn't see any panic, really. The people under the desks were doing the sensible thing. But again, to break the moment, I looked down and said, “By the way, are you going to finish your salad?” It was kind of funny at the time.

Were you always even-keeled as a kid, or was there something from your childhood that helped breed that temperament?

Yes, I was. Somebody said at Goldman, “You're very good in a crisis, and that's why you go out of your way to create them, just so you can give yourself an opportunity to be good in a crisis.”

I would say that my normal resting state is to not be resting. I tend to be a little bit wound all the time, and then I'll get especially wound in a crisis. In fact, things slow down for me.

Mhm.

I'm used to seeing things like that in slow motion, and I become very sensitive to what the people around me are thinking and trying to do, and I learn from that. But most of the time, at Goldman and in most of life, in a crisis the really important thing is just to get people to do their jobs and to stop being frozen. Don't submit to the chaos.

Do you think that was just your nature, or was there something from your childhood that helped breed that temperament?

I don't know. I wouldn't have predicted that about myself, but I've now gone through—we had the crisis of the century roughly every 4 or 5 years. It's always that way. By the way, it doesn't mean I like crises, and I wouldn't go out of my way to volunteer to be in one. It's just that when it happens, I generally have confidence that I'm not going to get discombobulated. I'm not trying to tempt the fates, but if I'm going to get discombobulated, everyone is going to get discombobulated before me. That's how I think about it.

That taught me a lot about the people that you need to rely on, because you can't really tell. I mean, not to coin a phrase, but you can't judge a book by its cover. I went through the financial crisis, and we had people—I'm thinking of one in particular—who was a great athlete, a terrific guy, a real man's man. He did rodeos on the weekends, and he was terrible.

Yeah.

Here I am, the co-president of the firm, trying to teach people, trying to say, “You have to breathe.” Then there were people who didn't look like they could walk up a whole flight of stairs, and they were really good. You just don't know.

That's why my advice, when you pick board members—

Yeah. To turn this from something generic into something very narrow, I think a good place to go is to find people who've already gone through a crisis. People can look like and sound like they'll get through it, but I'm not really sure how much of a correlation there is to the reality of it. When somebody's gone through a crisis, I think that's your best bet.

Totally. I definitely want to spend some time on the financial crisis, because it was such a defining period. But maybe, to go back to that topic for a second: You had a very modest upbringing. I was curious what role living near New York City, or Manhattan more specifically, played in creating ambition.

I didn't grow up in the projects, but I grew up very modestly as well.

Where did you grow up?

In South San Diego, in Chula Vista, about 10 minutes from Mexico. My mom was a public-school teacher, and my dad worked in retail in Mexico—very far from Cambridge. Harvard really changed my life.

Right, so your dad had to get through the border to get to Mexico every day. Did they give him a tough time at the border?

He had a motorcycle, so it was a little bit easier, and the shoe was on the other foot. Exactly. Harvard definitely changed my perspective on what's possible. I learned more from my peers than I did from my classes. I'm curious if you had a similar experience.

I grew up with Manhattan looming in the distance. Before I went to college, I probably went into Manhattan 3 times. I think 2 of those trips were to the Radio City Music Hall Christmas show.

Yep.

I know 1 of them was for my interview to go to Harvard. That was a big deal. We might as well have been 5,000 miles away from it because I grew up in public housing. It was—this won't mean anything to you—a 2-fare zone. You had to take a bus to the subway to get to the city, and it probably took a long time to get there.

I grew up in public housing, NYCHA. There was a gradation of incomes that you could have; there were different levels of public housing. If you made more than $90 a week, you couldn't live in that particular building.

Since then, I've met people who've walked across deserts and people who grew up in war zones. I don't want to compare stories, because a lot of people had tougher stories than that. But I didn't know a lot, so I didn't have the burden of high expectations.

That's a funny way of putting it, but I labeled the first chapter “Advantages,” as opposed to “Burdens,” because now that I'm on the other side of the ledger, I understand just what a burden high expectations can be on people.

I did not suffer from that. But I also didn’t know what was going on in the world. I’d never traveled. I’d never been on an airplane, for sure.

When I went up to Harvard and saw it for the first time, I really traveled. My sister took me up. It was more of a culture shock. I went to a failing high school. I don’t think I’d read a book. My board scores—I mean, I’m a pretty verbal person—my verbal scores were very low, and my math scores were almost perfect. I think it had to be like a 790. The only extent of my ambition was to go to an out-of-town college.

Mhm. That was it. Amazing. To get out of Brooklyn. Totally.

Maybe just a transition to Goldman. One of the things I’ve always found remarkable about the firm’s history is that it wasn’t a business built through a series of bank mergers, unlike many of its peers—J.P. Morgan, Bank of America, and so on. It was really a business built, at least from my vantage point, brick by brick by generations of entrepreneurial partners who raised their hands and went off to build Europe, the merchant banking business, or even retail.

Yeah. Retail started in a different direction after I left. That was an outgrowth of the merchant bank.

Totally. Nurturing a business, and then when somebody said, “Gee, this should be—we shouldn’t just be a private equity firm here; we should be strategic”—that’s how it was done.

Yes, that’s how it was done.

The one notable exception, maybe, from an organic-growth story was the acquisition of J. Aron.

I know you have your 45th-anniversary dinner in May, is that right?

Yes.

Did people at the time think that J. Aron would have such a big impact on the firm?

Well, I was an acquirer, so I don’t know what they thought at the time. I subsequently found out what they felt about it, and it was a disaster.

It was a little bit like Columbus sailing to find the Indies and instead finding America. It turned out okay, but for different reasons. They discovered something, but not what they intended to discover. They ended up getting an entrepreneurial culture that they didn’t know they were buying.

At the time, this was in the early ’80s, a period of high inflation. The manifestation was higher commodity prices and precious metals. Gold had only recently been freed up to be owned by individuals. Before that, we’d been on the gold standard. That evolved, and it’s hard to transport yourself back to that time.

The business of J. Aron & Company was kind of a sleepy business, except that it erupted in a positive way at the end of the highly inflationary period, before Volcker came in and clamped down on inflation. The savvy, streetwise guys at J. Aron extrapolated the value of the firm at the peak of its performance and sold itself to Goldman.

Interesting. At the same time, DLJ, which was an investment bank then, bought A.G. Becker, and Salomon Brothers and Phibro got together. So it was in the air that Wall Street firms needed a commodity arm, and Goldman Sachs got J. Aron.

J. Aron had a different culture. To the extent that this is all lost now because all these firms have blended and you wouldn’t know the difference, at the time Goldman was kind of an “Our Crowd” firm. It was a Jewish-y kind of firm.

So was J. Aron, but very different.

Interesting. Goldman was kind of an upper-echelon crowd, and J. Aron was more streety guys.

Yeah. Goldman recruited from the Ivy League.

Yeah, and people with MBAs. J. Aron just recruited people. For most of the life of J. Aron, the best entry-level job to get was the driver for one of the traders. Literally. It was almost mafia-like in a way, and that’s how you rose in the organization.

I’d gone through college, gone to law school, taken myself and my loans into a law firm, and worked there for about 4 or 5 years. Like a lot of other people at that time, I was doing well at the law firm, but it wasn’t necessarily for me in the long term.

I looked for jobs I knew nothing about. I interviewed at a lot of places. Being in New York, what do you go into when you’re done with law school? You either become a consultant or go to Wall Street. I said, “I’ll go to Wall Street.” There I go. I will bestow myself on them; they should be so grateful to have me.

I knew nothing about it, and of course I got a job nowhere.

Yep.

The only place that offered me a job—including Goldman, where I didn’t get a job—was J. Aron & Company, the small commodity-trading firm I’d never heard of. They hired me as a precious-metals salesperson, and right around that time they were acquired by Goldman, which is how I got into Goldman.

Was that where you learned to be a risk manager? That’s one of your most famous qualities, but I don’t know. I don’t think much of our audience has a good understanding of what trading in the ’80s or ’90s looked like at J. Aron.

It hasn’t shifted. The vehicles have changed, but the kinds of judgments and the perspective are the same.

Anybody who’s doing this business—and yourselves, anybody who’s investing—you’re doing 2 things. You’re trying to make money for yourselves, your investors, and your clients, so you’re trying to get out there and take risk. You’re also trying to be a risk manager.

You bifurcate yourself and say, “I know we want to take risk, but let’s go into risk-management mode and consider: Are we diversified enough? Are we overly committed to this? Are we managing it well?” That’s a different head that you have to bring.

You have to do both. We get challenged on both sides. Sometimes things go badly, and people don’t want to take risk—the pleasure-pain principles work. But we’re paid to take risk. You have to take risk. What do you want to do? You have to exhort people and sometimes shame people into taking more risk.

Sometimes you have to get them to say, “Okay, we’re not talking about what risk we want to take. Let’s go over our portfolio.” I’m sure you do portfolio risk, asking, “Where are we overly exposed? What contingency plans would we have if X, Y, Z, W, or G happens?”

Yep. What can we do today to mitigate the adverse consequences if any of those things happen?

When you go around the table for those meetings, you’re not so much interested in what people think about the future or where things will go. You just want to know—forget about what you think the likelihood and probability of something happening is—what will you do if it does happen?

Mhm.

And what can you do today to mitigate the consequences of that in advance, at a very low cost today?

Buying insurance is very expensive when everybody needs it and when the problem is dramatic. When the hurricane is coming and it’s on its way, it’s very expensive to buy insurance for your oceanfront property. In the middle of winter, when it’s the furthest thing from your mind, it’s a lot cheaper.

What can you do? We did both of those roles. I’d say what I might have had an orientation toward was the risk-management part because I could find the cloud around any silver lining.

My wife will yell at me. She’ll buy something new, and I’ll notice, “Isn’t that a chip on the lower part of something?” I think my wiring was always to be a little fatalistic, a little nervous, and looking for stuff that could go wrong.

It turns out that I had an appetite for risk. That’s a little bit different from saying I was good at risk-taking, but I could live with a risky situation. I didn’t shrivel up.

I ended up having to do both things, and we have a lot of risk-takers. I’d say that the biggest challenge for management is the risk-management side, which is really getting people to refrain from risk. That’s about a third of the time when you’re in that business—not the most important part, but probably the bulk of the time is getting people to take more risk when they don’t want to.

Totally. I think about that a lot here, too, for sure.

You get singed. You don’t want to do it, but we’re paid to put out money.

in the right place. And so, you just can't be afraid.

I spoke to Ashok leading up to this conversation. He said a few things. One was, from his perspective—

Ashok has been the head of trading at Goldman Sachs for a long time at this point, head of—

And I think one of your mentees, or at least that's how he—

Well, I'm honored by that, but yes. I always think of myself more as a tormentor than a mentor.

He said some amazing things, which I want to come back to. He said one of the cultural thumbprints that, from his perspective, you left on the firm was a culture of mark-to-market. The other thing he said was that you were a manager who understood losses, so you weren't afraid of them. You would often, to your point, encourage people to lean in.

He also said you were incredibly good at gathering information from the organization. You were very approachable, so people wanted to come to you. And when you were doing an audit of a division, you wouldn't just speak to the head of the division; you'd speak to the number two. So it's like—

I don't want to undermine that, but I always did. On that score, I tried to make it so that everybody felt comfortable talking to me. One thing I never did, if somebody was calling to tell me something that was bothering them, or that they saw an opportunity or a challenge, was say, “I know. I already know about it.”

Mhm.

Because I never wanted anybody to self-censor later and say, “He must have heard about it from somewhere else.” If a junior person was telling me something and three people up the ladder had told me the same thing, I would sit and listen.

First of all, you find out a lot about the person who's telling it to you. You're not just learning the content of what he's saying; you're learning a lot about the messenger. Secondly, I didn't want anybody to have an excuse not to tell me something. So I listened to a lot of redundant facts and circumstances.

I thought about that a lot. And about taking losses—you learn that the first day.

Sure. Of course, everybody can lose money. You can lose money because somebody's stupid, or you can lose money because somebody's wrong. Smart people are wrong. Smart people tend not to do stupid things, but they tend to be wrong.

You know the old saw about the best hitters in baseball making an out two-thirds of the time. It's very important that when something goes wrong, or somebody loses, you don't treat somebody who's wrong like they're stupid.

Mhm.

The big fault of risk management, or of bosses and managers, is that they let after-acquired information seep into their judgment of what they would have done at the time.

Mhm.

You have to be very careful about that. When you evaluate and engage with people, you have to show an appreciation of what people have done in the fog, which always exists, because none of us know the future. By the way, most of us don't even know the present.

Totally. The present is a mass of things. Who can sort that out? Once the present turns into the past, everybody's a genius. Nobody voted for Nixon, and yet he won in a landslide. Everybody remembers things differently.

I think it was your quote: “Good at predicting the future? Tell me what's going to happen next.”

Yeah. When pundits come up and say, “I knew this or that,” I say, “If you were so prescient, tell me what happens next.” They say, “Oh, well, it was easy then.”

When somebody's telling me about the certain future, I say, “Did you know that we would be doing this today, or that AI would be where it is? If you didn't know those things, why are you so sure that you know the future? People don't know this stuff.”

I'd say that most of what we do with respect to risk is not so much predicting and not so much forecasting. It's a lot of contingency planning.

Mhm.

If you're a good contingency planner, you go around the table: What could happen? Don't tell me about the probabilities; tell me what could happen. And, again, we said this before: What are you going to do about it?

The act of going through that exercise makes you so alert and on it. When things get triggered and you have a plan, you get off the mark so quickly that people think you anticipated it. But what you really did is hear the gun go off before anybody else.

I don't know why I use a sports analogy. I'm not the best sportsman in the world, but I know that in track and field, if they shoot the gun off and you leave within a tenth of a second after it, they call a false start, because your reaction time is at least a tenth. So you anticipate—you're not allowed to anticipate a start.

Mhm.

They'll call it a false start. I said, “I want everybody to be called for a false start,” because they hear the gun so much quicker than anybody else. They get off the mark.

That's the exercise you can do. Some people are more intuitive, and some people see things. But what I really think, for most people, is that they thought about what could happen: “I think X, Y, and Z could happen. If this happens, this is what I'm going to do.”

Yep. We have a lot of tech entrepreneurs and tech people in general in our audience. I'm curious: How did you think about technology during your time at Goldman? What role did it play in evolving the firm? I'm sure it changed the markets business, even—

Oh my God, technology was always changing everything. By the way, in a lot of things in finance, it's winner-take-all.

If you had an execution system that communicated digitally back to the floor of the exchange, you wanted your computers a half a block closer to the exchange than anybody else's, because the milliseconds mattered. Not only did they matter, it was winner-take-all. You got the offer or you hit the bid, and other people were left looking at your dust.

For that reason, you were always competing for the best technology in a winner-take-all situation. By the way, a lot of life, whether people realize it or not, is winner-take-all.

I can see the opportunity set, the challenges, and the anxiety people have about the current thing. Obviously, I still invest and transact in the market, so I think about that, too. But I would say that no one is a better adopter or pays more attention to technology.

Sure. Except, obviously, the hyperscalers themselves, who want to be the providers of the technology. But in terms of using the technologies, the financial sector wants to be on top of it.

Interestingly, you end up in a lot of cul-de-sacs. You end up going down bad paths because you just don't know. You have to do this, and I know that everybody's talking about looking for cost savings, but we always had to do things twice. We had to use the system we were confident in and then simultaneously run the new system we had high hopes for. We didn't have a high level of confidence in it.

As a regulated company, we weren't allowed to have mistakes. That's another schism between the Valley and finance. You could look at Robinhood—a great company—but early on, they declared that they had government-insured accounts that weren't government-insured. They had some slip-ups, and a lot of apologies get made. You could do that. We weren't allowed to do that.

We had to be right. We had to run things 50 times, and it had to be perfect the last 49 times before we could go that way. So we would always have the technology that we knew worked, inefficient as it was compared to the new system, and run the two simultaneously.

When we got confidence in the new system, we implemented it. Then there was a newer system that we were also beta-testing at the same time. So technology, in the first instance, always augmented our cost; it never detracted from it. But as we went from one lily pad to another, things got better and more efficient.

We were always testing new stuff, always geared toward it, and always very anxious about what would happen if somebody trumped us on something. In addition to execution capabilities and things that improved efficiency, our risk systems also gave us a huge technological advantage because of what we invested in early on.

Totally. We did a similar podcast with Marty Chavez a couple of years ago, and he really credits you for helping drive support, or maybe adoption, of SecDB. As you took over more parts of the firm, you know, getting every—

Yeah, I don't know if I deserve it. Whether or not I deserve blame, I accept anything that comes my way. But we did have very good early-stage risk models.

By the way, SecDB, which was a kind of risk-management system that we had, was modular, whereas other things were rigid. We could always change things. It was so good and so flexible that I think the system must be 25 or 30 years old, and the core of it is still implemented. It's amazing.

The only thing I know like that—and I once tweeted this out—is that I still have my HP 12C calculator.

Amazing. The battery went out, and I know that battery must have been in there for 22 years. I think I owned that device for, like, 40 years. I looked at that and said, “You know, I never thought of this before, but what consumer device is still chugging after 40 years?” Not only are people still using it, but it looks like it could have been designed last year.

Totally. It's an amazing thing. Well, our SecDB was kind of like that. It wasn't a consumer device, but it was good like this. So, I have a lot of admiration for design that really—you don't expect design to stand the test of time. Fashion doesn't.

Sure. But this does. I'm telling you, the original iPhone looks like an old product to me.

Totally. The HP 12C looks pretty good.

It says a lot about systems of record and their durability, and I think, yeah, Securify was sort of an example of that, certainly at Goldman. One of the things that I think was unique about your career as well is you spent half of your time at the firm pre-IPO, in a partnership, and half the time post-IPO. Very relevant to your entrepreneurs.

I'm curious: now there's an entire generation of leaders at the firm that didn't know Goldman pre-IPO, but they know the culture of Goldman Sachs, which has its roots in, and is committed to, the principles that evolved from the partnership. They may not know it was a partnership, but they know how we work.

Maybe you could describe what those principles were pre-IPO. People really credit you also for carrying that culture forward. Ashok said this as well, which is, “We don't have a partnership, but it still feels like a partnership.”

It's a partnership. So, let me just say the difference is—and, you know, in a partnership, now we're a big firm. You're dealing with small firms who want to become big firms, and some of them have become big firms. But there's a really big difference between a partnership culture and a corporate culture.

Sometimes, by necessity—and it was really to go public, and I'll tell you, we can go into that direction—we had to go public. But one of the big impediments to going public was the fear that we'd lose our partnership culture.

Now, what do I mean by partnership culture? Partners own the firm. The employees there, especially the senior partners, the senior people, are your co-owners of the partnership. To the extent that you're a senior partner, a lot of it is by consent of the governed. When you're looking at your senior colleagues, they don't just work for you. They're not just subordinates. They're your co-owners of this business. They have certain expectations that come from that.

For example, their fortunes rest on the success of the whole enterprise, not just their narrow silo. If you work for Amazon in the retail area, are you really raising your hand, asking questions about AWS? But if you owned it, you care about the whole. So, they own the whole, they care about the whole, and they expect, as owners, to have a lot of information about the whole. They expect to have influence about the whole. They expect that any sudden moves by the senior partner are socialized with them. They expect to have input into that. They expect the process to be slow enough for them to have that influence and input.

Yep. And you have to have a certain amount of discipline when you're managing that if you want to perpetuate it. I'll get to why you want to do that.

Because you have to socialize things. Maybe, in your decision-making, lightning bolts don't come from your fingertips. You're trying to make suggestions. Maybe you slow things up. You hear complaints. Maybe you actually don't do things that you want to do, or you table them for another time when things could be more revealed.

I spoke to Esta Stecher leading up to this conversation. She mentioned that one of your hallmarks of leadership was that you didn't feel very hierarchical. When you wanted to make a tough decision, you would at least go socialize it with a bunch of people and gather input.

First of all, generally when you're on top, people want to get in line with you. But sometimes they can't. They just think you're wrong. So, socializing and talking in advance had the benefit of enlisting support from people who otherwise might be neutral—not because they're sucking up, but just naturally, they want to be pliable. And then you had to honor the fact that they felt like owners.

Now, why do you care when they feel like owners? Because you get a much more stable organization. They feel attached. They feel committed. Even people who've been there for a few years take that away with them, and people who've been out of the firm for a long time still self-identify as ex-Goldman.

By the way, how we treat our alumni is another example of that kind of ownership. We treat our alumni very specially. Goldman has an alumni office. I put that in. I spoke to Allison Mass. Allison Mass is a partner; she runs our alumni office. We do things for people who've been out of the firm for 20 years.

I was going to ask you about this. I was only at the firm for 3 years—not that long—but I still have a lot of affection for my time at the firm. And it's a weird thing, right? Even people who've been out of Goldman for decades—Jim Cramer, you mentioned in the book—they're still often defined by the—

Oh, no, he goes on TV. He hasn't been at Goldman for 35 years or something like that. Where does that come from? Again, it's crazy to expect a kind of loyalty if you don't show loyalty. It's crazy to expect commitment if you don't show commitment. I would say leadership—my predecessor did, and my successor does.

Yep. The challenge of Goldman Sachs—we had to go public. I mean, I can get into this. We needed to go public and grow the balance sheet. When they repealed Glass-Steagall, once upon a time, the lenders were separate from the investment banks and the investors. That got repealed, and all of a sudden, people who gave advice could now implement the advice by financing it.

So, if J.P. Morgan was going to become an adviser, we had to become a good lender and a good financier. It meant that we had to have a bigger balance sheet. We couldn't run that on the impermanent capital of a partnership. And so, we had to go public.

But the big anxiety was that we'd lose the partnership culture. We went public, basically in an instant legally, but it's taken 25 years to get it done in a way that wouldn't undermine the partnership culture.

So, we do those things that make it partner-like. We have partnership elections. We pay people based upon how the whole firm does. If your area does particularly well, you'll know it in your compensation. The most important thing in compensation is, how does the whole firm do?

And so, you get people who are bankers sourcing investment things for the merchant bank. You have investment bankers who would like us to represent their client in an auction. There are 3 other investment bankers who represent 3 different potential buyers, and you have to pick 1. We sort it out together collectively: what's the right place for Goldman Sachs to be? Or maybe we should represent the seller, or maybe we should be a buyer ourselves.

Totally. How do you decide that? And you explain it, and you let everybody have their say: “What should we do here?” And you convince people that if they throw in with the enterprise as a whole and sacrifice in the short term, they get to use the platform and exploit it for their professional career and their personal career.

Yep. So, you have to get that. It's like—I use this metaphor, the metaphor of the 800-pound gorilla in the jungle gets his way. I'm the 800-pound gorilla. But what if you have 20 800-pound gorillas? Nineteen have to say, “Excuse me, after you.” And how do you get them to do that? That's a bit of the art. And the firm did that over—

By the way, there were other things we had to do in terms of reform to make it a public company.

Mhm. In a private company, you care—your partners, presumably, everybody cares about making money for their investors and their clients. But as far as you're concerned, you don't care whether you make money smoothly, in 5% higher increments every year. You can have 3 in a 10-year cycle, you can have 3 fantastic years, make no money for 5 years, and lose money 2 years.

Totally. And it could work out well. In a private company, you care about E—the earnings. In a public company, you care about P/E.

Sure. And if you have volatile earnings, your shareholders don't like that. They reward you with a lower multiple, or they punish you with a lower multiple.

And we've seen that even more recently with shifting off-balance-sheet into funds.

And so you could see over time that, at Goldman Sachs, we didn't want to lose the risk-taking culture at Goldman, because it's very important. I'll say why in a second, beyond the fact that it makes money. It's very important.

We shifted a lot of that to off-balance-sheet vehicles and, by the way, that means you have to do more of it. Instead of earning 100-cent dollars, you're earning 20-cent dollars with lower risk.

Yep, and a higher P/E and a higher return on equity as a result.

Yep. But that took some time because you didn't want to lose the people who do that.

Totally. Now, one of the reasons why it was very important—and apparently less important for other firms that don't have those big investing arms, like merchant banking—is that we were able to approach our clients as partners.

Mhm.

And not just as supplicants trying to get good brokerage business. So we spoke the same language. We put our clients first. We would forbear if our clients wanted to do something, or we'd partner with them and bring them in if we sourced opportunities that they wanted. We'd work that out.

It's not always easy to work that out, but we were able to engage with our clients as peers and not merely as supplicants looking for business. So there was a little more swagger, a little more understanding of what our clients were going through, because we're principals, too.

Totally. We didn't want to lose that culture, which, by the way, is not evident in our peers.

Yep. And there are other reasons for that. If you're going to be an investing business, it's a more volatile P&L. Going back to the beginning of the conversation, where managers get confused between being wrong and being stupid, at times when the people on the investing side made a lot of money, they wanted to fire the firm and go off and do their own thing.

Mhm.

And at times when they lost a lot of money, the firm wanted to disconnect from them because it couldn't bear the losses they had incurred. Goldman Sachs, in its partnership culture, was able to look through those short-term things and say, “Look, over the cycle, it's a great business.”

The people who ran those businesses stuck it out. Maybe they could have done better here or there, but there were other reasons why they stuck it out, and they did.

I think a lot about the alignment that you described, even in the shape of our firm. Obviously, we're much, much smaller than Goldman Sachs, but I wrote this piece where I drew a distinction between firm over fund.

The objective function of a fund is: How do I generate the most carry with the fewest people in the shortest amount of time possible? With a firm, you have to deliver exceptional returns, which is sort of a prerequisite for doing that well. But I think the second variable is: How do you build sources of compounding competitive advantage? What are your moats?

Again, it's about orienting not just around your individual fund, but around the cold, hard success of the firm.

Again, you have to put your money where your mouth is sometimes. That includes how you compensate people. People will try to pick off your best people because if you're paying the people who are going through the doldrums better because other people are running more money, it could be coming at the expense of the people who made more money, and someone will come in and take those people.

So there's a practicality to this thing. You can't pay everybody the same through good times and bad times. You have to do it, but you have to mute the effects of the cycle.

Yep.

It doesn't mean people won't leave. Some people are just entrepreneurial, and they don't want to be partners. They don't want to subordinate their own interests. There's a certain kind of person.

By the way, there are people who do spectacularly in the world and have great relationships with Goldman Sachs, but we improve their lives at Goldman Sachs by helping them separate.

Mhm. Sure.

Because they just weren't going to be that kind of person. They weren't going to have their platform be subordinate. Again, we weren't asking people to subordinate their egos forever, hide themselves, or not be famous or wealthy.

We just said that if you subordinate your interests in the short term, or at key times, in favor of the platform, you can exploit that platform professionally because the firm would have much more heft, power, and authority. People take Goldman's calls, even for our most junior person.

It's also good for your personal life. Away from Goldman, saying, “I was a partner at Goldman Sachs”—I'm not saying this is exclusive to Goldman—but saying you're a partner, at least, shifts the presumption that you're not a dummy unless you prove you're a dummy, as opposed to other people, where the presumption is that you're a dummy unless you tell me why you're smart.

Totally. And so we made that a positive. I mean, you definitely inspired a lot of loyalty during your time as CEO, I'm sure, even before that.

One of the quotes that I heard from Ashok was that you often believed in him more than he believed in himself, and that that's been the main driver for why he stayed at the firm so long, despite other, more lucrative opportunities along the way. It was sort of instilling confidence in your people.

I'm just curious how you thought about that.

Well, I'm sorry. You say “lucrative,” but people make a lot of money. I should have said he's done okay.

Oh, yeah. He's done okay.

Yeah, he's done okay. But he's a substantial guy, as opposed to being a bigger fish in a smaller pond, so he found that attractive.

Look, you have to—I think I'm a good judge of people. I like people. I care about them. I empathize with them. I want to be not so much liked as appreciated. I wasn't always liked—if you read my reviews—but I was always appreciated.

I wanted to make people better. I didn't want to juggle for them or tell jokes. I wanted them to think that I made them better than they otherwise would have been, that they got a lot out of it. And I really, to the core, care about them.

I think I can read people, but I identified Ashok early. By the way, it's not my brilliance for sourcing him; it's his brilliance for being brilliant. I don't want that to get confused.

I wasn't a victim of the organization chart. These firms can be very bureaucratic, but Goldman Sachs is not very bureaucratic.

I remember when I was very, very early in my career. I came from left field to J. Aron. J. Aron was acquired by Goldman, and Aron wasn't doing very well, but I had this idea. I was in the precious-metals business.

I dealt with people from the Middle East who were investors in gold. I was chatting with people on the other side: What are you doing? What do you need?

It turns out that even though they were speculating in precious metals, what they really wanted was to be able to invest money and get an interest rate—a predictable return. But under their rules of engagement, their law, they weren't allowed in those days—the really strict religious crowd wasn't allowed to take interest. It was usurious.

What they were looking for were ways of making investments that would read like an investment. They were allowed to make investment returns; they just weren't allowed to collect interest, but they wanted the stability and predictability of an interest payment.

What they were doing was cash-and-carry. People were doing arbitrages between a spot market in a commodity and the forward market. Effectively, if you buy the cash product and sell somebody a forward, you're relieving that person of the risk of the investment, but he doesn't have to put out that much cash.

You're the one who's hedging it by buying the commodity and giving him a forward. That has an embedded interest rate to it, but it looks a lot like an investment return.

And in chatting with them, I realized that the markets weren't big enough to operate at the scale they wanted.

A few years earlier, they had come out with the S&P 500 financial commodities, in effect—and those were big.

Interesting.

And so, in talking to them, I said, “Well, I'm at Goldman Sachs, the biggest equity trader, blah, blah, blah. What if we did this in the equity market in Manhattan?” We went out, and they bought...

of the S&P 500, put out the money in the market, and hedged it by selling it in the forward market. What was the embedded rate of return? It was very high because they were on the other side of speculators who didn’t have the capital.

Mhm.

I know this is a little bit complicated, but the short story was that I had the idea. I went to the then-number-two guy in the firm, Bob Rubin, who later became Treasury secretary. He ran Goldman—the whole firm—and I was tucked away in J. Aron, which was in a separate building at the time. We never moved.

He said, “That could be interesting.” He called someone on the equity desk and said, “Work with Lloyd.” I didn’t even have a title at that point.

That.

I remember I asked, when J. Aron merged into Goldman, “What’s my title?” The guy said, “Call yourself Contessa if you want.” So I had no title, and he sent somebody to work with me. The first order that came in—and this was back when this was real money—was for $100 million worth of this. That was by far the biggest trade ever. Anyway, that’s how it happened.

You want to be that way in your organization. By the way, that’s an easier thing in your line of work.

Yep.

Entrepreneurs are advantaged by their lack of attachment to history and tradition and the old way of doing things. The iconoclast in your business, and the young guy, is celebrated. Not only celebrated—they are the focus.

Sure.

And that’s not so much the case in bigger organizations. So, totally, we always wanted to achieve—that’s another thing to try to achieve: be an entrepreneur in an institution.

Maybe I’ll transition because I want to get to the financial crisis and a few other questions, maybe more present-day. Goldman fared obviously incredibly well during the financial crisis, and Goldman obviously earned public backlash, I would argue unfairly, as a result.

Yeah, I agree with that.

What do you think helped the firm navigate that period so well? Was it risk management, technology, or the fact that you didn’t have a big consumer business?

The lack of a big consumer business hurt us on the reputational side because people didn’t know us, right? We were big, influential Goldman Sachs. I have people who left Goldman who became very big officials—prime ministers, and, by the way, not just in the U.S., but overseas as well.

In the beginning, though, it was risk-management culture. Maybe that stemmed from the fact that we were a partnership and had unlimited liability. There’s nothing that focuses your attention better than having your partnership on the line. You’re investing client money, but you’re not leveraging your own money.

The partners not only had their capital accounts at risk; they had their homes at risk. I remember when I became a partner, I asked, “Should I be putting my house in my wife’s name?” Then the minister of the interior—this was back when we were a partnership—said, “Lloyd, no partner at Goldman Sachs has ever lost money because of losses at the firm. But plenty of Goldman Sachs partners have lost money because they put assets in their spouses’ names.”

That was a line. It was a funny line, but, by the way, like a lot of funny lines, it was true. It did focus your attention and made us very, very attentive to risk. Risk managers are very attentive to risk.

One consequence of that concern was that we marked things to market rigorously, religiously, and other people didn’t.

Yep. Do you think if the crisis had stemmed in the private-equity ecosystem, which I imagine the firm had a lot more notional exposure to, it would have navigated as well?

It would have been tougher because it’s hard to mark to market. We also had one-off instruments. We had a lot of loan commitments related to our M&A. We were the biggest M&A franchise, and so we made commitments. Those were outstanding. But we marked them down and made analogies. We also had a separate—I’ll say this word, I hate to say it—bureaucracy in the firm, away from the investors and the traders. They were partners and got paid a lot of money to mark those things. When there was a dispute, they always sided with that side of the house. We said to the traders and investors, “A very easy way for you to challenge the marks that you’re being given: go out and sell something. Sell a fraction.”

Totally.

Mark-to-market is not just a P&L system; it’s a risk-management system. We had things that were marked AAA. When we made people sell them, the bids vanished. They weren’t there. The bids were much lower, then much lower, and then much lower.

By the way, I didn’t think the market was right. I thought there was a big opportunity to accumulate those assets. But that would be like fighting the tides or gravity. It is the market. So we were going to keep marking them down until we found a market—a price at which we could sell them.

Therefore, it became easier to sell. It wasn’t like they had big losses; the losses were already embedded in their books because we marked them to market.

Totally. To your point earlier, if you’re testing the market early, it’s cheaper to buy insurance, I would imagine.

Exactly. One of the things we did—and there were a lot of things—we had a lot of exposure on paper to AIG. But we were also fully hedged because we had bought credit protection.

We also had a collateral agreement. So we got a single-A credit and got a collateral agreement with AIG, which was AAA. I think we may have been the only ones to do that because we insisted on it. We wouldn’t have otherwise transacted with them.

You had said in the book that it was like one of only 5 or 7 companies in the country that had that.

Right. Who would have had the temerity to ask them for a margin agreement? But we had the margin agreement, so we had their collateral. That was important because, again, it was our money.

It was your money, but you also cared about relationships. She said—I’ll forget the cast of characters who were in this meeting—but I think it was about your LBO financing exposure at the time, and he said, “Look, commitments are in the past and relationships are in the future. Go out and make sure that our clients know we’re still good.”

Oh, I had to do that in the financial crisis. Let me get to that in a second.

There was a time when we had this loan outstanding to Chrysler. I remember the CEO of Chrysler called me up and asked, “Are you going to honor that commitment?” I said, “Yes.”

He said, “Can you do that now?” I said, “No. I’m going to honor it, but it’s not going to be for more than we committed to, and it’s not going to be sooner than we committed. I promise you we will honor our commitment. But in this market, we’re not going to do more, and we’re not going to do it earlier.”

And we did all of that stuff. In hindsight, here’s another thing that’s in your head in an ownership culture: it’s your reputation. It’s your firm. You’re going to own that. It’s open-ended.

We’re going to be there when this crisis is over, so we’re not going to dis— we’re going to honor all our commitments because we have to be in business on the other side of this.

That, by the way, is something I think about when I’m dealing with someone else. Are you going to stand by this, or are you going to shut down and open up another firm with a different name and 3 different partners later?

I think Goldman coined the phrase “long-term greedy.” I think that was the one.

You’re right. It’s about relationships not being transactional. You’re going to go through life, and I would say this to new people in the firm: even for the most junior person, the dopey analyst in your class—roll the clock. You can’t imagine this, and believe me, looking at you, I can’t imagine it either—but your cohort is going to run all the important institutions 35 years from now, or 30 years from now, or 20 years from now.

You’re going to make your reputation with those people. How they remember you 30 years from now, believe it or not, is going to be based on how they remember you acting today—in this crisis or regularly.

And you must see that yourself. You came up—you were talking before about people you knew at Goldman—and they can become fixed in your mind as a certain thing.

So he said, “Remember, keep in mind that this is a cohort you’re going through this with.” And I thought about that in our business. The financial crisis is old now, but let me tell you: the grudges, memories, good feelings, and hard feelings that come out of that are sticky.

The important thing is that people will learn that through experience. But one of the things you could do as a leader, mentor, or advisor is get people to appreciate that without having them go through the experience themselves. So you tell them that.

One of the things I used to do with people was say, “How many of you go home to your spouse—to your wife, boyfriend, or girlfriend—and talk about your boss?” Everybody titters and says, “I do.” Everybody raises their hand. Well, guess what? I would do this with people who had just been promoted: the people who report to you are going home to their spouse, and every night they’re talking about you. Do you realize that?

They don’t realize that. You have to think about who you become, and you have to have that sense of yourself before you can have an impact on others. You have to realize that. And so, at the end of that, I would say, “What do you want them saying about you?”

You’re not there to be their friend. You can also be their friend, but you’re not there to be their friend. It’s like if you’re a military leader: you don’t want your commanding officer to be a good juggler or tell you good jokes. You want them to lead you well, worry about your safety, and not make you take stupid risks for no purpose.

That’s what you want. If they like you, that’s good, but you want them to appreciate you. You want them to feel they’re going to be better by partnering with you, by following your flag and not someone else’s.

I think it’s great advice. Maybe to transition more to the present day, for better or worse—I think, or maybe for worse, I would argue—a lot of the technology companies are going to inherit a lot of the public flak that firms get. Guaranteed.

Once upon a time, we were you. We were the investment bank, and all these other commercial banks, and then it evolves. Now you’re an institution, and there are people who market themselves as a more flexible, current version of what you used to be. But even beyond our firm, because I think a lot of the AI labs are going to create a lot of change in the world and in our economy, I think there’ll be a lot of negative backlash to them.

What advice do you have for the leaders of OpenAI, Anthropic, or maybe Elon, for how to navigate through that, even from a communications perspective?

Well, I think one of the things—and I learned this the hard way—is that we didn’t do this. We were a wholesale firm. We didn’t have, “Go get a mortgage from Goldman Sachs. Go open a checking account at Goldman Sachs.” Your local Goldman Sachs branch doesn’t exist. So people didn’t know us. Institutions knew us, companies knew us, and governments knew us. We were the biggest in that world, but we didn’t advertise ourselves.

We had a whole PR department to help keep our name out of the paper. It turns out we were too important, too influential, and too big to be anonymous—especially in a crisis, and especially to come out of a crisis as well as we did.

Yep.

And so nature abhors a vacuum, and the official sector filled it. What were we going to do—kick the shit out of Lehman Brothers, which almost didn’t exist anymore, or Bear Stearns? Or how about the big commercial banks that lost $50 billion, literally losing amounts like that in the crisis?

We were an example. We were there. Also, my predecessor at that point was Secretary of the Treasury, and a lot of the government officials there were probably doing a great job. We were that kind of target, and we had no anchor in the world. They didn’t know who we were, so we were a very easy target. We had no reputation.

My advice is—and of course, I wasn’t actually picked for being photogenic or being such an outward person. I was an inside guy, and then I had to make up for it by getting out. When you’re being defensive and people are trying to kill you, it’s not the best time to try to make friends with the public.

Mhm.

So I would say, before then—and I know that people will think this is ego-driven, that you don’t want to do it, that people are embarrassed to be out—go out and let people know who you are. Let them know the value of what you do.

Important businesses wouldn’t exist today but for Goldman Sachs taking a risk. In some ways, we were the invisible hand that links people with capital to people who need capital. We were early financiers in dark moments. You mentioned Elon: we took Tesla public at a time when—and this sounds like a quaint time—companies didn’t go public until they made money.

That was a big deal at Goldman at that time, to go out and do that. We did a million things like that. This is Microsoft, too, and other companies like that. That’s a very important function in the world. Guess what? It’s time to explain that.

You perform a super-important function. You’re taking risks on entrepreneurs and companies, risks that your predecessors took 15 years ago that are manifesting today, and decisions you’re making that are going to manifest in the future.

I think being modest and understated carries a lot of disadvantages. You have to explain the role you play in the market so that there’s some appreciation for what you do. One day, if people decide that you messed up—whether you messed up or not, they may decide that you did—you want to have a counterargument to that. You don’t want to be fumbling for one in the event.

So I’d love to hear your broader perspective on AI. You’re a student of history. Does this strike you as a technology similar to past product cycles? Is this time different? Where are you on the spectrum of excited to scared?

Generally, things never repeat, but they often rhyme. Is this like electricity—the electrification of the country? Those were very big deals. The internet was a very big deal. Could this be a bigger deal? I don’t know. I don’t think anybody knows, and I don’t think the people who express opinions know, either, but I don’t know.

We’re in the realm of contingency planning. It might be. One observation I’ll make is that the big hyperscalers are firms dominated by founding shareholders who are putting their own money where their mouth is. These aren’t professional managers making bets on the future with other people’s money. This is their own money. This is their own ego.

I’m not saying that necessarily makes them right, but it certainly makes it seem to me that their convictions are very deeply held. And so that’s another thing.

Will all these technologies—and you could talk about AI or anything—work? No. Will the people who have technologies that work all succeed? No. The world may not need 10 large language models. Maybe it needs 4. There will be winners: 2 will be very big winners, the other 2 will get by, and maybe it’ll get reduced over time to 2. Who knows?

There are forks in the road where people are taking the wrong fork. We don’t know.

Sure.

So I would bet—and I think you do, too. Obviously, you want to have an idea, but there’s going to have to be a lot of forgiveness down the road. People are going to come and say, “How could you be so stupid?” You weren’t stupid with the information available at the time.

You place your stack of chips on more than 1 possible technology, and within the technologies, on more than 1 place. Maybe you can’t, because maybe you have to show commitment to 1 and can’t do that. There are different considerations that leach into this.

But the answer is this: this is going to be very, very important. Will we go through a tech-bubble kind of situation where we’ll weed out the stuff that should never have been invested in or never have been made? Again, in hindsight, you shouldn’t have done it, but at the time, in prospect, you didn’t know.

What looked more speculative than Amazon?

Yeah, forever. For a long time—forever.

Yeah. I mean, at the beginning, Amazon was reinvesting all the money. And so there’ll be genius pundits and professors who will talk about how stupid somebody was, because they won’t be able to put themselves in the shoes of someone without the after-acquired information.

I’m sure there’s some stupid stuff being done, too. And you have better visibility on that than I do—things that you passed on and see other people doing. But I have more forgiveness for that, because I know that I don’t know. I would be making those bets today, and I know that the people making the biggest bets and putting their money—and their corporate money—where their mouths are, are themselves principals and not just professional managers.

Again, I know you don’t want to predict the future, but we are on the precipice of some of the largest IPOs ever, with SpaceX, likely OpenAI and Anthropic, and others coming.

I don't know. Where do you think we are in the cycle, or what risks do you think are underappreciated in the markets today?

Oh my gosh. Things will work; things will look different. Somebody else in a basement is doing OpenAI 7 that nobody else knows about, just the same way nobody knew all the stuff that's coming out today about things that happened. I'm reading with interest. I never knew this stuff, and nobody else—10 people knew all that stuff. And so, there's always upside surprise.

We may be overenthusiastic about the changes in the reliability function. If it's unreliable and you're in the business of horseshoes—

Mhm.

—or throwing hand grenades, you don't have to be precise. But if you're running a big institution, you can't make mistakes. Numbers really matter. Maybe you have to run things in parallel for a lot longer. One of the things that Google gave you was a bibliography you could check.

Mhm.

When you go into some of these large language models, you don't know the thought process. You lose intuition in these things. When I started out in the business, people would be shrieking at each other in noisy trading rooms. People would be fighting with their wives or their husbands; they were sitting at the desk at the same time people were transacting. But if somebody said the wrong price or did a trade backwards—bought something when he should have sold—the whole room would come to a dead stop and you'd hear it.

Mhm.

Today, you don't have that intuition because everything is whirring behind the scenes, and you don't get the trail or the thought process of these things. That's a problem. The leverage in these things is itself a pretty big problem.

So, before AI—before this technological age, not just AI but in general—could you have had a mistake that could cost billions of dollars?

Not really, because your intuition wouldn't let you. But now you can leave a piece of software that could go out and do 70,000 transactions. Even industrially, I think the biggest industrial accident that we ever had was in Bhopal. Terrible—single-digit thousands of people died. Horrible. But in the atomic age, with Fukushima, if the wind had blown in a different direction, it could have been tens of millions of people.

These are risks; these are consequences. One of the big risks is governmental and regulatory, and they may be right. We may want to have to regulate—to slow some of these things up—not because it's smarter than us and it's going to turn us into pets, but because we don't have the ability to test whether it's right or not. How do you build reliance on things that, fundamentally, you can't test?

And then they say things will test each other. Well, what if they're coordinating? What if the tests themselves are flawed? You'll think of more of this stuff than I do because you're a technologist. I'm a user, but I have, again, if there's reason to be anxious about it, you might as well be turning back the tides. There's no way I'm going to waste time thinking about whether it's good or bad. It's happening, and you're not going to unlearn stuff.

I know, and I remember when we spoke the other day, you said it's also scary in many ways, but it's also an enabler in many positive ways.

Oh, the positives are evident. I'm not talking about what they'll identify. Those we know. Anything, by the way, that makes us all more leveraged, I'm not against.

Yep.

We'll find more goods or services to provide. Maybe we'll have more massage therapists. I don't know. Turn back the clock to the beginning of the 20th century: more than half the country was in agriculture.

Exactly.

Guess what? A single-digit percentage is in agriculture today. People found stuff to do. We'll find stuff to do. And by the way, if we're generating all this wealth because of the leverage, maybe we'll have a 3-day workweek, 6 hours a day, and we can all be poets in the afternoon—or hunters or fishermen. Read more history.

Well, that's the Marxist ideology. That's what he was striving for. Funny to quote Marx, but anyway—

I am not mournful of the opportunities. I'm apprehensive about them, and I think they should get a lot of focus. I was listening to Bernie Sanders wring his hands over there: “Oh my God.” You know something? I'm for all this stuff. Let's let the official sector get on there and catch up to it.

Mhm.

I'm not slowing it down. Well, first of all, you can't. You're not going to get people to be stupider than they are or unlearn things they've already learned. You can wish that the atom had never been split because maybe the adverse consequences of atomic bombs are worse than the benefits of nuclear power.

True.

But guess what? You're not going to unlearn it, so don't waste any time thinking about it.

Totally. We have a lot of young people just starting their careers who are likely listening. What advice do you have for young people who want to have a fulfilling career, beyond working hard and maybe becoming good at whatever you choose to do? Anything else you'd add?

Here's one thing I would say to young people. With all deference to the success of Peter Thiel, I think people should make themselves complete people. I think your early life is for becoming a complete person, with a range of activities for your own sake, to make you appreciative of things.

It's also important for your commercial life, because in the long run, you're going to get by and be good, get investors, and have the goodwill of your colleagues and your subordinates because you're an interesting person. You're the kind of person that other people want to deal with. If you make yourself so narrow and exalt your narrow silo, even if you make a lot of money in the first game, your life will be better and your commercial life will be better if you're a more complete person. Your resilience will be higher.

So, learn history.

Mhm.

It's a good thing to know that we've lived through times like this before. Everybody talks about, “Oh my God, you've never been this bad. Never more polarized in politics.” You say, “Well, we just had a civil war.” Again: “Well, that was a long time ago.” Well, guess what? I was a sentient human being in the late ’60s—young, but still aware—when the National Guard was shooting people on campuses. It was political, not successful political assassinations, and college-age kids were leaving the country, going to Canada to avoid the draft. I would say those were pretty dangerous times.

Internationally, Russian tanks went into Czechoslovakia in 1968. I would say that was a bit more dangerous. During the Cuban Missile Crisis, the country was at DEFCON 2. The lower numbers are more severe; DEFCON 1 is nuclear war. We were at DEFCON 2.

It's very bad that we're fighting a regional war in Iran. We were at DEFCON 2 with the then-Soviet Union, with its ships being stopped in international waters on their way up because of a blockade of Cuba. I would say that was a more polarized time and more dangerous. If our parents could get through that—

Yep.

—we should get through this.

Yep.

I think knowing that—and I think it should be comforting to everybody else—is knowing that something has been done should give people comfort that it could be done again. Every time is different, but this is not more extreme.

I totally agree. I think range is going to be even more important now than ever. One of my—I've written about this, but it's sort of a life and maybe business philosophy, too—is that opportunities live between fields of expertise. I like living at—

And over the edge of cliffs.

Totally. And over your horizon of what you could see about the future.

And so, learning history—look, when I was growing up, everybody wanted to learn. My predecessor, Hank Paulson, spent so much of his time, as did I, going to China. Well, at least temporarily, we're not going to be making as many investments in China as we once did. This is not none, but it's not going to be as much.

When I was growing up, everybody wanted to learn Japanese because those were the winners in the tech stuff. I remember a time when Silicon Valley was Route 128 in Boston. There was no Silicon Valley. It was around Harvard and MIT, not around Stanford.

Yep.

Things change. In order to be resilient and a better person—and, I hate to minimize this, for your own sake—

Yep.

—learn humanities, learn history, learn those things. We're at a point now where most people who are young are going to live longer. They seem to be in much more of a rush to be a success in their kinds of enterprises. I don't know; some people will encourage it. I don't think that your only productive years are when you're 18 to 24.

I totally agree. And you can learn what you need for your career afterward. I think you'll be fine, in my humble opinion. But again, this is all very interesting.

I’m an older guy. No, I mean, it’s back to where we were in the conversation. I don’t personally believe people should drop out of school. I learned so much from my peers. It changed my life and my perspective on what’s possible. I think it makes you a more well-rounded person, too.

Well, here you are, interviewing people from all different walks of life and not just tallying ones and zeros. This was awesome, Lloyd. Thank you so much for joining me. I really appreciate it.