# Public markets can push companies to favor smoother earnings

Markdown copy of https://realalpha.app/s/public-markets-can-push-companies-to-favor-smoother-earnings/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Lloyd Blankfein](https://realalpha.app/people/lloyd-blankfein/) · Lloyd Blankfein is a former chairman and CEO of Goldman Sachs.
- Host: Jack Kokko · Founder & CEO, AlphaSense
- Show: How I Invest
- Episode: [Lloyd Blankfein at AlphaSummit: A Conversation with Jack Kokko (CEO of AlphaSense)](https://realalpha.app/v/GRMhjOlVwMg/), Oct 27, 2025
- Moment: 24:19 to 31:21 of the episode (7 min), playing on https://realalpha.app/s/public-markets-can-push-companies-to-favor-smoother-earnings/; the episode from there: https://realalpha.app/v/GRMhjOlVwMg/?t=1459

## Quote

> “you find yourself **sacrificing earnings** in exchange for having a smoother earning platform.”
> — [Lloyd Blankfein](https://realalpha.app/people/lloyd-blankfein/) at [28:49](https://realalpha.app/v/GRMhjOlVwMg/?t=1729) · How I Invest

## Takeaways

1. Private companies can focus on cumulative results rather than each period.
2. Public valuations can reward smoother earnings.
3. Investor scrutiny can affect decisions about people and operations.

## About this segment

Lloyd Blankfein explains why private companies can tolerate volatile results while public companies may sacrifice earnings for a smoother record. The pressure can shape business decisions, not just valuation.

From “Lloyd Blankfein at AlphaSummit: A Conversation with Jack Kokko (CEO of AlphaSense)”, Oct 27, 2025. [Watch the full episode](https://realalpha.app/v/GRMhjOlVwMg/)

## Transcript

From the transcript How I Invest publishes with the episode.

[24:23](https://realalpha.app/v/GRMhjOlVwMg/?t=1463) But let's shift a little bit and just talk about how how you see the equity market evolving. You know, when you talk about, you know, all the entrepreneurs no longer necessarily aspiring to go public. It's not a given that a company has to go public as they grow. See private market Yeah. Allowing startups to raise billions of dollars and not have to go public. So how how do you think about No. I am a good or bad thing?

[24:51](https://realalpha.app/v/GRMhjOlVwMg/?t=1491) You know, where is where are we heading with that? Well, it's Let me just say, my credentials for answering the question. I was at I spent almost exactly I was at Goldman, you know, thirty eight years. It was kinda hard to imagine. For you to imagine me, can imagine it. But exactly half my time as a private company and half my time as a public company. And it's a lot easier to function in a private company.

[25:23](https://realalpha.app/v/GRMhjOlVwMg/?t=1523) You don't have, you know, have you know, obviously, you don't work for yourself. You have investors instead of shareholders, but the rules are different. And, you know, the stuff you have to do, the burdens you take on as a public company, and the regulators you take on as a public company are very difficult. But if you want to achieve mass and scale and size, eventually you have to do it. And so people will put it off, But eventually, the people who you know, as you get lots of people who've invested lots of their time and lives in your company, they may wanna stop sleeping on their mother's couches and maybe wanna be able to sell stuff.

[26:01](https://realalpha.app/v/GRMhjOlVwMg/?t=1561) You can do that somewhat now and very highly publicized that people are, you know, like OpenAI managed to get liquidity and give liquidity to some of its people, but it's still not liquid. You know, you can't buy and sell shares in the company very easily if you're an insider. Other people can invest. And it becomes you turn yourself into a bit of a pretzel to try to make the things you can do easily as a public company doable in a private company.

[26:27](https://realalpha.app/v/GRMhjOlVwMg/?t=1587) And you can go for a very long time, but you can't it's very hard to go forever. I think the world externally has made it much more onerous to be a public company, which is why people stay private for longer. And you're gonna find out that they're gonna be the next set of problems and blowups could very well happen in private companies, and people are going go, tsk, tsk. You know, these are unregulated.

[26:53](https://realalpha.app/v/GRMhjOlVwMg/?t=1613) We have to draw them into the regulated world. And in order to do that, you might have to make it less onerous, so people want to go public sooner. I would say right now, the gap between the degree of difficulty in private and public is too great. I think I think there has to be more oversight of private companies if they're gonna be if you're gonna have, know, 500 which you already have, half a trillion dollar private companies, the world has to pay more attention to them, and it has to make it less burdensome to be a public company.

[27:24](https://realalpha.app/v/GRMhjOlVwMg/?t=1644) And so that has to be some convergence. But right now it takes it where people will stay private longer, but inevitably, it's very, very tricky and hard to do, and it's very hard to satisfy all your constituencies if you don't have the access to liquidity that a public and, you know, the ability a lot of capabilities that you only get from being public. But I would stay private long you know, I if I were today, I enjoyed life much bet It makes decision making different.

[27:58](https://realalpha.app/v/GRMhjOlVwMg/?t=1678) When I was in a private company, which by the way, it was one company, but the private Goldman didn't have you're you only cared about how much money you made in your in your capital account. If you made all your money in year one, lost money in year two, and made a fortune in year three, you added it all up, the bottom line was good, you split, and it all went into cap, and that was fine. In a public company, the value that you make is not it's your earnings, but it's your earnings times market multiple, and the market multiple may be affected by how smooth your earnings are.

[28:33](https://realalpha.app/v/GRMhjOlVwMg/?t=1713) In a private company, I never cared about how smooth my earnings were or your growth is 30% this year, 32% next year. It doesn't become ever doesn't ever go down. You never have a down round. Did I care in a a private company whether I had the equivalent of a down round or a bad year? But in a public company, you you find yourself sacrificing earnings in exchange for having a smoother earning platform.

[28:59](https://realalpha.app/v/GRMhjOlVwMg/?t=1739) So businesses that were more volatile, but maybe in the long run higher performing and higher income generating, you just chew because you cared about your stock price. And you might have you know, and your stock price was your earnings e times a p e. And if you had higher earnings one year, it might lower your p e that the market gives you, your price, you know, the multiple to a point where you wish you didn't have those earnings.

[29:27](https://realalpha.app/v/GRMhjOlVwMg/?t=1767) Crazy. And so I thought I could behave more rationally, in my point of view, in a private company, but in a public company. And maybe that's right. I shouldn't say that it's not rational because people will pay more for smoother earnings than volatile earnings, because volatility may suggest to people that it may not be there next year. And it was smooth for the last ten years, it's more likely to be there in the eleventh year.

[29:53](https://realalpha.app/v/GRMhjOlVwMg/?t=1793) So it not only affects your mood or your state of mind, it affects really your decision making. And in my mind, not necessarily for the better, but other people would dispute that and say you should, as a company, aspire to have, you know, this you know, kind of, you know, smoother growth pattern and not a volatility that suggests that it might not be, it might it might not produce in the next period.

[30:21](https://realalpha.app/v/GRMhjOlVwMg/?t=1821) Now it sounds like it's, you know, a lot a lot of arguments in both both sides, and maybe it's really depends on who you are as company. You know, as a public company, when you have to go through and talk to the public and communicate with sell side analysts, they're gonna you know, all of a sudden, the volatility by the it's not necessarily volatility in your earnings. It might be volatility in the way you deal with your people.

[30:43](https://realalpha.app/v/GRMhjOlVwMg/?t=1843) You may wanna replace people. And you might say, if you're a public company, gee, is this gonna make us look bad to the investor? You have to explain yourself to the investor community. You may not think those people are so smart, but, you know, they have you know, they you know, we know what they say. They buy this is a bad metaphor these days, but they buy ink by the barrel, and you don't. And so they publish, and, you know, you have to please people who, you know, you may not hire you may not think they're good enough to be hired in your own business, but they may have a lot of influence.

[31:13](https://realalpha.app/v/GRMhjOlVwMg/?t=1873) Absolutely. Well, not the Goldman analyst, but Of course.