Lloyd Blankfein at AlphaSummit: A Conversation with Jack Kokko (CEO of AlphaSense)

Be yeah. Just would love to hear kind of what shaped your approach at the top from those earlier experiences. Yeah. Well, there are people who started out in life in kindergarten being voted the most likely to succeed. That wasn't me. I started when I I'm joking about Brooklyn because I grew up in Brooklyn. And actually, I grew up in public housing in East New York, Brooklyn. None of you will ever have been there. And I spend a lot of time trying to leave Brooklyn. So it's always I always get PTSD when I have to cross the river and come back, but here I am, never nonetheless. But, you know, it was it's kind of unlikely.

I worked my way through it. My dad was a clerk in the post office, and we lived in the projects. And I always wanted to get out and go. You know, my ambition was to go to an out of town school. And, you know, I achieved that, worked my way up. And I'm not and, you know, it kinda worked out for me. If it hadn't, somebody else would be sitting here and you'd be talking to that person. But it I would say it was a low probability that it would be me and a high probability that somebody would be here. I would say that in terms of I don't wanna sound like I work walked uphill both directions to and from school.

You know, I you know, my parents, you know, had an intact family, and they valued education. They were happy for me when I got into schools. You know, I didn't I didn't have to walk across a desert to get out of a war torn country or anything like that. But I got in, I I went through essentially seven years of liberal arts. I went to college and law school, and I went to law school because it was kind of at that time was a continuation of liberal arts because I didn't know what I wanted to do, and of course, I graduated with loans and had to pay them back, so I ended up in a law firm, and that was when I decided after five years of that drudgery, I decided that, you know, to apply to Wall Street, and that's where we pick up the story of getting turned down by everyone, as I should have been, and getting a small job, and working my way up through starting out as a gold trader at J.

Aaron and Company, and eventually, you know, running fixed income trading and equities, accreting all the trading parts of the firm. So for twenty years, I ran the kind of the risk side of the firm, trading, and eventually became chief operating officer and succeeded my boss, my then boss, Hank Paulson, when he became Secretary of Treasury. Goldman had a tradition, Bob Rubin, Steve Mnuchin, Hank Paulson, of going into the cabinet and other government offices, which I kinda which kind of ended with me, because here I am with you and not in not in Washington. Well, we've got a room here full of decision makers and influencers, and we've been talking a lot about data driven decision making, how to be smarter about all I think it's terrific.

I'm curious about, you know, from your history at the top of Goldman Sachs, what are some of the big decisions that that you're most proud about? Maybe there's one or two. And maybe there's something that you'd go back and change and do differently. Well, I think and this is a generic thought. The things that you end up being proudest of were always you, you know, having gotten through your worst moments. And I, you know, I sometimes try to comfort people that, you know, the most prized thing in the American culture is resilience. Of all the things you could be is, you know, the person who gets knocked down and gets up.

And every time one of my friends or somebody I know gets killed on something, I say, well, congratulations. Now you have the predicate for a comeback. You know? But it but it's true. I would say that in a million years, I would never pull the lever to be part of the financial crisis. Although, you know, some of you are too young, but of a certain age, you know, spending, like, you know, a hundred hours testifying and getting killed in front of you know, being part of a on the wrong end of a show trial in Washington and all that kind of stuff. But at the end of the day, taking an organization through that is the the you know, is something that's distinctive.

I mean, anybody could anybody can run something when things are going well. You can get swept in a vortex along. You know, AI is a thing, you're in the right company at the right time, and you do it. What happens when the cycle shifts? Or more importantly, what happens when you have to decide whether something is cyclical and will shift, or secular and won't ever come back. And you have to convince some people that it's secular or cyclical, if the rest of the world is thinking otherwise. And those kind of fork in the road moments and those times when you're under the most pressure, the things that you know, you feel proudest about, you know, at the end of things because that's the only time you could think of, gee, if someone else was there, it might not have worked out as well.

How did you go about it? You know, you had your executive team. You had clients, other advisers, I'm sure, around you. Were were you leaning any any particular directions, or were you just, like, you know, doing this alone in a room instead of thinking hard and coming up with those tough choices? Well, I'm sure, you know, your Morgan Stanley culture is not gonna be that different from Goldman. And I would say, I don't think I don't think there were six people in all of Goldman Sachs who didn't think that I should be working for them and not the other way around. You know, and maybe, you know, maybe 10% of them were even right, but there I was.

So I would say in, you know, leadership if you're if you're running the post office or something like that or something where you have thousands of people who are happy to have a job and they get paid by the hour and it's a union, you know, that's different than when you're running an organization where everybody came out of great schools as ambitious as you are, can maybe are as smart as you, but maybe they're just younger and you got there first. And, you know, it's a different, you know, it's a different thing to manage people who are super smart and super effective and as ambitious as you are and have a legitimate claim to that ambition.

And I would say, and you must have this in your organizations, most important thing you can do is in building teamwork and partnership is communication. And whether or not you're a real partnership, technically, you can have the culture of a partnership. And I think, you know, startups and people in these industries do a very good job because they do share ownership. And so people can real feel skin in the game kind of partnership. But partnership also implies certain things. You know, the rights of a partner is to know what's going on. So communication excessively, sort of suborning the organizational chart, knowing people three layers down is an element of making people feel partner like.

Taking more time to socialize the things you wanna do. You know, in a normal corporate hierarchy, lightning bolts come from the fingers of CEOs. We're gonna do this, and everything is yes, sir. You know, taking more time to socialize the things you wanna do. It's cumbersome. It's by the way, occasionally changing your mind in the face of like like actually listening and paying attention. That's what makes an organization feel partner like, and the best organizations are partner like. It's like the difference between, you know, the Soviet Army and the US Army, at least theoretically. We have people in the field who make decisions like they own the consequences of what they're doing instead of rote obedience.

And in order to achieve that, the leader has to kind of bend and invest time and energy in acknowledging the equivalence of some people who are subordinate to you in the organization. And at the end of the day, you're responsible and the buck stops with you, but, you know, you let things go on maybe a little longer, tolerate a little less speed in order to bring everybody up to speed at the same time. Thank you. I I hope somebody's taking notes. I I wish I was.

I love that analogy of, you know, being one millisecond closer to the exchange. It sort of really crystallizes how, you know, edge really matters, even if it seems very minute. This can mean everything depending on what you're trying to do. So it makes a lot of sense.

That's that's fascinating. And and, you know, I think from your investment banking lens, banks are kind of all about risk control. It's sort of letting ambitious people go and take risks, but also building the right controls to prevent that.

And now if we're you know, there's a lot of ambition from technology players to go and build agentic, automatic things. I think that risk control lens is Look. There's nothing that can go wrong when you have balance sheets that are in the trillions, and you're in you know, you're advising at the, you know, at the sort of cold front of all these changes and technology shifts and other things and politics, there's nothing that could go wrong anywhere in the world that doesn't affect you adversely. And if you're Goldman, there's nothing that could go wrong where they don't accuse you of having caused it.

So, you know, so it really behooved us to pay a lot of attention to what was going on. And by the way, there's two things at work here. You wanna know what's going on so that you don't have problems, and you wanna put the effort in to know what's going on so when inevitably something slips through, at least the world knew you used your best efforts to try to stop things from going wrong. Because eventually, inevitably, something screws up. And and then the you know, and then what happens is, what did you do? How hard did you work? Were you negligent or worse? Or did you you know, was it something that was totally unavoidable given all the diligence that you put in?

So for a variety of reasons well, there's two reasons. One, you'd like to not have a problem. And two, when a problem does happen, you'd like to have the record show that you did everything you could. That makes sense. And, again, becomes a lot more a lot harder when you're trying to control machines at the speed of speed of machines. So that's that's fascinating.

You know, it's it's a thought experiment I've been having. So that's that's very I love love having this this conversation.

I'd love to continue to hear all your fascinating insights. Maybe one quick one at the end. What advice based on kind of what all of what you described on what's happening in the market, what's shifting, What advice do you have for what people should do differently now, whether it's whether you're investing in the markets or or company playing in that that new landscape?

Look. What's the new? Stay front of foot on all the things that are evolving and developing. You know, you don't wanna be, you know, you don't wanna be working on the boroughs community computer when everybody has a, you know, a desktop, and you don't wanna be, you know, you don't wanna be, you know, you know, there's a lot of stuff that has to be done, but if I were, you know, younger starting out, I'd wanna be on the forefront of the technological changes and the opportunity set that's that's happening, and try to stay on that train as long as you possibly can. I know people who are 80 I know people, you know, I'm not gonna name the names, but I couldn't even know them, who are in their seventies and eighties, are on the cutting edge and running companies that are that are in the cutting edge, and they're on the cutting edge within their own company.

I know people who are 35 years old and are just doing their jobs every day and hope that nobody asks them a question about what's new and different. And so just stay, you know, stay front and foot and try to stay on that just try to stay on that new that train of innovation for as long as you can. And, you know, don't and if you don't ever get off, you'll be you'll be at the top of the heap. Lloyd, thank you so much. It's been an incredible conversation. Thank you. Thanks for listening to my conversation. If you enjoyed this episode, please share with a friend. This helps us grow. Also provides the very best feedback when we review the episode's analytics.