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

Markdown copy of https://realalpha.app/v/GRMhjOlVwMg/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

Lloyd Blankfein says leaders must pair technology’s growing leverage with human judgment, verification and risk controls.

- Show: How I Invest
- Hosts: Jack Kokko
- Guest: [Lloyd Blankfein](https://realalpha.app/people/lloyd-blankfein/) is a former chairman and CEO of Goldman Sachs.
- Published: Oct 27, 2025
- Length: 36 min

## The best minutes

- [24:19](https://realalpha.app/v/GRMhjOlVwMg/?t=1459) [Public markets can push companies to favor smoother earnings](https://realalpha.app/s/public-markets-can-push-companies-to-favor-smoother-earnings/) (7 min)
- [31:15](https://realalpha.app/v/GRMhjOlVwMg/?t=1875) [Blankfein sees a supportive backdrop for risk assets](https://realalpha.app/s/blankfein-sees-a-supportive-backdrop-for-risk-assets/) (3 min)
- [16:10](https://realalpha.app/v/GRMhjOlVwMg/?t=970) [Automated trading can magnify errors and weaken human oversight](https://realalpha.app/s/automated-trading-can-magnify-errors-and-weaken-human/) (3 min)

## Also worth watching

- [10:26](https://realalpha.app/v/GRMhjOlVwMg/?t=626) [Technology concentrates value among Wall Street's top performers](https://realalpha.app/s/technology-concentrates-value-among-wall-streets-top/) (6 min)
- [21:17](https://realalpha.app/v/GRMhjOlVwMg/?t=1277) [Goldman's reputation and scale are hard to build incrementally](https://realalpha.app/s/goldmans-reputation-and-scale-are-hard-to-build/) (3 min)

Skip the opening event setup, career story and leadership discussion, plus the closing advice on staying near technological change.

## Full analysis: Blankfein says errant software could execute 100,000 transactions

- Blankfein said errant software could execute 100,000 transactions in one minute and lose billions.
- He offered a scenario, not a documented incident or measured failure rate.
- Set action limits, verify sources, and test stop rules before expanding autonomy.

Its 7 sections, what it means for you and what to watch are on [the page](https://realalpha.app/v/GRMhjOlVwMg/#analysis), free with an account:

- [18:02](https://realalpha.app/v/GRMhjOlVwMg/?t=1082) One error can scale before people can intervene
- [12:10](https://realalpha.app/v/GRMhjOlVwMg/?t=730) Technology gives stronger decision makers more leverage
- [17:28](https://realalpha.app/v/GRMhjOlVwMg/?t=1048) Speed can erase the room's warning signals
- [18:30](https://realalpha.app/v/GRMhjOlVwMg/?t=1110) Answers need sources, and systems need an audit trail
- [28:20](https://realalpha.app/v/GRMhjOlVwMg/?t=1700) Public markets can reward smoothness over resilience
- [8:33](https://realalpha.app/v/GRMhjOlVwMg/?t=513) Partnership culture keeps judgment distributed
- [15:38](https://realalpha.app/v/GRMhjOlVwMg/?t=938) Firms should keep pace but budget for correction

## Summary

Lloyd Blankfein served as chairman and CEO of Goldman Sachs from 2006 to 2018, leading the firm through the global financial crisis and major transitions in global markets. He says he joined J. Aron as a gold trader after Goldman rejected him; Goldman later acquired J. Aron, and he rose through the firm.

Blankfein argues that technology increases the leverage of financial decisions, making human judgment, verification and risk controls important as automated systems magnify both gains and errors. His leadership advice centers on resilience, communication and building a partnership culture where people can act with ownership. He contrasts the flexibility of private companies with the liquidity and scale of public markets, and says the gap between their burdens should narrow. He sees a supportive near-term backdrop for risk assets but urges people to stay alert to changing sentiment and technological shifts.

### Minute by minute

- [2:15](https://realalpha.app/v/GRMhjOlVwMg/?t=135) **A route into Goldman Sachs.** Blankfein says he grew up in public housing in East New York, worked through college and law school, and spent five years at a law firm before moving to Wall Street. After Goldman rejected him, he joined J. Aron as a gold trader; Goldman later bought the firm, and he rose through trading and operations to succeed Hank Paulson.
- [5:27](https://realalpha.app/v/GRMhjOlVwMg/?t=327) **Crises test leadership.** Blankfein says resilience is among the most prized qualities in American culture, and that leaders often feel proudest after getting through their worst moments. He points to taking Goldman through the financial crisis and Washington hearings, and says leaders must judge whether a shift is cyclical or lasting.
- [7:09](https://realalpha.app/v/GRMhjOlVwMg/?t=429) **Communication builds partnership.** Blankfein says strong teams depend on communication and a partnership culture, even without a formal partnership. Leaders should reach across organizational layers, explain plans, listen and sometimes change course; he says this takes time but helps people act with ownership.
- [10:26](https://realalpha.app/v/GRMhjOlVwMg/?t=626) **Technology magnifies decision leverage.** Blankfein says Wall Street’s ambition and risk-taking remain familiar, but technology gives decision makers far greater leverage. He contrasts trading rooms that relied on phone calls and his hours proofreading telexes with machine execution, and says people still need to apply judgment to better data. He argues that technology makes top contributors more valuable while routine roles may lose value.
- [16:10](https://realalpha.app/v/GRMhjOlVwMg/?t=970) **Automation can magnify failures.** Blankfein warns that fast, opaque automation can remove the human intuition that once caught bad prices or decisions. A software error could trigger 100,000 transactions in a minute and cost billions, he says. He wants AI answers to include their sources so users can verify them.
- [19:19](https://realalpha.app/v/GRMhjOlVwMg/?t=1159) **Controls prevent and explain failures.** Blankfein says banks need controls both to prevent problems and to show they made serious efforts when failures still occur. He says events around the world could affect Goldman, which could also be accused of causing them, so the firm had to pay close attention and document its diligence.
- [21:17](https://realalpha.app/v/GRMhjOlVwMg/?t=1277) **Big banks trade speed for influence.** Blankfein says it is hard to imagine building a new Goldman incrementally because its value rests on its influence, reputation and role connecting large pools of capital with those seeking it. Startups can move faster and have less systemic impact, while large firms require many partners and carry heavier consequences. He says the choice depends on whether someone prefers scale or entrepreneurship.
- [24:19](https://realalpha.app/v/GRMhjOlVwMg/?t=1459) **Private firms still need liquidity.** Blankfein says private companies avoid some of the burdens of public markets, but firms seeking scale and broad liquidity eventually need access to public markets. He argues that large private companies need more oversight and that public-company requirements should become less burdensome. He says he would personally stay private longer.
- [27:44](https://realalpha.app/v/GRMhjOlVwMg/?t=1664) **Public markets reward smooth earnings.** Blankfein says private-company decisions can focus on cumulative results, while public markets may reward smoother earnings through higher valuation multiples. That pressure can lead managers to give up potentially higher earnings in exchange for a steadier pattern, he says, though he acknowledges investors may see smooth results as more dependable.
- [31:15](https://realalpha.app/v/GRMhjOlVwMg/?t=1875) **Risk assets may get support.** Blankfein says the economy is doing relatively well, with full employment and major technological innovation underway. He expects lower interest rates and already-authorized fiscal spending to support risk assets, while warning that sentiment can shift without notice and that he cannot predict exogenous events.
- [34:25](https://realalpha.app/v/GRMhjOlVwMg/?t=2065) **Stay close to technological change.** Blankfein advises people to stay near the forefront of technological change and emerging opportunities. He says people in their seventies and eighties can remain on the cutting edge, while some younger workers stick to routine. He recommends staying on the train of innovation as long as possible.

## Transcript

How I Invest, hosted by Jack Kokko, with Lloyd Blankfein.

From the transcript How I Invest publishes with the episode.

[0:00](https://realalpha.app/v/GRMhjOlVwMg/?t=0) I recently attended Alpha Summit twenty twenty five in New York City, AlphaSense inaugural user conference dedicated exploring the future of market intelligence and decision making. This event featured a very insightful keynote conversation between Jack Coco, founder and CEO of AlphaSense, and Lloyd Blankfein, former CEO of Goldman Sachs. Core live on October 7, the discussion was inspiring exchange on leadership, markets, and innovation in the age of AI. I'm thrilled to share the special Alpha Summit keynote with you here. To learn more about AlphaSense, visit alpha-sense.com. That's alpha-sense.com.

[0:38](https://realalpha.app/v/GRMhjOlVwMg/?t=38) Enjoy. Really incredible to have you here. Thank you again for joining us. No. It's my pleasure. If I'd known it was like this, I'd have gone to Brooklyn more. It's beautiful. It is beautiful. Well, I think I mentioned to you that I started my career in investment banking, actually applied to Goldman Sachs, didn't get the job. So I ended up working at another firm. You know, I applied to Goldman Sachs and didn't get and never got a job there either. They turned me down, and I the only job I got was at a small commodity trading firm called J. Aaron and Company, and Goldman bought them. That's how I got into Goldman after being rejected by them.

[1:20](https://realalpha.app/v/GRMhjOlVwMg/?t=80) I spent I spent two years trying to avoid all the people that turned me down, and then and then they spent the next twenty years trying to avoid me. So so you didn't you didn't do a victory speech and coming back? Say again? You didn't do a victory speech coming back? No. No. But, anyway, go on. So so you went so you started Morgan Stanley. Yeah. I know. I was just gonna say that And then you went astray. I'm even more humbled, you know, given that, you know, just to be on stage with you. So, again, thank you. You've got an incredible personal story, and I thought it would be really great for the audience to hear kind of your story arc, you know, from kind of your earlier years through that period when you joined Goldman and ultimately led the firm from the top?

[2:11](https://realalpha.app/v/GRMhjOlVwMg/?t=131) 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.

[2:57](https://realalpha.app/v/GRMhjOlVwMg/?t=177) 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.

[3:36](https://realalpha.app/v/GRMhjOlVwMg/?t=216) 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.

[4:26](https://realalpha.app/v/GRMhjOlVwMg/?t=266) 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.

[5:14](https://realalpha.app/v/GRMhjOlVwMg/?t=314) 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.

[5:53](https://realalpha.app/v/GRMhjOlVwMg/?t=353) 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.

[6:31](https://realalpha.app/v/GRMhjOlVwMg/?t=391) 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.

[7:13](https://realalpha.app/v/GRMhjOlVwMg/?t=433) 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.

[7:50](https://realalpha.app/v/GRMhjOlVwMg/?t=470) 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.

[8:27](https://realalpha.app/v/GRMhjOlVwMg/?t=507) 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.

[9:16](https://realalpha.app/v/GRMhjOlVwMg/?t=556) 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.

[10:00](https://realalpha.app/v/GRMhjOlVwMg/?t=600) 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'd love to talk a bit about kind of taking a step back three years and how you've seen Wall Street change over the past decades since you first joined Goldman and perhaps even more so in recent years.

[10:45](https://realalpha.app/v/GRMhjOlVwMg/?t=645) Is it really sort of the financial crisis and regulation that drove most change? Was it technology? Is it kind of the rise of private markets or something totally different? You know, I would say Wall Street has again, what what it say you know, it doesn't repeat, but history doesn't repeat, but it rhymes or you know, I'm thinking that, you know, the DNA of a pig and the DNA of a human are about 97% the same, but the 3% makes a big difference. I would say it's different now, but 97%, you know, you have ambitious people making their way in the world, taking risk. The tools are different, and you're contributing yet another set and layer of very important tools that'll make things more efficient.

[11:31](https://realalpha.app/v/GRMhjOlVwMg/?t=691) But at the end of the day, it comes down to the judgment that gets applied to the the to the information and the data. You know, you wanna have the best data because you're competing with other people who are trying to get better data than you have it. But at the end of the day, you're at the fulcrum. You humans are at the fulcrum of a bigger lever. Having said that, the leverage is much greater. And so the people who are very good and very important to the organization are worth more, and maybe the people who are less important are worth less.

[12:03](https://realalpha.app/v/GRMhjOlVwMg/?t=723) **Lloyd Blankfein:** And so if I had to say one thing that's different, I think, is that the person who is making the decision has much more leverage today because everything has an extra two zeros at the end of it.

[12:20](https://realalpha.app/v/GRMhjOlVwMg/?t=740) And so I would say the winners are gonna be bigger winners. And the and the people who are just, you know, filling out the ranks are gonna have, you know, are gonna have are gonna have less fulfillment probably in in in the world that we're in today. But it's gone through those things before. You know, once when I started at Goldman in trading, there was a trading room of hundreds of people, you know, big buildings, which we don't need as much big buildings as before, and to get prices and to get liquidity, you'd have 10 people pick up a phone and call out and get 10 things, and somebody would scoop them all up.

[13:02](https://realalpha.app/v/GRMhjOlVwMg/?t=782) Now someone's just tapping on a machine. And they're still functioning. It's all you know, it's better. When I started out, I spent three hours a day proofreading telexes. Nobody's proofreading what's a telex? You know that ticker tape that used to fall out of building windows when somebody would you know, when you know, when somebody, you know, when the soldiers came back from World War one, there was a telling that people were doing that. Nobody's doing that now. I'm sure it was character building in some way, but not so much that it was worth so much time. There's just much more leverage in the system where the person who's you know, it's if it's not winner take all, it's winner take most.

[13:42](https://realalpha.app/v/GRMhjOlVwMg/?t=822) And therefore, the people who help with that who are special are worth more. And, you know, so, you know, you know, I'm sure that 90% of the people here are in the top 10% of their organization. So, you know, you have nothing to worry about. Actually, that that's a debate that we we end up having a lot. There's you know, I guess you can think about AI as a technology elevating everybody, but then your point is more about maybe it's the superstars that it elevates the most. It's all leverage. The world is and I think of it as a lever in a fulcrum. The people, you know, at the fulcrum are gonna lift more than they ever could have before, and it behooves you to do it.

[14:29](https://realalpha.app/v/GRMhjOlVwMg/?t=869) You know, people are wringing their hands about spec what choice do you have? You know, you can't in in trade, you know you know, trading evolved differently. Now it's, you know, you're you're entering things, and if you wanna get a price and, you know, we're not focused on this business principally, but if you wanna take an offer or hit a bid in the in a in a market, you're gonna the person who's one millisecond faster, who lives whose machines are a half a block closer to the exchanges machines wins a 100% of the time. So how could you not invest in the technology to get closer? And the same thing applies to the people who are exercising judgment over, you know, investment decisions.

[15:16](https://realalpha.app/v/GRMhjOlVwMg/?t=916) It may not be, you know, as as obvious, but you you wanna have the best tools and resources or at least have an arms race, you know, have a, you know, you know, a nuclear settlement where if you don't use it, I won't use it. But guess what? They're using it, so you better you better you better catch up and try to stay ahead. And if you're not trying to be ahead, you're gonna fall behind. You know, everyone's going and anguishing over whether you should have the spend or not. I said, who can afford it? How could you not do it? And if later you overspend or you invested in the you know, too bad.

[15:50](https://realalpha.app/v/GRMhjOlVwMg/?t=950) Sorry. You know, let's fix it quickly. But what choice do you have? You can't walk off the field. 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. How do you think you know, that's an example of sort of, you know, this automated trading and financial market players giving some control to machines, letting them make decisions in that millisecond scale where people can't compete.

[16:33](https://realalpha.app/v/GRMhjOlVwMg/?t=993) So the world has financial world has already given some autonomy to machines. At what point do they really get uncomfortable with that, with AI agents and, like, trying to automate? Well, tell you one thing that I think is that is worrisome is in the olden days, like twenty years ago, you could have a room and by the way, I'm using analogies from trading, but it applies universally, where it's something where you'd have the intuition of knowing whether something was right or wrong. You could have a cacophony of noise all around every you know, the person next to you is fighting with his wife, someone's, you know, arguing with her husband and blah blah blah.

[17:13](https://realalpha.app/v/GRMhjOlVwMg/?t=1033) Million things. But if somebody said something wrong, a wrong price, or somebody was buying and should have been selling, or someone was saying the wrong thing about a company, the room would stop and everybody would focus because it was an intuition about things. Now everything is in a glop in a box. And the things are going so fast and analyzing so much information that you you can't into it anymore. You it spits out an answer. What are supposed to do with it? You can't criticize it. You have to accept it. And that's where there's an opportune you know, leverage goes both ways. The age of this kind of thing, you can have you couldn't have a a mistake that would cost $10,000,000.

[17:58](https://realalpha.app/v/GRMhjOlVwMg/?t=1078) You know? You could do things backwards or you know? Well, how could it cost you that much money?

[18:02](https://realalpha.app/v/GRMhjOlVwMg/?t=1082) **Lloyd Blankfein:** Today, you can have an errant piece of software that in one minute exercises 100,000 transactions, and you could lose billions of dollars.

[18:14](https://realalpha.app/v/GRMhjOlVwMg/?t=1094) In other words, the world leverages made things better, but it also makes things more concentrated and dangerous and take away the intuition element. One of the things I like about your product is, you know, let me go things I'm more familiar with. The thing about Google was always, it's a bibliography. You get the sources and you have to investigate it. Then you come up with AI and it gives you the answers. But that's not totally satisfying because how do I know to trust it? What I want is I want the answer with a bibliography. I want to trust but verify. I want to get the thoughtful, you know, intelligent response to my question and maybe an elaboration of it.

[18:58](https://realalpha.app/v/GRMhjOlVwMg/?t=1138) But I want to go back and look at the sources. Or at least verify that there were sources. And I think that that's an important element going forward of all these different devices. Mere bibliographies aren't going to work. And the answer is not going to work. Because who could trust? You can't trust it. And you don't wanna trust it. And you don't want a world where everyone's gonna just trust it because then why do they need anybody? No. 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.

[19:38](https://realalpha.app/v/GRMhjOlVwMg/?t=1178) 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.

[20:13](https://realalpha.app/v/GRMhjOlVwMg/?t=1213) 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?

[21:00](https://realalpha.app/v/GRMhjOlVwMg/?t=1260) 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. I wonder, like, just taking that in another direction, with a thought experiment, if you think about, you know, the evolution of investment banking and where things are heading and take that even further, if you were starting Goldman Sachs today or an investment bank, how would you design it?

[21:40](https://realalpha.app/v/GRMhjOlVwMg/?t=1300) What would be the edge today for that sort of built from scratch, new winning winning bank? You know, there's different directions you can go in. Like, you know, the difference in a Goldman Sachs and what a lot of people here are doing. Goldman Sachs is a big company. The burden is it's very hard to move it, very hard to affect it. And in a startup like you're well, not a startup at this point, but a young company and other young companies, big impact. You don't have to have a burden that anything you do could blow up the planet because you're still small enough that you can't even if you wanted to.

[22:16](https://realalpha.app/v/GRMhjOlVwMg/?t=1336) And if you're a Goldman, you don't want to, but anything you do can. So how do you the idea of starting up a Goldman is very far is very hard to even imagine,

[22:26](https://realalpha.app/v/GRMhjOlVwMg/?t=1346) **Lloyd Blankfein:** because what makes Goldman a Goldman is the influence it has, the reputation it has, that

[22:32](https://realalpha.app/v/GRMhjOlVwMg/?t=1352) the people who have capital and want to invest it, and the people who need capital, and can you know, and our role is kinda intermediating between those very, very large and kind of very capable and effective groups. You know, the people who are the most entrepreneurial and the biggest who have the most demand for something and the people who have the biggest supply of it is no almost is no way of incrementing your way to it. And, you know, a lot in my life, most a lot of people like you worked in an investment bank for a while and then when you want to be an entrepreneur and you want to so there are some You know who you are and there's some people who value that kind of big ship, big thing, influential thing with the burden of not being you know, knowing that you have to have a lot of partners and it's not you alone and you're wielding you know, you're you're you're driving a battleship.

[23:30](https://realalpha.app/v/GRMhjOlVwMg/?t=1410) It could sometimes take 75 miles before you could turn it around and all the consequences of that. And there are some people who are wired to be more entrepreneurial and do things quicker, and you forego possibly the influence and, you know, unless you become one of, like, you know, one of the big hyperscalers who were both in this new world, and you can aspire to that, but that's rarefied atmosphere. So what would I do today? You know, I now know what the all what the other I didn't do both. I was a big firm kind of a person, but I got to a level where you could kinda wield it. And so, you know, that was, you know, that was fun for a while and very much not fun for other at other times.

[24:12](https://realalpha.app/v/GRMhjOlVwMg/?t=1452) 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. 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? You know, where is where are we heading with that? Well, it's Let me just say, my credentials for answering the question.

[24:58](https://realalpha.app/v/GRMhjOlVwMg/?t=1498) 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. 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.

[25:45](https://realalpha.app/v/GRMhjOlVwMg/?t=1545) 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. 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. 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.

[27:08](https://realalpha.app/v/GRMhjOlVwMg/?t=1628) 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. 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.

[27:49](https://realalpha.app/v/GRMhjOlVwMg/?t=1669) But I would stay private long you know, I if I were today, I enjoyed life much bet It makes decision making different. 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?

[28:50](https://realalpha.app/v/GRMhjOlVwMg/?t=1730) **Lloyd Blankfein:** 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. 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.

[29:49](https://realalpha.app/v/GRMhjOlVwMg/?t=1789) And it was smooth for the last ten years, it's more likely to be there in the eleventh year. 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. 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.

[30:29](https://realalpha.app/v/GRMhjOlVwMg/?t=1829) 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. 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.

[30:58](https://realalpha.app/v/GRMhjOlVwMg/?t=1858) 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. Absolutely. Well, not the Goldman analyst, but Of course. Let's talk about kind of, again, your perspective on just big picture markets and business. What has changed over the past decades, and then and what's different about the market today? And how then do you look at the next twelve to eighteen months?

[31:36](https://realalpha.app/v/GRMhjOlVwMg/?t=1896) What is gonna be the primary driver of what really changes the markets? Here is nothing ever I mean, history, you know, this is where it rhymes, but really rhymes. We're going through cycles now, and you can't turn on you can't watch pundits on TV without somebody saying, is this 1999 or 1996? You know, we've seen through these cycles, you know, one of the advantages of, not many advantages of being older, but one of the advantages, you have actually lived through these things. Now you can read about it in history books, but it's not quite as vivid. And when you live to these, you know, elevations and crashes and stuff, it's like the difference between living in a war or reading about the war.

[32:19](https://realalpha.app/v/GRMhjOlVwMg/?t=1939) I'd say it's cyclical with and it's changes. And why is it different this time? And, you know, it's very funny. You turned on, you listened to the punditry, and nobody's talking about this other than to describe the differences between the spend today versus the .com era. People were making money, they weren't making money then, you know, and and making those analogies. And, you know, I find myself thinking about that too. Not to overcomplicate things. But if you ask me about the market for the next period, there's a lot of exogenous events. The market, nobody really knows things. You have to, you know, that's why they call it speculating.

[32:55](https://realalpha.app/v/GRMhjOlVwMg/?t=1975) I don't know what's going to happen next, but with what I know, we're in a growthy market, things are going relatively well on the cusp of great technological innovation that can make things more efficient. It may take time, it may be spending too much or maybe not spending too much. But in this moment, when things are going pretty well, and I know if you're talking to a big group, you have to say there are a lot of people who are suffering, but in a macro sense, the economy is going pretty well. There's essentially full employment. And into this market, we're about to go we're about to go through tremendous monetary market stimulation because we're gonna take interest rates down, and whether we take them down in the next three cycles or we skip one, rates are coming down.

[33:41](https://realalpha.app/v/GRMhjOlVwMg/?t=2021) And we're about to go through a fiscal stimulus because all the all the stuff that's coming in with the last bill hasn't hit yet, but has gone. That spending is gonna hit.

[33:51](https://realalpha.app/v/GRMhjOlVwMg/?t=2031) **Lloyd Blankfein:** So I would say your starting position is that the next period going forward is gonna be very friendly to risk assets.

[33:59](https://realalpha.app/v/GRMhjOlVwMg/?t=2039) Having said that, they don't give you know, they don't blow a horn when sentiment shifts. So you'd have to be cagey, but I would say your baseline position is that things are that were that things are going well, what could go wrong, not like you know? And and that's how you have to start out. That's how you have to look at it. I I would say you start from a position of optimism and then worry about what could go wrong. Well, I'm getting some hints that we are running out of time. 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?

[34:53](https://realalpha.app/v/GRMhjOlVwMg/?t=2093) 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.

[35:46](https://realalpha.app/v/GRMhjOlVwMg/?t=2146) 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.