Three takeaways I learned in Goldman Sachs 10K program

As small business owner and entrepreneur, I have to admit I was skeptical of the idea of “learning” how to run my business in a classroom. Sticking 30 small business owners suffering from entrepreneurial ADHD in a room for eight hours seemed to me like a potential recipe for disaster. However, the Goldman Sachs 10K program and Babson’s approach of using instruction, case studies and collaborative learning was highly effective.

My peers in the class, the excellent faculty facilitation and the tools and expert advice provided by the program gave me a fresh perspective and renewed confidence as a business owner. Here are the three key takeaways I learned as a scholar in the 10K program.

Know how your business is truly performing

A business owner should identify three to five key performance metrics. I knew I needed to measure performance, but struggled with first, what to measure and second, prioritizing the time to streamline the calculation of what to measure.

One of the key metrics I look at is revenue per hour. As a consulting firm, revenue generated per total hours is a quick way to see how we are performing. We have a target of what that number needs to be. If it is too low, we are not billing enough. If that number is too high, we are not investing enough time in marketing, sales, or product development, which could indicate issues in the future.

As a CEO, my time is valuable. Identifying the three to five metrics that point me to where I need to prioritize my time and having these metrics quickly available is vital.

Run your company like you want to sell it

My 10K class had businesses at different periods of maturity; from initial start-ups to well established, long-running businesses. As part of the initial orientation phase, we were asked to share our exit strategies. Nearly all of the scholars wanted to sell at some point down the road. We learned that running and growing a profitable business that can potentially be sold requires good financial reporting, a strong leadership team and well-defined and repeatable processes.

The program helped us gain valuable insight into how the daily tracking of financial information can directly communicate the financial health of the business. We also learned that delegating responsibilities, while often difficult for entrepreneurs, is vital if you want your business to grow. Having a leadership team that values the same things you value and follows the processes and procedures you have helped define is important. In any sale, the buyer will want to make sure others — aside from you — know how to run the business.

You are not alone

One of the most important lessons I learned from this experience is that I am not alone. Being a business owner can be lonely. As much as you rely on and trust advice and input from your spouse, your leadership team and your advisers, they never fully know all aspects of an issue or decision.

Through the collaborative-focused learning process, we realized that the issues and decisions we face as business owners, although specific to each of us, are actually not unique. During the course of the program, we became intimately knowledgeable of each other’s businesses and our common struggles. This has had the highly valuable benefit of creating an informal group of advisers.

If you are a small business owner, I highly recommend you look into this program. You will meet some great people and learn valuable lessons that will change you and your business for the better.

Michael Moores is the CEO and founder of Envalo Inc. He is an 18-year veteran of the eCommerce industry and his expertise includes eCommerce, WebSphere Commerce, Magento, Strategic and Fiscal Planning, Organization Management, Project Management, Business Analysis and Product Management. 

 

Ex-Goldman Sachs trader did not manipulate markets: attorney

NEW YORK, Mon Dec 3, 2012 — A CME Group Inc. probe into ex-Goldman Sachs Group Inc. (GS.N) bond trader Glenn Hadden pertains to “technical risk management activity” in 2008, a lawyer for Hadden said on Monday.

Hadden, who is now head of global interest rates trading at Morgan Stanley, is being investigated by the CME for trades he made in Treasury bond futures, according a Financial Industry Regulatory Authority document. Hadden joined Morgan Stanley in March 2011 and was at Goldman at the time when those trades occurred.

“The CME matter concerns technical risk management activity in a one-minute period four years ago during which Mr. Hadden acted properly and followed established market practice,” Hadden’s lawyer, James Benjamin of Akin Gump, said in a statement. “There is no legal or factual basis for any suggestion of market manipulation.”

Onex to buy insurance brokerage from Goldman fund for $2.3 billion

NEW YORK, Mon Nov 26, 2012 – Canadian private equity firm Onex Corp. will buy USI, one of the largest providers of insurance brokerage services in the United States, from Goldman Sachs Group Inc.’s GS Capital Partners private equity fund for $2.3 billion.

USI, founded in 1994 and taken private in 2007, says it is the ninth largest insurance broker in the United States. It offers property, casualty, employee benefit and retirement consulting services.

Onex Partners III, Onex’s $4.7 billion private equity fund, will make an equity investment of about $700 million. Onex is a 25 percent limited partner in Onex Partners III.

Onex, with about $14 billion of assets under management, is a co-investor in the transaction.

USI said its employees, who invested alongside GS Capital Partners to take it private, will remain investors in the company.

The deal is expected to close by the end of the year.

Goldman names 70 partners to 2012 class

NEW YORK, Wed Nov 14, 2012 – Goldman Sachs Group Inc. named 70 new partners to its 2012 partnership class, the smallest number since the investment bank went public in 1999.

Goldman’s partner naming, a relic from its past as a private investment bank, occurs every two years and is a closely watched event on Wall Street. The prior partner class in 2010 included 110 people.

Goldman has been cutting staff since last year as it looks to cut costs in a weak revenue environment and the smaller partner number is reflective of that. The investment bank tries to keep its partner pool at around 1 percent of the overall workforce, which stood at 32,600 at Sept. 30.

Among the new partners are Russell Horwitz, who is CEO Lloyd Blankfein’s chief of staff; Kent Clark, an executive in the hedge fund products group of Goldman’s asset management division; and Huw Pill, Goldman’s chief European economist.

As of Nov. 2, Goldman had 407 partners, according to a regulatory filing.

Goldman using technology to cut costs, manage capital

NEW YORK, Tue Nov 13, 2012 – Goldman Sachs Group Inc. is deploying more information technology to handle trades and manage its capital as the firm cuts its payroll, CEO Lloyd Blankfein said on Tuesday.

The firm is hiring additional technology workers while cutting its total payroll, Blankfein said at an investor conference. Total staff at the investment bank was down 8 percent at the end of September to 32,600 people from 35,500 in June 2011, he said.

Goldman has deployed technology systems to show the impact of buying, selling or holding individual securities on regulatory measurements of bank assets. The information is being used to improve Goldman’s capital strength as measured under new standards being imposed by regulators, he said.

At the same time, trading currently done with “high touch” by individuals will increasingly be done with computers. Roughly 65 percent of the firm’s equity trading for clients now goes through what Goldman calls “low touch” electronic channels, he said.

Ex-Goldman director Gupta awaits sentence in insider case

NEW YORK, Wed Oct 24, 2012 – The sentencing on Wednesday of fallen Wall Street titan Rajat Gupta for insider trading could come down to whether a judge agrees that his lifetime of charity counts against sending him to prison.

The former Goldman Sachs Group Inc. board member was convicted in June of leaking boardroom secrets to hedge fund manager Raj Rajaratnam, his friend and former business associate, at the height of the financial crisis.

Gupta, 63, is to be sentenced by Manhattan U.S. District Judge Jed Rakoff, who oversaw the four-week trial. The former Goldman director, who also once ran the McKinsey & Co consulting firm and sat on the boards of Procter & Gamble Co and American Airlines, is the most influential corporate figure to be convicted in the recent crackdown on insider trading.

Indian-born Gupta had moved in elite business and philanthropic circles for decades until he became ensnared in the Rajaratnam case.

Gupta’s lawyers have requested that he be spared prison, citing his work with groups such as the Bill & Melinda Gates Foundation on fighting disease in developing countries. Bill Gates, Microsoft Corp’s co-founder, and former United Nations Secretary-General Kofi Annan are among the luminaries who have urged Rakoff to be lenient.

As one alternative to prison, the defense proposed “a less orthodox” plan in which Gupta would live and work with Rwandan government officials to help fight HIV/AIDS and malaria in rural districts, court papers said.

Federal prosecutors, however, argue that Gupta should serve eight to 10 years in prison. Gupta repeatedly flouted the law and abused his position as a corporate board member, they said.

 

Goldman Sachs removes Monster Beverage from conviction buy list

NEW YORK, Tue Oct 23, 2012 – Goldman Sachs removed Monster Beverage Corp. from its conviction buy list after the U.S. Food and Drug Administration said it was investigating reports of five deaths that may be linked to the company’s namesake energy drinks.

Shares of the company, which makes drinks such as Java Monster, Monster Rehab, and X-Presso Monster, fell 7 percent to $42.38 in late morning trade on Tuesday.

Monster is also being sued by the family of a 14-year-old Maryland girl with a heart condition who died after drinking two cans of its Monster energy drink in a 24-hour period.

The FDA said on Monday it was investigating possible links between the company’s drinks and five deaths.

“While the FDA has yet to establish a causal link between these deaths and the drink, we believe MNST shares could be range-bound in the near term,” analyst Judy Hong wrote in the note.

As of Monday, Monster’s stock had fallen 5.7 percent since being added to Goldman’s conviction buy list on January 16, the brokerage said in the note. The broader S&P 500 index rose by 11.2 percent during the same period.

Hong, however, maintained her “buy” rating on the stock saying that significant risk has already been priced into the stock.

“We do not believe these headlines will impact MNST’s sales growth in the U.S. nor do we believe the ultimate legal and regulatory outcome will be a significantly onerous one.”

 

Monster Beverage’s shares were down 5.6 percent at $43.12 on the Nasdaq.

Goldman to pay $12 million to settle “pay-to-play” probe

WASHINGTON, Thu Sep 27, 2012 – Goldman Sachs Group Inc. agreed to pay about $12 million to settle charges that it violated “pay-to-play” rules in a case involving undisclosed campaign contributions to a former Massachusetts state treasurer who was a candidate for governor in the state, U.S. securities regulators said on Thursday.

A former vice president in Goldman’s Boston office, Neil Morrison, worked on the campaign of Timothy Cahill around the same time that he was also soliciting underwriting business from the Massachusetts treasurer’s office, the Securities and Exchange Commission said.

Goldman settled without admitting or denying the charges. The SEC also charged Morrison, and the case against him continues.

A Goldman spokesman, Michael DuVally, said in a statement the firm detected Morrison’s activities, fired him, and alerted and cooperated with regulators.

“We accept responsibility for the consequences of his unauthorized actions under the terms of the settlements announced today and are pleased to resolve these investigations,” DuVally said.

A lawyer for Morrison did not immediately respond to a request for comment.

Goldman ends two-year program for new hires at entry level

NEW YORK, Fri Sep 14, 2012 – Goldman Sachs Group Inc. has ended a two-year training program for recent college graduates after running it for a quarter century as the U.S. investment bank found it was not meeting its aim of retaining new talent.

Goldman’s decision came after the New York bank fired a handful of analysts over the past year for signing on to work at other financial companies in violation of their contracts.

“We think the historic two-year program is no longer the best approach for hiring and developing the careers of analysts in our banking and investment management divisions,” Goldman Sachs spokesman David Wells told Reuters.

Wells said that making this change will allow Goldman “to emphasize the longer-term career opportunities available at the firm.”

He added that Goldman will continue to provide the skills and time needed to understand the company’s businesses.

By doing away with the two-year program, Goldman will not have to commit to keeping analysts and paying them for a set period of time. That gives the firm flexibility to cut analysts sooner if their work is not up to par, or if it has to cut costs.

Likewise, analysts can leave to take another role at a competitor whenever they choose if they decide Goldman is not the right place for them.

Analysts who start work in 2013, will no longer be eligible for the two-year program, Wells said.

Goldman Sachs adds JPMorgan Chase & Co. to conviction buy list

NEW YORK, Tue Jun 26, 2012 – Goldman Sachs added JPMorgan Chase & Co. to its America’s conviction buy list, saying the U.S. bank’s capital position and earnings power can offset its recent hedging loss of at least $2 billion.

Goldman downgraded Morgan Stanley to “neutral” from “buy,” and removed the stock from its conviction buy list, saying earnings could be hurt by muted capital markets activity.

While Goldman sees value in Morgan Stanley’s shares at current depressed levels, it expects better returns at JPMorgan.

The 15 percent decline in JPMorgan share price since the largest U.S. lender by assets announced trading losses at its chief investment office has been “drastic,” given the unit’s 5 percent average earnings per share contribution, Goldman said.

JPMorgan, which has temporarily halted its $15 billion share repurchase program, may also resume buybacks this year, lending further support to the stock, Goldman analysts said.

Goldman, however, cut its second-quarter earnings estimates for JPMorgan to 60 cents from 75 cents to reflect a quicker recognition of its trading losses.

The brokerage cut its price target on Morgan Stanley to $16 from $20.

In the long-term, Goldman said JP Morgan and Morgan Stanley offer meaningful return on equity.

Shares of JPMorgan closed at $35.32, while Morgan Stanley closed at $13.48 Monday on the New York Stock Exchange.