00:00:01:00 - 00:00:24:10 Wilfred Frost Welcome to the Master Investor podcast with me, Wilfred Frost, where we celebrate and learn from the success of some of the greatest investors, business leaders and politicians in the world, giving you, our listeners, the edge. We're recording this on Tuesday, the 22nd of July and coming to you from the London Stock Exchange in the beating heart of the City of London. My guest today is the most important person in capital markets globally. He has led one of the most storied institutions on Wall Street for the last seven years, guiding it through challenging times including Covid and setting it up for the long term future, more than trebling the share price in the process. He is the chairman and CEO of Goldman Sachs, David Solomon. David, welcome to London and welcome to the Master Investor podcast. It's great to see you. David Solomon It's great to see you. I'm happy to be here. Happy to be at the Stock Exchange. Happy to be with you. And, delighted, delighted to spend some time talking. Wilfred Frost I really excited about this. We've done a number of interviews, never here in London and never extended like, like this one is going to be. And I just have to jump straight here. Markets are all time closing highs once again. You're in the risk management business. Is is risk a little bit underpriced right now? David Solomon I think it's hard to say that risk is underpriced. But whenever you see markets running in one direction, I think you always have to ask “if I looked forward six months from now and the market was 10% lower, what happened?”. So we're in the risk management to a risk management business to a broad degree at Goldman Sachs and we spend a lot of time thinking about, you know, what if. What if this? What if that? A lot of the what ifs are probably small probabilities of happening, but I think it's a good time to evaluate what could break down some of the market momentum. Broadly, I'm quite constructive and positive about the current environment, and I actually think for our business and for capital markets broadly, we're probably going to have a pretty constructive run over the next 6, 12, 18 months. But I do see places where where, you know, I would say, you know, markets are showing a very, very forward view of earnings and growth and I think there are things out there that certainly could slow that could check that to bring that back. But I'm quite constructive on the set up at the moment, particularly for a business like ours. Wilfred Frost Let's run through a couple of the risks. The US debt position, does that worry you? David Solomon I've talked extensively about the US debt position and the change in fiscal policy over the last, you know, 10 to 15 years, particularly the last ten years, and particularly since Covid and the pandemic, there was really a step function in fiscal change during the pandemic coming out of the pandemic. And I think it's a very, very hard thing for governments, given the political environment we operate in, to shift or pull back. And so certainly reductions in how much we spend are very, very difficult. We continue to grow the amount that we're spending. So the question is, you know, how much are we going to grow? Can we constrain some of that growth and that's countered and balanced by how well we can grow the economy. And so I do think debt levels are concerning. I do think that over time, the issue that we have to wrestle with, if we continue to run the fiscal play that we're running and grow debt levels the way we are, is that you've got to raise the cost of financing that debt as the debt grows, generally speaking, and as you do that, that crowds out other investment and so and that crowding out of other investments slows growth. So I'm concerned about the level of debt and deficits, not just in the United States but in most developed economies. I think it's politically very, very tough to slow that fiscal play. That fiscal play is making the growth environment quite constructive and so that's why it's very, very hard to pull back on it. But I think when you look ahead over the next ten years, this is going to create some speed bumps, some headwinds to growth and probably at some point they'll be some sort of an event that creates a little bit more discipline around the way we think about debt deficits. Wilfred Frost There's so many countries, as you said, that are facing these sorts of debt dynamics. I mean, you used the word speed bumps there. Is there a chance of a much bigger crack in global bond markets? David Solomon There always is. A there always is a chance of a bigger crack in global bond markets. And when you talk about a crack, I think when people think about a crack, they think about an abrupt move or an abrupt change. That's absolutely possible. Something could spur a change. I mean, we've seen it. You could point to it here in the U.K., there was a moment where there was a gilt crisis and there was a little bit of a panic. That I would call that as a, you know, it was a very quick and short term change and a perspective on a bond market. In the U.S., you know, obviously back in April, we saw pressure on the bond markets, although that pressure was relatively short lived. I think you could see something like that. There could be an event that creates that kind of pressure, but I think the more likely scenario is we're growing our debt in the United States. The debt levels are growing. We're trying to run or this administration is certainly trying to run a higher growth play. If we can't get growth to accelerate from here to deal with the fact that we're spending more and we're growing the debt level over time, rates gradually will creep up because the debt stack will grow. You know, in rough numbers, we have $36/37 trillion of debt in the U.S. As we're refinancing the current stack at higher rates than it's currently financed, we're growing it through the rest of the decade into the 40s and if we continue to spend, you're growing at higher. So ultimately, the question is at what price? If you want to have term treasury rates to finance that debt and not finance at all, short against the policy rate, at what price do you have to raise or investors demand to finance that term debt? And I think over time, the pressure is going to be on higher term rates and that's going to be a secular change and that that will create pressure on growth and, you know, other fiscal issues over time. Wilfred Frost And what about tariffs and, I guess not so much the short term negotiations and uncertainty, but it looks like we're going to settle long term with the US at at least 10% global tariffs, quite likely higher than that. Is that a bigger drag on growth and and market sentiment than is currently priced in? David Solomon I think it's a drag on growth for sure. I think what the market's telling you, I think you're right. The market has basically accepted that the trade regime in the United States is going to be different and I think it's pricing in a 10% base tariff and some specialized tariffs in certain industries. There's talk of trade deals in certain nations, but we don't actually have those deals. There is a difference between an agreement and an actual deal. I think there will be some trade deals over time, but I think we're going to operate with a base level of tariffs and I think it's unclear exactly how much that will affect growth. But there will be an impact on growth from a 10% base tariff on these specialized tariffs. I think you'll get more of a handle on that during the fall. I think the forward growth prospects, if you listen to economists including our economists, have been reduced as you look at the second half of the year and into early 26 because of the prospect of this tariff structure. But I do think it's absorbable. I don't think it pushes us into a recession, but I do think it's a change and at the moment it's still uncertain as to exactly how that filters through the economy. Is it a one time step up in the price of goods and we kind of make that adjustment? Or are there other factors that cause it to actually have more of an inflationary effect, as opposed to a one time step up in the cost of goods? And that's hard to predict because we're, we're we're dealing with something that's not fully absorbed yet. Wilfred Frost And what about the way that, I mean, you have tons of meetings with politicians and business leaders all around the world as you as you're doing this week, and obviously off to see our Prime Minister and our Chancellor shortly. Has it changed the way people view the United States as it is? Has it changed the way they rely on America as a friend and ally? 00:08:24:07 - 00:08:34:21 David Solomon I think those are I think those are big picture questions that we should be very cautious about answering in a moment. So the US has been an extraordinary ally, to the UK and Europe, for a long, long time. Were going through something, you know, at the moment, that certainly is creating a lot of discussion about what's the base partnership and relationship like, but to to make both statements about substantive change and the way these relationships, you know, will exist as we go forward? I think we should be very cautious about that. The US is an extraordinary economic ecosystem. I think one of the good things that's coming out of this is that it's forcing some change in Europe, some more economic independence in Europe, which I think is good for growth in the world overall. And I would just be cautious about speculating as to significant changes in these very, very important, you know, bilateral relationships. Wilfred Frost It's really interesting because I agree, some of the results have been impressive on defense spending, for example, across NATO members, but I guess the view from here from London might be maybe tariffs are the right way forward but have they been delivered in quite an abrupt way to allies? Maybe central bank independence isn't the way always to go, but is the message delivered in a fair way to to the individual? And I think the one that really baffles people in Europe is maybe Putin does have some legitimate arguments and Zelensky deserves to be criticized, but is the way that criticism was delivered fair? I guess that's the what I'm getting at as to whether or not you hear that from any of your European partners, even Asian partners, that that the tone with which some of the change in sentiment has been delivered by the US president has caused a new perspective? David Solomon Well, I mean, I certainly... Wilf, I certainly hear that from lots of people. I hear that from people when, I mean, I've been in Europe six times in the last six months. And so I certainly hear it when I'm in Europe. I've been in Asia, I hear it when I'm in Asia. And by the way, I hear it in the United States. And by the way, I think it sometimes too. So, you know, but I think you're making a point that's a very, very important point, to some degree, to the question you're asking. I think that there's a lot of noise at the moment. One of my jobs running a big organization is to try to step back and be very thoughtful and think about what is substantive policy that's going to have substantive impact and what short term noise and I think there's a lot of short term noise at the moment. Now, I, you know, I think it's very fair to talk about stylistically the way different people do different things and I do think that matters. I'm not saying that that doesn't matter. I'm not dismissing it. But at the end of the day, when you talk about big structural changes in the economic order of the world and the way nations of the world relate, support each other, you know, partnerships that are deep. You know, I think you've got to be very cautious of allowing the noise in the short term to lead you to speculate to more substantive change and I think we're going to see. Wilfred Frost I mentioned central banks that spend a lot of moving parts on this the last couple of weeks. Do you expect Jay Powell, ultimately, all things considered, will finish his term and if he weren't to, would that be bad for the US dollar? David Solomon Um, a couple of things that that I would I would say on that and I just said Um which you know I don't really like to do, Wilfred Frost Well, it's a changing situation, so we don't know the answer. David Solomon A couple of things that I would say. First of all, I think that central bank independence and Federal Reserve independence, not just in the US. That's why I say central bank balance, has served us well. Central bank independence around monetary policy and Fed independence around monetary policy has served us very well. And I think it's very important and I think it's something that we all should advocate for, fight for, strive for. I do think Jay Powell, I don't know, but if you ask me to guess, even money bet, I do think Jay Powell serves out his term. His chair term. And you know, I would just I would just caution people again this gets to noise and substance and again there are things that that you know we can say we don't like stylistically but there's a long history of presidents trying to bully or influence, you know, central bank, you know, central bank chairs, fed chairs going back. You go back to Lyndon Johnson. You know, you can look at Richard Nixon, you know, there's there's a long, you know, there's a long history of this. I'm not saying it's right. I'm not saying the way it's being done is right, but at the end of the day, there is a large group of people who set monetary policy. I think it should be done independently. I think the leadership of the Fed is very, very important. And, you know, I'm hopeful that the transition from Jay Powell, when his term is up, to the next fed chairman, will be a smooth one. There'll be somebody that the markets look to and view as competent and carrying out that responsibility to set monetary policy for the goals around price and inflation that are very, very important and I think it's likely that that will that will survive just fine. Wilfred Frost Let's talk a little bit more about the UK and of course we're coming to listeners and our viewers from LSEG in the heart of London, for this episode. What does London still offer the world as a financial centre? And what have we lost in London? David Solomon Well, London like New York, London has some deep structural advantages in the investment that the most significant financial firms in the world have made over a long period of time. But the financial industry is still driven by talent and capital formation and those things are much more mobile than they were 25 years ago. So when we were talking in the back, a few minutes ago, I was commenting to you, because you're asking me about my travel schedule, I was talking about how much I move around to see our people, because our workforce is much more dispersed than it used to be. I commented to you that 25 years ago, 93 or 95, 94% of all of our employees were in four places: New York, London, Tokyo and Hong Kong. And today it's much, much more dispersed. I think that if you look and you step back, London continues to be an important financial centre, but because of Brexit, because of the way the world's evolving, the talent that was more centred here is more mobile. We as a firm have many more people on the continent in the last five years than we did, you know, 5 to 10 years ago. And I think that, you know, policy matters, incentives matter, and it's important that you get that balance right if you want to protect and retain, you know, the leadership position that the UK and London has in participating in the broad global financial system. And so I think it's fragile, and I'm encouraged by some of what the current government is talking about in terms of supporting business and trying to support a more growth oriented agenda, but if you don't set a policy that keeps talent here, that encourages capital formation here, I think over time you risk fraying that. Wilfred Frost It's interesting you said you you're encouraged by what the government is talking about. We are a year in, is it kind of time for for rubber to meet the road? Do they need to get on with their act because of the fragile situation, I think was the word you used? David Solomon I think this is something that's going on, you know, everywhere. and we were talking about it before. We were talking about, you know, debt deficits in the U.S and growth. Governments have to put policy in place that drives growth and investment and that's certainly the case here. I think it is I think it's important that that we get on with it. And so, you know policy matters, but politics are hard. And so, you know, I'm encouraged, for example, when, the Chancellor spoke here about regulation. She's talking about regulation not just for safety and soundness, but also for growth. And now we have to see the action steps that actually follow through and encourage that. I was in Paris, we had our board in Paris, a couple of months ago and I put out a piece talking about the fact that there's a great opportunity for the European Union to take some action steps that will encourage more growth and investment. You know, I'd say the same thing back in the United States. How do we drive growth and investment? So I, I do think when policy is set correctly, it encourages growth and investment and that's the way we bring people along. That's the way people participate. And if you don't get that right then we get to a much more difficult place. Wilfred Frost It's really interesting I hear you saying that and obviously Rachel Reeves gave her very high profile Mansion House speech last week, and you touched on the tone of it all overall. And you mentioned as well that ring fencing seemingly might be on the chopping block going forward. So we'll see if that materializes. It's also true she had a, you know, tough economic inheritance, the tax burden she inherited was at a post 1951 high. The debt level is at an all time high. Do you have sympathy for the job that she has to to do at the moment? I guess it's it's not easy and I'm not sure if you've seen this from afar, but, you know of late she was reduced to tears at one point in Parliament because of the pressure. Do you have sympathy for the Chancellor, the tough job that she has? David Solomon I have sympathy, I have empathy. Not just for the Chancellor, but for anyone who's serving in one of these governments or one of these administrations. These are hard jobs. These are people that that that I think want to do well and advance the nation, the economic prospects of the nation. But the politics are hard and the policy decisions and getting policy implemented is very difficult. You brought up ring fencing. You know, ring fencing is, you know a very small, minute, example that probably the most of the listeners don't even know what the specific issue is. Wilfred Frost I don't know. We have some geeky listeners. David Solomon Okay, maybe you have some geeky listeners, but at the end of the day it's a place where the UK is an outlier. And by being an outlier, it prevents capital formation and growth. What's the justification for being an outlier? Why is this so difficult to change? Okay, and you know that's politics. That's not you know substantive policy because it's hard to make a substantive policy argument that this is like a great policy for the UK. So why is it so hard to change? So I'm I've got a lot of sympathy and empathy for her. You know, I've met with her a handful of times. I think she's smart. I think she's engaged. I enjoy talking to her and I'm hopeful she's going to make real progress. Wilfred Frost That's really interesting. Let's just talk about one other policy, because a little bit of headlines that your former head of Goldman Sachs International, Richard Noddy, moved to Milan, and it was cited that the non-dom rule change played a role in that. Is that another policy that will drive people away, more Goldman Sachs employees away, where you said the situation was fragile. Is that something that should be revisited? David Solomon I think when you look at any jurisdiction, tax policy has to make sense. Incentives matter. If you create tax policy or incentives that push people away, you harm your economy and you don't you don't drive revenue increases. You know, at the end of the day, most economies have a barbell, you know, in terms of tax receipts and that end of the barbell, where you have very affluent people that have been successful that pay a significant share of tax, if you push them away and you push the smart talent, the people that are much more mobile away, I think you hurt your prospects for growth. And so I think all jurisdictions, whether you're talking about a nation or you're talking, if you look at the United States, you talk about states. You know, you can look at New York and California. Look at what's going on in Florida and Dallas and how they're attracting businesses and how they're attracting people. Incentives matter. And so I think this has to be done very, very thoughtfully. And tax policy has to make sense. It's got to create the right incentives. Wilfred Frost Without, and we talked about a couple of the areas there but without being specific, without policy changes of that sort of ilk, do you think more Goldman Sachs headcount and other US investment bank headcount will shift in time to the continent? David Solomon I think there are, you know, there are different conflicting issues there. You know, because of Brexit, there are requirements around certain job functions and certain things that we do in our business that used to be done in London, that now regulatorily are required to be done on the continent and that's created a shift. What's interesting, and this is that this is the point I want to make about talent mobility, Wilf. It's a it's a subtle point and I'm seeing this here in Europe and I'm seeing it also in the United States for example. We now a very large offices with significant collections of interesting, talented people and a variety of places across the continent. So if you go back, if you go back, you know, ten years ago, I think we probably had 80 people in Paris. You know, we have 400 people in Paris now and so it's a real Goldman Sachs office and a lot of interesting Goldman Sachs people and partners and junior people. There's a real ecosystem of Goldman Sachs in Paris. That makes Paris a more interesting place for somebody who wants to work at Goldman Sachs to live. And so in Goldman Sachs today, if you're in Europe, you can live in London, you can live in Paris, you can live in Germany in Frankfurt or Munich, you can live in Italy, you can live in Switzerland and we've got, you know, real offices. We've got a big, big, what I call kind of a tech office in Warsaw. So we've got, you know, we've got lots going on. By the way, here in the UK, we've got a very, very interesting office up in Birmingham. That's going very nicely because we're finding very, very good talent, you know, up in Birmingham. But the same thing in the United States. If you go back to Goldman Sachs in the United States, 25 years ago, we had 10,000 people, 9500 of them were in New York. Today we have 25,000 people, 9500 are in New York, but we've got 4000 people in Dallas. We've got 3500 people in Salt Lake City. We've got 400 people in southern Florida. We have a thousand people in Chicago. We've got 800 people in Atlanta. People can choose to live where they want to live. For us, as a talent organization and the mobility of talent, you know, we can give people more choices. And so people choose because the critical mass develops. You know, I think for places like New York and London, you just have to recognize talent is more mobile. Talent organizations like Goldman Sachs are giving their employees more choices because we want to attract that talent. And so you've got to make sure that you've got a very, very positive, you know, stake in the ecosystem. You know, when you are in your location to retain talent and attract talent. Wilfred Frost Let's talk a little bit more about Goldman Sachs specifically. Saw the earnings last week and there are lots of individual line items we could pick out, all of which I'm sure you were very, very pleased with. But I remember being at your Investor Day in New York in 2020 when you set out your your five year plan back then. I think I did the, I don't know if it's the only, I certainly did the first interview. David Solomon You were there, I remember that now. Wilfred Frost And of all the targets I remember you talking passionately about, ROE was one of them and we could talk about the great quarter in terms of earnings, but you're tracking at 14.8% ROE this year. You're ahead of the target you had back in 2020 and you've, you know, updated those targets since then. Is that the thing that pleases you most or in terms of that five year transition what jumps out to you? David Solomon I think I think what what pleases me most Wilf, is that that when this leadership team came into the firm in 2018, we really had a strong point of view about the need to evolve Goldman Sachs and set it up for growth for the next decade plus. And we, we spent a lot of 2019, I mean, you highlight this this Investor Day happened in the end of January, the beginning of February 2020. We spent a lot of 2019... Wilfred Frost By the way, everything changed about a month after that. David Solomon About a month after it! But the Investor Day was before, before Covid really got going. But we we spent a lot of 2019 really thinking about and talking about how we wanted to evolve the firm. What we wanted to do to our core business, how we wanted to invest in it and grow our core business, and then what were the areas of growth that we thought we could invest in and scale and really grow the business? Because I had a very strong belief that you can't run a public company, and Goldman Sachs have been on a journey where it was evolving from being a partnership to being a large public company. You can't run a public company if you don't grow. It's very, very hard to have a successful public stock if you don't grow and that required difficult decisions, change in strategy and an evolution. And we laid that out in 2020 and if you actually look, we've been executing on almost all of what we said successfully and we've significantly grown the firm, significantly grown the market cap. And one of the outputs of that is higher returns, which is also helping to grow the market cap. And so the team's done an unbelievable job. People have worked very, very hard. People are very, very aligned. It hasn't been a straight line. But it's really, you know, brought us to a place where I think the firm, based on these decisions that we made, you know, five, six years ago, is set up very well to continue to grow, is extremely well positioned in it's two large scale businesses, global banking and markets and asset wealth management and I think the opportunity set for the firm over the next five, ten years is really, you know, enormous. And so we're quite what we're excited about is that we had a view, we worked hard at it, we executed. There were some bumps, there were some mistakes. We adjusted. But we've got it to a place where we think it's very well positioned and the opportunity for further growth is quite strong. Wilfred Frost I mean, you mentioned the performance. I mean, the share price has more than tripled since you started, but it's more than doubled in just the last two years and you've over a two year period, significantly outperformed all of the banks in the US. Does that make you feel good. You said there were some bumps along the way, does it does it feel a great contrast now? David Solomon You know, you point to the share price. I'd highlight moment in time is important. You know, the share price got into the low 400s in 2021. So you know,it's true that over the last couple of years it got lower and then it's doubled. So I you know it's a journey. You know, the point is if you go back and you look at when we started the market cap was between 60 and 70 billion and now the market cap is 225 billion and that's been a journey. It's not been a straight line. Yes. We feel good about it. It makes me feel good. It makes the team feel good. But what actually is exciting is the fact that we think we got a long way to go and the client franchise is an extraordinary shape. And as you look forward and you think about the environment we're in. I actually think, you know, we've come through Covid, a very, very tough regulatory environment. Good news, no pandemic now, a better regulatory environment. We've been talking about governments running growth year plays. I think that's going to be a theme, you know broadly across developed economies. And so I think we're in a place, AI as a productivity gainer in the enterprise, I think is a huge, huge opportunity. I think I think the world set up for a period of time where the types of things we do are going to be quite active after being relatively muted for a period of time. And I think that's quite exciting because we can continue to grow our business and strengthen our position. Wilfred Frost During the speed bumps, if we use your phrase, you know 2 or 3 years ago, I'm saying this from, you know, far watching as I was from London, I'd moved back from the US. Some people reported it as if some of your deputies or lieutenants were trying to make make a play for the for the crown, as it were. Do you look back at that and think “if you come for the King, you best not miss”? David Solomon I think Goldman Sachs, is an organization that has thrived on the value of partnership. We have 4 core values. Partnership is one of them. I think we've done an extraordinary job over the last 26 years since we've gone public. We are truly a public company, but we retain a partnership culture that I think is unique and I think it differentiates the firm. tThat allows us to attract more extraordinary talent and there are enormous benefits to the decisions we've made in that culture we've created. I think one of the parts of that culture is people speak up if they're not happy and at times when, you know, the market environment is stressed and we're not performing as well as we'd like to perform, when candidly, compensation goes down, you know, from, you know, higher years, there's often been noise inside Goldman Sachs. That was not the first period of time when that occurred. And, you know, I think it goes with the territory, but I think the firm is incredibly aligned at the moment. The partnerships are incredibly aligned, and we're pushing the firm forward. And I think we're I think we're in a very, very good place. Wilfred Frost In terms of the strategy. Two core buckets. You mentioned them there. Semaphore, Liz Hoffman at Semaphore who is often right on the money when it comes to reporting on Goldman Sachs, reporting this morning that you're in the market for, I mean, it's a long article let's summarize the two key points, for an acquisition of size over 10 billion USD and in the asset management spaces. Is the gist of that correct? David Solomon I haven't seen the article, but but I'm asked constantly about our interest in doing something inorganic, to accelerate our journey. You can go back and listen to the earnings call last week. The question is asked a number of times and I'll say to you the same thing that I've said. I can't comment on this article because I haven't seen it, but the opportunity for us to grow our asset wealth management is a significant part of the growth strategy of the firm. Of course, if we could find something or some things that accelerate that journey and strengthen our competitive position, if you look at our asset wealth management business in aggregate, depending on how you look at it, fifth, sixth, seventh largest active asset manager, we supervise $3.3 trillion of assets. We have scale and we have a very unique leadership position because we really are in the business across the range of services from liquidity, fixed income, equity and alternatives. There's really nobody else that on a global basis has the breadth of that platform. But there are places where we'd like our scale to be more significant and so, you know, we think about those things. However, acquisitions are difficult. Culturally. Really good assets generally aren't for sale. You can never pick the timing of when you can do something like that. If you go back, you look you look at Morgan Stanley. The acquisition of E-Trade was something that they talked about, thought about, wanted to do for over a decade. So, you know, you don't you don't have the ability to pick and choose. And the bar I think for these things always has to be very high and for us to do something significant, and $10 billion by the way would be significant, the bar has to be very, very high because at the end of the day, you've got to be sure that it's accelerating your journey and you're sure you can integrate it and deliver it. Wilfred Frost So it's interesting. The timing point, I guess, was different from when I was covering you on a daily basis is I guess you've got the currency in the share price today that maybe you didn't, you know, 3 or 4 years ago in the valuation. A few things I want to race around. I know we've got to let you get off on time because you're off to see some important people and going Downing Street later on today. What we summarized, I mean, you've got a very positive tone, despite the challenges, both on Goldman Sachs specifically, I think on the economy, obviously, the markets at all time highs, which perhaps speaks for itself. When you step back from it all, is President Trump doing a lot more right than he's doing wrong? David Solomon Well, I'm quite constructive and quite optimistic. And it's rooted just in a fundamental belief I have that the glass is half full. We live in an extraordinary world that is advancing because of extraordinary technology that candidly over time makes the world better. I think about, you know, technology and the evolution of technology. One of the things I'm super excited when you talk about this AI technology. Of course, I'm excited about productivity in the enterprise, you know, etc. but how about in health and medicine? You know what this technology is going to do for us in terms of improving quality of life health, allowing us to continue to cure or treat disease. Just so many reasons to be very, very optimistic and also as somebody that's been doing this for over 40 years, I've watched lots of things go wrong, lots of speed bumps but we're an incredibly nimble society. We have an unbelievable ability to adapt, to evolve, to, you know, to change and generally speaking, we get through things and we move up to the right and we bring more people along. And I'm, you know, very optimistic that that's the direction of travel and I happen to think at the moment where we're in a relatively constructive economic, you know, period. And I do think that the regulatory burden that has existed in many nations, I talked about it when I was in Paris and in Europe, in the EU, you know, you and I were just talking about it here and I'd say in the US to the last four years, the regulatory burden was very high. I think, for a variety of reasons, as people get focused on growth, that that regulatory pendulum is swinging. That is quite constructive. So I think there are things that the President is executing on well. There are things that I think are actually slowing growth or creating more tension. Trade would be one, but I think that we'll get through that and we'll move forward. I think getting the tax bill done was important. There are things in the tax bill that I agree with and I like. There are things that that I wouldn't have put in the tax bill. The tax bill is more stimulative and that's something we're going to have to we're going to have to deal with. But net net, I think we're set up for a pretty constructive period of growth unless something comes along that really derails it. And you know, those are you know, those are left side small tails but I'm pretty constructive at the moment. Wilfred Frost So the next three questions we ask all our guests and the first one is what is the best strategic, the best leadership decision you think you've made in your career, your time at Goldman Sachs specifically? You can answer how you like. David Solomon Well, I appreciate the fact that I can answer how like, because I intended to do that anyway. Wilfred Frost Exactly. Goes without saying, David Solomon If you want to if you want to highlight a specific decision that I think has been very important, leadership decision that's been very important in my CEO tenure and I'd also say that there have been some lessons for me in the context of this decision looking back at it. The first day of my CEO tenure, October 1st, 2018, we put out a memo talking about a pilot for One Goldman Sachs to serve 30 significant clients of the firm. And it was an attempt by the leadership team to really set out that the client centricity of the firm was incredibly important and we wanted to improve the way our clients experience the firm. And we decided to do it by creating a pilot for 30 very significant clients and we call that One Goldman Well, it really caught on. It really worked. And it has become an operating ethos that has significantly changed behaviour and the way the firm operates with respect to serving clients and I think it's materially advanced our business. And I think it's had a profound impact on our performance over the course of, you know, the last seven years. And the lesson, part of the lesson in this, was this was trying something different to make sure people understood kind of where True North was on the compass and it was simple. When someone said, One Goldman Sachs, everybody might not have meant the same thing, but they understood the core value or the core principle of what it stood for and you were able to really translate that into action. And if you put incentives against it, you really got the whole organization moving. And so I think it's a great example of how sometimes with leadership, something simple is required, you know, to move the needle and this moved the needle. It's strengthened our client franchise. It's had a profound impact on our wallet shares and our market shares broadly. And, you know, I don't know if it was the most important leadership decision I've ever made in a 42 year career, but it was a significant leadership decision that's had a very, very positive result for the firm and our client franchise. Wilfred Frost And very illustrative, which we which we love on this podcast. What about the worst? David Solomon Well, I've made a lot of mistakes and, you know, I'm not very good at pointing to this one or that one and saying “this was the worst, that was the worst”. I think when you're in these leadership jobs, when anyone's in a leadership job, I think there are a couple of things that you have to understand. First of all, you know, if you look at if you look at Roger Federer and he said this publicly, you know, he won 51% of the points. So, you know, the best in the world gets things right. They get things wrong. You win points, you lose points. I think the most important thing about leadership is an ability to change your mind and an ability to make decisions, have conviction, but also be willing to constantly listen and be willing to say, “nope, not working, we need to change”. And, you know, I think there are places where we've really exhibited, you know, that ability to pivot or to change And I've, you know, I've tried very hard with my leadership team at the firm to really work on a culture that says it's okay for us to say “this isn't working, let's change”. It's okay to change your point of view. It's okay to have a lot of conviction and change. And so, you know, I think we've made, you know, plenty of decisions that in hindsight, we'd do differently. We've made people decisions we'd differently. But when you realize that something's not been a good decision, the most powerful thing you can do from a leadership perspective is to acknowledge it and change him. Wilfred Frost And in terms of, you know, we celebrate success on this podcast. So what is the overriding piece of advice you have for for all listeners that are pursuing success themselves? David Solomon Well, first of all, it's a marathon. It's not a sprint. It's a journey. And I just think it's very, very important. One of the things I've learned over the course of the last, yeah, I've learned this in my career, but it's really been amplified to me over the last seven years as I've sat in this job in the in the seat is you have to have a North Star. You have to have a compass that's pointing north. You have to have a clear vision of where you're trying to go. You have to have conviction around that vision. Of course, you've got to be willing to listen and adjust, but when you think about kind of North Star and the compass pointing north, you've got to have a clear vision and you have to be prepared for the fact that it's not going to be a straight line. You're going to be challenged on the direction of travel. And, you know, if you've got conviction about where you're trying to go, be patient, do the right things, be patient and ultimately, performance is rewarded and execution, you know, on the vision if the vision is correct, you know, will be will be embraced and will be rewarded. But it takes time and it's a journey and it's, you know, there's no free lunch. There's no straight line/ Hard work, showing up, persistence, resilience, all those things still matter in our complex world and, you know, patience. Patience really is a virtue. Wilfred Frost Well, David, it's been an absolute pleasure to catch up with you today and to have your wisdom and be able to share it with our listeners, particularly here in London, for an extended conversation here at LSEG. Thank you so much for joining us. David Solomon It's my pleasure, Wolf. It's great to see you always and thank you so much for having me. Wilfred Frost That was the chairman and CEO of Goldman Sachs, David Solomon. And this episode was sponsored by LSEG. Next week we'll be interviewing the Bridgewater founder Ray Dalio so make sure to subscribe ahead of that episode and please do remember that nothing said in the Master Investor podcast should be considered direct financial advice. As more information in our show notes about that. The Master Investor podcast is a production of Paradigm Productions and Master Investor Podcast Limited, in association with Bird Lime Media. If you've enjoyed this episode, please do subscribe and leave us a five star review and see you next week with Ray Dalio.