Morning Coffee: 50% of Goldman Sachs could work at home forever. The horrible similarities between Silicon Valley and Wall Street
The gradual inching back to normality seems to have begun at Goldman, with an all-hands memo sent out by David Solomon (and Stephen Scherr and John Waldron) detailing the beginnings of a plan to get people back into the office. The move back has already started in places like Hong Kong, China and Israel (and perhaps more surprisingly, Sweden), but things are a bit more challenging in the biggest financial centres, where severe outbreaks are still going on and where Goldman would need to find some alternative to public transport.
What’s interesting, however, is that the current plan, even in the Asian offices, is meant to take Goldman from its current position of having only 2% of its staff in the offices, to 20% and then eventually to 50%. At present, there’s no plan at all to get the offices any more than half full. There’s also no indication that any of the luxury perks that were ever so recently – and expensively – installed will be coming back into use. The “child centres” with the climbing walls, the mega-size gyms, the sleep pods, roof gardens and the like are as yet undecided. The cafeterias are definitely shut, however; it will be prepacked sandwiches and salad boxes for the foreseeable future.
It’s a real shame in so many ways that the need to maintain social distancing is going to undo so many of the office design fads of the last year for investment banks. Big mezzanine areas, where staff can mingle and queue up 25 deep at the Starbucks cart are no longer regarded as promoting the exchange of ideas and connectivity. Hot desking creates a whole new set of problems. Only last year, Citigroup announced plans to fit 12,000 employees in a building that previously held 9,000. That building currently has occupancy barely into three digits, and might now be considered to have a capacity of no more than 6,000. Fate has a way of mocking your plans.
But where are the other 50% going to be? It’s likely that a lot of IT staff, including the “technology fellows” and “engineers” building trading platforms and risk management systems, will be best suited to working remotely; many of them may even prefer their own environment to the distractions of a bank. It also seems, anecdotally, to be the case that a lot of salespeople and traders, once removed from the proverbial bustle and energy of the trading floor, have begun to realise that it was more of an irritating distraction than a source of synergy, and that all the information they need to exchange can actually be typed into Bloomberg chat.
On the other hand, there are some people in investment banks who really do need to have conversations face to face. Either because they are saying things which, for one reason or another, shouldn’t be written down or recorded, or because they need to look each other in the eye in order to see if they are telling the truth. It’s just not possible to win at capital markets & advisory business without occasionally doing something which could be misinterpreted if taken out of context, and that’s why it’s likely to remain a face to face business. Dealmakers are doing all right on their farms for the moment, but they’ll probably be the first to come back as soon as it’s safe.
Elsewhere, the sudden shift in architectural fashion is presumably going to affect the bean bags and ping-pong tables beloved of the tech industry too. And could it be that, deprived of their toys and free beer, the workers of Silicon Valley may end up having to admit that they’ve got more in common with bankers than they might like to admit? A thought-provoking Substack post by Ranjan Roy notes that the big difference between West Coast and East Coast cultures has always been that Wall Streeters have historically revelled in their industry’s power and leant into the anti-hero role models like Gordon Gecko and Patrick Bateman. The Valley types have tended to portray themselves more as holy innocents, creating fantastical services for the good of humanity. They also tend to act a bit embarrassed at people like Peter Thiel, who call a monopoly a monopoly and squeeze military contracts for all the juice the taxpayer can bear. In a post-virus world in which Amazon, Facebook and the like become even more dominant – and in which VCs find it harder to pretend that they’re not in the finance industry – perhaps Silicon Valley will take over as the popular villains.
Credit Suisse has its own return to work memo, with four “phases”. The final phase does seem to have everyone back in the office, but there’s no indication of a time frame. (Bloomberg)
“We are totally reliant on people doing the right thing”. A compliance officer’s worst nightmare is all of the employees, left to their own devices in a house full of non-recorded communications and not necessarily asking questions about potentially tricky deals. (Financial News)
From the mailroom to the C-Suite, literally – two bankers in Citigroup’s custody business used to have to open physical letters to collect shareholder proxy votes. Now the digital platform “Proxymity” is being spun off as an independent company. (Bloomberg)
Internship watch – PwC summer students will be gaming and learning about sourdough this summer as the program has been cancelled. They do, however, have guaranteed jobs for next year. (Financial News)
As the coronavirus impact is causing quoted companies to pull earnings guidance, analysts are being “forced to think for themselves, rather than being spoon-fed”. It’s not a pleasant experience. (FT)
Some careers are better adapted than others to working from home – for example, if you’re a professional operatic soprano, you might need to hide in your clothes closet in order to rehearse or your neighbours will hate you. (WSJ)
Massive plexiglass “sneeze guards” might be one solution to making offices less virus-friendly when people return to work. An even more futuristic solution being considered at some companies is apparently “encouraging people to take sick leave when they’re sick” (New York Times)
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