July 17, 2018
David Solomon's move into the CEO role at Goldman Sachs was more than a normal succession. Lloyd Blankfein had led the firm for 12 years, through the financial crisis, the post-crisis regulatory reset, and a period when Goldman's reputation was tested by mortgage-linked products and public criticism. Solomon inherited a firm with enormous franchise value, but a different revenue mix than the one Blankfein once ran.
The trading shift is the main number. Trading accounted for about 38% of Goldman's revenue, compared with almost 70% in 2007. Post-crisis regulation made the old trading-heavy model less powerful, and Goldman had to lean more on investment banking, debt underwriting, consumer lending, and other revenue initiatives.
Solomon fit that direction. He joined as a partner soon after Goldman went public in 1999 and ran investment banking for a decade. Debt underwriting produced record revenue last year and contributed almost 10% of the firm's total, which made his background more relevant to the next version of Goldman.
The leadership move also cleared up a competitive internal process. Solomon and Harvey Schwartz became co-presidents in late 2016 after Gary Cohn left for the Trump administration. By March, Solomon was sole president and Schwartz had left the firm. That kind of narrowing is normal at major financial institutions, where performance, timing, sponsorship, and internal positioning all matter.
The open questions were practical. Goldman still needed to decide who would replace Solomon in his prior role, how to rebuild leadership in trading after losing two senior leaders, and how to pursue the firm's goal of finding $5 billion of new revenue opportunities by 2020.
For recruiting, the useful lesson is to avoid treating banks like frozen stereotypes. Goldman was still powerful in trading, but the firm's center of gravity had moved. A candidate who can explain that shift sounds more current than one who only repeats old labels. Solomon's side career as an electronic music DJ made the profile unusual, but the business point was conventional: Goldman needed a broader model for a post-crisis market.