Escape from the Vampire Squid

From intern to executive, an ex-employee lifts the lid on life at Goldman Sachs. By Nikhil Kumar in New York

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The Independent Online

Back on 12 June 2000, as the dotcom bubble was deflating, young Greg Smith was all puffed up, clutching his "extra-large coffee" and looking up at "the formidable tower" that housed Goldman Sachs' equities trading headquarters in New York. "Holy s**t," he thought, as he arrived for the first day of his summer internship at the Wall Street bank.

More than a decade later, on 14 March 2012, not long after a different financial bubble had burst, the remark may well have risen in a hush over the Goldman dealing room as wide-eyed traders pored over an opinion piece in the New York Times. Title: "Why I'm Leaving Goldman Sachs". Author: Greg Smith. "Today is my last day at Goldman Sachs," Mr Smith proclaimed. Over 12 years, he said, he had understood what made the bank tick, "and I can honestly say that the environment is now as toxic and destructive as I have ever seen it".

Now, Mr Smith, who had risen to become a Goldman executive director and head of the firm's US equity derivatives business in Europe, the Middle East and Africa, is preparing tell us the full story. According to reports, his biting New York Times commentary on Goldman won him a book deal and a cool $1.5m (£930,000) advance, with the product of his labours, imaginatively titled Why I Left Goldman Sachs, set to hit the bookshops on 22 October. The night before, he is reported to be planning to break his self-imposed hiatus from public view with a US television interview.

Ahead of the launch, Goldman said yesterday it had conducted a detailed review of Mr Smith's claims and found no evidence to support them.

But as we near the release date, it seems the firm's President, Gary Cohn, who along with the chief executive, Lloyd Blankfein, merited special mention in Mr Smith's op-ed for losing "hold of the firm's culture on their watch", is likely to be among those waiting in line for a copy of the tome. "I probably will read it," he told Bloomberg television earlier this month.

If Mr Cohn wants an early look, the first chapter was released on the Apple iBookstore this week. Titled "I Don't Know, But I'll Find Out", it offers a glimpse of Mr Smith's first days in the belly of the "vampire squid", as the bank was memorably dubbed by Rolling Stone magazine.

Back then Mr Smith was a dedicated convert to the Goldman cause. That summer day, the 21-year-old had no premonition of what – in his view – Goldman would become, and how he would go on to feel. Young Mr Smith, then on a scholarship at Stanford, was, to his mind, justifiably proud. "The selection process for any type of job at Goldman Sachs is extremely rigorous. On average, only one in 45 people ... who apply for a summer internship, or a full-time job, get an offer," he says. To get ahead, he had prepped hard. "I'd read The Culture of Success, a history of the firm by Lisa Endlich, a former Goldman VP," he reveals.

With a toe in the door, Mr Smith was issued with a folding stool and a "big orange ID badge" on a "bright orange lanyard" – status markers to remind the intern that he or she was a mere "pleb, a newbie, a punk kid". Recounting how interns had to carry their stools around at all times because "there were no extra chairs at the trading desks", he says it was "innately demeaning".

The internship itself was demanding. "You came to work at 5:45 or 6:00 or 6:30 in the morning," Mr Smith recalls. Interns were put through two "open meetings" a week, where "a partner would stand at the front of the room with a list of names and call on people at will with questions on the firm's storied culture, its history, on the stock market".

"Depending on the personal style of the people in charge, the meetings could be brutal. They were always intense," Mr Smith says, recalling how, on one occasion, an intern was rebuked by a VP for not knowing enough about Goldman's stance on Microsoft shares. "What is our price target? What are the catalysts coming up? How has the stock been trading? Come on," the VP barked. The hapless intern "starts to tear up and runs out of the room".

Mr Smith also recalls the treatment handed out to an intern after a managing director ordered a cheddar cheese sandwich and was presented with a cheddar cheese salad. The boss "opened the container, looked at the salad, looked up at the kid, closed the container and threw it in the trash". "It was a bit harsh, but it was also a teaching moment," Mr Smith writes.

The anecdotes chime with the caricature of Wall Street as a laddish jungle where ritual hazing is just part of doing business. But at this early stage there is none of the greed that Mr Smith spoke of in his op-ed – he claimed, for instance, that people in the firm "callously talk about ripping their clients off". Instead, the gruelling intern routine is presented as a way of training new initiates to be "truthful, resourceful, collaborative".

Tantalisingly, though, Chapter 5 is titled "Welcome to the Casino".