Baby Blue

Sidney Weinberg came from nothing.

As a teenager, he hungered for a spot at a Wall Street trading house.

When he finally got a role, it was far from a trading desk.

A small broker hired him as the janitor’s assistant, and much of his time was spent shining partners’ shoes.

The traders at the firm didn’t even know Sidney’s name; he was formally known as “The Boy” around the office. Salary was $3 a week.

Sidney was a hustler and eventually the firm’s partners started to recognize his efforts. He was promoted from shoe-shining service to organizing the mailroom. Weinberg put his heart into making the mailroom as efficient as possible, and leadership took notice once more. Paul Sachs sent him to Browne’s Business College in Brooklyn, then NYU afterwards.

The small firm Weinberg worked at was called Goldman Sachs.

World War I interrupted Sidney’s career climb. He enrolled in the military and worked a job as a cook. Upon returning to the states, Sidney was welcomed back to Goldman, and he finally got the job he was searching for: securities trader.

Between 1918 and 1925, Weinberg excelled in his role. His coursework at NYU taught him about investment banking and he applied an advisor mindset to bond trading. Instead of capitalizing on price movements and trading in and out of securities, he focused on forming syndicates with other banks, managing the syndicates, and getting paid a percentage of the total syndicate size he was managing. So no matter the market, Weinberg made money. At the time, everyone’s focus was on making the next big trade and investment banking remained unpopular.

In 1925, Goldman partners took notice of Weinberg’s consistency and bought him a seat on the board of the New York Stock Exchange.

He became a partner two years later.

A Goldman partnership is held in the highest regard among Wall Street circles. To many, it represents all that is to be obtained in a career. Money, power, respect. $950,000 in base salary and often much more than $10,000,000 in total compensation. Partners have a seat at the table when it comes to the firm’s decision making, and other perks include access to special private investments, wealth management tools, and connections.

But at the time, there weren’t many Goldman Sachs partners and the firm was not the clear top dog. Sidney, at 36, was just the second partner that came from outside both the Goldman family and the Sachs family.

in 1929, the Great Depression hit and Goldman Sachs was nearly wiped out. During the Roaring Twenties, Waddil Catchings, Goldman CEO, had focused business efforts on trading. He created the Goldman Sachs Trading Corporation, essentially a leveraged hedge fund that traded client money and the bank’s equity capital, to profit off of the positive market environment. So when the Great Depression hit, Goldman was left exposed. Of the $172M lost in investment trusts that year, Goldman’s GSTC failure accounted for 70% of losses. The house burned and from those ashes rose the firm we know today.

Waddil Catchings was replaced by Sidney Weinberg.

Sidney still had old scars on his back from when he would get into knife fights as a teenager in the streets of New York.

Goldman Sachs had a new CEO.

First order of business was to switch the focus from trading to investment banking.

Weinberg still held the concepts he picked up at NYU close to his chest. To him, trading was a game of speculation, the reason Goldman almost went bankrupt during the Great Depression. He had been an advocate of investment banking since he got the chance to work as a trader, and now he was in a position to make real change across the company.

Sidney was no Wall Street man at heart, despite his moniker “Mr. Wall Street” - he had more in common with a Steve Jobs or a Henry Ford. His early life in the streets of New York provided a perspective that no one else on Wall Street had. He still remembered the nights he went hungry was a teenager, the nights that were freezing cold with no shelter. He didn’t grow up even thinking about college, he simply wanted to escape his current situation of dire poverty. So when he became a Wall Street executive, Sidney saw things as they were, not as someone else taught him to see it. An outsider can see things an insider can’t. And he could see from a mile away that investing in investment banking would provide stability for Goldman Sachs’s business model, regardless of the market environment.

IPOs, bond issuance, and merger / acquisition advisory became the new focus.

Over the course of Sidney’s tenure as CEO, Goldman Sachs evolved from a glorified hedge fund to a trusted advisor for the largest corporations.

In 1947, Sidney Weinberg met a 30 year old Henry Ford II, the new face of Ford Motor Company and Henry Ford’s grandson. The two began to build a relationship as Henry consulted Sidney on how to build modern management systems at Ford. Trust grew over time, and in 1950, Henry turned to Sidney for counsel as he looked to restructure Ford and fix the control structure.

Finally, when Ford went public in 1956, Henry Ford II asked Sidney to lead the IPO.

Goldman Sachs led a $657M IPO for Ford Motor Company, the largest IPO in history at the time, and created the perception that Goldman was the best investment bank in America.

On an IPO, investment banks are paid based on the size of the transaction.

An IPO underwriting fee can range anywhere from 3-7% of the total offering, with the lead bank taking the largest share of the fee.

For example, in the ServiceTitan IPO that took place in December 2024, Goldman Sachs was a co-lead along with Morgan Stanley.

12 other investment banks participated in the underwriting process, and a total of $625M was raised in proceeds.

5.5% of proceeds - $34M - went to paying the investment banks involved.

Goldman Sachs and Morgan Stanley were each entitled to 28.8% of proceeds as co-leads, meaning Goldman Sachs made $9.9M in fees on the ServiceTitan IPO.

So considering Goldman made almost $10M on a similarly sized IPO in 2024, guess how much they made on the Ford IPO in 1956?

Sidney declined to share those details with the media at the time.

Later on in his life he admitted that the truth embarrassed him. Since every bank on the street wanted to be the lead on Ford, it was extremely competitive, and underwriting economics went out the window.

Goldman Sachs made just $250,000 in fees on the Ford offering.

Nonetheless, the reputational upside was infinite, and the house Weinberg renovated became revered across Wall Street.

Nowadays, the Goldman reputation transcends finance.

The baby blue logo carries a feeling of assured authority, an untouchable brand. You’d be better off taking on the government than Goldman Sachs.

A nearly perfect parallel can be seen with the purple and gold. All of the most famous basketball stars outside of Michael Jordan have been Lakers at some point: Magic Johnson, Kareem Abdul Jabbar, Jerry West, Shaquille O’Neal, Kobe Bryant, Lebron James.

The LA Lakers are the biggest show in basketball and the league knows it. When the Sacramento Kings were on the verge of beating Kobe and Shaq in 2002, mysterious things began to happen. Referees started calling fouls they’ve never called before. Perhaps it’s just conspiracy. But the Lakers got 15 more free throws than the Kings and former referee Tim Donaghy says it was rigged it on behalf of the NBA league front office.

Goldman Sachs has been known to have deep government ties. Weinberg was the first Goldman chief to work closely with Presidents and other decision makers in D.C. During World War II, President FDR elected Weinberg to serve as assistant director of the War Production Board. Sidney went on to advise Presidents Truman, Eisenhower, and Johnson.

His legacy lives on today:

John C. Whitehead, co-chairman of Goldman Sachs: Deputy Secretary of State under Ronald Reagan

Robert Rubin, co-chairman of Goldman Sachs: Treasury Secretary under Bill Clinton

Gary Gensler, partner at Goldman Sachs: Chairman of CFTC under Bill Clinton

Jon Corzine, co-CEO of Goldman Sachs: Governor of New Jersey

Stephen Friedman, co-chairman of Goldman Sachs: Chief Economic Advisor under George W. Bush

Henry Paulson Jr., CEO of Goldman Sachs: Treasury Secretary under George W. Bush

Neel Kashkari, investment banker at Goldman Sachs: President of Federal Reserve Bank of Minneapolis

William Dudley, partner at Goldman Sachs: President of Federal Reserve Bank of New York

Mark Patterson, managing director at Goldman Sachs: Chief of Staff to Treasury Secretary under Barack Obama

Gary Cohn, co-COO at Goldman Sachs: Chief Economic Advisor under Donald Trump

Steven Mnuchin, Chief Information Officer at Goldman Sachs: Treasury Secretary under Donald Trump

Rishi Sunak, investment banker at Goldman Sachs: Prime Minister of the United Kingdom

Mario Draghi, vice chairman of Goldman Sachs International: Prime Minister of Italy

Mario Monti, advisor to Goldman Sachs: Prime Minister of Italy

Malcolm Turnbull, partner at Goldman Sachs: Prime Minister of Australia

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