Summary List Placement
Goldman Sachs launched its consumer-banking arm five years ago with a marketing blitz and much fanfare, sending a strong signal to Wall Street that it wanted to disrupt retail banking — and reshape its own future.
Since then the bank has built it into a $1 billion business by standing up new technologies at breakneck speed.
But now Marcus staffers are quitting in droves at the precise moment the bank needs them most, just as it announced a slew of ambitious products and reshuffled its corporate structure to focus on growth. Former employees, as well as banking consultants and an analyst briefed by Insider, said the exodus raises questions about Goldman’s ability to drive its people hard and still compete with Main Street banks.
Simultaneous product sprints wore out employees during the coronavirus pandemic, when they were already feeling an erosion of work-life balance, all while Goldman’s top-down management style infiltrated a unit deliberately set up to avoid Wall Street hierarchies. Nearly every significant leader in the business walked out the door.
Add it up and it’s exposed a cultural breakdown inside what was once seen as a rare success story, an exception to the notion that says a 150-year-old institution such as Goldman couldn’t innovate as nimbly as the technology startups nipping at its heels. Insider spoke with half a dozen people connected to Marcus — both current and former employees — who spoke on condition of anonymity so that they could speak freely without fear of retribution.
Goldman, which leads in more traditional Wall Street pursuits like M&A advice and trading, has staked part of its growth on cozying up to consumers, and it has plowed billions of dollars into the venture, a costly bet on a unit whose success is far from guaranteed.
“It’s what I would call a spark-plug business,” said Richard Crone, an independent consultant who has closely followed Goldman’s launch of the Apple Card and the toll it’s taken on engineers. “They run them hot so they burn them out.”
An ‘avalanche’ of exits
Marcus, which sits within Goldman’s consumer and wealth-management division, started in 2016. Now it has $100 billion in deposits and $8 billion in loans, and is generating $1 billion in annual revenue.
Engineers — spread across the branded Marcus unit and other partnerships like the Apple Card — make up about 1,000 of the consumer business’ roughly 2,500 employees. One early engineering hire, who left late last year, estimated that Goldman’s consumer business has lost at least a quarter of the engineers involved from Marcus’ beginnings. Goldman disputes that figure.
“The departure estimates are overstated and our business continues to be a magnet for talent,” Andrew Williams, a Goldman Sachs spokesman, said.
Seven or eight people from a different team, known internally as the digital-storefront team and in charge of creating the customer-facing technology that appears as an app or webpage, have left in the past several months, a second former employee said. Those departures — including engineers, designers, and product managers — account for about 15% of a team that tallies four to five dozen people, the former employee and a third ex-employee said.
“I don’t think it will slow down,” one of them said. “This is an avalanche approach. When one person leaves, others will follow.”
Williams said attrition across the broader consumer technology group was about 14% in the past year.
The attrition has been fueled by an ambitious product calendar, people said. In a little more than a year, Goldman launched a Marcus app, began work on a checking account, started building a credit card for General Motors, delivered a set of tools to help users understand their cash flow called Insights, and introduced Invest, a new robo-advisor for the mass affluent.
Filling out that suite in such a short time was an impressive feat, but one that came at a cost. The push required Goldman engineers, designers, and product managers to meet an aggressive time table set by senior managers, leading to overwork and burnout, the people said.
Goldman executives took its approach with the Apple Card — a consumer credit card announced in August 2019 in partnership with the computing giant that required a sprint to meet a contractual deadline — and brought that model into its broader product playbook, one of the people said.
As the Apple Card approach infused the rest of the unit, employees went from working 9 or 10 hours a day to 12 or 14 hours, a former employee added. A typical workday could start at 8 in the morning and continue until 10 at night.
Another ex-employee said that some weeks he would wake up and log on, stay online all day, and log off only when it was time for bed. That person said it wasn’t unheard of to get a text over the weekend requiring him to log on and fix a problem — a request that would sometimes take over the rest of his weekend.
That workload may not seem as extreme as that of Goldman’s investment-banking analysts, who made waves last month with a PowerPoint presentation detailing 20-hour shifts. But two of the employees who left said it was often easy for talented programmers and coders to find better-paying work for fewer hours, making it an easy decision to leave Goldman.
The Marcus employees suffered “cognitive overload” because they were juggling parallel projects simultaneously, one of the former employees said. “Starting in January, things went south,” the person went on. “I saw many good people leaving.”
Hiring another 200 to 300 engineers
January also marked a change in the unit’s leadership after Stephanie Cohen and Tucker York took over running the newly named consumer and wealth-management division.
Goldman is now listening to employees who have made it known that they are suffering from burnout, Williams said. Days after Citigroup instituted “Zoom-free Fridays,” Goldman’s consumer business followed suit, instituting “audio only” meetings after 6 p.m. on weekdays and all day Friday, an internal memo viewed by Insider said.
Williams added that Goldman was planning to hire another 200 to 300 engineers this year. It’s hired nearly 100 engineers over the past five months, and dozens more have accepted offers or are onboarding. The company signed a contract this month to bring on 14 cloud engineers “to help address the pressure we have in that space,” Williams said.
“Like any fast-growing organization, we have ambitious plans and constantly consider the right pace of growth,” Williams said. “We continue to listen to feedback from our teams and are significantly accelerating hiring.”
Former employees said senior turnover hadn’t helped. The consumer unit churned through three chief technology officers in less than two years, with Boe Hartman and Jeff Winner exiting since February 2020. The unit’s third CTO, John Fathers, is a Goldman lifer who worked at JPMorgan for a short stint before coming back to run the consumer-technology organization.
Fathers continues to use a management style that imposes deadlines from the top down, four people said. In one case, an employee objected to a deadline because it meant completing a project just weeks before Goldman was scheduled to move to another cloud environment with Amazon Web Services, which was going to require rebuilding some of the platform anyway. The person was overruled, and the work was completed twice.
Most concerning was that the Marcus team lost the autonomy it enjoyed earlier in its life, when it was started with 40 people and held up as a model for how to build a startup within Goldman, some of the people said.
Williams didn’t address the breakdown in culture that the sources cited, other than to say “we continue to be proud of this team and our culture, and don’t take these for granted.”
It’s not only the rank and file who are leaving. In February, reports surfaced that Marcus leaders and Goldman partners Omer Ismail and David Stark would join Walmart’s new fintech startup.
Harit Talwar, the partner Goldman hired from Discover Financial Services to build the business and who had taken on an advisory role in September, stepped back into an operating role after Ismail and Stark left, offering some continuity.
Other leaders lower in the organization also left, including nearly half a dozen managers who led critical tech verticals, one person said. Over the past year or so, the head of cloud engineering, the head of cloud infrastructure, the head of site reliability, and the head of data engineering all left.
As they’ve landed at other places, they’ve hired out of the Marcus team, hastening attrition. Moe Matar, the CTO of cards, decamped for Citigroup and hired at least one former colleague, as did John Stecher, who left Goldman and made his way to the CTO’s job at Blackstone, according to a former employee and LinkedIn profiles.
Another complicating factor is that some of the team joined Goldman in its April 2018 purchase of Clarity Money, a consumer finance app with a management team that preferred to hold an unfinished update or product rather than push it through. Many who remain will be free to leave in mid-April, with the three-year anniversary of the deal, another ex-employee said.
One of the founders has already checked out. Adam Dell, who ran Goldman’s product team until he was replaced by Sonali Divilek in January, started drifting away last year, just as members of the product team struggled with deadlines, one of the people said.
Known for being active on the team’s Slack channel and piping up when it came to design questions, the Goldman partner was much less active last year, the person added. Dell declined to comment when reached on his cellphone.
Green, yellow, or red
The former employees said Goldman’s managers made mistakes with their almost insatiable drive to stand up the next product without stabilizing and building resiliency into the current product. When the Apple Card was completed, for example, upper management pushed ahead on a checking account and other digital storefront initiatives, before shoring up Apple Card’s foundations.
As a result, some of the Apple Card processes and tools have not been migrated to the cloud in a way that they can be leveraged to build out the General Motors card, which it’s begun building after winning the mandate earlier this year, one person said. That’s meant that the team working on the GM card, according to this person, is having to do a lot of work over again.
“We didn’t upgrade the platform enough to make it ‘copy, paste, here is your new credit card,'” the person said. “Now a lot of new work needs to be done.”
A system to track tickets and tasks requires employees to classify projects by colors — green, yellow, or red — based on their level of completion.
The deadline pressure sometimes led employees to cut corners to mark a task or ticket as green, signifying its on-time status, one of the people said. One of the people said that Pete Gott, a former managing director, classified a number of Apple Card subprojects as green when they should not have been, which delayed the project’s completion. Gott did not respond to requests for comment.
Making matters worse, Goldman’s cost-cutting has loaded more work onto employees. Once free to hire consultants from places like EY and KPMG, managers have been forced to tighten their belts and are hiring fewer consultants, one of the people said.
When people do leave, Goldman managers tend to backfill not with tech talent found in San Francisco or New York but in places like Dallas and Salt Lake City, one of the people said. The choice means hiring engineers at lower pay scales, but at the cost of missing out on engineers who have valuable experience from working for other startups huddled together in Silicon Valley or Manhattan.
Insight competes for resources with Invest
The challenges came to a head for Marcus’ digital storefront team in the fall. Goldman managers were intent on standing up the new Insights product, even though top executives had already promised that a robo-advisor, branded Invest, would be delivered by year end.
The competing projects created a highly stressful environment, the people said. Managers often pressed engineers for updates on their progress, and some engineers grew anxious about hitting the deadlines, one person said.
Invest was finally delivered in February, two months behind schedule.
One former Marcus employee said he’d warned his bosses that continuing on the breakneck pace wasn’t healthy. A person involved in the Apple Card launch said managers should have known that sprints such as the Apple Card are doable but need to be followed by periods of relatively lighter workloads, to preserve staff morale.
Bert Ely, an independent banking consultant who has followed Goldman’s strategy, said the exits and crumbling culture could be a sign that Marcus’ ambitions have stalled — or that heightening competition has led to some unforced errors.
“It comes back to the business case for Marcus,” Ely said. “If it’s in fact a viable growing project and will be a significant engine for growth and profit, then they can deal with the personnel issues. If, on the other hand, they are slower to fill empty space, slower to grow from that standpoint, it may indicate that Marcus may be not up to the original hype.”
‘You burned out your folks, but you just got your entire wallet’
One of the former employees acknowledged that Goldman’s push has had the benefit of giving the bank a full suite of financial products for consumers in a relatively short time.
“Marcus now has an Invest product, they are about to launch a checking account, they have a savings product, they launched Marcus Insights,” the first person said. “In a year and a half, or two years, that’s amazing. You burned out your folks, but you just got your entire wallet.”
Nonetheless, the culture has changed, one of the engineers added. And it’s unclear whether that shift – an apparent preference for grinding work loads over the creativity of a startup culture – will hurt its prospects.
If Goldman gets it wrong, it may struggle to compete against the incumbents, who have retail branches to support their franchise, UBS analyst Brennan Hawken said.
“If you get a lot of turnover in a group, it makes it more difficult to hit your development targets,” he said, adding that cutting-edge tech will continue to drive Goldman’s ambitions since it doesn’t have a physical presence.
“You have to have a better mousetrap when you are the new guy on the block and you don’t have brick and mortar branches,” Hawken said. “You have to develop a much better experience than the legacy players.”
Originally published at https://www.businessinsider.com/goldman-sachs-marcus-burnout-cloud-tech-hiring-attrition-culture-gs-2021-4 on .