Monthly Archives: September 2008

Warren Buffet, Goldman Sachs,&Leadership Intelligences

Today’s Wall Street Journal reports that as recently as in March, Warren Buffet wrote to his shareholders expressing disdain for Wall Street firms, “You only learn who has been swimming naked when the tide goes out–and what we are witnessing at some of our large financial institutions is an ugly sight.”And yet, today’s WSJ reports that Buffet will invest $5 billion in Goldman Sachs, and also has an option to invest $5 billion more at a later time. What is Buffet’s rationale?Actually, Buffet is just demonstrating his great leadership skills. In particular, in the context of leadership intelligences, Buffet’s decision reflects his “analytical intelligence”. Think about it. Why Goldman and not any other company? Why now and not anytime sooner or later?Here are a few thoughts: About timing. Buffet knows that the financial markets need a shot in the arm, and as a thought leader, he is in the best position to provide that much-needed confidence by investing in a company. About Goldman. While not safe from the crisis in the financial markets, Goldman has avoided any mortgage-related crisis. And although profits have been declining, the firm has been steadily showing a quarterly profit. Now, with Buffet’s investment, Goldman can raise additional money from selling stock to the public. The boost Goldman is getting has already been demonstrated in the 6.5% uptick in its share price yesterday. The WSJ article notes that the deal “will give Mr. Buffet a healthy stream of cash and potentially ownership of 10% of Goldman.” Win-win. And of course, a desperately-needed vote of confidence in the financial institutions.Isn’t that leadership?

Wilbur Ross: NPR Interview

NPR interviewed investor Wilbur Ross this morning. During the interesting interview, Ross revealed that he had tried to be a creative writer in his student days. What had he found useful from his creative writing training, however short-lived that was, to his work today as he takes over and revived failed companies? His answer–not ideation or any such creative thing–but “analytical skills” (!) When you have 1000 words to write a piece in, he said, you have to “organize your thought processes, organize your questions, and think through what your observations were.” He went on to say how these abilities are useful in any kind of activity that calls for analytical abilities, and especially in his work in the private equity space.