Why I Left Goldman Sachs After Landing My Dream Job

In 2008, I joined Goldman Sachs as a banker on Wall Street after getting my MBA from Vanderbilt. It took me 39 one-on-one interviews to get a job at Goldman Sachs, my dream job. But just a few years later, I left Goldman because I learned one important lesson. That single lesson helped me build $2 billion companies, helped me invest in 100 plus deals. And today, I'm the CEO of Acquisition.com with my partners, Alex and Leila Hormozy. Building the next generation of private equity. All because I learned this lesson while I was at Goldman. So, I thought it would be important for me to share that lesson with you. And the exact honest reason on why I left Goldman. Because those lessons can help you hit your goals as well. And the first lesson that I learned was about fees. Well, it is amazing to me the amount of fees that these financial institutions charge their clients. Maybe on the principal trading side, investment banking side. Or even on the investment management side. I actually saw advisors charge their clients fees to just manage cash. Think about this for a second. They would charge you a fee to leave your money in cash. Because they were advising you, advising you on how to deploy your cash. That was insane to me. And the more I did research on this, I realized that while the fee in the first year didn't matter as much. The fees over time significantly started to add up. And so, if you took a million dollars. And you invested that million dollars over a 20-year period. Say in the S&P 500. And you got a 10% return. You'd roughly end up with 6.7, 6.8 million dollars. But, if you were paying a 1% fee. Which is very normal for advisors. So, you would now instead of getting a 10% return, get a 9% return. Over that same period, you would probably pay over a million dollars in fees alone. Think about that. You would probably pay more than your originating starting balance in fees alone. As I ran the math, I started to realize that, yes, it was a great business model. Yes, it was very lucrative for the bankers. Yes, there was smart people doing this and clients trusted them. But, the amount of fees that were being charged were, just blew my mind. So, you may say, well, what did you do while you were there if you didn't want to charge fees? Well. I actually realized that the only way that I could win was charging the highest fee instrument. Let me tell you what I mean by that. I was a person that did not like charging any fees. But, I charged the highest fee instrument because I was ethically okay with it. And, let me tell you what that is. I helped my clients more with structured notes than I did any other investment. And, if you're unfamiliar with this product. A structured note allows you to invest in a security that gives you a structured return no matter what happens. For example. If you were to invest in a structured note, the note may say, hey, you would get a maximum of 20% of the market but your losses are cut by, you don't get anything less than 3%. So, you can go as low as 3% or as high as 20%. So, the question you may ask is, well, Sharron, what happens if the market rallies 40%? Well, you don't get that benefit. Well, what happens if the market is down 40%? Well, you're not down more than 3%. It gives you a very tight range to win. And, all my clients, especially who had built or building and selling businesses, had made a significant amount of liquidity. They wanted certainty in the markets. I realized that my number one job to offer them as a banker was to give them certainty. And, the number one way to get the certainty was to help them and advise them on the structured note products where they were okay with not getting all the upside on things. But, they wanted to protect themselves from the downside. Which is why I spent. I spent most of my time advising people and building these structured notes around it. But, when I realized that the fees were so high, it made me question as to why I was really there. But, that brings me to lesson number two on the fees, which even those fees were not good enough. Let me tell you what I mean. One of my clients at Goldman sold his business for $100 million. The way he started the business was he built a healthcare IT company. And, he took an SBA loan for $5 million, pledged his house, and he built his business from scratch. He was able to sell that business for $100 million. When we were at the closing dinner, he took a liking to me, of course. And, he asked me, "Sharon, what was Goldman's fee in this process?" And, Goldman Sachs had made a million dollar fee as part of a few things that we had done. And, I was going to get a percentage of that, but Goldman had made a million dollar fee. And, my client at that point said to me, he said, "Sharon, you're going to have to do a hundred of these deals to get to what I made in one deal." Now, he was not appealing to the risk-taker in me, but what he was trying to tell me was I had a very clear job. I was being an advisor at that point in time, and he thought that I could do better as an entrepreneur. Now, he even offered me a job to come work with him. But, the thing there was, he showed me that at the end of the day, there was a million dollar fee that Goldman made, and I would have to do that 100 times to make what he made at the end of the day. So, even though I didn't love the fees, it showed me that it was never going to move the needle that much, even though it was pretty lucrative. So, that was like my big lesson number two, but then that all came together in lesson number three, when I was telling this same story to one of my mentors. And one of my mentors who was also my client was a big real estate investor, and he had invested in a small real estate startup in Beverly Hills, California. And he said to me, he said, "Sharon, hey, the next time you're in Beverly Hills, can you go visit this business? I'd love for you to take a look and maybe give them some advice on how they can run their business." Well, since he was my client, I did that. And as a part of my diligence process, I looked at the things that I was doing. I looked at the things that I was doing. I looked at the financials. And we found that the then CEO was actually embezzling from the business. So, of course, I reported that to my client, and he was flabbergasted, of course. And one conversation led to the other, and my client and I decided that we would step in and buy that CEO out. My client offered me this opportunity. He said, "Sharon, I know you want to be an entrepreneur. I'm going to give you the opportunity of a life. But you're going to have to come up with the cash for it." Well, I didn't have the cash. He gave me the opportunity to invest in this business and then also operate this business. Well, there are two things at play here. Number one, I didn't have the cash to actually buy the stake of investing in the business. And I'd never run a business before, and he was giving me the opportunity of a lifetime to be able to do that. So, the first thing that I did was, I did a reverse mortgage on my house. Now, you can't really do a reverse mortgage unless you are 55 and over. But I did a private note on a reverse mortgage on my house, private instrument, to get the cash out to invest in this business. And that allowed me to actually buy my stake in the business. The second is, I had never operated this business before, and he told me that he would be the chairman of this business, and he would help mentor me and teach me how to run this business. This was called, the company's name was Telus Properties. It had one office with 28 agents in Beverly Hills, California. And when I got a chance to take it over, I knew nothing about the real estate business. I had only bought one house in my life, and I had no idea how to manage people, how to build culture. I knew how to read a P&L, but never had run a business before. But I knew that I would do whatever it took to run that business. We got a chance to build and grow that business from a little over $300 million to $3.4 billion in five years. We grew that business 10x in five years, and then sold that business to Douglas Elliman, which is a publicly traded company out of New York. Those five years taught me one important thing, that I didn't know anything. I worked hard, just like I worked at Goldman. I worked hard just to prove myself. I just tried to figure out how I would learn every single day, so I wouldn't be the dumb CEO, that was on a first time taking this job. And everybody's like, "Man, I'm the operator, I'm the owner, I'm the CEO." They don't realize it takes a lot of skill, and a lot of reps, and a lot of mistakes to figure out what you're doing. They say, "The expert is the one that has made all the mistakes." Just figuring out the fees, doing this, realizing that the healthcare deal, where I have to do it a hundred plus times, and then getting the opportunity to have my client back me to operate this business, where I had to put money at stake, skill at stake, time at stake, is what helped me overall, just so you know. You may say, "Well, yes, Sharron, you got the opportunity of a lifetime, where someone just gave you a chance to run a business." Well, the two things that were true were, one, I reverse mortgaged my house. I didn't tell my wife. I took the cash to buy equity in this business that I had no idea how to run, and second, The business was not good. making any money. That's why the CEO is embezzling from it. For an 18 to 24 month period, I took no compensation. I took no salary. In fact, we missed payroll a couple of times. And so, yes, did I get an opportunity to do something? Yes. But there was also a massive amount of skin in the game and sacrifice to learn. And those three lessons are actually what helped me understand what I was truly meant to do. Goldman gave me the insight to figure out whether I wanted to be an advisor or whether I wanted to be an entrepreneur, not because being an entrepreneur is cool. Neither option is either good or bad, but one of them is probably a better option for you. So I hope that hearing this journey of me trying to figure out what was the best option for me is a reminder. You have to figure out what's best for you. You can make money being an investment banker. You can make money as being a lawyer. You can make money in a full-time job. You can make money as an entrepreneur, but you don't want to get good at something that you hate. So you have to figure out what is that you're called upon to do. And when you do that, you will get to your goals significantly faster.