Morning coffee: “We’ve exhausted the world we’re in: ‘Welcome to the age of discounts.'” Goldman’s partners quietly leave the room

It’s easy to make a mistake. You have a good year, maybe two, and in a fatal coupling of gentle optimism and unfettered gullibility, you assume this is what the world is like now. It is not, however, and that was just a break before reality was re-established.

This is where Stripe, the payments company, finds itself. Built by early Irish siblings, the European Unicorn has spent the past few years in growing mode. The Collison brothers are known to be making references to more established finance companies, accusing them of being “flabby and lazy”. But guess who is carrying the extra weight now?

“We’ve done too much for the world we live in,” Patrick and John Collison declared yesterday.We were very optimistic about the near-term growth of the Internet economy…We’ve increased operating costs very quickly…” Although this “hurts” them, Collisons are now in the process of correcting these errors: 1,000 people are being shed on Stripe; 14% of the workforce.

All of this is very reminiscent of Coinbase, the cryptocurrency exchange, which said something similar in the summer before shedding 20% ​​of its staff, and which is still struggling with poor revenue five months later. Envisioned conditions did not materialize, and the fintech companies that formed for their arrival found themselves too fat for the world that arrived instead.

The big question now is whether they are just financial companies. Why not the banks too? For example, Goldman Sachs increased its headcount by 15,500 people or 45% between the end of 2017 and the third quarter of 2022. Is Goldman Sachs not obese either? Was he employed in the world he is in?

We’ll find out soon. Meanwhile, while Moelis & Co. admits to being a banker for life, Morgan Stanley has reportedly decided he doesn’t need all the bankers they have in Asia and is willing to go through the painful extraction process. In the new world order, these bankers may find it easier to get new jobs from engineers; Moelis, at least, is doing the hiring.

Separately, next week is Goldman Sachs partner week, and while the company prepares to promote a potentially very small group of people to its top notch, some existing partners are pulling out to make room for them. Except, partners are never laid off at Goldman Sachs. Alan Cava and Chris Crampton are “retired”, as are all partners before them. Perhaps they can afford to do so. Crampton is only 44 years old, but he has spent the past 19 years working for the private equity firm of Boldman Sachs. Kafa is 57 years old and has a stellar real estate investment career at Goldman Sachs. Despite his retirement, Crampton has already secured a new job.

while…

FinTech Bull Case: “Fintech is a relatively young company and today represents only 2% of the market capitalization of public financial services. We believe the recent downturn will separate the winners from the losers.” (Bloomberg)

Coinbase wakes up to a new reality. “Revenues continued to decline for several years – this is a very likely scenario.” (Bloomberg)

Morgan Stanley has prepared layoffs lists. So far, they are mostly in their China related business. (Reuters)

Deloitte has disemboweled eight of the 16 people on its UK executive team. It will add six new and younger people. Only one woman will be from the new people, and two will be from ethnic minorities. (financial times)

David Solomon, CEO of Goldman Sachs, says primary market activity is on a “journey” toward recovery and it is just a matter of asset allocators adjusting to the new reality of slower growth, higher liquidity and tighter liquidity. (Bloomberg)

Goldman Sachs suddenly increased its legal cover from $300 million to $2.3 billion. Nobody knows why. (Bloomberg)

The markets do not force anyone to prostrate before Mammon. As long as there are people who value something other than maximizing wealth, markets will respond to their preferences. (Politico)

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