John Waldron COO Of Goldman Sachs: Not Nervous About IPO Market

John Waldron COO Of Goldman Sachs: Not Nervous About IPO Market
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The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Goldman Sachs COO John Waldron and CNBC’s Wilfred Frost which aired on CNBC’s “Closing Bell” (M-F 3PM – 5PM) today, Tuesday, December 10th. The interview took place live at Goldman Sachs’ annual Financial Services Conference. The following is a link to video of the interview on

Full interview with Goldman Sachs COO John Waldron

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MORGAN BRENNAN: Our Wilfred Frost joins us now from the Goldman Sachs’ annual Financial Services Conference of New York. Hey Wilf.

WILFRED FROST: Hey, Morgan. Yes, indeed. I’m delighted to be with the host of the conference, no less, as well. The President and COO of Goldman Sachs, John Waldron. John, thank you so much for having me.

JOHN WALDRON: Thank you for being here. Thank you for covering our conference.

WILFRED FROST: It’s great to be here, as it always is. End of the year, people sort of setting out their expectations for the year. What would have been the key themes for you so far from all the banks we’ve heard from?

JOHN WALDRON: Well, a lot of discussion about economy and the consumer in particular. The strength -- the underlying strength in the consumer is showing through. And you’re hearing people talk about it a lot today. Regulation. And the election. The prospects of whether there might be some shift in the regulatory environment, which obviously affects banks meaningfully. And then, I would say an incremental conversation this year may be more pronounced before than around technology. The impact of technology, the amount of technology spend, where are we in the disruptive phase of financial services more broadly—that’s become more of a prominent theme that we think about at Goldman Sachs quite a lot and that’s certainly been a focus today with our clients.

WILFRED FROST: We’ll definitely dive into what you guys are doing on that front, coming up. In terms of the macro sentiment, is the consumer strong enough to be offsetting perhaps less lackluster -- a little bit more lackluster kind of corporate momentum?

JOHN WALDRON: We’re pretty constructive on the overall economy. Certainly, in the United States in particular, the economy feels, if anything, like it might be accelerating again from what had been more of a patchy 2019, certainly in the first half. I do think that the Fed’s easing bias has made a big impact. Our financial conditions index is operating at a very relatively historic low level. So, we’re seeing that implication of easier policy coming through to the economy. And it’s become much more of a stimulant for particularly consumers, but corporations, as well. Manufacturing weaker, no question. But again, 70% of the U.S. economy is really driven by the consumer. So, as goes the consumer, typically, that’s where the economy runs.

WILFRED FROST: And on the corporate side, we did see all of a sudden, some M&A announced last month. Did you guys take part in that? And are you optimistic that can continue next year? Or is it kind of a last flurry, as it were, for 2019?

JOHN WALDRON: Well, I think again, consistent with an easing by us in monetary policy, it renewed risk appetite in the market, I think it improved sentiment in CEO offices and in boardrooms. We’re seeing more M&A activity. And it’s kind of the – what you would expect at this point. Our market shares are very good in M&A. We did participant in the vast majority of those transactions. And we have more transactions that are on the docket. We feel good about where we are with our backlogs and I think the activity levels have definitely evaluated from where they would have been 30 to 60 days ago.

WILFRED FROST: And what about the IPO outlook? Has that been genuinely damaged by the whole WeWork debacle?

JOHN WALDRON: No, I don’t think. I think the IPO market is still fundamentally healthy. You know, you have individual transactions that come and go – their own characteristics. But broadly speaking, there’s demand for IPOs and there’s a lot of supply coming. A number of good companies. We’re doing an IPO today in Brazil that’s going very well. So, you know, I think the market is doing quite well.

WILFRED FROST: To focus more on Goldman Sachs, you guys have a very important strategy update coming in January. How are you guys all preparing for that?

JOHN WALDRON: Well, we spent the better part of the year getting ourselves organized, not just for the Investor Day, but for orienting the firm really for growth. And so, when we come out in January, we’ll talk a bunch about that. We’ll talk about our strategy. We’ll talk about the direction of travel in terms of our investing and what we’re doing to build new businesses adjacent to our core franchises in some new businesses like consumer, which are more new builds for us from the ground up. And we will have targets, you know, around profitability and efficiency. And so, we’ll talk more about that in January. But we’re excited about it.

WILFRED FROST: So, the FT article recently that suggested you’re not going to be setting strict financial targets. I’d say the tone even suggested that you were going to try to duck out in that sense. Was that a false sentiment?

JOHN WALDRON: I’ve learned in this job, you can’t believe everything you read or hear on TV, sometimes.


JOHN WALDRON: --Unless they’re on your show. But I wouldn’t believe everything you read in any of the publications. What I said is what you should expect to hear.

WILFRED FROST: And do David, Stephen, yourself, do you see this strategy update, and of course with the investor reaction to it, do you see it as a kind of mark on your guys’ first year in tenure? Is there a sense of nerves at all coming into this update?

JOHN WALDRON: No, I don’t think so. We’re excited, because it’s an opportunity for us to describe in more detailed terms what we’re trying to achieve with the firm over a long period of time. And I think the over a long period of time part is going to be important. We really want to lay out a road map for what where we’re trying to go over a number of years. And that’s something that will be a little bit different from things we’ve done in years past. And we’re looking forward to that.

WILFRED FROST: One of the themes people that I guess have heard a little bit about but maybe not a full story about is how much you want to shift towards the kind of private equity space. You’ve reorganized internally to have a specific department to that. In five years’ time, is that going to be 2% of earnings, is it going to be 25% of earnings?

JOHN WALDRON: Well, I don’t want to make a prediction on how big it will be, but I would say a couple of things. We have a 30-year track record as an investor in private asset classes: private equity, credit, real estate, etcetera. So, we have a real business that’s scaled. We haven’t necessarily described it as such in more unified terms, which we will do more -- in a more detail in January. We think it’s a secular growth opportunity in the world. You can see how hard it is to create alpha in the public markets.

More money is flowing into private markets. As I said, we have a long track record, so we’re very bullish on the opportunity and we have a scaled business. So, we’re going to be an active player in that arena and we’re going to describe it in more detail as we get into in January.

WILFRED FROST: Are you nervous about the timing of that in any way? Whether that’s because of issues like WeWork showing that private market valuations in some areas, at least, might have peaked already, and on top of that, we’ve seen price wars in active management to public equities in the brokers as well. Could private equity not be the next area to see a price war?

JOHN WALDRON: Again, we’re not making a market call on being in the alternative business. This is a long-term bet that we’re making that this is a secular growth opportunity and we have a reason for being. We have unique attributes. We have a very big sourcing engine in our investment banking business, which lots of our clients want to access. And we have our own private equity and credit and real estate opportunities to access that as well in partnership with our clients. We also have a unique ability, I think, to talk to our institutional clients about risk management, allocation of capital. And we can offer them products that can help them do that in a more intelligent manner. So, we think we bring a lot of unique things to the table. And we’re very excited about the opportunity to build an even bigger alternatives business overtime.

WILFRED FROST: You mentioned the spend on tech is a theme that’s come out of the conference. And we’ve seen that play out recently in a subsector in the brokers. Robinhood enters, leads to price war, and then leads to some consolidation amongst the big players, Schwab and TD Ameritrade announcing a deal. Do you think of Goldman Sachs as a tech challenger or as the incumbent being challenged?

JOHN WALDRON: Well, that’s a good question. I think we probably sit in both seats. You know, we have a lot of legacy business where you can see some challenge to legacy ways of doing business. And we have some businesses that would be more disruptive. I would say what we’re doing in the consumer arena would probably tend to be more disruptive. We’re trying to build a digital storefront, a digital bank of the future. That’s more disruptive versus what would be the legacy infrastructure in consumer.

In the markets businesses, we’re trying to be ahead of the curve, almost disrupting ourselves in many respects, to have straight through processing and other platform capability. When you move from more voice, legacy, transmission of risk intermission into more platform and technology. So, in that case, we’re probably trying to make sure we’re disrupting ourselves so we’re not getting disrupted by others. And on the consumer side, we’re more of a disruptor. I’d say in transaction banking, it’s a combination of the two. We’re building a new platform. It will be disruptive.

We think it will be a great product. We think it will be an improvement on what’s in the market place. But we’re also taking advantage of legacy existing corporate relationships that are quite strong and important in a trusted advisory context, where we can offer something else that’s a part of our tool kit that will be valuable to  our clients.

WILFRED FROST: That broker price war obviously led to some suppressed prices and the Schwab/TD deal came about partly because of that. Some people criticize your predecessor, the leadership that came before you and David, for not making more moves when prices were depressed after the crisis, not being inquisitive then. Have you sensed any opportunities at the moment? People have tried to link Goldman Sachs to eTrade, for example.

JOHN WALDRON: Well, we’re not going to comment on individual names. But, we did make an acquisition in the wealth space recently, a company called United Capital, which is an RIA, a national platform in the United States that’s got a very good kind of high-net-worth wealth platform that we’re going to build upon. So, when we see opportunities that allow us to accelerate our existing organic plans, we’re going to look hard and want to access those opportunities. But the bar for doing something more transformational, or over larger scale, is very, very high. And will continue to be so.

WILFRED FROST: Let’s move on to the Apple Card, in partnership with you guys. David said on the recent earnings call, which I discussed with him when I interviewed him recently, that it was the most successful credit card launch ever. The numbers may say that. I wonder whether you guys retract at least part of that sentiment given the scandal that came up about potential gender bias in terms of the credit issuing decisions. Was that a blow?

JOHN WALDRON: Well, the way I think about this is, we’re starting a new business. It’s in partnership with Apple. It’s the first real credit card launch in a long time. And it’s going well. We’ve got a lot of new customers, the usage rates are very high. We’re feeling very good about how the processing is working. The tech platform works very, very well. Apple is a great partner.

There’s a lot to be very, very pleased about, and we’ll talk more about that in the coming weeks and months ahead. Vis-a-vis, the gender question that you asked around the credit approval process. We’re very comfortable there’s no gender bias in our approval process. It’s quite easy to go look at that. You can look at it on the phone in terms of what the factors are that drive the approval process. There’s no gender.

There’s no marital status. So, we don’t believe there’s any gender issue at all. We do think we may be have an ability to go talk to the world about the fact that it might be harder for women, as an example, to get credit. And so, we may be shining a spotlight a little bit on that, which I think is a good thing to be talking about in the world. But we don’t believe there are any biases in our processes.

WILFRED FROST: In terms of the card itself, Apple announced today that you can buy an iPhone spread over 24-month installments with no interest if you use the Goldman Sachs Apple Card. So, is that -- you have to forego the interest or Apple compensates you for that? Talk us through that.

JOHN WALDRON: Well, I don’t want to talk about our economic relationship with Apple. But it’s another example of where we’re trying to be innovative and help the consumer. The whole basis under which we’re doing this Apple Card, with Apple as our partner, is simplicity, ease of use, transparency, and trying to be sort of democratize, if you will, financial wellness out in the world. And Apple is a great partner for that. First of all, they’ve got a lot of great customers on the phone. And so, it’s very easy to access those customers. And we’re trying to mimic a lot of what Apple does well anyway, which is to be very simple and easy to use and allow people to have tools at their disposal and make their life better.

WILFRED FROST: I want to ask about 1MDB. On the earnings call, Stephen Scherr said that during the quarter, we elected to suspend our open market repurchases as we’ve begun discussions with certain U.S. market authorities with respect to the resolution of the 1MDB matter. Since then, last week and just the week before, both the U.S. and Malaysian sides have seen stories suggest that they’re close to a settlement. And they have not come out to outright deny those stories. So, I feel like there’s a sense in the market that you guys are very close to a settlement. Is this something that will be done in Q1?

JOHN WALDRON: Very hard to predict the timing of any of this. All I can say is that we are working to try to solve this as expeditiously as possible. We don’t control the outcome obviously. We’re one party. We have a number of people to talk to. And that’s really all I can say. We’re working as hard as we can to try to get it resolved sensibly.

WILFRED FROST: Do you feel like it’s suppressing the share price if people say it’s been trading at or below price-to-book value? Do you think settlement of this is something that would see it go back above that threshold?

JOHN WALDRON: I wouldn’t say we’re really particularly focused on the impact it has or doesn’t have on our share price at the moment. We would like to get it settled, we would like to get it resolved, we would like to get focused on, you know, all the other good things we’re working on. And that’s where we would like to be spending our time and energy.

WILFRED FROST: Final question, John, which I think lots of people genuinely are really interested in. We all know that David enjoys some downtime DJing. What’s your number one hobby outside of work?

JOHN WALDRON: My number one hobby is I have six children. And so, they are my number one hobby. I coach my son’s hockey team and I spend a lot of time with my daughter and her travel soccer team and that occupies most of my time. So, I’m not spending much time doing much else other than working at Goldman Sachs and spending time with my family.

WILFRED FROST: Well, that hobby is much more important than the job, but it’s great to discuss the job with you. Thanks for having us at the conference.

JOHN WALDRON: Appreciate the time. Thank you.

WILFRED FROST: Great to see you, as always.


WILFRED FROST: Guys, I’ll send it back to you at the Stock Exchange.

Updated on

Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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