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 Solomon’s Dilemma, LPJ vs. Chamath, and the Bitcoin Bubble
Welcome back to The Daily Courant. We know that you’re all here lusting after Dylan Byers‘ fresh reporting on the Jeff Zucker scandal. We are publishing it later tonight. Sign up here to get it sent right to your inbox.
Meanwhile, we lead with Bill Cohan‘s brilliant assessment of how Goldman Sachs, the most prestigious bank on Wall Street, became smaller than its peers—and what it can do to regain its throne. Speaking of Bill, Inner Circle members can join him and Baratunde Thurston tomorrow at 4 p.m. ET for an off-the-record conversation about the future of crypto and NFTs. Upgrade your membership or drop a line to [email protected] if you’re not already on the list.
Plus, below the fold, catch up on Teddy Schleifer‘s definitive power ranking of Laurene Powell Jobs versus Chamath Palihapitiya in the Silicon Valley donor-industrial complex. You might find your name in the honorable mentions.
How the most prestigious bank on Wall Street became smaller than JPMorgan Chase, Morgan Stanley, and Citi. And the M&A deals that could put it back on top. Back in May 1999, Goldman Sachs went public to great fanfare after years of internal debate among its partners about the wisdom of such a step. The top brass had been utterly devoted to the idea of remaining a private partnership, but they quickly got with the program, especially after the top top partners figured they were suddenly going to be worth hundreds of millions of dollars each after the I.P.O. That point was further driven home after the first day of trading, when the Goldman stock increased by some 30 percent.
Abracadabra, Goldman Sachs was worth more than $30 billion, and was trading at nearly five times its book value. It was the most feared and revered investment bank in the world and its high multiple of book value reflected the esteem in which investors held the firm and its ability to make money hand over fist, regardless of market conditions.
Nearly 23 years later, however, Goldman trades for around 1.1x its book value, below that of its two principal competitors: JPMorgan Chase, which trades at 1.7x its book value, and Morgan Stanley, which trades at nearly 1.9x its book value. At around $120 billion, Goldman’s market value is also significantly below its big competitors. JPMorgan Chase is valued around $440 billion; Morgan Stanley is valued at $185 billion, some 53 percent more than Goldman. Bank of America, which bought Merrill Lynch during the 2008 financial criss, has a market value of $380 billion. Even the much diminished Citigroup has a market value of $130 billion, some $10 billion more than Goldman’s.
Goldman still oozes prestige on Wall Street. Year after year, it retains its crown as the go-to M&A adviser—a considerable achievement—and it is always a leading underwriter of debt and equity securities. It is still harder to get a job at Goldman Sachs than it is to get into Harvard. But…
FOUR STORIES WE’RE TALKING ABOUT 
An outbreak of 9-figure deals is fueling a new arms race—and serious FOMO from producers like me.
DAVID T. FRIENDLY 
A potentially definitive, highly unscientific analysis of who has the most political juice right now in Silicon Valley.
TEDDY SCHLEIFER 
Hollywood’s new and diminished definition of success is perhaps the most difficult and debated question of the streaming era.
MATT BELLONI 
For so much of U.S. history., Black people were not allowed to build wealth. Is Bitcoin the solution, or just another false promise?
BARATUNDE THURSTON
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