Morning Coffee: Goldman Sachs wants you to work with it, not for it. The world’s most important investment banking client
Like all the world’s most pumping DJs, David Solomon plays at big corporate events as well as trendy nightclubs. At Amazon’s “re:Invent 2019” conference, though, the most interesting performance that DJ D-Sol gave was not as the mystery bald guy behind the wheels of steel but on a later panel discussion, where - respectably suited - he made some announcements that might affect the future of technology careers at Goldman Sachs.
The Marquee platform, the flagship of Goldman’s sales and trading strategy for the next five years, is going to move onto Amazon Web Services (AWS). Goldman’s reason for doing this is apparently to make the platform attractive to outside developers who might build it into new software products and apps, “building things we couldn’t dream of”. This doesn’t necessarily mean that Goldman is targeting a new customer base, but rather than training staff to deal with proprietary Goldman programming interfaces, clients will be able to recruit existing cloud developers familiar with the standard Amazon API.
It’s a classic trade-off in building a software platform. Ideally, we would guess that Goldman would love to keep control of everything and make sure that clients using Marquee were locked into a proprietary system. But moving it to the public cloud and using industry standard tools makes it easier to grow quickly. It looks like Mr Solomon (or possibly his CIO, the grunge guitarist and Amazon cloud computing veteran, Marco Argenti) have taken a gamble on getting Marquee out there and building market share, locking customers in by becoming the market standard rather than by making them invest in training or hiring Goldman-specific developers.
It also means that Goldman itself might gain some cost flexibility, as moving the system onto the public cloud means that a number of operational and support tasks will now be carried out by Amazon employees rather than Goldman ones. This looks like a strategy that might have been brewing for some time; Goldman has developed a non-exclusive but seemingly preferred relationship with AWS for quite a while now, and presented (without DJ set and sending an MD rather than the CEO) at the same event in 2017. For the immediate future, it looks like the consequence of this will be that cloud developers will still be in demand, but AWS cloud experience might become marginally more valuable.
It’s also worth speculating about what Amazon’s endgame is here, because there has been a regulatory cloud (sorry) on the horizon for a while for this industry. If Goldman wants Marquee to be the market standard trading and financial information platform, and Marquee is going to be on Amazon’s cloud, then … doesn’t that mean that essential financial infrastructure is going to be on the AWS cloud? And aren’t providers of essential financial infrastructure usually regulated pretty closely? Historically, “bigtech” companies have, while making a lot of noise about financial services, tended to fight shy of doing anything that might risk getting them regulated. Amazon might be about to grasp that nettle, and if they do decide to become a financial firm, they’re unlikely to be a small one.
Elsewhere, it seems that the once-wild world of Gulf state investment banking is getting a little calmer and more orderly. Khaldoon al-Mubarak, a senior advisor to the Abu Dhabi royal family and therefore one of the most important banking clients in the world, is profiled in the FT as the Emirate continues to centralise and rationalise its investments, under the umbrella of the gigantic Mubadala sovereign wealth fund. His selling point appears to be that he’s a safe pair of hands who doesn’t court publicity or drive flashy sports cars (like the previous chairman of Abu Dhabi-owned Manchester City football club). He’s also been given opportunities to expand his responsibilities as a result of some state enterprises getting caught up in the fringes of the 1MBD scandal. He’s the ultimate whale of a client – someone who manages a $230bn fund and is likely to have signing authority for multiple nine-figure deals every year is going to stand out. The Gulf State sovereign funds have a certain reputation for making their investment bankers hang around waiting for meetings, but for that kind of client, there's no hurry.
“All equity traders are liars”. It’s a point of view, although in a meeting with two equity traders it might be considered a bit on the rude side. The lawsuit between Bluecrest and two of its former traders (from whom it is trying to claw back bonuses) is hearing evidence from Alex Codrington and Russell Hartley about why they felt they had to leave the fund; as well as that bit of charm, they claim that Michael Platt said the trading business was “crap” and “so depressing he needed Prozac”. The other side of the story will come later this week. (Bloomberg)
If you’re an accountant and you don’t mind a bit of wind and rain (in the winter; the summers are actually quite nice), the Isle of Man is offering a lump sum refund of National Insurance taxes to sweeten the deal (IoM Government)
Bank of America’s Brexit preparations have “consumed days and nights and a few nightmares”, according to Vice Chair Anne Finucane, but apparently she “didn’t want to discuss the subject" further. (Bloomberg)
If you like JP Morgan’s stock recommendations, perhaps you’ll also like their recommendations for musicals, fish cookbooks, museums and vineyard tours. The “#NextList2020” has some interesting ideas, although cynics might question whether Stephen Schwartzman’s autobiography is included purely because it’s such a good book. (Barrons)
Eileen Murray is leaving Bridgewater Associates, “to pursue other opportunities”. This means that David McCormack will now be sole CEO of the firm (founder Ray Dalio is co-CIO). That’s a prospect about which he apparently “expressed dread” earlier in the year. (WSJ)
“People have been predicting consolidation since I was in high school”, according to one head of equity research, and now it’s happening; companies with market cap between $10bn and $100bn have seen their coverage contract by 26% since 2011. (FT)
Nordea has had to go to court in Denmark to establish that it’s allowed to ban its staff from trading Bitcoin. The employees’ union had argued that it was an unwarranted intrusion in their personal lives. (Bloomberg)
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