How Sidney Weinberg Went from Making $3 a Week to Becoming the CEO of a Prestigious Firm
There are few institutions in the world that evoke as strong of a reaction as Goldman Sachs.
To the broader public, their name is synonymous with Wall Street and the mortgage crisis that led to the great recession of 2007–2008. The prestige that was previously associated with their brand become the vehicle of recognition that later brought on widespread criticism.
There was, however, a time in history when they weren’t the giants that they are today. In fact, in the early 20th century, they were a mid-tier trading firm with a quiet reputation.
The name Sidney Weinberg may not ring too many bells today, but in his time, he was a man that commanded great respect. Fortune Magazine called him the “Director’s Director,” and he’s credited with being the force that turned a struggling bank into a lasting institution.
Weinberg has a classic rags-to-riches story. He began his foray into the world of finance as a janitor’s assistant making $3 a week. He left at the top.
Regardless of how you feel about Goldman Sachs, there is quite an interesting story here, and it sheds insight into the process behind breakout results
A Period of Proactive Consistency
Over a long enough timeline, if you stick to almost anything, you will make progress. The results start to build on themselves, and things get easier and easier as you move along. That said, these results aren’t always on the level of magnitude needed to make an impact.
There are many people who show up to do whatever work is needed of them, day in and day out, and still don’t quite get to where they need to be. The problem is that consistency itself can get in the way when it becomes a habit.
The strength of habits is naturally that they’re automated and that they take less effort, but this same strength can also be a weakness. Undeliberate motion isn’t always effective.
According to the prevailing narrative, the way that Sidney Weinberg initially got hired at Goldman Sachs was by simply walking into the building asking if they needed someone.
He didn’t get the answer he was looking for, but he showed up the next morning pretending that he was invited back.
Eventually, with some persistence, he managed to squeeze out that $3 per week job as the janitor’s assistance. From there, he just had to keep going.
Naturally, not every janitor’s assistant makes it to the C-suite, but Weinberg was proactive. He took the opportunity to make a small delivery to the Sachs’ household where he charmed Paul Sachs, a relative of the founders.
When Sachs promoted him to the mailroom, he didn’t just do his job. He reorganized everything to make sure that it was operating at full efficiency.
The difference is subtle. It’s not about consistency alone, but it’s about proactive consistency. It’s about maintaining the habit of showing up, day in and day out, but at the same time doing so in a way that ensures that you are seeking out and capitalizing on hidden opportunities.
It can be easy to get seduced into continuing to do what you’re doing, hoping that you’re moving ahead, but the real progress occurs when you disrupt the habit of consistency.
The Growth Enabled by a Critical Mass
After the work he’d done in the mailroom, Weinberg had established a reputation. Sachs was rewarded for his investment in the young man because of the competence he displayed.
At this point, the track record of his past and the reputation that he had built was doing more to advance his growth than the effort he himself was putting in on a daily basis.
Weinberg didn’t have the typical Ivy League background that most Wall Street traders have. He dropped out of high school at age 13, and he had been in and out of jobs since the age of 10. This meant that he lacked the penmanship required to advance any further.
However, due to what he had accomplished in the time he had worked with the firm, they sent him to Brooklyn’s Browne’s Business College. This is the point where the successes he had already worked to build started to rapidly accumulate to direct his trajectory further.
In nuclear physics, there is a concept known as critical mass, and it occurs when the smallest amount of material needed to sustain a chain reaction is reached. At this stage, rather than forcing a result through work, the process pushes itself forward.
This applies fairly well to our careers and other personal pursuits as well. Sidney Weinberg hit the critical mass point after showing competence in the mailroom. After that, he had existing assets (his reputation) that kept propelling him towards the optimal path.
If you use proactive consistency to build a base layer of long-term assets, then at some point, these assets will start doing the work for you. Once you hit the critical mass point, they will create a self-sustaining process that works with minimal energy and effort.
The unrewarded labor of initial effort pays long-term dividends far later in the process.
A Breakout Caused by the Lollapalooza Effect
For something to be considered a breakout result, by definition, it has to be rare and unique. There is a reason that the average ambitious corporate worker won’t become a CEO or even a C-level executive.
The reason is that it takes more than just one thing to create a large, visible success. Hard work alone isn’t enough, talent alone isn’t enough, and luck alone isn’t enough. Multiple things have to work together to really create improbable outcomes.
In Weinberg’s case, it wasn’t just his work ethic. It took more than that.
His first taste of true responsibility at Goldman Sachs came in 1925 when he was bought a seat on the New York Stock Exchange. He remained a securities trader for two years, until 1927, when he was made partner.
In 1930, in the midst of the firm’s struggle during the great depression, he took over and would remain the senior partner for almost four decades.
Granted, Weinberg did a lot of things right to rise from a janitor’s assistant to become the most respected figure on Wall Street. Still, it was more than just hard and smart work.
Throughout his career, he consistently had Paul Sachs champion him through the ranks, and the timing and the struggles during the great depression worked as a perfect opportunity.
Warren Buffett’s partner at Berkshire Hathaway Charlie Munger calls this the lollapalooza effect. It’s essentially a disproportionately large outcome produced at the intersection of three to four independent but simultaneous factors. They combine to create a huge outcome.
If you want breakout results, you have to plant enough seeds of potential to ensure that you have more than one thing going for you. That’s what ultimately makes the difference.
All You Need to Know
Imitating someone else is a bad way to make an impact. There are too many variables at play for it to work. That said, the underlying patterns of success are worth studying.
Goldman Sachs today isn’t the firm that Sidney Weinberg saved from bankruptcy, but this isn’t really about them. It’s about a real rags-to-riches story, and the very insightful and actionable lessons we can extract from it about the hidden process behind breakout results.
No matter what you’re committed to, it can be hard to identify the right steps while you’re in the process. That’s why it’s valuable to study high-level patterns from the stories of others.
Breakout results aren’t about doing everything right. They’re about doing the right things well.