How Goldman Sachs Found a Friend in America’s Small Businesses
By Charley Grant, Sept. 20, 2022, WSJ
Thousands of entrepreneurs packed into a ballroom at a conference center just outside of Washington this summer to hear from the likes of Warren Buffett and Gwyneth Paltrow. Sens. Kyrsten Sinema (D., Ariz.) and Tim Scott (R., S.C.) joined panel discussions.
Their host: Goldman Sachs Group Inc.
John Rogers, a top Goldman executive, addressed the audience. “When I look out in this room and see all of you, I see America,” he said. The crowd roared.
Goldman earns billions of dollars a year advising moguls and giant corporations. Behind the scenes, small-business owners are getting its gold-plated services free.
Since 2009, Goldman has handpicked over a thousand business owners annually for a monthslong crash course in entrepreneurship. It helps them secure loans from community banks and meetings with lawmakers. Goldman says it hosted about 400 meetings with lawmakers at its summer confab.
It is all part of the bank’s 10,000 Small Businesses program, an idea Goldman executives dreamed up in the depths of the financial crisis. Accusations that the bank misled investors to profit on the housing market’s collapse had badly tarnished its reputation. What better way to repair it, the thinking went, than to team up with America’s most-respected institutions: small businesses?
It was a savvy move. In a Gallup survey measuring confidence in U.S. institutions earlier this year, 68% of respondents said they had a favorable opinion of small businesses. That is higher than any other group, including the U.S. military. Just 27% of respondents had a favorable opinion of banks.
Business owners who have gone through the program say Goldman has helped them grow their companies and forge connections in Washington. Lawmakers get Goldman’s help connecting with some of their most politically engaged constituents. Some 90% of program participants plan to vote in November’s midterm elections, a recent survey found.
For Goldman, the benefit is subtle, but valuable: In serving as the bridge between lawmakers and their local businesses, the Wall Street firm gets to exercise a kind of soft power on Main Street. And what is good for Main Street is good for big banks like Goldman, which rise and fall with the health of the broader economy.
“Driving inclusive economic growth starts with supporting small businesses,” Asahi Pompey, a Goldman partner who oversees the program, said in an interview. Small businesses, she noted, account for about half of total private-sector employment in the U.S.
Goldman has spent about $750 million on the program in total. Some 13,000 business owners have graduated since its inception, and the bank has set a goal of reaching 20,000 alumni. The program runs in 19 locations around the U.S., and it recently expanded to France and the U.K.
When Jessica Johnson-Cope took over her family’s 16-employee security-services business in Bronx, N.Y., from her father in 2008, revenue had dwindled to a fraction of its prior highs. She heard about the Goldman program from a friend, applied and was accepted into its inaugural class.
The program gave her more confidence to negotiate effectively and successfully apply for government contracts, among other skills, Ms. Johnson-Cope said. Today, Johnson Security Bureau has more than 150 employees.
“Being an entrepreneur is a lonely trip for many people,” said Ms. Johnson-Cope, who serves as chair of the program’s national-advocacy wing. “When you feel seen and heard, that makes a tremendous difference.”
More than 70% of program graduates report an increase in their revenue 30 months after graduation, according to Goldman. More than half have hired additional employees over the same period. Nearly 40% of graduates are minorities, compared with 17% of business owners nationally, Goldman said.
A collection of 32 current program participants recently filled a community-college classroom in Queens, N.Y., to hear about the importance of setting a long-term vision, among other topics. They hailed from a range of businesses—mental-health care, hospitality, chemical supply, cosmetics and hair care.
“We are not in the present. We are thinking about what’s going to happen tomorrow,” an instructor said. “Let employees and managers figure out today, but we are in another space.”
David Simnick, 34, who co-owns several consumer product brands, credited Goldman with helping him establish a long-term vision for his business. When he first started making soap out of his kitchen right after college with some of his friends, his business was “failing forward.”
“Awful packaging, terrible price point, worst go-to-market strategy. We were 22 years old!” he recalled. Mr. Simnick, who lives in Washington, D.C., said revenue has surged since he graduated from the program in 2015.