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Sidney Weinberg’s Outsider Advantage

Walter Cabot Sydney Weinberg JFK Malcolm Gladwell has a new book coming out on November 18, 2008 called Outliers: The Story of Success. From his website:

“Outlier” is a scientific term to describe things or phenomena that lie outside normal experience. In the summer, in Paris, we expect most days to be somewhere between warm and very hot. But imagine if you had a day in the middle of August where the temperature fell below freezing. That day would be outlier. And while we have a very good understanding of why summer days in Paris are warm or hot, we know a good deal less about why a summer day in Paris might be freezing cold. In this book I’m interested in people who are outliers—in men and women who, for one reason or another, are so accomplished and so extraordinary and so outside of ordinary experience that they are as puzzling to the rest of us as a cold day in August.

In the November 11, 2008 Annals of Business column in The New Yorker, Gladwell wrote an interesting article about Sidney Weinberg, the classic outlier who lead Goldman Sachs from near bankruptcy to financial powerhouse. The Uses of Adversity – Can underprivileged outsiders have an advantage?

Sidney Weinberg was born in 1891, one of eleven children of Pincus Weinberg, a struggling Polish-born liquor wholesaler and bootlegger in Brooklyn. Sidney was short, a “Kewpie doll,” as the New Yorker writer E. J. Kahn, Jr., described him, “in constant danger of being swallowed whole by executive-size chairs.” He pronounced his name “Wine-boig.” He left school at fifteen. He had scars on his back from knife fights in his preteen days, when he sold evening newspapers at the Hamilton Avenue terminus of the Manhattan-Brooklyn ferry.

At sixteen, he made a visit to Wall Street, keeping an eye out for a “nice-looking, tall building,” as he later recalled. He picked 43 Exchange Place, where he started at the top floor and worked his way down, asking at every office, “Want a boy?” By the end of the day, he had reached the third-floor offices of a small brokerage house. There were no openings. He returned to the brokerage house the next morning. He lied that he was told to come back, and bluffed himself into a job assisting the janitor, for three dollars a week. The small brokerage house was Goldman Sachs.

Weinberg stepped into a leadership position at Goldman soon after the 1929 stock market crash and held it until his death in 1969. He was never considered a financial wizard but rather was an astute social operator. He provided counsel to Presidents and sat on the board of dozens of major American corporations.

But Weinberg wasn’t Yale. He was P.S. 13. Nor did he try to pretend that he was an insider. He did the opposite. “You’ll have to make that plainer,” he would say. “I’m just a dumb, uneducated kid from Brooklyn.” He bought a modest house in Scarsdale in the nineteen-twenties, and lived there the rest of his life. He took the subway. He may have worked closely with the White House, but this was the Roosevelt White House, in the nineteen-thirties, at a time when none of the Old Guard on Wall Street were New Dealers. Weinberg would talk about his public school as if it were Princeton, and as a joke he would buy up Phi Beta Kappa keys from pawnshops and hand them out to visitors like party favors. His savvy was such that Roosevelt wanted to make him Ambassador to the Soviet Union, and his grasp of the intricacies of Wall Street was so shrewd that his phone never stopped ringing. But as often as he could he reminded his peers that he was from the other side of the tracks.

At one board meeting, Ellis writes, “a long presentation was being made that was overloaded with dull, detailed statistics. Number after number was read off. When the droning presenter finally paused for breath, Weinberg jumped up, waving his papers in mock triumph, to call out ‘Bingo!’ ” The immigrant’s best strategy, in the famous adage, is to think Yiddish and dress British. Weinberg thought British and dressed Yiddish.

Weinberg exploited his outlier advantage to it’s fullest. Gladwell tells the story of a CEO retreat hosted by Averell Harriman in Sun Valley where Weinberg, who had never skied before accepted a bet to go down the steepest and longest trail on the mountain. It might has taken him half a day and lots of bumps and bruises to do it, but he did.

Here you have the Waspy élite of corporate America, off in their mountain idyll, subjecting the little Jew from Brooklyn to a bit of boarding-school hazing. (In a reminder of the anti-Semitism permeating Weinberg’s world, Ellis tells us that, in the Depression, Manufacturers Trust, a predominantly Jewish company, had to agree to install a Gentile as C.E.O. as a condition of being rescued by a coalition of banks.) It is also possible, though, to read that story as highlighting the determination of the Brooklyn kid who’ll be damned if he’s going to let himself lose a bet to those smirking C.E.O.s. One imagines that Weinberg told that tale the first way to his wife, and the second way to his buddies in the Biltmore steam room. And when he tried to get out of bed the next morning it probably occurred to him that sometimes being humiliated provides a pretty good opportunity to show a lodge full of potential clients that you would ski down a mountain for them.

Gladwell is a great storyteller and like all of his writing this piece is entertaining. While a bit along, the article is an interesting and worthwhile read for all students of leadership.

Another interesting profile written back in 1958 for Time magazine: Everybody’s Broker Sidney Weinberg

About the author

Peter A. Mello, Founder/Editor Founder of Weekly Leader and Sea-Fever Consulting, LLC, a leadership development and strategic communications consultancy. Previously, CEO of an international nonprofit organization and COO of a national insurance/risk management services firm. Peter has been leading people and managing organizations for over 30 years, writes a leadership column for MarineNews magazine and blogs about maritime culture at Sea-Fever. Follow him on Twitter.

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