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Chapter 1-6

ORGS 2010 Chapter Notes - Chapter 1-6: Organizational Culture, John Gutfreund, Money Supply

Organization Studies
Course Code
ORGS 2010
Marshall Walker

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Chapter 1: Liar's Poker
Michael witnessed a classic bluff and re-bluff between John Gutfreund (chairman of Salomon Brothers) and
John Meriwether (board member + bond trader). Gutfreund challenged Meriwether to "One million dollars. No
tears", to which Meriwether replied, after seconds of thought, "No, I'd rather play for real money. Ten million
dollars. No Tears!"
Chapter 2: Never Mention Money
Michael landed a job at Salomon Brothers through a chance encounter with two wives of Salomon MDs
(managing directors) in 1984. He reflects on his previous job hunting experience after getting his undergrad
degree 2 years earlier. Everyone wanted to work for Wall Street, and investment banking was a hot career.
Michael interviewed with Lehman and failed to get the job. Ironically, "I'm in it for the money" is not a good
reason to want a job on Wall Street.
Chapter 3: Learning to Love Your Corporate Culture
Salomon Brothers traded equities and bonds, but mainly the latter. The bond market exploded in the 80's due
to two events:
1. The Fed announced that the money supply would be fixed, and interest rates would float.
2. America borrowed money at a faster pace in the 80s than ever before, from $323 billion in 1977 to 7
trillion in 1985.
The first year at Salomon is the training program. Class is segregated into first row (serious types, geeky) and
back row (aloof, mischievous). Trainees sometimes abuse each other, but traders on the 41st floor abuse the
trainees at will.
Chapter 4: Adult Education
The class involves lectures from various MDs and speeches given by upper management. Most were there to
gloat about themselves and looking for ego-boosts. Rarely anything useful came out of these classes.
Memorable speakers included:
The Human Piranha - Perfect example of the fuckspeak culture on the trading floor.
Sangroid - cold and intimidating, made a point that every trainee must live and breathe the financial world.
Richard O'Grady - a young trader who started at Salomon as a lawyer. He told true, personal stories of
various abuses at Salomon. Once walked out on an interview with the company but came back a year
Everyone wanted to be in the mortgage bond department because that is where the money is at, and no one
wanted to be in equities. "Equity in Dallas" became the lowest of the low for a trainee to end up in.
Discussion Questions:
1. Chapters 3 and 4 describe the Salomon Brothers training programme. What was the purpose
of this training programme?
The purpose of the training program was to equip the new trainess and show them the
ropes of Salomon Brothers.
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