Goldman’s Facebook Naysayer: Spoilsport, or Smart?


Goldman Sachs’s decision to put $450 million into a Facebook investment vehicle is being widely praised inside the firm — where partners are lining up to get a piece of the action — and by grubby armchair quarterbacks who admire them for their ballsiness in charging their clients a stiff 4 percent investment fee and their willingness to brush up close to the SEC’s line of decency. True to form, the firm has been dead quiet on the subject of their big deal and hasn’t even put out a statement, preferring, we assume, just to bask in its own awesomeness. Goldman: Everyone wants to be them or fuck them! But within the firm, it seems not everyone is so impressed. Like Richard Friedman, the head of Goldman Sachs Capital Partners, who was given the opportunity to invest using the pension and sovereign wealth fund money he manages and turned it down. According to the Times, Friedman, a “longtime partner” at the firm

decided the Facebook deal was not suitable for his clients, in part owing to the high valuation and to a mismatch with his investment criteria. The $450 million investment values the Web company at $50 billion. After Goldman’s deal, some industry experts cautioned that Facebook’s growth would need to accelerate rapidly over the next couple of years to justify such a steep price — a risk with many brand-name technology upstarts. One person briefed on the discussions with Mr. Friedman, however, said he would have “thrown out” his typical investment philosophy if he had believed a Facebook investment was an “easy home run.”

Buzz. Kill.

Buzz. Kill.

But is the “longtime partner” [Let’s just say it: old] just an old-fashioned spoilsport with an uncool aversion to risk? Who will probably one day be forced to admit he missed out on the Next Big Thing? Who probably still listens to CDs? Or is he a soothsayer who sees a tech bubble and is wisely, like those at the firm who saved their asses by betting against the housing market, opting out early? Either way, Rich is apparently none too popular at the office today. Going out of your way to protect your clients when you could reap giant fees is just so un-Goldman.

A Goldman Unit Is Said to Have Rejected Facebook [DealBook/NYT]