Henry Paulson turns career adviser at U. of C.

Former U.S. Treasury Secretary and Goldman Sachs CEO adds career coach to resume

Former U.S. Treasury Secretary and former Goldman Sachs CEO Henry Paulson worked as a career coach Friday for University of Chicago MBA students.

He started with the rather unhelpful, yet charming, anecdote about setting off for Dartmouth College and telling his family he hoped to become a forest ranger someday.

"I never had the ambition early on to be the CEO of a major company," Paulson said as he stood next to the lectern in the Booth business school's downtown facility. He wore a lapel microphone, making the speech take on the feel of a fireside chat. "Maybe if I had had that ambition, I never would have achieved it because I would have tried to do all sorts of things to position myself."

Paulson, 66, now a senior fellow at the U. of C.'s Harris School of Public Policy, described his three or four economics courses at Dartmouth College as "not for me" and said he aspired to study English at Oxford University after graduation.

"But this was 1968; it was the middle of the Vietnam War, and I had a very low draft number," Paulson said. "I remember I applied for ROTC at Harvard. And my mother, who I had very seldom seen cry, almost never, cried because I was going to go into the Army. She said, 'Do the Navy. You're less apt to get shot in the Navy.' I took her advice and was accepted into the Navy ROTC. ... Back in 1968, if you were a good student, you didn't go to business school. You went into law or got a master's in English. And at the time I made the decision, the only school I could get into was Harvard Business School."

That prompted laughter. After business school, he got an occupational deferment from the Navy and joined the U.S. Department of Defense. His last assignment was the 1971 bailout of Lockheed Aircraft, then the nation's biggest defense contractor.

"I was the one guy in the Pentagon who knew how to do financials," Paulson said.

About six weeks before the Watergate break-in, he got a job at the White House, where he was quickly promoted to liaison to the Treasury Department.

"When it came time for me to leave, I had a whole different view, and I thought maybe I should talk to investment bankers," Paulson said. "I like multi-tasking. I like providing advice. I like working on good projects. ... Again, to make a very, very long story short, I chose Goldman Sachs. It ranked eighth or 10th at the time in almost every major category. In those days, if you were a really good business school student, you wanted to get a job at Morgan Stanley or First Boston."

The deciding factor: Goldman promised Paulson, who grew up in Barrington, that he would never have to move to New York. And he traveled eagerly to all of the places the New Yorkers didn't want travel to: Caterpillar in Peoria, Archer Daniels Midland in Decatur and the Upjohn pharmaceuticals company in Kalamazoo, Mich.

"Again, when I was promoted to partner, I didn't ask to manage anything. My boss came to me and said, 'I think maybe you should run the (Midwest) region,'" Paulson said. "I turned down two or three promotions to go to New York."

Goldman then asked him to co-head the investment banking division from Chicago and start a private equity business for the firm. He said the reason he stayed was he got to develop Goldman's business in China.

"Again, a lot of that was serendipitous," Paulson said. "I was co-heads with the guy in New York. He wanted Europe. We had no business in Asia to speak of, only three or four guys in Hong Kong. He said, 'Hank, why don't I take Europe? New York's closer to Europe. Chicago's closer to Asia.'" (Paulson is now working on a book about China.)

He said he turned down the offer to become George W. Bush's Treasury secretary three times. He said then-Goldman Sachs board member and former Sara Lee CEO John Bryan persuaded him to accept.

"I had all kinds of reasons" to say no, Paulson said. "There was 21/2 years left with a president who had a 28 percent approval rating. And my wife and my mother and my kids weren't fans of his, to say the least. ... And I couldn't think of many people who had gone to Washington and left with a higher reputation than they came in with. As soon as I recognized (it was fear holding me back), I said, I'm going to take the plunge."

He advised the students to focus on the project at hand rather than their long-term ambitions.

"People would always come to me and say, 'Hank, is it private equity or trading? Do you think I should be in London or China?'" he said. "Well, as they got older in their career, I told them where I thought they should be and where I wanted them. But early on, I'd be saying, 'Well, what do you mean? What is it that you enjoy? What is it that you do well?' Now I've talked to a fair number of CEOs, and, boy, they knew they wanted to be a CEO. They knew it from Day One, and they planned for it. If I had planned for it from Day One, I guarantee you, it wouldn't have worked. I would have been too blatant."

Melissa Harris can be reached at mmharris@tribune.com or 312-222-4582. Twitter @chiconfidential

Abridged Q&A with students

Q: What is the biggest difference between the private and public sectors?

A: Skill sets are the same as are all of the leadership skills, communications skills. But public sector jobs are more difficult. ... I thought (the public sector) was the best training available.

Q: What leadership quality is the most important prerequisite to leading a corporation?

A: Before I became a CEO, I had almost 25 years advising CEOs ... And in order to succeed, every one of them had to have the right people in the right seats. They had to be self-aware, play to their strengths, understand their weaknesses and have a management team around them that complements their strengths and compensates for their weakness. If they don't, these big jobs are so demanding they always uncover your weakness and you fail.

Q: How did you balance (interests) when shareholders or the public disagreed with you?

A: At Goldman Sachs, what I did was, I got a big group, 10 or 12 people, and knocked things around. My predecessor told me that one way to get in trouble was to feel so strongly about something that you want to go off by yourself and make a decision. ... But when you're sitting around making a decision in a real crisis, you don't worry about public criticism or what shareholders might say. ... The one thing you're focused on is how do you prevent disaster. So there, what you need to do, is you always need to weigh the trade-off of making an imperfect decision with what happens if you do nothing.

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