Goldman's Culture Sets It Apart

NEW YORK (TheStreet) -- Goldman Sachs (GS) seems like such an obvious buy, it makes me wonder if I'm missing something.

I have followed the investment banking industry for more than 10 years, and this company stands so far apart from its competition it is scary.

The much-repeated metaphor about Goldman from Rolling Stone magazine, that bank is "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money," is actually right in a sense. Goldman may be as close to capitalism incarnate as any financial institution out there. Like Google (GOOG), it seems almost to have a life of its own, naturally expanding in profitable areas and shrinking in unprofitable ones.

It is also run in a way that puts the interests of the bank above the individual. Its intense review process, in which it methodically culls underperformers from its ranks every year, is one example of this philosophy at work. Another is the fact that compensation is divided more evenly throughout the bank than at many competing institutions. If the bond desk has a great year, the equities desk will share some of that success, and vice versa. Other banks don't work like that.

Putting the group before the individual also contributes to better risk management. Risk managers at Goldman have more authority relative to star traders or salespeople than they do at other firms. Competitors try to replicate these things, but this is a difficult culture to create overnight: It takes years, and these days, most CEOs don't last very long. Even those that do spend too much time watching their backs to create the kind of lasting culture that endures at Goldman.