All Capital Locked Inside the Ship

“Our futures, as well as the success of the firm, were intertwined. Billy Salomon had wisely structured a unique compensation system. Salaries were actually quite low,4 but at the end of the year Salomon Brothers would distribute bonuses, based on how the firm as a whole had performed. However, we could draw only 5 percent of our capital, which meant the bonus money was invested with the firm. Consequently, the fate of the partners was directly linked to the success of Salomon Brothers, which fostered a clannish connection within that boiling cauldron of activity. It was understood that apart from our homes, insurance policies, and bank accounts, we didn’t have interests separate from the firm’s and we didn’t make investments outside the firm. All for one, one for all.”

“We used to play a game called “Liar’s Poker.” The game consists of a group of people, each holding a dollar bill close to his chest, and trying to bluff and call the bluffs of the others in guessing the serial numbers. The object is to psyche out your opponents, and to avoid being psyched out. We were professional gamblers; and Liar’s Poker, as well as other games of chance, fit in perfectly with our corporate culture.”