Tag Archives: finance

Description of Common Business School Classes

Pretty accurate description of Business School classes according to Jacob (via www.flailfast.com).

Andy

—–

Microeconomics: Taught by a professor supremely confident in their understanding of the world. Typically proven wrong every 10 years, but never in the classroom.

Macroeconomics: Taught by a professor supremely unsure in their understanding of the world. Typically proven wrong every 10 minutes, usually in the classroom.

Accounting: Criminally boring but universally regarded as important. Appeals to the perfectionist who demands compliance in their business dealings. Or the maverick who exploits accounting’s mile-wide holes. Both will likely be indicted in some sort of accounting fraud in the future, thanks to Sarbanes-Oxley, making the entire idea of becoming an accounting expert a lose-lose proposition.

Financial Markets: Where Microeconomics and Macroeconomics are distilled into supposedly practical “real-world knowledge.” A key example of the course’s pragmatism is the “Efficient Market Hypothesis,” an idea most elegantly proven wrong by the fact that a professor is paid $200,000 a year to teach it (a gross market inefficiency).

Human Resources: In this class you’ll learn how to dehumanize people as resources through the use of rewards and punishments. Outside of Financial Markets, the most efficient way to lose your soul.

Organizational Behavior: Ostensibly the study of advanced psychological techniques to bend large groups to your will, you wind up spending most of your time playing with legos, blocks, and fingerpaint to teach “team building” amongst adults. Colloquially called “Kindergarten Pro.” Strangely one of the most accurate representations of team building in modern business.

Operations: You learn how things are built but never how to build anything. You’ll discover concepts like “bottlenecks” and “critical paths” and spend weeks on “Six-Sigma Operations,” an idea popularized by Japanese automakers who were really, really consistent, by some arbitrary statistical value connected with the bell curve. You’ll marvel at the the technological sophistication but have absolutely no idea how to replicate any of it.

Marketing: Better described as “how to convince a consumer to buy damn near anything, usually against their self-interest.” Also known as “Advanced Lying Techniques” or “How Republicans Win Elections.” Biggest takeaway: never trust advertisements, PR agencies, or corporate executives.

Ethics: A class created by business schools to absolve themselves of any culpability when their graduates engage in evil, unethical things. Otherwise, serves the practical purpose of teaching you how to get away with doing evil, unethical things.

Strategy: The crown jewel of every business school’s core curriculum. Strategy synthesizes all other courses into a glorious edifice of oversimplifying frameworks and acronyms steeped in a solid foundation of rancid, steaming bullshit. It’s no coincidence that an MBA is sooner called a “Master of Bullshit Acronyms” than a “Master of Business Administration.” Strategy also holds many esteemed awards, including Most Frequent Abuser of the Case Writing Method, and Most Loved Class by Fortune 500 CEOs.”

 

 

Tagged , , , ,

i set values and goals to mirror those in my immediate surroundings, therefore i am.

i recently had the immense pleasure of auditing one of stanford’s entrepreneurship lectures, with guest speaker Brad Feld, co-founder of Foundry Group and Tech Stars, who spoke about the triumphs and struggles of his career.  At the end of the lecture, the students in the NVidia auditorium rushed to the stage to ask Brad questions.  For a brief, fleeting moment, I went back in time to my junior year at NYU Stern, when hordes of students in their suits would crowd around recruiters asking questions (while these recruiters really can’t answer questions in depth regarding the day-to-day of bankers and traders) and feigning interest (i can’t imagine any one legitimately interested in these carefully calculated and constructed conversation topics; the purpose behind these finance networking events is just to perpetuate the glorified self-righteousness of bankers by having a biannual opportunity where random people idolize them for an ephemeral moment before they head back to the cubes for meaningless excel spreadsheets) just to buy the powerball lottery ticket that, through this arbitrary social hurdle, could land them an internship or job.  not sure how similar this analogy applies to stanford entrepreneurs and guest VC speakers, though i am inclined to believe this relationship exists (give or take feigning interest, as VCs strongly consider passion and focus of the entrepreneur).

yes, stanford is to startups, as NYU stern is to banking.

the lecture began with a short announcement from Stanford’s BASES (‘Business Association of Stanford Entrepreneurial Students’), asking any hardware entrepreneurs to apply to its accelerator program (which, as it noted, was already backed by prominent VC firms such as Sequoia Capital). the level of involvement from top tier funding firms, with the empowerment of starting your own company to change the world (and being able to make some competitive money as a by product) truly makes it near impossible for anyone not to get excited about doing a startup or becoming an entrepreneur.  everyone and their pet dogs are starting companies. it is the cool thing to do.

though stanford, nestled in the bosom of silicon valley, has been and will continue to be the heart of tech innovation for several decades, the rest of the country seems to have caught startup fever for other various reasons; the economy is horrible, no one can find a job, people have computers and access to the internet, which contribute to the rise of the ‘creative’ class.  sure, to work a stable job and make six figures right out of college is awesome.  but have you made something? or are you just a content consumer, like the rest of the world? getting obese on other people’s creations? watch tv, but not write a spec? listen to music, but not play an instrument? eat your friends cup noodles, but fail to pour boiling water into a cup and let stand for three minutes?

the entrepreneurial bug is particularly contagious at stanford, for good reason, but sometimes it can cloud someones judgment.  if the environment was anything like NYU Stern and banking, the unchecked enthusiasm for handing over a few years of your life and soul for a hefty paycheck can even get the students who values rewarding and fulfilling professions to rationalize a few years of mind numbing corporate finance (‘it would be great to be able to calculate the rate of decline of the NPV of the respect my friends and family will have once i devote my entire time to my career’).  some students (usually you can spot them as the ones whose ties do not reach the middle of their belts or the ones who ask obscure questions obviously hastily pulled just minutes prior from the bank’s PR website before the networking event) have absolutely no idea what to expect after graduating and entering full-time as an analyst.  however, the immense groupthink that getting a career on wall street was the only way to ‘become a real person’ completely overruled any alternative possibilities. at what point did we stop thinking for ourselves?

15-cows-eating-grass

the problem is probably way less severe at stanford (or maybe i am just more cynical about the financial services industry).  and if everyone is thinking that the only way to ‘become somebody’ i to think and work for themselves as an entrepreneur, then so be it.  at least silicon valley is still vibrant with innovation, while wall street is getting shat on by main street (for semi-justifiable reasons, though think that the 99% are just unsatisfied with their lives and are bored enough with day time television to venture outside to be less bored with like minded people. and they happen to be standing in front of each city’s financial centers).

a strong motivating factor for me to quit my job and become an entrepreneur was because i didn’t want the next X years of my life pre-determined, to be working and living in someone else’s universe.  i want to be held fully accountable of my actions, to have full responsibility of my career and my life.

or, perhaps silicon valley, the mecca of startups, supported by its strong network and community of entrepreneurs and VCs, all believing the goal is to build and create, has me unknowingly convinced that this is the right path.

andy

 

Tagged , ,

engineers, financiers, and efficiencies

both engineering and finance are unique in that entry level positions do not require further schooling (relative to medicine or law which requires several additional years of specialized education), these sectors are generally dominated by men, and both professions require long hours working at a computer.  moreover, the people that these fields produce are perceived of possessing strong mental capacity (for example, 95% of people have common sense and can learn quickly, but we accept that there will always be a few loose ones that have made it through by potentially questionable means).

both engineers and financiers have strong analytical skills.  both also have the intent of maximizing efficiency as a means to achieve the end goal (adding value to society or making money).  however, each approach varies.

as engineering culture permeates throughout google’s campus, ‘googleplex’, there are several instances that demonstrate the engineering mentality of / commitment to efficiency: google minimizes any potential ‘distractions’ (‘work’ at google is always considered fun and challenging) by providing free-to-use bikes to travel between buildings, free-to-use electric cars for running errands in mountain view (if you commute to work via the free google shuttle), umbrellas in the lobbies in case it rains and you forgot yours at home, on-site car wash, laundry rooms, and hair cuts.  google, understanding that its employees are striving to be the best engineers, also places one-page ‘training lessons’ in the bathrooms (above the urinals in the men’s restroom or in the stalls–‘learning in the loo’, ‘training on the toilet’) that is updated occasionally (when i had the immense pleasure of using a google urinal, i had the opportunity to learn about ‘loose coupling’; please refer to google, as my diminutive finance brain will struggle to explain it.  in contrast, not once had i the joy of being reminded how horrible my life was by reading a credit approval memo while peeing at my previous place of employment).

it is obvious the efficiencies of googleplex outpace that of the outside world.  Douglas Edwards, google’s 59th employee and author of ‘I’m feeling lucky‘, writes “After Google, I find myself impatient with the way the world works. Why is it so hard to schedule a recording on my DVR? Why aren’t all the signal lights synched to keep traffic flowing at optimum speed? Why, if I punch in my account number when I call customer service, do I have to give it to them again when I get a live person? These are all solvable problems. Smart people, motivated to make things better, can do almost anything. I feel lucky to have seen firsthand just how true that is.”

though google is one example, silicon valley, an entire community of engineers, operates on this premise of efficiency.  the whole movement behind tech startups is that these are nimble forces focusing solely on solving one inefficiency–i.e. to create a website as easily as possible (onepager), to provide a back-end for application development (parse for mobile, heroku for web/cloud management), to search without personalized results and data tracking (duckduckgo).  the engineer mentality, seeing the world analytically with the intent of minimizing resources and maximizing efficiencies, drive silicon valley and the startup hub.

finance breeds similar efficiency hounds, but from a different perspective. the existence of the capital markets and financial intimediaries is to provide corporations, government entities, institutions, and households with the cheapest financing and the highest returns (influenced by economic environment, supply and demand, monetary and fiscal policies, etc).  the capital markets, with participants ranging from short-term day traders, long-term value investors, arbitrageurs, and liquidity (or ‘flow’) traders (sales and trading desks in investment banks, whose main goal is to provide liquidity for the rest of the market participants), theoretically functions as the platform that efficiently allocates scarce resources, driven by supply and demand.  all market participants, intending to get the best price (either rate of return or financing costs), look for pricing inefficiencies in the market.

for those that actively invest and/or trade in the market, these market inefficiencies can be a source of income (i.e. hedge funds, proprietary trading shops, private equity firms).  value investors (the most renowned is warren buffet) look for publicly traded companies that are underpriced by the market for various reasons.  private equity firms play another role in applying efficiencies in their business: they buy ownership in other companies (either from the public equity markets or from other owners) and reorganize the business through layoffs/debt restructurings/partnerships with other portfolio companies/etc. to maximize shareholder return and return on assets.  PE firms (most recognized in pop culture via gordon gekko in the 1987 movie ‘wall street’) are known for their ability to squeeze as much value as possible out of existing assets, laying off people and even selling the company in pieces, while making a quick buck.

business, in general, requires an efficient mentality–on a basic level, knowing how to minimize costs and maximize output (on an even more basic level, knowing to buy low and to sell high). this could explain why engineers start their own companies; because their existing workplace is inefficient, they love solving challenging problems, and/or they enjoy applying their hacking mentalities to running a business.

the one main difference between the approach towards maximizing efficiency from engineers and financiers is that engineers focus on the details, whereas financiers examine the big picture (though i believe this could be attributed to the differences in the nature of the field: engineers build solutions piece-by-piece, financiers take a macro view on industries and the economy).  just the culture and campus of google compared to the stiff hierarchy of an investment bank demonstrates the differences in the attention towards micro efficiencies.  just the nature of how an investment bank operates–highly regulated and with billions of dollars on the line–defines the tight-anus corporate culture and strict organizational structure that increases bureaucracy and slows any real decision making (at a bank, to the immense disdain or the tremendous pleasure of others, you are now forced to not only nibble at the teat of your immediate boss, but also of your boss’s boss, as well as his boss’s boss).  this analogy could be extended to our congress and to the way our leaders today make decisions (though i am highly suspect that things do not have to be this way; our current leaders are just increasing the barriers to compete against their organizations as a form of rent-seeking).

of course there are exceptions, as there are specialized financial engineers who focus on the probabilities and pricing of specific derivatives (focusing on a micro aspect of one financial instrument in the market place).

perhaps engineers and financiers are not too different.  after all, the majority of silicon valley is libertarian, as is the majority of manhattan.

andy

Tagged , ,

Is finance the right path for you?

http://www.yaledailynews.com/news/2011/sep/30/even-artichokes-have-doubts/

As for the argument that consulting provides an extraordinary skill set with which one can eventually change the world, I just don’t buy it,” he said. “Everyone knows what the skill set is for most entry-level consultants: PowerPoint and Excel.”

Detects_bullshit

the attached article discusses the “unusually high” percentage (~25%) of yale graduates end up pursuing finance and consulting coming out of college. the author of the article argues that these sectors are not “producing” or “creating” value and that these consulting and finance firms are so damn good at making recruiting as personalized and convenient as possible, as to derail future “Shakespeares” from their actual dream for a 2-3 year stint in the corporate cube.

not sure how 25% compares to historic Yale rates, but for NYU Stern the rate is closer to 90%  (granted, the following caveats 1. this specialized technical vocational school is a mold created specifically to transform individuals into bankers, and 2. the incoming student body is self-selecting–deep down, they know that  they want to change the world one committed loan or IPO at a time).

what is particularly shocking is that prior to actually working full time at a bank, so many people kill themselves trying to get in.  unless they have a history of receiving hours of unreasonable abuse and enjoy it, they most likely have no idea what to expect at work and are only in it for the external motivators of money and prestige (the several-round interview process intends to focus on separating those people willing to “kill themselves” or, in HR-speak, are “hungry”–whether or not the applicant knows how deep the abyss is before he/she actually takes the leap. how accurate and precise the interview process is another story completely).

though i have long noticed the detrimental effects of the lure of finance among some of my NYU friends and acquintances (signs usually include 1. attending all networking events, even the ones held by tier five investment shops such as “Nigerian Prince Investments, PLC”; 2. holding conversations void of any substance except for last year’s salary and bonus data; and 3. excessive masturbation to piles of cash, aka engaging in “money shots” as the colloquial term was known), i was still attracted by the money and the thought of working with the smartest and most ambitious people.  but of course i didn’t have a strong history of unreasonable abuse. i was a poser, a lamb in wolf’s clothing.

from a macro standpoint, finance is the direct application of economics.  it is the grease that allows capital flexibility among corporations and businesses. it is a constant innovator in developing new financial instruments that can lower costs for businesses to capitalize themselves (swaps, derivatives). it is the market place that best allocates resources among household savings and corporations wishing to borrow money. in the increasingly internationally capitalistic society, finance is essential.

however, due to the immense money flowing into the sector since the 1980’s debt “boom” (which should consequently be followed by a painful deleveraging process that will proceed to rob the current economy of any growth), banks have expanded its presence in the economy, thereby requiring higher demand for labor. thus began wall street standardized recruiting processes and the advent of specialized vocational schools aimed to feed talent to these growing banks.  as expendable as a pawn in the trenches of war, a financial analyst does all the work that requires more than one second of effort from any employee of higher seniority.

as a result, the distance between the analyst’s contribution and the end product–the value-add to society–increases drastically. without the gratification of seeing an eventual impact, the only motivating factor for the long hours at work is the paycheck and the bonus.  the money is a great incentive, but its positive effect on your morale is not permanent. you really have to be passionate about the profession or have a very clear focus on your long-term goal in order to stick it out.  the only reason the pay is as good as it is, is just to attract talent/recent graduates to work there.  no reasonable, sane person would subject themselves to the corporate jail cell without the six figure salary.  the salary is just the bank paying you to not pursue something else that you find more interesting or more “productive” than crunching out excel spreadsheets and powerpoints.

the only upside from working at a bank is the learning–about industries, capital markets, how businesses operate, navigating the world of office politics, and the demerits of cubicle life. though you could read about each on wikipedia, going through it first hand is an invaluable experience. also, accumulating enough cash to make a pile on the ground for a session of “money shots” is pretty cool.  for some, however, it is major a concern to live a life comfortable and coddled by the paycheck and to wake up one day, an old man, filled with regret.

andy

TL:DR; do you like money? are you ok with living at the office under a barrage of unjustifiable bullshit to get said money?

 

 

Tagged ,

From "prince" to "pauper"

Photo_1Photo

note: you can use the arrow key to click through the image gallery (there are two images).

disclaimer: the last time i used mint to allocate my budget was two years ago in 2008. the budgeting that i set at that time in my life is wildly unreflective of my spending habits in the past year.  additionally, the horrifying “budget exception” includes several transportation bills (airfare, cabs) that was reimbursed so graciously by my previous employer.  the images are just to comically emphasize the drastic change in spending habits from within a few weeks.

 

of the few extreme aspects of my recent “life changes”–from working at a bank (quite possibly the most corporate, hierarchical environment, to which someone can be subjected) to working at a startup (quite possibly the most formless, unstructured entity), from living in new york city (one of the few cities in the world where you can eat, drink, find drugs, find sex–essentially, satiate any hedonistic appetite–at any given time of the day, borderline unhealthy focus on career development) to living in california (eternal absence of humidity, perpetual laidback attitude and approach to life supported by limitless blue skies and palm trees)–one of the more prominent is spending habits.  by pursuing a startup, i forgo the bimonthly paycheck that financed my irresponsible drinking habits and set current spending limitations until our venture reaches cash flow positive (cash flow from operations less maintenance capital expenditures).

 

spending has significantly declined since my move to california (except for my recent expense on a new macbook air). unfortunately these cut backs occurred at the worst time possible, when i just recently discovered this site www.thisiswhyimbroke.com. where else can you buy an AK-47 lamp? actually, probably the AK-47 lamp store or via this link: http://lmgtfy.com/?q=ak-47+lamp

 

anyway, here is to my transition from a comfortable life of feeling like a boss and saying “yeah, i can afford it; you go ahead and supersize that” to living like a college student, once again (during which, i became an armchair coinnessur of korean instant ramen, as well as raised my cholesteral levels and tolerance to spicy MSG-filled broth).  goodbye $14 stirred dirty gin martinis, laphroiag 10-year with two ice cubes, speakeasies, bottle service (exclusively in lower east side, i should add; meat packing district was out of my first-year financial analyst price range and douche-tolerance zone for me to rage comfortably), tapas bars, bloody marys with brunch, and taking cabs.  hello low rent, free google food (thank you fourth roommate, Michael Wei), kalimotxo (equal parts two buck chuck wine and off-brand cola), and costco wholesale food.

 

andy

 

current morale level:

excited. counting down the days until michael gao’s birthday (9/30) and then until we move to Santa Clara (10/7).

Tagged , ,

Tips to become a winning financial analyst

Facebook-excel

like everything in life, navigating the confusing intertwining branches and brambles of the financial analyst jungle is a game.  winning requires steady focus, a strong stomach and disposition, and the expectation that you will get shat on multiple times per day.  i have compiled below a short list of tips and tricks to help analysts orient themselves in the fast paced environment, full of egos and death traps that will take the most promising career at the drop of a hat, to ultimately succeed in the race to the top.

1. make sure to get a loud keyboard:  if they can’t see you working, they better hear you working. sometimes i would intentionally slam away on my keyboard to make sure those around me know that i am cranking out memos. even when playing yahoo! text twist, i make the keyboard my bitch everytime i type a letter. a sub-tip would be to increase your typing and decrease your mouse clicking when bosses approach.

2. always look busy as hell, but accept new assignments happily: even if you are surfing dealbreaker and playing minesweeper, as soon as your boss comes around, do the following: sigh but with a smile on your face, appear flustered but eager to take on the new task, and say “i have a lot on my plate right now, but i feel this new assignment will help me learn more about [insert boring subject here] i am more than happy to accept.”  this will give everyone the illusion that you are working much harder than you are, but also that you enjoy more responsibilities, which will land you the position of ‘go-to analyst’.

3. do not make eye contact with anyone on friday afternoons: everyone needs their weekend. just because you are working at a bulge bracket bank suckling the tender teats of egos-gone-awry does not mean you are forced eat seamless orange-chicken at your desk on a friday night.  friday afternoons is right when bosses come around the floor looking for defenseless prey who would happily spend their weekends working on an assignment that will ultimately be tucked away into a folder on the shared drive for nobody else to see. when friday 2pm rolls around, you better glue your eyes to dealbreaker.com or minesweeper and hope to sneak out by 5pm. being well rested on weekends will undeniably restore energy for the upcoming work week.

4. know your windows hotkeys: this tip really should have gone unspoken. if you don’t know basic windows hotkeys, then shame on you. you don’t belong behind a computer, let alone working as a financial analyst. alt-tab, alt-escape are wonderful for when your boss comes over and you were just watching a hilarious video on geekologie, and you need to give off the impression that you were cranking away at an excel model.

5. leave a jacket or bag at your desk even after you leave for the day: this will give off the impression that you just stepped away momentarily from your desk and that you plan to return to continue working.  should someone request your immediate attention on something via email, just respond saying you were downstairs grabbing a coffee from the nearby deli and will return (begrudgingly) shortly.  bonus points for: changing your screensaver to an excel spreadsheet, jamming a pencil into your spacebar to keep the screensaver from appearing, using a fake cellphone or purse to solidify the impression that you will be returning shortly, and creating a complete body double to sit in your place to do your work.  EDIT: can also leave a half-eaten apple or sandwich on your desk, but there are some risks to this tactic–if maggots or flies appear on the food, then either your illusion of constantly working is shattered or people start thinking you are disgusting (contributed by Shelley Yang).

the key is to remember that retention compensation is not directly correlated with the quality and output of your work over the past year, but it is based entirely on the perception of the quality and output of your work over the past year.  of course, it doesn’t hurt to actually take pride in the quality of your work, but if you neglect to play the game for what its worth, you may not be doing yourself a favor.

 

andy

Tagged , ,

10 year anniversary in post-american world

Its been ten years since the 9-11 terrorist attacks. Ten years into the new post-american era that is being defined by tremendous shift in wealth, credibility, and relevance from america to the rising economic powers of tomorrow. What happened in the past ten years that lead me to believe this?

– collapse of american housing market, 2006-2008
– collapse of lehman and bear stearns: summer and fall of 2008
– US debt downgraded to AA, summer of 2011
– sustained unemployment of greater than 9%

Post undergrad entry level positions in 1990’s were ~$45k. Post undergrad entry level positions in 2011’s were ~$45k. Houses are now more than three times more expensive, as is fuel and consumer goods. Is the standard of living in the united states declining?

There are several factors, including the united states government levering up to support growth in the 80’s and 90’s, increasingly imbalanced international payments, inaccurately perceived wealth effect from rising home prices that encouraged households to increase consumption to an unsustainable rate, the increasing drain on our country’s economic resources to support a bipartisanship government structure that is both slow in decision making and terrible at reducing future uncertainty, etc. Right now unemployment is at all time highs, market volatility is out of control, and, not only investors but also the voting americans are afraid of the economic future.

But of course this is not to say that the chinas, indias, and brasils are the current safe havens. Developed europe markets are currently dealing with their own issues (should not have let greece in the eu in the first place). If the us economy sneezes, the whole world gets sick. Everyone recognizes this and will be pushing to move away from the united states dollar as the reserve currency over the next 30 years.

America is still a great place for business (except obama voiced his plan to close tax loopholes) and for innovation. We need real growth to support this economic machine. Real products with real buyers.

Excited and anxious for the future.

Andy

Tagged ,

What is your number?

The salary and compensation given to you from your employer is a measurement of several different factors–your worth to the company, the intersection of supply of qualified labor and demand for the position, and to provide incentive to retain your abilities.

Entry level bulge bracket financial analysts make 70 base, 10 signing bonus, and a year end compensation package labelled as a ‘retention incentive bonus’ that ranges between 0 to 70 (varies slightly by bank and group, but largely determined by your eagerness to take it in your ass). For every year, your base salary grows by 10. When you become an associate and actually join the bank (a conscience decision to be in finance for life), you receive a 40 signing bonus and your base becomes 125. You will receive your first real bonus on the same cycle as the rest of the bank–within six months of the signing bonus. All that money, of which gives me the sneaking suspicion that the money is there to make us feel better about how horribly soulless the job is. The compensation must be good, otherwise no one would want to do it. People would leave to go work in other industries.

If we look at banking through this lens, that the pay is inversely correlated to the satisfaction or joy derived from the work, then banking must be the among the worst jobs one can possibly have (arguable, of course; other influencing factors include prestige and allowing your chinese mother something to say to ther chinese mothers at dinner parties). Banking consumes your entire existence because of the hours. You are owned by the corporation.

Everyone has a number. The number is the threshold amount of money he/she needs to keep from leaving wall street. Even though some people claim they are principled and will leave no matter how much the pay is, their numbers are probably higher than most.

The number is also based on several different factors. How important money is to you is by far the most significant, and that is determined by your spending habits, your indebtedness, and your age. For young people with no families, the number is not that important. I spend all my money on alcohol. Though i like microbrews, i could go back to the old english (extreme example).

Andy

Tagged ,

Tips for managing directors

When one finally makes their way across the desert to reach the oasis of becoming a managing director, the bank issues them this short note, along with a large base pay raise and the key to the firm’s cafeteria (of course once when you have money to spend on $5 subway footlongs, you end up getting free meals at work).

—–

Congratulations <insert> on your transition from a corporate nobody to a respected member of this fine institution.

You made it.

You are now allowed to dine in the firm cafeteria that serves such expensive delicacies from filet mignon from cows that are raised for the sole purpose of providing that cut (the rest of the cow is thrown out) to shark fin soup (likewise, the rest of the shark is tossed out). You are also now allowed to make eye contact with the senior executives (but no touching unless it is consensual). Please see below a few notes to abide by to make your managing directorship as comfortable as possible.

– use the bathroom during the weekly staffer meeting to avoid awkward encounters with analysts at the stalls
– you can leave the office at anytime if you have an office
– feel free to create as much unneccessary work for the analysts for your own self improvement (why read the wikipedia page if you can make your analyst summarize everything and format it into a nice presentation?)
– dont make eye contact with analysts in the elevators, otherwise they will begin inane conversation with you and distract you from thinking about what yacht extension to purchase for your schooner
– dont get too attached to the analysts: they are dispensable and change every year

Again, congratulations on achieving your lifelong goal of becoming managing director. Please inspire in the junior members of the firm the dream of one day reaching MD by acting like a priviledged, self-righteous demigod.

——-

Andy

Tagged , ,

Bonus postulation

Yesterday, two important events happened.

1) i started this posterous so i can postulate relentlessly, and
2) i got my bonus number (to be funded in my bank account next friday).

Citi, like most bulge bracket investment banks, promises glory, allure, and prestige; you just have to have the gaping, desperate, corporate hole to withstand ‘taking it’ for the majority of your existence in order to achieve them. The bank reminds you everyday that you want it–the models and bottles, the envied lifestyle, the slim chance that you will make Managing Director by the end of your career and enter the exclusive world of the cultured elite–by hanging a glamorous carrot in front of you in the form of a performance compensation (which the bank keeps you in the dark regarding the entire process: when you will get your review, when you get your bonus number, and when it will be funded, that i honestly thought i would find out my bonus number first through popular wall street blog, dealbreaker); allowing you, an underqualified recent graduate struggling to maintain a laundry schedule, feel a false sense of self-righteousness by giving them absurd responsibilities (‘should we lend this company $1Bn?’), all at the same time raping you senseless and numb. You will feel priviledged for having a job and prestige for being so close, yet so far, from working with corporations that essentially run the world. Finally my mom can engage in conversation proudly to other asian moms when the topic turns to their children (which i would say conservatively is 90%).

Due to my dichotomous sentiment towards banking, I watched the 2008-2009 financial and economic crisis partly with a sort of twisted, perverse glee, vindicated briefly from my dirty pursuit to join the ranks that are so motivated by short-term performance to throw recklessly into the wind the long-term stability of the public, yet at the same time felt hopeless, seeing the value of my nyu stern-banker-technical school finance degree and my future career crash into the ground as fast as people were selling their lehman positions.

But i tried it anyway, the big game of wall street. It was the masochist in me, that pushes me to my limits, that see if i had it in me to withstand hours of excel spreadsheets and word documents. First, determine your objective: long term career, short term bonus. Then play accordingly.

It tests a wide range of human tolerance: emotional (‘why the fuck doesnt EBITDA match the one in the model?’), physical (‘i need to find the one restaurant on seamless that has at least one redeeming nutritional aspect’), and mental (‘you need to complete three credit approval memos by tonight. Client needs a response tomorrow’). All at the same time, knowing whose cock to rub in the office.

In the short to medium term, your performance (read: the size of your bonus) is not a close indicator of your skills. Your performance rests solely on how the managers perceive you. You can deceive them, so long as you dont get caught (by completing or volunteering for tasks that are high visibility, but ignoring behind the scenes work). However, in the long run, your performance is tied to your abilities. The success of a career depends on the person.

So i played the game and did allright for myself. I learned a lot, not just about financial markets or structuring a transaction, but about working with other people, managing expectations, and drinking myself senseless to stay sane (bear fights: jager bomb then irish car bomb). It has been a wildly (boring) year and i think i am ready for a change.

Or so i (incorrectly) postulate.

Andy

Tagged ,