ezekiel's chariot - 張敦楷 (pjammer) wrote,
ezekiel's chariot - 張敦楷
pjammer

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How Guile, Cunning & Subterfuge Beats an Ivy League Degree

(the following essay was written after a summer internship in one of the most evil mergers & acquisitions investment bank in Silicon Valley)

I sit at the bar of the spacious Hyatt Tower and stare at my $6 double shot of Jack Daniel’s. Whoo, I need a drink. Funny how much things can change in so short a time. Six months ago, I ran myself ragged to answer the question “how do I get into investment banking?” Now all I can wonder is: “How the hell do I get out?”

_____________________
ike every ambitious college student who ever watched “Wall Street” or “Barbarians at the Gate,” I wanted to be an investment banker. In between classes and crew practice, I studied The Wall Street Journal, the Harvard Business Review, and bootleg copies of The McKinsey Quarterly, dreaming of the day I, too could issue millions of dollars worth of AA-rated bonds to finance the mergers and acquisitions of multinational corporations. As anyone in the world of high finance can tell you, the investment-banking community is a clubby, insular fraternity. Insufferably snotty, their clannish recruitment procedures make membership in Phi Beta Kappa look about as exclusive as Price Club. I didn’t know it at the time, but there was no way I should have gotten my summer job. With hundreds of resumes battling for a dozen or so internship positions at each bank, I was working under some cruel handicaps.
Ivy League Blues
An astute friend once observed that “I-banks would rather hire from the bottom of the class at Harvard rather than the top of the class anywhere else.” Alas, this is true. Most investment bankers are alumni of Ivy League schools, and recruit from their alma mater out of a sense of loyalty and nostalgia. In the process, they form an ensconced elite, who preserves its dynasties of wealth through selective recruiting. Old habits die hard, and the habits of money and snobbery die hardest of all.

Grade Inflation

With no means to subjectively evaluate the hundreds of applications a firm might receive, the first cut is a quick-and-dirty GPA cutoff. As a refugee from the Physics department, I wasn’t going to make the typical stratospheric grade averages. How can I dazzle them with my business acumen if I can’t even get an interview?

Who's Your Daddy?
Capitalizing on family ties is a time-honored tactic used by well-connected shiftless oafs since the dawn of human history. As is the case for most first-generation immigrant families, my potential nepotistic connections were left behind in a nation thousands of miles away.

I didn’t have the pedigree, the grades, or the connections. Strike one, strike two, strike three. Thank you for your resume, Mr. Chang – don’t call us, we’ll call you. Fortunately, the game of life is not like baseball – it doesn't matter how many swings you take so long as you can send one soaring into the bleachers.

Only question is: how?

Gathering Intelligence

With publicly traded companies, one can tap 10-K/10-Q filings with the SEC, shareholders’ reports, and other sources of public data. I-banks (particularly regional boutiques) are generally set up as private partnerships, and their receptionists (the only source of corporate data outside of news clips from LEXIS/NEXIS searches) are notoriously tight-lipped.

How can I scale this wall of information blackout?

Enter reconnaissance. Through persistence, patience, and no small measure of luck, I secured a supply of in-house company newsletters form a prestigious investment bank (whose identity shall remain anonymous, for obvious reasons) and scanned it for useful information.

Hmm, typical company newsletter blather – “Congratulations to so-and-so’s promotion to Partner,” blah blah blah, “So-and-so’s new baby is taking her first steps,” blah blah blah ... a-ha! “Welcome aboard analyst and recent Wharton graduate ‘Alex Brown’…”

Bingo.

I picked up the phone and called an old professor friend at the University of Pennsylvania for details – not about “Alex” (that would be tacky), but rather data on school life, and in particular, the student newspaper, the Daily Pennsylvanian. After brushing up on enough of the basics to sound like a U Penn student, I picked up the phone again and called the firm.

“Good morning, how may I direct your call?”

“Alex Brown, please.”

“One moment,”

“This is Alex,”

Showtime.

I began my rehearsed speech: “Hi Alex, this is Donald Lufkin, calling from the Daily Pennsylvanian. First off, I just wanted to say – congratulations on your new job! We’re doing a Features story on successful Penn grads, and your name came up in our alumni directory. I know you’re probably busy right now, but would you be interested in a phone interview at a more convenient time?”

Instant (albeit manufactured) rapport.

In the subsequent “newspaper interview,” I tapped a motherlode of inside information: names and biographies of founding partners, office politics, recent and pending deals, who really decides whether to hire an intern or analyst (NEVER the gimps in Human Resources) and other gems.

After thanking him profusely, I left with a caveat: “Look, I’m a new writer, and I’m not sure if my editor is going to run this piece or not. If it does, I’ll send you a copy. In any event, I’ll call you whether the piece runs or not. Thanks again for all your help!”

Resourceful reconnoiters cover all the bases.

I spent the next three days composing a detailed cover letter to the managing director actually in charge or recruitment, detailing the company’s successful deal-making record, naming names, and congratulating them on their recent mergers and acquisitions deal. They must have been impressed – less than two weeks after I sent in my letter, I got an interview, ahead of several Harvard and Wharton students and the son of a U.S. Senator.

“How did you know so much about our company?”

I smiled cryptically. They didn’t call me “MacGuyver” back in high school for nothing, you know.

A few weeks later, I began my career in the world of high finance. Nothing I read in the Wall Street Journal could have prepared me for what was to follow.

Pledge Week in the Money Fraternity

The novelty of working in a prestigious investment bank wore off quickly. I-bankers work long hours to justify their obscene salaries, and the new recruits are pledges in this fraternity of wealth. “Face time” was important. Everyone was anxious to show off how much time they spent in the office.

This had its absurd moments. Analysts would arrive early, at, say, 6:00 a.m. and deliberately leave notes on managing directors’ desks like: “Came in to review financial models of equity repurchase of Company X – sorry I missed you. Talk soon, David. 5:16 a.m.” or “Need to review pitchbook data for fixed-income offering of Deal J before noon – URGENT. Michael, 4:57 a.m.”

This was not what I expected. I entered this world to learn about business and finance, not play “busier-than-thou” games opposite ass-kissing nitwits. But it looks as though the new pledges must sing and dance before they are seen as equals.

It has often been said that prestigious firms hire the same kind of smart people over and over again. It’s true: I can see it in my intern associates – every one of them an unimaginative, fearsomely intelligent young man destined to make piles of money doing the most absurd kind of nothing.

What do I have in common with these workaholic psychopaths?

What am I doing here?

The Price of Hubris

I never understood the price of blind faith in spreadsheets until I was working on what was to be my last deal. The firm was representing the buy-side of the acquisition of a small software company in Silicon Valley. Part of an I-bank’s function in its M&A capabilities is the performance of what is called “due diligence,” where, in theory, the bankers diligently study the business to be acquired to determine its fair market value.

Reality: The analysts and young MBAs are sent to crunch numbers while the managing directors go play golf with the CEO and executive staff.

Work in a corporation for a while, and you know how information becomes increasingly obfuscated as it travels through formal communication channels. Practical curiosity being what it is drove me to make a few visits on my own to the firm we were supposed to be evaluating.

In an information economy, the most valuable company assets drive themselves home every night. If they are not treated well, they do not return the next morning. These assets can never be boxed in a warehouse or conveniently quantified in an accounting ledger. Somebody should have reminded this fact to the investment bankers.

As it turned out, a majority of the truly innovative coding the firm produced was really the work of two junior programmers. Like many creative people, they pursued a number of private projects (in this case, spin-offs and add-ons to the firm’s platform software product). Their requests for funding to help defray the costs of these projects were continually denied. I wasn’t surprised – a quick review of the senior management biographies revealed not a single trained programmer.

They were the products of accounting, and finance careers, and saw employees as costs to be minimized, rather than investments to be nurtured.

To the surprise of everyone else, three weeks after the deal was consummated, two “minor” employees cashed in their now-inflated stock options and quit the firm, leaving behind a half-completed source code that would ultimately take months for replacement programmers to figure out, a dozen pointing fingers, and mutual accusations of bad judgment. My analysis report on employee dissatisfaction with unresponsive management was left unread.

I now understand why I’ve always mistrusted economists’ near-religious faith in numbers to quantify human transactions.

A little management foresight and thoughtfulness could have saved the firm, but the leaders were convinced they could run a business through a balance sheet.

Already disillusioned, I prepared my resignation letter. The firm was embarrassed, the client was left holding the smoldering ruins of an overvalued acquisition, and I, after two and a half months in the trenches, walked out of the office I fought so hard to enter with several thousand dollars and a hideously expensive Mont Blanc pen in compensation and bonuses.

They say internships give you a good idea what you want to do after you graduate. Why, oh why do my internships always show me what I would hate?.

_____________________

I loosen my tie and stare at the four empty shot glasses in front of me. Or is that eight? Whoo, I need another drink.

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