I work at a Bulge-Bracket Bank, so I’m used to this kind of reaction. Bulge Brackets are IPOing the next big media company, we’re advising the merger of the two largest consumer products companies in the world, and we’ll even take a moment away from the cool shit to facilitate the building of hospitals and low-income housing so that the world is a better place. Respect.
We’re the kids who turned down the Rhodes* and Marshall† scholarships because the companies we now work at have even stronger brand names. In the league tables, which track Bank deal performance much like a bathroom wall, we’re ahead. We’re the “cool kid” lunch table where if you sit with us, everyone knows, and if you don’t, you’ll do anything to gain acceptance.
Notable Institutions: MGM—Morgan Stanley, Goldman Sachs, Merrill Lynch*
Commercial/Investment
Regaining consciousness, the waitress reaches in and pulls out an Amex Gold Card. She recognizes the mini centurion, but it’s obvious she loves him less. She hands it back casually to my friend Taylor.
Taylor works at a “Money Center,” a commercial Bank that acquired an Investment Banking arm to round out its portfolio. He’s a good guy, and his firm is one of the better ones in this group. But as with our cards, a keen observer can spot many differences between us.
Primarily, Taylor lacks a certain added edge of confidence that comes along with knowing you work at the best place. His clothes hang on his body instead of floating, as they do on mine. He walks with an almost-strut, but the cadence occasionally loses rhythm.
I don’t mind Taylor’s flaws, but the very concept of his Bank troubles me. Merging Commercial and Investment Banking feels to me as if they’ve decided to keep a construction worker and a forklift guy in the same room as an architect who’s trying to design a fully solar-powered building. It’s like taking a Porsche and attaching a huge MAXIMA decal to the back windshield—it’s disgusting and wrong.
Taylor also happens to be somewhat short and, like the Bank he works at, has a Napoleon complex. They both can’t get action based on their looks alone, and they “throw around their balance sheet” to compensate. The deals his Bank and those similar to it work on get them a few points in the league tables, but their business is about as bland as the cum laude kids who work there.*
Notable Institutions: JPMorgan Chase, Citigroup, HSBC, Bank of America, Wachovia
Middle Market
I don’t even know Jeff. Someone else brought him along, and I hate him for it. When his MasterCard comes out and the hologram and cheap yellow and red logo reflect in the light, the waitress scrunches up her nose and kind of just flicks it back at him, disgusted.
Jeff works at a Middle-Market Bank, and oddly, he’s very proud of it. He talks about his work with the gravity of a cardiologist describing a quadruple bypass, but his Bank has done only two deals of note. They mirror his two female conquests, recounted and elaborated upon with transparent attempts at new twists.
Notable Institutions: Dresner, Piper Jaffray, Jefferies, Houlihan Lokey
Boutique
Marlo’s card is the last to get pulled out, and he’s the one who has to pay. None of the rest of us would have cared about taking down the bill, but when Marlo realizes he’s lost at yet another thing in life, the hurt is written all over his face.
The waitress pulls out his flimsy WaMu Check Card and she immediately bursts into laughter. We all hang our heads in embarrassment.
“I don’t even have one of these!” she jeers, pointing at Marlo. She calls over her waitress friends to come look, and they all inspect the card like it’s the silliest thing they’ve ever seen.
Marlo works at a Boutique Bank, one of a group of small Banks with few employees that, in general, do not really do anything. They are usually started by a few “old-timers” with decent connections who want to create an environment that reminds them of the days when they could punch their secretaries in the face and make Analysts work six-hundred-hour shifts in nothing but their boxers with their thighs duct-taped together. While they might succeed in creating this environment, they fail miserably at Banking.
The waitress runs off, still laughing, to charge Marlo’s card, and we throw our forks at him in revulsion. When she returns, Marlo signs the receipt and on the back of the customer copy, we see in her dainty handwriting: “212-555-6685. Tell your friend to call me. XX, Heather. P.S. Thanks for the laugh, WaMu.”
Marlo is now officially known as WaMu.
While Investment Banks have more history to them, the prestige of PE firms and Hedge Funds depends strictly on their size. Though their businesses are different, both make more money with more capital.
Imagine for a second that you decide to start your own Hedge Fund with the $5,000 that your grandmother willed to you when she passed away (my condolences). So you, Retard, LLC, are now a Hedge Fund that is taking various positions in the market. The thing is (at the writing of this book) you can only buy around ten shares of Google stock, and then your funds are exhausted. In this scenario, when a Google developer figures out time travel in his “Twenty Percent” spare project time and the stock goes up by 50 percent, you’ve still only made $2,500—maybe a big deal to you, but I left that much in a cab one time.*
Baller-Ass Funds
I got my acceptance call from the partner at the PE firm I’m moving to while I was on the street walking to a friend’s apartment. I answered the unrecognized number with my work tone, and the partner spoke with the confidence of an invincible man. Even over the street noise, it was weird, like hearing my own voice played back to me.
“Welcome to the team,” he said. I could distinctly hear the giggle of a girl just old enough to not be his daughter.
I also heard a splash and the bubbles of a Jacuzzi, and I pictured him on the phone on some exotic island, taking a break from getting a hot stone massage to laze by a pool and make a few work calls.
The fund I’m going to be joining manages more than $25 billion. It’s in an elite set of funds, most of whom manage over $10 billion, whose moves make the earth shake. These Hedge Funds and PE firms are buying out brands whose jingles are ingrained in everyone’s memory and taking positions that could break the economy.
Notable Institutions:
PE*
—Blackstone, Kohlberg Kravis Roberts & Co. (KKR), Texas Pacific Group (TPG), Thomas H. Lee, Warburg Pincus, The Carlyle Group
Hedge Funds:
—Citadel, DE Shaw, Qantas, Fortress, AQR, Cerberus, Renaissance Technologies, SAC Capital, Och-Ziff
Pretty Good Funds
After I hang up with the partner, I’m reminded of a kid, Dave, from my eating club at school. We all thought he was just another normal Princeton guy, not particularly a standout, but someone who had piggybacked his way into the club off a few well-connected kids he had managed to become friends with. Turns out it was all an act. Someone eventually ended up getting close enough to Dave to be invited to his house, and get this: Dave was poor.
When the friend came back to school, word spread like wildfire across campus. At Dave’s house, his friend had spotted what became our go-to term for anything shitty, an AGP: aboveground pool. From then on, everything mediocre was an AGP. Tufts? AGP. “Yo, that Toyota your mom drives is sooo AGP,” we’d say, even if her car was a Lexus.
Pretty Good Funds, those who generally manage between $500 million and $10 billion or manage more but lack prestige, still count as Hedge Funds or PE firms, technically, but like AGPs, they’re not really that fun to be in because they’re so small.
Notable Institutions:
PE
—Hellman & Friedman, Clayton Dubilier & Rice (CD&R), Providence Equity Partners, Welsh Corson,
Hedge Funds
—Maverick Capital, Millennium Partners, TPG-Axon
Not Funds at All
I try to think of something worse than Dave’s AGP, and I can’t come up with much. I recall the stories I’ve heard of underprivileged communities and how they often use fire
hydrants or sprinklers as makeshift pools. That seems maybe worse.
There’s a great number of Hedge Funds and PE firms under $500 million, and to me, they’re all naked little children playing giddily in spurts of water shooting out of a hydrant. These funds may seem happy, but not only are they insignificant, they’re depleting otherwise better served resources.
Notable Institutions: None.
In finance, the institutions you work at dictate almost everything about your life. They determine what people think of you and, more important, what you think about yourself. You can either be like WaMu—skipping around in your neighbor’s sprinkler, holding up your debit card so the bar code doesn’t get wet. Or you can be like me—the ex–Bulge Bracket, PE guy—hanging out by a grotto in the South of France, getting comped drinks served to you by a pantyless cocktail waitress.
* * *
COMMENTS FROM leveragedsellout.com
Wachovia has the best investment bank around—even better than Goldman and Morgan, combined!
Where else can you get a guy who worked his way up from his father’s pig farm making a million bucks a minute?
Or a guy who dropped out of high school who worked his way up from teller to repro-room assistant?
I always throw up a W symbol on my chest when meeting my Wachovia peeps. Everyone else is just a poser…
WACHOVIA FOR LIFE!!!
POSTED BY ANONYMOUS, MAY 31, 3:21 P.M.
All comments are real and unedited.
* * *
CASE STUDY: THE BOUTIQUE
This is the story of Todd, a misguided soul, and Prescott, the guy who set him straight.
The tall, blond, athletic young man presented himself first. “Hi. I’m Prescott Moncrief,” he said, extending his hand with a well-practiced smile and MBA eye lock, still debating whether he ought to have included his roman numeral (III) in his introduction.
“’Sup man, I’m Todd,” responded the other, grabbing Prescott’s formally outstretched hand around the thumb, forcefully wringing it, and releasing it with a loud snap that only he had generated. Todd then used the same hand to clumsily tuck in the loose pieces of his non-slim-fit shirt into his slightly baggy, pleated trousers while attempting to unsuccessfully balance a dip cup in the other.
“So Todd, what do you do here in the city?” inquired Prescott, regaining comfort but still frazzled by the urban handshake. He couldn’t help but feel awkward as he shuffled his feet, trying to dodge the stray dip splitlets that might sully his new driving shoes.
“I work for a boutique investment bank,” responded Todd cockily, smirking and now pulling his pants up over his temporarily retreated beer gut, making it clear that this was one of those hardcore New York manorexia and exercise weeks. He would be spilling out of his pants next week no problem after this weekend’s depression gorge.
“Oh, I see,” replied Prescott as if the pieces had started to fall together. “I work in finance too. I work at Goldman Sachs,” replied Prescott, suppressing the urge to rip Todd’s confidence to bits. He had just put together Todd’s life story:
Todd grew up in a wealthy family in upstate New York or Connecticut, went to a state school (Tufts/Northwestern included) or Second Tier Ivy like Cornell or Penn, where he was a 3.0–3.3 GPA econ major and borderline drug addict. Nearing graduation, he incessantly tried to interview with every bank on The Street, cold-calling the ones that didn’t bother responding to his pathetic résumé, and then botched the few interviews he actually managed to get by forgetting the impact of goodwill on net income. Finally, dear daddy, the savior, swooped in and landed Toddkins a position at aforementioned “boutique,” where he has since toiled obsequiously under the tutelage of has-been “heyday” bankers.
Todd paused and collected himself. “Yeah, I mean, I just really wanted to be closer to the deals, you know. Get more exposure.”
“Yes, of course. Very understandable,” replied Prescott, feigning belief and interest. He told himself he was above mocking his feeble conversation partner, but he could not resist.
“So, done any big mergers lately? I hear Joe’s Deli bought a liquor store in the Bronx.” Prescott snickered.
Todd instantly turned fiery red. The chip on his shoulder was throbbing so hard it was actually beginning to appear as a translucent mass. “F*ck you, man. We just did a huge IPO of this trucking company in Ohio!” retorted Todd angrily, immediately realizing the idiocy of his statement. He muttered something, fumbling to recover, and then finally got out, “Well, I work really closely with our partners who have great connections in the industry!”
Prescott just shook his head in disbelief. “Todd,” Prescott said calmly. “I’m going to refrain from further ruining your few hours away from the testosterone-driven madhouse you call work. Actually, I think I hear your out-of-date, boxy BlackBerry going off right now. That’s your MD. I think he wants you to bring him another coffee. But keep ‘trucking,’ they might even promote you to Excel next month!”
Prescott paused, basking in his pedigree.
“And I’m going to do you one more favor,” continued Prescott, unable to restrain himself. He reached into his pocket and removed his wallet. He flipped it open and grandiosely pulled out a business card. “Take this. Put it in your pocket, and maybe then you’ll get some small sense of what it’s like to work at a real bank. And maybe you’ll finally be able to pull a half-decent girl instead of that hog over there waiting for you.”
Todd could do nothing more than gape into the space Prescott had just occupied. Memories of mediocrity inundated and paralyzed him. Images of report cards with Bs, mid-1300 SATs, cute-face-but-overweight girls, and trophy chests with only JV letters ricocheted off his mind’s eye and piled together in one big subpar hunk. Then the logic hit him like a blow to the gut—he was mediocre, and so Boutique Investment Banks must be too. The one thing he had thought separated him from the schmoes actually just illustrated how much of a schmo he really was. He sank to his knees and let his head and prematurely thinning hair fall into his hands. He was a joke.
Case Study Takeaway: Boutiques are cool in SoHo…not in Midtown.
PERFORMANCE REVIEW #1
In a WWF-style cage match, what would be the order of elimination (first to last) of the following combatants? a. Trader
b. I-Banker
c. PE Guy
d. Hedge Funder
The Correct Answer
2. You recently came into a multimillion-dollar inheritance. Who do you not trust to manage your money? a. A company whose name consists of two or more Jewish surnames.
b. A firm with a Web site that looks like it was designed by a Down syndrome baby.
c. Johnnie Chan.
d. A bank that charges ATM fees.
The Correct Answer
3. Aboveground Pool: Olympic Size :: $500MM Hedge Fund: ______ a. Citadel
b. CD&R
c. Goldman Sachs
d. Houlihan Lokey
The Correct Answer
4. True or false: Underwriters are pimps.
The Correct Answer
5. Mark the following items of a portfolio as long/short: a. Barack Obama
b. Digital Music
c. Uggs
d. Shia LeBeouf
The Correct Answer
6. You come home from work and your two-hundred-pound girlfriend explodes upon you with glee as she tells you she’s reduced her weight by one hundred bps. How much does she weigh now?
The Correct Answer
People
FACT #5
Georgetown? I wouldn’t let my maids’ kids go there.
Schools
SCHOOLS AND BANKING follow the same basic patterns as all things in nature. For example, look at the most discrete element of matter: the atom. In basic orbit, the electrons of an atom cannot jump from any given energy level to another; they are restricted to the orbitals in which they belong, their ground state.
Finance operates by these same rules. Kids from middle-ti
er schools stay at middle-tier Banks and Top-Tier kids stay in the Top Tier. Just like no electron can hop from e1 to e5, there’s no Miami of Ohio student who miraculously ends up at a top private equity firm—that shit just doesn’t happen. It would be chaos.*
Banker Schools
High School
As far as primary and secondary education are concerned, Bankers now come from various, diverse upper-middle and upper-class schools. Sadly, the days when all Bankers prepped at a proper institution (Exeter, Andover, Hotchkiss, et al.) like I did are over. Some Bankers are still legit, but a large portion went to these places I hear them refer to as “public schools.”
College
In the current environment, much more important than prior education is the college or university one attends. Top Banks mainly pull from the highest-ranked institutions, but overall, Banking has a smattering of students from many different schools, as people weasel their way in through family networks and sickening feats of persistence.
Getting an interview at a top Bank can range from being as easy as putting your name down on a list to as difficult as sitting around trying to guess at recruiters’ e-mail addresses based on various syntactic schemes ([email protected], etc.). Hint: The guy guessing e-mail addresses didn’t go to Harvard.
Damn, It Feels Good To Be a Banker Page 3