Ahead of the Curve

by Philip Delves Broughton

  The careers service kept making announcements: “95% of the class of 2006 have accepted job offers!” One week later: “97.6% of the class of 2006 have now accepted jobs!” I was part of a very small and fast-dwindling group. I’d like to say I was cool about it. That I was sticking to my guns. That I had paid attention to what every single guest speaker had said. Do what you love. Don’t settle. Take risk now, because it will be much harder later in life. Your family is more important than your work. Don’t do anything for the money. If you love what you do, the money will follow. But I wasn’t cool. I was freaking out. As the end loomed, I felt like a man edging toward the end of a plank.

  My biggest worry was that I had wasted the experience. And what greater proof was there than my looming joblessness? I knew people would think less of me. “You went to Harvard Business School and couldn’t find a job?” A clear hierarchy had also emerged within the class. At the top were those going to the private equity firms and hedge funds on salaries of hundreds of thousands of dollars a year. People called them “studs,” as in “he’s a total finance stud, going to Blackstone.” Then there were those going into investment banking and consulting, cliquey groups all swapping notes on which office they would be heading to, which partners they would be working for. Five percent of the class was going to McKinsey, around forty-five students. Among those interested in technology, several had snagged jobs at the top venture capital firms in Silicon Valley and Boston. Seven more were off to Google, nine to Microsoft. Once you added them up, finance, consulting, and major technology firms had taken 69 percent of the class. Right at the bottom of this hierarchy were those without jobs or even offers: me.

  The international students were split between those going straight home and those who wanted to spend more time in America. The Latin Americans tended to want to get a blue-chip American firm on their résumé before going home. A few years with Citibank or Goldman Sachs would not only help pay down those loans but give them even greater credibility. Most of the Europeans were heading straight back across the Atlantic, many to London. A new trend among the Indians was to go immediately back to India. One of the smartest finance students in our entire year gave up a place at Goldman Sachs’s top internal hedge fund in New York to set up a private equity fund in India. The Chinese were the same. The opportunities for them as HBS graduates in China were far greater than if they had become yet more MBAs scurrying around New York. Aside from the explosive economic opportunities, they would be special at home in a way they were not in the United States.

  Whenever I started feeling the anxiety, I turned to Margret. She reassured me. I had not wasted my time. I had worked hard. Read every case. Never gone to class unprepared. Attended talks. Made time for the section. Tried my hand at a start-up. Gone for interviews. I just hadn’t found the right thing. But as the weeks slid by, she admitted that she, too, was getting anxious. We had two young sons. We needed an income. At some point, the agonizing was going to have to stop and I would have to choose. The loans I had accumulated were now starting to weigh on me. I had spent pretty much exactly what HBS told me my education would cost, including tuition and accommodation, health insurance and living costs for me and my family. The total bill was $175,000. Much of that I had borrowed, and the first payments would come due six months after graduation. Max, the German entrepreneur, told me not to worry. “They’re all flexible, and you can delay and reduce the amounts. Think of it as easy credit, debt on your balance sheet. You’re leveraged. It’s what we’ve been taught to do.” I was not consoled.

  The evening after the Managing Oneself class, I went around to Bo’s house for dinner. When I arrived he was busy inserting a Budweiser can up a raw chicken, which he then rested on top of his grill. “We’re having beer chicken,” he explained. “Real juicy.” When I told him of my anxiety, he threw himself down in one of his large recliners and ruffled the hair of his two dogs.

  “PDBizzle,” he said, using his, and only his, nickname for me. “When are you going to stop thinking of these people as your peer group? They’re this weird, self-selected group of people. Most of them want to be bankers and consultants. They are not like everyone else in the world. I know this, so listen to me: you would hate working with them. You would hate working at a large company. You might think that because you enjoyed a few courses here, you would enjoy it. But you would not. Business and business school are totally different things.”

  And yet, it required more inner strength than I could muster that March and April not to measure myself against my business school peers. Every company that came to campus seemed to want candidates with “two years of management consulting or investment banking.” Still I applied and was frustrated when I was rejected. I imagined that an MBA would be proof enough of my interest in business and of some basic competence. But for big companies with a number of MBA résumés to choose from, HBS alone was not enough. You needed to have been following the path to these companies long before. Whenever I called an HBS alumnus for help or advice, he was invariably interested and helpful. He’d pass on names of other people to call, suggest ways into companies or sources of finance for ideas. Many alumni told me that it was far better to take a great job in September than one I would hate just to have something at graduation. My deeper problem was that I still didn’t know what I wanted to do, and I was starting to feel pretty pathetic about it.

  I realized I was torn between extremes. At one end was Joseph Galli, at the other Alice Trillin. Galli had visited campus one dark winter afternoon during the second year, several months after being fired as CEO of Newell Rubbermaid. He had been appointed to this job at the precocious age of forty-two, after a successful career at Black and Decker. But he lasted just four years and failed to turn the company around. He was clearly feeling chastised after his failure at Newell, but retained this manic quality, as though he were in withdrawal from the CEO life. “I’ve had the benefit of taking four months off,” he said, talking at a blistering speed. “For four months I’ve gotten to know my family, relax, read the books I’ve always wanted to read.” I wondered, could it take just four months to do all that? Later, he said, “I don’t think you can be a good CEO and spend time with your family, play poker three nights a week, join a golf club, go to Myrtle Beach with the boys, hit the strip clubs. Something’s going to have to give.” He said that he did not know his eighteen-year-old daughter until she was twelve and admitted he “blew it.” But as I sat there listening, I wondered how he would have spoken if he had succeeded at Newell. If his professional life had continued on an upward trajectory, would he be telling us about his relationship with his daughter? Galli, I felt, along with all those businesspeople who boasted of attending their kids’ sports games, as if that were the ultimate sign of good parenting, had made their choice: work first, family second.

  A friend from the section who had found a job at a blue-chip investment bank told me that he had had this weird conversation with the head of his bank when he came to speak at HBS. They were standing around before the talk, the CEO was staring at his feet, so my friend struck up a conversation. “Any regrets about being a banker?” he said. “Well, it’s exhausting,” said the CEO, without looking up. “And I barely talk to my son.” My friend related this story as if it were one of the most pathetic things he had ever seen. But he still took the job.

  Alice Trillin was the wife of the writer Calvin Trillin. She died in 2005, and Calvin wrote a beautiful reminiscence for The New Yorker, which I read at the end of my time at HBS. Alice, he wrote, had a very strict view of parenting. Either your children were the center of your life, or they were not. Everything else was commentary. The words electrified me. It was a truth I had known coming into HBS but had slowly lost grip of. You could not have multiple centers in life. It would only lead to confusion. There was no balance, there were no trade-offs. Just elementary choices about how you lived your life. You had to pick.

  One evening, a friend who had graduated from Georgetown’s busi
ness school and started a hedge fund that closed within two years took me for a drink at the Racquet Club in New York. We sat on the balcony staring up at the office buildings on Park Avenue, which hummed with light and life. “I’ll tell you what your problem is,” he said, pointing at me with his cigarette. “Your problem is this: You wanted to make all this fucking money and you went to Harvard Business School so you’d have the opportunity. But all the time, you couldn’t quiet the voice inside your head telling you that just making money is a ridiculous way to spend your life. I know this is your problem, because I suffered from the same thing, before I got over it.”

  The previous summer in London, several friends had bombarded me over dinner, saying I was selling out by going for a highly paid job, asking me why, since I had so many of the pieces in place to live exactly the life I wanted, wasn’t I grabbing it? Why was I trying to rejoin the herd at the very moment I had a chance to escape? “You’ve managed to stay off the hamster wheel this long,” one of them said. “Don’t for God’s sake go jumping on now.”

  We had a month-long break between the end of classes and graduation. I returned to England for a week, and we also spent some time in New York. One day, I was sitting on a bus going down Lexington Avenue around lunchtime when I looked out to my left and saw a stocky little figure in a camel overcoat cut to mid-thigh fidgeting on the sidewalk. The way he stepped from foot to foot, he looked as if he were desperate to pee. His large head was shaved and his face was pinched into a sour pout. Beneath his coat he wore a pair of expensive-looking jeans and pointy black leather shoes, all of which looked made for a much younger man. A few steps in front of him stood another, much larger man in a long black raincoat, holding his finger to an earpiece.

  The bodyguard looked up and down the busy street, maintaining an invisible cordon around his ward. It took me a moment to recognize the man in the camel coat. And even then I didn’t quite believe it. Why was Ron Perelman, all seven or eight or nine billion dollars’ worth of him, depending on where the markets were that day, standing on a street corner in the middle of the day? Didn’t men of this stature have people to stand on street corners for them while they gobbled up companies?

  The first time I ever read the name Ron Perelman was in an issue of Vanity Fair in 1995. He was photographed sitting in a Porsche near his summer home in the Hamptons. At that point, he still had some hair clinging like lichen to the outer surfaces of his lumpen head and he had just wriggled free of his second marriage to embark on his third. In the photographs, he looked extremely pleased with life, as well he might, and either oblivious to or contemptuous of what the rest of the world thought of small, tubby, middle-aged men with Porsches, blond wives, and billions in the bank. It felt like he was grinding his good fortune like one of his dead cigars into the ashtray of the reader’s face.

  During the 1980s, when Perelman made the bulk of his money, he was considered a renegade, a thug holding up corporate America. He looked for companies he considered undervalued, bought them with large amounts of debt, and then broke them up for a profit. The debt was often provided to him by Michael Milken of Drexel Burnham Lambert, who later went to jail for securities violations. Since it was poorly secured, the debt carried high rates of interest and came to be known as “junk.” But the term junk never made sense to me. The risk of a loan derives from the probability of its being paid back. Now you can assess that probability based on the physical assets securing the debt and the cash flow they generate. But you can also assess it based on the personality of the borrower.

  Ordinary banks use individual credit scores to size up borrowers. But a sophisticated lender looks more deeply. What drives this person? How much does he want to succeed? If I were a lender presented with the red-hot ambition of a Ron Perelman, all of that seething insecurity, that extraordinary will to power, that unquenchable need for cars and women and status, I would lend and lend again, and the last thing I’d call my loan would be “junk.” I would be delighted to have the opportunity to lend to a man so motivated to make money. J. P. Morgan said something along these lines in testimony to Congress. Morgan was being questioned by Samuel Untermeyer, a relentless corporate lawyer. Untermeyer asked Morgan if the main criterion for lending was the money or property of the borrower. “No, sir,” Morgan shot back. “The first thing is character.” “Before money or property?” Untermeyer asked. “Before money or property or anything else,” Morgan said. “A man I do not trust could not get money from me on all the bonds in Christendom.” The financial system turns on personalities as much as anything else.

  Anyway, somehow time and events have cleaned any stain from Perelman’s methods. Today he would be fêted as a private equity genius, maybe even touted as a future Treasury secretary. The heirs of Perelman and Milken are today’s financial mainstream. Leverage has gone from dirty word to byword. Firms like Blackstone borrow cheaply to buy undervalued companies and then reorganize them at enormous profit to themselves with barely a whimper from Perelman’s erstwhile critics. The predators have become the establishment.

  So there stood Ron on the street corner, one hand in his coat pocket pressing, perhaps, on that bursting bladder. I stared and stared, while the bus stopped to let people on.

  It took Perelman until his mid-thirties to really get going, which gave me some hope. I still, just, had time to catch up. But once he got going, he was unstoppable. A multimillionaire by the time he was thirty-six, a billionaire soon afterward. Along with the billions came the divorces, four in total. My first reaction, after recognizing Perelman, was delight. How ordinary he looked! How miserable and shifty-looking on this gray Manhattan morning. The last thing I wanted a multibillionaire to look was happy.

  But almost immediately I wondered, what was my problem? What had Perelman ever done to me? It is not as if I had never wanted to be rich like that. So why was it that every time I encountered someone with enormous amounts of money, my first instinct was to think, “well, of course, he must be miserable,” and then seek out the frailest shred of evidence to support my assumption. So you need to pee, do you, Perelman? Hah! Fat lot of good those billions are doing you. Here I am in my nice warm bus, a paperback in my pocket, happy as only a soon-to-be-jobless Harvard MBA can be. Give me a billion dollars and I’d know what to do with it. Let’s just say paying a bodyguard to walk me across Lexington Avenue would not be top of my list. You’re a loser, Perelman. Go ahead, count your billions and your blondes. Doesn’t change anything. You’re still a fat man in a tight coat looking anxious on a street corner.

  But why on earth had I put myself through Harvard Business School, of all places, an institution whose purpose was teaching people how to amass and deploy vast resources? Why did I still experience this emotional whiplash in the presence of the very rich? If I admired them so much, then I should simply try to emulate them, not yearn for their misery. Was I just jealous? Or was I experiencing the deformed emotional offspring of my encroaching awareness that for lack of ability, personality, and hunger, I would never experience that kind of wealth? As a twenty-year-old, I had imagined I might be Jimmy Goldsmith. Now here I was thirty-three, no closer than I had been thirteen years earlier, with any hope of achieving that ambition shriveling with every passing day.

  I recalled a morning in Aldrich Hall, when Cedric and I were passing the time between classes talking about French politics. Jacques Chirac, he told me, was rumored to consult West African marabouts, witch doctors. These marabouts, it was said, would help a man achieve great power only in return for enormous personal sacrifice. In 1988, after Chirac lost the presidential election, it was said he summoned a marabout to Paris. If he wanted the presidency, the witch doctor told him, he must sacrifice one of his daughters. Soon afterward, Chirac’s younger daughter, Laurence, began suffering from extreme anorexia, from which she has never recovered. In West Africa, Cedric assured me, this outlandish story was accepted as gospel.

  This tale struck me as a twist on the Faustian pact. If you are ready to
give up your soul or, failing that, a child, the devil will give you anything. Perhaps an economist will do the work one day. How many very rich or powerful self-made people have suffered a terrible personal loss? And do they suffer more than average? But watching Perelman, I thought about Faust in a different way. Instead of being a morality tale, perhaps the story was just a reflection of how the less fortunate have always consoled themselves. No one could be rich and happy. It was one or the other. It had to be. Didn’t it?