by John Rolfe
“This story is about the dues that all junior investment bankers have to pay….In general, the only way for a young associate to survive the investment banking gauntlet is either to buy into it hook, line, and sinker or to maintain some sense of humor about what it is that he is doing. Keeping one foot grounded in reality, though, doesn’t necessarily dictate the maintenance of any mental equilibrium. After all, if you’ve got one foot on a block of dry ice and the other on a red-hot stove, the average temperature may be pretty comfortable but you’ll still end up with two blistered feet at the end of the day.”
—from MONKEY BUSINESS
“Outrageous and hilarious.”
—BookPage
“Well written, humorous…food for thought…timely, quick-paced.”
—Library Journal
Copyright
Copyright © 2000 by John Rolfe and Peter Troob
All rights reserved.
Warner Business Books
Warner Books
Hachette Book Group
237 Park Avenue
New York, NY 10017
Visit our website at www.HachetteBookGroup.com
The Warner Business Books logo is a trademark of Warner Books.
First eBook Edition: October 2009
ISBN: 978-0-7595-2320-3
When we started writing this book, we ran into a dilemma. We had lots of stories we wanted to tell, but we also had lots of friends who didn’t necessarily want their names associated with those stories. We knew that a story without people isn’t much of a story, though, so we decided to make some changes.
The stories in this book are true. However, we’ve modified the identities and certain details about the people and companies and divisions we’ve written about. All the names except our own, DLJ’s, and those of Dick Jenrette and John Chalsty, have been changed. The dialogue has been reconstructed to the best of our memory. After all, we didn’t spend our days as investment bankers wired up like a couple of CIA guys.
Hopefully, we’ve managed to protect the innocent and embarrass only ourselves. We’re OK with that. We hope this keeps our friends friendly and ensures that neither of us will ever wake up with a horse’s head under our bedsheets.
Truth is indeed stranger than fiction.
Contents
Copyright
Acknowledgments
Introduction
Recruiting: The Seeds of a Dream
Interviews and Ecstasy
Summer Boot Camp
The Courtship
Training Wheels
The Food Chain
The Business
The Sizzle
Fishing for Value
The Merry-go-round
The Bottleneck
The Holiday Party
Drafting
Push the Button
Travel
Bonuses, Reviews, and Compensation
The Epiphany
The Last Straw
Liberation
Epilogue
Acknowledgments
There are a whole bunch of people we need to thank.
First of all, we’d like to thank the lovely ladies who’ve promised to spend the rest of their lives putting up with us: Marjorie and Amy. We’re two very lucky guys, although we might not tell you that quite as much as we should. Your support and encouragement are priceless. We love you.
Second, we’d like to thank our entire families. Moms, dads, stepparents, grandparents, brothers, sisters, in-laws, and the rest of the gang. We’re just happy that we’re not the only dysfunctional ones in the crew. You make us proud. If it weren’t for you, we’d have no one to thank for our deviance.
We’d like to thank our editor, Amy Einhorn, for great editorial advice and for making this entire process as easy as it could have possibly been. Thanks for helping us relax when we just got too damned hyper. You’re an angel.
We’d like to give special thanks, for both reading the early drafts and providing other invaluable advice, to Lisa Cohen, Susie-Q Silva, Julie Wurm, Mike Marone, Nick Day, Deion Oglesby, and Lou Wallach.
We’d like to thank everybody else who read the early drafts of the book and told us that we needed to try a little harder…Climpedy Ballbag, John McGuire, P Rowan, Dan Shore, All- Sports & Kelley Day, David Hillman, David Jackson, and Jon Bauer. One day perhaps we can repay you—like with a cookout or something. We’ll even buy the beer.
We’d like to thank the entire crew at Time Warner Trade Publishing, especially Sandra Bark—without all of you, it wouldn’t have happened.
We’d like to thank simian artist extraordinaire, Larry Keller. You draw the best monkeys of anyone we know. May your life be full of bananas.
We’d like to thank our counselor, Bob Stein, for providing good advice and helping us chart a safe course through the sometimes uncertain waters of publishing legalese. We like you lots and would love to spend more time shooting the shit with you, but that damned business of getting charged by the hour is standing in the way.
And, of course, we’d like to thank all our other pals who were in the trenches with us at DLJ, without whom we wouldn’t have had anything to write about. You know who you are. We hope that every single one of you finds what you’re looking for.
Caution: Cape does not enable user to fly.
—Batman costume warning label
Introduction
I never could understand how two men can write a book together; to me that’s like three people getting together to have a baby.
—Evelyn Waugh
A few years ago, Rolfe and I stood on the edge of what we thought was a desert. Across the desert we believed we saw a lush, green oasis. We hoped that the pleasures of that oasis would one day be ours. The more we thought about the oasis, the more convinced we were of the untold pleasures that lay within its luxuriant borders. There was only one problem. The desert.
When we first started out as investment banking associates, the oasis was represented by a coveted appointment as a managing director of the firm. We were willing to cross those hot burning sands, the interim years as investment banking associates and vice presidents, in order to one day bask in the shade of a palm frond. A few months after beginning our journey, though, we began to suspect that the original oasis that we had seen might be a mirage. For a time we became lost, delirious in the hot sun, but eventually we regained our bearings. It became clear to us that whatever oasis lay out there for us, to get there we were going to have to cross more sand than we could ever have imagined.
We reasoned that many careers have a painful rite of passage attached to them. The medical profession has med school and residencies. The legal occupation has clerkships and the years of initial grunt work. The investment banking business is no exception. Young investment bankers must pay their dues in order to be able one day to grab hold of the brass ring. Most, if not all, senior bankers paid these dues and took these lumps. Some of them are better off for having done so. If they had to do it, then so did we. Those were the rules.
Are we better off for having subjected ourselves to the associate ranks of investment banking? Yes. Was it all miserable? Absolutely not. We experienced lots of good and lots of bad while on the dues-paying highway, most of it without much sleep. But at one point along that highway we decided to pay the exit toll and get off. We both still work in the world of Wall Street, and we’d be lying if we told you that money doesn’t matter to us. When it came to investment banking, though, the costs and the benefits seemed way out of whack. So we don’t work as bankers anymore, and now we enjoy walking into work every day.
This is the story of our rite of passage. It’s the story of two investment banking associates and our long journey from eagerly compe
ting to enter the world of investment banking to even more eagerly scrambling to get out of it. This book is our catharsis. Banking is what we did—investment banking associates were who we were. Like virgins defiled, we can’t possibly rid ourselves of the scourge to which we knowingly submitted. It strengthened us and it toughened our hides. That was good and that was bad. If there was a pumice stone for the soul, we would have scrubbed ourselves raw. There isn’t.
Investment banking is a profession characterized by extremes. Whether it’s money, booze, food, sex, or work hours, the typical banker believes that more is better. We experienced our fair share of these extremes, and have recounted some of our adventures within these pages. Excess and debaucherous pursuits are only half the story, though. The other side of the coin for us was our realization that being anointed investment bankers didn’t make us the big-shot advisers to corporate directors we thought we were going to be. Instead, it turned out that we spent most of our work time as mindless paper processors. And even though we were paid mighty well to push that paper around, the unwavering devotion to the job that was required of us just wasn’t worth it. We’ve tried to convey our path to these realizations within these pages as well. We don’t have a lot of regrets. There aren’t many jobs, after all, that could have given us the opportunity to live like hedonists and come to the realization that the emperor has no clothes, all before our thirtieth birthdays.
We worked at Donaldson, Lufkin & Jenrette (DLJ). This story isn’t just about DLJ, though. This story is about the dues that all junior investment bankers have to pay. We have lots of friends at other investment banks. Same shit. Investment bankers spend 50 percent of their time trying to convince potential clients that their bank is different than the other guy’s bank, but for a junior banker, at the end of the day, they’re all the same. Any young investment banker, regardless of the bank he works at, can tell the same stories about working for three days straight with no sleep, getting screamed at for messing up the page numbers in a pitch book, or aging before one’s time like a block of cheddar cheese left out of the refrigerator. The older bankers may have had better lives, they may have had more fun, but we wouldn’t know this because we were junior bankers. As junior guys, our lives sucked.
For some, hopefully, this story may provide a fresh window into the world of investment banking. Without being one, no one can really know what a banker does. Before we started, all we knew was that bankers, traders, and egregious salaries were always mentioned in the same breath. Understanding what a trader does is a little more intuitive than understanding what a banker does, because everybody’s traded for something in their life. It may have been something as simple as a rookie Ron Guidry baseball card for an All-Star Reggie Jackson card, but the concept of an exchange for relative value is as old as humankind itself. Investment banking has no such intuitive counterpart in real life. It took our mothers six months to realize that we weren’t stockbrokers, working the phones to sell crappy public offerings to unsuspecting investors. It took us another six months after that to realize that we were, in fact, selling crappy public offerings to investors. The only difference was that we weren’t selling them over the phone, we were doing it in person, and the investors weren’t unsuspecting individual investors, they were the Fidelitys, the Putnams, and the T. Rowe Prices of the world.
The closest most people have ever come to understanding what an investment banker does may have been on October 24, 1995, when they heard the outrageous special interest story of the day. The wire services released the story first. It was quickly picked up and parroted by almost every major media outlet in the country as a classic example of Wall Street excess. A fifty-eight-year-old frustrated managing director from Trust Company of the West, on an airplane trip from Buenos Aires to New York City, downed an excessive number of cocktails, got out of his seat in the first-class cabin of a United Airlines flight, dropped his pants, and took a crap on the service cart. There you have it. That’s what bankers do: consume, process, and disseminate.
In general, the only way for a young associate to survive the investment banking gauntlet is either to buy into it hook, line, and sinker or to maintain some sense of humor about what it is that he or she is doing. Keeping one foot grounded in reality, though, doesn’t necessarily dictate the maintenance of any mental equilibrium. After all, if you’ve got one foot on a block of dry ice and the other on a red-hot stove, the average temperature may be pretty comfortable but you’ll still end up with two blistered feet at the end of the day.
Our first full-year compensation after signing on full-time at DLJ following business school was about eight times what the average college graduate earns at his first job, and we could expect that compensation to double every two years. We traveled the country by private jet, stayed in the best hotels, and ate in the best restaurants. Eventually, though, we realized that the compensation levels and the perks weren’t in place because being an associate in investment banking was a great job. They were in place because the job sucked. The one immutable truism that exists for bankers is that any problem can be solved by throwing enough money and time at it. The implication? The banker’s greatest enemies are those people whose souls are not for sale, and those who realize that time is a nonrenewable commodity.
Our intent here is not to judge. Lots of our friends are still bankers. They’re still out there crossing that burning-hot sand with the sun beating down on their heads, and some of them really like what they’re doing—just like a throng of wandering Bedouins. As some malcontent once said, it’s a dirty job but someone’s got to do it.
When we talked about writing a book about our time as associates in investment banking we asked each other, “What will we say?” And then we immediately answered, “How we got there. What we did and how we got out. How we lost our balance. Everything, man.”
Well, as our favorite boxing referee, Mills Lane, always proclaims, “Let’s get it on!”
Recruiting:
The Seeds of a
Dream
See the happy moron,
He doesn’t give a damn.
I wish I were a moron—
My God, perhaps I am!
—Anonymous rhyme
In the middle of Times Square, at the intersection of Broadway and Forty-third Street, sits what was once the United States Armed Services’ premiere recruiting office. The office, built almost fifty years ago, was conceived as a shining testament to the unlimited promise of a military career, positioned as it was in the middle of the Crossroads to the World. Today, though, it is only a vague reminder of what it once was. Vagrants use the back of the building to provide some relief from the summer sun, and occasional relief from a bottle of Boone’s Farm. On a good day, a few listless teenagers may wander in to find out exactly how much they’ll get paid to be all they can be.
With the decline of the military’s once-venerable institution, however, has come a concomitant rise in another recruiting institution: the Wall Street Investment Banking Machine. From lower Manhattan to midtown, the well-oiled device hums around the clock and around the calendar. Its serpentine tentacles are rooted in nearly every well-regarded undergraduate institution in the country and all of the top business schools. The machine’s sole objective: to fill the conduit with as many analysts and associates—the serfs and indentured servants of the investment banking world—as it can find.
Ultimately, as we would find out, a large part of any investment bank’s success becomes a function of how many bodies it can throw at a given piece of business, or, even more important, a potential piece of business. The effort to fill the pipeline with these bodies, therefore, is never ending.
The Analysts
At the lowest level of the investment banking hierarchy are the analysts. To find this young talent, the I-banks send their manicured young bankers out to the Whartons, Harvards, and Princetons of the world to roll out the red carpet for the top undergraduates and begin the process of destroying whatever noble ideals th
ese youngsters may still have left. For the recruiting banker, the ideal analyst candidate is somebody with above-average intelligence, a love of money (or the capacity to learn that love), a view of the world conforming with that of the Marquis de Sade, and the willingness to work all night, every night, with a big grin on his face, like the joker from Batman.
The analysts are at the bottom of the shit heap. They are the algae under the rim of the public toilets at the Port Authority bus station, the scum below the scum at the bottom of a beer keg. They’ll spend two to three years being mentally, emotionally, and physically abused, and for that benefit they’ll be well trained and extremely well compensated. No matter how bad things get, they’ll never have anybody lower on the corporate totem pole to whom they can off-load their misery.
Following their two- to three-year stint, the vast majority of the analysts will either strike out for any of a handful of graduate business schools, depart the firm for other opportunities within Wall Street’s financial community, or regain their sanity and elect to pursue other interests entirely. There’s very little upward mobility from the analyst programs into the higher echelons of the investment bank. Analysts quickly learn, in no uncertain terms, that their days as analysts terminate after three years. To the uninitiated this may seem, at best, shortsighted and, at worst, akin to infanticide. Why jettison these young minds with two to three years of hardcore financial training? The answer is simple. The analysts have been tortured and abused for three years. They’ve reached the point of being dangerous. To keep them on would be to institutionalize sure seeds of discontent within the investment bank.
A majority of the analysts leave the job pissed off and with a deep-seated hatred of the investment banking institution. They learned a lot and enjoyed being paid more money than they ever thought they could make, but they also despised the work and the people that made them do it. However, amazingly, it seems that about 50 percent of those analysts who hated what they did go back into investment banking after two years in a graduate business school program. Somehow, absence makes the heart grow fonder. As with a bad injury, they tend to forget how terrible the pain was. They know it was horrible, but they just can’t remember exactly how much it hurt. So these analysts go back into banking thinking that life as an associate will be different. Basically, they reinjure themselves. Troob was one of these injured veterans who decided to return for a second tour of duty.
