Monkey Business

by John Rolfe

  With the start of our new careers edging ever closer, we were beginning to feel good about our choice. We had a conversation in July and talked about doing IPOs and doing deals in the Merchant Bank. We talked about the big money and the time we’d have to spend it. We discussed our grand plans of taking the New York social scene by storm. The parties, the big life. We talked about being hotshot investment bankers at the hottest firm on Wall Street. We were stroking each other and it felt good. We thought we were entering nirvana, and that we would soar like eagles over the heads of the common folk.

  Actually, we weren’t eagles. We were pigeons, following a trail of bread crumbs.

  Training Wheels

  Never try to teach a pig to sing; it wastes your time and it annoys the pig.

  —Paul Dickson

  Both Rolfe and I graduated from B-school in May. DLJ training didn’t start until mid-August, so we had over two months of pure, unadulterated freedom on our hands. We were both thoroughly relaxed by the time DLJ training began. We entered training bright-eyed and bushy-tailed, and believing that training was the first step on the road to the pot of gold at the end of the rainbow.

  Investment banking training can be summed up pretty succinctly. It’s a huge waste of time and money but a necessary step for the investment banking machine to teach you your role as an associate and lure you into a high standard of living. Once you’ve started living with limousines and expense accounts, it’s hard to go back.

  On the first day of training we did nothing. We said hello to our fellow associates and found out that they, too, had been wined and dined and told that they were the best candidates that the investment bank had seen in years. We found out that all members of the associate class had been told that they were going to be the next “golden child” and that they were going to work in the Merchant Bank and make all the dough. They, too, were told not to worry and that they would be “protected.” We started to realize that we had all been duped.

  However, the human brain has a peculiar way of rationalizing everything and filtering out the unpleasant realities that it knows to be true. Each of us sat there and said to ourselves, “All these other associates were told this nonsense to cajole them into taking the job, but what they told me was the truth.” Somehow this warped rationale made everybody feel a whole lot better.

  My father taught me many years ago not to believe my own bullshit. Well, we didn’t heed this sage advice, and we were so deep in our own garbage that we were suffocating underneath its weight. All of us, as associates, made ourselves believe that we were different and special. We would soon learn the real truth. But until then, we felt great about ourselves and our choice of careers.

  At the end of the first day of training, the investment banking machine handed out corporate limousine account cards, beepers, and cellular phones. It made us feel like investment bankers should feel. Like superstars. We imagined ourselves taking a corporate car to the airport while negotiating a big deal on our cellular phone. Then, we imagined going out to a restaurant with our clients and throwing down the platinum credit card to cover the thousand-dollar bill that included a four-pound lobster, porterhouse steak, and two bottles of Château Lafite Rothschild red wine, all of which would be reimbursed by the firm.

  We were ready for anything because we were the superbankers, able to force huge mergers to happen in a matter of minutes and bring in monstrous fees to the bank. We were able to have our party house in the Hamptons and our memberships at Maidstone, National, and Shinnecock. We were able to crap lightning and shit thunder.

  Training lasted approximately three weeks. We met every day, including weekends, in a conference room from 8 A.M. to 6 P.M. A potpourri of officers of the firm were paraded before us, and each explained a different product or service the bank offered.

  Basically, training taught us our role in the process and how we could get the process done as quickly as possible. We learned that companies followed our advice for a fee and that was good. We learned that “a busy associate is a good associate.” We weren’t being trained to be thinkers. In training we learned what we were going to be doing for at least the next four years of our lives—processing lots of junk for fees and making things look pretty so that the Fidelitys, Putnams, and unsuspecting individual investors of the world would buy them without asking too many difficult questions.

  While some evenings during training were designated as social nights out, other evenings were reserved for projects to be done the following day. Either way, every evening was accounted for. We needed to learn what we would be doing, for whom we would do it, and how to get it done.

  A second-year associate came to class at the end of the first week of training and explained to us what role we were being paid to play. He didn’t seem quite as excited about the whole investment banking shindig as we thought he should have been. He said…

  “As associates, the standard stuff you’ll do is to help managing directors get business. The managing directors sit in their offices and think of ways to make money for the firm, and to make money for themselves. This sets the ball in motion. We create pitch books for the managing directors so that they have something to give to the potential clients. The managing director wants the potential client to know that we worked very hard and spent lots of hours preparing for the meeting. This shows the company that we’re serious about the business and will give the company our full attention.

  “You’ll have to do some valuation analysis so that you can prove that DLJ will be able to obtain the most money for the company being pitched. You’re going to spend a lot of time while you’re putting the pitch together working with the word-processing department and the copy center.

  “After you stay up all night doing the pitch you make flight arrangements for you and your team, and then you go to the pitch and carry the books. If you have an analyst, then you have him carry the books. This is the advantage of being an associate.

  “If you go to the pitch, and if you are able to stay awake, then you can watch how a managing director grovels for business. If you get the deal, then you and your team have lots of work to do. You may as well cancel all of your plans for the next six weeks because you’re in for some long nights and hectic days.

  “All in all, it’s hard work. But, you know, you get paid pretty well to do it and you’re learning important banking stuff. That’s really it.

  “More important, tonight the firm is letting all of you live the high life on the DLJ nickel. Don’t waste time dillydallying around here. According to my watch it’s five P.M. and if I were you I’d start whooping it up. I’d love to join you, but I’ve got loads of work to do. Have fun, because once training’s over you guys won’t see the light of day again.”

  Rolfe turned to me with his brow furrowed. “He seems a bit bitter. Maybe he had a tough night. Maybe he’s not working for the right people. He probably likes his job and is pretty happy, right?” Rolfe was looking for assurance that we had made the right choice, but I wasn’t able to give it to him.

  Instead of further exploring this revelation, we ignored it and jumped into one of the black chauffeured cars that were waiting for us in front of the offices, compliments of the firm, and went out for an evening of festivities—all paid for by DLJ.

  The investment banking machine was beginning to suck us in with the lavish lifestyle that it would allow us to live.

  Designated evenings out during our weeks of training were filled with baseball games, dinners at the Palm and Sparks, and nights out at dance clubs and, finally, strip bars. Most of it was paid for by our beloved firm. We were living large. The days were filled with lots of catnaps and free lunches. The firm was keeping us in an inebriated state so that we wouldn’t realize what the hell we were getting ourselves into. If we had, we might have left immediately. But we were loving every minute of it. A bunch of twenty-six-year-old self-important business school grads wearing our best suits and ties and being told that we would be the next big sho
ts on Wall Street. This was where Rolfe and I rekindled our friendship, sitting at the Crane Club drinking Jack Daniel’s on the rocks and discussing how we were going to be managing directors in five short years. We felt BIG. We followed up our Crane Club fun with a visit to what would become one of our favorite hangouts, Shenanigans—a second-rate strip club right around the corner from DLJ’s offices.

  As the night wore on, the drinks all began running into one another. We had no idea how much we—i.e., the firm—owed on our bar bill. As the bill racked up, though, something extraordinary began to happen. The alcohol actually cleared our brains of all the clutter and set our thoughts straight.

  “Hey, Rolfe,” I shouted over the booming Shenanigans dance music. “You know, you were right, that second-year associate was pretty bitter. Do you think he hates what he’s doing?”

  “Yeah, maybe. Maybe his life really sucks. Maybe he was told that he would work for the good people, but then when he finally got to DLJ things changed.”

  “Shit. That wouldn’t be so good. He did look pretty tired, not to mention angry and about forty years old, didn’t he?”

  “He sure did, Troobie. He sure did. Man, that’s fucked up. Do you think that’ll happen to us?”

  It was like we were finally sober for the first time since we’d set foot inside DLJ as summer associates over a year before. The alcohol had sent a bolt of lightning through the gray matter, and we were realizing that we weren’t going to be treated like gold, and that we were going to have to pay some mighty painful dues. Dues that most of the senior guys had paid but that nonetheless were agonizing. If they had to do it, then so would we. Those were the rules. Maybe it was due to our drunken stupor, but it sure felt like we had been sold a bill of goods. We began to realize that we were in for a long, painful experience.

  Then one of our favorite dancers, Angel, finished up on the main stage and headed our way to resume table dancing for us.

  “What? I can’t hear you, man. The music’s too loud. I’ve got the next round. You want another scotch and water?”

  “Yeah, make it a double.”

  The night went black. The next day Rolfe and I conveniently forgot the revelations we had come to the previous night. We were back in training class going for the gusto, and taking our place at the back of the queue.

  The Food Chain

  The higher a monkey climbs,

  the more you see of his ass.

  —General Joseph Stilwell

  Within an investment bank there is a strict hierarchy. It’s a pyramid, with each level of the pyramid resting on the shoulders of the level below. The further down you travel into the pyramid, the more primitive the species of banker becomes. Remember who built the great pyramids of Egypt? That’s right, it was a bunch of sunburned slaves in loincloths.

  The senior managing directors are at the pinnacle of the investment banking pyramid. They’re the guys on the front line. They source business. They scour the world looking for ways to make fees for the investment bank. They approach companies in order to sell them on doing an IPO or raising money through a bond underwriting. They ask companies to buy other companies or to sell themselves. Every managing director’s prime concern is to attract clients and bring fees into the bank. That’s why they’re paid the big bucks. Imagine a handsome gentleman in a twenty-five-hundred-dollar suit. He’s neatly shaven, nicely manicured, and his shoes cost more than most people’s living room furniture. That’s the managing director.

  The senior vice presidents are the next level down in the pyramid. At some banks they’re called junior managing directors, but their role is the same. They attempt to bring in some business in order to justify their high-paid existence, but much of the time they simply process the deals. They inherit the business from the managing directors and with their team they process the hell out of it. They make sure that whatever deal was promised to the company is done quickly. Sometimes they even make sure it’s done correctly. All the t’s are crossed and all the i’s are dotted. They are so close to the brass ring that they can taste it. Imagine a used-car salesman wearing a polyester leisure suit. Maybe he hasn’t shaved for a couple of days and he’s starting to smell a little gamey. That’s the senior vice president.

  Next come the vice presidents. The vice presidents are a crew of processing robots, few with any life outside the office. The vice presidents are making roughly half a million bucks a year, but they don’t have any time to spend it. When and if they do get out of the office, they sleep. This turns them into a hapless bunch of angry young men and women who can’t understand why they’re so frustrated. They want to have relationships and become functioning members of the human race, like their friends outside of the investment banking realm, but they don’t have the time. Usually, the only dates they can get are with the gold diggers who want to get their claws into a piece of that healthy paycheck. The nice boys and girls in the city, the ones that the vice presidents wish they were dating, are busy screwing the unemployed artists and musicians who have no money but plenty of time.

  The vice presidents are making too much money to change careers because no other organization, with the exception of another investment bank, will hire a vice president and pay him half a million dollars a year to process deals. The vice presidents don’t really take any financial risks. If they’re willing to shamelessly kiss every upper-level ass they see and run around all night churning documents, they know that they’ll continue to get a fat paycheck. The problem is that the vice presidents are making all this money, but they’re not content. They’re a miserable crew because they’re trapped. Like caged animals. Imagine a prisoner of war kept shackled in a moldy basement for five years with no light, nothing but shoe leather to eat, absolutely no bathing privileges, and occasional doses of electroshock therapy. That’s the vice president.

  At the next level in the pyramid are the associates. Lots of them. The associates’ lives suck. The vice presidents take out their aggressions on the associates all day and all night. It doesn’t end until the associate either becomes a vice president, leaves, or commits suicide. The associate kisses the vice president’s ass because the vice president helps determine the associate’s bonus. Here’s how it works: the managing director says “Jump” and the senior vice president says “How high?” The senior vice president then perpetuates the panic attack by sending a voice mail that conveys a false sense of urgency to the vice president. He basically kicks the dog. The vice president looks at the associate, takes a hot poker, and shoves it up the dog’s ass. The associates are barely human but at times are brought to client meetings and are expected to act human. The associates are the Cro-Magnon men. They live in caves, have trouble walking upright, and have a lot of hair on their backs. Usually, they communicate by grunting. Those are the associates.

  Finally, there are the analysts. Monkeys. Tons and tons of little monkeys. Not humans, just monkeys crawling all over each other and pulling lice out of each other’s fur. Those are the analysts.

  With all these different kinds of investment bankers, the investment banking department appears to be a huge place. It is. Goldman Sachs, Morgan Stanley, and Merrill Lynch each have their own investment banking army with thousands of soldiers. Then there’s Lehman Brothers; Bear, Stearns; and First Boston. The list goes on and on. In reality, though, the investment bankers are just one small part of the broader investment house. They’re just one little cog in a much grander machine.

  Within each investment house there are capital markets desks, an institutional sales force, a trading operation, a research department, and a retail brokerage arm. Each department has a function, and they all work together. First, the bankers go out calling on companies, looking for the ones that need to raise some money. Once they find one, the bankers call up the capital markets desks and tell them to get the wheels rolling. The bankers tell the capital markets guys, “Look, man, we gotta raise some dough. What’s it gonna take?” The capital markets desk tells the bankers, “
We can raise your money. Here’s the terms our buyers are gonna want.” After that, the capital markets desk calls the institutional sales force and tells them to round up some customers. The institutional sales force then begins calling the mutual funds, the hedge funds, the pension funds, and the university endowments—any and all institutions that control money that needs to be invested. These customers give the investment house some money to buy the new securities, the investment bank keeps a piece as their cut, then they pass the rest on to the company. A few weeks later the research department writes a report on the company that extols the virtues of the newly issued stocks or bonds. Eventually, the retail brokerage arm gets into the picture, calling on the retail investors with their latest and greatest investment idea—those same newly issued stocks and bonds. It’s a profitable operation.

  There are many other types of financial institutions in the Wall Street universe as well: clearinghouses, hedge funds, mutual funds, commercial lenders, and commodities trading operations. The investment houses are just a small part of the greater Wall Street universe. The associate is smaller than a piece of dust on a wart on the ass of a large male African elephant. The inside of the cheek of the ass, not the outside.

  The Business

  The brain is a wonderful organ. It starts working the moment you get up in the morning and does not stop until you get into the office.

  —Robert Frost

  So, how does a banker justify his or her compensation? When it comes down to it, bankers really only provide two services for companies: they provide advice on matters of corporate finance and they raise money. The banker stands at the vortex of the capital flows, siphoning off a portion of the swirling funds. For providing these services, the average upper-level investment banker can expect to earn about $750,000 in an average year. Is the average banker worth five times the average executive in most other industries? Does the average banker add five times as much economic value to the greater good of the common whole? Given that investment bankers carry a disproportionate share of civilization’s unjustified attitude and hubris, the world would arguably be a better place with fewer bankers and more guys selling soft-serve twisty cones down on the corner. Shit, take away some of the investment bankers, the terrorists, and the tax authorities and you’re coming darn close to Shangri-la.