This book is dedicated to
165 Church St.
—the most prestigious
apartment building, ever
Contents
Preface
Business
Fact #1 No. We do not have any “hot stock tips” for you.
Industry
Fact #2 I smell synergy.
Hierarchy
Fact #3 Have it on my chair by morning.
Terminology
Fact #4 Your firm sucks.
Institutions
Case Study The Boutique
Performance Review #1
People
Fact #5 Georgetown? I wouldn’t let my maids’ kids go there.
Schools
Fact #6 You’re just not the right fit for us.
Selection
Case Study Fitzwater
Fact #7 Mergers are a girl’s best friend.
Girls
Fact #8 Diversity is one of our core values.
Race
Fact #9 Holla back, office!
Support Staff
Case Study The State Schooler
Performance Review #2
Culture
Fact #10 Even this T-shirt is bespoke.
Fashion
Fact #11 It’s all about the bonuses, baby.
Compensation
Fact #12 It’s all Jersey to me.
Geography
Case Study The Shitshow
Performance Review #3
Entertainment
Fact #13 Best book ever: The Unquestionable Tightness of Banking.
Diversion
Fact #14 This is how we do it on Broad & Wall, bitch!
Partying
Case Study The Benefit
Fact #15 Every little deal I do is magic.
Music
Fact #16 Back that cash up.
Dance
Performance Review #4
Conclusion
Acknowledgments
About the Author
Copyright
Preface
LET ME BEGIN by saying that I’m not writing this book for any of the reasons all those hack junior college creative writing all-stars dream about writing a book.
I’m not writing this book for money; I bonused ten times the advance I got for this my first year out of college. I’m not writing this book to get chicks; I am an Adonis. And, most important, I’m not writing this book for any sort of literary cachet; most writers are pretentious, ill-educated douchebags who couldn’t break 650 on the SAT I Math Section. I got 1600 (unrecentered), twice.
I’m writing this book because it needed to be written. I represent a group of individuals whose work buttresses the world’s economy, and while I normally wouldn’t give a fuck what the proletariat thinks, I figured it was time I set everyone out there straight and explained what Banking is really all about.
Every other book on the industry has been written by a jaded 10th tier loser who wished he were more “creative” or some clueless writer spewing esoteric nonsense. As such, I figured it was time that a real Banker stepped up to educate the world on the important realities of Banking and its lifestyle.
This is the result—a book of Banking facts that will introduce you to an amazing world that you’ll never be able to become part of.
Dad, thanks for not letting me study liberal arts.
Logan
Business
FACT #1
No. We do not have any “hot stock tips” for you.
Industry
IN THE FALL OF 2005, I moved to New York City to work as an Analyst at a Bulge Bracket Investment Bank. Leading a wave of other recent Princeton graduates, I casually stepped from one of society’s most elitist playgrounds to another. It felt completely natural. Since then, my friends and I have made the city our own. Frequenting The City’s hottest nightclubs and bars, we throw the best parties, and we experience its most beautiful women. Essentially, we run shit. We dominate The Scene, and it is all facilitated by one overarching fact: we work in finance.
To clarify, we don’t work in the layman’s concept of finance (fī'năns), spoken with a long “i”; we work in finnance (f?-năns'), the refined English pronunciation reserved for only the upper echelons of the industry. We are “Bankers,” but not in the traditional sense. When most people think “Banker,” they’re really thinking of Retail Bankers—those who offer loans and credit to fledgling T-shirt stores and overeager franchisees. Retail Bankers wear golf shirts they buy on eBay, live in North Carolina, and get home at 6 p.m. to eat dinner with their kids. As Investment Bankers, we are their polar opposite—we spend thousands on any given night, wear suits the price of automobiles, and work intimately with the world’s most high-profile businesses.
That fall, I moved into an apartment in one of TriBeCa’s most exclusive areas with seven guys from school. Five guys ended up living in an apartment upstairs, and three of us took a place directly below them. Getting the apartments was a breeze; when our Russian landlord saw the names Goldman Sachs, Morgan Stanley, and Blackstone written all over our applications, his face lit up with delight. “Gold men and sex!” he proclaimed, prophetically. He was so confident we’d be good tenants, he even offered us a “very special rate.” Cheap things generally suck, so we doubled it.
Investment Banking
I chose to live in the three-man with the two guys the rest of us didn’t know that well, not out of kindness, but because I wanted my apartment to operate efficiently, exactly like an Investment Bank.
Corporate Finance
My room, with floor-to-ceiling windows, southern exposure, and its own private bathroom, is the Corporate Finance arm—the Investment Banking Division (IBD). I help companies raise capital and advise them on mergers and acquisitions. I conduct in-depth, highly quantitative analysis that requires both the utmost intelligence and extreme diligence. Starting out, I often worked upward of one hundred hours a week, pausing only to instruct the world on nightlife best practices and to budget my Bonus. Hearing about this schedule, people often naively asked, “When do you sleep?” To which I offered the only logical response: “If I wanted to sleep, I’d have been a surgeon.”
Sales and Trading
My roommate Jon is in Sales & Trading. While IBD is often referred to as the “library,” S&T is the “locker room,” and from the Gold Bond–ish stink of Jon’s room, it’s quite obvious how this nomenclature came about.
Sales at a Bank is just like sales anywhere else—pushing stuff that people don’t want down their throats. In this situation, however, financial products and trading ideas are being peddled, and since it’s an Investment Bank calling, people actually pick up the phone. Jon, a Trader, prices and executes the trades that the sales group has orchestrated. Jon lives and dies by the market, waking up at 6:30 a.m. before it opens and getting home around 6:30 p.m. after it closes; it even dictates his bathroom habits, forcing him to be able to go in less than fifteen seconds so he can return to sit by his obsession, vigilantly. It would ruin the Bank I have created, but I’ve been not-so-secretly hoping Jon will move out, taking with him his jock straps, empty beer cans, and sweat-wicking Under Armour button-downs.
* * *
INSIDER INFO WITH MORGAN, A COMMODITIES TRADER
For the record, Traders aren’t freakin’ Bankers. Yes, some of us might work at Banks, but I mean, Bankers are SISSIES, bro; Traders are MEN. Don’t forget it.
Bankers play with computers and make graphics and shit all day. Fuck that! We bring in actual money for the firm, son!
Shit. Call me a fucking Banker and see what happens. I played rugby in college, man, not some lame shit like squash. Yo
u think a Banker could hang with me on the pitch?
By 10 a.m., all a Banker’s done is recheck 500 formulas in a spreadsheet; my group’s made like $10MM, and we haven’t even warmed up yet.
Ask me a math question. Go ahead, ask me! I will do it in my head before you can even blink! Ninety-five times 12 is 1,140, BAM! Automatic, baby, automatic.
Instinct—that’s what Trading’s all about. Show me a Banker who’s got raw instinct, and I’ll show you how to open a beer bottle with your ear.
* * *
Equity Research
My third roommate is Gopal, who works in either Fixed Income or Equity Research—I always forget which, but they’re both a joke. He deals with debt or writes seventh-grade-level reports on stocks, respectively; irrespectively, he’s a wannabe. He’s the smallest, gangrened, and brownish arm of Investment Banks, and while he’s often annoying, he occasionally provides some utility. Just so Gopal’s role was clear, we stuck him in a 150-square-foot room with no windows carved off of our living area with a pressurized wall. There is a thin slit at the top of his door, however, which lets in just enough light to remind him how comparatively bleak his life really is.
Consulting
For a few weeks when we moved in, we had a Consultant * crashing on our couch. He worked for a place called Boston Consulting Group and earned a pittance. From what I gather, he toiled away in a conference room for an unimpressive seventy hours a week before delivering PowerPoint “play books” or suggesting a non-English-speaking Indian call center as a means of increasing productivity. Despite the name of his firm, he never worked out of Boston, which might have been somewhat acceptable; instead, he bounced from one Bumblefuck part of Ohio to another every week, coming home only on the occasional Friday night before heading right back out on Sunday. He wasn’t quite prestigious enough to hang with us, though, so we had to boot the Consultant, forcing him to live strictly in Comfort Inns out of his well-worn Tumi suitcase.
In the flood of Princeton students who moved to New York my year, there were maybe one or two graduates who were “testing out finance” before moving on to business school or into different careers. I imagine they are now on welfare. Most of us real Bankers, one and a half years later, have landed even better jobs in finance, and in a few months we’ll be moving from the Sell Side (Investment Banking) to the Buy Side (Hedge Funds and Private Equity).
Hedge Funds
Hedge Funds are, in essence, companies that make third-world-country-GDP-size bets on changes in the market. They’ll bet on stocks, bonds, the green tea market, the amount of fluctuation in the green tea market, and, for sport, the number of peasant workers who will die for that fluctuation in the tea market—virtually anything you can attach a price to. Hedge Funds exist as individual entities or as proprietary desks trading a Bank’s own money, and they employ a wide range of strategies (Macro, Value-based, Event-driven, Special Situations, and so on). But while they might be betting, Hedge Fund guys aren’t “gamblers.” They’re “arbitrageurs.”
Hedge Funds are 100 percent driven by results and compensate and fire their employees along these same lines. As such, successful hedger guys are generally performance-driven individuals: ex-Traders, poker stars, and Fantasy Football Hall of Famers. Also, as a result of these stringent metrics, unsuccessful hedgers quickly become unemployed, alcoholic stay-at-home dads.
Private Equity
Hedge Funds are a lucrative business, but I’m personally moving into Private Equity (PE), which carries even more prestige. Only a select few are able to land these jobs, and it’s the end-all and be-all in finance—the coveted inner circle of truly badass Bankers. If I even whisper the term PE around people I can see them visibly shiver. We’re the real Financial Executives, taking pools of money gathered from institutions and wealthy individuals to invest in nonpublic companies (or public companies we take private) to grow, turn around their business, or sell off pieces of them for a profit.
Before I knew all the details of the Buy Side, a female friend of mine from school, Whitney, started dating a Hedge Fund portfolio manager twenty years older than she was. He did all the things a proper boyfriend should do: flew in her friends from around the world, sponsored their chauffeured shopping sprees, and made a production of paying for everyone when we all went out to dinner.
Meeting him for the first time, I introduced myself and told him my name.
“Oh, I know,” he responded casually, shaking my hand. And with a confidence glowing almost brighter than mine, he patted his monogrammed cuff. He further explained his omniscience: “I work on the Buy Side,” he said, as if the emphasis would clear everything up.
I paused to consider this statement. Wtf does that mean? I thought. If I had told him the name of my tailor, would he have already known? Had I said: “Your girlfriend cheats on you religiously,” would I have gotten the same response? At the time, it wasn’t entirely clear why he should have had seemingly in-depth information about everyone and everything. “I work on the Buy Side” seemed insufficient to explain infinite knowledge. But now, after getting a job at one of the most prestigious PE shops, I use the phrase all the time.
FACT #2
I smell synergy.
Hierarchy
I’VE NEVER BEEN a fan of the whole concept of using the Internet to get girls; it lacks a certain level of finesse, especially when compared to getting a table at a club and just letting them walk over to me. Plus, at work, my computer is the tool with which I build and shape the economic landscape, and call me old-fashioned but there’s something not that sexy about a girl who knows how to use my hammer. Wait, I take that back.
My roommate Gopal, on the other hand, might never meet a girl if it weren’t for technology. It’s how he meets 90 percent of the four girls he hooks up with, and he even has this weird ritual where he will bring his laptop into our living room, connect it to the TV, and project his Facebook account onto the fifty-inch screen.
“Virtual Game Time!” he screams excitedly, as if we should all come running. Occasionally, my Trader roommate, Jon, and I will emerge from our respective rooms, plop down on the couch, and humor Gopal’s little hobby for a short while.
The “game” is Gopal’s application of finance concepts and terminology to getting girls via Facebook. He also refers to it as the FBAX—the Facebook Ass Exchange. It’s a concept he may not have originated but has certainly refined.
It all started when he created his profile a year or so back. He was late to Facebook, but fell in love with it immediately and obsessed over his “IPO,” Initial Public Offering.
In Banking, when a company IPOs, it is raising capital and putting itself up on the public market. An Investment Bank underwrites this process—it helps the company find investors and then structures and trades the financed funds. A large part of the effort in this process is the pitch book, a massive document that gives detailed financial and qualitative information about the company in question as well as the Investment Bank’s history.
For weeks before Gopal actually IPO’d, he asked us to help underwrite him—Jon and I both had established Facebook accounts and could have helped Gopal in his search for cultural capital. He would have to issue some debt and directly request friends, but we could have let him post on our walls or orchestrated some other virtual roadshow to draw equity investors to him.
As underwriters, Investment Banks generally earn not only fees, but also profit from keeping pre-IPO shares of the company for themselves and selling out after an initial market “pop.” But in Gopal’s case, there was no such incentive.
During this early period, if Gopal was anywhere remotely interesting or if he thought his hair was looking particularly awesome, he would stop and make someone take a picture of him. “Just working on my pitch book,” he’d say casually, as if he were creating a graph of a company’s five-year EBITDA projections.
Gopal started out small, adding about 7 people his first week public. He’s been steadily trending upw
ard and is now a mid-sized stock with a market cap of about 220 friends. The other day he called us in for some FBAX trading, and we reluctantly sat on the couch as the main page loaded.
I felt like I was in front of a massive Bloomberg terminal. Just like at work, I had access to detailed information, news feeds, and status updates; Gopal had even color-coded his keyboard for added authenticity.
His main page showed one new friend request. When advising on mergers and acquisitions (M&A), Banks will do accretion/dilution analysis to spot synergies or negative effects that might result from a transaction. For example, eBay did this poorly when acquiring Skype; it hasn’t helped them at all. We weren’t about to make the same blunder.
The request was from a relatively unattractive girl. We knew, however, that markets are crucial, and we delved in a bit deeper to see whether she had access to any worthwhile groups or was connected to any networks of good-looking females. She wasn’t.
“Ignore!” Jon and I shouted in unison, and Gopal obediently rejected her.
“Wait,” I said, having spotted a detail in the friend request. “It said that you two were related?”
We learned that the girl was actually Gopal’s first cousin, but, like a good Banker, he stood by his analysis. “Whatever,” he justified. “Can’t be destroying value like that.”
Damn, It Feels Good To Be a Banker Page 1
