Damn, It Feels Good To Be a Banker

by Leveraged Sellout

  True.

  The computer went somewhat haywire for a second, and a series of ads popped up. One of them was for a sale at Neiman Marcus, and Gopal got all excited, talking about how he needed to go pick up some new clothes. I realized his beta—a measure of how correlated behavior is to the market—was very high. Betas generally run from 0 (uncorrelated) up, and since Gopal reacts even more strongly than the average consumer, I put him at around a 2.1.

  I got up to grab a drink while he closed the dozens of windows and realized that my beta is-1; I react completely inversely. “Ugh,” I thought, pounding some Fiji. “Who wants to wait in those lines?”

  When I returned, Gopal and Jon were conducting some due diligence on three girls to potentially add to Gopal’s portfolio. In Banking, due diligence is done before anything. All the available information must be gathered and analyzed before any decisions are made.

  The three girls were:

  These girls’ profiles might have been “bitch books,” but since they were already public, they were essentially their 10-Ks—the statements public companies issue to report performance. Just as a 10-K offers financial information and can tell an investor whether a company is manipulating earnings, overpaying its CEO, or being audited, we were able to conduct fundamental analysis on these girls’ profiles to come up with reasonable valuations.

  * * *

  Total Friends: 913

  P/E Ratio: 85

  Name:

  Jackie

  Networks:

  Harvard Alum ’06

  Relationship Status:

  Single

  Looking for:

  Random Play

  Hometown:

  Blank, Illinois

  Interests:

  Golf, wine, Sex and the City, partying it up in Montauk, The Hills, shakin it, surfing, pole dancing at S Factor, and of course Leonardo DiCaprio movies!

  * * *

  * * *

  Total Friends: 220

  P/E Ratio: 20

  Name:

  Shilpa

  Networks:

  Stanford ’06

  Relationship Status:

  Single

  Looking for:

  Dating

  Hometown:

  Newport Beach, California

  Interests:

  Love Actually, tennis, squash, surfing, all sports really, traveling, Radiohead, reading in Bryant Park, playing lots of games

  * * *

  * * *

  Total Friends: 8

  P/E Ratio: 3

  Name:

  Lindsay

  Networks:

  Washington University in St. Louis ’05

  Relationship Status:

  It’s complicated

  Looking for:

  Friendship

  Hometown:

  Lower Merion, Pennsylvania

  Interests:

  Dinosaurs and unicorns. If you made me pick: dinosaurs. Red licorice, anything organic, anything Lethem, swiping the free cherries at Trader Joe’s, wordplay.

  * * *

  1. On the surface, Jackie seemed like a great target for Gopal to try to hook up with. She was a good-looking, single Harvard graduate looking for “random play.” But our keen financial senses told us otherwise.

  A common statistic considered for companies is their price/earnings (P/E) ratio; it tells how much each share of the company costs relative to income. With online profiles, more photos generally allow you to assess a girl more accurately. The caveat is that many people strictly post “money shots,” which highlight only their best qualities. To offset this, Gopal considers his own P/E ratio, which he has defined as photos/exposures, where photos is the total number of pictures available for a girl and exposures signifies the number of distinct angles and poses in these pictures. (Do we see lower body? Are there any front-on pictures or are they all profile? Is there a swimsuit picture? Etc.) Like a real P/E ratio, his isn’t perfect, but it can be used for guidance.

  Jackie had a P/E ratio of 85—she had a lot of photos online from several different angles. Her body was tight; she seemed like the kind of girl who, at the sign of even a few bips (1/100th of a percent) of weight gain, would quickly deny herself her only meal, a midday Pinkberry. The photos ranged from risqué to flat-out skanky. With her rather high 913 friends, our assumption was that this girl must be inundated with messages from random, sketchy guys. Gopal was tracking her relationship status for a couple weeks, and it had been extremely volatile.

  Jackie was perhaps a solid near-term opportunity for an aggressive, good-looking guy, but that isn’t Gopal. He had to employ a more value-based Facebook strategy, and we concluded that she was overvalued and not worth his time.

  “I’m short this bitch!” Jon screamed, obviously more into this process than I was. We moved on.

  2. Shilpa appeared to be a great all-around pick, perhaps even a long-term hold for Gopal. She had an average number of friends and enough distinct photos to indicate that she wasn’t cloaking any weird features. Gopal opened up Microsoft Excel, and we saw he had done a significant amount of modeling on Shilpa’s scenario. Bankers often look at comparable companies analysis to gauge the value of a company based on other, similar companies. In his spreadsheet, Gopal had fifteen comps.

  We paused to reflect on how pathetic a loser he was, but the comps were encouraging, and he decided to get long and message her. It wasn’t a pure hedge, but Jon suggested that Gopal reduce his risk exposure by poking several of the “comparable cuties.”

  3. The last girl we considered was Lindsay, and she was a speculative play. As a target, I liked her. She was cute but possessed a latent hotness that hadn’t been realized. There weren’t enough pictures to be certain, so she carried an inherent risk. She only had eight friends, and we discovered her boyfriend was just some loser who worked at Urban Outfitters. I thought Gopal should “take her private,” fix her up a bit with some makeup and clothes, and then go back public with her.

  This girl piqued the PE guy in me, and I let out an excited: “LBO Opp!”

  PE firms often make their money via leveraged buyouts (LBOs). These are situations where the PE firm has spotted an undervalued company that it can buy, reengineer, and sell for a profit. We didn’t need leverage (to borrow money), but this was exactly what we decided to do to little Lindsay.

  Gopal started strategizing on his exact approach, and while the FBAX was fun for a moment, I had officially grown bored of the exercise. I briefly considered a couple of the financial concepts Gopal didn’t have in his game. There were no sense of cash flow, no liabilities, and, more important, no EBITDA, arguably the most telling aspect of a company.

  I left the living room and got back to doing less geeky activities. From down the hall, I heard Gopal devising a new “ass flow” metric, then shook my head as he burst out laughing in self-amusement.

  Overwhelmed by his lameness, I walked back to where Gopal was seated, paused, and slapped him swifty across the face. Then, as he held his hand to his swollen cheek and looked back up at me remorsefully, I could tell he understood: behaving like a real Banker does more for your game than any stupid Web site.

  FACT #3

  Have it on my chair by morning.

  Terminology

  WHEN I ENTERED BANKING, the rigid hierarchy I had heard about was indeed in full effect.

  In most groups, there are about twenty or so Analysts, around ten Associates, several Vice Presidents (VPs), and a few Directors and Managing Directors (MDs). From these buckets, smaller “deal teams” are built for individual work streams. This ladder is given a Mafia-esque respect, and orders propagate downward, unquestioned.

  Analysts

  Analysts are the foot soldiers, actually staying up all night, banging out the spreadsheets and PowerPoint presentations that are the cornerstones of the world’s financial markets.

  We’re the top 1 percent of the top .05 percent of the ninety-ninth percentile of the under-twenty-five population, and
instead of playing pool in the back of some Italian deli, we’re seated together in a cube farm known as “the bullpen,” getting well over six figures a year direct-deposited into our bank accounts.

  Early on, there was an Analyst in my group, Andy, a real “gunner.” We both performed well, but I, a “hitter,” did things casually and instinctively, while Andy backstabbed and brownnosed like an overly competitive go-getting little bitch. What kind of schoolyard name is that anyway, Andy? In true gunner fashion, he was the kind of guy who had little mirrors set up on his monitor so that he could see whenever our MD came around and prepare to fawn appropriately. To be fair, the mirrors had some utility, but I despised looking over at Andy’s monitor, which was always cluttered and filled with despicable #N/As from incorrectly implemented Excel functions.

  One day, Andy was bragging about some cheap $70 shirt he had just bought at Charles Tyrwhitt, and our MD walked by and accidentally spilled a cup of coffee on him. Of course, when it happened the gunner didn’t say a word, he just dabbed his burn wounds with a soiled napkin and told the MD: “Oh, this old thing? No big deal.”

  But the rest of the day, Andy complained to his other gunner friend about how his shirt was ruined. I guess those mirrors must not have been aligned right, because our MD came by and caught him mid-whine. The gunner turned bright red and shut up instantaneously. Our MD stormed away but came back five minutes later and slapped $300 cash on Andy’s desk.

  “Go get yourself a new fucking shirt,” he said, matter-of-factly. Andy sat motionless, frazzled.

  “But give me that one on your back. Because I just bought it.”

  And he made the gunner work the rest of the day in his undershirt.

  Associates

  Associates are technically one rung above Analysts, but in general, they’re less intelligent and worse off. While Analysts have the flexibility of moving onto the Buy Side after a couple years, Associates have pretty much missed their shot. They come in many hideous breeds.

  The Investment Banking Hierarchy

  The post-MBAs who are taking on their first job in finance. Clueless and disoriented, they speak in a messy jargon that they use to pad their limited knowledge. They easily fall into fits of frenzy that are followed by weeks of depression in which they question their entire lives.

  Analysts who “stuck it out” for three years and decided to “stay with the firm.” Translation: “I couldn’t get a job in PE.” These are battered wives without battered wife syndrome—they hate their husbands and want to leave them; they just can’t find anyone better to house them.

  My Associate. Very good at nothing. A disastrous combination of the above two types: he worked in finance, went to B-school, couldn’t get a Buy Side job, lied about it, and then came back—a battered wife with a worthless degree.

  Vice Presidents

  On a deal I did about a year ago, I was working with a VP who, when speaking to his Analysts, consistently referred to himself as “The Game.” I’m not sure whether he came up with this nickname independently of the rapper, but he seemed to embody the title even better.

  He was the consummate VP, stuck in limbo between the junior and senior Bankers. “The Game isn’t execution-oriented,” he’d insist, with an Ebonics flair to his tone. “The Game is client-oriented.” But then The Game would call us up ten minutes later, screaming about a spelling mistake in a pitch book.

  At thirty-two years old, he still went out to clubs with us to throw money at girls ten years younger than him—a laudable effort, of course, but still kind of depressing. Twenty-five-year-olds on the Buy Side made more than The Game, but after so long in Investment Banking, he was doomed to a life of Sell Sidedness and could do nothing more than try as hard as possible to inch himself up a couple more rungs. He was a nice guy, but to me, it seemed that The Game was pretty much over.

  (Managing) Directors

  The position immediately above Vice President is referred to by a variety of names: Director, principal, Executive Director, or Senior Vice President. Occasionally, it’s skipped and the VPs that make it jump straight to Managing Director, MD. While ordinary Directors might not “manage” enough to earn the extra M of prestige, they still “manage” to make a couple million bucks a year.

  In the grand scheme of finance, Directors and MDs are generally not as celebrated or well-paid as Hedge Fund Managers or Partners with their own Private Equity shops, but within Investment Banking, they run the show.

  They are the ones responsible for bringing in and maintaining relationships with clients. They go to the opera, to lavish banquets, and to gallery openings—anywhere they can cultivate prospective business opportunities. Once the business is brought into the Bank, they are essentially out of the picture until it’s time to present the work, at which point they put back on the charm and make sure the “sit-down” (the deal celebration dinner) goes well.

  In every Banking group, there are a couple International Analysts. Through some pairing of foreign charm, exaggerated ignorance of American culture, and parental networks, these Analysts are able to completely disregard the Banking Hierarchy.

  It may not come up for a couple months, but eventually it’s revealed that the International Analysts working beside you are sons of luxury hotel moguls from England or daughters of Kashmiri saffron barons. After university, they spend a couple years in the United States to polish themselves with some Banking pedigree before they return to “the family business.” They use this term because it sounds modest, but within Banking, everyone knows what it means. It’s not a meager dry cleaner’s or corner store they’re referring to; “the family business” is a multi-billion-dollar steel conglomerate.

  Their parents’ companies represent huge opportunities for Banks, and as such, International Analysts receive immunity—they can be drunk, boisterous, and irreverent without any fear of repercussion. We had one such Analyst in my group—Sebastian, from Argentina.

  He was both intelligent and hard-working, but he wore ostentatious clothes and came to meetings minutes late, somehow getting away with it by blaming time-zone differences. On one particular occasion, our deal team was out at a bar for a celebration, and Sebastian was rowdily encouraging everyone to do shots of some spicy, aromatic liqueur. Almost everyone complied, including a thirty-four-year-old mother-of-two VP.

  Our MD, generally a reserved, polished senior Banker, resisted, but Sebastian didn’t relent. In his oblivious way, Sebastian, seated right next to the MD, pounded shot after shot. He preached the various merits of Fernet-Branca to him, insisting that even though we hadn’t yet eaten, it would help digestion.

  Our MD tried to get up and escape, but Sebastian followed, continuing his sermon. He just kept on talking, using his hands liberally for added emphasis. Finally, after about an hour, either Fernet ran out of curative qualities, or the Argentine just got totally hammered. At that point, now drunk and staggering, Sebastian pointed his finger at the man five rungs and two zeroes beyond him in the Banking Hierarchy, slammed his hand down on the bar, and in his thick, lilting accent screamed: “FUCK YOU!”

  The professional chatter in the bar immediately turned to silence, and a young Banker Chick fifty feet away shrieked, as if a homeless person had just walked in. But our MD, calm and reserved as ever, just stared back at Sebastian. After a moment of looking into the eyes of insolence, he took the glass in his hand, lifted his chin slightly, and tossed the shot back. The movement was elegant but casual and practiced, such that a tinge of ex–frat boy shone through.

  None of us ever knew whether it was Sebastian’s disarming accent or the fact that his father was high up in the Telefónica Group, but after our MD slammed the shot glass on the bar, he leaned back, laughing, and slapped Sebastian lightheartedly on the shoulder. “Stomach’s feeling better already!” he announced. Then he ordered another round for everyone.

  * * *

  INSIDER INFO WITH LAUREN, A SYCOPHANALYST

  My MD is my hero. He’s like the dad I alw
ays wished I had.

  My MD made MD when he was like twenty-seven or twenty-eight or something nuts. I’m not sure exactly when it was, but it was the fastest ever.

  My MD brings in more money for The Firm than anyone else.

  My MD once threw a book at and nearly killed this guy who complained about being worked too hard.

  My MD pointed his finger at me one time and called me “his resource.” I nearly fainted.

  * * *

  FACT #4

  Your firm sucks.

  Institutions

  ONE’S TAXONOMIC AND hierarchical placement as a Banker is important, but the size and esteem of the institution one works for is even more crucial. This final piece of prestige is what separates the real hitters from everyone else—pitchers and catchers.

  I have four friends from school with whom I go out to dinner regularly. We’ll meet up on a Thursday or before a big Saturday night, stuff ourselves, and get rocked. When the check comes, we don’t split the bill; instead, like Bankers, we credit-card-roulette it. The waitress will have already been engaged by our wit and confident advances, and she’ll happily oblige when we ask her to take off her hat or panties and toss in our cards.

  We instruct her to pull them out one by one, dramatically, and to charge the last card with the entire massive tab.

  Bulge Bracket

  Out first is my Amex Black Card. Anodized titanium, it’s stealthy and sleek. The waitress blushes and it’s obvious she realizes the magnitude of what she’s just touched. I have to pry the card from her hands as she bats her eyes at me, and it appears as if she might just jump on top of me right there, pantyless.