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.
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 these 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 s**t 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 hard-core 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.
At the next rung up the investment banking ladder are the associates, that's what we were. You can generally assume that the associates are a happier lot than the analysts, since they have both the institutional backing and the ability to ease their own misery by heaping agony onto the analysts. Therein lies the beauty of the heirarchy. Since the investment banks are in the aforementioned practice of regularly paroling virtually the entire third-year analyst class, which class would have included any analysts with the potential for promotion to associate, the recruitment of associates and the replacement of these departing third-year analysts becomes a full-time process.
For the associates in an investment bank, there is no corresponding get-out-of-jail-free program to avail oneself of at the end of a two-to-three-year stay. There is no light at the end of the proverbial tunnel. The associates are recruited under the expectation that they know what it is they're signing on to do, and that once on board, they'll dutifully climb the corporate ladder to the top of the golden pyramid. Vice president, senior vice president, managing director. The path is clear. In reality, the attrition level for associates is fairly high. They leave for competing investment banks. They leave to work for clients of the investment bank. They leave when they realize that sex with themselves is becoming the norm. Whatever the reason, between the moles brought on board to climb the ladder, and those helicoptered in to replace the departing lemmings, the flood of fresh-faced associates is constant.
The Others-Vice President to Managing Director
Above the associates are the vice presidents, the senior vice presidents (or junior managing directors, depending on the firm), and the managing directors. The associates all have the same goals. They want to make vice president in three to four years, senior vice president in five to seven years, and managing director in seven to nine years. They all hope to be making seven figures by the time they hit managing director.
Sometimes, though, from the associates' perspective, it seems like there are just three levels in the banking hierarchy: analysts, associates, and everybody else. After all, anybody senior to an associate has the institution's divine sanction to s**t on the associate's head, and if you're the one getting s**t upon there isn't usually much reason to further subdivide the hierarchy of those doing the s**tting.
The Breeding Ground-Business Schools
The most fertile grounds for the associate recruits are the nation's graduate business schools. Due to the sheer number of recruits now requisitioned by Wall Street, the preferred hunting grounds have broadened from their original select subset of only the most arrogant Ivy League institutions of the East (i.e., Wharton, Harvard, Columbia) to include other marginally less pompous institutions. As distasteful as this decrease in the overall level of enlistees' arrogance has been for the old-line bankers, it has been driven by necessity.
The business school students, for their part, are in no way gullible victims of the evil capitalist pigs. Most have returned to business school with a sole objective: to further their career goals through exploitation of the recruiting opportunities that the business schools provide. In all fairness, it should probably be acknowledged that a small minority of the graduate business school students do in fact return to school with the accumulation of knowledge as a primary objective. Those that do, however, are swiftly enlightened and made to see the error of their ways.
The indoctrination into the money culture and the transition to job-search mode begins long before the arrival of the MBA-to-be on campus. Following the receipt of the school's acceptance letter, which goes to great lengths to assure all budding MBA candidates of their status as members of an academic aristocracy, a large packet follows in the mail.
At Wharton and Harvard, the packet was similar. It was filled with policy manuals, health care application forms, and sundry other administrative delights. The most important enclosure in the Wharton packet, however, was a pamphlet titled The MBA Placement Survey. The placement survey was a gold digger's delight. Every imaginable statistic on the recruiting success, or lack thereof, of the prior year's business school denizens was broken down and reported: percent taking jobs in given industries, percent taking jobs with given employers, percent taking jobs in given geographic regions, it was all in there. There was only one overriding statistic that really mattered to the budding MBA, though: average starting salary by industry. The first time I saw these figures, my ticker skipped a beat. I was a guy who was coming out of the advertising industry making $17,500 a year and eating black beans and rice four nights a week. There were salaries in The MBA Placement Survey with six figures, and that wasn't counting any decimal places.
We were entering the land of the obscene here. If the starting figures were up on into six-figure range, where would the madness end?
A somewhat closer look at the heavily laminated pages should have yielded another clue as to the goals and mind-sets of our future business school classmates. The two job categories snaring the highest percentage of the graduating class, management consulting and investment banking, also happened to have some of the highest starting salaries. A coincidence? I think not. Troob and I were about to jump into a velvet-walled cage with some of the greediest bastards this side of Ebeneezer Scrooge. Unfortunately, at the time, we were both wrapped up in a Richie Rich fantasy of our own. We were about to start a frenzied two-year race with America's most prized business school graduates, blindly thrashing our way toward the almighty dollar.
At Wharton, the official start to this seminal marathon was the "Welcome to Wharton" seminar during orientation week. Whatever delusions I may have had prior to this cozy little gathering were quickly dispelled. Surrounded by 750 other hearty young business schoolers in a massive auditorium, all feelings of being part of something elite, something special, began to melt away. When the progression of second-year students took the podium and began describing, in lurid detail, exactly what awaited everyone on the job-search front, the essence was laid bare. We were there for a two-year mating dance with the recruiters. What the Wharton name would get us was a shot at the best of those recruiters. Given that opportunity, though, it would be up to us to distinguish ourselves from the sea of equally qualified candidates in the seats all around us. We'd have to be willing to climb over these people while wearing golf shoes with sharpened cleats to get where we wanted-no, needed-to be. F**k camaraderie.
What I didn't realize at the time was that not everybody in that auditorium was reaching these same wrenching realizations that day. Something between a sizable minority and a majority of my new classmates that day already knew exactly what game was being played. There were bastards there who knew what awaited them, and had voluntarily come back to subject themselves to the process, all for the sake of professional advancement and the accoutrements that accompanied it.
The phenomenon, mind you, was in no way peculiar to Wharton. In fact, 350 miles to the north, at that most venerable of all institutions-the Harvard Business School-a like scene was being played out. And among the 750 dandy young recruits there was one of those bastards who knew the game. A stocky little former investment banking analyst whom I'd later come to love as we wallowed together in our collective misery paying our dues as investment banking associates at DLJ. Peter Troob.
Later, after we got to know each other, Troob would confirm my suspicion that things at Wharton and Harvard were just about the same.
Yeah, I was going through the same mating dance at Harvard Business School. However, I had a big advantage: I'd worked in investment banking before going back to business school. I'd been an analyst at Kidder Peabody. I knew the pain, I knew the long nights and the late dinners eaten in the office six nights a week.
The thing was that I had sworn off investment banking. The sixteen-hour days, the people who had institutional authority to kick my ass, the extra ten pounds I had put on since college, and my nonexistent social life. The investment banking life as a junior guy sucked and I knew it. It paid me well for a twenty-two-year-old snot-nosed brat from Duke, helped me get into Harvard, and taught me how to break out a company's financials with my eyes closed, but as I sat in Harvard Business School I promised myself that I wouldn't go back. No way. I promised myself that I would find a more rewarding career, one that made me feel good about myself. One that cleansed my soul instead of soiling it.
So why was I willing to jump right back in? That's a good question. I remember sitting with one of my good friends, Danny, in the steam room at the beginning of the school year discussing that very question. We had both come from a two-year boot camp at Kidder Peabody and we were both at HBS. Danny asked the question first.
"Troobie, are you gonna go back to banking?"
"No f****ing way, man. Are you kidding me? Kidder sucked and my life was hell. F**k banking. I'm gonna do something else."
"I don't know, consulting or some s**t like that."
"Consulting? Making all those two-by-two charts and matrices and being shipped to some buttf**k place like Biloxi, Mississippi, to help consult some manufacturing company for two months? No thanks."
"Yeah, maybe you're right, Danny Boy. Not consulting. I'll try to get a job in a buyout fund."
"Yeah, right, Troob. Tommy Lee is only taking two guys this year and KKR is taking one. You're good, but either your dad has got to be loaded or you've got to get the managing partner laid if you want that job."
"Well, maybe I'll look at the banking jobs again."