Investment banking is hardly known for its cushy lifestyle, but every now and then we’re reminded of just how bad it can be.
Earlier this week a buddy forwarded me this email message from a staffer at Moelis.
I don’t know whether it’s legit or not (I’m told it is), but irrespective it’s hardly a unique message in investment banking.
Long story short, the staffer (who is responsible for assigning bankers to projects) sent an email to his team after walking the floor at 2am, and noticing how many seats were empty.
As he supposedly wrote—
Given that new staffings continue to flow in and you are all very near capacity, the only way I can think of to differentiate among you is to see who is in the office in the wee hours of the morning.
Can you imagine that?
You’re working your ass off 7 days a week in a grueling job, and now you’re being judged on how busy you are based on whether you’re in the office at 2am?
I can. I lived that life, and I also did a year in the job of staffer.
While it’s easy to beat up on the staffer for his lack of managerial skills (and judgement in sending that email), I can attest that it was perhaps the hardest job I did in banking, where you’re constantly pulled and pushed in every direction.
It’s demand and supply, baby!
As the staffer, you have a limited pool of resources to assign to projects, and unlimited mouths to feed.
In my experience it was the rare senior banker who would step back and really think carefully about the work that needed to be done (blast from the past shout out to George Lee, Mike Wishart and Kevin Quinn), and whether it was worth having someone sit up all night and do it.
Generally, that’s not because senior bankers perceive working like a medical resident as a rite of passage, or they don’t care about their team, but because they also have mouths to feed.
Clients. Bosses. Shareholders. Enormous, enormous pressure to perform.
As Lloyd Blankfein once put it, the culture of insecurity runs all the way to the top in banking, and while senior bankers might want to help their juniors have a more balanced life, most of all they want to deliver their best for their clients.
The 100 Hour Workweek
Fact is, the 100 workweek is part of the game.
As the last credit crisis dangerously reminded us, banks are highly cyclical businesses that boom and bust with the cycle.
In good years bankers work horrendous hours to get paid very well. In worse years, many get fired, and those remaining work slightly less horrendous hours for much worse pay.
I’ve been told that in the early days the lifestyle was quite “normal,” but it’s also important to understand the banking mentality.
Many bankers wouldn’t do the job for less hours with less pay. Some of them even take great pride in working around the clock like they’re saving lives (I used to).
I loved the thrill of being pushed to my limit and cranking it out, getting an unreasonable amount of work done in too little time.
When Is Too Far?
A former Navy SEAL I train with told me about his experience in BUD/S training.
We’ve all heard the horror stories about Hell Week, and every SEAL has plenty of stories of their own.
As he puts it, even those who make it through without dying or sustaining serious injuries often come out with stress fractures and other damage that may never fully heal.
It’s a brutal filter, yet how far should you push elite soldiers who are responsible for our deadliest missions and keeping their buddies alive?
Wall Street bankers are hardly saving lives, nor are they required to stay up all night in a fire-fight, yet the mental and physical strain placed on them might suggest they are.
And while most bankers are people who have challenged themselves in many facets of their lives, sometimes the job pushes them too far.
In the last few years there have been a number of analysts who’ve died or committed suicide because they were seemingly overwhelmed with the job.
It’s terribly sad, and terribly unnecessary. It’s also emblematic of the stress that we’re increasingly putting on young people starting their careers.
Look at medical residents. Young grads working in the Hollywood mailroom. The long hours at Google. Or a startup. And you see that ridiculously long hours have become the norm.
Personally, I never had a problem with the lifestyle. Even today I work all the time.
I’m a lunatic like that, and Goldman Sachs gave me an opportunity to sign up for as much work as I could possibly handle.
But, I Did Have Another Problem
It wasn’t the hours that got to me, but the mundanity of the work.
You get to work on some amazing stuff in banking, yet most of the work is just straight up a colossal waste of time.
When you’re working on a deal, like an emergency room doctor, there’s no limit to what a banker should do to serve their client.
Banks are paid hefty fees, bankers at all levels are paid extremely well to deliver exceptional service to their clients, and most bankers take great pride in delivering their best.
But, unfortunately, where many junior and mid-level bankers toil many days of the year isn’t in the trenches working on deals, but in formatting pages and putting borders on cells.
A Culture of Books
From the outside looking in, investment banking is a highly prestigious industry where you can imagine top graduates from the world’s top schools working on landscape defining transactions.
But most the time, bankers are doing pathetically useless tasks that have little impact on driving the business.
If you’ve been in banking you know exactly what I mean, but if you haven’t, just imagine it this way.
Bankers spend a lot of time doing client service, and otherwise running around doing marketing meetings with potential clients.
In any other industry this would be called selling, but given that many bankers eschew the title of salesperson, very few of them have actually trained to sell.
Top salespeople know that presentation decks don’t sell products, and bankers know that the prototypical 100 page banking book barely gets opened in a meeting.
Yet, because nobody has ever taught them how to win any other way, most bankers just keep showing up playing the same old exhausting game, trying to win by chopping down trees.
It’s normal for a senior banker to dream up an idea for a deal, have a team of bankers crank for weeks on a book and a model, only to then figure out that the client has absolutely no interest in the deal.
No legit salesperson would use their time and resources this way, but in banking there’s zero cost of resources, and nobody has taught them a better way.
This is why the typical solutions to the junior banker lifestyle fail, fail, fail.
Pig-Lipstick Solutions Fail
When the economy is strong and banks are looking to retain their junior talent, they pull out all the stops for their employees.
My era was one of business casual, and I was even so lucky to get an early promotion to associate because Goldman was competing hard against Internet Bubble 1.0.
Banks have eliminated the two-year programs. Precluded junior bankers from entering the office on Saturdays. And any other number of pig-lipstick type solutions.
They’ve also heavily invested in technology to make bankers more efficient, but this typically just leads to requisitioning more useless work be done in the same amount of time.
As long as demand and supply is the core of the problem, nothing will change.
What’s The Solution?
In our consulting firm we built an end-to-end program which tackles both sides of this problem.
At the top you want your bankers to be masterful at building relationships and selling. And at the junior and mid-levels, you want to help bankers become systematically excellent with their time.
While our program is detailed and proprietary, here’s just one idea for the top and bottom of the pyramid.
1. Actually, Train Bankers How To Build Relationships and Sell
The fact is, if you have 15 years to train somebody, shame on any bank that can’t turn most of their top graduates into top rainmakers.
Top selling organizations like GE and Oracle do this as effortlessly as bankers play golf, and there’s so much low hanging fruit for banks to pick.
When I was a second-year associate, at the ripe old age of 26, I was given a list of clients to call on and told to make it happen.
Make what happen? Go and build relationships and sell the firm, stupid.
So, how do you do that?
If you watch most bankers, like I did, they do it terribly!
Which is why nearly every single banker who starts at a junior level will fail to evolve into a banker who can drive the business at a senior level.
Indeed, the pyramid gets sharp at the top, and, ultimately, the only thing that matters to a long and successful career is how much revenue you put against your name.
Yet without being taught how to actually build relationships and sell, senior bankers revert to what they learned from working all night at the junior levels.
At Goldman I do remember once attending a presentation skills training for half a day. It was only helpful to the extent that you could better present a useless, big book, but it taught you nothing about what actually builds relationships and sells.
How do you reach a potential client? What do you say to a gatekeeper to get in the door? When you reach them, what do you say to compel them to meet with you?
What do you do when you actually get in the door?
Most banker books start with a team wheel. Seriously?? Come on!
A high-priced banker will spend the first ten minutes of a hard-to-get meeting talking about Joe Blow in debt capital markets who went to Wharton, rather than actually engaging a client in what they truly care about.
Even once they begin the meeting many bankers spend their time looking down drearily reading bullet points rather than actually looking at and engaging the client.
How, specifically, do you build rapport? How do build it unconsciously, fast? (e.g. matching and mirroring). What types of questions do you ask clients to understand their needs? How well do you listen, and take note of what really matters to them? How do you profile people to know how they think and buy? How do you get to their pain? And to the solutions they need?
How do you sell the firm? What is your story of why you do this? What benefits do you lead with? How do you embed those benefits deep in their brain? How do you handle objections? What are your favorite objection destroyers? What are your go-to stories for building trust, establishing credibility, and otherwise driving the sale?
Such obvious questions that top salespeople spend their lives honing, few bankers have ever trained, let alone built a systematic process to masterfully execute.
Competence builds confidence and of course bankers who lack the skills to confidently sell are going to fall back to destroying trees and junior banker lives!
2. Train Bankers To Be Masterful With Their Time
For all the griping that you hear about the investment banking lifestyle, you hear too little about the amount of wasted time.
Hours a day gets consumed in office banter, perfunctory meetings, sitting around eating dinner, and other activities that anyone who is serious about optimizing their time would avoid.
A favorite quote from famed basketball coach John Wooden is “Never mistake activity for achievement,” yet bankers spend much of their lives on zero-achievement activities.
As I look back on it today, I’m embarrassed by how much of my life I wasted reading the same news, talking about the same old junk (what do you think will happen in the markets?), focusing on useless details (e.g. that bullet needs a period at the end), clearing a junk-filled inbox, and otherwise burning my time.
Today my clients save literally hours a day by getting focused on what truly matters and eliminating most of the noise.
But herein lies a massive rub.
In banking, as in most jobs, there’s an enormous disincentive to optimize your time…
You have to be there anyways!
If you’re too efficient, you get more work. If you turn a book faster, rather than put a finished product on the shelf, a senior banker is likely to turn it again.
Even if you’re a badass at your time and get your work done 2X faster, just like the Moelis email highlights, you’re perceived underutilized for not being in the office in the wee hours!
And, then, there’s the facetime culture.
Ugh, if you can’t leave the office until your MD who has never had a life and hates his wife goes home for the night, then you’re stuck there until he slinks out anyways.
Solutions, Solutions, BUT…
We’ve been talking about this stuff to leaders in banking, but only a select few really get it.
By definition, if they have made it to the top without learning a lick of selling skills, or getting excellent at their time, then they assume that anyone else can do the same.
But, that’s selection bias right there…
Anyone who wasn’t somehow naturally good at these things was managed out and never made it to the top.
So those who have made it often believe that you’re either capable of doing it or you’re not.
And If you look at the lifestyle problems that plague the industry, and the failure of most senior bankers to actually drive revenue, it’s clearly more like not.
No sports team in the world would dream of treating their top draft picks that way. They do everything they can to train top athletes to play their best game.
And any bank who gets this right, literally, will massively improve their revenue generating capabilities while also building the best culture to have ever walked The Street.