Why You're So Easy to Replace
mod (Andy) note: "Blast from the past - Best of Eddie" - This one is originally from 9/2/10. If there's an old post from Eddie you'd like to see up again shoot me a message.
"The meek shall inherit the earth, but not its mineral rights." - John Paul Getty
After a particularly brutal day at the office, you might go home feeling like you're nothing more than a tiny cog in a vast investment banking machine. Hours of mundane labor leave you feeling like your contribution will never be recognized. You wonder if you've made the right career decision, and you wonder how much longer you can stand being just a cog in the machine.
You need to take a deep breath, relax, and quit flattering yourself. Even on your best day, you're not a cog in the machine. When a cog breaks down, people actually notice. You're more like the sandy bit of grease that gets squeezed out between the cogs. Completely expendable, and wiped away with as much thought as any other industrial nuisance.
Get ready, because I'm fixin' to lay some ugly truth on you.
Wall Street isn't fair.
I was inspired to write this because of a recent spate of posts written by you guys about the various screw jobs you've been forced to endure as a junior guy in this industry. VaTech4Ever just got his dream offer yanked because he broke his leg. D-Rock got hosed (BIG time) on his bonus after the hedge fund he trades for had a banner year. And who could forget a panic-stricken blumie when his boss refused to reimburse him for $8,000 in research reports he paid for on his own credit card?
G.K. Chesterton has perhaps the best definition of Capitalism that I've ever read. The fact that he penned the definition 100 years ago makes it no less applicable today. He described Capitalism thusly:
Capitalism is that economic condition in which there is a class of capitalists, roughly recognizable and relatively small, in whose possession so much of the capital is concentrated as to necessitate a very large majority of the citizens serving those capitalists for a wage.
The class of capitalists to whom he refers we know of as the guys upstairs. You know the guys. The guys who make a figure roughly equivalent to your annual all-in comp over the course of a conference call. The guys who pretend you don't exist when they're forced to share an elevator with you. The guys who wouldn't piss in your mouth if your guts were on fire.
Because of the choices you've made to this point, you represent an expense to those guys. And they hate expenses. Expenses limit the number of Murcielagos they can buy, and the number of illegal aliens they can hire to wax them. You might as well be raining shit down on their happy little parades with your expectations of a living wage.
The expense of your salary is largely ignored during good times (though the bonus system is still designed to engender animosity, disappointment, and the cannibalistic urge to destroy fellow peons in the junior ranks. How else would you explain the buckets?). When the hard times roll around, however, your salary and bonus are viewed as the Achilles heel of the firm, and the wholesale slaughter of lower-rung guys is de rigueur at the first hint of a missed quarterly target.
The guys upstairs consider you eminently replaceable. Believe me, if they thought a call center in Bangladesh could produce decent pitchbooks, you'd be out on your ass already. Remember how tough it was to break into the industry? Well, there are tens of thousands of kids right behind you laboring under the mistaken notion that Wall Street is the promised land, and the guys upstairs are pretty sure they'll work cheaper than you.
In case you have any doubt about the food chain, over 20,000 Lehman employees got laid off while Dick Fuld and 4 other top execs pocketed over $1 billion in comp. Bear Stearns laid off thousands as well, while the top 5 guys there walked away with $1.4 billion. They got rich and flooded the market with experienced talent willing to work cheap. That's why, even after recording profits bigger than 2007, analysts all-in comp today is still only two-thirds of what it was then. That's if you're lucky enough to even have a job.
>You make it too easy for them.
Investment bankers are a risk averse bunch. Don't get me wrong - they're willing to take deliriously stupid risks with other people's money. But they expect their own paycheck to arrive on time and not a penny short, as though they punch a clock in a factory.
Investment bankers all attend the same schools, where they attend the same classes. They think alike, dress alike, and have a bilious distaste for anyone who doesn't conform. Non-conformity frightens them. They spend good money to buy the kind of job where you can make six figures with little effort as long as you fly under the radar.
Investment banking is the pinnacle of employment for mere mortals. It doesn't require physical labor, it pays ridiculously well relative to effort, and enables those with no extraordinary skills to make an extraordinary income. But it is employment nonetheless, which means you make that extraordinary income at another's whim. As fast as that whim can change, your life can be turned upside down.
You're easy to replace because you think like an employee. You want to come to work, have someone tell you what to do, do it, go home at night and do it all over again the next day. You want to repeat this process daily for years, move up the ranks, and make more money along the way. Sure, it's mind numbing and soul destroying, but there's no risk, right?
If this sounds like your game plan, you suffer from a common condition known as Cerebral-Anal Hypoxia. In other words, you've got your head so far up your ass that it's choking you out. It's time to drop the lemming act and start looking out for Number One, because right now you're relying upon the kindness of strangers. Strangers who don't give a frog's fat ass about you and your family.
You're an unrestricted free agent.
It's time to quit thinking like an employee and start thinking like the CEO of You, Inc. In the game of life, you're an unrestricted free agent. What you do in this life is entirely up to you. Maximize your personal profit. If that means your objectives temporarily align with your employer's, so much the better. But never forget that your objectives have to come first.
Just about every employer will extol the virtue of teamwork, tell you that there's no "I" in "team", and tell you that a chain is only as strong as its weakest link. And I'll admit that there is value in pulling together with others - as long as they're pulling in your direction. But do yourself a favor and consider the source.
Was Dick Fuld playing team ball when he bankrupted Lehman and skated with hundreds of millions of dollars while thousands of employees got the shaft? The guy didn't have his own private elevator because he felt any solidarity with his employees.
I mean, Richard Fuld, they had a private elevator. His driver would call Lehman Brothers at the front desk, and the front desk attendant would press a button, and one of the elevators in the southeast corner of the building would become frozen. A security guard would come over and hold it until Mr. Fuld arrived in the back door. He comes in through the back door, so there's only like 15 feet where King Richard Fuld is exposed to the rabble, I guess you'd call us.
Look, it's not your fault that you have an employee mentality. Ever since the Industrial Revolution, big business has colluded with the education industry to churn out an endless supply of consumable resources in the form of employees who have been trained to work for a wage. Like any other consumable, these employees are used up and then discarded in favor of newer, cheaper consumables.
If you want to transform yourself from a consumable to an asset, you need to become a free agent. A free agent can sell himself to the highest bidder, negotiate the terms of his employment, and maximize his personal income. But free agency requires a shift in thinking, and a willingness to shoulder some personal risk.
It's decision time. Are you in it to make you rich, or are you in it to make them rich?
Time for a check-up from the neck up.
No one is looking out for you. That's a cold, hard fact. You are on your own in this world. And you don't have any golden parachute waiting for you. You've got a box full of your shit and a security guard walking you out. (side note: When you really screw the pooch, they send two security guards for you, just in case you flip out. Good times.)
So what can you do about it? I'm glad you asked. You need to re-wire the way you think about earning a living. There's nothing wrong with being an employee, as long as you recognize and embrace the transient and impermanent nature of employment. Use that to your advantage.
Learn to view everything under the lens of whether it moves you closer to your goals or further from them. Sit down and figure out what is the worst thing that would happen to you if you lost your job, and be honest with yourself. Sure it would suck, but it certainly wouldn't be the end of the world.
When you can go into a job interview and pity the interviewer because you know that he needs the job but you don't, that's power. And it's power that comes across in an interview. With that in mind, here are a few steps you should take to get your head in the right place:
- Read The 4-Hour Workweek. There's a reason it's been on the New York Times business bestseller list for a million years. You shouldn't be allowed to graduate college without reading it. Whether or not you agree with the premise of the book, or ever plan to implement anything suggested in the book, the book will change the way you think about business. And that's its real value.
- Start looking for a new job today. You don't have to be obvious about this or do anything to jeopardize your current situation. But there's a high probability that your ideal situation exists somewhere outside your current employer. And this is the best time to be looking in the past three years. Even if you're completely satisfied with your current situation, it never hurts to reach out to headhunters and see what else is out there. If the rug gets jerked out from under you suddenly, you'll be glad you have your resumé polished and your interview skills honed. Don't be afraid to look outside Wall Street. There's a whole other world out there.
- Develop multiple streams of income. Nothing gives you more independence and a stronger negotiating position with employers (or prospective employers) than knowing you don't need the job. If all of your income is generated from one source, you experience a lot of pain when that source dries up overnight. Just ask the Lehman crew. Start developing streams of passive income to cushion any financial blows and to eventually give you the power to walk away. This can range from buying rental properties to selling baseball cards. It doesn't matter, as long as you make money. One last thing: you need a hell of a lot less than you think you do.
- Simplify your life, for crying out loud. In case you didn't get the memo, models and bottles are out. I'm not trying to sound like Captain Buzzkill, but conspicuous consumption has never been a good idea. I can say that because I made the mistake myself, and the recovery process can be long and painful. Ask yourself which of your possessions are really important to you and then get rid of the rest. Consider this: when I was packing up to move to Paris in 2008, I was putting a lot of stuff in storage. I came across boxes in my attic that hadn't been opened since I packed them to move into my new house in 2003. How important was that stuff?
Don't let your possessions come to own you. Get rid of everything you don't need. It's liberating. When I moved to New Orleans in 2001, if it didn't fit in the back of my Ford Ranger, it didn't go. I guess the irony is that by the time I moved to Paris in 2008, I had enough shit again to fill a 3,000 square foot house. In my defense, I'd also picked up a wife and two kids along the way, so some things can't be helped.
- Ditch the salary and get paid on your P/L. This is a scary notion for a lot of you, but if you really want to move yourself out of your employer's liability column and into the asset column, start getting paid what you're worth. I realize this isn't a practical solution for everyone, but if you have the ability to get paid based on how much you make the firm you'll be one of the last guys to ever get laid off. I can chalk it up to the trader in me, but there's no way I would have been as successful if I didn't have to sing for my supper.
If you want the big money, you have to take the big personal risks. A nice byproduct of that willingness is the ability to move from employer to employer based on who is going to give you the best deal. At that point, you no longer work for your employer, your employer works for you. He's no longer paying you to come to work, you're paying him to provide you a platform and clear your trades. And that's power.
Time to wrap this up.
In the immortal words of Drill Instructor Sergeant Martin (a man I still have the occasional nightmare about), "It's a dog eat dog world, boy. Somebody gotta get fucked."
Take the above advice and you'll be prepared the next time the guys upstairs get horny. Then you'll actually be glad you're so easy to replace.
Comments
Lengthy post, but it has
Lengthy post, but it has substance. Easier said than done though...especially when you are just coming out of school and just starting to realize what's out there.
Bravo Edmundo. Wonderful
Bravo Edmundo. Wonderful post. You are nothing, but a number.
MSF Website
MACC Website
MSF Twitter
Much appreciated, Edmundo.
Much appreciated, Edmundo. This is exactly what I needed to hear.
Great post Edmundo...
Great post Edmundo...
People like Coldplay and voted for the Nazis, you can't trust people Jeremy
Like Edmundo said, "You are
Like Edmundo said, "You are utterly fucking meaningless to the guys upstairs."
Its not just in IB, its in every fucking organization.
Silver Banana
Silver Banana
Best advice I ever received -
Best advice I ever received - Always have a plan B so that you can walk away at any time. I have been living that way since people started getting fired in large quantities.
This is an awesome post. If I
This is an awesome post. If I didn' t have so few "credits" I'd award a silver banana. Even for an alcoholic, this is so right on. :) And yeah, the 4-hour work week is an amazing book (it is actually on my desk as I type).
I've been telling my friends this wisdom, too. I can't believe how guilty my buddies feel when they have to give their 2-week notices or when they start looking around. I keep telling them: if cutting your job improved NPV by 1 penny, you'd be out on your butt. As an employee, you are the lowest form of human life.
F it. Silver banana for the income stream recommendation.
Excellent post. "Don't let
Excellent post.
"Don't let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner." -Neil McCauley (Robert De Niro) in 'Heat'.
See my other WSO blog posts
Well written. The only thing
Well written. The only thing I can add is to ignore any concept of "loyalty." Companies (at least the big firms) aren't loyal to you, and if they say they are, they are lying. Its all about what you have done for them lately, and I have seen whole desks, entire onboarding teams, and other acts of just wholesale cuts without any regard to personal performance or sacrifices made for the firm just because that business is drying up or prospects don't look good. Maybe the guy running the group will get re-assigned somewhere else, but that even seems increasingly rare (if anything, companies seem way more apt to take out the top guy, but maybe keep one or two of the guys just below them).
You have to move around in this industry, and when you start getting mistreated, leave. It really infuriates me when you go to these big division meetings and they start spouting about loyalty, when just last week the guy next to you got sent home with three weeks severance. I must say I am fortunate, 8 years in this business and I have not been laid off yet.
Glad to see the resounding
Glad to see the resounding "no loyalty" comments. The day when you owe a company anything more than 2 weeks is done and gone.
MSF Website
MACC Website
MSF Twitter
Good article Eddie. I still
Good article Eddie.
I still think there is something to be said for a reasonable degree of loyalty, though. Not the 40-years-for-a-gold-watch kind, but the keeping your commitments because an employer took a risk kind.
When you get hired into ANY job straight out of school, you're making an 18-month commitment. That is, your employer loses money on you if you leave before 18 months, and it's only fair for you to stick it out that long. In the world of job hopping and brutal meritocracy, a strong sense of fairness and justice is incredibly valuable. It's something that intelligent folks with a moderate degree of wisdom can spot and tend to be attracted to in the business world.
And I know I can come off as tackily cheap sometimes (I like to say shrewdly thrifty), but at the end of the day, you need to follow the mantra of "save, save, save"- at least until you have your student debt paid off and an emergency savings fund built up. There's nothing more empowering than knowing that you would be OK for the next two or three years if you quit your job or got fired tomorrow.
Work hard, play hard.
Here's a quick note to the
Here's a quick note to the quants out there (IP, you just reminded me). I thought about putting this in the post but it was long as it was.
If you are a programmer working for a bank (or anyone in intellectual property, for that matter), pay close attention to your employment contract. Chances are there is a provision in the contract that allows your employer to lay claim to any code you write, even if you do it on your own time.
So if you write the gnarliest black box code that kicks the shit out of Goldman's doomsday machine and you want to go set up your own shop, chances are your firm will sue you for ownership of the code. And they'll win. Just be aware.
Even for an alcoholic, this is so right on. :)
I'm not an alcoholic. I'm a drunk. Alcoholics go to meetings.
IlliniProgrammer wrote: Good
Good article Eddie.
I still think there is something to be said for a reasonable degree of loyalty, though. Not the 40-years-for-a-gold-watch kind, but the keeping your commitments because an employer took a risk kind.
When you get hired into ANY job straight out of school, you're making an 18-month commitment. That is, your employer loses money on you if you leave before 18 months, and it's only fair for you to stick it out that long. In the world of job hopping and brutal meritocracy, a strong sense of fairness and justice is incredibly valuable. It's something that intelligent folks with a moderate degree of wisdom can spot and tend to be attracted to in the business world.
It is different for guys just out of school. Firms do invest a tremendous amount of time and money in their campus hires, and just for your own good you should stick it out for at least two years, unless you are in an area you hate. I suppose it is also a dick move to "take a promotion and run," but that all depends on the circumstances. Once you have been around a bit, I don't see a reason to put up w/ so much shit though. It seems I am kind of unusual here in being mid level and not just out of school or a wannabe.
On another note, I 100% agree with save, save save. The less beholden you are to your employer, the less stress you will have. If you can swing two streams of income, even better. I have taken a few cracks at this with some reasonable success, but nothing that I can live off of. Stay out of debt (even mortgage debt if you can) and save your ass off, and you sleep a lot easier at night. Life is a lot rougher when you are not only fearing for your job which you happen to hate, but need that job to afford the monthly payment on your McMansion and BMW lease. Saving sneaks up on you, it wasn't that long ago that I woke up and checked out my bank account, and realized that I had well over a year's paychecks in my bank account, and enough investment income each month to cover my beer/food bill each month. That was a good day.
olafenizer wrote: Excellent
Excellent post.
"Don't let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner." -Neil McCauley (Robert De Niro) in 'Heat'.
Haha.. Watched Date Night last night and that was quoted in the movie.. Great line
And equally great post EB. Ever since I have been a sophomore I've been looking for that passive stream of income. Unfortunately I'm just getting the ball rolling 2-3 years later. But I think the upcoming months before I start my analyst gig will at least get me what's needed for my monthly student loan payments.. Leaving my salary untouched
Great post and great replies.
bigmuffin wrote: Great post
Edmundo Braverman wrote: So
Work hard, play hard.
IlliniProgrammer wrote: Good
A classic eddie. I don´t
that is some pretty
---
man made the money, money never made the man
Something additional that I
...after reading this I
WSO Conference 2013
Private Certified User Chat
I've been splitting my time
looking for that pick-me-up to power through an all-nighter?
TechBanking wrote: After a
Work hard, play hard.
Patrick, I'm glad you joined
IlliniProgrammer wrote: Oh
Great post Edmundo! Tons of
Agree with Edmundo we
Edmundo Braverman
WSO Conference 2013
Private Certified User Chat
I'm going to buy 4-hour
Learn Financial Modeling
Interview Guides
Resumes
Dont count on only working 4
Great post, really made a lot
This really was a great post.
Greenapple, I think it all
I think that was an excellent
I have saved this as one of
1.5 year bump... Very
"Sounds to me like you guys a couple of bookies."
TL;DR lol, jk. I read every
-MBP
Great post as always Eddie,
Love it. I always felt like
I hate victims who respect their executioners
Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital
Edmundo Braverman: It's time
The Auto Show
Mmm easier sait then done -
Nice job. I need to do some
......just trying to save at least one hour a day for myself....for sanity purposes.
BlackHat: Love it. I always
Head of Metal Website: www.headofmetal.com
https://twitter.com/headofmetal2012
Liked the post a lot. read
Because when you're in a room full of smart people, smart suddenly doesn't matter—interesting is what matters.
Edmundo Braverman: Here's a
It's all relative. The
good stuff
Nice. Got to look out 4
"The future isn't what it used to be "-Yogi Berra
"Perhaps you've failed to take into account my hidden assets"-007
The coolest cat on WSO
My BLOG