Blackrock MD BY 31: Ask me Anything

Bio: Khe attended Yale University and has 15 years of finance experience, mostly as a fund of funds investor. Khe was promoted to Managing Director at Blackrock at the age of 31, and last year left to explore entrepreneurial passions around community building and helping people be their best selves. See his full bio below. Here are some principles he lives by:

Don't “Network”

Genuinely help people. Build meaningful relationships, instead of asking for introductions or advice. Younger employees often feel insecure that they have very little to offer to older ones, and that it is an asymmetric relationship. Remember though, making a genuine offer to help is a strong and noticeable gesture. Furthermore, any one, irrespective of age, has something unique to offer: a unique perspective.

Set Up Systems

It isn't human nature for us to remember so many names and details— so don't bank on just using your brain. Organize relationships based on interests (i.e. sports or hobbies) as well as by frequency of contact . Use a simple spreadsheet or an off-the-shelf CRM. Building and maintaining relationships takes immense effort and precision, the same way you would treat your job or your work out.

Think Long Term

Like any “investment,” you will not see any results for a long time. There are no shortcuts. But if you genuinely care about helping people, then you are executing on a passion. The more you care, the more your “network” will become just “friends.” Have fun with it, remember at the end of the day it’s just people, like you and I, who have passions, quirks, aspirations, and experiences. Connect on the “human” side and the “professional” side will work itself out. Trust me.

Think Different

Getting people's attention these days itself requires creativity. Write a hand-written note saying thank you. Old friend's belated birthday? Send them a video of you singing them happy birthday. Remember: you are not just competing with every other kid trying to get a job— you're competing against everyone in their life, period. Flex those creative muscles - go the extra mile to show that you care.

Full Bio: Khe attended Yale University and has 15 years of finance experience, mostly as a fund of funds investor. Khe was promoted to Managing Director at Blackrock at the age of 31, and last year left to explore entrepreneurial passions around community building and helping people be their best selves. He now runs Rad Reads, a platform of curated content around the topics of leadership, self-inquiry, innovation, and culture.

Khe curates a weekly newsletter, which frequently covers relationship building and leadership. You can subscribe here. He also shares advice on Snapchat @RadReads and blogs on Medium (http://medium.com/@khe).

 

Hi Khe, thanks for doing this! A few questions:

  1. Could you explain to me the pros/cons of starting a career at a fund of funds, as opposed to IBD or another traditional route? I've heard the acquired skill-set isn't particularly transferable, and hence doesn't lead to many exit opps, but the work is still interesting as it is on a macro level. Not to mention the work/life balance is a lot better. I'm hoping you can elaborate.
  2. Could you discuss compensation levels at a top FoF for junior (analyst/associate) levels?
  3. What work-specific skills were most important in helping you make MD at 31? Was it technical skills, or being able to communicate with external managers effectively, etc.?
  4. Do you see FoFs to be shrinking post-crisis due to the additional fees they charge on top of the underlying HF/PE fees?

Thanks again!

 

Hi There, thx for reading the post!

  1. Pros:

- Very broad exposure to many elements of capital markets. - Less structure, so for the right person the opportunity to be "in the action" sooner - The ability to meet w/some of the smartest investors in the world - Non-traditional career path cuts both ways, you can accelerate quickly w/out being subject to the "track" but it's harder for the outside world to know your experience purely based on title

Cons: - You are removed as decision maker (since you pick managers) - Decisions take a long time (i.e. redeeming can take years) - There are not a lot of "decisions" (you may only make a few inv per year)

  1. Hard to say, they are all over the place depending on firm size but comparable to IBD in those roles

  2. A mix of both. I was a voracious reader of technical materials (text books and white papers) but also (per the article) had built a very extensive network, which gave me unique insights and access. As I progressed, learning how to be client facing was particularly important.

  3. It's already happening. I'm also surprised that HF fees haven't been cut yet, but after a dismal Q1 it appears that there is going to be a major shakeout across the HF managers as well.

 
KhemaridhHy:
A mix of both. I was a voracious reader of technical materials (text books and white papers) but also (per the article) had built a very extensive network, which gave me unique insights and access. As I progressed, learning how to be client facing was particularly important.

Hey not sure if this AMA is still active but would you mind recommending some of the material you have been reading? Quite interested in reading them too. Thank you.

 

1) why did you leave BlackRock after only 1 year of MD?

2) Why does it seem everyone who leaves top roles like this goes to motivational speaker / life-and-career-coach/ professional networker? I understand the genuine desire to give back and help others and don't mean to undervalue that, but does it have other tangible / intangible benefits as well? (Pay / access to corporate BoD seats/ etc.?)

3) How did you get into Yale? What was your major and did you go to B-school?

4) How do you invest your money?

 

Hi - thank you for reading

1, 2. I actually left after 4 years as MD, 8 in total in BLK. It was a personal decision around a few factors. I had a lot of interests outside of FOF (tech, community, writing), I was looking for something with more of an impact, and I had done a lot of reflecting about how I wanted to design my life, specifically around being a new dad. Said differently, my priorities shifted.

I'm not necessarily become a motivational speaker or career coach. I am working to build communities and help others, but will either start a company or join a high growth company. I think there are so many things to learn in the world, and the best way is to challenge yourself in an area where you now nothing about.

I also think that people are re-calibrating how they think about success. It's about more than comp and recognition (beyond a certain point). I wrote about it on my Medium post called "The Dirty Termsheet of Life" and my handle there is @khe

  1. I went to a small private school and had good grades. I didn't have any pressure to go to a top school from my parents, in fact, they didn't even really talk about it with me (unless I asked). Computer Science at Yale and no MBA, but I did get a CFA.

  2. Mostly passive, a few HF/PE Funds, and a small amount of direct private deals.

Hope this helps, and thank you.

 

This is why I love WSO.

Thanks for doing this Khe!

Could you give any advice on how to find a mentor or request someone to mentor you?

Occasionally I meet successful people much older than me (at work or friends of family) with who I am able to establish a connection, however, I am eager to learn from them but don't know how to go about requesting them to mentor me. Just saying "can you mentor me" feels unnatural. Not sure if anyone has ever approached you with such a request, but any of your thoughts are appreciated.

Thank you!

 
Best Response

Hi - glad you appreciate the post.

This is a really good question and there's no clear cut answer. Finding a mentor requires "playing the long game." As you meet people who you respect, your number one question should be "How can I be helpful to them?" It's not always obvious when there is a big gap in age, but always remember that you bring a unique perspective. In fact, when I meet younger folks, I ask them questions like "What are the coolest technologies you and your friends use?" or "Which book/movie/artist was inspirational to your generation?" They have perspective on that, and as an older person, that's very useful.

With regards to your question, as you meet people, listen... Actively listen. Look for any clues about things that interest them. If they mention they like Rutgers football, set up a google alert to pick up the news and if there's a juicy story, pass it along. Always offer up your time to them - you can flat out say, I really enjoy learning from you, I'd love to find ways to work closer together, even if that means doing things outside of my role on the weekends and evenings. Just make yourself helpful, in a respectful way.

I hope that helps. In fact, tomorrow, I'm writing a semi-related post on my blog on Medium (user: @khe)

 

This. Absolutely, 100% this. I went and donated to WSO just so I could get credits to SB this post.

"How can I be helpful" to the person you want help from is the best way to build relationships.

 

Hi Khe,

Thanks for coming by to answer questions. Greatly appreciated. I have a few for you:

1) What are you thoughts on general trends in the Asset Management industry? Do you think passive products will continue to become more popular, and what does that mean for active managers?

2) What do you look for in external managers? How important is past performance vs. other factors?

3) Are there any strategies you have been wary of? Where do you think active management can have the biggest value-add?

Thanks!!

 

Thanks for your question!

1/ I do think that passive will continue to grow, esp with the growth of the roboadvisor. In active, there will probably be a shakeout of consistently underperforming managers. Also, fee compression. But remember, the market cannot be 100% passive. If so, then there would be no differentiation between FB and Ford. So, there is some cyclicality

2/ Past performance is not an indicator of future performance!!! LOL. We didn't spend too much time on past perf. We looked at the experience of the team, process, strategy (and the macro headwinds/tailwinds for that strategy), structural considerations that created/reduced opportunities, crowdedness in trades, individual referencing, to name a few.

3/ High leverage and those with limited pricing discovery, esp when there was a reasonable amount of investor liquidity.

Hope this helps, have a great day

 

Thanks for your post. I have a question about your first point: Don't "Network".

Would you say your advice about having something unique to offer applies to those of us still in college as well? I noticed in one of your replies that you said you ask younger folks questions such as what technology they use, for which obviously I would have answers to and can help in that regard. However, what if whoever I am speaking with are not interested in these things, or at least don't ask me? I don't feel like these are things I would randomly bring up if I don't sense an interest on their part. How can I provide value then - especially since I am not even working yet?

Thanks!

 

Great question, and thank you reading my post.

I think EVERYONE has something unique to offer, again, their perspective. It may not feel that way. But also, remember, there are a lot of people who want to mentor, just because THEY like giving back. They don't expect anything in return, they are "paying it forward." So the challenge is finding someone who does both, appreciates your perspective and that is willing to give back. To find that second person, it requires a lot of effort, putting yourself out there, having a lot of conversations, asking good questions, being honest and authentic, and following up.

I hope this helps

 

What would be your advice for an undergraduate freshman (EU) interested in hedge funds and AM? I like to trade on my own and see HF/AMs as genuinely interesting careers, but the rise of fintech and passive investments (etfs) and so on really decrease the demand for active opinions these guys offer. Is it worth to pursue further on my dream or is the business going slower and slower? Any views on that?

Will be majoring in finance, obviously, but have a lot of courses to choose from besides major studies. Your background is CS, think any basic CS would be helpful (python, maybe understanding sql?)? Advanced micro/macroeconomics? I chose few courses from accounting already since it is pretty much needed everywhere but looking to fill in the rest and can't decide which would be helpful.

Thanks for the ama!

 

Thanks for your question!

Active management is not going to go away. It may change, evolve, and have fee compression, but remember, a 100% passive world cannot exist. And pursuing HF/AM also gives you a wider understanding on company analysis, risk, portfolio construction, and more.

I genuinely believe that you should pursue things that you find interesting - if you start w/money and title, it's not enough to carry you through the long and grueling process to become good at something.

Re: which classes, I'm going to throw a curveball, but I would say philosophy. Some of the smartest folks I know in both Finance and Tech are philo majors. Philo teaches you how to learn and reason. Also, history, for context on why things are where they are today. I think one needs to have breadth in their knowledge.

 

I would also add:

Really can't underestimate the importance of being broad. If you google Rad Reads 63, there's a great article on Charlie Munger and Mental Models (Article 2). And you should subscribe! (shameless, plug!)

 

Hi - please see my answer above. I would also learn statistics/data science as well as be able to code a bit. Really can't underestimate the importance of being broad. If you google Rad Reads 63, there's a great article on Charlie Munger and Mental Models (Article 2). And you should subscribe! (shameless, plug!)

 

Career and learning wise, not much.

BUT the thing I didn't realize at the time was that one enters business school at such a unique time in their lives. You are more comfortable with who you are, know (sort of) what you want to do, secure in your relationships, and have some disposable income. That personal stability (and maturity) helps you develop very strong friendships that last for the rest of your life.

I was lucky to have (semi) replicated this through the above, but see my peers and am very struck by the lifelong friendships they have built (which also translate into business)

 

Hi Khe,

I was wondering if you could speak to some exit opportunities you saw your colleagues in hedge fund of funds move to (specifically investment roles if there were any)?

What would you say was your biggest challenge in FOFs and how did you separate yourself from those less successful? Outside of your independent learning.

Do you feel like the HFOF industry is consolidating even moreso than it has already?

Thank you for doing this AMA, its awesome that you look to share your experiences with younger folks.

 

Thanks for your question!

re: Exit opportunities: Very mixed, a very small number moved to HFs as risk takers. Many moved onto other allocator roles, with Family offices being the most sought after given their flexible mandates and lack of "fund raising needs." I also saw a lot eventually move to IR or Marketing at HFs and recently have been seeing folks move to FinTech Cos.

re: biggest challenge - the breadth of things to know about as a generalist. And being able to "vet" investors, having never been a direct investor myself. Re: separating, I think I worked extremely hard to develop a very extensive set of relationships, I studied what it was like to be a professional (public speaking, writing, negotiation), and as I got deeper into my career was more focused on being the best manager possible.

 

So young man, I am 30, you're 31, you would be an upper class man of mine if we were in high school. Do you enjoy the life of the family man?

I am contemplating finishing up my philosophy major and publish a few articles on core ethics in the field of finance and medicine, actually. I made the switch to Statistics/Computer Engineering because of the opportunities I was presented at the time. Am I happy? Not necessarily. Do I think they offer great tools that will help should or if I pursue this route instead of the alternatives in life? I don't know. I have an engineering background at both giant tech companies you can teach anyone how to do anything.

When you mentioned philosophy majors, thinking meta-physically and abstractly, I agree. However, to understand the fundamental layouts of such thought experiments, you have to first understand the basics of that given industry. I love the discussions we have in class, and what conclusive information can be deducted from those discussions.

Have you thought about working for a non-profit, given your background to make an impact? My friends all left their suit life in IBD/Trading/BigLaw to run and join these non-profits because we all saw what was going on.

I admire the conviction you portrayed and thank you for doing the AMA post. You sound a lot like one of my friends I have as an inner circle. One chose to be a professor at Kellogg instead of going into the industry. He said he enjoys the freedom and the impact he can do as a professor, and views IBD/Trading as a retirement career (he still gets daily offers).

Two last questions from me, and I don't expect a perfect answer, in what ways do you plan on making an impact, and what is driving you to do so?

 

First off, thanks for sharing about your career. Second, what would you say is lacking in the education system today which is relevant to working in the financial industry today? In business school, we kept on being told that business communication was one of the most important, because that covers a large range of topics, from company culture to performance apprasials to various leadership methods to keep most worker motivated, increase their performance and getting rid of the poor performers after several efforts for them to improve.

Thanks.

Want to Lose the body fat, keep the muscles, I can help.
 

Thanks for reading - I think that there are a few things. First, there is a zero-sum mentality in finance. I win, you lose. I think that sets things up as an inherent conflict, both at a strategy level but also between teams. I believe that business works in an abundance mindset, meaning, that there are many winners.

Second, I think that empathy and compassion are not taught. Truly understanding what others are feeling, putting yourself in their shoes. This makes for good leaders, good clients, and great relationships with your investors.

It may sound a bit woo-woo, but I think that tech, broadly as an industry is getting this. When a top performer leaves a tech firm, he/she's not walked out of the door by security the same day. In fact, the opposite happens - the former colleagues go out of their ways to praise the colleague, wish them luck, etc. And what usually happens is that the former colleague ends up doing business with their old firm. So both parties win, i.e. abundance, not scarcity.

 

Yes, you are correct about that, the biotech and technology companies certainly do that and same thing happens in England. I worked in Silicon valley for awhile and almost every company that I worked for I saw the praises and take the person out for goodbye lunch, presents and cards. So, my next question is, there room for making real friends? or is everyone just a colleague?

THX

Want to Lose the body fat, keep the muscles, I can help.
 

Hi Khe,

Thank you for sharing the details of your Career at BlackRock. I have just one question:

Would you suggest to apply for BlackRock Solutions within BlackRock? I would like to apply for either Aladdin Client Services or PAG next year which are within this division. Are they central in the investment process through Aladdin? Do you see Aladdin to be used more widely by large banks and sovereigns as Bloomberg is?

Many thanks, I really appreciate what you are doing.

 

Hi - this is a bit tricky for me to answer, as I was in a very different group. Conceptually, I believe that risk systems will continue to grow in importance/relevance to all investors, both big and samll, and BRS is in a great position to cater to that demand.

 

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