Thought I'd give you guys a peek inside the book now that it's finished:
Just Another Day at the Office
People ask me all the time what it was like to work in a boiler room, so I thought I'd devote a chapter to describing what it was really like. The movie Boiler Room got a lot of it right, though I thankfully never worked for a place that was an out-and-out scam selling stock in companies that didn't exist.
Keep in mind I worked on the West Coast, so the hours were quite a bit different from what would be typical in New York. It's also important to understand the underlying philosophy of a boiler room: it's a numbers game. The more people you call, the more money you're going to make. And that's true whether you're working for Stratton Oakmont or.
So a typical day for me began by arriving at the office between 5:00 and 5:30 a.m. Our official showtime wasn't until six, but the top guys noticed who got there early and who didn't, and that made a difference when it came to doling out leads and accounts. So I'd get in around five, grab a cup of coffee, and shoot the shit with the other guys while we waited for the morning meeting. Sometimes I even did a little cold-calling on the East Coast. You'd be surprised who you caught in their office at eight in the morning before their secretary got in and screened out your call.
At six the morning meeting would start. This was a nationwide conference call held over the hoot and holler. Most mornings it was the vice president of sales who held the meeting, but occasionally the CEO would get on and spit fire. The meeting consisted of any news updates on our portfolio companies, and then we got daily pricing.
Daily pricing was the only part of the meeting that really mattered, and it was the only part of the meeting most guys paid attention to. Daily pricing was when they told us what all of our principal deals were "up from" for the day. In other words, it was the daily chop report.
Thewould go down the list, read off the company name, and then either give the price the stock was up from (meaning the secret price below the offer that was the broker's hidden commission on top of the 5-percent markup on the offer) or just give the total percentage. He'd say something like, "MAIN (Main Street & Main, Inc. - a T.G.I.Fridays holding company) is up five with twelve, PFTI (Plants For Tomorrow, Inc. -- a landscaping company in the Everglades. You can't make this stuff up.) is up five with seven and a half, etc.", meaning MAIN paid a 12-percent commission to the broker after the 5-percent markup, PFTI paid 7.5 percent total after the 5-percent markup, etc.
Whenever a particularly greasy stock would get called out (say up five with twenty or more), you'd see all the senior guys start flipping through their books trying to figure out whom they could sell it to. At a 20-percent commission, even a $25,000 trade paid you $5,000. And all the client ever saw was the 5-percent commission printed on his confirmation.
The morning meeting would end a couple of minutes before the opening bell at six thirty. You used these couple of minutes to take a quick leak, grab another cup of coffee, and gird your loins for what was to come. Because at six thirty it was game on.
Everybody knows that working in a boiler room involves a lot of time on the phone. What most people don't know is just how much time and how many dials it takes to keep your job. For your average advisor or broker today, if he makes fifty calls in a day, that's a lot. If you worked at that pace in a boiler room, you'd never last until lunch.
The minimum number was 250. My firm measured both the number of dials you made and the number of minutes you were on the phone each day. Two hundred fifty dials a day kept management off your back as long as your minutes were respectable too. On a 250-dial day, you should be throwing up at least one hundred eighty minutes. Think about that for a minute. That's three solid hours of talk time. And that was just to stay under the radar.
So at six thirty every morning you picked up your phone and you didn't put it down until eight thirty when we took our first break. The firm was dead serious about it too. If your phone rested in its cradle for sixty seconds, an alarm went off on the branch manager's computer alerting him to which extension had been idle for a minute's time.
This went on for two hours until eight thirty. At eight thirty the breakfast cart would wind its way through the office selling bagels and cream cheese, individual boxes of cereal, whatever. You had fifteen minutes to hit the bathroom, collect any messages you had at reception, and wolf down whatever breakfast you'd managed to procure.
During this fifteen-minute break, the branch manager would grab a printout from the TELS machine. The TELS (or Tele-Sense) machine was not your friend. The TELS report listed everyone's extension and the number of dials and minutes they had for the day so far (also another good reason to pad your dials before the morning meeting). Every single day you were guaranteed to see someone get publicly reamed for their numbers being too low. Every. Single. Day.
But the raw numbers weren't the only thing the TELS machine spit out. It also gave management the anomalies report. This consisted of numbers you'd called too many times (like your girlfriend or your bookie), and also highlighted any other anomalous behavior. For example, if you had high dials but low talk time, it meant you were getting a lot of hang-ups or busy signals. That meant that either your leads sucked or you were purposely calling bad numbers because you had call reluctance. As you can imagine, neither was a good outcome and both led to public reaming. Not pretty.
At eight forty-five it was back to the phones for another two hours of smiling and dialing. We took another break at ten forty-five (so the boss could run another TELS report and dole out the requisite reaming), got back to work at eleven, and then powered through to the market close at one. That's when we broke for lunch.
We had one hour for lunch, so we were lucky that there were plenty of places to eat around us. In the beginning I was so broke that I just brought ramen from home (true story) and just heated it up in our kitchen. Every once in a while I'd church it up by dropping a raw egg into the boiling soup. Good times. Some guys used their lunch to work out in the fitness center upstairs, but I never had the desire.
The afternoon meeting began promptly at two. God help you if you were late. Being late for the afternoon meeting might have been the most serious infraction you could make (aside from low numbers, naturally). The afternoon meeting was a pretty casual affair: we covered anything that happened that day, and then we got overnight pricing. Overnight pricing was the chop we'd get paid on any orders we had ready to go at the open the next day.
This was kind of a genius move on the part of the firm. By giving us overnight pricing, trading had a very good idea of what volume was going to look like in our principal deals the next day. It helped them manage inventory and gave us a carrot to chase after.
Once the afternoon meeting was over, you were pretty much on your own the rest of the day. What exactly "the rest of the day" meant varied from person to person, but if you went home any earlier than management, it wasn't something you did twice. They generally got out of there between six and seven, and about half the office bolted within another half hour.
The hard-core guys (and all the rookies) worked until at least nine. By nine, you couldn't cold-call anyone in the continental United States anymore. Some of the guys worked Hawaii and Alaska because it bought them another couple of hours of cold-call time, but I never bothered. Sixteen hours was usually more than enough for me.
We worked this schedule Monday through Thursday. Fridays we came in at the same time, but we bolted at the close. Saturdays we worked from nine to one. Friday afternoons were the most egregious showcase of substance abuse I've seen to this day. There was so much steam to blow off that you'd often see guys roll in on Saturday wearing the same clothes they were in the day before. Those Friday afternoons were a large part of the reason my first marriage ended.
Now, you'd think working under conditions like those would be unbearable, but I have to tell you it wasn't. And that's all due to the crew I worked with. They were so cool and so much fun that the hours pretty much flew by. We celebrated each other's successes and lent each other money when we failed. You even got the sense that management was pulling for you, which made the frequent reaming a little more tolerable.
The crew I worked with cared about their clients and strove to do their best by them. There were guys in the office who did shady shit, but they were outside the fold and generally didn't last long. Despite its questionable lineage, the firm really did try to clean things up, and that made it a pretty decent place to work relative to our competitors. I know that because I eventually went to the dark side, and that was a whole other ball game.