The BlackHat Interview: 3/4

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Rank: Almost Human | 7,950

Mod (Andy) note: The much anticipated BlackHat interview is here (see part 1, part 2). Questions came from myself and members of writing and intern teams. BIG thanks to BH for his really in-depth/quality/quick responses. I promise all of you will have some great takeaways from this series.

If you don't know of BlackHat, he has been in the HF industry for 5 years (broke in straight from ugrad), has been one of the most active members on the site this year, and boasts a formidable 241:27 sb:ms ratio.

Here's how the four part series will go:

  1. Background / breaking into HF
  2. Working in HF, Money & Motivation
  3. This post: Career advice for all you WSO Monkeys + how he advanced in his career
  4. Last post: General life tips


First question of Part 3: What is the most important piece of advice you could tell a college student?

(btw, try to keep your questions relevant to the current post as he may have likely already answered it in a previous or upcoming post.)

Don't fool yourself. Especially considering the school I went to, I had friends who came into college thinking they basically HAD to go into a certain industry, force themselves to like a certain thing. The motivation could be prestige, family pride, money, or all of the above, but it's the worst thing you can do to yourself in college. I've always seen college as the time to figure yourself out before the real world starts, and one of the big things you have to do to accomplish that is find out what you enjoy doing all day. Try as much stuff as you can, by yourself or with friends, and once you realize you really enjoy something and it's practical (people forget this. I like boxing but I'm not going to be a fucking boxer) you need to look into it and don't lie to yourself and do something that's gonna pay better or sound better to your parents.

What would you look for in a potential intern candidate?
There's really only three things I'd need to see out of someone to know I can work with them. Even though they're all pretty close in importance, I'll order them this way:

1) Autonomy. I could never have an intern who's either following me around "trying to learn" or is sitting at his desk with big squirrel eyes looking up at me waiting for me to tell him what to do every single time he has a project. Being independent and autonomous is extremely important, so if I were to tell my intern I needed him to take over covering a stock or a certain sector, I'd expect him to take some initiative and figure out how to go about doing that, or at least ask me some questions early on and then go from there. If I'm out of the office all day he'd have to be smart enough to find a way to be productive, otherwise he's just useless to me.

2) Good Sense of Humor. This one could arguably be the most important, but I put it second since it's not actually job-related per se. I could never work with someone who I couldn't be relaxed and joke around with, it's probably the one thing that keeps me sane in this job. If I feel uncomfortable around you, you can damn well guarantee I will not want to be around you ever again. Be lighthearted, have a sense of humor, and don't take yourself or your job too seriously... if you can do that, then even if you absolutely suck at your job I'll at least give you a good recommendation or something.

And 3) Passion for Investing. I know it sounds cliche but honestly most people in this business and people trying to "break in" don't have an actual passion for it. If they did, they'd be spending their free time investing or learning about the markets, following companies, forming opinions on businesses, etc. If I can't sit down at lunch and talk about why XYZ Corp is total horseshit and hear your opinion on it, it's not gonna work for us. And related to that, if you don't really like learning about XYZ Corp and how it operates, the four 10-Ks, 8 10-Qs, and thousand pages of industry reports and research reports I put on your desk probably won't be getting read too quickly...

What are your 3 favorite interview questions you like to ask potential new hires?
Well I haven't done many interviews at my current fund, but I did quite a few at my last HF and those were the ones that were pretty funny since those guys had a strange faux-badass culture. My favorite definitely has to be a 2 on 1 we did where the other analyst asked the kid "Are you trying to fuck us?" and he had no idea what it meant and ended up thinking we thought he was gay or something. Definitely not what we meant...

Another good one that I like to ask, and I think really tells a lot about someone, is what their favorite movie is, favorite musician, and favorite word. The different responses you get for favorite word are hysterical. I always tell people my word would be "sarcophagus." I've heard answers ranging from clueless arrogance to plain creepiness, with words like "money" and "penetration" respectively. I'd say a 3rd question that's always a blast is to ask interviewees what they would do if they knew their boss was cheating on his wife and his wife came to him and asked if he knew anything. It's not about how they answer that question that we like, it's more about their reaction to it.

The people that laugh and say something witty tended to be our favorite, while people who took it seriously and talked about morality or analyzed how each decision would affect them economically are usually a lot more boring. We wanted to see people take a step back and see the absurdity of the boss's wife coming to some 1st year analyst for info on her husband's sex life.

During recruiting, how were you able to set yourself apart from the many other competitive candidates at your school?
Like I said earlier, having experience in the markets and being able to talk about it goes a long, long way. For the job I ended up taking, there was never any competition. Most people interviewing were probably extremely smart people with GPAs much better than my own - I had a 3.3 - and they probably got great internships in something like banking or consulting, so I won't say they weren't "competitive candidates," but for this particular internship they really weren't. I interviewed the day before everyone else did for the position, and essentially the entire interview was just a discussion about the markets and about what I thought of certain businesses and what stocks I liked. For me it was a really laid-back conversation and I ended up cracking jokes with my soon-to-be boss about different CEOs or companies or what have you. At the end of the interview he told me he didn't need to see the other candidates and offered me the job in the room, which was great considering I was jobless if I didn't convert that interview.

But yeah, I'd say the thing that set me apart was that I had been investing for a long time and had a legitimate understanding of the investment process, whereas even at a place like Wharton most people don't. You apply for all the finance jobs under the sun and you probably end up in banking, which you don't necessarily need any certain experience to do, but at a firm that has an intensive research process and no training program, you can't hire just any capable person to come in and do that job. That's where I had an advantage over the people that had much better credentials academically than I did.

----------
Career advancement questions:

You have managed to switch companies quite often--is this a usual occurrence? If not, how did it work out for you?
I'd say I haven't switched any more than most people my age. I've worked at 3 firms: 2 years at my first, 2 years at my second, and coming up on a year at my current firm. I'd say this is fairly common but varies by situation. For most people you'd expect 2 years in investment banking, then typically transition to PE/HF/VC or whatever, and from there you have a little bit of room to move around from shop to shop if you have a diverse enough skill set. You could stay at the same fund for your whole career, of course, but in my case the first HF I worked for started slowing down and I didn't like the environment too much after my first year, so I started looking at my options for lateraling to a different fund. I may have mentioned it before, but I simply contacted the headhunter who originally sought me out for that job, and he helped me get an interview at the fund I'm currently at. The rest is history.

Did you get an mba or are you considering it?
Nope, and never saw the point. Especially since I went to an undergraduate business school, and most of my classes were with MBAs anyways. I don't think people ever go to learn, and I've never seen the value in networking because my entire job is basically research and talking to people, so I'm not sure what more I could really do. Two years of foregoing a wage isn't exactly an exciting thought either, and there's like 2 people at my fund that actually have an MBA.

One didn't come from a finance background so I can see the use for it there, but I've made it a point to do my best to not stay in academia any longer than I had already had to. There's no pay increases for having an MBA in the HF world that I'm aware of, nobody will pay for you to go back, and I can't imagine it's any more fun than being out on your own. But for some people it's a great option, especially if you don't have a finance background and are trying to break in, or if you're trying to increase your chances at a certain job. If you've got a job lined up and it's one you like, I don't see a reason for it.

Who is one person who had a great impact on your life as you live it now?
I'd have to say it was my fiancee. I've always been a bit scattered in terms of going after what I want or kind of asserting myself I think, and as far back as I've known her she's been remarkably supportive of me even when she's had no real reason to be. I think back to when I was interviewing for internships my junior year of college. I had to make a decision between accepting an exploding offer and risking it by taking an interview after the exploding date with the firm I really wanted. I was set to take the exploding offer just to be on the safe side even though I really wanted the other, and I was on the phone with her telling her about it and she pretty much called me out on it and said she couldn't be happy if I wasn't, and I needed to do something about it. I still don't know why she cared so much, which I guess made me a very stupid kid at the time, but long story short she pushed me to follow what I wanted and I ended up getting the job I actually cared about and that pretty much shaped the rest of my career.

That example is just one of a handful of times she's known what I wanted better than I have, and she's kind of helped me figure out when I'm lying to myself. But the biggest reason she's impacted how I live now is she's the reason why a lot of the things I used to think were important really weren't, and she's kind of taken the spot at the top of my list of things to care about now. I owe her quite a bit for lookin' out for me even when I never would have expected her to, so she's definitely the biggest influence on me in the past few years.

Did you ever have a mentor and who were some other influential people who helped you along the way?
The one thing I missed out on was having a mentor for my career. I always had my dad to look up to as far as becoming a man, but never anyone who could give me advice about how to proceed in my career. Rather than mentors, the thing that I did have that gave me a huge advantage is a great group of supporters. My fiancee, like I said, was always there to kind of pick me up and knew what was best for me even when I didn't, so that was a big help getting traction in my career. The same goes for my parents. Neither of them knew anything about business or the first thing about banking or hedge funds or any of that stuff, but they were always asking me what I needed to move forward, or kind of pushing me to find out what the next move should be. I'd say that was probably even better than having a mentor since it helped me learn a lot of stuff on my own, and I think that's a lost art these days.

Comments (39)

Aug 6, 2012

Great content, can't wait for the final installment!

Aug 6, 2012

Thanks again Blackhat. Just going to reverse engineer a question:

What are the 3 favorite interview questions that you have been asked or wish you were asked by potential new hires?

Thanks

I think your mentor is almost your autonomous nature.

Aug 6, 2012

Damn Blackhat, what a baller

Aug 6, 2012

Again, thank you man.

Aug 6, 2012

penetration

Aug 6, 2012

If someone seriously said "penetration" as their favorite word, I think I'd just pack my stuff in a box and see myself out. I don't think I want to live in a world where someone says "penetration" as their favorite word in an interview.

Aug 6, 2012
TheKing:

If someone seriously said "penetration" as their favorite word, I think I'd just pack my stuff in a box and see myself out. I don't think I want to live in a world where someone says "penetration" as their favorite word in an interview.

When I heard the guy say "penetration" I looked at him for a sec and thought he was so over my head that he was saying this just to fuck with me and satire the stupidity of the question I had just asked him... then I gave it about 5 more seconds and realized this guy was on some serious shit or something, I ended that interview pretty damn quickly lmao

Aug 6, 2012
BlackHat:
TheKing:

If someone seriously said "penetration" as their favorite word, I think I'd just pack my stuff in a box and see myself out. I don't think I want to live in a world where someone says "penetration" as their favorite word in an interview.

When I heard the guy say "penetration" I looked at him for a sec and thought he was so over my head that he was saying this just to fuck with me and satire the stupidity of the question I had just asked him... then I gave it about 5 more seconds and realized this guy was on some serious shit or something, I ended that interview pretty damn quickly lmao

That's too fucking funny. Absolutely ridiculous.

Aug 6, 2012

I'd say a 3rd question that's always a blast is to ask interviewees what they would do if they knew their boss was cheating on his wife and his wife came to him and asked if he knew anything

....well it matters which one is more of a babe, the wife or the mistress?

Aug 6, 2012

Thanks for the insight. Wish I had a mentor.

Aug 7, 2012

great stuff. I cant imagine how hard it was to keep a straight face towards that kid who said 'penetration'

Aug 7, 2012

This one's a bit personal.

BH, I too have had a similar run in with depression in highschool only I was also diagnosed with ADD which is now apparently ADHD and Bipolar type 2...basically a slew of mental illnesses. That said, were you ever perscribed to any medication? If so have you ever gone off it and if you did, what was it like? Were you fine without it or did you need it to cope with stressful times at work or school etc?

6 months ago I just went off it all cold turkey. I cant really say if I notice a difference from when I was on it other than insomnia and that adderal is still helpful and I take it as needed, although not often. I have had a friend tell me that when I'm off my medication I just blank out like I'm half there or something and that they could tell when I missed it, but that was several years ago back in highschool when I took it regularly. And as far I can tell I'm 100% here without meds.

Any thoughts?

I'm definately holding out to tell my psychiatrist about all of this because I'm afraid she'll take me off and I'll end up needing them for this fall semester and Lord knows its hard to book an appointment with this lady.

Aug 7, 2012

Y'all seem to place a lot of emphasis on research and knowing the ins and outs of an industry; does your firm ever hire consultants?

Aug 7, 2012

Hi guys, long time reader, first time poster here.

BlackHat, couple of questions. Your first firm seems like a great place to work at, considering that you seem to be getting along pretty well with your boss, plus they gave you the chance into a HF role straight out of university.

How and why do you decide that you want to move firms (for both your first and second jobs)?

How did your bosses respond when you tender your resignations?

Aug 7, 2012

Great insight. Thanks again

Aug 7, 2012

Would you briefly elaborate on your HS/college studies outside of school that prepared you for your first job and interview?

Books?
Simulator?
Using your own money? How much did you start with?
Or just raised with it being in your life as a child?

Thanks

Aug 7, 2012

Really good read. Thanks.

http://DollarDrip.com Username: Knowledge Kick

Aug 7, 2012

BH, thanks for doing these interviews they are immensely helpful.

If you are interested in a company that is outside your normal area of expertise, do you start by finding out everything you can about that specific company or do you start by researching the industry in general?

Aug 7, 2012
13235314:

were you ever perscribed to any medication? If so have you ever gone off it and if you did, what was it like? Were you fine without it or did you need it to cope with stressful times at work or school etc?

Yes but won't go into any more detail on what it was. I experimented with going off of it for periods during college and it always sucked, I just felt sapped of energy and sick to my stomach, plus the brain zaps... if you know what those are then I feel bad for you. I never was off it long enough to know if I was worse off when I stopped taking it, but I told myself when work started I'd get off it, but then when I tried it sucked again and things were busy and I didn't want to risk messing up at work so I stayed on it. Still on it but vowed to get off it after my wedding. We'll see how that goes...

burnt tangerine:

Y'all seem to place a lot of emphasis on research and knowing the ins and outs of an industry; does your firm ever hire consultants?

We definitely do an excessive amount of research, but it's for the best because if you're holding something for 5+ years then you should probably know a lot about it (this goes for women too). We don't have any consultants and not really sure we consider them actually, but if that's something consultants do maybe we should bring one in and listen to the kid haha.

john_doe88:

How and why do you decide that you want to move firms (for both your first and second jobs)?

The first time was actually stupid - I moved because I was getting the chance to jump to a pure hedge fund that was hot at the time and had a huge AUM, so I thought there'd be a lot more opportunity and I wouldn't have to wait around as long to make a big impact and get some responsibility. I was horribly wrong though, and after a year there I realized not only did I hate the culture, but the fund was pretty awfully run and it wouldn't be long before we crashed and burned, and that's why I started looking at other opportunities and ended up here.

How did your bosses respond when you tender your resignations?

They understand. People leave all the time. Nobody's ever like really pissed off or anything like that, and they certainly never get emotional, but young people come and go so often in this business that it's really not a big deal, and it's not personal. Just a "keep in touch" and a handshake and that's just about it.

historiclegend:

Would you briefly elaborate on your HS/college studies outside of school that prepared you for your first job and interview?

Books?
Simulator?
Using your own money? How much did you start with?
Or just raised with it being in your life as a child?

I read all your basic value-investing books, plus some other investing books from more new-age value guys like Einhorn (obviously) and Greenblatt. Not sure what simulator is but if you mean paper trading then definitely not, I felt the only way to get an idea of the real thing is to experience the real thing. I had an investment fund I ran, and I started out just managing money for a bunch of friends / people in my high school who wanted to learn how to invest. But by college my primary investors were a few local businesses that I had gotten in contact with through a friend of a friend who was invested with me before. It just started growing and I decided to actually turn it into something real, and had a great time / learning experience doing so. Not going to throw out figures out of fear of the massive amount of trolls out there but it was enough for it to not look stupid on a resume.

Grayson:

If you are interested in a company that is outside your normal area of expertise, do you start by finding out everything you can about that specific company or do you start by researching the industry in general?

I usually just go right at the company. If you don't know at least the basics of the industry then it just means you're young and inexperienced, since most industries you should probably at least know what they are just from every-day life. But normally just reading the 10k of a company (and re-reading it...) is enough to get an idea of how they conduct their operations, what metrics are important, what the key issues for the company/the industry are. So normally it's not general industry research, it's company specific from the get-go. Not to say I don't spend a ton of time looking at competitors.

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Aug 7, 2012

"Yes but won't go into any more detail on what it was. I experimented with going off of it for periods during college and it always sucked, I just felt sapped of energy and sick to my stomach, plus the brain zaps... if you know what those are then I feel bad for you. I never was off it long enough to know if I was worse off when I stopped taking it, but I told myself when work started I'd get off it, but then when I tried it sucked again and things were busy and I didn't want to risk messing up at work so I stayed on it. Still on it but vowed to get off it after my wedding. We'll see how that goes..."

I would love to now what you're taking, I have a similar dilemma with two parents on both sides of whether I should take them or not. I feel guilty but at the same time I feel like a normal human being when I take them.

I am looking forward to part 4 of your interviews the most out of all of your installments. Keep it up man!

Aug 7, 2012

Thanks a lot for this interview, very interesting stuff!

You mentioned autonomy, good sense of humor and passion as 3 crucial points. I'd like to know how you and other people in the industry consider honesty?

In a way, I feel good after reading your post because I also don't have an exceptional GPA but I place, I guess, like you, a lot of importance to somebody's personality. I guess you need a GPA high enough to get the interview and do your best. A 4.0 won't bring you that much if your personality doesn't match with either the company or your coworkers.

Aug 7, 2012
MEvolutionToday:

Thanks a lot for this interview, very interesting stuff!

You mentioned autonomy, good sense of humor and passion as 3 crucial points. I'd like to know how you and other people in the industry consider honesty?

In a way, I feel good after reading your post because I also don't have an exceptional GPA but I place, I guess, like you, a lot of importance to somebody's personality. I guess you need a GPA high enough to get the interview and do your best. A 4.0 won't bring you that much if your personality doesn't match with either the company or your coworkers.

I wrote up this long-winded thing but somehow it disappeared. In short, honesty is only good to a certain point. You have to be able to be honest with me and your co-workers - that's just expected - but if you're overly honest and it makes you a pushover, that's not very useful for the job.

Aug 8, 2012

Thank you for doing this. Your interviews have been helpful. Other than answering a question incorrectly, showing up in sweat pants, or something obvious, what gets candidates dinged the most?

Aug 8, 2012
KKS:

Thank you for doing this. Your interviews have been helpful. Other than answering a question incorrectly, showing up in sweat pants, or something obvious, what gets candidates dinged the most?

This is a tough question to answer, but there's certain things that you kind of look for that end up being "dingworthy." First is probably showing some sort of interest outside of the area you're interviewing for. You might think it makes you look well-rounded or maybe you're just telling the truth, but when it's between you and a similar candidate who said nothing rather than mentioned they applied for prop-trading as well as IB because he's not sure what he wants to do long term, the interviewers aren't going to pick you. So I'd say good advice is to put on a show, be who you have to be in terms of telling them what your goals are or if this job is your dream job.

As far as one-time events like saying something blatantly stupid or wearing the wrong shit, I think I've actually dinged someone indirectly for their only question being something I had already explained to them at the start of the interview. Don't come across as that retarded. I've also heard of people getting dinged for asking what the "culture" of the firm is like as one of their questions. Apparently people hate that, and I guess I can see where they're coming from. Ummm let's see, one more... don't put volunteer work on your resume. And don't talk about it in the interview unless it's somehow very impressive and you're in some crazy leadership position and it's a well-recognized charity/non-profit or whatever. It comes across as filler and has nothing to do with the job you're about to have, so when you emphasize that in an interview you're gonna come across as boring and grasping for straws just trying to make it sound like you've done something impressive. I know that sounds kinda bad but you get the point, we're not the United Way so your food drive at the local YMCA is not something we need to hear about.

Aug 9, 2012

Thanks for doing this, your answers are really interesting. I understand if you can't answer this, but can you explain a successful short you had in the past? Hearing how you first targeted the company, what drove you to make the bet, how it played out, when you exited the position would be really cool.

Aug 9, 2012
stanvalchek:

Thanks for doing this, your answers are really interesting. I understand if you can't answer this, but can you explain a successful short you had in the past? Hearing how you first targeted the company, what drove you to make the bet, how it played out, when you exited the position would be really cool.

Biggest one I'll probably ever have was ZNGA, up in the high 13s I got short on it. Some things are hard to explain the rationale behind, but with this one it just seemed like a very simple model - keep making good addicting games for the Facebook platform and mobile and continue to get people to come play them and maybe some people will pay to get in-game items. This is all predicated on ZNGA being able to 1) keep making good addicting games and 2) people being willing to pay for in-game items. Do the math / common sense and it really doesn't make sense that they would be able to sustain this model and have any success with it, especially after acquiring DrawSomething which essentially was an admission that paying their R&D department $200M was less likely to have a return than an annoying charades game that's more than likely peaked in popularity. This shows ZNGA's team running out of creative juices, its management forcing itself to expand and acquire competitors... or both. In this case it was obviously both, and I don't have time to go into all the details since the research process is much more complicated than simply this, but you notice a lot of things that are wrong with the way management handled the public offering and the way they go about generating market share is totally nonsensical. So ultimately, valuing the company in the double-digit billions made no sense and assumed a lot was going to go right for them. The question marks far outweighed the growth potential here and it made sense to get short at that level since one miss should have theoretically destroyed the share price, which it did - again and again. It's still a short down here. It's hardly worth 1B in my mind.

Aug 10, 2012
BlackHat:

and I don't have time to go into all the details since the research process is much more complicated than simply this, but you notice a lot of things that are wrong with the way management handled the public offering and the way they go about generating market share is totally nonsensical.

haha wtf... that's the most interesting part of that short!

Aug 10, 2012

LOL

Aug 10, 2012

BlackHat,

Question regarding going into a HF straight out of undergrad. I interned at a HF but my mentor recommended not to start working at one straight out because it'd be better to learn something from at an IB, particularly a restructuring group. So since there is no formal training program, how do you make up for that? How did you learn the initial skills needed in the beginning or because of your background you were as qualified as someone maybe 2 years into working? Because the whole lack of training thing is the only downside for me I think.

Thanks,

Mokey

    • 1
Aug 10, 2012
mokey1234:

BlackHat,

Question regarding going into a HF straight out of undergrad. I interned at a HF but my mentor recommended not to start working at one straight out because it'd be better to learn something from at an IB, particularly a restructuring group. So since there is no formal training program, how do you make up for that? How did you learn the initial skills needed in the beginning or because of your background you were as qualified as someone maybe 2 years into working? Because the whole lack of training thing is the only downside for me I think.

Thanks,

Mokey

I'd imagine that's the downside for most people and the reason why you don't see more recruiting directly from undergrad. For me it was just the fact that I spent a good chunk of my free time investing, following the markets, reading investing books, etc. and I was managing a fund of my own that allowed me to kind of have that experience early on. The types of analyses that most HFs are doing is never something that's going to be taught to you in school, which is why going to banking first is preferable for 99% of the kids who would want to ultimately end up at some sort of fund. For me the reasoning was just that I already know how to do this stuff, I'm not particularly interested in IB, and I want to end up at an HF anyway... so starting earlier really has zero downside. Had I needed training to be effective, it would have been a horrible situation and I probably would have had an awful time and ended up hanging myself out to dry.

Aug 11, 2012
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Aug 13, 2012