As I've been going through the IB recruiting process, I have been wondering where this monster even came from. Does anyone have any info or insight on the origins of the modern analyst programs and how we got to the system we have now?
Feel free to get your Euphrates Partners circa 1,800 BC jokes out as well.
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I don’t think a single person was going to make that joke.
Proverbially speaking, there used to be no networking/no real interviewing (besides for a couple spots they couldn’t fill) - your dad was an MD at Goldman, so you became an analyst at Goldman. A couple people would break in each year somehow (you got some MD to like you by harassing hundreds and then the MD would get you a job), but the VAST majority of hires came through nepotism.
With the proliferation of prep materials like WSO’s course, BIWS, etc., more people learned how to prepare/network and recruit. More people started winning interviews, banks started changing the way they recruited for PR reasons (it’s not exactly good in this day and age to have a bank only filled with white lax bros whose uncles got them a job - your bank would essentially get cancelled by the media), and we got to where we are today.
I agree to some extent. I think another reason to open up the industry is that it grew a lot (specially since the 90s). You may get a few hires from MD’s relatives, but there aren’t enough of those to fill the current industry needs in the 100s. And to add to this there is a big chance many of those kids will flop. Finally, its not like MDs aren’t still using blatant nepotism to hire their friends/ family. Its just that its become a drop in the ocean with the larger analyst classes.
OP of the original post: totally agree - the world of IB has boomed in the last 50 years. It could even be argued that we're in the golden age in a sense. # hires, # of banks, everything is booming - it would've been impossible to keep strictly nepotistic hiring practices because there simply aren't enough of these people to fill the positions.
Clarification: golden age referring to the proliferation of the industry, not in the life of analysts (WLB still blows, as evidenced by the # of threads referencing quitting every day).
You can't really answer that question without answering the question of where investment banking itself (as in M&A / Capital Markets advisory, as opposed to S&T) came from. Like, M&A as a distinct business unit didn't exist before the 1970s or so at IBs. Back in college I read a couple decent books that touched on this topic (which I have now forgotten the titles of... I think the end of wall street was one of them? Not sure.) In a lot of ways, the evolution of the IB analyst lifestyle to the masochistic version we now see mirrors the modernization / professionalization of highly paid workforces as a whole over the past few decades. For example, pro athletes used to party the night before games and drink beer at halftime; now you hear stories about Tom Brady pulling all nighters watching game tape after bad performances. Similarly, business execs used to take power lunches with midday drinks; no one really does this anymore either. In a nutshell, this is really just managers of formerly nascent businesses (NFL GMs and coaches pre-1990s, IB staffers pre-1980s or 1990s) figuring out how to get the most out of their employees.
The other factor is technology. Back in the day, to some extent, you were limited in what you could do within a deck. Color printing wasn't always available (check out Monkey Business for how they used to need to print B/W and color separately and then manually merge the printed decks... shoot me now if I have to do this) and obviously there just wasn't as much accessible information pre-Internet. On top of that, it's not like you (the analyst) were available all the time either - there was a time when cellphones weren't a thing (maybe pagers were, IDK), plus even if you could be reached, you probably didn't have a PC and if you did, how would you send/receive info with internet connections not being super prevalent?
Skip forward to modern day, combine all these things, and you get modern IB analyst sweatshops.
Oh there's also an economic argument to be made - I vaguely recall in one of those books that salaries weren't quite as good as they now are in finance. IDK if that's actually true or not (maybe I am mis-remembering) but if so, there's another factor - when you pay people top dollar, on some level, you get to demand more from them.
Just ordered a copy of Monkey Business on Amazon, thanks for the rec!
Robert Greenhill (more known today for Greenhill & Co.) and his team at Morgan Stanley are credited with creating the modern analyst program in the early 80s
Makes sense considering his military background. Probably modelled it off of his experiences
Where Robert Greenhill live? I just wanna talk
I remember seeing an article that was like "a while ago, Goldman Sachs realized that most college students have no idea what they want to do after graduating. So they figured they'd give them more money than they know what to do with and work them until they want to jump off the Brooklyn Bridge"
That article you are referring to from TFM was actually the first thing I found when I started researching this.
An update on my findings so far: I stumbled on an article in the NYT from 1990 by a student who recruited for investment banking that year. In the article, he said some Wall Street banks came to campus (Dartmouth) in to recruit for the analyst training program so I assume these programs were already in full swing by then.
One tidbit I found interesting: the NYT article said that the students selected to go down to NYC and interview on the weekend called it "Super Saturday"-- I assume this is the origin of the term superday? Is this commonly known? I'd never heard that before.
Thank you for your research fellow monkey
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