The BlackHat Interview: 3/4

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.

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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.