Mod Note (Andy): I'm posting this under DingDong08's account so he can reap all the silver banana love :-)
Winning by an astounding margin (33% of the votes vs 14% ), congratulations to WSO super user @Dingdong08 for winning the 2015 WSO Member of the Year vote. Also congratulations to to @IlliniProgrammer ("Mr. Frugality" and 2011 member of the year) for coming in second with 14% of the vote. @thebrofessor ("The People's Champ") came in third with 12% of the vote. @TNA ("MSF Jedi") came in fourth with 11% of the vote. And of course a big shout out to @DickFuld who was also a HUGE part of the community this past year. We hope to see all of you continuing strong in the forums in 2016!
Dingdong08, from all of us at WallStreetOasis THANK YOU for your continued contributions to the forums. You really take the time to give helpful advice to not just the younger monkeys, but rather to EVERYONE on the site, and we are all a little smarter because of your involvement. Whether it's answering a recurring question from a young chimp, or giving your response to commentary from a senior member, you are always there to offer up your quality opinions, insights and advice. We hope you continue to be a big part of WSO into the future :-)
Inside the post you'll find the top ~15 quotes/links to his top comments (ranked by # of silver bananas) and links to all of his forum/blog posts in the past year+. (Big thanks to my new content intern for the help compiling the post).
Which comment and/or post from Dingdong08 is your favorite?
It depends on how you handle it, where you direct your energies, how you manage your work and personal time and your actual job. I'm older, senior, am married and have two younger kids and most of my friends and peer group are in similar situations so I'm speaking from experience. If you're in any higher powered job-finance, law, corp exec, high tech, politics, etc-you're not going to be a 9-5'travels to the industry convention once a year so you just accept that you're not going to be coaching Little League because you can't commit to it. You will also miss certain events because you're going to get stuck in meetings, end up with last minute travel or missed flights home or a laundry list of possible shit, and you work far more hours than a 9-5'ER.
If you accept this type of job-because no one is forcing you into it or to continue doing it-you just need to know that's how it will be. It all depends on how you handle the other times. For example, you schedule times for your family and unless there's a real emergency going on at work (and you learn to differentiate between the proverbial house burning down and a fire on the lawn that one of your associates/VP's set and can put out themselves) you don't break those times. You also sacrifice personal stuff you may have done previously and would still like to do. You don't get to golf on the weekends often because that's 5 hours out of your day and you're not at the office or traveling so that's time you've decided to spend with your family. Same with other hobbies/pastimes unless they involve your family and you do things you can do with your kids, especially as they get older-hiking and fishing are go-to's for me. You also go home when you're done your work, which becomes easier the more senior you get but you also don't take up the invite to go out to drinks unless you deem it something necessary for work rather than just grabbing a few drinks with colleagues or friends.
That doesn't mean you never do it, especially because young kids go to bed early so if you're not getting home before 8 (or whatever hour) you might as well do it then. And it doesn't mean you never get to golf, but it takes a back seat to your kids until they become teenagers and don't want to see you anyway. As you get more senior you also get more flexibility in your schedule and you control it to a much greater degree. It's a fallacy among many kids in college or at the analyst level that once you become a SVP or MD or move to the buyside that your job is now 40-50 hours/week and it's huge paychecks with much less work (you still basically work all the time, but you just don't have to be in the office to do it) but no one's looking for you to be in your seat at 9:30 (because you flew 300k miles last year, entertain clients/investors/J.O.'s 2-3x/week at dinners/drinks and just got back from a 2 week trip to China) so when you have that time in the morning you take your kids out to pancakes or even just drive them to school. You also go home after work, spend time with the kids, put them to bed and then work for another couple of hours.
Your kids, and wife, will get used to you missing some things but it depends on how you make it up to them. And I don't mean bringing home a nice shiny toy or piece of jewelry, but by spending time with them. Personally, I make sure to take each kid out individually a few times per month and not even necessarily to something big, just lunch, ice cream, a hike or whatever. I have a good friend who's a C-level tech guy who works and travels a shit load with slightly older kids and he has 4 set weekend dates a year with each kid when he takes them each somewhere-Disney Land, skiing, camping, etc-for the weekend.
Then it comes to what you actually do in finance. I've been in PE for a long time and I think the buyside is much easier to control your schedule than IB or law where your client says jump and you say how high. I'd imagine that would be far more difficult because client facing businesses are going to limit your ability to control your schedule. In PE you have things come up but you can generally tell when that's going to happen weeks/months in advance. I have friends in long only's that generally work market hours +/- a few hrs in the office (they're typically thinking, researching or doing analysis around the clock but that doesn't have to be done in the office) and just know that earnings seasons is going to be busy and they know in advance when they're going to do site visits at companies to kick the tires.
OP, like you, my parents were divorced when I was young and my dad wasn't the greatest. But that had little to do with his job or how much he worked, he was just a dick. You can be a good parent and still hold down a high level job, you just have to manage your time and make sure not to be a dick.
-52 silver bananas
Raising a first fund is really, really tough no matter who you are (almost). I would never discourage anyone from being entrepreneurial but it is very difficult so if you decide to do it, truly know and accept it deep down. And I don't just mean on the surface and say that sure, other guys have problems but I'll be different because I'm, well, me and me is awesome. I have raised first funds, I think I'm pretty good, I did it with partners who also had incredible backgrounds and thought they were even more awesome than me, we had deep pockets, knew investors who loved us, and it is fucking hard. Check out these guys: http://www.jaguargrowth.com/team/ I know Gary and, although I haven't talked to him in at least a year so I don't really know what they're doing now, he was Zell's ex-right hand and partner in all of their international stuff and it took him over 2 years to raise something like $150-$200MM.
He couldn't believe how difficult it was, how much time it took not just in the amount of calendar time from start to close but also the amount of hours he had to put into it and, again, he was SAM ZELL's former partner. I don't know if there's a bigger name in real estate. He made the mistake of thinking that he'd just be able to say that he was raising money and the LP's would rush in so that definitely added time but just realize that even with a pedigree like that it's an uphill battle. And realize there's no single best way to do it so what I'm going to say isn't gospel.
Let's just assume you know your product, your background is great, people love you, your strategy and product is good, unique enough to attract and make money, yada yada yada. Your goal from now until you decide to jump off the cliff is to get to know investors well. HNW's, institutions, possible strategic and JV partners-absolutely anyone who can write big checks or invest along side you as JV's (and some of those could be construction co's that'll kick in equity if you use them, for example). Get to know as many of them as well as you can both professionally and personally. PE and REPE doesn't require you to be a genius (sure, some average 100 IQ person's head would probably explode but I'm going to assume we're all moderately intelligent but not necessarily physicists at Princeton) so the difference between the guys with their name on the door, proverbially, and everyone else is their ability to raise equity. You know who does have to be a genius?
A quant hedge fund guy and what industry has former employers seed them and entire pools of capital set up to seed them, house them and tuck them in at night? I can tell you it's not PE or REPE. Get to know equity investors well. One of the most important pieces of the puzzle when raising a fund is having that cornerstone investor who can fill out the base, and not a $2MM guy but someone who's writing a sizeable check. The more institutional and better known name, the better it is (decent sized pension, institution, insurance co, endowment, a former billionaire industry guy who's retired or sold out, etc) but beggars can't be choosers.
As others have said, it's usually easiest and best to go off on your own and do a few one off's as you're raising a fund and/or to get a few deals outside of your previous firm that are just you before you try to raise a fund, and of course for personal cash flow. Make them good deals and use your equity contacts you've been building up over the years to invest in these deals. That gets them used to doing deals just with you while they still have the ability to say yes or no to individual deals rather than in a blind pool. More LP's are setting up direct investment functions who invest with fundless sponsors so this isn't a horrible way of doing deals in today's world. Just set them up with the same basic terms that you would with a fund: 2/20 withhurdle or whatever is market at the time. Get as much as you can but expect some negotiation down from LP's, although I've heard that LP's are slightly more ok with fundless sponsors getting the full nut because the fees only kick in once the deal is done and nothing's drawn before their money is actually at work, but that's third hand knowledge on my part.
I've been in corporate PE for years now (but I've raised a few pools of capital for RE, especially in the depth of the recession to take advantage of opps at the time) and this doesn't come up on that side, but you're most likely going to need someone with afor the recourse if you can't get non-recourse. There was a good thread on this sometime in the last year so I won't get too into that but you'll need to think about this and come up with a solution.
On the GP front (and I'll just use GP interchangeably for management co, holding co or however you structure it if you're doing one off's or can get directly into a fund) it's not bad having partners. I agree that you don't want 3 guys each owning 33% because you really want to be the 51% guy who can pull the trigger. They can all put in money to cover expenses and for the co-investments you'll need to make at the one off level and when you raise a fund. Don't pay yourself a salary until you raise a fund and/or are really making money. 1040 income is the least tax efficient means of compensating yourself and avoid it as long as you can. Think about paying yourself a salary out of money that you've put into an LLC: you put in 100 and get 60-70 back and ship the rest off to Uncle Sam. If you're successful the IRS will eventually make you take an income that is suitable for the entity that you're running but wait until your CPA's tell you to do this.
It's also not a bad idea getting a strategic institutional investor to come in at the GP level for a few reasons. The obvious is to cover overhead and expenses before you do a few one off's and/or have fund fees coming in the door, but it's also a vote of confidence to the market. I think the Jaguar guys I linked to above got New York or Met Life to come in and invest at that level. If you can get a big enough name it signals to the market that you've passed the test. It's kind of like being married, and the single guys won't get this: after you get married and have that ring on your finger you will get hit on by more women than you ever have because one crazy chick married you and you now have womenkind's seal of approval. Unfortunately most wives won't let you bring back those extra chicks back to your bed, but your early investor will want you to bring as many other investors in as you want.
This is going back 10 or 15 years, but I knew the guys who started Stag Capital in Boston and they got Steve Karp (he sold NE Development to Simon and walked away with a billion dollars 15 years ago) to invest at the GP level for a minority stake. The actual money helped cover overhead but it also was an instant seal of approval from a guy that basically invented the shopping mall. After that other investors looked at them and thought that if Karp invested, they must be good, he introduced them to other investors for one off's and eventually their fund, he invested in their deals and funds and I'm pretty sure he'd sign for recourse or convinced lenders that they didn't need those carveouts.
As others have said, run as lean as possible until you're cash flowing. Seven investment people is overkill unless you're wealthy enough to cover that nut and/or are buying billion dollar assets. Run with your partners (another advantage of having partners) and maybe an analyst. Remember you have no assets to manage, you're only trying to do deals and raise capital. Yes, you and your partners will be back in the weeds of Argus and, you'll be doing all of the DD, and you'll be the CEO, the copy girl and the janitor as well, but that's startup land. It's not as nice and easy as being at an established shop but no one said it would be. Like @prospie noted, share office space for as long as possible with a broker, a lawyer (we did this at first), a friend or whomever.
Office space in big cities is expensive and it's a bitch because it typically entails a lease term longer than you want (welcome to the other side of RE, being the tenant) and all of those costs like setting up IT and phones is expensive and an absolute waste of money. At worst go for a Regus type of office. When you're raising a fund you'll most likely need your own office space because LP's will want to kick the tires and make sure you're real but hold off as long as possible on that and when it comes time, go for as cheap as you can handle. It's always been my philosophy on the principal side that I'd rather be in a Class B building that's easy to get to and take home thebetween that B and a Class A shiny tower in the CBD.
You should also have good to great relationships with lawyers and accountants when you're ready to go out on your own. Negotiate with them to discount their hourly fees (or better yet, get them to give you a fixed cost for a deal or docs) and just promise them that you'll stick with them forever if they'll give you a break up front and allow you to pay their fees once you've closed deals or a fund. Legal fees can be really expensive. Everyone knows this because you see those legal bills come in or you plug them into a spreadsheet but when those are paid out of your pocket they are infinitely more expensive than before. For example a good set of fund docs from a decent law firm will cost you $200k or more, and sometimes considerably more if you're negotiating with multiple LP's who want to negotiate a lot. But you want them to be bullet proof and you want them them from a law firm with a decent name because when you market your fund you don't want your law firm to be some guy who just hung out his shingle, you want it to be a name that people should recognize. That doesn't mean you necessarily need to use Skadden Arps at $1000/hr but it should a name that people can recognize or at least if they look it up they'll see the firm has a few hundred lawyers in multiple locations. A decent lawyer who's done this before can also introduce you to LP's and their advisors that they've done deals with before.
You'll need to personally co-invest in the fund and most likely in the one off deals before you raise a fund, probably in the 1-2% range like you said. LP's want you to have skin in the game and there's no way around that. This can be where having partners really helps because you can split that up. It's also where having an institutional strategic partner at the GP level can help because they'll also share that co-invest, and if you do a few one off deals before you may be able to go to that partner and say "I have $XMM in equity tied up in those deals and I'm out $YMM in startup/overhead costs, can I pledge my interest in those deals and you lend me the co-invest?"
This isn't a full picture and I'll probably think of more but my plane's landing soon and need to put my computer away.
-18 Silver Bananas
Dude, you were practically lynched! You're lucky you got out of there alive.
So social justice warriors are all bad, you're completely against them but as soon as you perceive the slightest racist sentiment you cry about it and actually make a big enough deal to get some retarded bumpkin suspended? Your ass gets chapped by something as small as that but you're ok to say shit like "blacks need to get their shit together rather relying on the government to get into elite schools and jobs." //www.wallstreetoasis.com/forums/trump-wont-r... You go Rosa Parks.
-15 Silver Bananas
There aren't many blacks in banking because black people are scary. Not as scary as Chinese people, but still pretty frightening.
But on a more serious note (I don't think black people actually are scary), if you lump black in with lower income and assume they get into a top college that is a target for IB, and leaving aside the affirmative action argument fomenting here, there are a few factors why there aren't many African Americans in banking or consulting, and probably why there aren't that many poor people in these fields in general. Most lower income people don't know about IB whereas everyone knows about law and medicine. When you're poor but you're smart and get into a good college the jobs you think of to make money are being a lawyer or a doctor. Bankers are tellersbranch. Your aunt or neighbor may work there. You don't want that as a job. And you've most likely never heard of consulting.
If you don't know about IB, you're already behind the 8 ball because you have no idea you need to get internships early on in college and there's no way you can take an unpaid internship after your freshman year, or during any school year, because you have to work for money to do silly shit like eat. You're probably also working near full time during the school year. There's also no real chance your family would have any connections that may help you network into internships.
Your dad or uncle doesn't have to be an MD at Goldman, but maybe the uncle knows someone at a F500 who can help you get that freshman internship. And you probably have no idea how to network because lower income people don't network. It's just not a known concept. And you think you can jump on a train or bus and go to NYC for a couple of days to get coffee with alum or other people you've reached out to? No, because you don't have money for that and your parents don't either. And networking is really tough because you probably don't have a hell of a lot in common with an upper middle class white guy who spent summers at a beach or lake, who grew up in a perfect suburb and never really knew the meaning of the words want or need. He wanted a sailboat growing up. You just needed food and wanted the lights not to get shut off that month. Throw in that you're a black kid from Newark, or Roxbury or North Philly and that's a big confidence hurdle to overcome.
I grew up as poor as a church mouse but got into the good school. I'm white but I had a lot of black friends. They were the only other kids as poor as me. I had no idea what IB was or really about anything other than lawyers were rich, therefore I should go to law school (thank god I didn't). I also thought I already hit the jackpot because I got into a good school, what came after that was purely an afterthought because I already punched the golden ticket. I also didn't have time to think about banking, or buy courses to teach me about them (I have no clue if those existed when I was in school) or do internships because I had to work 30-40+ hours per week to afford school and to eat.
-12 Silver Bananas
Illuminate: While I admire what you do for your family, are you happy? Personally I need free time to read and exercise in order to feel fulfilled (I barely get that now as an analyst w/o a family). What motivates you?
Good question. I am happy. I have a great wife, two wonderful kids and a career that I truly enjoy and that doesn't suck when it comes compensation. I don't mean to sound like the preachy ~40 year old but as you get older you realize you don't get it all and you make decisions with non-binary results: they have both positive and negative aspects. You just build your life by hopefully making decisions that end up giving you more positive than negative when you hit the sum function, and it's completely relative to you. For example, I had an absolute blast as a young, single guy making good money with no ties when I could fuck everything that moved. And this isn't meant in a bragging way at all, but I loved women and I loved sleeping with different women on a regular basis and having a few regulars in every port of call. It was a hobby/pastime for me. Then I hit a point in my life where my now wife and I got together and I concluded that being with her, and no one else, outweighed the positives of screwing as many other women as possible.
I made the right decision for me but that doesn't mean that would have been the right decision for someone else. And it doesn't mean that occasionally I wouldn't enjoy screwing the brains out of the hot 26 year old associate/bartender/woman walking down the street. And if you think it's easy to get laid as a 23 year old throwing around that you, you have no idea how women will throw themselves at you when you advance and get towards the top of the work food chain. But I made the decision to be married and net-net, being with my wife is better than shagging randoms. It's the same with kids: my wife and I hit a point where we had done a lot of cool stuff-living abroad, traveling extensively, cannabis and leather parties in Amsterdam (not really)-and decided that we wanted kids. And that means, at least for me, that I sacrifice some things to be a father. Some parents do it differently. Would it be cool to go back to the days when we lived in London pre-kids and regularly went to Paris or Barcelona last minute because we wanted to go to a favorite restaurant and stay the weekend? Sure, but I wouldn't give up my life with my kids for anything. But that's what does it for me and the next guy may have a totally different point of view. If someone told me 15 years ago that this was going to be my life and that I would be happy with it I would have asked what type of crack they were smoking.
Every person encounters this but with finance (or other high pressured and high paying careers) you simply work a lot more and have much higher demands from your career. And it's stressful-if making lots of money were easy, every person of above average intelligence would do it. If you think being an analyst who simply works a lot and has tons of shit thrown at them is stressful, wait until you actually need to make investment decisions, or raise capital from LP's or generate fees and drive revenue. So unlike the mid level marketing or finance manager at the suburban company that's 5 minutes away from their house, you need to adjust your life and be good at time and stress management because your time is literally worth thousands of dollars an hour. And you only make it for the long term if you can take the stress and hours for decades and balance it with outside activities that you like. For some that may be going fishing with their kids, for others it's the gym, art, golf, sailing, or wearing their wife's panties at work. Whatever gets you through the night.
With regard to time for me at the gym or to read and things like that: luckily I don't need much sleep. I'm good with 4-6 hours so I wake up at 4:30 am and go to the gym. I also have tons of time in airplanes and in hotels by myself. It may sound lame on the surface but I usually fly business or first class and do a lot of international travel. On a good airline like Cathay, Singapore or even BA a 12 hour over water first class flight can be like a mini-vacation. I get good food and booze, I can watch movies or read and no one-not my wife or kids, an associate who thinks their minor issue is on the same level as a nuclear attack, my lawyers, lenders or investors-can bother me. I once came close to booking a first class ticket on Cathay to HK as a vacation in itself. I also do a lot of business entertaining and while that can get old, I eat at restaurants 2x+/week that most people get to a couple of times in their life. Maybe 25% of the people I deal with are dull fucktards that I'd rather not be with but most are interesting folks and when I'm with that 25%, I can always fall back on my friend the dry Sapphire martini.
One of the great things if you can build a successful career in finance is that you actually have the ability to walk away from it and be financially set for life at a relatively young age. As long as you're not an idiot and don't blow all of the money you make it's actually possible to quit and retire in your 40's if you find yourself in the position that you don't like your life. Most people won't do that because the person who makes it in finance isn't the person who's going to sit around for 40 years of their life playing golf but if I weren't happy with my life and career, I'd be gone.
-11 Silver Bananas
Absolutely agree. I'll leave aside sales in the finance field (and commercial real estate because it falls under the same umbrella of not truly producing things and being obvious high potential incomes-no offense) because that's been discussed multiple times, and all of the other posts are spot on but you can make tons of money in sales and you don't necessarily have to go to a really top school like you have to for IB or to work at Google/Apple. Yes you can get into those without having gone Ivy or similar but by and large, you get in through those schools. I think too many people associate sales with used car salesmen or retail telemarketing but if you get into enterprise software and other b2b tech, industrial equipment, medical devices, or other large ticket items you can make tons of money and the sales process isn't as bad as smiling and dialing all day because you have a/the product that the business wants and/or needs, and your company produces it (not that you won't be cold calling of course). You don't easily get into those positions by going to NW Shitstain U but a decent state school and higher ranked private won't make it anywhere as close to the uphill climb as getting into a top IB/PE/HF would be.
Like bro said, no one will be that great and I highly doubt they'd be very happy if they're an introverted person who doesn't like speaking to people all day long and you need to be able to handle rejection but I know plenty of people who make as much or more than the average finance person or lawyer (read average: not everyone who starts an IB analyst program ends up being a 35 year old MD at MS, gets on a partner track at KKR or becomes a top PM at an billion dollar HF). And one of the beauties of sales is that if you're good you'll never be out of a job. Every business always needs sales and there are never enough good salespeople. And there are decent opportunities that can get you out of direct product sales into true strategic biz dev roles (setting up JV's, breaking into new international markets where you're not just trying to sell the product but simply breaking into it, in service businesses putting together and negotiation large scale MSA's with customers, and things like that) and if you're intelligent you can then move up into the executive ranks, and perhaps c-level, that are non-sales related, i.e. you're not going to be the CFO.
The wealthiest 100% self made guy I know started in sales (he grew up poor as shit). He's probably the most incredible sales/biz dev guy I've known (and I know a lot of great ones) but he left his well paying cushy exec job at a global F20 company and started a related service business. Went all in and bootstrapped, spent their savings, tapped into their retirement and life policies, etc. The guys was below average at finance, ok at ops, a disaster at HR but he could drive the top line like no one I've ever seen. We invested with him about 3 years after he founded the company and he was doing $90MM (he hardly measured anything below that-he wanted to pay his bills and the IRS-great bd, zero finance). We minority invested, which I normally hate but he basically gave us control over everything except for sales (and he was glad to because he didn't give a fuck about any of that and only wanted wealth-good clue for investment).
Within 3 additional years we sold it and he personally was worth >$500MM after dilution. One of the best deals I've ever done. I don't do start up or true high tech stuff, much more salt of the earth, so it's somewhat different in those fields but 9/10 times I'd back an awesome sales guy with shortcomings than a bunch of PhD engineers or doctors (done those also). With a great sales guy you can fix most things underneath-you can hire ops, finance, HR, perfect pricing, etc and correctly structure a company and they'll most likely be ok with that-and make it go. With a bunch of much smarter engineers or doctors they'll think they're smarter than everyone else in the world and people should just buy their product because it's awesome, or if they just add another feature that'll fix sales. And that'll be a clusterfuck convincing them otherwise.
The biggest problem with sales is that you can improve your skills (and not simply by sending ee's to a Carnegie course) but you basically need to be born with a certain set of skills to ever become good, let alone great.
And honestly the toughest high end sales role I. Getting semi wealthy to truly wealthy people give you their money with little brand differentiation and, at least from their pov, small differences in strategy (either because there isn't, or more likely they don't understand because investing isn't their business), has to be insanely difficult. If you can make it there, you can sell anything.
Sorry, wicked long. I start a response in word and as I get time I add. And add. And add.
-10 Silver Bananas
I was the interviewer and not interviewing, but my first job out of college was in REPE and our group was pretty small so they had analysts that had been there for a couple of years interview new hires, and probably for only 15-20 mins. So just remember: interviewing to be an analyst at a real estate investment firm. The guy wasn't great overall but when we got to the do you have any questions for me part he asked me how much math would be involved. When I said nothing too complex like you don't need to do multi-variable calc or advanced stuff but you should be able to hold your own in basic business math, some algebra, be quick at numbers and be efficient at excel and the math involved with that he said "I was under the impression there would be no math involved in this job." I didn't know what to say after that. Just silence.
-9 Silver Bananas
I went on a few interviews in college for jobs I didn't want at all to practice interviewing and one guy was just a douche bag like some of the above mentioned stories so I decided to screw with him. I think it was the third or fourth person interviewing me in the day (and I thought I was only going for a normal ~hour interview so I was already kind of pissed off that I was still there) and he started grilling me in a dickhead way and saying I was wrong when I wasn't so I started answering questions just to fuck with him and see what he'd do. He'd ask a qualitative question, one was one of the typical what's your greatest weakness or something like that and I answered 7. Another was a quant question where the answer should have been a number and I said red. He turned beet red and I thought he was going to jump across the table and hit me. I just walked out after a few minutes and said I had to be somewhere else.
-9 Silver Bananas
It doesn't happen often for a variety of reasons. You have to be supremely confident and a big enough rainmaker to know that your clients (stress the plural of client) will come with you and you'll be able to attract new clients. That means not only an incredible relationship with those clients, but your name has to carry enough swag that the CEO and CFO will be willing to go to their board and say we should go with John Just Hung His Own Shingle LLCor Goldman and that's not going to be a VP or a newer MD. Some of that goes to the old saying "no one gets fired for hiring IBM." It's a CYA game even at the upper levels so that banker's name has to carry enough weight that the CEO feels like he won't get fired because a deal goes sideways and he hired John instead of Goldman. When a deal gets fucked up and GS was the banker, the CEO can say to the board "I hired Goldman, what else could I do?" rather than "I hired John and I fucked up in doing that. What's my severance package look like?"
It also costs a lot of money to set up a new firm. A banker at ais used to having lots of resources at his fingertips, a nice office in a gleaming skyscraper in NYC and an existing staff-from analysts to VP's to secretaries and a printing department-and all of those things cost a lot of money to set up. Senior bankers make decent money but they're used to steady paychecks and bonuses and outside of a few really BSD's they typically don't make the 10's of millions annually that would put enough in the bank to open their own shop and feel comfortable taking that risk. And there's little overall risk in a banker staying at a big shop while starting up your own shop is a big financial risk in the money you put out to start it and the risk that it works and works well and doesn't hurt their rep. Not too many people would feel especially great having worked their entire lives to be leading big WSJ front page deals at GS/MS/ their own shingles and scraping to get small mid-market deals.
If you're a top notch MD in your 40's or 50's when you possibly have the rolodex and experience to start your own shop, you probably have a family at home, a mortgage or two, kids in private schools, and a bunch of other expenses. You probably also have a decently secure job at a top firm and you're making a few million a year and unless something catastrophic happens (I really like the example of a "relatively safe" job and Lehman in the same statement), you're going to make be making a few million per year for the foreseeable future and it's a big risk leaving that.
You also have to run your own company. Sure, maybe if you're an absolute rock start you could run with less than 10 people and actually do deals, but most guys are going to start something up with a team of people so, for example, even though it's called& Co, he left with a team of 7 or 10 other senior bankers and that multiplied the employee count from the start. That adds up in management duties and takes away from actually doing deals. is an outlier, but even running a 10 man shop takes up extra time and 99% of the time a 10 man shop isn't doing billion dollar deals.
For every Taubman who can advise on multi billion dollar deals by himself, or the& Perella 's or Moelis's who can and do open their own shops, the vast majority of bankers don't have those skills, don't want to take the personal and financial risk and are simply comfortable where they are professionally.
-9 Silver Bananas
Personally I like Hillary because she's the most pragmatic person so far and sits in the center. I don't want an ideologue who's going to push stupid shit simply because they come from the more extreme of their parties (Warren or Rubio) or from libertarianism (Paul). The last good and effective pres we had was a Clinton because he didn't get bogged down in believing that everything was black or white or by being so influenced by extreme elements in their parties that they did stupid shit (neocons pushing invading Iraq) or didn't get much done (Obama). I think demonizing or lionizing, depending on your POV, someone because they run around beating their chests saying they're true conservatives or true liberals demonstrates the idiocy of our current political environment. Too many people seem to act like politics and government are a football game and they're either Eagles or Cowboy fans and the other side is to be hated and viewed with so much disgust that there is no room for even considering the others viewpoint. They hardly know what they actually believe in, just that they like the Eagles or Cowboys and despise the other team.
And I just can't trust the modern Republican party. I'd probably be the last of the Rockefeller Republicans out there but I don't like half of what the current party stands for and I don't think it even truly knows that it stands for. The party sold its soul out to the religious right starting in the 80's, which beyond bringing up social issues that I don't believe belong in politics (and I'll be honest I just can't vote with a party that questions evolution to kowtow to a voting block) brought in a huge group of voters who don't necessarily agree with or even understand most of the economic points of the GOP but are ardent fans of the party because they think that the Flying Spaghetti Monster needs to be involved in government. Then there's the Libertarian wing that doesn't really jive with most of the GOP's traditional international platform or its current social platform but gets thrown in with the party because it's otherwise homeless. I don't even know how to classify the Tea Party but they seem to be losing influence regardless. And while the dems have some dumbasses in office they at least didn't nominate an absolute idiot as their candidate for VP in Palin.
There are a few other dichotomous aspects of the GOP that I don't feel like listing but I also really don't like the litmus test that a candidate must pass to be considered a true conservative and not a RINO. I liked a lot about Christie but he's needed to shift to the far right on every issue to even be considered a candidate. Mitt had to do the same. They had logical and good points on many issues but they need to get in line with the more extreme elements of the party or they're basically considered socialist pussies. There's no room for a moderate in the GOP. I just don't see that in the current Democratic Party. The far left doesn't like Hillary but she's the most likely candidate of the Dems. I see that as a good thing and something that can't happen in the GOP. Dogmatism and extreme political philosophies are interesting topics to debate and discuss in academia but, in my opinion, they just don't do any good in actually governing when there is no negotiation or discussion, just foot stomping and being the equivalent of an 8 year old taking his ball home from the playground because he's not getting his way. That chaos, the general fractured nature of the party and the incalcitrance of working with opposing viewpoints and subsequent willingness to shut shit down and to make extreme decisions is far worse for Wall Street and the economy than a moderate Hillary could ever be.
And contrary to what the right wants to be true, Mitt didn't lose because he wasn't conservative enough, he lost because he had to go too far right to win the nomination and couldn't back track to gain an extra 3% of the moderate vote.
-8 Silver Bananas
First off OP, sorry to hear that. Unfortunately rejection from a job is one of the hardest to swallow because it feels too personal, like "I'm not good enough, someone was better (even though I'm obviously awesome), or I suck." Almost all the time it's not those, but it still sucks. I prescribe bourbon.
I'm a little more experienced than most on WSO and I've come to love rejection. At this point in my career and for the last 8-10 years I've been primarily pitching to acquire off market companies, to raise money from new fund LP's or other investors for outside somewhat crazy individual deals or putting together (again) crazy deals with multiple moving parts that are grand slams or strike outs in the bottom of the ninth with bases loaded. It hurt and I took it personally the first couple dozen times I was rejected but after a few of those things hit-getting a few of those acquisitions, landing a new brand name LP or putting a grand slams together-I realized that getting rejected 99% of the time made those awesome opportunities happen. I've done well for myself and have no regrets but I get shot down or fail the large majority of the time. Still.
And it's ok. If you're not getting rejected you're not trying hard enough or reaching far enough in multiple parts of work and life (obviously within reason-don't apply and set your heart on an MD job if you have 3 years of experience, or try to acquire a $10B company if you work in the lower MM, or ask a super model out if you're 5'2", 180 lbs and work at McD's). I think that's why sales/biz dev experience is a great thing to have on a resume and why PWM guys can keep going. One of my most successful college friends began in PWM (not totally started there but surprisingly after a 2 year IB stint) but after a few years at a wirehouse ended up founding a multi-family office investment firm and has over $5B in assets and it's because he was rejected so often that he overcame it (and he was a political and networking animal and incredibly intelligent).
When you confront rejection enough and realize it's the only way you're actually going beyond the normal, it just doesn't matter anymore.
-8 Silver Bananas
What's your scale of 1-10 like? Is 10 full on bestiality and 5 is plain old missionary so 6/7 is doggie? Then that's bad. If 6/7 is just a stupid face pic like you want to fuck her, then it's probably just embarrassing.
I think IT people will get a bigger laugh that you have hotmail still.
-8 Silver Bananas
undefined:The reason people never leave, even after reaching their "this is what I need to leave" goal, is because once you get to a certain point, the money is just too good. Once you hit the MD point where you would have enough money to retire early, the prospect of earnings another few million for working "just one more year" is just too good to pass up.
This and if you make it to the point that you're able to retire very early and not really worry about money, you're almost certainly good at what you do and you like it. And unless you've always had a dream of doing something specific (from going the non-profit route and saving the world to opening a bar or a bait shop, whatever) you have a lot of years left in your life without much to do. 40 may seem old to a 22 year old, but when you hit 40 you realize, or at least hope, that you have 30-50 years left. When I was younger I thought that $X at 40 or so and I would retire then I realized that I have no idea what I'd do for that many years. If you're someone who's made it to the upper levels of finance by that age you're most likely someone who's really motivated and used to working long and hard. Unless you make hundreds of millions (which just doesn't happen unless you sell a company or maybe if you're the outlier HF guy) and have fuck you money where you could sail the world or fly in your G5 to your multiple houses around the world, that's a long time for retirement. I have a good friend who did exactly that-HF guy, made that type of money and retired in his late 30's. It stuck for a little while but after a few years he's getting back into working because he just got bored.
-8 Silver Bananas
My details (so you don't think I'm a 22 yr old giving you marital advice): ~40, been married for 10 years, been with her for 15 and I've known her since we were freshmen in college, couple of kids, house in the burbs, the whole shitshow stereotype. Very happily married, she's a great woman. I've never strayed, and this isn't bragging but not because I haven't had the opportunities (any somewhat successful and not horrible looking guy has the opps all the time, or if you've ever done business in East Asia, it's just constantly presented).
You're in a dangerous arena. As you know (and this may come as a surprise to younger folks) when you're married you still look at every hot woman, and sometimes not so hot when you work in a field dominated by men like finance, and want to fuck the shit out of them. New 25 year old associate in the office, lawyer at one of the firms you use, the freaky looking chick atwho pours your coffee every morning, every random attractive woman who walks down the street, etc. You know you're not going to but it's part of your nature. Caveman see hot woman, want to spread seed.
Developing feelings is bad but I think it happens to nearly every guy who's been married for a while. It doesn't necessarily reflect on your feelings for or relationship with your wife (it very well could of course) but after a few years of marriage it seems like your brain wants something different (that seven year itch isn't complete bullshit). I've had nearly all of my close friends say the same thing. Happened to me a couple of years ago. Woman in the office (I'd bet for guys who work a lot it's almost always a work related woman), a more junior employee (but not someone who worked directly for me), smart, hot, interesting, the whole package. I thought I was developing feelings and probably was. But the important thing is to do NOTHING with them. Let them pass. Don't fuck her and definitely don't tell her or your wife. Try to avoid her to whatever degree you can (difficult if she's your boss), volunteer for a long work trip, take a vacation with your wife, or whatever that gets you spending time with your wife and not the boss. As the last option switch jobs, or see if you can be put on a different team. Those feelings could and should go away and you'll realize it was a passing fancy and won't even think of it in a few years. It's only been a week.
If they don't go away then you have to really take stock of your life and marriage. Is it worth losing your wife for an untested property? Can you imagine life without your wife, for all things big and small? Are you just horny and need to fuck a different woman? This isn't the path I'd take but a friend of mine thought it was that he just wanted to fuck someone else so he picked up a random, fucked her and it all passed.
Just a few thoughts. I wouldn't put too much stock into it. Like I said, it happens to most guys and it just passes.
-7 Silver Bananas
If you mean $10-30MM payouts from starting a company and selling it, very, very few people will get to that point no matter how much work they put into it. Especially at a young age.
In the startup/VC/tech world, how many seed level companies actually succeed to any degree? Very few. Very few series A co's even make it. And if you're not on the founding team the chances of getting any meaningful equity to cash an 8 figure check is very rare unless you're brought in as a pre-IPO CFO for a company that sells for a billion. Or you have the incredible mix of talent and luck (primarily luck) to get in at an early stage of the next planet wrecker like MSFT or Apple in the mid 70's, Compaq in the 80's, a Yahoo, AOL,in the mid 90's (and sold out at the right time), Google in the late 90's or FB in the early '00s. The verdict is still out on the over inflated Uber's of today, but for every one of these companies (or the Whatsapps that somehow sold at those valuation) there are thousands of tech companies that didn't make it. Can you make $10-30MM off of these types of co's? Yes. But it's very far and few between and involves an incredible amount of luck no matter how hard you work.
In simpler industries, the ones that I typically deal with, I'd say most of the sellers who cash decent checks are from family businesses that they inherit and grow (or don't grow), or from guys who start a business and grow it over decades, so when they cash and 8 or 9 figure check they're in their 50's, 60's or beyond. Yes there are exceptions, but they're just that, the exception.
I'm about 40, most of the people in my social circle have top notch undergrads, half of them seem to have gone to Wharton or HBS and have all the great names on their resumes-, Bain, GS, MS, different HF's and PE's, F500's and some have started businesses-and out of probably 50-100, maybe 5 or 10 could be considered wealthy (and I live in non-NYC but one of the wealthier burbs in the country, so this doesn't include any real "normal" people). And a few of those are more like 50+. It's just way outside the norm even with top notch credentials to sell a company and make $10-30MM or be making 7 figures a year.
Sorry to hijack the thread.
-7 Silver Bananas