Mod Note (Andy) - as the year comes to an end we're reposting the top discussions from 2015, this one ranks #49. This one was originally posted 4/28/15.
"I wish I had this chance if I was your age again." - said my MD when I resigned in April 2013. (He wouldn't let me later go until August)
Hi Gorillas, Orangutans, Baboons, Monkeys, and Chimps:
I'm a former equity salesperson at UBS Investment Bank (S&T, APAC) that left in 2013 for entrepreneurship. I just launched my first Kickstarter campaign (https://www.kickstarter.com/projects/1439854980/b…) and wanted to share with you how I got there and provide some value along the way if going down "the other road" is on your mind.
I started in November 2009 at the bottom of the market.
Shit was still hitting the fan with people getting fired left and right. As the most junior guy in the office, nobody thought I would last since headcounts were getting made redundant left and right. Our research team had about 6-7 analysts and 4-5 research associates.
The trading floor had about 15 people between sales, salestrading, and dealers. A few guys from Wealth Management also sat on the same floor, but their operations weren't part of the core equities unit.
For those who aren't familiar with S&T, it's part of the equities unit within an investment bank. The primary clients are hedge funds, sovereign wealth funds, or mutual funds that need institutional investment advice, execution, and research for their portfolios. Occasionally there is cooperation with IBD/ECM where there are deals that involve raising money, block trades, and all that jazz.
The frequency of these deals depends on the positioning of your bank, i.e. relationships IBD/ECM has with local corporates (sourcing) and the depth of your equities platform (distribution) in the region.
US firms like GS, MS, JPM, etc. generally have a stronger footprint in the domestic US market where as in Europe it's Barcap, DB, UBS, CS, etc. It's not to say that one bank is better than the other, but rather than their value propositions have different product/market fits around the world.
Upon hiring, my predecessor was promoted to Hong Kong because they fired someone more "expensive" and was using a junior staff to plug in the gaps where it made sense. Despite having a 2.8 GPA in college (lol) going to a non-target school, somehow I got this position compared to other folks with much better credentials on paper. I would later learn that paper credentials don't mean much once they get you in the door.
"Everyone was terrified of being let go"
In November 2009 everyone was terrified of being let go as folks were still scrambling left and right. The year end party I attended in December was exceptionally somber and low-key. As a full-time employee hired on temp status since there was no headcount, I wasn't allowed to participate in the gift draw and raffle.
Most experienced folks in finance know that its a very cyclical industry. MD and EDs are proud to say they've been through 2-3+ cycles of the market. It's like they were wearing imaginary "I Survived Jurassic Park" shirts, but instead marked as Asian Financial Crisis in the 90s, Tech Bubble of 2000s, and now Housing Bubble of 2008.
If the hiring of banks seems random to you, here is some insight. Banks tend to over-hire in good times, and when things take a nosedive they are quick to let people go. In an industry where nothing physical like inventory or products being produced, removing and freezing headcount is often the fastest way to cut expenses if there's a revenue drop.
Usually it starts by downgrading travel policies, freezing headcount, then finally removing people from their jobs. Because banks also overreact, when the market starts to turn around they realize there's not enough staff to capitalize on the upside growth in certain areas and begin a hiring spree. (Japan is a great example of this in recent years)
In calculating the true cost of a headcount, it's much more complicated than someone's salary. I don't know the exact figures and it probably varies between banks, but management takes into account backend costs like HR, insurance, office rentals, and other factors to get a final figure.
It took six months for me to become a permanent headcount at UBS. Since headcount was frozen for the longest time, approval had to come down from our Global Head of Equities. I later learned that bureaucracy is quite normal in finance, and learning how to navigate that is a good skillset any junior staffer should acquire.
UBS in Asia
In Asia, UBS was one of the first foreign brokers that entered the equities market since the late 80s/early 90s. Back then it wasn't even called UBS, known as Warburg or Paine Webber depending on which entity you were at. Because of the early footprint in Asia, they've been able to build one of the best platforms in the region.
But despite that it was still a hard slog every quarter since 2009. Every time things seemed to turn around, some black-swan event would royally fuck it up: $780M fine by the US government in 2009, $2.3B loss by a rogue trader in 2011, and another $1.5B in fines for LIBOR rigging in 2012.
As someone who joined in 2009 with no connections to those departments, it was frustrating that we all had to share the blame and of their mistakes. Like a famous Chinese saying my mother used to say, someone else was taking a shit and we had to wipe their ass.
Asia is the crown jewel of UBS because it's the most profitable area for the company. What pissed a lot of people off (including senior management) was that revenues being generated were often used to subsidize other regions that were weaker in performance. This affects compensation, which ultimately influences your ability to retain talent. In a hot market like Asia, that's even more critical because there are still tremendous growth opportunities.
Around 2010-2011, the senior staff started trusting me with clients and accompanying them to company visits. Buy-side fund managers and analysts visit these companies because they are looking for updates, new ideas, or maintaining the relationship. After all, if you are a big shareholder of XYZ, you want to keep in touch with management on how things are going and if there's anything you should be aware of.
Some of these meetings were fun, but most were quite boring. Especially in some industries like steel, oils, and financials where you needed domain expertise to understand what was going on in meetings. Oils and petrochemicals have a ton of scientific terms that went over my head. It took me a while to understand net interest margin, asset quality, loan growth, and other acronyms that influence the profitability of banks. Then there's wafer sizes and a whole other world to understand in the semiconductors space. (I'm still omitting food & beverage, hospitality, real estate, airlines, shipping, and industrials here.)
"Projecting a positive story..."
For those looking to enter S&T, you should know that the investor relations department in most companies always try to project a positive story. When things are bad, they need to spin the message that they are prepared and are better positioned from competitors. When things are great, they may over exaggerate sales prospects and revenue growth. It's up to you to filter through this information along with market noise to find a view/story that you can convincingly sell to clients. It also has to be differentiated enough: if 30 people on the street already share the same view and you have nothing unique to offer, then you are adding zero value.
As I sat with clients in the car after 6-7 meetings per day, they'd often ask me for my personal view on things. Early on I had no idea what I was doing and instead of giving them some bullshit answer trying to look smart, I just admitted that I was new and didn't know much. Then, I'd flip the question and ask THEM what I should be taking away from this.
Buy-side clients of S&T have different levels of sophistication. Yes, there is dumb money and smart money, just like angel investing and VC - it's all relative. Depending on the institutional fund mandate, the client may have specialized or generalist functions based on sector, geography, or market.
CIOs generally don't have much knowledge on company specifics and prefer to keep topics at a high level. In contrast, this is different to an analyst who has been in the industry for decades, knows the technology, and perhaps has real domain expertise.
Learning how to calibrate your social interactions based on the person you are talking to is an incredible skill set to learn. As humans, we have a natural tendency to like those who like us (likability) and help those who help us (reciprocity). Depending on the client, I was able to tailor my conversations based on their interests, beliefs, and perspectives. This comes down to developing empathy which you can only learn in life, not school.
My Secret Sauce
Around this time that's when I realized my secret sauce - the ability to be a good listener, to observe, and to learn. It's about putting your pride away and admitting that there are things you just don't know. Instead of acting like some arrogant prick intern or MBA pretending to know-it-all, it was refreshing for everyone I interacted with.
It got to the point that whenever overseas clients, colleagues, or senior management visited I was the default go-to person. I would never put them on a pedestal like many others would, and this allowed us to have very honest conversations.
By 2011, I had started to become frustrated with my career path. I was looking to move into a regional role at our Hong Kong office but the headcount just wasn't opening up. Things were looking better across the market, but senior management was still cautious when it came to hiring and making internal transfers.
I wanted to be at a regional office because there's more exposure across clients, colleagues, and the greater market. A regional office allows you to see things on a bigger scale whether its in S&T, IBD, ECM, PB, WM, or other functions. There is more serendipity when it comes to promotions because you are in closer proximity to senior management, bigger deals, and the center of gravity within a bank. For anyone ambitious in a junior role, always try to plant yourself at a regional office.
More on S&T...
WithIn S&T, there are different categories of equity salespeople usually mapped against a buy-side organization chart. At the country level, a salesperson is a specialist in that market and only brokes ideas within their local coverage universe. At the regional level, a salesperson can cover multiple markets and sectors, having the ability to pick and choose what's interesting like a buffet.
An example would be a Korea salesperson based in Seoul that can broke Hyundai Motors, Samsung Electronics, or whatever equity research has coverage on to clients. A regional salesperson in Hong Kong could also do that, but along with tech companies like Lenovo, SingTel, or HTC. S&T generally sticks with larger market cap ideas because that's where a big chunk of equities revenues comes from - commission off share trades that are liquid and in high volume. There's just not much incentive to cover a small/mid-cap stock if the bank can't see the ROI of putting human capital and resources into that effort.
In my situation, a regional sales role just wasn't opening up due to various circumstances. I'd fly to Hong Kong every few months on my own dime visiting the APAC management to stay top of mind but nothing was working. I was getting impatient, but knew it was just a matter of time - management knew who I was and colleagues across HK/Singapore had nothing but good things to say.
Around late 2012, I had to get a small operation for a hernia I had in my lower abdomen. It was nothing serious, but I had to take a week off to recover. At the hospital I was placed in a room with two older patients between me. One guy was in a car accident in this 60s that broke his leg. Another came in with lung issues and was moved into a private room when he started having breathing problems and a wife that was freaking out.
I never found out if he made it and couldn't sleep all night.
I kept wondering what would be going on in my mind when I'm old in his position. Would I be happy with the life I lived? And if not, why not change things when I still have the chance?
That evening had a profound impact and led me down a wormhole. Coming from an Asian family as the oldest son where you are supposed to be a doctor, lawyer, or banker - there was tremendous pressure to follow a life script that most of your peers and society subscribed to.
What to do with my life...
As the weeks and months passed, I started wondering if sitting on a trading floor was really what I wanted to do with my life. The cracks were starting to show: I was turning to retail therapy for happiness, getting plastered on the weekends, buying expensive clothes, and drifting through life in a stagnant state. I even bought a $1,000 controller (Traktor S4) to try and DJ on my spare time. There was an emptiness I was trying to fill, but the hole just kept getting bigger and I couldn't figure out why.
I started looking online for topics on quitting your job and found blogs like Tropical MBA which showed a different path of life through entrepreneurship. The idea is that as an entrepreneur, you have a much better opportunity and ability to capitalize of serendipitous situations to make money than working at a job for 20-30 years, and technology now made it easier than ever. Working at a large corporation was an outdated life script from the industrial age as everything was being disrupted by the internet, mobile phones, and decentralization of information.
After almost a year of dicking around, failing to start, buying domain names, and being a wantrepreneur, the opening for a promotion finally came through...but I didn't want it anymore. It's funny how life works sometimes - the more you want something, the more it runs away. But the moment you choose to let it go, it comes right back at you (just like a cat).
By this time my boss could tell the enthusiasm for the job was already gone. I was leaving early and disappearing on my laptop whenever I could. I'd doze off during the morning meetings because I stayed up too late the night working on my side project. Eventually he caught on and asked if I really wanted this - I couldn't hide it anymore and said no.
Being only 29 with no family, kids, or debt - I recognized that this was probably the only chance in my life to take such a risk. I wouldn't be able to live with myself if I had just put these ambitions away and slaved my soul away for the next 20 years. I'd seen the scars it left on people I knew who sacrificed their health for this.
Even if banks made record levels of revenue, political and public sentiment would prevent them from compensating employees at pre-2008 levels. With new regulations like FACTA, Dodd-Frank, and multiple other ones since 2008, the industry was getting handicapped left and right.
Trading automation was also pushing down margins as clients opted for DMA (Direct Market Access) systems that cut banks out as the middleman. Most would shop their orders around the street, seeing which broker would take the lowest commissioned to execute that order. And occasionally, some would do it at a loss just to get market volume or hope that it would build a better relationship for profitable orders down the line.
So where was the upside for junior staff in this industry? None of the MDs or EDs could give me a straight answer. Everyone agreed that it would be a long slog.
Breaking the news to my parents also created a big rift. In most Asian cultures the oldest son is responsible for taking care of the parents when they are old. But if I couldn't take care of myself, how could I possibly take care of them? In their view, quitting this job was essentially disowning them.
But fuck it, I didn't want to sit on a trading floor anymore.
I recognized that throwing away two decades like this is time that I'll NEVER get back. Money can always be made. But when time is gone, it's gone forever. That's what makes it the most valuable asset. Most people just don't value their time - so they spend it in gossip magazines, reality TV, or worrying about stupid shit in the news.
"Life is something you play to win, instead of playing not to lose."
Most of my friends also thought I was crazy for throwing something like this away. But life is something you play to win, instead of playing not to lose. Because that's just the same as defeat, and you see it everywhere when people empty out from soul-crushing jobs.
Eventually I resigned in March 2013, but wouldn't officially leave until August 2013. I stayed on board to make sure all projects transitioned well and a suitable replacement could be brought up to speed before I left for good.
Most people that quit dream of an Office Space style exit, where they drop the microphone, tell everyone to fuck off, and walk away in glory. But in my mind, there was no need to burn these bridges. UBS is a genuinely good place to work with smart and kind people. Believing in karma, you never know what can come back too and it's better to have an abundance mindset instead of scarcity.
So as a reader that's looking to get into finance - if that's truly what you want, then go for it without holding back. Fucking balls to the wall and all-in like a savage. But if it's just something you're looking to try out because your parents and peers said so, stop bullshitting yourself and save some time.
It's your life. Stop giving a fuck what other people think.
Since leaving in 2013, I've worked on many things to varying degrees of success. My typical day starts at 7:00AM and I'm happy to work until 2:00AM because it doesn't feel like a burden. I've moved to Vietnam to cut down my burn rate, but every day is a reminder that if it exceeds my revenues, it will be game over soon.
But is entrepreneurship for everyone?
Startups have become very sexy in recent years. Specifically because of shows like Silicon Valley, Shark Tank, and the lottery mindset of average people. It's to the point where everyone talks about it, but very few are actually doing it. These folks are called wantrepreneurs with a NATO policy: no action, talk only.
My first venture is an e-commerce store where I design and sell my own handmade Italian leather wallets at ballerleather.com. It started late 2013 while I was still working at UBS, visiting China suppliers on the side and fulfilling orders out of my living room.
Now I'm working on a new project on Kickstarter called the Black Turtle Sleeve. It's a beautiful and stylish leather MacBook sleeve that comes bundled with an ultra-slim battery pack and cord organizers. For someone that wants a classy sleeve for business meetings, this one is made for you.
Happy to hear any constructive or critical feedback as those are all market signals to take note of. Thanks for taking the time out of your day to read this if you made it all the way through.
CAMPAIGN LINK: https://www.kickstarter.com/projects/1439854980/b…