WSO Podcast | E186: How to Break into a Top Hedge Fund - The Analyst Speaks (Part 1 of 2)
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In this episode, we follow member Propshead on his nontraditional path working in emerging markets in various startups to working as a strategy consultant before his MBA. Learned a key step he took before going to business school in order to be able to break into a top hedge fund post-MBA as well as how he was able to get enough internships on his CV to overcome his non-traditional work experience.
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WSO Podcast (Episode 186) Transcript:
Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis, your host and chief monkey, and this is the Wall Street Oasis podcast. Join me! As I talked to some of the community's most successful and inspirational members to gain valuable insight into
Propshead: [00:00:19] Different career paths and life in general.
Patrick (CEO of WSO): [00:00:22] Let's get to it. In this episode, we follow member props
Propshead: [00:00:27] Head on his
Patrick (CEO of WSO): [00:00:28] Non-traditional path, working in emerging markets in various startups to working as a strategy consultant before his MBA. Learn about a key step he took before going to business school in order to be able to break into a top hedge fund post MBA, as well as how he was able to get enough internships on his CV to overcome his non-traditional work experience.
Propshead: [00:00:47] Enjoy.
Patrick (CEO of WSO): [00:00:55] Ok. Props head, thanks so much for joining the Wall Street Voices podcast. Good afternoon. So it would be great if you could just give the listeners a short summary of your bio and we'll go from there. Sure. By way of background, I came out of what Wall Street Oasis might refer to as a target school in kind of a non finance background, after which I actually I went and worked in emerging markets for a number of different years. So you could say I had kind of a non-traditional path to the buy side involving working in startups, in an emerging market, doing a lot of work in frontier markets and then returning back to the states where I attended a finance program at a business school. And then after business school, what happened there and so did you go straight in to buy side from business school or what happened? In fact, I even got started on the buy side before business school even kicked off because I had been told, and I'm going to share this with the listeners, that one of the best things you can do is do a pre MBA internship. It's hard for a skeptical interviewer to argue with something that's on somebody's resume already showing them doing by side work. Very good advice. So, OK, what about? And so that since the MBA, what was after that in terms of Type kit funds and types of buy side work? You did? Sure. Since the MBA, I joined a large platform fund, one of the multi-strategy firms doing long short equity. And I had kind of a specific niche under my coverage, which I've continued even to now, and I've since moved to another firm since then, but all with the same coverage. Got it. So I would say that I'm able to speak to what it's like to work at a platform fund so you can think of something like the citadels of the world or the Point72 of the world that kind of is set up. And I also did a little bit of a hedge fund work during my MBA as well
Propshead: [00:02:53] At different types of funds. Before we get to the
Patrick (CEO of WSO): [00:02:55] MBA, let's go to undergrad and you know, you didn't do a finance major. Was finance ever on the horizon? Was it was it something that you kind of thought was interesting or was it did it take several years after graduating? Well, I was a bit of a busy athlete during college, so I have to say that my understanding of finance, especially since I didn't do a finance major, was kind of limited to some gibberish. I saw scrolling under the screens in the dining hall when they had the TV on. And so you're kind of coming up, let's say, to junior senior year. You didn't have any internships and you know, in the summers kind of that stuff like that, You know, it's kind of funny. What I did for my junior year internship was I was deciding if I wanted to go into medicine. So I actually worked at a hospital for part of the summer. And then
Propshead: [00:03:40] It's not as if I sat on my laurels not doing a finance major. I actually studied a rather in-demand language and I spent the other half of my junior year summer working as an interpreter for a national organization for an upcoming sporting event.
Patrick (CEO of WSO): [00:03:54] Oh, very cool. So you did
Propshead: [00:03:56] That. And then basically, once
Patrick (CEO of WSO): 00:03:57] You graduated or as you're approaching graduation, what? How did you line up the job? What was the first job right out of undergrad? Well, the first job out of undergrad I actually graduated right into the global financial crisis, so I was in some job. Was it a no job coming out of it? I think that would probably be the best way to characterize it. Yes. But I spoke in in demand language in a country that was really just off to the races. So I thought, well, you know, if I speak a very in-demand language and I. And I have all this energy, why don't I see what I can do? And so, you know, one thing I like to tell people is you should take the biggest swings when your risk tolerance is at its highest. And so when you're twenty two years old, that's going to be about as high as it's going to be for the rest of your life. And so I worked for a number of different startups before kind of finding my footing and eventually moving into the world of management consulting, which is not yet finance. But I got to learn a lot about business. All those startups, what did you learn like? It sounds like you were using this, this language and the fact that maybe you've been educated in the U.S. was that an advantage or disadvantage as a foreigner? Sure. What I would say is. The major value was that I was able to take one language and translate it into native quality English language content. This was something that would repeat when I worked as a consultant, which actually sent me to a lot of frontier markets where you needed where native quality English for the stakeholders in the projects
Propshead: [00:05:40] Was kind of in short supply. And so If you're kind of like a mid-20s guy who can Manage a few different Processes of research and then communicate it effectively to the stakeholders? That was kind of a good niche at the time.
Patrick (CEO of WSO): [00:05:53] Got it. So why you you're kind of doing these startups? A couple of looks like you're there for a year or two. Why not stick around on the startups? None of them take off. Or was it just like the grind? What was your thought of? Why go consulting and how did you even make that transition? Well, you may reasonably infer from the fact that my Zoom background is not the interior of a G6 that the startup was big on equity, but we kind of ran out of
Propshead: [00:06:23] Time, which is another Way of saying we ran out of money before kind of the rocket took off. So the I would say that in terms of, you know, not having a finance background coming out of undergrad, but having kind of a lot of world expanding experiences. What I like to say is if if a sandwich were something like. Or rather if a career were something like a sandwich. I was 99th percentile hot sauce and a lot lower than 99th percentile meat and potatoes. And so the best way I could think of to kind of straighten things out and iron out, you know, fill in a few gaps, iron out a few wrinkles was to join a consulting firm where I'd be kind of forced by the environment to be in front of clients and really learn very quickly what it means to be a global professional. And that's what I did.
Patrick (CEO of WSO): [00:07:13] But what they tell you to do that did a mentor tell you, Hey, you should go do consulting or do something? Was it obvious to you? This was just actually a shotgun approach to any things could have gone really in any number of different directions. I had wanted to stay in the region where I was. I felt like, you know, I hadn't squeezed all the juice out of the fruit in terms of life experience that I could have gained. And. So one of the things actually just hit and then I joined the consulting firm.
Propshead: [00:07:41] And you were there for a while. I was almost five years.
What I would say is if somebody is worried about having two short of stints on their resume, nothing will wash away all of that, like spending four and a half years at your next thing. It shows there wasn't something fundamentally wrong with you. It's just, you know, there were circumstances, But it's actually in that four And a half years I got to see so much in consulting that I kind. That was when things started to appear on my radar that perhaps, you know, this was a nice chapter, but I wasn't going to see this book all the way through to the end. And consulting the story wasn't going to end up being a consulting partner. And this was, you know, I had some free time. I read some finance books and then things really started to click, And then I started to see how What I could read or what I could see began to translate into what was going on in the world and by virtue of working in emerging and frontier markets and consulting. I noticed this repeatable pattern where stuff I did at work would show up in articles in The Economist, like three months after I did them. And so then I thought, Oh, this is kind of the flow of information in the world, but I didn't want to stop at just. Offering insights or compiling data, I thought this is really very interesting, is there some way that I can participate in the upside of some of the investments that were due diligence? You know, if there were just some way that I could become an investor? But getting back to that meat and potatoes thing, it's going to take more than just the desire to become an investor before you can make the switch. And so that was one of the big pushes for me to go do my MBA.
Patrick (CEO of WSO): [00:09:18] Now, before even going into the MBA, when you said, you know, it's a shotgun blast approach, and I applied to all these consulting firms and whatnot in other places and that one hit what were the interviews like? Was it the typical case interview type methodology? And were you prepared for that? You know, did you feel like fish out of water, given that you didn't start up, start up and then suddenly you're interviewing for all these consulting roles? And did they like that? You know, I think the way that went and this would happen a couple of different times, I would probably
Propshead: [00:09:49] Advance to maybe, Let's call it the second round or third round. But ultimately somebody else would eke over the fence. And so just in a split decision, it would usually favor the somebody the candidate who had kind of a more. I would say understandable background because people say, well, you know, here's this long list of companies I've never heard of and I can't find much information on the internet about. I mean, you're a real person sitting in front of me. Can you tell me a little bit about this? And so some of the consulting firms, one of them had a
Quiz like some kind of test to sword people. Another one was trying to kind of understand where I best fit because it was sort of a niche because the majority in this region, the majority of candidates would be people who had studied overseas and were returning to kind of where they felt more at home. And so the system was largely configured to receive that type of candidate. So I would I could be an interesting complement in such environments. But it took, you know, a little bit of sticking out of the neck of the people who wound up hiring me to believe that. As for how prepared I was, you know, I would have loved to have had something like the guides that Wall Street Oasis has or kind of the mentors who do kind of what I do out. Wall Street always is kind of helped people bridge the gap. Yeah, yeah. I I, you know, I was big on energy and big on ideas. And you know, a person can never be 100 percent ready, but there is such a thing as being unprepared.
Patrick (CEO of WSO): [00:11:22] Had you had you thought about being an investor or not yet investing hadn't kind of gone. It sounds like the consulting is kind of what brought up the investing working in this or had you considered going by side or did you even know what, like investment banking was or any other options? You know, I had thought about it and I had even thought about doing banking For a period of, you know, maybe it was a couple of weeks. I was kind of enthralled by what I had read and all the investing books. And really, it's incredible what you can learn, the timeless lessons from reading, the writings of famous investors through time or even interviews with them. So I gained a lot from that, but it was clear to me that there was just an air pocket that had so much to make up. You needed, you needed the meat and potatoes, The meat I needed, I needed meat and potatoes stack. And so the kind of softer on ramp was consulting. I mean, what people say about, you know, consultants do a lot of slides, they don't do a lot of models.
Propshead: [00:12:19] Yeah, that's all true. Just that. That's the way it is. But I think what it did was it created kind of the on ramp for me to go to business school, which I don't think would have been possible had I gone straight from the startups.
Patrick (CEO of WSO):: [00:12:32] Yeah, tell me about that decision when you knew it was the right time because you know you're it looks like you're probably on a little bit on the older side to go to get your MBA. Yes, that's right. Tell me, why didn't you go earlier? Why stick around? It sounds like you're maybe you're still learning and doing interesting working with interesting clients.
But yeah, some of it had to do with how interesting the clients were. Another piece had to do. You know, I didn't really have what a person might refer to as a mentor during a lot of these decisions. So a little bit like a Roomba figuring out the layout of a room I just kind of learned by doing. But one piece of advice did stick with me, and I was kind of doing consulting. I was getting ready to do it, know for a little bit longer. And what somebody said to
Propshead: [00:13:16] Me was, you know, you should progress to a level where if everything fell apart after your MBA, you'd still shake out at a post MBA level so you could just slot right back in. And sure, you'd have the last two years. You probably have some fun stories or something from business school, but you wouldn't be so at a loss. So I kind of took that to heart, and by the time I was applying to business school, I was at a post MBA level, so I thought, OK, worst case scenario, everything crumbles, but it'll be water off a duck's back. As you know, I won't be starting from lower on the ladder.
Patrick (CEO of WSO): [00:13:51] It's interesting because I think a lot of people would
Propshead: [00:13:52] Say, Well, that's the whole point of
Patrick (CEO of WSO): [00:13:54] The MBA is to kind of be able to lateral or jump or career switch. But you did kind of do that. You did leverage it. Yeah. What I would say
Propshead: [00:14:03] And people will always backfill what suits them. So, you know, you can take this with all the sell you want. I'm still going to say it a lot of experiences that I had that I only encountered as I progressed in the consulting job. That had I not had those experiences, I might not have gained as much as I did from the MDA as in situations that occurred in case studies to me were parallels of things I'd seen at the job, and I was able to ask more incisive questions where if I didn't have as much experience, I'd be learning about these things for the first time from the classroom. But because my work experience was along a number of dimensions very far removed from the standard bread and butter post-college experience. I felt like I was actually filling in a lot of gaps, and I had kind of. Some knowledge about working in different markets or in different environments that I think couldn't be readily taught in a business school classroom, so I think I made the most of it. Certainly had I not gone to business school, it would have been a much steeper climb and maybe an impossible one to make the career change that I did.
Patrick (CEO of WSO): [00:15:15] Tell me a little bit about just the type of work you did as a strategy consultant. You know, you don't have to share specifics on the clients, but just like, was it, was it a revenue optimization or was it restructurings? Was it? What was it, you know?
Sure. I would say some of it was stuff that people will be familiar with kind of business unit optimization, maybe zero based budgeting type of stuff for some clients and just kind of rebuilding, you know, from bare bones, what would be what sort of resources would be needed for a business unit, those kinds of projects. I, you know, I did a few of those in a row and those maybe had something to do with my desire to do something a little bit more interesting. But before I could say before, I could even utter a peep, I got a lot of other interesting assignments. I spent over a year with a large client reorganizing their procurement department and going through kind of the processes associated there learned a lot about the how the sausage gets made in terms of corporate procurement. And then I was actually sent to not an emerging market where I worked, but a frontier market where emerging market people may go from time to time.
Propshead: [00:16:26] And so that was very eye opening and exciting for me, and I don't think that's something that I could have seen under most other circumstances. Okay. So when does when does
Patrick (CEO of WSO): [00:16:36] Business school come on the radar here, your three or four and you start thinking, OK, I got to take the GMAT, I think. You know, what I would say is my employer at the time was putting together a program to disseminate materials internally that could be of use to other colleagues. And I, in my experience, having seen a lot of colleagues flown in from overseas, fully expecting to have reliable data and trustworthy statistics were blinkered when none of these things turned out to be true. And so I thought, well, something that would be very useful is kind of like a field manual for working in emerging and frontier markets to help ease the transition for colleagues coming from overseas.
Propshead: [00:17:22] And so I put in my proposal to kind of headquarters, and for a moment there, I was actually going to go where the corporate headquarters was and I was going to have this kind of mini sabbatical, which, you know, if you can architect something at the age of twenty seven like this, you know, hats off to you. So the pieces were all starting to come together until the very last second, when actually the entire program got shut down. And then I thought, well. I would like to do something different, I think I can't stay here anymore because when things that are so set in stone. Are subject to change, and by the way, it's a business at the end of the day, they're not trying to collect money from clients to fund people sabbaticals or what have you. But I just felt like at that time, OK, if this knowledge is not going to be directly applicable here, I'd like to do something else. And so that was maybe one of the other nudges as well.
Patrick (CEO of WSO): [00:18:18] Ok. And then so you tell me about the whole application process for consulting MBAs
Propshead: [00:18:23] And how do you decide where
Patrick (CEO of WSO): [00:18:24] To go and and then this this magical internship? Yeah. Well, I was a little fortunate in that the two people who ran the office that I joined at the consulting firm
Propshead: [00:18:37] Were alums of the business school that I ultimately attended. Now that didn't stop me from applying to a number of different places. But I would say the process, actually in all candor, I did actually lob a handful of business school applications when I was at the, you know. Twenty four, twenty five age. And some things looked kind of interesting, but there wasn't a clear. I should say thrust of my application at that time, just I knew I needed to go to business school and like that was about as far as I got. So, you know, I got in at one place and then I thought, Well, I mean, maybe, but I'd rather go to one of the other places that you know, I was talking to. And so as time went on for for this one? It's actually kind of funny. One of them, I applied in round two, and I guess just sometimes, you know, round one, they already had a guy who worked in an emerging market who did another thing and did this and did that. And so that's already one of those in the bucket. So by round two, just they already got one. They're all set. Maybe, maybe next year. Yeah, I did have. I always like to tell the story because enough time has passed that it's fine to share. Sure. One of the schools in almost all the places said that you needed to put your job experience not in chronological order, but in reverse chronological order. And this was different from all the other application processes. And just when your day job is running around a frontier market, putting out fire after fire, and there's this and there's that you'd be surprised at, like these little tiny details that can just scuttle your entire blood, sweat and tears poured forth so. Like everybody who's editing skills, get 10 times better the second you hit send. Yeah. When I submitted the application, I thought, Oh, you know what? Asked for this in reverse chronological order and I put it in or whatever it was, I got, you know, I got the order mixed up. But it just it shook out that the way my application looked was just somebody whose career got progressively worse over the years. And I joke about it. I don't know how many people have seen the first Star Wars movie, but there's a scene where you just see a ship moving and then a laser fires and it blows up another ship. And that tells you that there is a battle going on. Well, my application at that school, I think, was that little ship that just got vaporized to show that it is a competitive process and you need to have your T's crossed, your i's
Dotted and everything in a row. So it was a little bit rocky, but things actually wound up advancing at the alma mater of the of the people who were running the office where I worked. And just for another added layer of complication, just in case people think that they have, you know, a difficult situation, these situations abound. And actually, I could not let anybody at my employer know that I was thinking about making this move to business school.
Patrick (CEO of WSO): [00:21:48] So even the alums, even the arms, One of them had a direct revenue interest in my continued employment by the firm. And even in as much as everybody's replaceable, it would have at least taken a good number of months to replace me, I think. And so couldn't let that particular alumni go, and I could also not let the other alum actually, by the time of my application, had parted ways with the firm and was able to write a recommendation. That's you all. So all my recommendations came from people not currently working at the firm. And so I think it was a little out of sorts that all that my application appeared to be so clandestine. But that's why they had that box that happens.
Propshead: [00:22:29] But that happens. Yeah, I mean, they said, Is there anything you'd like for us to know? And I said, Well, the reason why none of my current supervisors are writing glowing recommendations is because this is a process that I am doing independent of my job. And should things not advance, I may remain at this job. And that was that. But you only need to get into one school, and that's what I did,
Patrick (CEO of WSO): [00:22:51] And it was a great school. And so, you know, you got in. That's exciting. But then tell me about the decision or how you actually ended up getting this by side internship with no by side experience.
Propshead: [00:23:02] Yeah.Well, this is one of these things where
Patrick (CEO of WSO): [00:23:05] By side meaning
Propshead: [00:23:07] We can
Patrick (CEO of WSO): [00:23:07] Just say Hedge-Fund. Well known. Sure.Yeah, it could be a hedge fund. It could be private equity, you know? Candidly, I at the beginning, I had worked on so many private investment projects as a consultant because I was working on. The heaviest of the heavy infrastructure, and that a lot of that is private or it even takes place at the sovereign level, right? And so I thought that was very interesting, but I also was energized by markets. But here I was thinking which one? Which one of these am I supposed to do? You know, I wanted to do investing. I'm going to business school. So which one is it for me? And it's it's like asking, what would it even be like? It would be like if you went to a mountain and someone said, So are you a skier or a snowboarder and you're standing there with, you know, crumpled hand written directions for how to get to the mountain? You say, you know, I like being outside. I like the temperature. I actually don't know which of these I'm supposed to be good at. And then people say, Oh, well, you can't say you don't know which one that's that's that'll doom your whole application. You have to have been born for this. Well, so what I did was, you know, I dusted off my my shotgun there and I just put out leads in as many directions as I could in as just in any direction that I could. And I, you know, I
Patrick (CEO of WSO): [00:24:24] What did you use for that LinkedIn or what did you at this point? Was LinkedIn
Propshead: [00:24:27] Bigger? Well, at this time you could do LinkedIn, but I got kind of the traction you would expect for a total stranger sending messages from very far away from here. So not a whole lot at the end where things shook out was, I had the option. I actually had made a friend who was running kind of a mid-market PE firm in the region where I was working. And then there was something that came up through another kind of personal connection in the states and just. At the end of it, it was either do I do something where I'm going to get a lot of investment experience in the region that I know better or should I do something back in the states? And so, you know, in these situations, what you do is you get on the phone, you ask your mom. And so I got on the phone and then, you know, my mom not having a clue about how this all works. She just said, Well, you've been living outside the country for a while, and there's probably a lot of adjustment to do so. The one that allows you to make more adjustment earlier is probably the right one. And that was it. So good. Good advice, you know? And so that's what I did. I came back and, you know, I had to change some habits, you know, change a little bit about how I talked because some of this was just region specific stuff that I didn't know that.
Patrick (CEO of WSO): [00:25:50] But so this this role, this internship, I mean,
Propshead: [00:25:53] It was this like a summer analyst
Patrick (CEO of WSO): [00:25:55] Role. So like, who do they typically give that to and how did you even get into that funnel through a friend of a friend or something? Or yeah, you can call it something like friend of a friend kind of a referral. These are typically that's actually a very interesting thing that you point out. Not all places will articulate that they could benefit from having a summer analyst, but some time and you will only know this if you knock on one hundred doors. But there could be one or two that just say, You know what, we do actually have kind of a few lingering to dos that we just need somebody to hammer through them and they don't even need to be superstars. They just need to do them. Yeah. And for, for my part, not wanting to be caught kind of on the wrong side of things, I did do a number of modeling courses before doing this because I thought I was going to be engines revved and I just needed to. Yes, I can use excel without a mouse, you know, just all that kind of stuff. I knew I needed to be ready. And so that was what I did, and I did a lot of research stuff, kind of the stuff that people always would like to do, but there's just not enough time to do. Finally, they had somebody who just spend all the time in the world on it and then be gone after a handful of months. And so was it unpaid? It was. This was just through a friend of a friend, but you had also just blasted alumni what like just,
Propshead: [00:27:17] Yeah, This one came through friend of a friend. It was. It was paid a nominal amount. I think that that's kind of something where a calibration is required as in when you're doing something that is kind of rare anyway, that is to say an internship before you begin your degree program. It's not necessarily something that the employer budgeted for at the end of last year, but they may handle on an ad hoc basis. So if you kind of work out what you think the ad hoc wiggle purse looks like, it's going to be something it'll it'll keep the lights on and the rest. You can help yourself to whatever's in the fridge in the break room.
Patrick (CEO of WSO): [00:27:57] Do you mind sharing what you're paid kind of in your consulting firm or around a arrange? Just so we have an idea of start ups to sound like it was a lot of equity and not a lot of cash. That would be a fair characterization. There are several years of that, but what do we think? What are we saying here, like 20 thousand USD a year? Like, were you living on like obviously the lower cost of living area? But you know, what I can say is you can really maximize and make your dollar go far if you know how to economize here and there. When you when you have fewer needs, you can just make everything go further. The consulting firm was much more, shall we say, anchored to like a global pay standard, right? So if you're a post MBA by then, you're probably making you sell these six figures right by the end before you left. Yeah, yeah. So and then so then you have to kind of take a step down as a summer analyst or internship. Sometimes you just have to. It's something I think about a lot where just you have to kind of own the trade. You say, What is it that I want? What is required to get the thing that I want? And what am I willing to exchange for that? And so there's no, you know, there's nothing dramatic or emotional about it. It's just a calculation of what is the price for this thing, right? And so, you know, if you're willing to make that trade, then you just own it and get on with life.
You came back to the states, Had a little bit of a culture shock, a little bit, and fantasy football got real popular while I was out of the country. I'll say that. So then you're here. You're basically gone through the summer internship at this. We'll call it a platform, a large hedge fund slash. You know, they do everything but you there. Are you learning anything there? Is it more like you said, research projects
Propshead: [00:29:40] That are just like, Hey, just
Patrick (CEO of WSO):: [00:29:42] Handle this and no one can take care of you over the next four months. I think it was one of these things where in taking on kind of. Some are analysts, they just wanted to put bowling alley bumpers on the amount of damage I could do by doing something wrong, and that's OK because by the way, when there's no lasting interest, I suppose I did something catastrophic that that took down the entire firm. What are they supposed to tell their investors? Well, it's funny. You see, we didn't think this summer analysts could get into this much trouble, but wouldn't you know it? So there's a reason why they do that. And I think actually, when you get these simpler tasks, it's actually a good thing because it's an opportunity for you to excel. And at the end of it, people can say you did X, Y and Z. And if anybody ever comes calling asking what you do, they can say So-and-so did x y z. Got it. And so at this point, you're thinking, this is what I want to do. I want to actually get to the investor side of this firm. Yeah, so it was so exciting. I'll forever be grateful for the types of interactions I saw in the investment committee
Propshead: [00:30:46] At this firm. They let you sit in
Patrick (CEO of WSO): [00:30:48] On the investment committee. Oh yeah, I forgot to mention that. So this was glad for the follow up.
Propshead: [00:30:54] So I got to see how people really look in deals from every different dimension and angle. And that was tremendous because a lot of the time when you're going through models and you're saying, Oh, well, should I raise the growth rate by 30 bips here? You know, what do I think? And then you talk to people who have made a life's work of investing in things and you see what it looks like when you pull back from everything. Now that's not to say throw away all your growth rates, throw away everything that you think matters in the model. That's not that at all. It's just to say this is just punching your ticket to sit in the room. But you have a long way to go before you can really be in kind of the rarefied upper level of investing.
Patrick (CEO of WSO): [00:31:39] Yeah, my fault this was this was almost like a more of a private
Propshead: [00:31:41] Equity type internship in this case. Oh no, that's fine. So this one was private equity. And so by that time, I thought, you know, too much of this feels too much like consulting. And I, you know, if one can articulate it as an itch to see what it's like in the public markets, It was clear that private equity was not going to be sufficient for that, you know, to to explore. And you do that just
Patrick (CEO of WSO): [00:32:09] From that internship, just from sitting in there and thinking, You know what? Public markets are still exciting for me is that kind of what I think. I think what I thought was if I if I'm not falling over myself and loving it here, I'm not sure where I will. And so then I thought so. Perhaps the answer lies in public markets. And so that's what I did as soon
Propshead: [00:32:30] As at the MBA in October. You know, everybody,
Patrick (CEO of WSO): 00:32:35] You start recruiting right away, right? Like right away, Right out of the gates. I mean, I'm hitting refresh on the job board. Like, what's going on? How do I know? And then as is natural, a lot of people went and you know, they were more qualified. They had more relevant experience. And so the things that were kind of first up for grabs were the ones that they got. But you know what, I I think that that's actually the way that it should be. You wouldn't want somebody who had zero experience to just, you know, Disney Express pass to the front of the line every single time. And so I just said, you know what? I've been admitted to a school places will recruit from this school. And sooner or later, they're going to run out of the qualified people with all the good history. And sooner or later, we're going to land on. Kind of that's but that's not really, you know, that's surprising. You think that because they're pulling from other schools to other top schools, right? So like, did you you
Propshead: [00:33:29] Know, it's you know, you're you're right. But I think also at the other top schools, sooner or later, you know, all the top people in the top echelon of the cohort are going to be.
Patrick (CEO of WSO): [00:33:42] Is it fair to say that there's less people also recruiting for like hedge fund or public market experience at these top schools versus like a consulting and banking?
Propshead: [00:33:53] Definitionally, just pick any year that will be the case. Yeah, people will be going for consulting and banking, it's kind of it's kind of a Hail Mary to go to the public markets via business school.
Patrick (CEO of WSO): [00:34:04] That's what I was saying. I want to make sure people don't think like, Hey, I want to go get to the public markets, let me go business school, because a lot of times there's hedge funds will say, Oh, now you need their research place to say, you know, just get a CFA or call it a day. Why go get your MBA?
It's a good point, and it's a point well made. Just you have to understand that the odds are long. But if you don't do an MBA or if you don't do a CFA, the odds will be even longer. And so. And I should also point out, it's not as if the difficulties and trials end on your first day working in the public markets. Instead, you're introduced to a whole new variety of trials and tribulations that one can have in the
Propshead: [00:34:45] Public markets as you're
Patrick (CEO of WSO): [00:34:46] Kind of going through this private equity summer internship pre MBA. Are you thinking to yourself, Well, I really want the markets where you think to yourself, maybe I should not go to get my MBA and just do the CFA? Did that ever cross your mind? I felt, you know, in as much as I don't know that the bank transfer was reversible to the school, The value is there, the value is there I was I was committed for at least a little bit. And the other thing was I thought, probably at least in my case, chances are, if I had a few cultural shocks here and there, I'd probably just be best off by going through a quote unquote finishing school. As a lot of people do learn how to be kind of professional and interact with all kinds of
Propshead: [00:35:30] People in that kind of environment. But what I thought was, here's my chance to kind of get in front of a lot of different firms for internships and just have that opportunity to chat because it's not as if, you know, I go down the street and everybody is whatever playing flag football or something, and then somebody gets sick and then I have to swap in and then they say, Oh, which one do you want to work at? It doesn't work like that. It used to more, you know, there are all these stories, but nowadays it's they try to make it more formal. And so I thought my odds would be best if I were at business school.
Patrick (CEO of WSO): [00:36:07] Ok, so you're there, you're not getting interviews for the blue chip place right away because they're taking all the qualified. But then so it looks like you did an internship during the year. I did so by October. I found one place and here's what I did, and I would recommend this to anybody who's changing careers.
Propshead: [00:36:25] First, you have to you have to understand you're sending your your your whole application to people who are professional cynics and skeptics. And so don't try and sugarcoat things. Just be real about it because people will see right through the sugar coating. and so what I said was, Hi,
I do not come from a standard background. There are I am confident that you know where to find people who come from this background. I am very interested in joining in accumulating work experience in the public markets. The way that I hope to do that is by doing an internship. I can understand if you're uneasy and have misgivings about hiring somebody with a nontraditional background. So I put to you the following as a proposition if you're if you don't have as many misgivings, why don't you give me some kind of piece of work that takes between five and 10 hours? And then if you're satisfied with the outcome of that work product, then we can talk about an internship. It's low risk to you because you're not committing to something that you don't understand. And even if things don't go anywhere, I'd be grateful for the educational opportunity to do the kinds of things that somebody working in the public markets would do. And so I was just real. I love it.
Patrick (CEO of WSO): [00:37:43] I love that everyone should replay that, and I just use that word for word. This is no, but it's great because, you know, there's a lot of great things that you said in there in terms of like there's you're being humble, you're acknowledging the elephant in the room right away, so you're not hiding from it, which makes people like you more. I like to think so and give you a shot and give you a shot and they get free work. Yeah, it's really
Propshead: [00:38:06] Hard to at worst, you can say. Interesting note, we just don't have anything at this time. And you know, the worst thing you can say is nothing. And by the way, if you send out enough of those missives, you'll find that, well, maybe 80 plus percent of the time they will say nothing. So you don't really get, you know, it's not like looking, but even
Patrick (CEO of WSO): [00:38:24] 10 percent is a response rate if you're getting a 10 10 percent response rate, even at 20 percent. That's incredible for me. You know it far, be it for me to say that the response rate is even that good. But it comes back to as long as you get one that is your next stepping stone. And now you go from person who took a break from attending all the fall babies birthdays during business school to really getting down to the business of finding an internship to somebody who now has an internship. And once you have that, it all kind of builds. It kind of snowballs because then you have people from the MBA internship who can vouch for you. And the one that you did
Propshead: [00:39:03] During the semester who can vouch for you. And then you can start to tack these on to to the point where when I was interviewing for kind of the big internship in the summer, I sat in the room and the PM said, You know, you've never done investing, actually, and you don't come from a traditional finance background. Why do you want to do this? And then I said, Well. I'm already doing two internships in hedge funds at the same time, in addition to my coursework, I'm really not sure I could do a third and I don't know what else I can do to show that I'm interested in this opportunity, but I assure you, I'm pretty interested. And so it's just one of those things, you know, you can debate the merits all day long about, Oh, well, you know, was that real investing or was this this or was that that? But you can't argue with you're doing something somewhere and there are people who will who will vouch for you
Patrick (CEO of WSO): [00:39:54] And then tell me a little bit about like the type of projects that have you do that at that five to 10 hours of work? It was. It was it like research specific on specific companies, industry sectors and how many of them did you actually have to suffer through? Oh my word. You know, this is one of these things where. Be careful what you wish for, kind of thing or what. You know, I joke that some of my decisions, my my guardian angel just must be this close to death from exhaustion keeping me out of trouble. But I find, you know, if you do enough, if you put yourself out there and you're kind of humble about it and feel about it, there's something very disarming about being very real. And so I and it's hard to remember because most places just said nothing. But I did. I did hear back from one. They said, Hey, you know what? We kind of like these scrappy rag tag types, and sometimes that's what it takes to be in the markets. Tell you what, we've been looking at this company. Can you do a survey of
Propshead: [00:40:50] The, You know, you've done consulting, you've done this kind of thing before? Can you put together for us kind of a little write up one or two pages with just the market landscape of what these guys do, what the differentiation is and if it's really even that valuable of a product. And so really, all they're asking you to do, you know, if you want to translate it into like work product is, you know, you take down with the average selling prices for each of the products. You know what the different features are. Maybe you can take a stab at why somebody would go for one versus the other one. Yeah, i-, it's probably best that I don't say what I was researching.
Patrick (CEO of WSO): [00:41:31] Do you do some party like first party? You actually did some research and surveys and stuff? Yeah. So I called around a little bit and tried to get information that way. You know, sometimes people call that scuttlebutt, but this is what it is. It's feet on the street finding, finding out what's going on. So I did that and then I said, Well, you know, when all is said and done, it looks like this company that you're looking at, this product is actually pretty sticky. And you know, as I go through product reviews on whatever product review website,
Propshead: [00:42:00] People really can't be bothered to change the product once they've been hooked. So it seems like probably what's most important for this company is the customer acquisition, because once you've got it, the retention is actually quite high. And so they said so then they brought me in and, you know, to try and figure out like, who is this guy like, you know, this whole? You know, kaleidoscopic resume all over the place. And so, you know, we had kind of a chat and they said, OK, well, you know, we're we're kind of a new fund and we're trying to get stuff up and off the ground. But we'd like to hand to you kind of some of the research responsibilities for this company we're looking at. And so there was like a model and going through earnings and saying like, OK, you know, I think the stock is going to do this on earnings, that kind of stuff. And also taking very good notes on the interviews with, you know, with experts that we talked to or with the company. And a quick aside on bringing forward some of the things that you used to do in your old job and applying them in the public markets. Most of people just aren't going to care. You know what? What fund is doing? Well, I shouldn't say that I haven't worked at a fund that has been swayed on an investment decision by a PowerPoint hasn't happened yet. I don't think it's coming. But what I did learn how to do is take good notes and also just because I was working in a different region with a very different language and I even worked, you know, here and there as a translator, I became very high, particularly in, you know, business meetings in between different parties. I just became very highly attuned to tone of voice, body language, the exact words somebody chose for something. And so this was all stuff that, you know, when they bring in the, you know, they have sometimes these trainings with people who have worked for various law enforcement or intelligence agencies. Oh, yeah, that that kind of stuff. And they'll say, Well, you know, they said it this way and not that way. And some people are furiously taking notes. So I was like, Yeah, I've kind of lived this like, you know, I think I've got this. And so that was that was something that I could bring forward. And so they they noticed that I was just able to pick up these tiny nuances. And I'll say, Hey, don't you find it interesting that in the past three quarters, they always used this adjective to describe the market, but then all of a sudden they use this adjective like, you know, this has to be boilerplate language. They changed it for some reason, you know, just those, those kinds of little things. And sometimes those can be canaries in the coal mine. Yeah, but I didn't, you know, I didn't kick in the door and say, What's up, everybody? I pay attention to conversations because I wouldn't have gone anywhere.
Patrick (CEO of WSO): [00:44:40] Yeah, so tell me a little bit. So you're kind of doing the internship, you're doing some good work for them
Propshead: [00:44:43] And you get the big interview
Patrick (CEO of WSO): [00:44:45] For a well known fund. And they say, the guy says, Why do this? You say, I can't really prove it anymore. I mean, I'm doing two other internships
Propshead: [00:44:52] And they on the spot, they
Patrick (CEO of WSO): [00:44:53] Say, you're hired. Are they forced you to do a stock pitch and a short pitch? Or what do they do? What are they forced to do? and at this point in time, at this particular firm, there was not so formal of an intern process as that. And if I think back on it and I would say this to anybody who's looking to change careers, you are going to be doing a lot of work for what looks like not very much reward towards the front end. And what do I mean by that? Because people say, Oh, you know, sure, you cry about it more.
Propshead: [00:45:25] Well, here's the here's the thing. During that semester, when I was looking to apply for internships, I flew to the West Coast twice in a week and I couldn't just remain there because I had internships back on the East Coast. So, you know, there I am, just flying back and forth, going to interviews that are going, you know what could charitably be referred to as OK? And you know, you just have to keep hitting those things. So I was I was getting to the point where and this is the thing I love to tell people. If you're in business school, the best thing you can do, the best skill you can invest in is reducing your cover letter cycle time because it takes about the same amount of time to understand the firm's investment principles. Philosophies go through the news about them. If it's a hedge fund, go through their holdings. That all takes about the same amount of time, but people just get stuck on their cover letters and I just say ,Ok, your self-interest is not going to change all that much in between. Firms know what you're looking to do with the internship. Probably not going to change all that much in between firms. So the real really, the only thing that really changes the most is specifics that show that you've done your homework on the firm and if they even read it. Not only can you spell the firm's name correctly, but you actually know a thing or two about them and you know that kind of thing. And so just I was getting really good at getting these letters out really fast. And so that gave me more shots on goal because even though the majority are never going to respond for those that do, you know, you kind of have your foot in the door. And so the funniest thing happened when I was having the big fund interview, someone said, Oh, you know, somebody left such and such fund. And I said, well, actually somebody also left to go start something. And my prospective PM at the time said, No, no, that was somebody else. I said, you know, I'm not saying you're wrong, but I literally interviewed with them like two days ago and they told me this is what happened. So you can make of that what you will. But I'm just telling you what I know. His phone buzzes and he looks up at me. Whatever it was he saw on his phone, he says, OK, I guess you were right. But I think in that little moment right there, I was able to show that I could disagree without trying to railroad over what was said and just lay the facts out, you know, and kind of a judgment for your way. Yeah. And so what happened is
Patrick (CEO of WSO): [00:47:48] That critical skill for public market type. It's you're going to have, you know, I wasn't sure when I was going to say it, but the biggest change between the public markets and other jobs is most jobs in the world reward the ability to build consensus among various stakeholders. But public markets, you have to turn that on its head the most. The way to get rewarded the most in public markets is to break and bust consensus,
Propshead: [00:48:12] Which means you have to get very used to people doubting you telling you you're wrong. You know, it's not. It's not pleasant. You know, being told you're wrong by both the market and by market participants that you're wrong. It's not a pleasurable experience, but at least you know when your call is out of consensus. And you know, that's probably one of the larger adjustments for people coming from environments where affirmation is more common than being kind of torn apart. But for what it's worth, I wouldn't take ferocious pushback personally, Because the stronger the pushback, I mean. Think of it this way. A PM is just going to move on to the next thing and be like, Yeah, OK, I think we're done here like they'll just say that. But if they're really digging in and really asking tougher questions to me, this means the wheels are turning and they're really thinking, you know, is this worth maybe risking a little bit of money on? And that's kind of just kicking the tires on the pitch rather than trying to dismantle you. And, you know, for sport, it's not that. So I've just come to take it that way, and it's a good way of kind of keeping me on my A-game because I say, you know, if you can convince the people who are diametrically opposed to what you think is the right thing to do with this stock, you know you might be getting somewhere.
Patrick (CEO of WSO): [00:49:22] And thanks to you, my listeners at Wall Street Oasis, if you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis. And till next time.
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