What do you want?

Well it's come again. Recruiting season. I've been surprised how many students have reached out to me this year, wanting to get advice and hear about where I work. It's a good thing though - the more that reach out, the better chance we have of finding the best new analysts!

I've noticed more and more how easy it is to tell the difference between somebody who has prepared and somebody who hasn't. And the difference is obvious within three minutes of talking with a person. This is why when you interview, the interviewer usually makes a decision by the time you've told your story - the rest of the interview is spent confirming that decision, whether to ding you or to pass you on.

I thought it might be helpful to write down one of the ways I prepared which I feel really helped me perform in interviews.

So a little background. I had just finished up my internship at a bulge bracket bank, and was thinking about what to do next. I felt like it would be a good idea to interview around, and I reached out to people I had met in the lead-up to internship interviews. Luckily, I had a great summer and was able to have some substance to my resume as I was sending it out. At the places where I didn't know anybody, I simply sent my resume to the websites of those companies. I didn't think it would lead to anything, but when you don't have anything to lose, why not? It turns out that I ended up taking a job at one of the places that found my resume through the website.

As interviews progressed, I was fortunate enough to get a few offers. At this point, I realized that I was going to have to make some decisions about what I wanted to do for the two years following college. I had a lot of questions, like, "Bulge bracket or boutique?" and "Investment banking for a career or private equity after banking?"

I decided that to really be able to figure out where I wanted to be, I needed to decide what I want out of my two-year analyst experience. I sat down with a blank sheet of paper and began writing out what I really wanted as an analyst.

My thoughts focused around three broad categories: (1) Finance / technical experience, (2) Culture / lifestyle and (3) Career / Exit opportunities.

Finance / Technical
Within this section, I included the following:
-Deal team size (10-15+ at bulge bracket, 4-5 at boutique)
-Generalist vs. product/industry group
-Modeling (templates vs. building from scratch)
-Analyst responsibility (double-staffed with other analysts or sole analyst on deal teams from day one? Run the model or share with associate? etc.)
-Mentoring (assigned or just part of the culture? Interaction with senior people daily or never? Chain of command or flat culture?)

It turns out that the things most important to me were to get a lot of responsibility and experience modeling from the get-go. I also wanted to be a generalist and focus on M&A, because I had decided that my long-term goal was to go to private equity.

Culture / Lifestyle
-"Face time" policy
-My view of the culture (basically I just used adjectives to describe how I viewed each bank's culture based on my interactions with people from the banks)
-Salary (not that important, but still a data point)

This section was important to me, but it wasn't what really swayed me one way or another. I still view investment banking as an investment in the future, and if you have to deal with a rough culture for two years, you can do it. But, if you can go to a top-tier bank and be in a great culture, even better.

Exit Opportunities
-Firm's view on interviewing for private equity (fire you vs. help you)
-Firm's view on promoting internally
-How well have analysts done in the past in recruiting at this bank? (this was all based on hearsay and research I did on my own just looking at various websites of the PE shops)

Although this isn't something you can bring up as a positive point in an interview about why you would want to work at a specific bank, it was very important to me. In the group where I spent the summer, the analysts who were interviewing literally had to lie about what they were doing and sneak out to interviews. I really didn't want to be put in a position where I felt that I needed to be dishonest just to do what I wanted. Because this was a priority, I ended up choosing a bank where people are very willing to help you prepare for and do well in private equity interviews. Luckily, my analyst class did amazingly well in private equity recruiting, and I think it's largely because of the way the firm views recruiting.

This exercise took quite a while to think through and fill out, but once I had gone through the page and ranked the various banks at which I had an offer or was likely to receive an offer, it became very clear to me that based on the criteria I had prioritized, I needed to go to one bank in particular. I knew what I was giving up, and I knew full well what I was getting. At that point I didn't even have an offer from this bank yet, but I had final rounds scheduled.

When the time came for interviews and I was asked, "Why do you want to work here?", I began to explain how I had thought about that question quite a bit. In essence, I said something like this:

"I've thought about this in great detail, and the way I have approached it is to think about what things I really want to experience as an analyst. I know that the criteria that are important to me are [list off the things I just wrote about above]. As I've considered the various banks, yours absolutely fits those criteria the best. I would love to be here, and have no doubt in my mind that I could thrive here."

I would go on to list of specific things about the bank, such as their views on analysts, modeling, mentoring, culture, deal teams / experience, etc. It was clear to every person with which I interviewed that I had given this question substantial thought. The great thing is, I was talking about all the same reasons that they loved working at this bank, and my answers resonated strongly with the interviewers.

I received the offer and have had an absolutely fantastic first year. My point in writing all of this is to encourage those of you with interviews coming up to really put thought into what is important to you in your analyst experience and to convince yourself of the best place for you. Then, when you interview there, it will come across clearly that you have thought it through, and that you are a great fit for the job.

Summer

Thank goodness for first year analysts. It's still hard to believe that a year has gone by since I got out of training. It's been awesome to have the new first year analysts around to share the load.

July was definitely the worst month of my life. Because the analysts in the class above me left to go to private equity and the new analysts in the class below me were in training, my class of analysts basically had to carry the load for the month of July. In a span of a week I went from being on two live deals to being on six live deals. I'm still not sure how that's even possible, but I, along with the other analysts from my year, basically didn't sleep for a month and just cranked 24/7.

But now...now it's so much better. Even though I'm still on four live deals, just having first years around to take on new pitches and other work makes a huge difference.

Another good thing about the end of summer is that we're heading into recruiting season. This is one of my favorite times of year because I really enjoy seeing students step up and perform under pressure. Now that I'm involved in the recruiting for our firm, I feel like I have a much better idea of what is important / what works than I did when I was actually recruiting. I still can't believe that I actually got a job at my firm by sending my resume to the firm website, especially since now I'm the guy receiving the resumes from the website and I know how hard it is to really give people a good look when it's 3am and you've been working all week. But I really try to screen the resumes well because I feel like I owe it to future generations of students trying to break in the same way I did.

I'd forgotten how cathardic it is for me to write a blog of what's going on in my banking life, and I think I'm going to start writing again. Who knows if people still read this, but regardless I figure it will be good for me to have a record kept of my years in New York.

Because it's recruiting season, I'll probably be writing a lot about what made me successful in interviews, and what I feel like the best candidates do to stand out.

It's good to be writing again!

The Real Deal

Well it's 4:23am on a Tuesday morning and it's been at least 65 days since I had a day off. I guess this is banking. Since I last wrote I moved to New York, went through training, and started real work, did some deals, got a job in private equity, and am just starting into my second year.

I have to say that these are really interesting times to be doing investment banking. It seems like the M&A markets are starting to come back, and there's a lot of talk about IPOs making a comeback as well. It's by no means time to say that we're free and clear of all the mess we've been in (just look at the commercial mortgage markets!), but finally it seems like deals are starting to get done again.

I haven't written in so long simply because I've been too busy for it, but writing about my experiences is actually pretty enjoyable for me, and it's a good way to keep a record of what it's like in banking. It's pretty strange to think of all that's happened in the last few years since I started really getting serious about getting into the world of corporate finance.

Just today I was reflecting on everything I went through over the past three years to get here. It's amazing to think that I actually pulled it off, and it's clear that a lot of it wasn't at all because of my own abilities but just a factor of putting myself out there and being in the right place at the right time. I have noticed, though, that the harder you work, the more "luck" you seem to have.

Winner!

Sorry for the long break in posting. It's been a busy semester, but lots of good stuff has been going on. A team of my friends and I won the school's Private Equity Case Competition. Teams had to pick a company, propose an LBO of the company, then create a presentation and present to judges about the deal.

Of course there might be mistakes and errors - feel free to point them out if/when you find any. It's the first time any of us had built a three-statement LBO model, as well as a dividend recap, so it was a great learning experience. Check out our presentation and model below!


Coach Final

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COH_Model_v.7

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My Story

Hey all - it's been a while again since my last post. This is a crazy year, and I seriously can't believe what is happening in Washington and on Wall Street. I'll be posting more about this stuff soon.

I thought it might be helpful to post "my story" to give you all some background into how I got to where I am today. Here it is:

I go to a non-target school and decided that I wanted to do banking near the end of my sophomore year. During the following summer, I began reaching out to the few alumni from my school that work at banks both in New York and San Francisco. I sent out many, many emails and called tons of people all under the premise of simply wanting to learn more about the world of investment banking.

While making all of these calls, I got a subscription to the Wall Street Journal and started reading that every day. As per the suggestion of a returning summer intern at my school, I read the Vault Guide to Investment Banking and Vault Guide to Finance Interviews. I also read as many books about investment banking as I could, reading everything from the entertaining stuff (Liar’s Poker / Monkey Business / Barbarians at the Gate) to recruiting stuff (Never Eat Alone / Running of the Bulls) to more technical stuff (Accounting & Valuation books).

I flew myself out to New York four times and to San Francisco once, meeting with everybody from analyst to MD over the course of the next six months. Some of those trips were in groups but most were on my own. In preparation for my trips I took every single summer analyst from my school that had done an internship on Wall Street out to lunch. These one-on-one meetings were really helpful to me because I would just ask them how they got their internships, what they did to be successful, and what types of things I could ask in informational interviews.

I called people working on the Street that I had contacted over the summer to let them know I was coming out, then set up 10-15 visits over the course of a few days. Those visits were informational in nature, but usually led to more introductions and an expansion of my network. I usually started by meeting with analysts, making a good impression, then having them introduce me to more senior people or the rest of their group.

The first time I ever went to New York, I had a layover in Minneapolis. While waiting at my gate to go to New York, I saw a guy standing there holding a Credit Suisse bag. At this point I was just barely starting to grasp what investment banking even was, but I knew that I had to take every opportunity I could to meet investment bankers. I started talking to him and, although it was only five minutes, managed to learn that he was an SVP working in the Consumer group at CS.

We got on the plane (he sat in first class, I sat in the back), and I failed to get his card. I knew that if I was coming out to New York, I needed to meet people, so when we got to JFK, I literally ran through the airport to catch up to him. I finally caught him while he was waiting to be picked up in a black car, and I asked him for his card. He must have thought I was crazy, but I told him my story and that I was just doing everything I can to get a job. It impressed him enough to meet with me later in the week, and I ended up getting interviews at Credit Suisse in New York because of that guy.

In many of the informational interviews I had, I was asked typical questions like, “Why do you want to do banking?” and “What do you know about this bank?” Some people asked me about what groups / industries I was interested in. A few of the interviews actually got into technical issues, such as one Goldman VP who had me tell him all the factors affecting IRR on an LBO.

Especially as time got closer to interviewing season, the informational interviews became more and more like real interviews. Around November people really started asking me tougher questions about leadership / experience / technical stuff. This turned out to be great preparation for actual interviews.

By December I had managed to meet people at every major bank on the Street. I felt like I could really speak freely about why I wanted to do I-banking, what an analyst does, and why one bank differs from another. I was taking finance classes in school, reading the WSJ every day, and reading blogs online like Mergers & Inquisitions (though I didn’t find it until I already started interviews), LSO, Wall Street Oasis, and others. These sites gave me a better feel for what it’s really like in banking, as opposed to the more academic look at finance I had been getting from other books.

When it came time for SA interviews, I called up all of my various contacts at different banks and had them submit my resume. By this time, many of the analysts I had met with and really trusted had already seen multiple iterations of my resume, so I was confident that more senior people would be comfortable passing it on to HR since my analyst friends had given their blessing.

The interviews started coming. My first interviews were in early January, and they went on through February and even into March for some firms. I had done numerous mock interviews with analysts and even some associates and a VP at different banks in preparation for interviews, so I felt very confident going into the interviews. At every bank that I interviewed at, I received an offer to come on as an intern.

While a handful of firms actually do recruit at my school (almost exclusively for the West-coast offices), I only interviewed on-campus for Credit Suisse LA (and got an offer), but really wanted to start in New York. I accepted an offer with a BB bank in New York and had a great time there this summer.

I started this blog over the summer because I wanted a source for people looking to understand banking on a day-to-day basis. There are a lot of “Week in the life” posts around the internet and in the Vault Guide, but I wanted to give people a look at my entire internship. It's been fun to write it all down and hear from people all over the world who are reading the blog. I plan on continuing as I go full-time to let people know what it's like now with so many things changing.

I did very well in my internship, was rated highly, and received an offer to return full-time. Although I had a great experience, I decided to interview around. At this point for the first time I looked at boutique banks instead of only focusing on the bulge brackets. The problem was that there wasn’t a single alumnus from my school at any boutique on the Street, so all the contact I had with these banks was cold calling.

Because I had spent significant time on my resume (I'm still doing resume reviews if you're interested!), I felt confident in sending my resume out to other banks. I put together my cover letters and resume, then just sent my resume out to various boutiques. I was specifically interested in restructuring.

Similarly, I used LinkedIn and other online databases to get names of people at firms, and I found a way to make a connection enough that I could call them or send them my resume. It was awkward at first, but I had the attitude of, “I already have a good offer, so what do I have to lose? If they turn me down, it’s no problem.” I think having confidence really made a difference for me.

From some of the boutiques, I got an email back saying they would be reviewing my resume. Others directly called me back and invited me to come in and meet some people. At one boutique in particular, I went in the day after I got a call and met with their head of recruiting, head of M&A, and the analyst/associate staffer. Because I was able to do well in those interviews, they invited me back for final rounds “whenever I could make it back to New York.” I just let them know when I could come, and they set up six more interviews for me.

Because I was out early talking to firms, it seemed like all of my interviews were very unorthodox. Literally all of my first-round interviews with boutiques were kind of on-the-fly and not official in any way. People would just email a colleague, ask if they could talk with me for 15 minutes, and away we would go. Final rounds were more structured, but I was still interviewing in August before all of the official on-campus recruiting started.

I’ve come to see now that it was vital for me to get out there early. Many of the firms now are only looking at people from target schools. I know this because a lot of my friends who are just as qualified couldn’t get interviews with the same firms I met with in August.

Through efforts like these, I was able to get interviews and some offers from many top boutiques (Lazard, HLHZ, Greenhill, Miller Buckfire, Audax Group). I reached out to contacts that I had made over the past year at many other BB firms, and was able to get offers at two different BBs as well. I feel extremely blessed to have options in a year like this, and I directly attribute it to the work I put in over the past year to not only build a network, but also to study my brains out so that when I meet new people I can speak to things that they are interested in.

One interesting side note – about a year ago now I met a guy working at Morgan Stanley. Right after I met him, he was asked to come down to Treasury to work on mortgages and housing markets. Well it turned out that he needed an intern for the fall semester. I had stayed in touch with him, and heard about the internship spot. I applied and got the internship.

So because I met this guy at Morgan Stanley, I worked at Treasury for four months. He is running part of this $700B bailout and I worked directly for him on the team. It was an amazing experience and just another testament to the power of networking and doing your homework.

So that's my story. I'll be heading back to NYC in June to start it all over again full-time.

Accepting the Offer

One of you asked, "In one of my interviews I was asked:"If I give you an offer now, will you take it?" How would you answer this question?"

The answer, like pretty much everything else in the world, is that it depends. When I was interviewing, even though I sold myself to every bank as if they were my top choice, I clearly had my top choice in mind. In fact, I ranked all the banks based on my own measures of "culture", "prestige", "exit opportunities", "analyst experience", "group / industry opportunities", etc.

I'm sure everybody has their top choice, so if you are interviewing with this bank, and they ask you the question, it's not a lie to go ahead and say that you would accept. BUT, you want to be cautious in how you answer. If you say that you would accept, take it as another chance to show that you've done your homework and understand exactly what you would be accepting.

I would say something like, "You know, I would be glad to accept that offer for a few reasons. First of all, I've taken time to meet with people at pretty much every bank on the street, and I feel like the people here not only care about the analyst experience, but they are very intelligent and will challenge me to be better. Second, it's important to me to be able to contribute a lot, and your bank is known for giving analysts lots of responsibility. I know this is a great challenge, but it's one I would gladly take on. Third, I feel like your bank is the best positioned to take advantage of the current market situation, due in large part to [XYZ]."

But, because you might get offers from banks other than your top choice, you want to be very careful not to pin yourself in a corner. Don't commit to accepting an offer just so you can get the offer. If you say you'll accept, get the offer, and then reject it, that not only reflects poorly on you, but also reflects poorly on your school, and could lead to big problems you don't want to face. In short, it would be unethical to lie, so don't do it!

If I'm not sure I'm going to accept, I would answer by saying something like this:
"You know, if I were lucky enough to receive an offer from you, I would treat it like I do any important decision [or you could say, any investment I've made or whatever] in my life. I would take some time to think about what is important to me, what the costs/benefits will be of either choice, and then I'll sleep on it. As it stands right now, I don't see any reason why I wouldn't accept, and surely interviewing with many people here today has helped me get a much better understanding for the "feel" of the firm."

If they give you the offer and press you to accept it or lose it (another variation is when they say that there are three spots and five candidates, and the first three to accept get a spot), I might reply like this:
"Frankly I would like to work for a bank that hires me because I fit the qualifications of the job and am the best person for the position, not because of my willingness to accept on the spot. Like I said, I think your bank is great and am honored to have an offer. I'd just like to think it through before I make a decision that will have a potentially huge impact on my life and career going forward."

Take this all with a grain of salt - it's all just my opinion. I think it is very unwise to accept anything on the spot unless you have already thought through the implications of taking the offer. If it's a take-it-or-leave-it deal, then I'll leave it 99% of the time unless I can think it through first. I hope this helps!

Phone Interviews

One of you asked about phone interviews, so here are a few quick thoughts.

Phone interviews are usually a candidates first official interviews with a bank, and are usually conducted by people in HR. Occasionally they will be conducted by analysts or associates who are usually alumni of the school. Interview questions are just about the same on the phone as they are in person for a first round interview, so make sure you can answer the big three:

(1) Walk me through your resume / tell me your story.
(2) Why banking?
(3) Why [insert name of bank conducting interview]?

You might get a few technical questions, but especially if it's somebody from HR, you probably won't get anything too deep, so just know the basic Vault Guide stuff and you'll be fine. The big focus will be fit.

Phone interviews present unique challenges and benefits to you as the person being interviewed. For one thing, it's a lot harder to get your personality across over the phone. You have to try extra hard to be animated without sounding like a cartoon. On the phone, though, it is easy to sound like a robot so be conscious of your tone and vary it as you describe different things.

Another challenge is that you can't see your interviewer, so you don't know how they are responding to what you're saying other than how they inflect their voice. It's still a good idea to use humor and be easy going, but pay more attention than normal to how they are responding to you.

One of the benefits of a phone interview is that you can have all of your information right there in front of you. You should never be stumped by a question on a phone interview. Usually before an interview, I'll get out my phone interview resume. This is my normal resume, but with examples of different stories or qualities that are related to every bullet. It's actually about three pages long, but I never have to scramble to come up with a story to tell about X experience because I have it right there in front of me.

I'll also have all of the information about the company, including awards they've won, their stock price, recent deal information, and my reasons for wanting to work at that bank. I have a calculator there, a blank page with a pen, and the name of my interviewer all right in front of me (side note - if you use the calculator, make sure to do it quietly - you don't want them thinking you're not paying attention. Same goes with using a computer - don't type while you're on the phone because it's distracting and they can hear it.

Normal principles of good interviewing still apply. I even will wear my suit for the phone interview because it helps me to remember to be professional and not too casual. Make sure you have a reliable number for them to call, and don't have a stupid voice mail message, just in case you miss their call.

Good luck with the interviews!

"The Best We've Ever Seen"

Hey all - I'm back. The two months have been crazy for sure, but it's been fun. I've been mostly focused on helping students at my own school, doing homework for my classes, and practicing building LBO models, but I figure that a two-month sabbatical is enough.

This time last year I was just getting into final rounds with most of the banks I was interviewing with. I thought it was a rough year last year, and now I think it's even harder to get a job. With that in mind, I wanted to write a few thoughts on interviewing - specifically final rounds.

As a disclaimer, I'm not by any means an expert on interviewing. All I have is my own experience and the experiences of my friends. I can say, though, that I feel confident in my own abilities to interview, and I hope to share some of the things that work for me. Over the last year I've interviewed with many firms, and every single place that I've interviewed at has given me an offer (except for the firms that I cut off the process with after accepting my internship or full-time offer, but even with those firms I had made it to final rounds and am confident that I could have received an offer if I would have kept interviewing). I don't share that to be boastful, but just to point out that there are some tangible things you can do to be ready for interviews, many of which will come off as impressive.

A lot of my success in interviewing is due to good old preparation. My end goal was to go in, totally destroy every answer, and leave having the interviewer thinking, "That was the best candidate I've ever interviewed. We have to get this guy to come back." You don't want to leave any doubt in their mind that you are the right person for the job.

Analyzing the Competition
When I am preparing for an interview, I'll do a few things to get ready. First of all, I think about who else will be interviewing that day. Often for final rounds, the firm will fly you out the day before interviews, and many times you'll get to meet other people you're interviewing for. If you don't meet them the day before, you'll meet them in some sort of pre-interview meeting for all the people attending the Super Day.

I come from a non-target school, so I needed to know how to tell my story to come across in the best way. If the other people interviewing were from target schools (usually the case), I would really focus in my interviews on how hard I worked to get the interview and the fact that absolutely no one they could hire would out-work me over the summer. I would usually not dwell on my school too much - I let my GPA and test scores speak for my academic background. Instead I would focus on my work experiences and show that I already was a great analyst.

If the people I was interviewing with were either from my school or from other non-target schools, then I would focus a bit more on my school work and what I had accomplished. Because I would assume that everyone had worked hard to get there from a non-target school, I would focus on my experiences that made me unique, whether it was talking about interning at Treasury during TARP, living in Eastern Europe, or working with regional private equity firms to manage their portfolio companies.

Technical Powerhouse
In addition to tailoring your interview based on who you are interviewing against, it goes without saying that you need to know your finance. I really believe that the technical stuff is nothing more than a hurdle you have to get over (fit is way more important than if you really know accretion/dilution because they expect you don't know anything anyway). If you can absolutely crush the technical stuff, they'll not only check the box, but they'll remember that you knew more than the average interviewee. There are plenty of places around the internet that will prepare you for technical questions (I've covered a few, and www.ibankingfaq.com is my favorite site for quick refreshers on corp fin). Just be ready for anything and show them that you can think on your feet.

Make 'em Laugh
One of the best things I did in interviews was to incorporate my personality in the interview. I would often try to make funny (but appropriate - not childish or vulgar) comments during the interview, and the feedback I got was usually that the interviewers thought I was a funny, nice guy.

One example comes from my final round interviews with Lehman Brothers (Barclays) last year. When I got off the elevator on the 24th floor, I noticed a big sign saying that they were having fire drills throughout the day, and they listed the various times that each floor would need to be evacuated. In many of my interviews, when the interviewer would ask me how things were going, I would usually say something like, "Oh fine. You probably noticed this morning when I pulled the fire alarm though..." It was a little thing, but the interviewer usually laughed a little and then we carried on. Using humor to endear yourself to the interviewer is one of the best ways I can think of to come across as "somebody they'd want to spend 8 hours in the airport with."

Final Thoughts
Before you go into the interview, you should quickly check the stock price of the company (assuming they're a public company), read the WSJ one time quickly, and go to the company website to see a few reasons why they are great. I usually knew of 4-5 awards the company had recently won for being a good employer, being kind to working mothers, or whatever it was they wanted to brag about on their website.

When they ask, "Why do you want to work here?" You tell them personal reasons you like their bank, then you say, "And plus you guys were named one of the 50 best places to launch a career, Forbe's said you were the M&A house of the year last year, you are one of Working Mother's top 25 firms, and your CEO was just named CEO of the month in Investment Banking Weekly." They're not expecting you to know all that, but listing off random facts shows that you took a little more time than the average candidate to prepare for the interivew.

I could go on for a long time about all the ways I prepared for interviews, but it basically came down to preparation. Knowing the company and what they stand for, knowing the qualities they were looking for and telling stories specifically to show I had those qualities, and using some humor or good manners to impress them enough to remember me.

Good luck to all of you who are out there interviewing. I'll be back in a more normal schedule of writing, so you'll hear more from me about interviewing in the coming days/weeks.

The Path to Treasury

I've been asked by email and your comments about how I got to be an intern at Treasury. I think it's an interesting story and one which demonstrates the value of networking.

More than a year ago in August, I flew out to New York for the first time to meet investment bankers. I was part of a larger group flying out, and the guy hosting all of us students was a vice president at Morgan Stanley. I only talked with him once over the three-day period, and he probably wouldn't have been able to pick me out of a lineup.

In October, I went back to New York and this time met with my Morgan Stanley friend one-on-one. He only had time for a five-minute chat and a bagel, but it was better than nothing. I went to New York two more times (one trip alone and one with a group), and both times I stayed in touch with this guy. I never asked him for anything, and just enjoyed learning from him and hearing stories about his work.

I interviewed at various banks and worked at a bulge bracket over the summer. It was while I was in New York again that I heard that my friend had been asked to go to Treasury to head up the housing and mortgage markets team. It seemed like a really cool role given the turmoil in the housing markets.

About a week after my internship ended, I heard through the grapevine that the intern currently at Treasury (an HBS first-year) was just finishing up and going back to school, and my friend was looking for another intern for the fall. I sent him my resume and told him I'd like to be considered for the spot. I believe that because he knew me and had kind of watched me progress and learn over the past year, he felt good about giving me a shot. I interviewed with him and another guy at Treasury, and a week later got the call that I had been chosen to be the intern!

At first I was solely focused on housing and mortgage markets, but when Fannie/Freddie/Lehman/Merrill Lynch/AIG/etc happened and TARP popped up, my friend, another guy on our team, and I all hopped on the TARP team and I spent the rest of my time at Treasury working on TARP.

I had an absolutely amazing experience. I met with over 65 CEOs of various companies of all size, did work directly for Neel Kashkari, went to industry conferences, and sat in meetings with Paulson, Bernanke, Kashkari et al. I learned a TON about the housing markets and the economy in general.

I feel like I have been very lucky to have done an internship like this. Because of the fact that I took classes during one summer while doing a local internship, I was able to skip classes during this fall semester and go out to Treasury. It's not a requirement for my school, but more just a great opportunity that I was able to take. For three months I was the only intern working on TARP (for the last few weeks another intern at Treasury did some work on the Capital Purchase Program).

It was an amazing semester, and I loved being in DC during the election. It was awesome to work in the actual Treasury building, right next to the White House. Every night I would walk out past the statue of Alexander Hamilton and look back to see the view on a $10 bill.

Being at Treasury has really got me interested in policy, and I won't be surprised if I end up working for the government again someday.

Trainwreck

Well Friday was my final day at Treasury. What an amazing run it's been! Below I'm posting a time line put together by our Markets Room that shows the events that have got us to where we are. The amazing thing is that every event after the second week of August is something I was here for.

I just had my picture taken with Neel Kashkari (Treasury's way of saying, "Thanks for working 14 hours a day, six days a week for free for the last four and a half months!") and it was pretty cool. The best part was that after the photo I got to just sit there in his office for a while and talk about things. He asked about my future plans (and he likes the bank I'm going to work for - good news), talked about life, and talked about what it feels like to run $700 B. I've been in plenty of meetings with Neel before, but this was the first time I got to just talk with him one-on-one.

I thanked him for his leadership and told him I was impressed with his composure on the Hill two days ago when so many irate congressmen and women took pot shots at him. He responded by saying that it has long been his nature to fight back when people attack him, but that he's had to work hard to acquire the ability to sit there and listen without being hostile back to hostile attackers. Much respect for Neel Kashkari.

I'm putting together a post of things I heard/experienced while at Treasury this past semester. I guess one way I can describe my experience here is like that of someone watching a train wreck in slow motion: it's incredibly interesting and intriguing, and at the same time horrifying.

LINK TO THE TIME LINE

The Perfect Book

Hey all - a few posts ago I mentioned that I had another doc to post here about how to make a perfect pitch book. One of my friends forwarded me this email, which was apparently sent out from a VP to a few Associates in some bank. Some of the suggestions here are a little extreme (ex: hand calc everything in the book???) but during the summer this was a God-send.


Many many times I was the one who was turning books and putting in the last-minute changes, and I was often tempted to just turn in the book as fast as I could. The times when I would take five extra minutes to run through this checklist (even when the VP was yelling at me and sending me emails asking me when it would be done), the books I produced were always error-free and I got a reputation for at least not making stupid/careless mistakes. Enjoy, and let me know if you have any other suggestions to add to the list here.

"Too Busy"

Sorry for the dearth of posts over the last week and a half. I'm back at Treasury after a nice break and things are crazier than ever. I was told when I first started that by mid-October there wouldn't be anything to do. Then TARP came along. Then everybody said that after the election everything would start to wind down in the "lame duck" Treasury. Well it's been nearly as busy as when we first started working on TARP, so I'm happy about that.

In that spirit, and also in the spirit of my last few posts, here is one more thing I posted on my wall to remind me to work hard. It's pretty funny, and hails from the glory days of DLJ, which became UBS LA. They were known for being more hard-core than anybody else, and you can see why. My favorite part is the calculation under the picture by the guy figuring out just how many hours he's going to be working now. (If you click on the picture below it will bring you to a site where you can download this for yourself as a pdf - I don't know how to get a pdf up here on blogger)

Some Inspirational Quotes

Like I said in an earlier post, this summer I put up quotes around my desk to remind me to work hard and to have a good attitude for those nights when I never left the office. Here are a few to think about:

"To give anything less than your best is to sacrifice the gift."
-Steve Prefontaine

This is one of my favorite quotes of all time. Pre was an amazing runner and this quote always motivates me to work harder.

"That which we persist in doing becomes easier, not that the nature of the thing changes but our ability to do so increases."
-Ralph Waldo Emerson

Another classic that helps when you are just starting out with something you've never done before. Think of it as getting ready to interview. You may struggle now, but with practice and persistence, you ability will increase.

"The heights by great men reached and kept were not obtained by sudden flight. But they, while their companions slept, were toiling upward in the night."
-Thomas S. Monson

This quote really fit well with investment banking. I liked to think that while I was putting up all the extra hours and effort and "toiling...in the night" I was actually achieving great things and learning valuable skills. Of course, most of the time when you are working in the middle of the night you're doing things that are annoying and mostly useless, but hey - the quote helped.

There are some other things I had up on my wall, many of which I'll post in the coming week. I had a guide on how to make a perfect pitch book (VERY helpful), some "rules for being a great intern" that I gleaned from the analysts over the summer, and a few other things.

Hope

Dennis left a comment on the last post that is, I think, especially important:

"I've been doing all those things, but I think you still need to keep some hope. If you don't some hope that your hard will will come into fruition, then there is no point of the hard work."

Thanks for that Dennis - you're absolutely right. While the point of my last post was to remind everybody the importance of not feeling a sense of entitlement, or sitting back and waiting for everything to come to you, it is vital to believe that your hard work will pay off.

I think having a belief, even if it's against all the odds, is what really helped me and many others to get where we are now. Coming from a non-target school (and frankly any school these days), it's easy to feel like there's no point to hard work, that there's no chance for an opportunity. Granted, nobody knows the future and where investment banking will be come next summer, but you just have to believe that if you do all the right things, you will have that chance. If you study, read, network, learn, prove yourself, and prepare, that hope grows into confidence.

There comes a time when you don't have to just hope it will happen - you will be confident that it will actually happen. That's how you want to feel when you go into those interviews - so confident that you know they would be crazy not to give you a job. You know that nobody has prepared more than you for this interview. You know that, if given the chance, you would work harder and smarter than anybody else they can find out there.

Thanks Dennis for the great reminder - we have to hope. In times like these, we have to believe there will be chances for us to do what we really want to do. And that hope can grow into a confidence that will help you to stand out when you actually do get your chance to shine.

My Investment Strategy

In meeting with various people this week at the Treasury, I learned some pretty good lessons and thought I would share one with you all. While describing the investors out there saying that we should all buy bank stock right now, based on the fact that they think things will rebound and turn around in the financial sector (and I'm not saying whether I agree or not) one visitor said, "Hope is not an investment strategy."

That is a great thing to think about as you are preparing for interviews and trying to get a job or an internship in the coming months. Hope will not get you there, especially this year.

It's not enough to hope that you'll be ready to answer the "big three" questions in the interview:

• Tell me about yourself...
  
• Why do you want to do investment banking?
• Why do you want to work for [insert name]?

If you're not ready by the time you call people for an informational interview, it's too late.

It's not enough to hope that you won't be asked to walk somebody through a DCF valuation. You have to know that sucker backwards and forwards, inside and out. You have to take the time to pick a random company and build a DCF yourself so you make sure that you know it.

It's not enough to hope that you'll get interviews on campus when the banks come (if they do). You need to be SURE that you'll get an interview by networking with bankers and having them confirm that they'll go to bat for you. You need to be visiting every bank getting interviews everywhere because you just don't know which banks will even be around by next summer. You need to know by January 15th that you'll have interviews at multiple places.

It's not enough to hope that you'll be able to explain in a real general sense what's going on in the economy. You need to be talking with people in the markets, reading blogs and news articles and the WSJ, and making sure that you can tell people why we got where we are and what we need to do about it.

You see, hope is great and it's actually a really healthy thing to be optimistic and hope for the best in these times. But these are days to take action. These are days to be proactive. To rely on your own hard work to really make things happen.

In the immortal words of William Henley's Invictus:

Out of the night that covers me,
Black as the pit from pole to pole,
I thank whatever gods may be
for my unconquerable soul.

In the fell clutch of circumstance,
I have not winced nor cried aloud.
Under the bludgeonings of chance,
My head is bloodied, but unbowed.

Beyond this place of wrath and tears
Looms but horror of the shade,
And yet the menace of the years
finds and shall find me unafraid.

It matters not how strait the gate,
How charged with punishment the scroll.
I am the master of my fate;
I am the captain of my soul.

One of the things that I did over the summer was to put up inspirational quotes around my desk that motivated me to work hard, continue learning, and do the best I could. I'll post in the next day or two some of those quotes that you all can read and get fired up and ready to get those internships and jobs.

Blog freaking out?

Is anyone else seeing that all of my posts are suddenly double-posted? Please comment...

Professional Modeling

Some thoughts on learning to build models. Keep in mind that I still have a ton to learn on my own, but these are some ideas that have helped me to get where I am today.

I. Financial Knowledge

If you are going to build a financial model, it just makes sense that you need to have some basic knowledge of finance in order for it to be a functioning model. The goal of a good model is to be fully integrated and dynamic, meaning that changes flow through the entire model and everything still balances. Models also need to be flexible enough to test different scenarios and to make changes according to management projections and the projections of your associates who sometimes like to "massage" the numbers.

If you just want to build a basic DCF model, then read the Vault Guide and you will be ready to go. If you're going to be interviewing, you should be able to "walk somebody through a DCF" anyway, since you WILL get this question in most interviews you will have.

For more complex models, you might need to study up on accretion/dilution, purchase accounting, and other more in-depth accounting and finance issues in order to conceptually understand what is going on in your model. There are a ton of good valuation books out there, so grab one and learn something!

II. Start with somebody else's model

Before you just start from a blank screen, get a hold of another model (preferably a simple model so it's easier to follow) and begin by working your way through. Go line-by-line and make sure you understand not only how the model works, but why the functions are set up the way they are, and what happens when you change inputs.

You need to understand the "flow" of a model before you can build one. As you go through a model, try to see how the different financial statements link and fit together. Notice how changes on one statement flow through the model and affect your outputs.

Once you've gone through the entire model and feel like you understand what is going on, it's time for the hard(er) work to begin.

III. Re-build the model

At this point it's good to either pull the 10-K and 10-Qs from the company of the model you've already worked through, or you can just copy the numbers out of the original model. I think it's better to pull the SEC docs because that's how it is when you make your own model.

Work through building a model that's just like the one you already looked at. You are basically just rebuilding the exact model that you are familiar with so that you can say you've done it yourself. Hopefully as you go through this you will start to learn better how to use Excel and how to save time using shortcuts.

As a side note, most firms have some kind of coloring system in their models. I like to make inputs (numbers that I get from 10-Ks and -Qs) blue and calculated numbers black. I've also seen people putting numbers pulled from other tabs/sheets in green and negative numbers in red, but whatever is easiest for you.

Once you've completed the model, making sure that everything works just as well as the original, then do it a few more times! Each time try to rely less and less on the original and more and more on your own intuition and understanding.

IV. Build your own model

Now that you feel comfortable re-building a model, pick a company that you would like to model out. Go to http://www.sec.gov/ and find their 10-K and most recent 10-Q. Build a model with their numbers, reflecting all of the nuances of a different company. You can still refer to the original model if you get stuck, but hopefully by now you are figuring out how to build a basic operational model with all three statements (and a debt schedule and depreciation schedule if you're getting a lot better).

Building models for various companies is good practice and really causes you to learn the more nuanced parts of a model.

The final test will be to see if you can open Excel, pull some SEC docs, and build a dynamic operational model. Once you have mastered the operational model, you can move on to more complex models like LBO models or merger models. They all require the basic understanding of how financial statements fit together and how changes in one place flow through the rest of the model.

There are lots of training programs out there that can teach you modeling skills. I personally think the best learning comes when you just figure things out on your own, especially since you will get formal training when you start at a bank. But I can also see great benefits in learning things the correct way the first time, instead of teaching yourself incorrectly.

Like I said at the beginning, this is just a BASIC overview of a process, and there are a lot more things I could have mentioned about modeling. I'll probably continue to post about modeling as I get farther along in the model I'm building, just because that's what's on my mind these days.

As a personal goal, I want to be able to build solid LBO and merger models before I start. I figure that if I build a model a week, I'll get there by next summer. Who wouldn't want an analyst to come in already feeling comfortable building models. From the various types of models I saw over the summer, it's obvious that no matter what preparation I do there will still be tons to learn, but I figure the more I can come up the learning curve on my own, the faster I'll be able to take in the more advanced stuff on a real deal.

Good luck, and good modeling!

And congrats to President Obama.

Learning to build models

Hey all,

I'm working on a post about modeling, and wanted to share some thoughts about learning how to build a model. I'm building one right now based on another model, as you can see below. Stay tuned for some info on learning how to build models and learn excel.

Vote!

Hey all -

Don't forget to vote today! I woke up early and stood in line for two hours, but still voted and made it to work on time. My personal thoughts on who to vote for are largely based on the economy and a desire to be able to be the one to decide where my money goes instead of letting the government do it for me. But however you decide to vote, just get out and do it!

Good luck -

The Analyst

Short-lived idea

So the ring-management tool already exists. But not yet on my blackberry, and apparently not on the phone of that CEO...