How to Apply the 80/20 Rule to Your Recruiting Efforts and Get Into Investment Banking with 1/10 the Effort
“Pls add periods to all sentences. Pls change spacing to single-spacing everywhere. Change all heading fonts to size 16 everywhere. Have on my desk by morning. Thx.”
You spend a lot of time on useless tasks in investment banking.
I get questions on how you can be more “efficient” – but it’s almost impossible, because you have to do whatever your superiors demand.
But it is possible to make your recruiting efforts more efficient – by applying the 80/20 rule.
This applies to anything from business to personal matters:
- 80% of your profits come from 20% of your customers.
- 80% of your time is spent with 20% of your friends.
- 80% of your recruiting results come from 20% of your time and effort spent on recruiting.
And it applies in the negative as well:
- 80% of your frustrations are caused by 20% of your customers.
- 80% of your stress is caused by 20% of your “friends.”
- 80% of your time spent on recruiting helps you achieve only 20% of your results.
In some cases, it’s even more skewed: the ratio might be 90/10 or even 99/1.
We’re going to use the 80/20 Rule to make your recruiting efforts more efficient in 2 ways:
- What is the 80% that contributes almost nothing? Cut this.
- What is the 20% that helps you? Focus on this.
- Often the tasks that require the most time or money are the least important.
- The amount that you worry about something is inversely proportional to how important it is. You should be more worried about what you’re NOT worried about.
- If something is not immediately actionable, ignore it.
- Focus on output rather than input. Most “news” and information online is useless and a waste of time to consume.
- “Batch” your tasks as much as possible so that you spend 1-2 focused hours on recruiting each day rather than being in “The Grey Zone” constantly where you’re multi-tasking and getting nothing done.
- No matter what you do, it still takes time and effort to break into finance. You can’t go from unknown school and no work experience to Goldman Sachs investment banking in 30 minutes.
The 80% That Doesn’t Matter
Warning: if you were “offended” when I said the CFA was not a good use of time when breaking into investment banking, stop reading right here. You’re about to get a lot more “offended.”
Revising Your Resume 533 Times
This is one of the reasons I stopped doing personal resume edits: people were spending too much time on irrelevant details.
Should you end your sentences with periods?
What about the proper font and font size?
What about minor tweaks to the last 3 words of bullet #7 in that work experience entry?
It doesn’t really matter.
If you really want to improve your chances, network with someone at the bank before he/she sees your resume.
Then the person might actually recognize you as more than “mid-tier private school, 3.6 GPA, private banking internship.”
If you have a top school on your resume, an internship at a bulge bracket bank, and a good GPA you will get interviews even if your resume sucks.
If you don’t have that background you need to put in a bit more work, but 1-2 revisions at MOST are all that’s necessary.
Solution: Write an initial version of your resume using the university student investment banking resume template or investment banker resume template on this site, modifying them where necessary. Then, have a friend help with 1-2 revisions and leave it at that.
99% of the benefits come from 1) Using the right template to begin with, and then from 2) The first 1-2 revisions.
If you’re debating word choices and whether you should use a semi-colon or a comma, STOP!
Obsessing Over Technical Interview Questions
It’s “easy” to practice technical interview questions: just get a friend in banking to quiz you on every single technical topic, ranging from the obscure to the truly obscure.
But it doesn’t matter past a certain point. No matter how much you study, you’re never going to master every single possible technical question, because interviewers can always create new ones.
Do you understand the concepts? Do you know intuitively how to value a company, and how accounting works?
Focus on the concepts rather than memorizing thousands of questions – you need to think on your feet in interviews and reason your way into answers even when you’ve never heard the question before.
Solution: Spend some time learning these concepts and practicing the essential questions, but don’t waste days surfing the Internet trying to find every single “advanced” question – or begging your friends in banking to help you all the time.
Going Through 25 Practice Interviews and Scripting Out Your Answers
Why not just script out every single answer and memorize them word-for-word?
Because you sound unnatural and interviewers pick up on it instantly. I can tell within 5 seconds if someone has “rehearsed” their answer to a question and memorized what to say.
Have a few “stories” in mind that you can use in multiple questions and have a solid idea of what you’re going to say for your “tell me about yourself” and “why investment banking” questions – but never memorize exact answers. Over-preparation is a bigger mistake than under-preparation.
Solution: It’s worthwhile to do 1 or 2 practice interviews, but the best “practice” is the real thing: schedule interviews with places you don’t care about first so you can practice for the ones that matter later on.
Getting Certifications Just to Get the Certifications
Most of the negative commentors on the article about why the CFA is a poor idea missed the point entirely.
It’s not that the CFA – or other certifications – don’t help you at all. And it’s not that they teach you nothing.
It’s that the time required would be much better spent elsewhere.
Hedge fund managers may “like” to see the CFA on your resume. But what helps more with getting into a hedge fund – experience at Goldman Sachs and Harvard Business School, or an exam?
Or even better yet, talking to people in the industry and building your network?
If you’ve already taken some of these exams, you can keep them on your resume. And if work or school requires you to take them, go ahead.
But having conversations with even 10 bankers is a better use of time than spending 10 hours on certifications.
Solution: If your goal is to get into investment banking / front-office finance positions, spend your time elsewhere – unless you’ve already networked with hundreds of people and have absolutely nothing else to do.
Arguing on Message Boards
What better way to take out your frustrations than by arguing online with anonymous people?
Does the San Francisco office ask interview questions similar to other offices, or is it completely different? Just how many people got offers as interns this year? What’s the MOST prestigious office ever?
None of it is actionable, and most of it is hearsay. Browsing these sites looking for that one magic bullet that’s going to get you into finance is also a waste of time.
Solution: Check your favorite sites and message boards once a week to see if anything interesting or relevant came up. But don’t spend your free time consuming non-actionable information.
Worrying About How to Round Your GPA
I had a question once about rounding your GPA from a 3.44 to a 3.5 and whether or not the person would get their offer rescinded for doing this, and I almost started laughing.
Is this what people at Ivy League schools do these days? Worry about decimal points?
Just make a decision and go with it. Unless you’re completely lying and saying you have a 4.0 when you’ve been doing cocaine and skipping all your classes to get a 2.0 GPA, you’ll be fine.
Solution: See the guidelines here and remember that this doesn’t matter assuming you have an inkling of common sense.
Reading News Sites and Checking Facebook/Twitter/Email Constantly
Sometimes people are surprised when I tell them I never read the news.
(They get even more perplexed when I try to answer that boring “What do you do?” question.)
If you’re going through interviews you need to have an idea of what’s going on with economic news and recent deals – because you’ll be asked about it.
But don’t spend all day doing this. Otherwise you’ll be in a perpetual “Grey Zone” where you’re not really working, not really studying, and trying to multi-task while “preparing for interviews.”
Avoid the Grey Zone!
Solution: Limit your news consumption to once per day, preferably at the end of the day so you don’t get distracted when you first wake up.
Spend 20 minutes looking for items of interest. To prepare for deal discussions or “recent event” discussions in interviews, read 2-3 articles on the topic in the WSJ or FT and sketch a 3-4 point outline of what you’re going to say.
Doing Activities Just to Seem Impressive
Who do you think you’re fooling when you create that laundry list of activities? Does it mean anything to be Vice President of 12 student clubs?
No one cares about any of this – when a banker scans your resume, he looks at where you’ve worked and where you went to school.
Unless you’ve done something very impressive with an activity, joining these groups to pad your resume is a poor idea.
Solution: Focus on depth rather than breadth with activities. It’s more impressive to start 1 organization that makes a big impact than to join 20 just for the titles.
Networking with People Who Don’t Like You
As you’ve probably guessed, networking is part of the 20% that matters.
But “networking” in the generic is not useful. You need to focus on your highest-probability “leads” – those contacts most likely to help you.
If you’ve ever been to a speed dating event, you know that some people are just poor matches and always will be. But at least you can discern who’s hot and who’s not in 5 minutes and then move onto the next person.
With networking, though, you might make the mistake of continuing to follow-up with someone who doesn’t care about you.
Solution: Yes, reach out to as many people as you can – but focus your follow-up on those who are most receptive.
And “batch” your efforts so that you don’t spend 15 minutes calling someone, then an hour watching TV, then 5 minutes emailing someone, then 10 minutes stalking your ex on Facebook – allot 1-2 focused hours each day for networking.
The 20% That Matters
The list is shorter than you might expect, and that’s a good thing. Minimalism is an underrated virtue in a culture that values more, more, and even more even when it’s pointless.
Yes, you do need to spend some time preparing your resume and reviewing topics for interview questions.
But don’t go crazy with it.
Make an initial version using a solid template, do 1-2 revisions, and then go through a few practice interview sessions.
If you have no finance background, you may have to spend time learning the concepts.
That’s fine, but you need to do it efficiently – rather than reading books, either get a friend who knows his stuff to teach you, or go through a program specifically designed to be a finance/accounting crash-course.
Don’t script out or memorize your answers, and if you find yourself saving version 77 of your resume STOP RIGHT NOW.
This is one of the most neglected parts of the recruiting process. You can’t do anything concrete to prepare for it, and going through books, training, or getting certifications won’t help you with your story.
But it’s essential not only for interviews, but also for networking – you better have something credible to tell people when you call them and explain why you’re interested in finance.
You don’t need to spend days or weeks developing your story, but you do need to run it by friends in the industry to make sure it doesn’t put them to sleep or confuse them.
Just remember that having non-clichéd reasons for going into the field is far more important than date alignment on your resume.
The Right Kind of Networking
You can make a couple big mistakes that cost you time with networking:
- You might spend too much time trying to “develop relationships” with people who don’t like you or who can’t help you.
- You might try to follow-up based on some arbitrary timetable and attempt to contact everyone once a week, or once every 2 weeks… leading to a lot of pointless emails and 0-value communication.
Cast a wide net and reach out to a lot of contacts – but it’s almost impossible to “stay in touch” with hundreds of people. Focus on the ones who seemed most helpful.
And you shouldn’t feel pressured to follow-up every week, 2 weeks, 3 weeks, or any other schedule. Yes, try to keep the conversation going by asking questions at least once every few months, but it’s more important to have a good “reason why” when following up.
Solution: Reach out to a lot of people, but focus on the ones that will help you most. Move to in-person meetings and/or weekend trips rather than relying on the phone/email – meeting in-person is always better. Follow-up when you have something real to ask about, and if you want their help getting an interview, ASK FOR IT.
Anyone you contact knows you want a job so it’s silly to trade 500 email messages before getting to the point. Make a good first impression, follow-up once or twice, and when it gets to be recruiting season, ask how you can best position yourself for an interview.
Shouldn’t It Be Harder Than This?
If you want to make your life miserable you could do plenty of extra work.
Why not also take 10 classes to boost your GPA by 0.02 and go through 5 certifications and exams as well? That way you could sleep only 2 hours per night and boost your recruiting chances by 0.01%!
But you’re better served by spending 90% of your time networking and 10% on “preparation.” If you do this properly and actually stay focused, this might take 10-15 hours each week over a couple months.
You can go beyond this if you’re in a time crunch or haven’t networked at all yet, but it’s not always necessary.
So what do you do with the rest of your time?
For starters, slow down. Not every single minute of your day needs to be filled with information overload, work, or constant motion.
And if you don’t believe me, just take a trip to Buenos Aires… and take a siesta while you’re at it.
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