Cost of Capital, Episodes 1 and 2

71 Comments | Cost of Capital

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Let’s get straight to the point here:

Cost of Capital – Episode 1 – The Idea:

Watch on YouTube.

Cost of Capital – Episode 2 – The Fundraising:

Watch on YouTube

Overview & Executive Summary

Since all these episodes are videos, I’m going to give you the “Creator’s Commentary Track” in text here – we may also go back and do the same on each video itself.

Episodes 1 and 2 kick off the series and bring up the issue that pretty much any Associate in private equity will be faced with: how do you find good investments?

In real life, of course, the answer is rarely “from coked-out bankers at a club about to be rejected by models.” But investment ideas do often come from talking to others in the industry and hearing about what bankers are pitching.

And you also usually find at least a few companies that might be interested in doing a deal, as opposed to only one questionable one that may or may not want to sell.

But the issues that come up here do come up in real life as well, even if they’re dramatized here:

  1. Yes, there is a “David” at almost every firm. There’s almost a 100% guarantee that you’ll run into someone who enjoys being unreasonable for no reason other than to make himself look better.
  2. There is pressure on Associates to source investment ideas at many firms, especially anything outside the mega funds – and yes, some places do track how many companies you call.
  3. CEOs are often conflicted about whether to stay or move onto something new and potentially better. Maybe the timing doesn’t line up quite as well as it does here, but this business of getting “soft” job offers happens all the time.
  4. Yes, executives change their minds all the time about whether to sell the company or not, whether or not a deal will go through, etc. – this is why deals die, come back to life, die again, and so on.

The bankers depicted here are a little over-the-top, and that’s the intention: Todd and Leonard are sort of like C-3PO and R2-D2.

In real life, cocaine usage is not that common or as out in the open, though previous coverage might have suggested otherwise.

Would a private equity firm actually hire a new Associate  (Martin) who doesn’t know what the hell is going on?

Yes and no… you definitely see “mistake hires,” but they’re more common at large banks where the recruiting process speeds by and there isn’t enough time to do proper “due diligence.”

These hires are somewhat less common in PE because recruiting is very thorough and can last for months.

And why would a PE firm hire someone who’s seemingly incompetent? Good question… keep watching?

Behind the Scenes

There were several scenes here that were cut and/or modified for various reasons – in Episode 1:

  • Todd and Leonard at the Club – This was originally a longer scene where we got to see them go hit on the blonde girl, but we had to cut it due to technical issues – the footage just didn’t look that good and the scene itself didn’t turn out well on camera.
  • Jason Calling Companies Montage – I originally envisioned this part as more lighthearted and more like something out of Entourage, but it came out looking more serious. Part of what David did at the end of this scene was moved to the first scene between them instead.
  • David and Jason at the End – Originally this was supposed to take place in a parking lot and there was going to be a sign with “Up” in one direction and “Out” in the other direction. Yes, I am so clever – we had to change this around due to difficulties locking down the location.

In Episode 2:

  • Opening Scene – The actors ad-libbed some of this (yes, I’m looking at you, Todd, licking something off the seat…); originally part of this was going to take place in a moving car but it was too difficult to shoot with limited time.
  • Board Room Scene with Martin – Originally, we were going to have more interaction between him and the Partners and show how nice they were to him despite his incompetence – but it didn’t work well on screen so it was cut.
  • David and Robert in the Massage Parlour – The setting was changed multiple times here. At first we wanted to do this on a golf course, but the location and weather were problematic.

If you want to see how these scenes were going to play out originally, click here to go to the dedicated Cost of Capital page and sign up for the mailing list.

Later this week we’re going to send out the scripts for Episodes 1 and 2 – so you’ll get to read the “uncut” version and see how everything was going to play out originally.

References to Other Finance Books / Movies / TV Shows

There were several in these first two episodes. “Surprise me, astonish me,” Equities in Dallas, Californian Pension Funds… and maybe more?

You can go back through them and scour for these references.

They come up a lot, especially in later episodes.

Maybe we’ll even send you a free bottle if you catch the most references…

Subscribe to the Cost of Capital YouTube Channel right here to get free updates and the next episodes as soon as they’re released.

Cost of Capital – The Entire Series:

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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71 Comments to “Cost of Capital, Episodes 1 and 2”

Comments

  1. Fred says

    havent had the chance to watch these yet but i def. will soon. really excited to see them.

    but i have a quick question or two.

    my school is lucky enough to have a great online service where companies post internship and job openings. I was looking through finance and accounting internships and i noticed that there werent too many.

    1) when does recruiting season start for most firms? this early?

    2) I am only a sophomore and some internships are for sophomores but would i have much of a chance. I have a 3.6 GPA and i am involved in 3 clubs but no real leadership positions.

    3) if i do sign up for an interview, would they ask me accounting questions on actual accounting principles?

    If there is an article written about these kinds of things, please point me in the right direction to it. didnt have time to look at it.

    thanks!

    • says

      1) For full-time jobs, yes – most places started in August and finish by October or sometimes later in the fall. Internship recruiting is more in the winter.

      2) For some internships, yes, it depends on how hard you network and hustle for them.

      3) Yes, you will get accounting questions. Not on debits or credits but more on things like how various changes affect the 3 statements.

    • says

      You can either try to get reassigned or simply be more forceful than Jason is here – sometimes standing up firmly to someone like that works much better vs. passively sitting there and taking it.

  2. morange says

    “Being with a client is like being in a marriage. Sometimes you get into it for the wrong reasons and eventually they hit you in the face”

    have you worked my favorite line into the next episode?

    and, are you pursuing a career in screenwriting now brian?

    • says

      Hah, don’t think that one is in there but I’ll see if we can add it…

      This project is just an extension of M&I / BIWS so no, this is still what I do full-time. My writing projects are just a hobby.

  3. Ali says

    Wow! Cognrats – this is success for sure, very well shot!
    Just one complaint – why ep. are so short? you left me wanting more, guess that’s a good thing!

    • says

      Thanks! Episode length – since we created these for YouTube, we didn’t want to create 40-minute episodes since the attention span is somewhat shorter there. It was also an issue of timing and budget, i.e. producing 6 40-minute episodes would have taken longer to film than a movie and would have greatly increased the budget. So we wanted to start with shorter episodes for now and see where it goes.

  4. Anita says

    Absolutely loved it! As you have already mentioned, there is a David in every office :D Me and my colleagues had a great laugh this morning because David is an exact copy of a VP in our department… especially when he leans over the computer – priceless!!!

  5. Simon says

    You got me hooked! Good job!!
    PS: although it’s a male dominated industry, showing hot females here and there won’t hurt….

  6. Vag says

    Really good show! I loved the scene with the new shy/nerd associate,haha. I didn’t even know that there were such people in this industry.

  7. Trolololo says

    Great job. I hope you keep the plot and characters grounded in reality. Don’t “jump the shark” just to attract eyeballs. I don’t know how you are going to make money of this, though.

  8. Trolololo says

    Great job. I hope you keep the plot and characters grounded in reality. Don’t jump the shark just to attract eyeballs. I don’t know how you are going to make money of this, though.

  9. Othman says

    Brian, the first 2 episodes are great! I can’t wait to see the next ones. May I ask how you intend to make money out of the show (that’s a serious question)?

    Cheers

  10. Eve says

    First 2 episodes are really good, especially considering that it’s your first try on TV scripts. Congrats Brian!

    You’ve been marketing so much about coke and strippers that I was almost expecting a comedy lol…It turns out serious, but nicely done. Actor did a nice job too.

    I hope the script or a subtitled version would be available online….for your international audience you know:p

  11. Trololololo says

    Good job on the first 2 episodes. I hope you keep the plot and characters grounded in reality so the series is as instructive as it is entertaining. There’s no need to “jump the shark” just to attract eyeballs. I don’t know how you are going to make money off this but as long as someone is paying the cast & crew, keep up the good work. My sister is a high school teacher and she considered showing it to her business studies class but unfortunately the coke snorting scenes just wouldn’t be appropriate in a school.

  12. Trololololo says

    The soundtrack needs improvement. Try adding some songs from new artists with catchy tunes who need exposure. Like what Eagle Eye Cherry’s Save Tonight did for Dawson’s Creek. I still remember scenes from Dawson’s Creek because of that song.

    • says

      I agree that the sound could be better, but it is difficult, time-consuming and expensive to get those rights (a TV episode often costs $2-3 million+ to produce… and, um, we’re working with a lot less than that) And modern lyrical songs like that would not fit in at all.

  13. Shayan M says

    Congrats Brian. The two episodes are very impressive. Maybe you have a 2nd career as an A-list Hollywood director in your future :)

  14. Jared says

    Congrats. Entertaining videos. I notice the yacht scenes were filmed in San Diego. See the Harbor Club & Convention center in background. If you continue to use SD for filming,ping me. I’d be interested to chat more about the videos/finance etc. Did some film finance in a past life and currently work for a small group putting deals together. I think working on some film projects again would be fun.

  15. Rainmaker says

    To make money off this, try selling embedded product placements. For example, in Episode 2, the yacht brand could be prominently displayed if the manufacturer would pay a few grand. Same for the wine. Get the cast to smoke Cuban cigars and see if the the Cuban government will give you money. If you really have balls, ask a Mexican drug cartel to give you money to add a few more coke snorting scenes.

    • says

      Thanks for your feedback. At this point we’re not attempting to make money from this for a number of reasons. I like the Mexican drug cartel idea, though, maybe we could expand show crystal meth next year as well.

  16. Jason says

    Holy frick covered w/ frick fill with more frick on top! I just saw the first episode and that literally was my life during my first P.E. internship as an undergrad. That actually isn’t as dramatized as some people believe.

    I worked at a MM PE firm and 1 of my projects to contact execs. Unlike Jason (in the show), I was contacting about 70 – 100 execs a day. (Yes, they do tell you to f*ck of if you actually are lucky enough to get them). Hit rates are next to non-existent, ~10% and out of those 25 – 50% include management meet ups and you would be lucky if 10% of those end up being a deal.

    It’s more common at MM PE firms with small headcounts that do 10 – 100 mm in deals, from my experience.

    Good stuff Brian, I thought you ripped of my life for a second.

    • says

      Well, first you need the money to do it… then you need the talent (cast, crew, etc.), which I found via networking. And then you need scripts, logistics, etc. I would not recommend doing this unless you have the money to spend on it – TV shows, movies, and web series are not cheap.

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