Reader Q&A: Financial Modeling, Breaking In No Matter What, Venture Capital and Crazy People (No Relation)
This week, we cover financial modeling, what to do if you’re still looking for internships or jobs at this late stage, how to decide on offers if you actually have them, a bunch of questions on venture capital (and private equity), and then the usual roundup of nonsensical questions (always my favorite part).
1. Do you have an opinion on which financial modeling product is best?
Yeah, I don’t like any of them. In the past I used to give a vague answer here, but now I’ve looked at them in detail and talked to customers who have used them, and I’ve come to the conclusion that nothing out there is that great.
Learning from text and diagrams (existing products) is not effective, but in-person training is prohibitively expensive for most people.
But there are alternatives, which I’ll be writing about soon.
2. Should I spend $5,000 on advanced training?
Um, no. Unless you’re already a multi-millionaire, which brings up the question of why you’d ever want to work in finance in the first place.
3. How can I learn Excel?
By using Excel. You “learn” Excel when your MD asks you for something and you only have 30 minutes to finish it. Nothing happens without a deadline.
One quick tip: beyond the basic 10-20 shortcuts there’s not much point to learning all the advanced/obscure stuff because you rarely use it in banking/PE.
Help! I Need to Get In No Matter What!
So what do you do if you don’t have something lined up for the summer? Apply for everything under the sun and continue networking like mad… but don’t ask to be a banker’s “assistant.”
4. I have some PE and banking internships, but I could not get any offers this summer. Now I’m applying to accounting firms but they’re also turning me down – am I “over-qualified”?
Yes, most likely. I would probably tone down the finance experience on your resume and speak with the accounting firms first or at least get someone on the inside to push for you before you apply. Networking is especially important if you’re “under-qualified” or “over-qualified.”
5. I’ve been speaking with alumni to ask about other opportunities since I couldn’t get anything at a bank for the summer – how can I get them to submit my resume?
There’s no magical trick. It’s just like any other relationship – you don’t meet someone for the first time, speak for 5 minutes, and then propose on the spot (ok I guess some people do that).
You find reasons to contact the alum, continue your conversations, and see what develops from there. Two quick tips:
- I would not ask directly for a job unless you know him/her really well.
- Always get him/her on the phone. Psychologically they are more inclined to help you if you’ve met in-person or at least spoken on the phone before.
They know why you are contacting them, so if you continue talking and they like you, they’ll offer to help if they can.
6. I just finished a military tour and am back in the country looking for work. Do you think I could shadow bankers and use that to eventually get in?
This would work better if you were younger, as in university student-age. If you’re already in business school or have substantial experience, asking to shadow someone sounds… kind of weird.
Your 2 best options are networking or an MBA: using both together will also give better results.
7. I want to get some exposure to finance, but I don’t want to be a nuisance to bankers. Is there any way I could come in at a position lower than Analyst?
Well, banks technically have Assistants and other administrative positions but I don’t know how you’d actually apply for those at your level.
In bull markets Assistants have climbed the ranks to become Analysts, but I wouldn’t hold your breath these days. It will also look a little desperate if you ask about becoming a banker’s Assistant…
Aim for smaller firms rather than “smaller” positions.
Decisions, Decisions…
Despite rumors to the contrary, some people actually got offers this year. In fact, some of them have multiple options and are trying to decide which is best…
8. I got a summer offer at a bank that has acquired significant assets of another bank in the past year – any idea which group is best?
Your guess is as good as mine – it’s too hard to predict in the midst of acquisitions or restructurings. You probably want to stay away from anything involving debt / financial sponsors but other than that I would just pick what interests you.
9. I am working at a regional boutique bank right now, but my MD recently cut my pay substantially and I can no longer support myself on this salary. I do have an offer from a “less prestigious” regional boutique that would offer higher pay – but I’m concerned that I’ll never be able to move to a larger bank if I go there. What do I do?
I’d say being able to eat and clothe yourself are higher on the priority list than prestige. Also, I don’t think one regional boutique vs. another makes a huge difference in terms of “prestige” – if we were talking Lazard vs. random unknown boutique, then it might be worthwhile to stay at the better-known firm… but in your situation it doesn’t make much of a difference.
Keep in mind that the market determines where you can move to next – when and if the economy picks up, bulge brackets will start looking for lateral hires again.
10. Should I take a middle-office summer internship at a bulge bracket, or a front-office internship at a boutique? I think the middle-office one might be more stable.
Haven’t we covered this one before? Front office always beats back/middle-office, unless you’re interested in doing sales & trading and can leverage the experience more easily into a front-office role.
Theoretically a non-client-facing role might be “more stable,” but that is a poor reason for doing it if you have no real interest.
VC, VC, VC… and PE
Despite financial apocalypse and general doom-and-gloom, there continues to be interest in venture capital and private equity. We’re also planning some upcoming interviews that will address many of these questions.
11. You wrote about private equity recruiting – how is venture capital recruiting different? How do I get in from a banking background?
VC recruiting is less dependent on headhunters, so you have to do a lot more networking. Some of the larger firms still use recruiters, but a lot of the smaller ones have very informal processes.
Union Square Ventures in New York, for example, recruits Analysts based on their blogs. Hmm, maybe I should apply there…
You’ll have to make yourself known within the VC community, go to events, and get to know startups and investors to have a good shot at VC recruiting.
As you might expect, that is difficult if you’re working banking hours.
12. How does VC lifestyle and pay compare to PE?
Hours and pay are both lower. You’ll still probably be in the six-figure income range but it will be at the lower end of the scale, at least if you’re coming in as an Associate.
The upside is that it’s less intense than hedge funds / private equity and hours are closer to “normal.”
13. What’s the best path to get into VC? Should I join a startup?
Keep in mind that VC attracts people from more diverse backgrounds compared to banking/PE. In the “old days” when the industry first started, mostly guys with operational backgrounds (founders of successful companies) jumped into the field.
Back in the late 90’s, more and more pure-finance guys joined because of the (perceived) potential for high payouts.
These days it’s a mix of former bankers, consultants, entrepreneurs, and everything in between. So there’s no best “path” to break in – but if you’ve already had some finance experience, getting operational experience would be helpful and vice versa.
14. Since fewer people are interested in finance now, do you think private equity recruiting will become any less competitive?
If anything, it’s even more competitive these days because so many people are looking for work – and the ones who are remaining are very well-qualified and determined.
Numerically, there may be less competition but the quality of that competition has risen.
Random Asides
Now we get to my favorite section: miscellaneous questions that don’t fit in elsewhere, along with a daily dose of crazy-person email.
15. How did you find a former female investment banker so knowledgeable about fashion?
She came to me, and I thought an article on women’s fashion would be good.
Side Note: Anyone else out there with a blog/other site with something to say, we accept and like guest posts – as long as they’re good.
16. Why did you disable comments?
Because I was spending an inordinate amount of time moderating and removing inappropriate ones. Once you’re online for awhile, you start getting all sorts of crazy / fanatical people coming after you with different threats and insane comments (see below). Just look at what happened to Michael Arrington.
I’ll selectively enable them from now on.
17. How do I know if your site is a scam or not? I don’t believe someone would ever want to help me get a job! YOU ARE ASKING ME TO SPEND MONEY BUT HOW DO I KNOW I CAN TRUST YOU!!!! YOUR SITE SHOULD BE SHUT DOWN! [This rant continued on for several pages]
To quote Jack Bauer: “With all due respect… ask around.”
18. I mentioned Mergers & Inquisitions in an interview when they asked how I learned about investment banking – was that an ok answer?
Wow, really? What? Yeah I guess it’s ok, but it’s probably better if you can point to some kind of personal experience that drew you in… you get points for flattery, though.
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Tags: crazy people, financial modeling, investment banking, lateral hires, military, Networking, picking offers, private equity recruiting, understanding investment banking, Venture Capital, venture capital recruiting
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(The Q&A is probably a more appropriate post for my question so i put it here too)
Hi,
I am going to attend the spring week of GS in London in a couple of weeks. This is the info I have about what will happen during the week.
“Overview presentations on Banking, a tour, networking session, a mixture of technical and soft skills workshops, culminate in a group exercise.”
What kind of workshops is it? And what can the group exercise be in particular? How and how much should I prepare?
Do you have any other general tips about spring weeks? How do I benefit from the week the most? Do I get better odds on the summer internships of 2010?
I would be really grateful for an answer!
Best Regards
I would simply try to get to know as many people as possible and come across as personable. I’m not sure what the workshops will be specifically, but I would focus less on trying to memorize finance concepts and more on how to best present yourself to others. usually the group exercises involve some type of case study… keep it simple.
It will definitely give you better chances at an internship if you impress the right people.
I love your answer to Number 17!
Awesome!
Jack Bauer provides my answers to everything in life…
It’s funny how you mentioned M&I in your interview. I happened to mention Wallstreetoasis.com
Studies show that mentioning M&I yields better results.
I have a summer internship lined up for this summer at a BB ST. I know everyone says dont stress just have fun blahblah… but really I want some prepartion before I start training so I do not come of as stupid.
I am a non finance major (think social science) what should i be doing??
Maybe try some trading/investing on your own and read up more about the markets? For S&T I think there’s less formal prep you can do.
Just how ubiquitous is the blackberry? I think giving up my iPhone would be a deal-breaker.
uh you can still keep the iphone if you want, but you will definitely get a blackberry as well… not everyone uses it for voice.