Reasons NOT To Do Investment Banking: Models And Bottles
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“I just purchased my third pair of Ferragamo loafers, and I think my wardrobe is nearly complete! Looking into my closet makes me harder than I get when I smell the deep, earthy ink aroma of a fresh WSJ.”
-My Wardrobe, Leveraged Sellout (11/12/2004)
I get a lot of questions on good reasons to say you want to be an investment banker. The good news for everyone out there is that the list of reasons to do investment banking is fairly standardized. There’s not a whole lot you can say that I haven’t already heard before, and to be honest, standard answers like “I want to learn a lot” are still good ones.
But as an investment banking analyst, there is typically more downside than upside in most of what you do.
The same goes for interviewing and especially superday interviews. It’s easier to give a bad answer than to surprise someone with a brilliant answer, because there are no brilliant answers: just good answers, mediocre answers and terrible answers. Today I’m going to focus on the downside: mediocre and terrible answers. Reasons NOT to do investment banking.
Models And Bottles
This is one of the funniest videos I’ve ever seen on “banking lifestyle” (ok, I guess there haven’t been all that many videos on this topic), but it doesn’t mean you should say “models and bottles” when asked why you want to do banking. I don’t think anyone’s actually foolish enough to answer with this exactly, but any variant of making money/living the high life/getting beautiful women is a bad answer.
A lot of (most?) bankers are actually in the job for this very reason, but it’s not acceptable to admit it or suggest that’s why you’re interested in the field. Yes, investment banking salaries are legendary, but it’s taboo to discuss that.
Sometimes they try to put you on the spot in stress test superday interviews and get you to admit this under duress. In one interview they asked me, “Are you motivated by money?”
How do you answer such a question without admitting that you are motivated by money but also letting them you know you are in fact motivated by money?
“I’m not motivated if you just hand me a pile of money. I am motivated to work hard and earn money through my efforts.”
Plus, if you actually admit to doing it for the models and bottles, you’ll probably be fired (like A.J. here in the video once HR found out).
You Want An Entrepreneurial Work Environment
This one is a bit more controversial. I’ve heard interviewees say their long-term goals are to start their own companies or do something independent, and they’re just using banking as a stepping stone. Even if this is your actual goal, I would strongly recommend against saying so in an interview.
Working at a bank, especially as an investment banking analyst, and doing something entrepreneurial are completely different. As Samuel L. Jackson might say, “ain’t the same ballpark, it ain’t the same league, it ain’t even the same sport.” At the very top levels of banking, what the Managing Directors do is somewhat entrepreneurial because they have to build the business and bring in new clients. It’s not the same as building a business from nothing, but it’s closer than an Analyst will ever be.
The other issue here is that investment banks want to see that you are committed to the job for at least 2-3 years. Even if you don’t want to stay in banking, they would be much more comfortable knowing you want to go to private equity or join a hedge fund, because at least those are still in the realm of finance.
To Say You Could Hack It
This one, again, falls under the realm of something you wouldn’t say, but might have in the back of your mind if you want to do something completely different eventually, such as public service.
Although you can learn a lot in 2 years of banking, it is not worth the pain and suffering you go through if you just want to show people “you could hack it.” If you really do want to do it and then go off and do something unrelated, it would be most rational to be an Analyst for 1 year and then leave for other pursuits. I know of several people who have done something similar. While it’s still painful, 1 year is better than 2 (as long as you’re not at UBS LA). And you still get to take advantage of those investment banking bonuses.
Most of your learning occurs in the first 6 months – 1 year period, so you won’t be missing out on much if you leave after that; the main drawback will be fewer closed deals to discuss.
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Tags: Hedge Funds, investment banker, investment banker lifestyle, investment banker salaries, investment banking analyst, investment banking interviews, models and bottles, Private Equity
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This is a question every prospect is bound to get. I always hated the idea that my “why do I want to do banking” answer would be the same as a lot of others (in a general sense), but I suppose there are other areas that I can shine in (talking about my resume, experiences, etc.).
Once again, great article. Keep up the good work.
Joe, thanks – glad you enjoyed the article. Yeah I personally hate the “why i-banking” question and avoid asking it when interviewing people, but you’d be surprised just how many candidates have poor responses. Standard answers with your own personal touch tend to work best.
Once I land an investment banking job I will _always_ show up at the club with the appropriate arm candy. Models and bottles eh? I now have something to look forward to.
Oh, make sure you show up with the appropriate arm candy. Otherwise you can never get into Cain.
I got away with talking about how I wanted to build a company in the future and create value. Really got into the nitty gritty of how I thought the team I would launch with would be more important than the idea. Talked about using banking as a stepping stone to either VC or smaller PE shop to get connected. After getting connected building a team of 4 to 5 people then raising the capital we would need for a venture.
Most interviewers want you to be honest about what your aspirations are. They don’t want you to say “yeah, yeah, yeah investment banking”. They know that no one interviewing in front of them right out of college really wants to be or knows that they are going to be a BFL (banker for life). In the end interviewers are just trying to see if you get it and your view of what banking is about is realistic.
As far as Cain, Joshua Tree, Marquee, etc. They are fun for awhile but after 2 red-eye flights and a 135 hour work week the only thing you want to do outside of the office is sleep.
-The Prince
http://www.princeofwallstreet.com
Prince: I actually used similar tactics and it worked fine. Still, when interviewing candidates I am definitely more comfortable hearing someone wants to do “business” or “finance” or is really interested in the markets vs. wanting to be the next Mark Zuckerberg, because he/she could just leave at any point and do that.
Honesty is important, but so is telling them a unique version of what they want to hear.
And yes, NYC “banker” clubs generally get old very quickly.
I’m a second year analyst at a bulge bracket firm and am going to a top 5 PE firm in August. Still find hard to get sufficient arm candy to come with us to cain, usually end up just buying bottles and meeting the candy there..sigh.. oh well
mlbanker: just wait til you make as much as Steve Schwarzman and you’ll be flooded with models and bottles.
So where are the models? I see subpar girls……….
Real models hang with the big boys like Donald Trump, the type of guy that can fly a bunch of women around in his private helicopter touring buildings he owns in Manhattan. And even Trump is poor amongst the wealthy, just check out Forbes most wealthy list and Trump doesn’t even make the cut.
As a first year Analyst, you need to learn something about humility. Even in a hot economy, a first year Analyst can’t afford much after tax and Manhattan rent. You don’t see hedge fund guys in Fairfield County, CT making silly videos like these. Because real wealthy people don’t want to bother with this non-sense. They would rather spend their time enjoying life rather than showing off.
Not trying to hate as the kid probably have potential, but it’s worth pointing out that the kid is being an immature jack-ass. I wonder what his banker friends were thinking when they saw this rookie first year Analyst out with his Sony camcorder trying to look cool….
I-Banking exposes you to an unreal environment; where your only real sustenance is cocaine, caffeine or some comparable amphetamine. Money is great, but does not neccessarily motivate everyone. This aspect seems to be over-emphasized in just about every MBA program (at least the one I attended). An MBA is the most senseless master’s degree the education system offers. Give me a break. Porter’s 5 forces is speculative bullshit, as well as every other “theory” in Organizational Behavior, Marketing and Organizational Decision Making and Design. In those studies, their samples are not representative and skew the results; even though the solution falls in the 5% confidence interval, and appears to be statistically significant (I’m sure those researchers fail to acknowledge Type I or Type II errors).
The point is that money is not a universal incentive. The United States is a superficial society. Has anyone ever read “Theory of the Leisure Class” by Thorstein Veblen? A great majority of people suffer from relative depravation and compensate their insecurities through conspicuous consumption (i.e. Ferrari’s, Rolex’s, houses that they can never fully occupy even at their best party, etc.). M&A’s, hostile buyouts, liquidations and spin-off’s are all Shumpeterian economics. A Capitalistic economy is supposed to be self-corrective (in which Creative Destruction exists), but a proffession is not to be exploited from this principle.
“The family which takes its mauve and cerise, air-conditioned, power-steered and power-breaked automobile out for a tour passes through cities that are badly paved, made hiddeous by litter, blighted buildings, billboards and posts for wires that should long since have been put underground. They pass into a country side that has been rendered largely invissible by commercial art. They picnic on exquisitely packaged food from a portable icebox by a poluted stream and go on to spend the night at a park which is a mennace to public health and morals. Just before dozzing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may relfect vaguely on the curious uneveness of their belssings. Is this, indeed, the American genius?
-Friedrich August von Hayek: “The Road to Serfdom” (Prologue)
Does a bigger yacht or another car really improve the quality of life?
That’s from Galbraith’s ‘The Affluent Society’ not Hayek
So what are some standard answers that are good? I hope to be interviewing in a few weeks and my answer was gonna be something along the lines of: “I’m really interested in investment banking because doing large deals that drive the markets seems very exciting. I’ve always had an interest in business, as I started my own business in high school… and I have an appetite for challenging and rewarding work.”
Is that a pretty good answer? What other standard reasons do interviewers like to hear? Thanks.
There are no “standard answers that are good” because everyone is different… the key is to make your answer personal with an anecdote about yourself or your background, and use that to explain your interest. The own business angle that you have could be good to use.
If they ask why I-banking, what if you say it’s because you want to rule the world and that it’d be a good place to start?
Feel free to try it – let me know how it goes.
(Don’t say I didn’t warn you)
Rule the world. Ha ha ha ha.
we can always dream…
What if I don’t care about “models and bottles”?
I badly want to break into IB. I don’t care about the hours, or any of the other ‘bad’ stuff involved, but I also don’t care about the “models and bottles”.
Don’t get me wrong – I want to make a lot of money, and a Ferrari wouldn’t hurt either… but the models and bottles thing – not really me.
Does this mean I won’t be suited to the job?
No, it just means that you may not get along with everyone else. You can still do it, but a lot of people will be very focused on wasting money on bottles and girls.
So I have a dilemma- I’m a Senior EE major Finance(minor) at Berkeley and these are the reasons I want to do IB: 1) I want to do product/biz dev for a growth tech companies, and a lot of the positions I want require an engineering degree & either 2-5 yrs of IB or StratConsult, & strat is for losers (jk, but seriously). 2) I MIGHT be beneficial/look good in becoming a GP (no interest in being jr guy (aka cold calling monkey, I want to run the show, hop around to board meetings, and blog my ass off haha)) at a VC firm 10-15 some odd years from now. 3) I’ve been obsessing over it for the last 2.5 years. 4) Wrk and hrs don’t bother me, getting to tell people that I work for BB easily makes up for it. 5) Not going to lie I want the prestige, and some models and bottles would be nice for a while
.
I have a exploding offer at a BB IB for next summer, which if I don’t take, it would make it tough to try again next fall. I’m interning at a small VC firm right now, but its exactly where I want to end up/spend the rest of my life. Its just four founders & they really are passionate about being part of the tech community and not just trying to pump money into it. They think my time would be much better spent operationally as a engineer. I wouldn’t have problem at all with that: the upshot is 1) Actually getting to create value, be creative, entrepreneurial 2) Where my sneakers everyday 3) Enjoy my friends and family|Downside 1)A little sketchy stability wise 2) Much less money 3) Much more Chocos & much less models and bottles 4) I don’t get to wear sweet suits everyday.
Practically, I should just start working at a start up here: I’m plugged into the community, get to use the degree I worked my ass off for, get to actually make something, I’ve already made tons of great hookups in the tech world. But I just cant let go of the golden streets of WS, especially with my offer, I feel like f*&#ing Gollum from LOTR ha. Do I need to just snap out of it & realize you can still be important in life without being an IB analyst?
Sorry for the book. You have substantial experience in both worlds so I’d love to hear your thoughts. Thanks!
Honestly if your ultimate goal is to be a Partner at a VC firm, your best bet is to work at / found a successful startup because operational experience is way more important than finance.
Your current VC firm sounds ok, but I would actually recommend moving to a startup instead if you really want to be a Partner one day.
Why doesn’t the models and bottles video work anymore? Can you post a new link?
Looks like it has been taken down everywhere, this article was written a long time ago (late 2007)
You can find it on youtube
I get that models and bottles might be the motivation for lots of guys- but lets talk ladies here. What about women in investment banking?? Are we automatically taboo given that we’ll probably turn into mothers (way) down the line? Seriously. Or does the fact that we ARENT interested in ‘models’ mean we’re out of the club?
You can go drinking with everyone else if you want, just be aware that you will probably become more tom boy-ish in the process because it is a male-dominated field.
Lots of female bankers I knew were very aggressive or became that way after starting.
how aggressive?
You say “Lots of”, then does it mean that there is still some female bankers who behave “in normal ways”? How do they achieve that level?
It would be great help if you could write an artical about females in IB.
Thanks!!!!!
I stay away from this because people get offended very easily.
There are always normal people, but investment banking does tend to attract lunatics / serial killers or make people that way…
First time watching “models and bottles.” I hope this isn’t a realistic illustration of a young i-banker. Without money, that kid would still be a virgin… probably because he’s never been invited to a real party.
Are all young i-bankers socially awkward out of the office, especially around girls?
As an analyst, does anyone skip the clubs to go drink and socialize at a bar with normal non-fakelosercokehead adults?
Maybe it’s my four years at a southern university, but I wouldn’t be caught dead at a club with my co-workers, partying with call-girls who are grinding on me just to get enough cash to buy one more 8ball.
Most people are ok, but there are definitely some awkward ones.
I rarely went to clubs (and still rarely go) because I don’t find them fun + the music is usually bad. People are always up for going out to eat / drink though.