10 Years of Running This Business: My Top 10 Red-Pill Truths
Ten years ago this week, I officially launched M&I.
If you do a quick survey of your friends, acquaintances, and co-workers, you probably can’t find anyone else who has held the same job for 10 years.
Which makes me lucky, insane, or a bit of both.
To put the time in perspective, I started out when Lehman Brothers and Bear Stearns still existed, and when Donald Trump was best known for The Apprentice.
The first iPhone had been released months ago, everyone was incredulous at Facebook’s $15 billion valuation (it’s now worth $500+ billion), and people were certain that Hillary Clinton would be the next President.
And I was young, naïve, and eager to quit my job and live the dream running an online business from a beach in Thailand.
Since then, I’ve taken the red pill.
I’ve launched products and services, hired and fired people, survived crazy relationships in both New York and Korea, and traveled and lived around the world.
And I’ve I learned some uncomfortable truths in the process.
I came up with dozens, but here are my top 10:
1) If You’re an International Student, Watch Out! Universities Are Exploiting You
There has been a massive increase in the number of international students at universities in the U.S., U.K., and other Western countries over the past decade.
Universities might claim they’re doing this to “embrace diversity” or “go global,” but don’t be fooled: It’s mostly about the money.
International students in the U.S. are not eligible for most government aid, so students must pay close to the list price – which means they either come from wealthy families or borrow hundreds of thousands of dollars.
Many universities, especially in the lower tiers, are in dire straits financially, so they need the money. It’s a match made in heaven.
Just one small problem: It is very difficult to get a work visa after graduation, especially if you majored in a non-STEM subject. And even if you do get a work visa, there’s no guarantee that you’ll get to stay in the country indefinitely.
So, you apply, accept admission, pay a small fortune… and then get sent back after graduation.
To get around this, you need to start early and major in a STEM subject, attend a Master’s program and do the same, or give up and return to your home country.
2) The Fundamentals of Recruiting Don’t Change, But the Details Do
The truth is, not that much about finance recruiting has changed, despite what random 18-year-olds say online.
I just glanced at my emails from 2007-2008, and there were a lot of questions about networking, winning interviews from an unknown state school, overcoming low grades, and moving into banking as a career changer.
And today… the questions and comments are virtually identical.
Even in the reader interviews I conduct, the accounts of networking and interviewing at banks have stayed consistent over the years.
The top three points that have changed are:
- Candidate Pool – Banks can no longer get “the best and the brightest” because finance jobs have become less appealing. Smart and accomplished people from top schools still go into the field, but the average quality is lower.
- Timing – Summer-internship recruiting and buy-side recruiting now start so early that it is almost comical; these early start dates partially explain why banks no longer get the best candidates. If this trend continues, banks will soon be recruiting summer interns from elementary school, 15 years in advance of internships.
- Required Technical Knowledge – You need to know significantly more about accounting, valuation, and financial modeling to win offers these days, particularly at the elite boutiques.
These points may seem significant, but think about how much has not changed:
- Your story is still critical, and you still tell it in a similar way.
- Technical questions still cover the same topics.
- You still use emails, LinkedIn, and informational interviews to network in the same way.
I have been revising and updating articles on this site, but that’s mostly because I didn’t capture everything correctly the first time around – not because there have been massive changes.
3) Your University Friends & Network Are Incredibly Valuable… But Only Up to a Certain Age
I’ve lived and worked around the world in the past decade: South Korea, Australia, Argentina, Finland (kind of), Spain, and more.
But I’ve made almost no long-term friends in these places.
Almost everyone in my current social circle is from university or is connected to it in some way (friend of a friend, referral, etc.).
In school, you don’t need a specific reason to become friends with someone, which makes it easier to develop friendships “just because.”
Once you graduate, friendships tend to become more situational and transient.
You might become friends with someone at your new job, but once the person leaves, that’s it.
But the network you develop in school tends to withstand work and geographical changes more readily.
On the other hand, it also gets weaker over time as people settle down, have families, and drift into new fields.
So, you need to replace lost connections and develop a non-university network as you get older.
I’ve done a poor job of this, so I’m not sure I have any specific tactical advice.
But I have observed that “work friends” tend to disappear more quickly than others, so a starting point might be to depend more on activities/hobbies and less on co-workers.
4) Don’t Build a $5,000 Product for a $500 Market
One of my biggest mistakes, detailed in Part 5 of my Life Story, was taking the financial modeling courses and guides I created in 2009-2011 and revamping them to make them 10x more detailed.
Each new case study was based on a real company or deal, and there were SEC filings, press releases, industry research, channel checks, and more.
There were 32-page stock pitches, 50-slide pitch books, Excel models with thousands of rows, and 100+ hours of video.
And… no one cared.
I made the mistake of listening to a vocal minority who wanted “more advanced material” rather than the vast majority who simply wanted efficient training.
Also, I ignored the ugly truth that most people who buy educational products – even expensive ones – do not use them.
We get customers who pay $1,000 or $2,000 and then don’t even open the files or submit their resume/CV for editing.
And if someone does use the product extensively, he/she still tends to value brevity more than 543,123 hours of training.
More comprehensive products don’t necessarily sell better; people are willing to pay a certain amount for certain products/services, and “quality” is tough to define and use as a selling point.
I’m now reversing this mistake by replacing the courses with shorter, simpler versions, but I should never have gone down this path in the first place.
5) Don’t Hire Friends, Family, or Acquaintances
Almost all my hiring mistakes have happened because I hired a friend, a friend-of-a-friend, or an acquaintance rather than a professional.
If you run a business, you may be tempted to hire someone you know because “He/she would be great, and you already know him/her!”
But as Admiral Ackbar might say, it’s a trap!
People you already know personally tend not to respect you as an authority figure, and they often drag personal issues into the job.
One time, I hired a friend to do some design work in the early days of M&I, and he was 6 months late finishing the project because he was busy with his new band.
Another time, a friend I had hired in a customer support role couldn’t answer questions because his roommate locked him out, and he had to use an ax to force open the door.
No joke – he sent me the photos of the broken door.
You get the idea.
You could make a case for co-founding a company with a friend, family member, or acquaintance, but stay away from hiring them as subordinates.
6) If Customer Service is Killing You, You’re Doing Something Wrong
You read a lot of stories about “customer-centric” companies like Zappos killing it because they are responsive and willing to chat with you on the phone 24/7 to resolve problems.
I followed a similar philosophy a long time ago.
I used to kill myself staying up until 3 AM fixing customers’ Excel files, answering every incoming pre-sales question, and even offering phone consultations.
If someone wasn’t happy with even one small part of the product, I went out of my way to please them with free bonuses, services, and my own time.
But eventually, I realized it was all pointless:
- 80%+ of Customers Don’t Even Ask Questions: There are about 34,000 active BIWS accounts and ~13,000 submitted questions right now. Even if you assume that each question is from one unique customer, 62% of our users have never even asked a question. And the real percentage is much higher – probably 80-85% – because the same 5-10 users tend to ask questions repeatedly.
- Fewer Than 5% Ask Questions Before Buying: Yes, even with products priced at $197, $497, $997, and $1,497, we get relatively few questions. Be skeptical of people who claim you “need” to do phone or in-person sales above a certain price point.
The problem with the “Zappos approach” is that someone with complex or demanding requests is unlikely to be satisfied by any response.
You can go out of your way and spend hours attending to the problem, and the person will still not be satisfied because he/she is inherently a difficult person.
So, why bother?
“Customer service” might be a differentiating factor in a commoditized business (online shoe sales), but if you’re selling highly specialized or luxury products/services, don’t kill yourself.
Get the offer, the pricing, and the marketing right, and provide competent-but-not-Zappos-like service afterward.
7) The Facts Don’t Matter – Only the Story Does
When I started this site, I had a serious problem: I knew the industry, and I was confident I could coach clients and teach the technical side, but I had zero credibility.
I was very young, and in real life, I didn’t come across like the stereotypical banker at all.
I seemed more like a tech/startup person, and people sometimes didn’t believe I was in finance.
So, I did what any good storyteller would do: I invented a new identity (“The Inquisitor”) that was better aligned with the market.
If I could demonstrate my competence with content and client results, my actual credentials and qualifications – or lack thereof – wouldn’t matter.
Early articles made it sound like I was Patrick Bateman crossed with Jordan Belfort from The Wolf of Wall Street.
I never gave detailed information about myself because I wanted you to come up with your own story about me.
Any story that you create and tell yourself is far more powerful than any story that I could tell you.
Back in 2008-2009, many visitors assumed that I was an anonymous Director or Managing Director at a large investment bank.
Anyone who read between the lines and beyond the lines was skeptical, but this is the Internet: Critical thinking is an endangered species.
The usual reaction was: “He has a ton of helpful, in-depth content. Judging by this content and my interactions, he must be an experienced banker who knows this stuff really well.”
To get around my lack of formal credentials and qualifications, I relied on the story.
And if you want to get ahead, so should you.
8) Raise Prices
When Tim Ferriss interviewed Marc Andreessen on his podcast, he asked him the famous “billboard” question:
Tim Ferriss: “If you could have one billboard, anywhere with anything on it, what would you put on it? If you wanted to convey a short message to as many people as possible.”
Marc Andreessen: “I’ve got one, I’ve actually thought about hiring a skywriter to do this one. Right in the heart of San Francisco would be a billboard with just two words on it: Raise Prices.”
Pricing is the #1 mistake that startups make.
It’s certainly one of the top 2-3 mistakes I’ve made.
And it’s almost always the same mistake: Entrepreneurs price their products and services too low, which sets the perception that their products and services can’t be any good.
Then, they can’t afford the sales & marketing required to sell them… and when nothing sells, they cut prices again, making their products look even worse and even harder to sell.
Here are my top pricing mistakes:
- Industry-Specific Courses: Initially priced at $97, even though competitors’ courses were in the $497 – $997 range. I should have started at $247 or $347 at the very least; when I finally increased prices to $247, units sold increased!
- Interview Guide: Started at $47, went to $97 after a year, and stayed at $97 for almost a decade, even as the content and services multiplied. When we raised the price to $197 in June this year, the dollar volume of sales increased by 2.5x.
- Releasing New Versions for Free: When Microsoft releases a new version of Office, do you get it for free? No! You pay for an upgrade, or you get it as part of an annual or monthly subscription.
If I could go back in time, I would fix everything above and gradually increase prices over the years.
9) Make Your Money Early – But Not Too Early
As I’ve written about before, money affects you in unexpected ways.
Coming from a lower-middle-class family and graduating from university with over $100K in student loans, I’ve become more isolated as I’ve gained wealth.
It’s difficult to relate to friends and family members who are struggling to earn more when I have the opposite problem (money, but almost no free time).
But… I’m much happier to be in this position than the “I’m in my mid-to-late 30s, don’t have a stable career, and don’t have enough money” position.
Once you reach that age, it becomes difficult to amass significant wealth with conventional methods.
Careers like investment banking, consulting, and private equity are shut off, so your main options are to start your own business, join a VC-backed startup and win the lottery, or start a side hustle such as real estate.
Those sound nice in theory, but your free time and motivation drop as you get older.
Having kids will annihilate your free time, but even without them, you’ll get sucked into more family/legal/other issues, you may develop health problems, and your day job will get busier with age.
So, if your goal is wealth, act on it when you’re young.
But there is one corollary: Don’t make too much money when you’re too young.
Most of my friends and acquaintances who hit the jackpot by working at companies like Facebook or Google in their early 20s haven’t done much since then.
Making millions or tens of millions at that age is like entering a cheat code in a video game: You win the game, but the boss battles are boring.
It’s good to struggle, fail, pivot, and change because it makes the journey more interesting and the final boss battle more rewarding.
As a rough guideline, I’d say that 20 years after university graduation is a good time frame to target for “financial security.”
I won’t define that term precisely because it means different things to different people.
At that point, you could downshift and focus on family or double down and feel secure enough to start another venture.
10) Don’t Stay in the Finance Industry for the Long Term
You could still make a strong case for starting out in investment banking and spending a few years there.
You gain a well-defined skill set, a solid network, and client/transaction experience that will be valuable everywhere.
But the long-term industry prospects have become much worse – everything from compensation to automation to the increasingly-under-pressure hedge fund/asset management/private equity industries.
Plus, you do nothing useful for the world.
Most of your work involves making rich people even richer, so you arguably make the world worse.
There are occasional exceptions, but they are few and far between.
The only good reasons to stay in finance for the long term are:
- You Care About Money and Nothing Else – For example, $1 million is not enough; you need at least $10-20 million, or you’ll be a failure.
- You Find the Work Legitimately Interesting – If you enjoy the process of digging into financial statements, wining/dining clients, or advising on deals, then sure, knock yourself out.
Another 10 Years?
As you can tell from the tone of this article, my enthusiasm has declined quite a bit.
I could explain that in many ways: Worsening market conditions, sillier and sillier questions, less rewarding interactions, and increased time spent on minutiae.
But the simplest explanation is often the best one: Ten years is a really long time to spend on one job, especially when that job barely changes.
I don’t necessarily want to quit, but I do expect to change the format of this site in the future.
For example, I may delete the less-popular articles, focus on keeping the top 100-200 updated, and occasionally write something new.
The good news is that I’m more interested in expanding/improving the BIWS courses, so you’ll see updates there far into the future.
I could see that lasting for another decade – even if M&I, in its current form, does not.
But who knows?
Everyone thought that Star Wars was over in 2005 when Episode III came out, but then Disney bought Lucasfilm in 2012, and now we’re getting a new franchise movie each year.
So, maybe this site will continue indefinitely.
Hopefully, George Lucas won’t be involved.
Coming Up Next Month: What I would have done differently over the past decade, from business to personal decisions.
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