Will a Gap Year Really Help You Win More Finance Job Offers Than an Internship at Goldman Sachs?
For example, can a Managing Director, a Partner, or a Portfolio Manager give you better career advice than an Analyst or Associate?
You might think that’s a clear “yes” because senior professionals have more experience…
…but after watching dozens of interviews and reading even more nonsensical articles, my personal answer is no.
The latest example comes to us from billionaire hedge fund manager Michael Novogratz, who said that students seeking internships should:
“Go do something different. Get on a motorcycle and travel through India and take photographs. Create a story where you learn something… I’m a big fan of the gap year.”
He pointed out that “kids” they interview always want internships at Goldman Sachs and McKinsey.
The reporter’s suggestion, which became the headline of the article, was that students might benefit more from traveling around India than from completing an internship at Goldman Sachs.
Before you cancel your IB internship plans and book a flight, though, you might want to pause and reflect for a moment.
Why Does This Matter?
I only saw this article because my social media person posted it on our Facebook page last week, and it drew a lot of comments and controversy.
Most responses were along the lines of: “This is a terrible idea! Plus, who can afford it? Don’t listen to this guy!”
Meanwhile, responses to the article itself on CNN were mixed to positive.
I always worry about these types of articles because, in my experience, people take what they read online way too seriously.
Also, online discussion tends to move in extreme directions and skips the middle ground entirely.
In my view, this hedge fund manager’s advice is mostly wrong – but there are a few kernels of truth that you should apply to your own internship and job search efforts.
What is the “Gap Year”?
If you’re American, you probably have little idea of what a “gap year” is. We don’t value free time, vacations, or active social lives very highly.
In other regions, however, people think there is more to life than academic and career success (I know, I know, strange concept, but just go with me here…).
So this “gap year” concept was born and became particularly common in Europe.
The idea is that after finishing high school (or university, or other life stages), you take time out to go off the beaten path and experience new things before going back to your regular academic / career path.
Since you’re unlikely to have much money (with exceptions for the trust fund babies), often this gap year turns into backpacking and trying to see as many places as possible for as little money as possible.
Allegedly, this “gap year” makes you more mature, gives you better perspective, and helps you clarify your long-term goals.
Supply and Demand
Over the years, I’ve conducted 200+ interviews with candidates and professionals from all six inhabited continents.
In every single case, students without solid internships were at a huge disadvantage in the finance recruiting process.
In some regions, like Mexico, you have no real path to winning a full-time offer at a bank unless you’ve interned there for 6-12 months first.
The real problem is supply and demand: there is an oversupply of candidates applying to business and finance-oriented roles, so hiring standards keep going up.
By contrast, if you were an engineer in Silicon Valley, you could switch companies every year and take tons of time off, and no one would bat an eyelash because engineers are in such short supply there.
Technically, a gap year in between high school and university shouldn’t matter because you’re not losing out on a great internship.
But in practice, many students extend this concept and end up doing gap years or “gap periods” after university, during university, in between rotational internships, and so on.
The Truth About Gap Years
Besides missing out on a potential internship, there is another issue with taking a year to backpack around to 27 countries: it probably won’t help you figure out what you want to do with your life.
The real way to “figure out your goals” or “discover your passion” (hearing that phrase makes me want to jump off a cliff) is to put in enough hours to get good at something, and then see how much you like it, relative to other options, once you’re at a certain skill level.
I tend to agree with Mark Cuban’s recommendation to follow your effort, not your “passion.”
So unless you want to be a professional travel writer or a tour guide, it’s unlikely that you’ll discover any career insights about yourself.
Yes, everyone should take time off periodically, travel is great (I fly ~150,000 miles per year), and studying / living / working abroad is essential, but the gap year is not such a great idea.
The Kernel of Truth: Most People Are Boring!
So even though this hedge fund manager’s advice is not correct, there is a grain of truth in it: most people are REALLY boring.
When I published the article about how you should be a line, not a dot, to maximize your chances of winning internships and jobs in the future, I was not recommending that you only do finance-related activities.
Yes, you need something relevant on your resume / CV from an early stage, but you also need to be a human being who has interests outside of internships at Goldman Sachs and McKinsey.
When readers write in and ask for feedback on their stories, my most common response is:
“It’s well-structured, but it doesn’t set you apart. Come up with something that only you could say, and use that to pitch yourself.”
The most common objection is: “But not everyone has climbed mountains in Japan” (I only climbed Mt. Fuji once and I will never do it again) or “It’s too expensive to travel or do something interesting” or “I don’t have time.”
The problem is that people take an “all or nothing” approach and assume that substantial internship experience precludes you from doing interesting things, or that doing interesting things precludes you from getting solid work experience.
So I propose two solutions to this problem: 1) Complete a “productive gap year”; or 2) Take a “gap week” or “gap month” and spin your shorter, cheaper experience into sounding awesome.
Solution #1: Do a “Productive Gap Year”
If you need to take a year off, I understand where you’re coming from.
When I quit banking, I was tempted to sit around on the beach for a year – unfortunately, I ran out of money much sooner than that.
If you do follow this path, the lack of a formal internship at a finance firm will still hurt you… but you can get a lot out of a “year off” despite that.
Here are two examples of how you could use a “productive gap year” to gain interesting experiences while also developing useful skills:
Example #1: Go abroad, but stay in one place (or only a few places) and combine language study or volunteer work with financial skill development.
This plan has many benefits, including lower expenses, less time wasted in transportation, and the ability to get to make real friends.
For example, maybe you decide to go to Indonesia and study the language while also learning to sail or scuba dive.
Since the cost of living is low, you don’t need a fortune saved up to do this, and if you really do need extra money, you could always get a job teaching English.
In your spare time every few days or at night, you could also research stock pitches and you could brush up on the required financial modeling and valuation skills.
You don’t even need to spend that much time on this; you could spend 5-10 hours per week on it and come up with 3-4 stock pitches in a year.
By the end of this gap year, you will have some great stories, knowledge of a useful language, and “evidence” that proves you could add at least some value to a hedge fund or asset management firm.
(Well, assuming you made the right calls on those stock pitches…)
Example #2: Go abroad, but use your time to focus on networking while you’re teaching, working, or doing other activities.
The best example of this one is this excellent interview with a reader who left a back / middle-office role in the UK to teach English in Mexico.
He didn’t just do this randomly – he was strategic in choosing to teach business English, AKA English for employees of banks.
In the meantime, he also studied Spanish (since it’s useful and much easier than other “useful” options if you’re a native English speaker).
Then he leveraged the connections he made while teaching, plus his previous experience at banks in the UK, into interviews at banks in Mexico City.
You could approach this in other ways as well: just find any job that puts you in contact with finance professionals, whether that’s teaching, doing guided tours, training people to windsurf, or anything else you can think of.
Solution #2: Take a “Gap Week” or “Gap Month” and Spin It Into Sounding Impressive
This solution is intended for you if you believe it will take too much time or money to do something interesting, or if you agree that a traditional gap year may not be the best idea.
All you have to do is find something off the beaten path for a short period of time and then use one of our spinning techniques to make it sound great: omission of facts, hedged exaggeration, re-adjusting the focus, or blaming a 3rd party.
There are some good examples of how to apply these techniques in the comments accompanying the article, but here are two of my favorites:
- Six Months of Unemployment to… Shepherd: One reader was unemployed for six months and claimed he took time out to become a shepherd on a farm. He did visit a family member’s farm for a week, but then he spun this short experience into his unique angle in interviews and explained all the leadership skills he gained in the process.
- Sports Team M&A Advisory? One coaching client spent a week of his summer in early university visiting 2-3 famous stadiums, hall of fame locations, etc. He then spun this into his “finance spark” by saying that he traveled cross-country researching what made sports teams viable acquisition targets, and that his broader interest in finance developed from that.
The list goes on.
If you have an imagination and you can use Google, this should be straightforward – and if you need help spinning what you did, leave a comment below.
Gap Years vs. Goldman Sachs
So in the end, no, a gap year will never beat an internship at Goldman Sachs – at least not if your long-term career goal is something other than “travel writer” or “tour guide.”
But you can certainly apply some of the ideas from gap years to make yourself into a stronger candidate and win offers more effectively.
If you find yourself wanting to do the gap year anyway, make it shorter, do something useful for your long-term career, or do some networking and skill set development at the same time.
And if you choose to ignore this advice and find yourself motorcycling through India, don’t say I didn’t warn you.
Your chances of getting traditional internships and jobs might be worse, but maybe you can apply to Michael Novogratz’s fund with that gap year experience.
I hear they’re hiring.
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