by Brian DeChesare Comments (52)

So, What Should You Do at Investment Banking Summer Training Besides Getting Wasted Each Night?

So, What Should You Do at Investment Banking Summer Training Besides Getting Wasted Each Night?

You’ve just been through a warzone to get your offer: 53 interviews, 3 weekend trips to New York, and so much time spent staring at Excel that you’ve developed a monitor tan.

But things worked out, you accepted your offer, and you’re about to start work in 2 weeks.

You just need to make it through the training program first.

But that should be the easiest part of the entire process, right? Right?

Does This Really Matter?

When I first got questions about training programs, I was confused: it seemed like a topic that didn’t warrant much advice.

“It would be about as stimulating as all those suggestions over the years to create a recommended reading list,” I thought.

But then I sat down to think about it in more detail and started asking around, and realized that there might be some important and not-so-obvious points to make.

Why Training Programs?

They’re a combination of marketing and education: banks pride themselves on offering “the best investment banking training” – even though banks use the same companies to train you – and they want to get people from non-finance backgrounds up to speed quickly.

Beyond just teaching you about accounting, valuation, and finance, lots of banks bring in speakers from different groups and use them to introduce you to their culture and how things work.

For some inexplicable reason, a few banks really like to tout their training programs and use them as a selling point when interviewing candidates, which might just be the strangest recruiting tactic ever.

No one joins Goldman Sachs because their training program is so great – they join because of the name “Goldman Sachs.” Their training program could disappear tomorrow and it wouldn’t matter.

The “education” from these programs is most helpful if you’re not from a finance background.

You will indeed have a tough time at first if you know little about accounting, valuation, and finance – but then it would also be difficult to get an offer these days without knowing those topics to begin with.

Even if you are completely new to finance, training programs are still not that helpful because different groups have different standards and it can be hard to focus when everyone is talking to each other and chatting online.

So don’t stress too much over all the content – there are more pressing concerns during training, beyond just getting enough bottles every night.

What is a “Training Program”?

Right before you start working, the bank will fly you and all the other incoming analysts and associates to New York or London (or wherever your bank is based) and spend 1-2 months “training” you.

Translation: You get to spend each weekday in a crowded room learning all about Excel, accounting, valuation, and finance from outside training firms and occasionally internal speakers from the bank.

You follow along on your screen as they instruct you, and you keep Facebook and Gmail open so you can chat with everyone else about how bored you are and how the instructor has a receding hairline.

You may also get tests and case studies to complete, and group exercises similar to what you find at assessment centers. And then there are those fun standardized tests you have to pass – the Series 7 and 63 back in the day, and the Series 79 in recent times.

Sometimes banks also determine group selection during training, but most of the time it happens well before that – either at your sell day, or as part of the interview process itself.

You’re not working banking hours during this time – weekends are mostly free and you rarely stay late at night, which is the first and last time that will happen as long as you work in the industry.

If you’re going into an internship rather than a full-time job, you’ll get just a week-long crash-course rather than the 1-2 months that full-timers get.

Many boutique banks don’t offer training programs at all because it’s beyond their budget – you’re also not likely to go through training at private equity firms or hedge funds, because they’re small and they expect you to know everything you need once you start working.

If you’re going into sales & trading or another non-IB area at a bank, you’ll probably have some type of training as well but the material will be different and it might be shorter.

As you’ve probably guessed by now, the 2 most important words in everything I’ve written above are “crowded room.”

If you’re not meeting other people and networking during training, you’re wasting your time.

So How Do You Approach Training?

Ask most bankers about what to do during your training program, and you’ll get 1 of 2 responses:

  1. “Just get drunk every night! Party! It’s the best part of the analyst/associate program.”
  2. “Study hard and take all the homework assignments and case studies seriously! Oh, and if you don’t pass those exams, you’re screwed.” (This one usually comes from students who aren’t even in the industry yet)

Neither one of these is quite right.

On #1, yes, you should go out and have fun since this will be one of your last chances to do so in the next few years.

But you need to be strategic about how you do it and also make sure you meet the right people in the process.

On #2, despite rumors to the contrary, most of the work they give you does not matter that much. Just do reasonably well and pass what you need to pass – it’s almost irrelevant next to your deal experience in your first year.

But I Heard This Person Got Kicked Out for Slacking Off!!!

Most of these rumors are greatly exaggerated. Yes, if you do something incredibly stupid – kidnap the Managing Director’s son, start drinking at work, etc. – you might be removed from training, but that hardly ever happens.

If you already have your group placement, homework assignments and tests during training aren’t important – the senior bankers at your office don’t have time to read the details of what you did and then change your group based on that.

If you’re really concerned about not knowing enough or being disadvantaged next to everyone else there, learn some material before training starts.

If you’re reading this site you’re probably a Type-A overachiever anyway, so you’ve already signed up for modeling courses before you even got interviews.

Just dust those off and start going through all the material and you can doze off during training and still do well.

What About the Series 7, 63, and 79 Exams?

These are actually important to pass because some banks won’t let you start working for real until you’ve cleared the exams.

They’re horribly boring and you’ll forget everything you learned in about 2 days, but you need to pass them anyway.

I’m never going to produce a course on these because they’re too boring even for me – but I’ve heard that the Knopman materials are good.

Do not underestimate these exams because they are more difficult than you initially think.

There’s a lot of rote memorization (certain questions will give you choices of 5 days, 10 days, 15 days, or 20 days and you just have to know which one is correct), and it’s hard to cram and learn everything in a few days.

So yeah, make sure you pass these – but don’t spend every waking moment studying at the expense of networking.

OK, So Then What About Networking – What Do You Mean by “Make Sure You Meet the Right People”?

Going out and getting bottles every night is almost a good idea, but there are a few problems:

  1. You won’t have much money yet since you just started and may not even get a paycheck until training ends.
  2. It’s more helpful to know people in different offices and different groups instead of always hanging out with the same crowd.

Let’s say it’s 2 AM, you’re working on a pitch book for an industrials company, and you need to include a case study of a deal the Chicago office did but you don’t know where the files are.

If you don’t know anyone there, you’d be screwed – yes, you could just email the entire office and ask for someone to help you, but everyone is busy with their own fire drills and deadlines so they may ignore you.

But if someone sees your name and recognizes you from training, you’re in much better shape and you might actually get the answer you need.

It’s almost impossible to get to know people from every group and every office, so focus on 5-10 analysts/associates.

Get some geographic diversity (if you’re in the US, know people in a few different cities and also a few in Europe and Asia) and industry diversity (if you’re in an M&A group, get to know people in industry groups and also ECM and DCM).

Doing this is not difficult and I would feel silly writing a “guide.”

Each day there are plenty of breaks, and most banks throw lots of events and parties during training – take advantage of these and go up to meet new people there.

Just think of it as a big information session, only without seasoned bankers. And it’s even easier than information sessions because you have an enforced time limit and everyone else is new and wants to meet others.

Does It Really Help?

The main problem is the high turnover rate in finance – by the end of your first year, at least 50% of your incoming analysts/associates will be gone.

So it won’t help you forever, but it doesn’t matter too much because your first year is the most critical anyway – do well at first and you’ll get better work and better exit opportunities, and do poorly at first and you’ll get the MDs laughing at you and bottom-tier bonus.

During training, I made the mistake of constantly going out with the same group of people and not getting to know others.

Things still turned out OK (see: this site), but there were quite a few times when it would have been helpful to know people in different groups.

It’s not a question of life-or-death, but it will save you some headaches and possibly let you get 6 hours of sleep rather than 4 hours – at least on some nights.

In Short…

So do what you need to pass everything and learn the material, but don’t take any of it too seriously at the expense of meeting other people.

If you’re concerned about not knowing enough when you start working, start preparing beforehand and learn as much as possible from classes or training programs.

And make sure you find out about your office and who makes decisions there before you start working as well.

Get to know 5-10 people well so you have contacts in other groups and other geographies when you need something and no one else in your office can help.

It’s tempting to befriend only the incoming bankers in your own office or your own group, but that defeats the purpose of training: you want to spread your net wide and meet people from all over.

And if you’re already doing all this and you know accounting, valuation, and finance like the back of your hand, have some fun and try to show up for training every day without passing out on your desk – they might actually notice that, especially if you’re in the front row.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Why You Can’t Break Into Private Equity as a Foreigner in China

China Private EquityDespite my repeated warnings that emerging markets don’t care about you – only people who know the language, have connections, and are qualified to work there – this question won’t go away:

“I really want to work in China! How can I break into finance there? I’ve studied Mandarin for 5 years and I can read faster than Chinese people now! Show me how to get into PE!”

I’ve gotten tired of answering that one, so today you’ll hear from someone much better qualified to answer it than me: a reader who works in private equity in China.

He’ll tell you all about:

  • How to network your way into the industry and how it’s different from PE in the US/Europe.
  • Why foreigners are getting pushed out of the industry and why you’d have to be “crazy” to go work there these days.
  • What you should do instead if you want to do business in China.
  • How the pay and work culture differ from other parts of the world.

How It All Began

Q: Can you walk us through your background and how you broke into private equity in China?

A: Sure. I was a newly minted MBA, and back in 2005-2006, China’s PE market was much less developed.

I went to AVCJ’s annual conference in Hong Kong, networked like mad there, and got an internship helping a small fund with a capital raise. That fund later went on to become the #1 PE fund in China, and I rode their coattails to success.

I still believe that conference, among others, is the best way to break in but today it would be almost impossible to follow the same path if you’re a foreigner.

There are way too many local Chinese who work or study abroad and then return home, and too many bankers eager to move into PE.

And even though I’ve been here for years, even I have been getting pushed out of the industry – just like all other foreigners.

To be frank, I wish I had heeded the warnings of others and had spent the time breaking in to PE in the US/EU instead. Now, nearly six years later, I don’t think I’ve had the experience and training I would have had in the more developed markets.

So, if you’re a foreigner, be kind to yourself – don’t try to get into PE in China. If you absolutely must have your China experience, feel free to come over, but focus more on “bridging” roles, like investment banking, sales & trading, and so on.

PE is a local market, and in China, it is hyper-local. Five years of Mandarin won’t cut it; heck, near-native-fluent Chinese won’t cut it.

Even foreign-born Chinese, Taiwanese, Singaporeans, and people from Hong Kong have a tough time finding roles here because they’re also too foreign. You were either born and raised here, or you weren’t – and if you weren’t, you’ll always be an outsider no matter how much baijiu you can drink.

Now, if you are from mainland China, then there’s still a lot of opportunity.

I would recommend coming here in that case, because there’s more going on and if you can hack the local game you can get some great deal exposure and you might even make a fortune in the process.

Q: OK, let me stop you right there because I want to return to that topic of how you actually break in at the end.

So most foreigners would face a near-impossible battle to get in, but what is the private equity industry in China like?

What types of deals and companies do you focus on, and is it mostly local firms or international ones that make investments?

A: The industries themselves are diversified – you see manufacturing, state-owned-enterprise commercialization, consumer/retail, clean-tech, software and IT, energy, construction, infrastructure, healthcare and so on.

Many firms are still generalists with certain sectors of expertise / focus, but a few sector funds have sprung up as the market has matured – there are a few healthcare funds, a few clean-tech funds, a few technology funds, and a few consumer / retail funds.

Local funds and international funds are completely, 100% different animals.

The local funds staff huge teams – sometimes up to 100 investment professionals in a firm – and the pay therefore is lower, there’s often little formal training. You may struggle to get noticed and find a mentor, and it’s tough to navigate the political environment.

But the local firms do most of the deals, whereas international firms are having trouble closing anything.

Some of the regional funds (such as Barings, HSBCPE, Actis, etc.) are able to get some good deals done, but PE firms such as Carlyle, TPG, and so on, don’t see much action here.

In short:

  • Local PE Firm: More deal exposure, but no structured training, and lower compensation.
  • International PE Firm: Brand, better pay and training, but lower chance of closing deals – which will hurt your CV.

Friends here have been frustrated at both types of firms – those at local firms feel underpaid and under-appreciated, and those at international firms complain about never closing deals.

Q: Right, so you’re stuck between a rock and a hard place there.

What’s your average day like in terms of responsibilities and work? Is it mostly due diligence and modeling, or do you get more “random” tasks?

A: So far I’ve focused more on fundraising and investor relations than anything else. When I first joined this firm I started out as a deal guy, but once there were more skilled locals in the market, my role was shifted to fundraising.

I actually don’t mind that since I enjoy fundraising more than deals – analysis and due diligence can get repetitive, and you see companies at such a high-level that everything starts to look the same after awhile.

The good part about fundraising is that I get a lot more exposure to Limited Partners than if I were in the US or EU – there’s a lot of potential there for future networking since they all know who I am now.

Sometimes it does get repetitive telling the same story to potential investors, but that’s true of any sales job or even if you’re the CEO of a company.

Q: So they’re pretty much limiting the investment/deal work to locals?

A: Yes. Again, I would actively discourage foreigners from trying, unless you really have native-level Mandarin (beyond just “fluency”).

The nature of the job for locals or returnees, however, is compelling.

The deal professionals get to explore very interesting companies across a whole spectrum of industries, and the work includes due diligence and business analysis, which involves researching an industry by speaking with experts, interviewing the company’s management, and speaking with competitors.

You do some financial modeling, but it’s not really meaningful – at least not in the traditional sense.

Most businesses are growing so quickly that standard models are meaningless. With 50-100% revenue growth rates, analyses like the DCF break down and even valuation multiples don’t tell you much if the company is growing at that rate.

Private equity here is more like venture capital in developed countries.

Investors spend their time on industry and management team analysis, and most of their time is spent deciding which industry is best to invest in, whether the target company can become a market leader, and whether or not they can trust the management team.

Trust is still a major issue in China, and you can’t depend on legal documents to be truly binding – they are a framework, but interpretation and enforceability are questionable.

So half of your due diligence time might be spent understanding the psychology of the management team – particularly the founder. If you’re depending on your closing documents to protect you, then you’re already in trouble before the ink is dry.

Q: Interesting – and that foots with one of the previous interviews here from a reader who completed a PE internship in China.

What about the pay and work culture there? I’m assuming that pay is lower on an absolute basis, but higher relative to the cost of living?

A: Pay varies greatly between local and international firms. Foreign firms here pay about average global pay for PE – so between $150K and $250K USD all-in for associates.

Local PE firms pay less – maybe around $90K USD for new associates.

In 1990 or 2000 those figures might have been a ton of money in China, but over the past 10 years the cost of living here has skyrocketed and places like Beijing and Shanghai aren’t as cheap as they used to be.

They are still less expensive than New York, and so you won’t starve on $90k per year. But it just isn’t the bargain it used to be. The tax rate is also higher than in Hong Kong – up to 30-40% vs. about 15% in HK – so that also eats up a good chunk of your pay.

Bottom-line: you will make less in PE here compared to the US / Europe, and you’ll make significantly less working at a local firm. You have to decide if it’s worth it, and that trade-off makes little sense unless you’re truly committed to staying in this market for the long-term.

Q: What about carry? Since the market is less developed do they give that to associates or anyone less senior than MDs?

A: Carry is almost always restricted to the senior MDs here.

There is a very patriarchal/monarchical feeling at many of the firms – you’re either a rain-making MD who brings in deals, or you’re commoditized execution.

This may sound just like the US and EU, and to a certain extent it is – just a more extreme version of the usual investment banking hierarchy.

It’s not unheard of for just a few guys at the top to get all the carry and for everyone else to get nothing. That creates a situation where the guys at the top are making literally millions (or billions) and everyone else below them is making base pay, keeping their fingers crossed for bonuses, and hoping to climb up the pyramid for a shot at some equity… hopefully… someday… maybe.

That said, those who did manage to get a slice of the carry are probably looking at returns that could easily fund a comfortable retirement in just a few years’ time. Many of the funds have returned 3-5x, and have had IRRs of over 100%, so the carry really is making some people incredibly wealthy.

Again though, carry is not awarded to the non-MD investment professionals. Yes, it can be similarly lopsided in the US/Europe, but at least as you move up you’ll earn progressively closer to what MDs and Partners make, and eventually you will get carry even if you’re not the top person at the firm. In China, carry is just shared among a small number of hands.

Foreigners, Abandon All Hope?

Q: Let’s go back to why it’s so tough for foreigners in the China PE market. Do you have any foreign co-workers, or are they all locals from mainland China who worked or studied abroad and returned home?

A: There are fewer than 10-15 foreigners working full-time in the entire PE industry in China, and we all know each other.

Most of us have been pushed out from deal work and, like me, focus more on fundraising and investor relations.

Q: OK, but I’m sure there must be a few foreigners there in high-up positions? One of our other interviewees mentioned that the MD at her firm was foreign.

A: There are some exceptions. For example, a few foreigners got in 5-10 years ago as founding MDs of their firms, so they have unique positions.

But the rest of us – other investment professionals – have been mostly pushed out. There was one other guy who was relocated to Asia by a major international PE shop, but he was then axed to free up the position so that a local could be brought in instead. And he was a senior officer with 10 years+ of PE experience and fluent Mandarin.

Q: OK, point taken – but wouldn’t knowing the language give you a big advantage and let you compete more effectively with people from mainland China?

A: No.

Becoming 100% fluent in written and spoken Mandarin has about a 1% chance of helping you break into private equity here.

These “exceptions” I’ve referenced were already 100% fluent in the language and could read and write extremely well, and they were still pushed out.

Most of the foreigners here are now in fundraising roles, even if they worked at bulge bracket investment banks before and earned MBAs from top schools.

No one is interested in foreign professionals anymore, and it’s not even about the language – it’s that the work culture and deal environment here are so local.

It’s not like some countries (the US and UK) where anyone who can learn the language can advance to the top. They heavily favor locals and will tolerate foreigners, but will never fully accept them.

That’s why I’m making such a strong recommendation against coming here to work in PE – it’s just not realistic with the current state of the market.

You could spend years studying and learning the language, then more years struggling to break in, only to find yourself sidelined and underutilized because they don’t care how good you are or how much experience you have, only that you’re not a mainland Chinese who can bring in deals and charm the local entrepreneur.

Q: Not exactly the rosiest picture there…

Let’s say that someone is really interested in doing business in China – would you tell them to just give up altogether, or just to forget about PE?

A: If you’re from here originally, have family/connections, and want to go back home, China is great. There are opportunities in PE, banking, consulting, and entrepreneurship – you name it. The rapid growth engenders opportunity.

But if you’re a foreigner, and you absolutely, positively can’t get China out of your mind, then you can take your best shot.

However, if you want to make the leap I would steer clear of PE and focus on other areas like investment banking, investor relations, consulting, or being the CFO of a company.

In those areas, international experience/exposure is more valued and you don’t actually have to be Chinese to fulfill the role.

Oh, yes, and make sure you get to 100% fluency in Chinese – reading, writing, speaking, and listening; obviously reading and writing are the hardest parts and will consume 95% of your time.

Q: Out of curiosity, why do you think there is such a strong bias against foreigners in PE?

A: Similar to venture capital in the US, Europe, and other markets, private equity is a hyper-local business here. You need to be here on the ground communicating directly with management teams to have any chance of winning good deals.

They favor locals because they know that they have connections and are better able to reach local businesses; plus, they understand the culture implicitly and won’t get “rejected” by entrepreneurs nearly as much as foreigners.

Also, both the local and international firms must project an image of being local from a marketing standpoint – whether they are showing their local chops to entrepreneurs, the government, and especially their own LP investors.

Q: So we’ve established why you don’t want to work in PE as a foreigner in China.

But let’s say that someone reading this is from mainland China, has studied or worked abroad, and is returning home – how would he or she go about breaking into private equity?

A: It’s all about networking and conferences here. You need to go to the AVCJ conference in Hong Kong and the SuperReturn China conference, and then do a lot of networking with people you meet there. Bring 300 or so business cards, meet everyone, and try to set up side-line meetings in advance.

You should also connect with friends who work at the firm you’re interested in and who can help you get in touch with the senior staff (MDs or CEOs). Business school classmates and alumni can also help.

Some of the larger domestic firms have also been going to business schools lately to recruit there, so that’s another option as well.

If you’re returning home and want to be here long-term it’s still a great time to get into the industry, since you can join a fast-growing firm and rise to leadership. The competition is tough, but it’s possible to break in and advance, and the rewards are certainly there.

It definitely gets more competitive each year, but since most PE firms are looking for people with very specific profiles you have a much better shot of getting into PE here than you would by competing with the broader market in the US or Europe.

Q: Are there any differences they should be aware of with recruiting, CVs/resumes, and interviews?

A: The main difference is that you don’t need investment banking experience to get into private equity here.

Technically this is not true in developed countries, either, but let’s be honest: the majority of people who break into PE have done banking or something similar like management consulting or Big 4 Transaction Advisory Services.

But in China, most PE professionals are not from an investment banking background, so they don’t expect you to have that experience either.

It’s really about networking, meeting the right people at conferences, following up with them and being persistent until they give you interviews.

CVs/resumes are not much different, and in interviews they’ll ask similar questions though there’s obviously less focus on modeling and deal experience; it’s more about “fit” and your general knowledge of how to analyze businesses.

Q: Great, thanks for your time. And I hope your situation improves and that you can find a better role in the future.

A: No problem – enjoyed sharing my story even if it sounded a bit pessimistic at times. And yes, I’m working on other roles right now….

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Pitch Anything: “The Game” for Investment Banking?

Pitch AnythingIt’s 11 PM and you’re sitting down at a bar with a friend. You see 2 gorgeous blondes stroll over and sit down across from you (if you’re female, just imagine this from your perspective instead).

You strategize with your friend about what to say and who to approach, you think of the perfect opening line, and then you go up and make your move.

The first girl stops you in your tracks, glares at you, and says, “If you’re going to recite lines from that book, we’ve heard them all before – you can go away now.”

Ouch. What went wrong?

The problem is that it’s 2005 and Neil Strauss has just published The Game, detailing the secret society of pickup artists and the exact tactics they use to get beautiful women night after night.

It became so popular in New York that women learned all about it and instantly knew when a guy was using tactics from the book.

And now a new book by Oren Klaff, a capital markets banker based in LA, might just do the same thing for the world of business and investment banking.

What?

It’s called Pitch Anything, but it could be titled “Persuade Anyone” because that’s what it’s about: how to present an idea so that the other person gets intrigued and ultimately signs on the line which is dotted (yes, Glengarry Glen Ross should be part of your required viewing).

“Wait a minute! I don’t want to work on the sell-side, why would I ever need this? I am a math genius and can sit behind the computer, look at spreadsheets all day, never talk to people, and still make bank!!”

I see where you’re coming from, but even on the buy-side you’ll need to persuade people and pitch your ideas all the time:

  • You just got a horrible bonus, only 1% of your P&L. You want to negotiate a better number for next year – how do you approach your fund manager?
  • You have a new investment idea and need to present it to the investment committee at your firm. What story will convince them to say “yes”?
  • You’ve had enough and are quitting your fund to start a new hedge fund. You need to raise $500 million – how do you sell investors on the idea?

Of course, if you want to keep your bottom-tier bonus, never get any respect from anyone else, and never get the funds to start your own firm, feel free to keep staring at Excel.

Got Skepticism?

When Oren first contacted me and told me about the book, I was skeptical: I get tons of pitches and requests each day and everyone wants me to promote their products and help them out with random favors.

So I let it sit for a while and didn’t get around to reading it until my flight got delayed on a recent trip, I ran out of battery, and I had nothing to do.

And then I almost missed my flight because I couldn’t put it down once I started reading.

The Big Idea(s)

There are many big ideas here, but the ones that stood out most:

  1. The way you pitch something and the way the other person perceives it are completely different.
  2. Setting the frame makes all the difference when pitching anything or talking to anyone.
  3. Don’t pitch numbers or logic – tell stories.

A “frame” is just the way a person views the world and what he uses to doubt whatever you’re pitching.

If he digs into your numbers and calculations and keeps questioning those, he’s using the analyst frame; if he spends 30 minutes talking about himself and then looks out the window when you get a turn to speak, he’s using the power frame.

There are others, and there’s an appropriate way to respond to each of them and “break” the person out of whatever he’s using to belittle you.

How to Use the Book

The section on frames and how to respond to frames, by itself, is so insightful that you’ll probably think of dozens of uses just from that (I recommended the book to other friends after finishing that part).

Here are a few situations where you could use the advice in the book:

Handling Co-Worker Harassment

Let’s say you just started working on the trading desk and the other traders are giving you crap for being the new guy. In addition to making you get lunch each day, they’re also making you pick up their dry cleaning and get gifts for their families.

There are 2 bad ways to handle this situation:

  1. Do nothing and ignore the traders as they make fun of you.
  2. “Argue” your way out of it by telling them to respect you.

Doing #1 is the equivalent of getting a terminal illness and not going to see the doctor: you can ignore it, but you’re still going to die.

#2 won’t work because of the same reason it didn’t work on the bully in the playground when you were 10: he’ll ignore you and keep pulling your pants down anyway.

In the book, Oren goes through a few examples of how to use a power-busting frame and other tactics to handle a situation like this and re-assert yourself by lightly defying “the authorities.”

It doesn’t require memorizing long scripts or anything like that, but it does require going outside your comfort zone – but if you want to advance in the industry you better get used to that.

Raising Funds… for Your New Hedge Fund, or Even a Student Group

You’ve dreamed of starting your own hedge fund since you were 10 and first saw Wall Street.

And now, after 15 years of working at other peoples’ funds, you’re ready to raise the $500 million of capital you need for your own.

You’re in a meeting with a potential investor and he is using the analyst frame to nit-pick your numbers and press you on whether or not you can really achieve the returns you’ve outlined.

“So I’ve looked at your IRR calculation here based on the funds invested and the potential cash flow coming from these investments and I wanted to know how you derived the margin right here…”

You do not want to get into an argument over the numbers or go into nitty-gritty detail in response to this.

If they want more detail, you can send it to them after the meeting.

In a situation like this you’d apply intrigue or suspense (by telling a story or starting to tell them something surprising and leaving it open-ended) to get the other person to step back from the numbers.

Oren has a few examples of doing this aggressively in the book – you may not want to implement everything he suggests, but using just the basic ideas can take you a long way.

More?

This first section on frames could be applied to almost any social situation; the other parts of the book are more applicable to pitching itself, but remember: much of your life consists of pitching and persuading other people.

So if you’ve spent more time developing your IQ rather than your EQ, this should be required reading.

Flaws

Though I’m a big fan, the book is not without problems.

First, if you’re a new analyst or associate, you can’t literally apply all the strategies and stories that Oren shares in the book.

If you show up to work on the first day and start “defying” your MD he’ll get pissed and you will develop a bad reputation.

So you have to do it in moderation and not get carried away with following it to a tee.

Another issue is that the deals described in the book, while big (millions / tens of millions and up) to a normal person, are small by the standards of bulge bracket investment banks.

In practice, most pitches from investment bankers for mega-deals are practically identical – hitting emotional triggers all the time might work, but it may also backfire if the audience is sophisticated and wants things presented in a certain way.

Finally, similar to other popular business books (The 4-Hour Workweek), sometimes the author makes everything seem too easy.

It would have been interesting to explore when the strategies here don’t work as well, or whether they apply to much larger deals as well.

Do You Actually Need to Read This Book?

I’ve gotten lots of questions on what the culture of Wall Street is like and whether or not it’s really a frat house.

Experienced traders aside, at most investment banks analysts and associates are more nerdy than fratty.

That’s what happens when you recruit top-performing students at top schools: you get a bunch of math wizards who are great at Excel but not so great at having difficult conversations.

If you already have a lot of real-world experience dealing with skeptical people, persuading others, and pitching your ideas, maybe you’re an exception to this rule.

But if not, I can’t recommend Pitch Anything highly enough – and at the very least, you’ll be entertained by all the stories within.

The Next Neil Strauss?

Pitch AnythingSo will Pitch Anything become The Game of the investment banking world?

While guys who want to get more girls read everything they can get their hands on, bankers have no time to read or do anything besides pitch, deal, and occasionally snort cocaine.

So unlike that situation with the 2 blondes back in 2005, you won’t suddenly have a market where everyone knows your tricks.

And that’s great news for you, because you can pick up Pitch Anything and start applying the tactics right now – when no one else knows how to respond to your newfound superpowers.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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