How I became the Wall Street banker being 22

Wall Street intern

“Guys, guys, don’t worry, I have… SO MUCH money”
– An intoxicated senior investment banker hailing a cab on the streets of New York City in the summer of ‘14.

This is the story of David, who left Serbia at only 19, and dug his way into the world’s financial center.

As someone who grew up in a country where the average monthly salary amounts to about $400, and as someone who spent his late teens supporting his family financially in such an environment, I was stupefied to witness a multimillionaire investment banker drunkenly wave his hand around and publicly flaunt his wealth in front of a group of college students, no less. Yet, given everything that I had known and experienced about Wall Street thus far, I somewhat expected such a scene. But, let me explain by providing a little bit of context.

Ever since the financial crisis of ’08, Wall Street has gotten an increasing amount of negative attention. This negative sentiment was expressed in multiple ways: From the “Occupy Wall Street” protest, to public outrage after multiple financial scandals (e.g. LIBOR fixing), and even expressed in Scorcese’s “Wolf of Wall Street” and many other movies. The world’s financial hub seemed like it had fallen out of favor with the people and lost its former glory. The public was (and still is) outraged with Wall Street’s lavish-but-irresponsible ethos.

But, aside from sounding like a neat story, this outcry has had real-world consequences. Specifically, MBA students at top U.S. schools have been increasingly opting for Silicon Valley over Wall Street while searching for jobs, and many of the investment banks have had to increase employee pay in order to stay attractive for job applicants. Additionally, the extravagant actions of rich Wall Street bankers have been widely criticised.

Pedja: That does seem harsh compared to what we have been hearing on TV here in Europe. Are people still interested in working on Wall Street?

Absolutely. Even with such a publicly-condemned culture, Wall Street still seems to attract a large percentage of students from the world’s top undergraduate schools. In my experience, there are two reasons for this: First, Wall Street provides college graduates with unparalleled responsibility and learning opportunities. At no other job does a twenty two year old fresh out of college get to build a full financial model for transactions worth billions. The second reason is the perceived prestige. After all, if you are one of the people belonging to the 2% hired5 by Goldman Sachs, you have to be the best of the best, right?

Wall street intern

But at least the view is awesome.

Pedja: Well, do you have to be a top candidate in order to get hired by Wall Street firms and succeed once you are in?

The answer to such question is not as simple as you might think. In order to be one of the few, you definitely have to be bright and social enough to get through the grueling, multi-round interview process. You also definitely need to be able to work for 100 hours per week (and, quite often, more!), and thus give up your social life. Yet, the interview process can be studied (i.e. gamed), and self-selection combined with a desire for money take care of the 100-hour-per-week stamina. Now, let me be perfectly clear: What you do not need to succeed are things such as critical thinking, original ideas, and a desire to improve processes and/or the world, or even a pleasant personality. With such things often missing from the hiring equation, can anyone truly believe that the people hired are the “best of the best”? And, as most people who are part of the Wall Street machine do not even have time to ask themselves such a question, is a real life multimillionaire investment banker publicly flaunting his wealth in drunken stupor really that surprising?

Pedja: You mentioned a draining multi-round interview process. Can you talk a little more about how the process is set up?

Sure. So, the interview process is a bit different depending on the school you come from, because Wall Street firms pool colleges into “targets” and “non-targets”. If you are in a target school (e.g. Ivy League and other top schools, usually), then you have much higher chances, as each Wall Street firm usually has a quota (i.e. how many people to recruit from each target school). If you are in a ‘non-target’ school, the process is much more competitive, as you are competing with everyone not from a target school. Also, if you are from a non-target school, you will almost certainly not get an interview by applying online. Instead, you need to network hard, and get someone to recommend you. Since I was coming from a non-target school, and I was international (meaning I had no prior connections), I had to network really hard to get interviews. I have talked to and/or met over 200 people on my path to Wall Street, most of whom I cold-emailed or cold-added on LinkedIn.

Wall street food

Dinners are free if you stay past 8pm, which you literally always do

Pedja: What about when you have worked your ass off, and you actually get an interview? What does that look like?

Investment banking interviews follow a pattern. If you are at a target, you will have an on-site interview, where you will get asked basic questions about your experiences, and basic corporate finance and accounting questions. If you pass into the next round, the company will fly you in for what’s called a “super day”. A super day is basically a full day of back-to-back interviews, anywhere from 6 to 10 in number — it can get quite exhausting. The super day interviews are much more difficult, as you will interview with everyone – from Analysts (bottom of the ladder) all the way up to Managing Directors (top of the ladder). Super day questions are also designed to either drill you on your finance, accounting, valuation, and market knowledge, or to make you feel uncomfortable and really crack who you are.

There are a couple of different things in the process when the applicant is coming from a non-target school. First, the applicant can go through one (or more) phone interviews before the super-day instead of an on-site interview. Depending on who is interviewing you over the phone, those interviews can either be a breeze (if Human Resources interview you) or as brutal as super day interviews (if an actual investment banker interviews you). I had an interview that was supposed to last for 30 minutes, but lasted for well over an hour, because the guy who was interviewing me asked me to describe (in detail) some financial models I have built a couple of years back. The second thing that’s different is that a non-target applicant gets a lot more questions that attempt to check his interest in investment banking and his ability to survive in such an environment.

This is Part 1 of an ongoing guest series…

Wall street office view

Office view

References:
http://www3.universumglobal.com/2014-us-ideal-employer-ranking-mba/#.VYFeXPmqqkr
http://www.reuters.com/article/2014/08/20/us-goldman-salary-idUSKBN0GK1O620140820
http://www.washingtonmonthly.com/magazine/septemberoctober_2014/features/why_are_harvard_grads_still_fl051758.php?page=all
http://blogs.wsj.com/moneybeat/2013/05/30/at-goldman-you-start-among-the-2/

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