I’ve been drafting a blog post the past few days discussing some of my internal struggles of late. Ironically enough, a post came up in one of the forums I check relatively often with a lot of similarities. The writer highlighted some good examples and is generally in line with some of the stuff I wrote. Since I am still finishing up, I figure I would share the post. I found it to be a nice read and something to think about.
Source: wallstreetoasis (SenhorFinance)
My point here is that putting too much effort in issues that are tactical in nature will drain precious time that you could be employing in learning how to be better at something that I will call, for the lack of a better name, the great strategic game of life. Let me share a little framework that I use when I get to fate-changing professional bifurcations and follow up with a few stories.
Let’s kick off by depicting three young fellows: #1 joins public service making $20-30/hr. #2 breaks into IB at the same pay, but aspires to make ten times that within the decade, by then #1 will have at best doubled his pay in real terms. But #2’s riches will come at a hefty lifestyle expense. #3 is starting a business. His hourly “wage” is likely to range from ($25-50) – yes, negative – to extremes of $1k-10k. Variance is not only #3’s circumstance, it’s his friend. Chances are that he will go broke at some point throughout his career. These guys look familiar to you, no doubt.
So what? It’s simple. The ownership and accountability structure of university OCRs, HR departments, corporations and other institutions impacts their incentives: its agents are rewarded for short term results. But unless you’re the heir of a multibillion dollar company, the duration of your life’s balance sheet LHS is much higher than that of those entities. Procedures they follow, plans they draft and speeches they give, all have a hidden yet powerful underlying assumption: that your career choices are mutually exclusive and irreversible, so you better get it right. But are they? Does the set [#1, #2, #3] exhaust the option space of paths for your life? Probably not, right?
Right. Now for the $50 questions. Is IB riskier than Management Consulting? Is MC riskier than F500? Is F500 riskier than public service? Yes, yes, yes. Those answers come quite naturally: we have an innate ability to sense risk, hard-coded in our DNA since our hunter-gatherer ancestors learned the hard way when to run from lions and when to lay camp. Of course this sense can be refined by taking decision theory courses. But I digress.
Now, join me for the coolest part of this nice woolgathering exercise. I will need you to enter into a sort of hypnotic trance, which requires you to:
- Forget about your next year’s compensation
- Forget about rent
- Forget about tuition
- Forget that $5 lattes mean $1,250 by yearend, shut down any trace of the miserly and penny-saving mindset that modern advertising subliminally injected you with
- Forget about the IRR/direct/indirect/opportunity costs/payback/NPV of stuff like MBAs, CFA, certifications, sabbaticals, vacation, and the like
- Forget about the whole “which b-school should I apply to in order to land an offer in [insert job/firm/both here]” argument; forget school rankings, glassdoor.com, etc.
- Forget about “is it better to be a BB MD in NYC, a pimp in Singapore or a paper tycoon in Zimbabwe”-type discussions, which are worthless even when only thought of
Does that change where you want to be in 20 years? No. Why? Because all of this is noise. Eventually you will realize that every single item in this list is worth less than cigarette money. Most importantly, realizing it now will save you a lot of time and from unnecessary anxiety. To me, when at a crossroads, it all boils down to three questions:
- Do I have what it takes to succeed in [insert here the potential paths you see], including a legitimate passion for it?
- Will I hold my head high if I fail, despite having what it takes?
- Will I and my immediate dependents be fine with the circumstances of a post-failure life?
We have been brainwashed to perform well at interviews, to network with the BSD in the office next door, and we only think about questions like these when memorizing sample answers for BB behavioral interviews. But once in a while, think about it: did you ever feel like many of your most troublesome/stressful decisions were quite irrelevant, and you could have focused your energy on working longer, harder, smarter; potentially finding and seizing awesome opportunities?
Part 2 is a few accounts that he shares backing the ideas in part 1:
Story 1: Once upon a time, there was a classmate of mine that was really smart. Well, she wasn’t amazing at classes or exams. But she did OK, and on top of that, she was charismatic, knew how to make friends and how to network like no one else I’ve met. She didn’t come from money and had a hard time paying her way through college, an extra motivation tool.
As soon as she could, she got a part-time job in a BB bank, and performed brilliantly. She went from Analyst to Director in less than 10 years, no b-school. Yes, market was great, especially in the first years, but her story was unique by any standards. She was really obstinate about getting there. And she did it.
Now, for the bad part, she had probably 3 or 4 weeks off since then. She has no close friends anymore, besides work acquaintances, who she herself admits she can’t really trust. Conversely, she isn’t seen as the most trustworthy person. She’s been everywhere in the world, but only for work. Maybe a couple of free afternoons in those cities, and that’s pretty much it for traveling. She’s loaded, of course.
Story 2: Once upon a time, there was a systems engineer in a media company. He went up real fast. He grew in the company in the age of huge recording contracts, when system and infrastructure needs were massive. He was promoted to a regional C-level office, with a 2-3M first-year comp (roughly a third of his entire net worth accumulated over 15 years), and a good perspective of a CEO chair later on.
Times went sour for the industry, and his company was entertaining merger talks. The deal was lined up quickly and he soon learned that his seat was gone. He had a month or so left and a $1M severance. He tried to reposition within the music industry at a high position, bummer. So what did he do?
He knew his knowledge could be valuable in other industries, but he didn’t know where to start. He brought his wife and kids to visit their dream house, and bought it. He was now deep underwater. He started working 100-hour weeks, drafting business plans, buying several thousand dollars worth of data, and he opened himself a job. Regional CEO for a tech company in round C financing. Comp was 200k plus shares. It IPOed and his current worth is in the low 9 digits.
Story 3: This is the shortest one. A really bright high school classmate, born to a very wealthy family. Went to work for a F500 company, finance department. Never really took any risks, stuck to 9-5, never cared to network that much, very slow progression. There are only two things that really distinguish her: (1) she has a lot of free time, and enjoys every minute of it. She travels the world, eats well, lives well. But that all comes with a cost. (2) She’s severely cash constrained.
Being born in a golden crib fosters expensive habits. Expensive habits don’t really go well with a low comp, especially at the mid 30s. She is postponing her wedding for almost 5 years, because for personal reasons she refuses to take a wedding party (one that is socially adequate for her) as a gift from her family.
Bottom line: Risk taking has little to do with recklessness. It is a choice, and it has a lot to do with motivation and life goals. But make sure you understand them well, and you have a good plan B.
People sometimes come with that old bullshit that money isn’t important, but really, I am not writing for a charity website. The monkey ambition par excellence is making a shitload of money and becoming a BSD. That being said, yes, go for it. And, yes, you can measure success and cash.
The final point here just that being worth a ton of cash doesn’t make you a winner. You can only be sure that you “won it” when you look back and you are absolutely sure that it was all worth it. Everyone says you need to be passionate about what you do, and that is true. I hope these stories illustrate why: the cost is just too fucking high if you aren’t.
Hopefully I’ll finish up my post soon. I’m pretty terrible at actually finishing blog posts. I have a tendency to write a bunch of drafts and then never complete any for publishing.
Source: (1), (2)