Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in
Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
Speaker 2: This week on the podcast, I have yet another extra
Speaker 2: special guest. Melissa Smith is co head of Commercial Banking
Speaker 2: for JP Morgan.
Speaker 3: Previously, she was co head of the bank's Innovation Economy Group.
Speaker 2: Really fascinating because she sees the world from a very
Speaker 2: unique perch. Has incredible access to every aspect of both
Speaker 2: commercial and investing banking that a small startup or medium
Speaker 2: sized company and by medium I mean up to two
Speaker 2: billion dollars in revenue might need, and that gives her
Speaker 2: this really incredible set of insights into how these companies
Speaker 2: are growing, what they need, what direction various industries are
Speaker 2: moving in. It's really kind of fascinating because if you
Speaker 2: remember back twenty five years ago, Wall Street and the
Speaker 2: large investment banks and brokers were kind of accused of
Speaker 2: moving up market and abandoning that whole middle section and
Speaker 2: allowing private equity to get a toe hold there. To
Speaker 2: their credit, JP Morgan has aggressively moved back into what
Speaker 2: some people used to call, you know, middle merchant banking
Speaker 2: or middle market banking. And I thought this conversation is
Speaker 2: just a whole world that you don't know exists and
Speaker 2: is in fact robust and growing rapidly. I thought this
Speaker 2: was a fascinating conversation and I think you will also
Speaker 2: with no further ado, my conversation with JP Morgan's Melissa Smith.
Speaker 4: Thank you so much for having me. It's a pleasure
Speaker 4: to be here.
Speaker 2: Well, thank you for being here. Let's talk a little
Speaker 2: bit about your background before we work up to JP Morgan.
Speaker 2: Bachelor's in political science from American University and then you
Speaker 2: get a master's in public policy from University of Chicago,
Speaker 2: not the traditional path for people in finance.
Speaker 3: What was the original plan?
Speaker 5: So I definitely thought that I was going to work
Speaker 5: in the public sector. When I'm recruiting at JP Morgan,
Speaker 5: I always get the question sort of how did you
Speaker 5: get into investment banking? And I would love to tell
Speaker 5: people I had a grand plan. I didn't really have
Speaker 5: a grand plan. But my policy degree was at University
Speaker 5: of Chicago, so it was very heavy econ and stats
Speaker 5: and basically the same core curriculum as the business school.
Speaker 5: And in my summer in between, I worked for Mayor
Speaker 5: Daily in Chicago and economic development issues and as I
Speaker 5: was doing that, I sort of decided it would be
Speaker 5: even more interesting to come to the public sector at
Speaker 5: a more senior level. And I also wanted to make
Speaker 5: sure that I was going somewhere that would really leverage
Speaker 5: the quantitative skills that I was acquiring at Chicago. And
Speaker 5: I also thought it'd be a really good idea to
Speaker 5: be able to pay off my undergrad and grad school life.
Speaker 2: So that makes a lot of sense. But before you
Speaker 2: got your master's in public policy, you have a little
Speaker 2: bit of a different professional experience. You began ballet at
Speaker 2: age four and dance professionally for how many years?
Speaker 4: For three years?
Speaker 2: Tell us about that that is not the usual path
Speaker 2: to Wall Street.
Speaker 5: Definitely not so. Yes, I started taking ballet at a
Speaker 5: very early age.
Speaker 4: That was my.
Speaker 5: Original career aspirations. Starting in seventh grade. My poor mother
Speaker 5: drove me one hundred and twenty miles round trip every
Speaker 5: day to Washington, d C.
Speaker 4: To go to ballet where I was from.
Speaker 5: Left school early at noon, kind of got home at
Speaker 5: nine or ten at night every night, and so, you know,
Speaker 5: quite frankly, my parents were sick of driving me. So
Speaker 5: I graduated from high school year early in order to
Speaker 5: dance and sort of continue my dance training and then
Speaker 5: dance professionally before I went to college. And my again,
Speaker 5: my aspiration was to just continue dancing professionally. As you
Speaker 5: may or may not be aware, you know, very few
Speaker 5: people obviously sort of make it in that world point
Speaker 5: zero zero zero zer zir one percent are ever going
Speaker 5: to be an ABT, which is sort of the pinnacle
Speaker 5: in the US American Ballet theater. And so while I was,
Speaker 5: you know, good enough to be in a small company,
Speaker 5: I was not going to be an ABT and I
Speaker 5: didn't want to totally give up my education, and so
Speaker 5: that's why I stopped.
Speaker 2: I know people who were pretty far along that same process,
Speaker 2: and as they've gotten older, they talk about like they
Speaker 2: sound like old football players talking about injuries, their ankles,
Speaker 2: their toes, their caves, their knees. I'm like, wait, no, no,
Speaker 2: you guys are just dancing and they laugh when you
Speaker 2: say that.
Speaker 3: What was your experience like with that?
Speaker 5: I mean, it was an amazing experience in that it
Speaker 5: teaches you such a huge amount of discipline and you know,
Speaker 5: takes determination, perseverance and kind of grit. You know, just
Speaker 5: back to there's very few people who sort of make it.
Speaker 5: You are in a sort of a siloed world because
Speaker 5: all you do every day is dance. Is kind of
Speaker 5: how I describe it. And I would also say, you know,
Speaker 5: I can have this debate with people all day long.
Speaker 5: I think there is no greater form of athlete than
Speaker 5: a dancer. To your point, they are It is grueling
Speaker 5: on one's body and really really physical, really really physical.
Speaker 5: I'm in any way that any other athletics are. With
Speaker 5: the added sort of thing on top, which is the
Speaker 5: whole point of ballet is to make it look effortless.
Speaker 5: There's no like grunting down the basketball court or the
Speaker 5: football court, right, So it takes the same amount of strength,
Speaker 5: but you add the control of your body on top
Speaker 5: of that to make it look effortless. And that's why,
Speaker 5: you know, sort of the athleticism is very unique. But
Speaker 5: it was an incredible experience and I felt very lucky
Speaker 5: at a young age to have something that I was
Speaker 5: so passionate about. Not everybody sort of has that in
Speaker 5: their lives at an early age.
Speaker 2: And your comment about perseverance and grit, those are personality characteristics.
Speaker 2: I don't know you know whether to call them skills
Speaker 2: or not, but that will help you no matter what
Speaker 2: you do. Absolutely absolutely, So ballet to college to grad school.
Speaker 2: How did you stumble into JP Morgan?
Speaker 5: So again, did not have a grand plan at the
Speaker 5: time that I was in Policy School at Chicago. JP
Speaker 5: Morgan's public finance team recruited specifically at the policy school.
Speaker 5: Just back to it was this, you know, very kind
Speaker 5: of quantitatively based and so kind of randomly went to
Speaker 5: the interview to be quite honest, and was you know,
Speaker 5: did well, was offered a role sort of back back
Speaker 5: to my earlier point, kind of thought it was good
Speaker 5: to get some private sector credibility at my resume, learn
Speaker 5: something new, and I think probably as anybody coming out
Speaker 5: of either undergrad or grad school thinks, you know, oh,
Speaker 5: I'll go do this for five years and sort of.
Speaker 4: See where that leads me.
Speaker 5: And lo and behold, you know, have been at JP
Speaker 5: Moore in to your point, you know, twenty plus years.
Speaker 3: Now, that's amazing.
Speaker 2: So you start as an associate, You're focused on debt? Yes,
Speaker 2: was there an interest in debt? Was that just related
Speaker 2: to public policy?
Speaker 5: So I started in public finance, which is back to
Speaker 5: that's why they were recruiting in the policy, So taxes
Speaker 5: and bonds for municipalities. I did that for about a
Speaker 5: year and a half, two years, and then I moved
Speaker 5: in to deck capital markets for corporates, so kind of
Speaker 5: an easy transition taxes and bonds to a corporate bonds.
Speaker 5: And then I spent you know, the majority of my
Speaker 5: earlier career, the first sixteen years of my career in
Speaker 5: the investment bank in debt capital markets.
Speaker 2: And just for the youngsters listening, twenty five or so
Speaker 2: years ago, high rated municipal tax free bonds were yielding
Speaker 2: five six percent maybe more, maybe more. Just those were
Speaker 2: the before we start where I guess we're only halfway
Speaker 2: through our forty year rate cutting cycle.
Speaker 3: You could get tax re yield.
Speaker 2: At seven percent imagine and a rated not jump.
Speaker 3: Imagine what that was like totally all right, So so you.
Speaker 2: Go from public finance, how did you evolve towards cohad
Speaker 2: of innovation economy?
Speaker 5: So was in a decent deck capital markets? I like
Speaker 5: to say I grew up in deck capital markets, which,
Speaker 5: as an aside, I think that was such a great
Speaker 5: experience because you know, in DCM you're sitting on the
Speaker 5: trading floor, right. Loved being in that environment because I
Speaker 5: think it fosters learning so much more quickly. I literally
Speaker 5: sat next to the managing director that I worked for
Speaker 5: and listen on all the client calls and sort of
Speaker 5: you understand much more quickly how to handle specific situations.
Speaker 5: I also it was sort of an interesting dynamic where
Speaker 5: you're on the private side, on the origination side, talking
Speaker 5: to corporate clients and advising them about their next you know,
Speaker 5: debt raise or their funding needs, but you have to
Speaker 5: spend a lot of time with the traders who are
Speaker 5: trading the bonds and the public markets, and they're obviously
Speaker 5: on the public side, so you're sort of walled off, right,
Speaker 5: But then you'd have to go over on to talk
Speaker 5: to the traders, and sometimes you'd walk over there and
Speaker 5: you need information from them, but they can't give you
Speaker 5: any information, and so you'd walk over there and sometimes
Speaker 5: they sort of look at you because they're busy, and
Speaker 5: you sort of get this feeling, you know, get out
Speaker 5: of my face, Well what do you want? So I
Speaker 5: think it was an interesting experience because you have to
Speaker 5: kind of, you know, gain some credibility with them, and
Speaker 5: you know, ask insightful questions, show that you have some
Speaker 5: sort of use. So I thought thought it was a
Speaker 5: great way to kind of like grow up and learn
Speaker 5: about the business. But again, was in DCM for sixteen years,
Speaker 5: including three years that I was in London running our
Speaker 5: European dek Coup of Markets business.
Speaker 2: I got a lot of questions for you about Europe,
Speaker 2: but we'll so back to that later. I'm looking at
Speaker 2: my own handwriting twenty two or twenty seven years?
Speaker 3: Is that twenty.
Speaker 2: Seven years you've been there?
Speaker 5: I think it's twenty six so going on twenty so
Speaker 5: going on twenty seven now I feel old.
Speaker 3: So it's not.
Speaker 2: Well, what's more fascinating is and you started when you were,
Speaker 2: you know, seventeen, so there got a big deal. But
Speaker 2: you know, that's relatively rare these days to be at
Speaker 2: any one firm for quarter plus century. What is so
Speaker 2: special at JP Morgan? What's kept you there for so long?
Speaker 4: Sure?
Speaker 5: So first I would say you will actually find many
Speaker 5: senior people at JP Morgan who have been there for
Speaker 5: twenty years plus, and I think that is obviously a
Speaker 5: great testament to the culture that we have at the firm. Secondly,
Speaker 5: I would say JP Morgan is a large place, clearly,
Speaker 5: and what that means is there are multiple lines of
Speaker 5: business with many different things that you can do over
Speaker 5: the course of your career. And generally speaking, we are
Speaker 5: sort of number one or number two in everything that
Speaker 5: we do, which which again is a great privilege to
Speaker 5: work there from that perspective, so it doesn't make a
Speaker 5: lot of sense to go necessarily to another firm when
Speaker 5: you're sort of trading down, if you will.
Speaker 4: In some instances maybe I shouldn't say that the way.
Speaker 5: But and so I think what's cut me there is,
Speaker 5: you know, a just the opportunity to do many different things,
Speaker 5: learn about many other aspects of the business. And two,
Speaker 5: you know, obviously you know very much appreciate kind of
Speaker 5: the culture and environment at JP Morgan kind of back
Speaker 5: to that's why people stay there for so long. It's
Speaker 5: a very team morek oriented environment. You know, we like
Speaker 5: to quote JP Morgan first class business in a first
Speaker 5: class way. We take that very seriously and just appreciated
Speaker 5: that about the environment.
Speaker 2: So let's talk about your dual role, your your cohead
Speaker 2: of Innovation Economy and your head of specialized industries. Tell
Speaker 2: us what each of those roles encompass.
Speaker 5: Sure, so our specialized Industry's business sits within our our
Speaker 5: middle market business, and just to define that middle market
Speaker 5: sort of means in the commercial banking, right, so anything
Speaker 5: from kind of a very early stage startup to a
Speaker 5: company that's up to two billion in top line revenue,
Speaker 5: so kind of a very wide wide readmit.
Speaker 4: If you will.
Speaker 5: About half of that business is the industry business that
Speaker 5: I run, So I have nineteen different industry teams, so
Speaker 5: bankers that are experts in those specific industries to provide
Speaker 5: obviously coverage to clients in those industries. And I would
Speaker 5: just say, I mean, we are just a big believer
Speaker 5: in the the you know, better coverage and better that
Speaker 5: we can much better serve a client when our bankers
Speaker 5: have that expertise in terms of the industry. So we're
Speaker 5: kind of very big believers in industry expertise and kind
Speaker 5: of hyper segmentation in terms of covering companies at different
Speaker 5: stages and sizes in their life cycle. So nineteen different industries.
Speaker 5: Innovation economy is basically a part of that, and we
Speaker 5: use that innovation economy kind of umbrella term to describe
Speaker 5: tech early stage tech, life sciences, health tech, climate tech
Speaker 5: businesses which are generally making high growth VC backs businesses overall.
Speaker 2: Well, let's talk a little bit about that. I'm familiar
Speaker 2: with a lot of the companies that vcs tend to back.
Speaker 2: But one of the things that we've been noticing very
Speaker 2: obviously over the past few years is the amount of
Speaker 2: not venture income, but either private equity or private debt.
Speaker 2: How does that play out in the companies you're servicing.
Speaker 4: Absolutely two really important trends.
Speaker 5: So I would say so within the innovation economy, to
Speaker 5: your point, a lot of the companies tend to be
Speaker 5: VC backed, but there definitely is growing growing sort of
Speaker 5: crossover into into growth equity funds. I think in the
Speaker 5: middle market commercial banking business as a whole, there has
Speaker 5: been a ton of activity from the financial sponsor community,
Speaker 5: so a ton of consolidation of those middle market businesses.
Speaker 5: And when you just look at sort of the levels
Speaker 5: of activity, like what are sponsors buying, it is within
Speaker 5: that middle market space. So that has definitely driven a
Speaker 5: lot of activity overall and something that we spend a
Speaker 5: lot of time talking about with with our clients. And
Speaker 5: then secondly, to your point, on the private credit direct
Speaker 5: lending side, that also has been just a massive trend
Speaker 5: impacting sort of that part of the business with these
Speaker 5: companies looking for alternative sources of capital and direct lending
Speaker 5: being a great, a great alternative. That's in fact why
Speaker 5: we as a firm sort of developed our own direct
Speaker 5: lending capability a couple of years ago. And I think
Speaker 5: the great benefit of that is again we sort of
Speaker 5: pride ourselves on being kind of financing our product agnostic. Right,
Speaker 5: we can do a traditional bank loan, we can do
Speaker 5: sort of a sort of you know, public execution and
Speaker 5: the public debt markets, or we can do a direct
Speaker 5: lending transaction sort of whatever best fits the company's objectives.
Speaker 4: We can sort of do it all.
Speaker 2: So let's talk about that, because you know, part of
Speaker 2: your job description is delivering a cohesive banking experience to
Speaker 2: fast growing companies. So the two different divisions that you're
Speaker 2: running head or cohed innovation Economy and specialized industries obviously
Speaker 2: have to work together. What other divisions at JP Morgan
Speaker 2: are you collaborating with?
Speaker 4: Sure?
Speaker 5: I would say just generally we collaborate across the firm
Speaker 5: and everything that we do. So the commercial bank is
Speaker 5: very broadly speaking, regardless of industry, regardless of what aspect
Speaker 5: of the commercial bank we're talking about. We're constantly working
Speaker 5: with our partners in the investment bank when companies need
Speaker 5: obviously excuse me, strategic capital raising M and a advisory
Speaker 5: whatever the case may be. So we're constantly kind of
Speaker 5: working in conjunction with one another. And at the same
Speaker 5: time we are often working with our asset management colleagues
Speaker 5: when companies have you know, large cash balances that they
Speaker 5: need to invest, and our private banking colleagues. And I
Speaker 5: think a good example of that is within the innovation
Speaker 5: economy kind of ecosystem overall, where because it is so interconnected.
Speaker 5: When you think about VC firms funding you know, portfolio companies,
Speaker 5: those portfolio companies having founders, they're oftentimes there repeat founders.
Speaker 5: It's important that you can serve sort of the needs
Speaker 5: of that entire, very interconnected ecosystem.
Speaker 4: So bankers on my.
Speaker 5: Team, on the Innovation Economy team are serving those portfolio
Speaker 5: companies right But at the same time we're working with
Speaker 5: our colleagues and asset management and the private bank who
Speaker 5: bank the VC firms themselves and bank the VC partners
Speaker 5: and the founders for their private wealth needs.
Speaker 4: So our objective is to deliver sort of.
Speaker 5: All the needs of the ecosystem, and that's why sort
Speaker 5: of by definition, we're always working across lines of business.
Speaker 2: So really what you're saying is from a checking account
Speaker 2: up to a secondary financing, private debt, up to an
Speaker 2: IPO and even beyond that if there's an acquisition or
Speaker 2: a merger. You guys are full service not only commercial bank,
Speaker 2: but investment bank.
Speaker 3: There really is in any space that you.
Speaker 2: Guys can't play in and service exactly what a fast
Speaker 2: growing startup needs exactly.
Speaker 5: You said it perfectly, and as I often like to say,
Speaker 5: we serve companies from startup to IPO and beyond, and
Speaker 5: so you know, again, we believe we're really one of
Speaker 5: the few firms who can actually serve every.
Speaker 4: Need of these companies. And again they're the founders themselves.
Speaker 3: Huh. Really really interesting thing.
Speaker 2: So let's talk a little bit about middle market banking.
Speaker 2: You referred earlier the definition of middle market banking as
Speaker 2: up to two billion in revenues.
Speaker 4: Top line running.
Speaker 2: So that's this is not a little These are not
Speaker 2: all little companies. That's a two billion in revenue is
Speaker 2: a pretty decent sized company.
Speaker 5: Absolutely, and again we have teams focused on the smaller size.
Speaker 4: What we call emerging middle market.
Speaker 5: So think about that's kind of twenty million to one
Speaker 5: hundred million in top line revenue, innovation economy doing the
Speaker 5: high growth, you know, VC backed startups, and then a
Speaker 5: bunch of different industries obviously within kind of that broader
Speaker 5: commercial banking universe and bankers that are focused simply on
Speaker 5: one hundred million and plus in top line.
Speaker 2: Revenue's that's really interesting. And we've talked earlier about the
Speaker 2: role of venture banking in this Where does that fit in,
Speaker 2: Where does venture capital fin into startups, and where does
Speaker 2: venture banking fit in as companies get a little.
Speaker 5: Larger generally speaking, And our objective is to really become
Speaker 5: the company's primary operating bank and trusted advisor from the
Speaker 5: very beginning, right, And so as an example of that,
Speaker 5: we now have a startup banking team that actually covers
Speaker 5: companies at pre seed and seed stage, so oftentime, could
Speaker 5: be before they've even raised an institutional.
Speaker 4: Round of capital.
Speaker 5: And at that point in time, their needs are very
Speaker 5: sort of simple, if you will, right, They need a
Speaker 5: bank account, they need to pay their employees, they need
Speaker 5: to have a way to sort of collect funds. They
Speaker 5: may need a credit card, just very simple banking needs,
Speaker 5: and then obviously as the companies you know continue to grow,
Speaker 5: those needs become more complex over time, including the need
Speaker 5: to either raise additional capital and whether that be from
Speaker 5: a venture capital fund or whoever that may.
Speaker 4: Be coming from.
Speaker 5: They may need some debt financing, and sort of on
Speaker 5: and on and on in terms of what they ultimately
Speaker 5: need to achieve their objectives and kind of become the
Speaker 5: company that they want to become.
Speaker 2: So what's the split between the companies you work with
Speaker 2: that are VC funded, that are private equity backed, or
Speaker 2: just bootstrapped by the founders themselves.
Speaker 5: So I would say again it very it would very
Speaker 5: significantly depending on the industries that we're talking about. But
Speaker 5: I if just we focus on the innovation economy business specifically,
Speaker 5: the vast majority of those are going to be VC backed.
Speaker 5: As I mentioned, of course, you know sort of the
Speaker 5: crossover if you will, between growth of equity and VC.
Speaker 5: The lines continue to get blurred, But I would say
Speaker 5: about twentysh percent of the business is sort of PE
Speaker 5: backed and the rest is VC back. Just brought broad numbers.
Speaker 2: Bootstrapping still goes on, or is that.
Speaker 4: It does again?
Speaker 5: And you see that you know, certainly at the sort
Speaker 5: of preceed and seed stage and then but I would
Speaker 5: say it's still it's a minority, right of the larger
Speaker 5: companies within the innovation economy.
Speaker 2: So I'm thinking about their balance sheet, what's the split
Speaker 2: between how much is equity, how much is debt or
Speaker 2: do you do a combination of debt and equity?
Speaker 3: What does this look like today?
Speaker 1: Yeah?
Speaker 5: No, absolutely so Again, the whole purpose of having a
Speaker 5: partner like JP Morgan is that a we can sort
Speaker 5: of help the companies think through what the optimal capital
Speaker 5: structure is and back to sort of the point of
Speaker 5: we're sort of product agnostic, depending on what the company
Speaker 5: choose to do. Most of these companies that are high
Speaker 5: growth VC backed in what we call the innovation economy
Speaker 5: business tend to still be pre profit, right. They're growing
Speaker 5: really rapidly. They're throwing everything back into the business in
Speaker 5: order to achieve scale. So for the most part, their
Speaker 5: use of debt is quite small, usually some kind of
Speaker 5: small venture debt component, and we really want to work
Speaker 5: with those companies to think about when is the right
Speaker 5: time to put debt in their capital structure, depending again
Speaker 5: on where they are and sort of that life cycle,
Speaker 5: and depending on sort of what their cash burn looks like,
Speaker 5: how close they are to the next capital raise, what
Speaker 5: is the likelihood that they're actually going to be able
Speaker 5: to raise the next round of capital. So it is
Speaker 5: a combination of both, but again, the majority of their
Speaker 5: capital structure is definitively going to be equity given that
Speaker 5: they're cash burning companies generally speaking.
Speaker 2: Yeah, and I'm assuming you're not involved in angel rounds
Speaker 2: or very early seed stuff, which kind of leads me
Speaker 2: to what sort of criteria does your team use when
Speaker 2: you're trying to figure out, Hey, is this an early
Speaker 2: stage company that we want to have a banking relationship.
Speaker 3: Can we be value add to them?
Speaker 2: Or they still too novel, too green, no business, no revenue, Like,
Speaker 2: how do what sort of corterity do you use it?
Speaker 5: So I think about it as as quite as a pyramid.
Speaker 5: So there is a lot that we can do for
Speaker 5: companies across, you know, all stages of their life cycle.
Speaker 5: But when you're talking about the very earliest stages back
Speaker 5: to they have fairly simplistic needs, right, and so we
Speaker 5: want to be able to bank and can bank as
Speaker 5: many of those companies as possible, assuming that you know,
Speaker 5: there's we don't find anything from a reputational risk perspective
Speaker 5: or something or an industry that we think is challenging.
Speaker 5: But I think again, becoming their primary operating bank, helping
Speaker 5: them optimize their working capital is sort of like the
Speaker 5: biggest challenge that these companies are. Not the biggest challenge,
Speaker 5: but one of the challenges that these companies face. So
Speaker 5: we can bank in terms of providing a bank account,
Speaker 5: credit card again, sort of payables, receivables, many, many, many companies.
Speaker 5: As we think about which are the companies we're going
Speaker 5: to lend to, right, which is a sort of the
Speaker 5: next round of the pyramid, if you will, and that's
Speaker 5: we obviously need to really assess their sustainability over time,
Speaker 5: their ability to raise the next round of capital, because
Speaker 5: when you think about venture debt, that's really one of
Speaker 5: the gating factors. Is this company going to be able
Speaker 5: to raise the next round of capital, what's the cash
Speaker 5: burn look like to obviously get them to that next
Speaker 5: capital raise, and how are they using debt to sort
Speaker 5: of extend that runway overall?
Speaker 4: So those are sort of the types.
Speaker 5: Of things that we're thinking about when we think about
Speaker 5: which of those companies that are sort of credit worthy
Speaker 5: for us to be lending to and obviously support them
Speaker 5: to again get to the next roundcap really interesting.
Speaker 2: So I have a recollection of the era following the
Speaker 2: dot com ramp up and then the crash in two
Speaker 2: thousand and it felt like a lot of the major
Speaker 2: banks had moved up market, like the middle market was
Speaker 2: kind of abandoned, so and lots of private equity seem
Speaker 2: to have filled that gap. So kind of fascinated that
Speaker 2: a giant bank like JP Morgan is addressing that same
Speaker 2: market segment that generally people seem to have feel like
Speaker 2: the bigger Wall Street banks have abandoned. You're telling me
Speaker 2: you're focusing in that.
Speaker 5: Space absolutely, because I think, and i'll again kind of
Speaker 5: focus on two segments, if you will, kind of just
Speaker 5: the broader commercial banking business and then the innovation economy
Speaker 5: of business. Specifically, when you think about the broader commercial
Speaker 5: banking business, right, so not just high growth VC backed companies,
Speaker 5: but small businesses overall. Right, there are three hundred thousand,
Speaker 5: you know, small businesses across across the country that represent
Speaker 5: you know, thirteen trillion in revenues and employee forty million people, right,
Speaker 5: So it is a massive part of the economy overall
Speaker 5: that we very much want to serve, and we've been
Speaker 5: expanding that business quite substantially, mainly through sort of geographic
Speaker 5: expansion over the course of the last several years. We
Speaker 5: serve you know, thirty two thousand middle market companies today
Speaker 5: across our commercial bank. So certainly, again there's back to
Speaker 5: a lot that we want to do and can do
Speaker 5: to support small business as kind of an engine of
Speaker 5: the economy overall that we very much think is there's
Speaker 5: an opportunity there for us, but it's also sort of a.
Speaker 4: Responsibility right for us to serve those businesses.
Speaker 5: I think on the innovation economy side, just back to
Speaker 5: how I mean when you look at the disruption going
Speaker 5: on across every industry today and the innovation, JP Morigan
Speaker 5: clearly wants to be there to support those founders with
Speaker 5: sort of the next innovative idea. And I always like
Speaker 5: to point to the fact that you know, we've been
Speaker 5: serving innovative companies literally for over two hundred years when
Speaker 5: you look back at our history, right, we supported Thomas
Speaker 5: Edison and the invention of the light bulb, the railroads,
Speaker 5: the automobile like those were disruptors at that time. But
Speaker 5: I think on the innovation economy business specifically, when we
Speaker 5: first started, I'll give you a little history of the business.
Speaker 5: When we first sort of started a dedicated focus. So
Speaker 5: we had always served early stage tech companies in the
Speaker 5: commercial bank, but just by sort of a local banker
Speaker 5: that didn't.
Speaker 4: Have any expertise in tech. Right, they cover all industries.
Speaker 5: So back in twenty sixteen twenty seventeen, we put in
Speaker 5: place sort of a dedicated team of bankers. At that
Speaker 5: point in time, I would say we primarily did. We
Speaker 5: were very good in terms of our capabilities at serving
Speaker 5: let's call it kind of series C and beyond right,
Speaker 5: And when I came into this role, we very much
Speaker 5: noticed that a founder right and for their company would
Speaker 5: walk into a Chase branch, they'd open a bank account,
Speaker 5: and then they would quickly leave that Chase branch and
Speaker 5: move to one of our competitors who were very good
Speaker 5: at serving early stage, high growth, early stage VC back companies,
Speaker 5: and then they'd come back to us at sort of
Speaker 5: series C right generalization. So when I came into this
Speaker 5: role sort of said, what are we missing? Right in
Speaker 5: that very early stage in terms of our capabilities, Like,
Speaker 5: let's skip that part where they leave the JP Morgan
Speaker 5: sort of franchise, right, And really what we were missing
Speaker 5: was sort of a very simplified treasury what we call
Speaker 5: treasury kind of payments bundle for companies to manage working capital,
Speaker 5: a simple digital platform for earlier stage companies, and a
Speaker 5: venture de capability. And that's what we really built out
Speaker 5: sort of from kind of twenty seventeen twenty eighteen over
Speaker 5: the course of the past several years, so that we
Speaker 5: had best in class capabilities both for early stage companies
Speaker 5: as well as late stage companies where everybody thinks about
Speaker 5: JP Morgan is serving later stage.
Speaker 2: So you mentioned earlier that you're expanding geographically. We'll talk
Speaker 2: about international in a few minutes, but let's stay in
Speaker 2: the United States for a bit. I think of JP
Speaker 2: Morgan down on Wall Street, very New York based. What
Speaker 2: geographies have you been expanding to. What parts of the
Speaker 2: country seem to be very fast growing these days?
Speaker 4: Sure?
Speaker 5: Well, so I would just say today our commercial banking business,
Speaker 5: you know, is in the eighty five you know, fastest
Speaker 5: growing top sort of msas across the country. We have
Speaker 5: one hundred and twenty five offices across the country, two
Speaker 5: thousand plus bankers across the country. A big part of
Speaker 5: that expansion over really the last decade has been sort
Speaker 5: of California in the West coast overall, where we prior
Speaker 5: to the Wallmu acquisition didn't have a ton of sort
Speaker 5: of like retail presence and or sort of boots on
Speaker 5: the ground there. So that's accounted for a lot of
Speaker 5: that geographic expansion as well as you know, expansion into
Speaker 5: the Southeast and sort of other states in the West obviously,
Speaker 5: sort of moving from what historically, you know, decades and
Speaker 5: decades ago, was more of an kind of East Coast
Speaker 5: dominated business, and that's what's accounted for a lot of
Speaker 5: the growth within the business as a whole.
Speaker 2: What about down south places like Charlotte or Nashville, or
Speaker 2: Texas or Florida.
Speaker 5: Absolutely, I mean when you look at again kind of
Speaker 5: depends on the industry, but when you look at the
Speaker 5: innovation economy business and kind of where some of the
Speaker 5: newer markets are. From a VC funding perspective, you are
Speaker 5: seeing a lot of growth in you know, the Phillies
Speaker 5: of the world, the DC's of the world, you know,
Speaker 5: San Diego. I mean, certainly there's still like a huge,
Speaker 5: huge concentration in kind of you know, the Bay area
Speaker 5: and then kind of New York Boston area. But there
Speaker 5: are cities. Miami is a good example for our healthcare business.
Speaker 5: Nashville is you know, has exploed did over the past
Speaker 5: several years. So again depending on the industry, it depends
Speaker 5: on sort of where our concentration of bankers are. But
Speaker 5: you know, back to that's why we are in one
Speaker 5: hundred and twenty five cities across the country.
Speaker 2: So let's talk international. You spent was it a year
Speaker 2: in London?
Speaker 4: Three years?
Speaker 3: Three years?
Speaker 2: Yes, So you're an old hand there you go dealing
Speaker 2: with Europe. So let's talk a little bit about what's
Speaker 2: happening in the UK and what's going on in Europe.
Speaker 2: How do you look at those markets? Can you play
Speaker 2: in those spaces? Tell us a little bit about what
Speaker 2: the work is like there.
Speaker 5: Sure, So I would say from a commercial banking perspective,
Speaker 5: we definitely support companies globally, and I do think that's
Speaker 5: again one of JP Morgan's competitive advantages. As earlier stage
Speaker 5: companies are looking to expand internationally, we can support them
Speaker 5: across you know, basically any market they're gonna they're going
Speaker 5: to across, you know, both Amya and a PAC. So yes,
Speaker 5: we support companies there. And then we have teams on
Speaker 5: the ground in Europe and Asia, et cetera that are
Speaker 5: supporting early stage companies that are headquarters in Europe in
Speaker 5: a PAC and their expansion into the US. So kind
Speaker 5: of doing it both ways, inbound and outbound. And again
Speaker 5: I think that that's something that with our long history
Speaker 5: of operating in these various jurisdictions, helping to advise companies
Speaker 5: on sort of the right strategy as they think about
Speaker 5: those international expansions.
Speaker 2: Huh really really interesting. What percentage of your business is international?
Speaker 2: I can't imagine JP Mugan feels like it's so dominant
Speaker 2: in the US. What's the perception like overseas?
Speaker 3: How is it?
Speaker 5: So, I would say for our commercial banking business. So
Speaker 5: let me separate this out of a moment. So again,
Speaker 5: the commercial banking business the US is serving US headquarter companies,
Speaker 5: but when they have a European sub or an Asian sub,
Speaker 5: that clearly is a smaller percentage of the company's overall revenue.
Speaker 5: So a smaller percentage of like the revenue that we
Speaker 5: would earn as well, but we're supporting them globally. The
Speaker 5: commercial banking sort of build out in Europe and in
Speaker 5: Asia for bankers on the ground supporting European and Asian
Speaker 5: headquarter companies is a newer effort, newer over the past
Speaker 5: seven or eight years. So it's not as robust in
Speaker 5: terms of our robust is the wrong word. It's not
Speaker 5: as far along right as I mean.
Speaker 2: It is clearly, clearly well established here for hundreds of years.
Speaker 5: Hundreds of years, and we've been in Europe and Asia
Speaker 5: for hundreds of years. Investment banking hundreds of years is
Speaker 5: maybe a strong word, but for many, many, many decades
Speaker 5: from an investment banking perspective. But the build out of
Speaker 5: the commercial bank supporting smaller sized companies in those markets
Speaker 5: is newer seven, seven or eight years ago, and.
Speaker 2: That's a white space that's got to be wide open.
Speaker 5: Now, absolutely absolutely, and again we're finding great traction because
Speaker 5: there is so much obviously, as we all are well aware,
Speaker 5: economies and companies operate in such a global fashion today
Speaker 5: that a company sitting in Europe obviously has generally speaking
Speaker 5: plans to expand in other parts of the globe, the
Speaker 5: US being a huge market, particularly across tech and consumer
Speaker 5: facing businesses, et cetera, So that connectivity is important.
Speaker 2: And you said earlier from checking to IPO, how do
Speaker 2: you think about the IPO market which has been so
Speaker 2: quiet the past few years. We really haven't seen a
Speaker 2: lot of companies coming public. How do you view this,
Speaker 2: When might that change and how does this impact your business?
Speaker 5: Sure, so, we are definitely optimistic on the IPO market
Speaker 5: this year, and I think even you know, in twenty
Speaker 5: twenty four saw a significant uptick in issuance versus twenty
Speaker 5: twenty three. Obviously we were coming off a low base,
Speaker 5: but we saw about thirty three billion in IPO volume
Speaker 5: in twenty twenty four. We think that that could double
Speaker 5: this year, you know, just given I think a stable backdrop,
Speaker 5: more kind of confidence all around the markets. We've also
Speaker 5: just seen a more stable you know, US economy obviously
Speaker 5: so far, you know, knock on wood, feels like we
Speaker 5: sort of took a soft landing right.
Speaker 4: In the US.
Speaker 5: We now have rates on the decline, which is supportive
Speaker 5: of the IPO market. We'll sort of see if that,
Speaker 5: you know, how that kind of plays out of the course,
Speaker 5: of the year, and then I think, you know, the
Speaker 5: expectation of sort of double digit earnings growth in the
Speaker 5: coming year is also very supportive of the equity market.
Speaker 5: So we do think you're going to see a lot
Speaker 5: more activity in the IPO market this year. And obviously
Speaker 5: there's just a ton of supply that's built up over
Speaker 5: the past couple of years of as companies have stayed
Speaker 5: private longer and waiting for a better window to access
Speaker 5: that IPO market.
Speaker 2: So we're recording this at the end of January. I
Speaker 2: don't recall seeing anybody's forecast for the year ahead saying, hey, really,
Speaker 2: an expensive AI from China Deep Seek is going to
Speaker 2: completely disrupt everything. How do you look at the not
Speaker 2: just the technological disruption that we're all experiencing, but the
Speaker 2: incredible pace as to how rapid everything is advancing.
Speaker 3: How do you think about this and how does that
Speaker 3: impact the day job?
Speaker 2: How does it impact the work?
Speaker 5: Sure, so clearly, you know, just talking about Deep Seek specifically,
Speaker 5: obviously just a huge impact on the equity markets.
Speaker 4: You know, as you.
Speaker 5: Saw a lot of a lot of some of the
Speaker 5: larger names trading down significantly, we did see a rebound
Speaker 5: sort of the following day, which was which was beneficial.
Speaker 5: I do think, you know, AI is obviously going to
Speaker 5: be continued to be a big story over the course
Speaker 5: of twenty twenty five. There's also just a tremendous amount
Speaker 5: of capital that needs to be raised to kind of
Speaker 5: support that industry overall. And so I do think, like
Speaker 5: back to sort of the comments about sort of stable
Speaker 5: macroeconomic backdrop rates declining, all of that will be supportive
Speaker 5: of the broader IPO market and the ability to access
Speaker 5: those markets. Yes, we're going to kind of continue to
Speaker 5: see volatility with some of these surprises, like the deep
Speaker 5: Sake example, but it hasn't really changed our view, our
Speaker 5: very constructive view on the market going forward.
Speaker 2: Let's talk a little bit about some of your thoughts
Speaker 2: on leadership at the bank and long term strategy. If
Speaker 2: we go back five or six years, you're a managing
Speaker 2: director and head of specialized industries. What types of firms
Speaker 2: were you working with then and are you still working
Speaker 2: with the same firms or has your portfolio widened since then?
Speaker 5: Well, I would say that portfolio has widened in the
Speaker 5: sense that we've continued to add various industries. So specialized
Speaker 5: industries I think I mentioned before it's nineteen different industries.
Speaker 5: There was some example, Yeah, so that spans a very
Speaker 5: wide remit. So some of our very mature businesses, for instance,
Speaker 5: our government business supporting states and municipalities and school districts
Speaker 5: across the country. We've been doing excuse me doing that
Speaker 5: since you know Japan worn sort of was founded. So
Speaker 5: the government business are not for profit healthcare, hire ed
Speaker 5: and nonprofit business. Again to very mature businesses. We also
Speaker 5: have you know, beverage food and nag our M and
Speaker 5: C business supporting some of the subsidiaries. Media, communications and
Speaker 5: digital infrastructure very hot sector right now in terms of
Speaker 5: the huge need for data centers and capital for data
Speaker 5: centers overall, the innovation economy business again as I mentioned,
Speaker 5: sort of part of all that. So those are some
Speaker 5: examples of the industries that that fall within that that remit.
Speaker 5: So again, when we first started specialized industries, I'm not
Speaker 5: going to remember the exact number, but we probably had
Speaker 5: five industries within that, right, and so we've just continued
Speaker 5: to build out that dedicated expertise over the course of
Speaker 5: the past several years, which we've just found great success in.
Speaker 2: So how do you assess risk when you're rolling into
Speaker 2: a new sector or specialized industry. When you're working in
Speaker 2: a space for a while, you kind of learn what
Speaker 2: the you know, where the minds are laid. When you
Speaker 2: move into a new space, how do you approach that?
Speaker 5: Well, I would just say it's not as if we
Speaker 5: weren't banking companies in each of those industries before. It's
Speaker 5: simply that we did not have dedicated bankers that only did.
Speaker 4: That, right, So back to this is why we very.
Speaker 5: Much believe and it's been proven out in terms of
Speaker 5: the growth that we've seen in sort of the specialized
Speaker 5: industries business. So we sort of focus in on the
Speaker 5: sectors where we think it makes a difference for the
Speaker 5: banker to have that industry expertise. Keep in mind, we
Speaker 5: partner with the investment bank on the m and A
Speaker 5: advisory and strategic capital raising and they are all industry focused, right,
Speaker 5: But does the commercial banker need that industry expertise? Is
Speaker 5: there something very different about the credit risk associated with
Speaker 5: those industries that that banker expertise helps and that we
Speaker 5: need sort of dedicated credit teams.
Speaker 4: Again, with the focus on those specific.
Speaker 5: Industries, is there something different about the product and solution
Speaker 5: set for those companies that would require us to have
Speaker 5: that dedicated focus back to kind of the innovation economy business.
Speaker 5: As I was saying earlier, we didn't have the early
Speaker 5: stage capabilities that we needed, you know, seven eight years ago,
Speaker 5: and that's what it was a very kind of bespoke
Speaker 5: to those high growth companies and the challenges.
Speaker 4: That we fade that they face that led us to.
Speaker 5: Kind of build out those digital capabilities and bundled solutions.
Speaker 5: So that's a good example of why we felt like
Speaker 5: we needed to build that as an industry.
Speaker 2: So it's kind of fascinating that you're serving clients who
Speaker 2: are rapidly innovating, expanding into spaces that wholly on we're seeing.
Speaker 2: How do you keep up with that, how do you
Speaker 2: make sure that you're innovative and cutting edge, and how
Speaker 2: do you build this when it it's almost as if
Speaker 2: your clients are outpacing you know, the rest of the market.
Speaker 5: Absolutely, and I would say that is one of the
Speaker 5: best parts of my job is meeting with founders all
Speaker 5: day long and really obviously hearing about their businesses and
Speaker 5: what they are doing to kind of disrupt industries, new
Speaker 5: technologies and that is extraordinarily rewarding in terms of hearing
Speaker 5: about that and how we can help support that growth. Overall,
Speaker 5: it is very different meeting with again kind of back
Speaker 5: to my earlier background spending time in deck capital markets.
Speaker 5: You're basically covering Fortune five hundred companies. It's very which
Speaker 5: is its own unique circumstances and those companies have their
Speaker 5: own challenges. But it's very different speaking to the treasure
Speaker 5: CFO or CEO of Fortune five hundred company than a founder, right, Like,
Speaker 5: there's just it's a very different.
Speaker 3: Different focus, different.
Speaker 4: Space exactly, and skill set.
Speaker 5: So that again is sort of the most fun part
Speaker 5: of my job is being able to interact with all
Speaker 5: of those founders and hear about sort of the technology
Speaker 5: to come.
Speaker 2: So I'm intrigued at about the work you did in
Speaker 2: debt capital markets, especially when you were in Europe for
Speaker 2: three years. What are the major differences between the way
Speaker 2: we manage debt capital markets and the way they do?
Speaker 3: Is it structural?
Speaker 2: Tell us about you know, why is it that? Are
Speaker 2: they very similar or are they different?
Speaker 5: Well, so a couple things, I would say that, just
Speaker 5: one in terms of how we think about covering companies
Speaker 5: in deck hon arcerts. In the US, we're organized by
Speaker 5: industry team. In Europe for obviously obviously reasons were organized
Speaker 5: by country team given language differences. So that again was
Speaker 5: something that I very much enjoyed, was sitting back to
Speaker 5: in DCM. You're in the trading floor environment. I would
Speaker 5: have my UK team over here, my Germany team, my
Speaker 5: Italy team, so you know, everyone speaking different languages. I
Speaker 5: kept thinking I was going to learn five languages by osmosis.
Speaker 5: That did not work, so unfortunately.
Speaker 4: That's not the case.
Speaker 5: But that was that was a great experience overall. I
Speaker 5: was you know, the European debt capital markets are tend
Speaker 5: to be a little bit more volatile than the US.
Speaker 5: It's also because they are a lot smaller, right in
Speaker 5: terms of just the total volume the investor base that
Speaker 5: sort of supports those markets all around, and so that's
Speaker 5: one of the major differences. What I would say is
Speaker 5: for larger global companies, having access to that European market
Speaker 5: has been quite advantageous, both from a capacity perspective if
Speaker 5: they were running up against capacity constraints for a very
Speaker 5: frequent issue obviously in the US, and two just from
Speaker 5: a cost of funding perspective. So over the last several years,
Speaker 5: given to the divergence and interest rates between the US
Speaker 5: and Europe, for many companies, it's actually been cheaper to
Speaker 5: issue bonds or you know, access to debt markets in
Speaker 5: Europe than it has been in the US. Right in US,
Speaker 5: interest rates were higher. So that's obviously just a great
Speaker 5: alternative right for companies when they need to access enormous
Speaker 5: amounts of capital and or are obviously very focused on
Speaker 5: sort of what the most advantageous cost is.
Speaker 2: So I know you're not an economist, so I'm not
Speaker 2: going to ask you that question, but it just feels
Speaker 2: like Europe cannot get out of its own way for
Speaker 2: I don't know, past five years, ten years, go back
Speaker 2: to Brexit and nearly Grexit. What's going on that Europe
Speaker 2: seems to be almost structurally lagging the US and having
Speaker 2: such difficulty finding its footing.
Speaker 5: Well, I'm also not an expert on politics, so I'm
Speaker 5: not going to comment on that because I think there's
Speaker 5: something to be said there. But what I would say
Speaker 5: from sort of a structural perspective is I think probably
Speaker 5: one of the bigger differences today is demographics, where kind
Speaker 5: of working age population in Europe is declining. I think
Speaker 5: it's still growing modestly in the US, and obviously that
Speaker 5: will turn in the US at some point in time,
Speaker 5: but so that that has been sort of one issue
Speaker 5: in Europe. I think the post COVID recovery in Europe
Speaker 5: was a lot more challenging, primarily because of the Russia
Speaker 5: Ukraine War and sort of the energy crisis that they faced,
Speaker 5: given a lot of their energy was coming from for
Speaker 5: energy supply was coming from from Russia. So that had
Speaker 5: a very different impact in Europe than it did in
Speaker 5: the US.
Speaker 4: Overall.
Speaker 5: If you look at Germany, obviously the largest, you know,
Speaker 5: economy in Europe, it's very still sort of heavily manufacturing based.
Speaker 5: Higher interest rates have really had hurt manufacturing, global manufacturing,
Speaker 5: and so that's how a bigger impact I think on
Speaker 5: Germany with those manufacturers operating globally. So those are some
Speaker 5: of the things that I would point to. And you know,
Speaker 5: there's just never been the same labor productivity across Europe
Speaker 5: as there has been in the US, and quite frankly,
Speaker 5: just the support for innovation and right and new technology,
Speaker 5: and I think that's just had a big impact. Back
Speaker 5: to Germany's heavily manufacturing based right, the US probably less so.
Speaker 2: Because when more service oriented, is that the.
Speaker 4: More service oriented?
Speaker 5: And I think again, you don't have the same I
Speaker 5: think a lot a lot of countries in Europe are
Speaker 5: looking to put in place policies to better incentivize some
Speaker 5: of the technological development. But I mean, you don't have
Speaker 5: a Bay Area type right, right. I mean you have
Speaker 5: little pockets of that kind of concept right where you
Speaker 5: have sort of this ecosystem coming together to disrupt and
Speaker 5: innovate and support new technology. But there there's nothing as
Speaker 5: sort of big as the Bay Area in Europe.
Speaker 2: But you do have world class manufacturing throughout Europe. And
Speaker 2: I think absolutely of Mercedes, Porsche, BMW in Germany. You
Speaker 2: think of all the I guess it really doesn't scale
Speaker 2: watchmaking and things like that, but there are some really
Speaker 2: high end companies that are incredibly successful. Are they just
Speaker 2: the exceptions?
Speaker 3: What is it? I'm trying to conceptualize?
Speaker 5: Sure, But I also think it's it's much more fragmented
Speaker 5: obviously than the US market, with each different country with
Speaker 5: its own own rules and regulations and you know, some
Speaker 5: some sort of more national less policies than others. And
Speaker 5: I think that just has an impact on their ability
Speaker 5: to kind of domin and we're talking about Europe is
Speaker 5: if it's one thing.
Speaker 3: But it's not so.
Speaker 2: You're saying, really, it's it is structural, it's not so.
Speaker 2: The combination of these structural challenges relatively high interest rate,
Speaker 2: less productivity gains, and a focus that's less service oriented,
Speaker 2: more manufacturing oriented demographics and demographics. Yeah, so the people
Speaker 2: who have been waiting for hey, you know, Europe is
Speaker 2: going to catch up. It's going to mean revert any second.
Speaker 2: That doesn't seem to be in the imminent cards anytime soon.
Speaker 4: I don't think that's in the twenty twenty five cards.
Speaker 4: Let's put it there.
Speaker 2: Okay, Hey, that's fair. That's a perfectly fair thing. I
Speaker 2: want to talk a little bit about some of the
Speaker 2: work you've done on women in banking.
Speaker 3: You were on the Women on the Move.
Speaker 2: Podcast and one of the things you said that struck
Speaker 2: me was women don't have as robust of a network
Speaker 2: as as men do.
Speaker 5: Explain, so that was that was a little bit of
Speaker 5: a generalization, probably, but I think what I meant by
Speaker 5: that was if women tend to stick to because I
Speaker 5: think often earlier in their career and probably I did
Speaker 5: the same thing early on. That you stick to sort
Speaker 5: of the women's network that you develop, right, and there's
Speaker 5: a lot of sort of women's networking events. I'll speak
Speaker 5: for financial services specifically. If you only stick to that network,
Speaker 5: there's still a lot fewer women and sort of banking
Speaker 5: or pick many industries, right, then there are men, and
Speaker 5: so that limits kind of that network overall. And so
Speaker 5: I think like important that you're spending time with people
Speaker 5: across the organization, picking mentors across the organization, networking across
Speaker 5: the organization to make sure that you're developing the same
Speaker 5: robust network that's sort of some of your male colleagues
Speaker 5: would already be doing.
Speaker 2: So I also read you value and prioritize mentorship. How
Speaker 2: do you approach this at your job? We'll get to
Speaker 2: questions about who your mentors were, But do you have mentees?
Speaker 2: Are you?
Speaker 3: Are you practicing what you preach?
Speaker 4: Yes?
Speaker 5: And I very much take that as a serious responsibility
Speaker 5: and sort of part of my day job. You know,
Speaker 5: we have various I would say, organized programs and then
Speaker 5: there's more informal you know, mentors mentorship programs, and I
Speaker 5: think both are important. But I think over the years,
Speaker 5: you know, making sure that all of the senior individuals
Speaker 5: are sort of participating in those mentorship sponsorship programs, giving
Speaker 5: younger people sort of the opportunity to learn from someone
Speaker 5: else about their career, and again sort of doing the
Speaker 5: informal mentoring. I think back to the JP Morgan culture.
Speaker 5: I think it's just very endemic there. Someone reaches out,
Speaker 5: you know, to have a cup of coffee with you,
Speaker 5: you go do that, right, and it's just sort of
Speaker 5: something that's expected and something that sort of I grew
Speaker 5: up with, if you will, and so certainly something that
Speaker 5: I again take very seriously.
Speaker 2: So when I first started this podcast, I want to say,
Speaker 2: almost eleven years ago, was very hard finding women in
Speaker 2: senior leadership roles and having them come on as guests.
Speaker 2: That has become much easier. I'm curious how you see
Speaker 2: the industry as as once male dominated. It's still mostly
Speaker 2: male dominated, but it feels like it's improving somewhat.
Speaker 3: What are you what's your perspective.
Speaker 5: I do think that a lot of progress has been
Speaker 5: made overall. I think, you know, JP Morian not to
Speaker 5: toot our own horn, but I think is a great
Speaker 5: example for the industry where you look at, you know,
Speaker 5: our operating committee, which are the individuals that report directly
Speaker 5: to Jamie.
Speaker 4: You know it is heavily female.
Speaker 2: Jamie, I'm sorry, I'm not familiar who is that.
Speaker 5: There are many many females on the operating Committee. So
Speaker 5: we've done a great job there and I think that
Speaker 5: that's kind of you know, filtered down throughout the organization.
Speaker 5: So yes, I do think it has improved substantially. I
Speaker 5: do still think there's a lot of challenges, particularly at
Speaker 5: that sort of VP late VP early ED level, early
Speaker 5: executive director level. A lot of times when people are
Speaker 5: having sort of their first their first children and sort
Speaker 5: of making sure that we're providing this a supportive environment
Speaker 5: that they're able to obviously you know, come back to work.
Speaker 4: As they would like to.
Speaker 5: But yes, I think significant progress has been made at
Speaker 5: But I think that is a very intentional effort back
Speaker 5: to kind of understanding why if we are losing female
Speaker 5: employees or diverse employees, why that is in the same
Speaker 5: way that we want to understand why we're losing any employee, right,
Speaker 5: any talented employee we don't we don't want to lose.
Speaker 5: But I think you have to be just very intentional
Speaker 5: about measuring progress and understanding what the challenges are and
Speaker 5: if there's anything that you can do or should be
Speaker 5: doing to have a more sort of accommodative environment and
Speaker 5: inclusive environment.
Speaker 2: So I have a question later about advice to recent
Speaker 2: college grads, but as long as we're talking about women
Speaker 2: in banking, let's stay focused on that here. What advice
Speaker 2: do you have for any young woman who wants to
Speaker 2: become part of the financial sector or banking industry.
Speaker 5: I would just say, really taking advantage of friends colleagues
Speaker 5: that you know, your network peers to understand all aspects
Speaker 5: of the industry. And you know that's hard to do
Speaker 5: sometimes when you're in college and you're not sort of
Speaker 5: sitting in the organization. But I do think, and this
Speaker 5: is not a commentary on females versus males, but just
Speaker 5: sort of back to the networking point, you have kind
Speaker 5: of a natural advantage if your parent was an investment
Speaker 5: banker or a lawyer or right that dealt with with
Speaker 5: sort of the banking industry, or you know, pick another
Speaker 5: sort of adjacent profession, and so you know, those individuals
Speaker 5: know the right questions to ask, are more aware of
Speaker 5: the opportunities across the firm. It's not just investment banking.
Speaker 5: There's lots of other things we do a JP Morgan
Speaker 5: or any firm. So I think just making sure that
Speaker 5: you're figuring out how to kind of gather that information
Speaker 5: and ask all of those questions so that you are
Speaker 5: a little more educated coming in about sort of what
Speaker 5: the opportunities are overall.
Speaker 2: Huh, really interesting. So let me throw you a curveball question.
Speaker 2: We talked earlier, not only about your ballet at age four,
Speaker 2: but dancing professionally for three years. You're a member of
Speaker 2: the board of trustees for American Ballet Theater, that's the
Speaker 2: pinnacle of dance in America. Tell us a little bit
Speaker 2: about the organization, how you found your way to it,
Speaker 2: what are you doing with them?
Speaker 4: Sure? So, I have been on the board since two
Speaker 4: thousand and nine.
Speaker 3: So wow, that's fifteen plus.
Speaker 4: Yes, yes, so a long time. So again.
Speaker 5: American Ballet Theater, one of the greatest ballet companies in
Speaker 5: the world, based here in New York, officially designated by Congress,
Speaker 5: is America's national ballet company.
Speaker 4: Huh.
Speaker 5: And actually, as of January of this year, I am
Speaker 5: the new chair of the Board of ABT.
Speaker 2: Which is super exciting.
Speaker 4: But you know, the.
Speaker 5: Board obviously has its basic sort of governmance functions, but
Speaker 5: you know, we spend a lot of time helping with
Speaker 5: fundraising for the organization and helping provide you know, expertise
Speaker 5: where each individual has it. Any nonprofit obviously has a
Speaker 5: much more limited sort of staff overall. So if there's
Speaker 5: people on the board that have real estate expertise, or
Speaker 5: finance expertise or HR expertise, that is very valuable to
Speaker 5: the organization as a whole. So there's always sort of
Speaker 5: special projects that we you know, sort of participate in
Speaker 5: from that perspective, but a big chunk of what the
Speaker 5: board does is really making sure people are aware of ABT,
Speaker 5: helping with fundraising, helping attract new donors, helping attract and
Speaker 5: develop new audience members.
Speaker 3: Huh really really interesting.
Speaker 2: Have passed board members and or chair people been former
Speaker 2: professional ballet dancers or is this unusual?
Speaker 5: There's always a few, but certainly the majority of people
Speaker 5: on the board don't have a background in dance. And
Speaker 5: as I always remind everybody, I call it the separation
Speaker 5: between church and state. The board is there to sort
Speaker 5: of help with the business of running the ballet company.
Speaker 5: They have no input whatsoever to anything artistic, which is
Speaker 5: why it's not required that you have any sort of background.
Speaker 2: But I'm curious if there have been previous chair people
Speaker 2: who were professional ballet.
Speaker 4: Dancers that I would have.
Speaker 5: I don't think so, But I'm not one hundred percent
Speaker 5: part right, I don't think so. Our previous chair who
Speaker 5: retired at the end of last year, his sister danced
Speaker 5: with a company for many years, and that's really how
Speaker 5: he became involved in Obviously, you know, very passionate about
Speaker 5: the ballet huh.
Speaker 2: Really, it's one of those fascinating things that just I
Speaker 2: don't see on people's resumes all that often. And I
Speaker 2: had no idea you was shamman, but it's really fascinating,
Speaker 2: all right. So while I still have you, let's jump
Speaker 2: to our favorite questions that we ask all of our guests.
Speaker 2: Speaking of entertainment, Let's start with what are you streaming
Speaker 2: these days? What's keeping you entertained? It could be Netflix, podcast, whatever,
Speaker 2: What what are you enjoying these days?
Speaker 5: So first I would say I am sort of an
Speaker 5: avid reader. I was talking with a colleague on my
Speaker 5: way over here. Everybody consumes information differently. I consume it
Speaker 5: better reading, I think, than always listening right the same way.
Speaker 5: So I'm sort of very religious about getting through The
Speaker 5: Economist and The New Yorker every week. And I won't
Speaker 5: let myself read the next issue of The Economist until
Speaker 5: I finish the first one.
Speaker 4: So even if i'm behind, I know that.
Speaker 2: I'm in nineteen eighty six if I follow.
Speaker 4: The Okay, there you go, I might have to get
Speaker 4: that up at some point.
Speaker 5: I am currently streaming, I guess, the second season of
Speaker 5: The Diplomat, which I'm very much enjoying.
Speaker 3: I so good.
Speaker 5: I love the political action thrillers, but I think I'm
Speaker 5: running out of them because I've watched all of them
Speaker 5: at this point.
Speaker 4: So you s oh, no, I haven't seen that.
Speaker 2: Okay, so a little more intelligence community slash tip of
Speaker 2: the spear, okay, but you know, the same sort of
Speaker 2: back and forth layers of intrigue. And but I really
Speaker 2: enjoyed The Diplomat. I thought that was fascinating. And then
Speaker 2: what was its secretary of state?
Speaker 4: Was the madam secretary Secretary?
Speaker 3: That same concept.
Speaker 5: I will admit I've watched it a couple of times.
Speaker 5: Oh really, Yes, exactly. I think it's a good pick
Speaker 5: me up, particularly when partisan politics are you know, depressing everyone.
Speaker 4: It's good. It's just a happy there's always a happy ending.
Speaker 4: I appreciate the.
Speaker 2: Time there's you have an ability to go to a
Speaker 2: space you're wholly unfamiliar with and be challenged. It's not
Speaker 2: just entertaining, but it you know, clears the cob webs exactly, exactly,
Speaker 2: really interesting. So we talked about you as a mentor.
Speaker 2: Who were your mentors who helped shape your career?
Speaker 5: So I would say I feel very lucky when I
Speaker 5: was most of my career, when I was in Deck
Speaker 5: Capital Markets, I worked for a woman who ran DCM
Speaker 5: at the time, and then she went on to do
Speaker 5: different things at the firm who was very much a
Speaker 5: sponsor mentor.
Speaker 4: For me overall.
Speaker 5: And it's just, you know, over time she's retired now
Speaker 5: from JPMorgan but sort of you know, become a friend.
Speaker 5: But I think that's where I really, I think learned
Speaker 5: and embraced kind of just this concept of attracting talent,
Speaker 5: retaining talent, helping to kind of bring up the next
Speaker 5: generation of women is a responsibility of senior people. And
Speaker 5: she really demonstrated that, and certainly I took that to heart.
Speaker 2: So since you are a reader, let's talk about books.
Speaker 2: What are your favorites and what are you reading right now?
Speaker 5: So favorites are hard, but what I'm what I'm reading
Speaker 5: right now? So I actually just finished over the holidays.
Speaker 5: I tend to alternate between fiction and nonfiction, okay, because
Speaker 5: I think both are important. Finished Chasing Hope, the Nicholas
Speaker 5: christoph book is a Foreign Correspondent for The Times, which
Speaker 5: is interesting. I finished a biography of Alexeira Monsky, who's
Speaker 5: a choreographer. I don't think many many listening to this
Speaker 5: podcast may find that book interesting.
Speaker 4: But I did a new.
Speaker 5: Fiction by Michael Cunningham called Day. So those are all
Speaker 5: really good. Some of my favorite authors Isabelle Ending Dave Edgars.
Speaker 4: That's what I would say.
Speaker 2: Edgars is kind of funny if I.
Speaker 5: And he has funny titles which I love. Heartbreaking Work
Speaker 5: of Staggering Genius one of his first books.
Speaker 4: Love that book.
Speaker 2: Yeah, so we're down to our last two questions. And
Speaker 2: this is a broader question than I asked earlier. What
Speaker 2: sort of advice would you give to a recent college
Speaker 2: grad interested in a career in either banking or finance.
Speaker 5: I think to make sure that they embrace risks taking.
Speaker 5: And I say that because maybe just because I myself,
Speaker 5: maybe I'm a little bit risk averse. But I think
Speaker 5: over the course of your career, you have the opportunity
Speaker 5: often to do many different things, and a lot of
Speaker 5: times people are afraid to sort of leave their current
Speaker 5: group and do something different, and it just opens up
Speaker 5: a whole world of possibility. So I think sort of
Speaker 5: taking a little bit more risk than you might naturally
Speaker 5: do is always good advice.
Speaker 2: And when you have no spouse, no mortgage, no kids,
Speaker 2: that's the time full on your face because you get up,
Speaker 2: dust yourself off and start over again. It's funny how
Speaker 2: when you're a few years past being young, that's obvious,
Speaker 2: but at the time it doesn't feel that way.
Speaker 4: Well, and it feels like such a big ust.
Speaker 2: Got it's so risky, right exactly. And our final question,
Speaker 2: what do you know about the world of banking and
Speaker 2: investment and growth companies today that would have been really
Speaker 2: helpful twenty five or so years ago.
Speaker 4: That's a really good question.
Speaker 2: And it's not I should have worn in video when
Speaker 2: it was fifty cents. It's like, what philosophically would have
Speaker 2: been useful to know that you eventually figured out.
Speaker 5: I think because I started in the investment bank and
Speaker 5: then by definition was really working with primarily larger size companies.
Speaker 5: I think I know, as I kind of mentioned earlier,
Speaker 5: understanding how different it is and the fact that you
Speaker 5: have the ability to make an even bigger difference for
Speaker 5: a smaller size company that needs that sort of trusted
Speaker 5: advisor even more, I think it would would be sort
Speaker 5: of good to know, right because it is. I think
Speaker 5: financial services overall, you have the ability to take on
Speaker 5: a lot more responsibility at an early age than other industries.
Speaker 5: But I think again, the ability to kind of influence
Speaker 5: and advise an early stage company is just incredibly rewarding
Speaker 5: given the limited resources staff that they have.
Speaker 2: Melissa, this has been absolutely fascinating. Thank you for being
Speaker 2: so generous with your time. We have been speaking with
Speaker 2: Melissa Smith. She is co head of commercial banking for
Speaker 2: JP Morgan. If you enjoy this conversation, we'll be sure
Speaker 2: to check out any of the past five hundred or
Speaker 2: so we've done over the previous ten years. You can
Speaker 2: find those at iTunes, Spotify, Bloomberg YouTube, wherever you find
Speaker 2: your favorite podcasts, and be sure to check out my
Speaker 2: new book, How Not To Invest, coming March seventeenth, wherever
Speaker 2: you get your favorite books from.
Speaker 3: I would be remiss if.
Speaker 2: I did not thank the Crack team that helps put
Speaker 2: these conversations together each week. Sarah Livesey is my audio engineer.
Speaker 2: Anna Luke is my producer. Sean Russo is my researcher.
Speaker 2: Sage Bauman is the head of Podcasts at Bloomberg. I'm
Speaker 2: Barry Rutults. You've been listening to Masters in Business on
Speaker 2: Bloomberg Radio