WEBVTT - Scott Bok Explains What Investment Bankers Actually Do All Day 0:00:02.720 --> 0:00:13.960 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.160 --> 0:00:21.440 Hello and welcome to another episode of the Odd Lots podcast. 0:00:21.520 --> 0:00:23.720 I'm Jill Wisenthal, and I'm Tracy Alloway. 0:00:24.040 --> 0:00:25.720 Racy, how good at Excel? 0:00:25.760 --> 0:00:26.080 Are you. 0:00:28.960 --> 0:00:31.160 Not good? Compared to a lot of people who listen 0:00:31.240 --> 0:00:33.440 to this podcast? I would imagine, I mean, I can 0:00:33.520 --> 0:00:36.239 do some basic stuff like auto some and you know 0:00:36.320 --> 0:00:36.840 so some. 0:00:37.200 --> 0:00:37.720 No, it's not. 0:00:37.920 --> 0:00:40.199 That's like literally clicking a button. I can write like 0:00:40.240 --> 0:00:42.839 a couple formulas in the little command prompt. But I 0:00:42.840 --> 0:00:43.519 think everyone can. 0:00:43.640 --> 0:00:46.360 I could write some really rudimentary formasts, but I never 0:00:46.520 --> 0:00:50.040 really I got to the degree that some people are. 0:00:50.159 --> 0:00:52.360 But the good news is I saw that I have 0:00:52.400 --> 0:00:53.880 to learn it. We don't have to learn I saw 0:00:53.960 --> 0:00:57.280 that Claude code they have or Claude they have some 0:00:57.400 --> 0:01:00.920 extension where you just talk to Excel and and you say, like, 0:01:00.960 --> 0:01:02.720 you know, build this kind of formula and make these 0:01:02.800 --> 0:01:05.360 changes and import this. I haven't played around with it, 0:01:05.400 --> 0:01:07.440 so not one hundred percent sure would work. And to 0:01:07.480 --> 0:01:10.520 be honest, because by limited Excel skills, I wouldn't even 0:01:10.520 --> 0:01:12.839 be able to verify if it worked in the first place. 0:01:12.880 --> 0:01:15.360 But my sense is, you know that maybe that seems 0:01:15.400 --> 0:01:16.760 like a maybe that's changing. 0:01:16.840 --> 0:01:19.920 I would guess that it works pretty well. And imagine 0:01:20.160 --> 0:01:23.160 if you're someone who's been working probably in finance for 0:01:23.200 --> 0:01:25.959 like twenty years, and you became known as not and 0:01:26.040 --> 0:01:30.800 I don't want to say Excel spreadsheet monkey, Excel spreadsheet gorilla, 0:01:31.000 --> 0:01:33.840 like you know, someone really admired for their Excel skills 0:01:33.959 --> 0:01:36.560 and suddenly you've been disrupted totally. 0:01:36.640 --> 0:01:38.800 Wellst Sometimes you see these things online where like they 0:01:38.840 --> 0:01:43.160 show this stuff like oh, the investment bank investment analysts 0:01:43.240 --> 0:01:45.280 or junior analysts just got put out of a job, 0:01:45.880 --> 0:01:48.040 and like there's a go I'm pretty sure there's more 0:01:48.080 --> 0:01:49.880 to the job. So I do know that, like building 0:01:49.960 --> 0:01:52.880 models and so forth, there's an important thing in finance 0:01:52.880 --> 0:01:57.120 and Wall Street in various capacities. I'm pretty sure that's 0:01:57.200 --> 0:02:00.080 not the entire job. I'm pretty sure automating Excel was 0:02:00.160 --> 0:02:04.120 only part of it. But nonetheless, technical skills are technical skills, 0:02:04.120 --> 0:02:06.960 and if that changes, who knows, maybe the job could change. 0:02:06.960 --> 0:02:07.160 Well. 0:02:07.200 --> 0:02:10.079 The question I've always had about Wall Street is how 0:02:10.160 --> 0:02:14.520 much of it is driven by your own personality and 0:02:14.560 --> 0:02:18.760 sort of client facing skills versus I am a brilliant 0:02:18.800 --> 0:02:21.240 analysis who is not only able to come up with 0:02:21.320 --> 0:02:25.600 amazing ideas for mergers and acquisitions, sort of you know, 0:02:25.840 --> 0:02:29.320 working girls style, where like Melanie Griffith is in an 0:02:29.360 --> 0:02:32.000 elevator and is like, I know your company needs to 0:02:32.000 --> 0:02:35.240 start with whatever, versus like I'm just really good at 0:02:35.240 --> 0:02:37.160 hopnobbing with executives. 0:02:37.360 --> 0:02:39.320 It's probably a mix, right, That would be my guess 0:02:39.360 --> 0:02:42.440 that there's someone is really good at this company that 0:02:42.720 --> 0:02:46.000 is parking lot, so this the city could buy another 0:02:46.400 --> 0:02:49.079 parking lot company and so forth, and then another person 0:02:49.120 --> 0:02:51.680 who's really good at staying out and taking the class 0:02:51.680 --> 0:02:53.400 to a nice dinner. I don't think you could really 0:02:53.680 --> 0:02:55.600 or I don't really want to have a conversation, but 0:02:56.360 --> 0:02:59.360 the degree to which AI is going to disrupt all 0:02:59.400 --> 0:03:02.120 of these white jobs until I have a better handle 0:03:02.160 --> 0:03:03.920 what the white color jobs are in the first place, 0:03:03.960 --> 0:03:04.560 I feel like we are. 0:03:04.600 --> 0:03:07.440 How important are excel skills actually in this business? 0:03:07.520 --> 0:03:09.960 What is the sort of distribution of skills that it 0:03:10.000 --> 0:03:12.919 takes to thrive in some of these capacities. Anyway, very 0:03:12.919 --> 0:03:15.480 excited to say, we really do have the perfect guest 0:03:15.560 --> 0:03:18.120 to talk about some of this. Someone we talked to 0:03:18.400 --> 0:03:20.639 last year and that was about sort of the history 0:03:20.680 --> 0:03:24.120 of investment banking over the last several decades and the 0:03:24.200 --> 0:03:27.720 sort of connection between global capitalism investment banking. We wanted 0:03:27.720 --> 0:03:30.280 to have them back on the show because as an 0:03:30.360 --> 0:03:32.480 investment banking veteran, someone who can maybe talk about the 0:03:32.520 --> 0:03:35.440 inside and how people work and how the culture change 0:03:35.480 --> 0:03:38.120 and how technology changes. So we're going to be speaking 0:03:38.200 --> 0:03:41.800 with return guests. Scott Baki is the former longtime CEO 0:03:41.840 --> 0:03:44.880 of the investment bank Greenhill, the author of the recent 0:03:44.920 --> 0:03:47.680 book Surviving Wall Street and it comes back on odd Lot. 0:03:47.760 --> 0:03:50.080 So Scott, thank you so much for coming back with us. 0:03:50.120 --> 0:03:50.960 It's great to be back. 0:03:51.000 --> 0:03:51.320 Thank you. 0:03:51.880 --> 0:03:54.760 What are you for listeners who, in case they didn't 0:03:54.760 --> 0:03:57.640 listen to the previous one, which they should. What did 0:03:57.680 --> 0:04:01.400 your career span on Wall Street? When did you first 0:04:01.440 --> 0:04:04.120 get into it? And you know how well give us 0:04:04.120 --> 0:04:07.520 the sort of the thirty second Scott book career bio. Well, 0:04:07.800 --> 0:04:08.480 I feel like. 0:04:08.520 --> 0:04:11.880 I started at the very beginning of really the explosion 0:04:11.920 --> 0:04:13.960 of the investment banking business. You know, as I said 0:04:14.000 --> 0:04:16.160 in my book, when I graduated from Wharton, I did 0:04:16.160 --> 0:04:18.599 not know what an investment banker was. I knew exactly 0:04:18.640 --> 0:04:20.880 one person from our entire class who got a job 0:04:20.880 --> 0:04:23.279 on Wall Street. So it was a very small place. 0:04:23.360 --> 0:04:26.760 Back then, M and A was very rare. Here were 0:04:26.800 --> 0:04:29.200 we talking about nineteen eighty one. Okay, you know, it's 0:04:29.320 --> 0:04:32.200 your interest rates peaked. It's the you know, stock market 0:04:32.279 --> 0:04:35.279 was had been flat for more than a decade. You know, 0:04:35.360 --> 0:04:37.840 private equity is a phrase didn't even exist. Hedge fund 0:04:37.839 --> 0:04:40.000 didn't exist. I mean, it was a very very different role. 0:04:40.080 --> 0:04:41.680 By the way, it wasn't even legal to buy back 0:04:41.720 --> 0:04:44.599 your own stock back then. That that happened a year later. 0:04:45.160 --> 0:04:47.440 It was viewed as market manipulation to do that. So 0:04:47.480 --> 0:04:49.559 the whole thing of sort of playing with balance sheets, 0:04:49.560 --> 0:04:51.760 putting companies together and so on. I mean, there had 0:04:51.800 --> 0:04:54.000 been a bit of that in the nineteen sixties, mostly 0:04:54.040 --> 0:04:57.039 around building conglomerates, which I think in part was because 0:04:57.040 --> 0:04:59.680 they couldn't buy back stock. Because if you're generating cash 0:05:00.200 --> 0:05:02.080 to do with it, you could be it t a 0:05:02.080 --> 0:05:04.480 big industrial company, and so I think I'll buy the Hartford, 0:05:04.480 --> 0:05:06.960 a big insurance company. You know, today people would think 0:05:07.000 --> 0:05:09.440 that's a crazy idea, but that was kind of the 0:05:09.520 --> 0:05:12.920 predecessor to what became, you know, the M and A 0:05:13.040 --> 0:05:18.599 and transaction business around you know, maximizing shareholder value. That 0:05:18.600 --> 0:05:20.839 that really began, I would say, right at the beginning 0:05:20.839 --> 0:05:21.400 of my career. 0:05:21.440 --> 0:05:24.839 Perfect, this is already a fascinating conversation, I have to say, 0:05:25.600 --> 0:05:30.200 so I imagine this dynamic would have changed throughout your career. 0:05:30.400 --> 0:05:34.040 But how much of the investment banking business is the 0:05:34.080 --> 0:05:38.160 bankers approaching clients and saying we have an idea for you, 0:05:38.320 --> 0:05:41.120 versus the clients coming to the bankers and saying we 0:05:41.200 --> 0:05:43.359 have a problem, such as we have all this cash 0:05:43.360 --> 0:05:45.760 and we can't you know, buy back our shares or 0:05:45.880 --> 0:05:47.560 we want to do something with it to reduce our 0:05:47.600 --> 0:05:49.160 cost of capital or whatever. 0:05:49.960 --> 0:05:51.840 You know, that changed an awful lot of our time 0:05:51.839 --> 0:05:54.040 because it's the beginning. There were lots of companies and 0:05:54.160 --> 0:05:56.760 very few investment bankers, and so they didn't get a 0:05:56.839 --> 0:05:59.520 visit all that often, and so when they did, the 0:05:59.520 --> 0:06:01.800 bank would try to bring, you know, ideas and maybe 0:06:01.800 --> 0:06:05.240 they hadn't heard before. You know, Now there's thousands and 0:06:05.279 --> 0:06:08.560 thousands of investment bankers, many many different firms of many 0:06:08.560 --> 0:06:11.920 different types, and they're all maintaining relationships. So it really 0:06:12.000 --> 0:06:14.520 turns into more of a dialogue where you don't you 0:06:14.560 --> 0:06:16.200 don't just you know, you never met the client before 0:06:16.200 --> 0:06:17.480 your show up say hey, I think you should buy 0:06:17.520 --> 0:06:19.760 this company down the street and wow, that's a great idea. 0:06:19.760 --> 0:06:22.080 I hadn't heard that before, and they do it. It's 0:06:22.120 --> 0:06:25.799 more like you have an ongoing dialogue with a client. 0:06:26.080 --> 0:06:28.440 You figure out what they want to do, what they're 0:06:28.880 --> 0:06:31.039 you know, kind of what their appetite to their board is, 0:06:31.120 --> 0:06:33.400 what their balance sheets like, how their business is going, 0:06:33.440 --> 0:06:36.080 how they feel about their share price, you know, what 0:06:36.080 --> 0:06:37.880 what they think is kind of the next big thing 0:06:38.000 --> 0:06:40.640 for them, And over time you come to an idea. 0:06:40.839 --> 0:06:41.680 Almost mutually. 0:06:41.720 --> 0:06:44.359 I would say, what were you good at in the 0:06:44.400 --> 0:06:47.000 early eighties or the people that you went to work 0:06:47.040 --> 0:06:49.800 with very early on, what would you say you had 0:06:49.880 --> 0:06:52.160 in common? Why? Why did uh you know? Why was 0:06:52.200 --> 0:06:52.840 it a fit for you? 0:06:54.279 --> 0:06:56.039 For me, I was probably a little bit different since 0:06:56.040 --> 0:06:57.960 it came from a legal background than some. I mean, 0:06:57.960 --> 0:06:59.840 there were some people who were you know, the ex 0:07:00.240 --> 0:07:01.800 and by the way, Excel wasn't even around then. It 0:07:01.800 --> 0:07:04.200 was Lotus one, two three. Who are the you know 0:07:04.320 --> 0:07:07.159 Excel jockeys who built these you know, enormous models and 0:07:07.160 --> 0:07:09.360 so one and I did a bit of that myself. 0:07:09.440 --> 0:07:14.680 I think my strength was more in sort of structuring, conceptualizing, negotiating, 0:07:15.280 --> 0:07:18.880 you know, marketing, talking to CEOs and boards. It was 0:07:18.920 --> 0:07:21.280 more of that kind of uh in many ways, the 0:07:21.360 --> 0:07:25.360 qualitative skills, the math. You can pick up what you 0:07:25.440 --> 0:07:28.880 need fairly quickly. And you know, I sometimes tell, you know, 0:07:29.080 --> 0:07:31.760 people of like my my son's generation, he's he's thirty 0:07:31.840 --> 0:07:34.280 years old. I tell his people at his pure level, 0:07:34.280 --> 0:07:36.760 I see, you know, the great rubicon a cross in 0:07:36.800 --> 0:07:38.840 the world of you know, Wall Street and related fields 0:07:38.920 --> 0:07:40.480 is when you get to the point where there's somebody 0:07:40.520 --> 0:07:44.080 smart working for you. You're you're You're no longer yeah, 0:07:44.160 --> 0:07:47.680 you're You're no longer the one, you know, training some 0:07:47.840 --> 0:07:51.280 complete newbie. You're no longer the one doing it all yourself. 0:07:51.320 --> 0:07:53.480 You're the one who's doing a bit of conceptualizing and 0:07:53.480 --> 0:07:55.560 giving into a very smart person who's going to stay 0:07:55.640 --> 0:07:57.239 late at night and build you a beautiful model. 0:07:57.800 --> 0:07:59.480 I want to ask you what it was actually like 0:07:59.560 --> 0:08:01.960 working a sort of junior banker in the eighties. But 0:08:02.040 --> 0:08:04.720 before I do, what's with all the people with legal 0:08:04.760 --> 0:08:07.720 degrees going into banking in the nineteen eighties, Because you 0:08:07.720 --> 0:08:09.600 weren't the only one. I think there were a few 0:08:10.040 --> 0:08:13.800 other famous compatriots at the time. Lloyd blank Find for instance, 0:08:13.920 --> 0:08:16.240 stands out. But what was it about having done a 0:08:16.320 --> 0:08:19.200 law degree that translated into banking? 0:08:19.240 --> 0:08:21.960 Back then, there were many who made the move, And 0:08:21.960 --> 0:08:23.760 as a matter of fact, while I was interviewing the 0:08:23.760 --> 0:08:26.400 New York Times, Sunday magazine had a cover story called 0:08:26.480 --> 0:08:29.800 lawyers Becoming Bankers. I mean, it really was a big phenomenon, 0:08:29.840 --> 0:08:34.400 and I think literally the reason was the business exploded suddenly. 0:08:34.440 --> 0:08:37.720 There's just massive amounts of transaction activity. There aren't that 0:08:37.760 --> 0:08:40.160 many investment bankers. You're not just going to hire more 0:08:40.200 --> 0:08:42.160 people who are twenty two years old and train them. 0:08:42.480 --> 0:08:44.880 You need someone who's twenty six or twenty eight or 0:08:44.880 --> 0:08:47.200 thirty years old who actually has kind of been around 0:08:47.240 --> 0:08:49.720 the business. They may have some skills to learn, but 0:08:49.760 --> 0:08:51.679 they bring other skills to the table, and so they 0:08:51.720 --> 0:08:55.120 brought into bank the lawyers, including myself, is kind of 0:08:55.120 --> 0:08:58.440 a way of sort of ramping up the scale of 0:08:58.480 --> 0:09:00.599 the team rather than just saying we're going to just 0:09:00.640 --> 0:09:02.040 hire more twenty two year olds and train them. But 0:09:02.080 --> 0:09:03.600 you didn't have a time for that, you know, there's 0:09:03.679 --> 0:09:06.600 so much such a growth in transaction activity. That's why 0:09:06.640 --> 0:09:08.160 a lot of lawyers made that move. 0:09:08.720 --> 0:09:11.720 Well you mentioned just now you're like, okay, it's nice 0:09:11.760 --> 0:09:14.760 to be in the position where you can conceptualize something. 0:09:15.040 --> 0:09:17.680 And then the really you know, the smart wiz kids 0:09:17.679 --> 0:09:20.559 stays up all night building the model? Are they staying 0:09:20.600 --> 0:09:21.079 up all night? 0:09:21.240 --> 0:09:21.400 Like? 0:09:21.440 --> 0:09:22.760 This is the This is sort of one of the 0:09:22.760 --> 0:09:25.280 big questions that people have is like, what is it 0:09:25.559 --> 0:09:29.400 about the business that demands these sort of in some 0:09:29.480 --> 0:09:32.400 case extreme hours laid into the night. Why can't they 0:09:32.440 --> 0:09:34.880 just do it during the day? I clock out at five? 0:09:35.920 --> 0:09:37.800 Very good question, you know, I think one in this 0:09:37.800 --> 0:09:39.640 this kind of relates to, you know, the future of 0:09:39.679 --> 0:09:43.400 AI and efficiency and investment banking and so on as well. 0:09:43.679 --> 0:09:46.520 I think maybe the dirty little secret of the industry 0:09:46.559 --> 0:09:49.040 in terms of how the sausage is actually made, is 0:09:49.080 --> 0:09:52.480 that the actual building of the model, the creation of 0:09:52.520 --> 0:09:54.800 the math that says why it makes sense or doesn't 0:09:54.800 --> 0:09:58.079 make sense to buy something that certain share price, that 0:09:57.760 --> 0:10:02.320 that takes a limited amount of time, the fiddling with 0:10:02.679 --> 0:10:06.760 the PowerPoint pages that expressed that information so it makes 0:10:07.000 --> 0:10:09.040 just the right points and just the right way and 0:10:09.240 --> 0:10:11.439 just the right color seam, and you know, just the 0:10:11.520 --> 0:10:13.840 right things in italics and other things in bold and 0:10:13.880 --> 0:10:17.000 things like that. You know, bankers tend to be perfectionists, 0:10:17.440 --> 0:10:19.120 and so they will fiddle with that for a very 0:10:19.120 --> 0:10:20.679 long time and a lot of times. I mean, if 0:10:20.720 --> 0:10:22.640 you ask people who are in the early part of 0:10:22.679 --> 0:10:25.959 their careers, like, what are you really doing when you're 0:10:25.960 --> 0:10:28.800 there late at night, it's very often it's fine tuning 0:10:29.640 --> 0:10:31.160 math that was done long ago. 0:10:31.640 --> 0:10:35.840 There's also a schedule misalignment, I guess, because you get 0:10:35.840 --> 0:10:39.640 the feedback from your boss at like five or six pm, 0:10:39.880 --> 0:10:42.360 right and like at the end of their day, and 0:10:42.400 --> 0:10:45.360 then you have to stay up really late to make 0:10:45.400 --> 0:10:47.280 all the changes and get them on their desk in 0:10:47.320 --> 0:10:51.000 the morning. But okay, perfectionism long hours. Was that the 0:10:51.000 --> 0:10:54.559 case when you were initially entering the industry in the eighties, 0:10:54.679 --> 0:10:57.160 very much so, But not with PowerPoint, with something else? 0:10:57.400 --> 0:11:00.640 Well, that's true. I mean it literally was. I don't know, 0:11:01.080 --> 0:11:02.719 I'm not sure it was called anything. I think it 0:11:02.800 --> 0:11:04.640 was like a typed page, you know, of numbers. 0:11:04.679 --> 0:11:04.840 You know. 0:11:04.880 --> 0:11:07.600 It was kind of the early, the early version where 0:11:07.600 --> 0:11:09.760 there wasn't all the software that put it in pretty 0:11:09.760 --> 0:11:11.760 pictures and so Matia look that that came along with 0:11:11.760 --> 0:11:13.840 the you know, pie charts, and bar charts and things 0:11:13.880 --> 0:11:17.320 like that. You know fairly early, but it wasn't nearly 0:11:17.559 --> 0:11:21.079 as kind of beautiful, is it. And I mean now 0:11:21.080 --> 0:11:24.640 it almost looks like you know what Vanity Fair magazine 0:11:24.720 --> 0:11:26.560 used to look like, right you open up's got beautiful 0:11:26.600 --> 0:11:29.679 color and pictures and charts and and all that sort 0:11:29.720 --> 0:11:31.880 of thing. But people always worked very long hours. That 0:11:32.240 --> 0:11:35.360 was always the sort of ethos of the industry that 0:11:35.480 --> 0:11:37.360 there's a lot of work to be done. We wanted 0:11:37.360 --> 0:11:39.480 to be perfect, and hey, if you can make it 0:11:39.480 --> 0:11:41.400 a little bit better by staying another half hour, you 0:11:41.400 --> 0:11:42.280 stay another half hour. 0:11:42.559 --> 0:11:44.360 So how much of that do you think was driven 0:11:44.440 --> 0:11:47.640 by genuine client demand in the sense that you know, 0:11:48.000 --> 0:11:51.080 a client presumably would be not very impressed if you 0:11:51.120 --> 0:11:53.960 saw that a bullet point was slightly misaligned in a 0:11:54.000 --> 0:11:57.760 PowerPoint presentation or something like that, versus driven by the 0:11:57.840 --> 0:12:01.280 institution itself and a soret. I don't want to say 0:12:01.320 --> 0:12:03.960 hazing culture, but there is a sense that, you know, 0:12:04.360 --> 0:12:06.760 we all have to work long hours. I worked long 0:12:06.800 --> 0:12:09.160 hours at the beginning of my career. It's expected that 0:12:09.200 --> 0:12:11.360 now you are going to work long hours yourself. 0:12:12.120 --> 0:12:14.000 I think if you go back to the beginning really 0:12:14.040 --> 0:12:17.080 the nineteen eighties. I think it grew initially out of 0:12:17.160 --> 0:12:19.000 neither of those things. I think it grew out of 0:12:19.000 --> 0:12:21.800 the fact that business was growing so fast and you 0:12:21.840 --> 0:12:24.400 had a limited sized team, and you had twice as 0:12:24.440 --> 0:12:26.520 many deals to work on as last year, and next 0:12:26.600 --> 0:12:28.640 year you had fifty percent more than that, and I 0:12:28.640 --> 0:12:30.840 mean it was a really extraordinary growth, and so there 0:12:30.880 --> 0:12:33.320 just like weren't enough hands on deck that you could, 0:12:33.400 --> 0:12:35.680 you know, go home at seven o'clock at night. Now, 0:12:35.720 --> 0:12:39.400 over time, that generation of bankers, including myself, you know, 0:12:39.480 --> 0:12:43.160 they bore the scars of those years throughout their careers, 0:12:43.160 --> 0:12:45.679 and so yes, there probably was in the industry some 0:12:46.000 --> 0:12:48.199 element of hey I worked like this, You're going to 0:12:48.240 --> 0:12:51.040 work like this. But initially it was just a genuine 0:12:51.080 --> 0:12:54.400 business issue of hey, there's so much business to do, 0:12:54.679 --> 0:12:56.000 so a few of us here to do it. We 0:12:56.120 --> 0:13:10.520 have to work very lately get it done. 0:13:14.120 --> 0:13:19.319 What about the element of essentially banking, Like many other fields, 0:13:19.360 --> 0:13:22.360 including academia but also law, you know, there's like a 0:13:22.400 --> 0:13:26.280 pyramid element where there's like a very small number or 0:13:26.480 --> 0:13:32.439 relatively small number of extraordinarily good slash remunerative jobs at 0:13:32.440 --> 0:13:35.840 the top at a large base of junior analysts and 0:13:35.880 --> 0:13:38.599 so forth, and how much is it a sort of 0:13:38.800 --> 0:13:44.480 emergent competition amongst the junior bankers or whatever such that 0:13:44.559 --> 0:13:47.960 it's not even necessarily some directive to put it in 0:13:48.040 --> 0:13:51.240 crazy hours. But there's a big field of people and 0:13:51.280 --> 0:13:53.880 they want to get up to the next rung, and 0:13:53.960 --> 0:13:57.680 there's fewer spots to the next rung, and that creates 0:13:58.040 --> 0:14:01.640 that mechanism of intense competition, the desire to sort. 0:14:01.440 --> 0:14:04.200 Of over please, you know, to just go over the top. 0:14:04.240 --> 0:14:07.160 And yeah, that's that certainly is there as well. I 0:14:07.200 --> 0:14:09.320 remember back I don't know why I remember this, but 0:14:09.400 --> 0:14:11.800 back you know, kind of in the late eighties. I 0:14:11.840 --> 0:14:14.640 was probably in late twenties at that time, not even 0:14:14.640 --> 0:14:16.560 a vice president yet at Morgan Stanley. I remember we 0:14:16.559 --> 0:14:19.360 had this meeting once with the head of investment banking 0:14:19.400 --> 0:14:21.480 at Morgan Stanley, the guy named Joe Fog very very 0:14:21.560 --> 0:14:23.680 sort of, very sort of tough guy of that era, 0:14:24.240 --> 0:14:26.040 and we're sitting around the table. I don't know, there 0:14:26.120 --> 0:14:28.560 must have been twenty some associates in New York at 0:14:28.560 --> 0:14:30.880 that time something like that, and people are asking them 0:14:30.880 --> 0:14:33.600 the question, hey, you know, we have someone you know 0:14:33.640 --> 0:14:36.680 who covers the retail industry, someone who covers the industrials, 0:14:36.760 --> 0:14:39.520 someone who covers you know, insurance companies, Like, what what 0:14:39.680 --> 0:14:41.800 are we going to grow up into? You know, what 0:14:42.080 --> 0:14:43.680 are the roles going to be for us? And so 0:14:43.720 --> 0:14:46.440 people did try very hard to differentiate themselves. Now, of course, 0:14:46.480 --> 0:14:48.560 what none of us around that table knew is this 0:14:48.680 --> 0:14:51.320 business was going to be like a hundred times bigger. 0:14:51.760 --> 0:14:54.600 So it wasn't like, oh, we have somebody to cover 0:14:54.640 --> 0:14:57.040 the retail industry, So I guess that's not an opportunity 0:14:57.080 --> 0:14:58.720 for me. No, there was going to come a day 0:14:58.720 --> 0:15:01.960 when you would have twenty five people covering the retail industry. 0:15:02.240 --> 0:15:04.800 But there's always been that sense of, you know, few 0:15:04.880 --> 0:15:07.280 opportunities at the top, even when it wasn't true, you know, 0:15:07.320 --> 0:15:09.680 even when there was going to be more opportunity. 0:15:10.600 --> 0:15:13.040 So I imagine quite a bit of the work you 0:15:13.080 --> 0:15:15.360 were doing in the nineteen eighties is what we would 0:15:15.480 --> 0:15:19.040 now characterize as pretty rote work in the sense that, 0:15:19.240 --> 0:15:21.680 you know, we didn't have computers, we didn't have Bloomberg 0:15:21.720 --> 0:15:25.320 terminals that would show the share price or a bond quote. 0:15:25.320 --> 0:15:27.960 You would have to like actually call someone up and 0:15:27.960 --> 0:15:28.360 get that. 0:15:28.240 --> 0:15:31.360 Inn which that's right now. Who owned that company, but 0:15:31.360 --> 0:15:33.280 Bloomberg put it out of business a long time ago. 0:15:33.880 --> 0:15:36.520 Shout out to the Bloomberg terminal. I guess, but you know, 0:15:37.160 --> 0:15:40.920 you went through a wave of disruption, basically, And yet 0:15:41.080 --> 0:15:44.960 it seems that the work of physically going somewhere to 0:15:45.120 --> 0:15:47.840 find corporate papers or physically calling someone up to get 0:15:47.880 --> 0:15:50.640 a share price quote, that was replaced with work of 0:15:50.680 --> 0:15:54.160 a different kind. Can you explain how that substitution kind 0:15:54.200 --> 0:15:54.760 of happened. 0:15:55.880 --> 0:16:00.240 I think it was replaced with going from the sort 0:16:00.280 --> 0:16:04.120 of very intermittent meetings with a limited number of clients 0:16:04.160 --> 0:16:07.280 to talk about ideas to a place the industry is 0:16:07.320 --> 0:16:11.840 today where you go very very regularly to almost every 0:16:11.840 --> 0:16:14.360 company on the planet of any real size. Right You're 0:16:15.000 --> 0:16:18.440 someone is there, and you're there with analysis of their industry, 0:16:18.680 --> 0:16:23.400 their performance, their stock price, their competitors, what's for sale, 0:16:23.520 --> 0:16:25.960 what might be for sale, and so it's more like 0:16:26.000 --> 0:16:29.000 a saturation coverage. It's you know, it's a little bit. 0:16:29.120 --> 0:16:31.680 I think investment making is very very different from consulting, 0:16:31.760 --> 0:16:34.680 but you know, but where it has some similarity is 0:16:34.720 --> 0:16:37.440 this kind of try, this attempt and desire to sort 0:16:37.440 --> 0:16:40.080 of almost get inside the business and really know your 0:16:40.080 --> 0:16:42.320 client's business, and that was not something that was even 0:16:42.360 --> 0:16:45.080 attempted back in the nineteen eighties. But that's what all 0:16:45.080 --> 0:16:46.960 those people are doing with all those extra hours. 0:16:46.960 --> 0:16:49.720 Now you mentioned you in the early eighties, you couldn't 0:16:49.720 --> 0:16:52.080 have anticipated that the industry was going to grow one 0:16:52.120 --> 0:16:54.840 hundred folder whatever it was. And this is one of 0:16:54.880 --> 0:16:58.680 those things where perhaps from any indo people, many in 0:16:58.680 --> 0:17:01.000 the public like wise, finance so big? Why why is 0:17:01.000 --> 0:17:04.720 there so much money in this area? Finance doesn't produce anything? 0:17:04.880 --> 0:17:07.840 Why why is this? Why has this grown so much? 0:17:07.960 --> 0:17:12.720 How would you articulate that to someone? Why fundamentally, there 0:17:12.800 --> 0:17:16.000 is just so much demand for financial services at the 0:17:16.040 --> 0:17:18.640 corporate level, and so much more than there was, say 0:17:18.720 --> 0:17:20.280 forty years ago or forty five years ago. 0:17:21.000 --> 0:17:23.960 Look, I think there there are literally it's no exaggeration 0:17:24.280 --> 0:17:29.240 to say that there really was an ethical change that 0:17:29.320 --> 0:17:32.879 the world of sort of post World War two. You know, 0:17:33.200 --> 0:17:37.680 big companies building conglomerates, you know, work at the same 0:17:37.760 --> 0:17:40.720 place for thirty five years like my father did. And 0:17:40.880 --> 0:17:43.840 you know, not a massive amount of intense competition, not 0:17:43.920 --> 0:17:48.119 a lot of mergers, kind of stable, stable companies and 0:17:48.119 --> 0:17:50.320 and and you know, maybe that meant slow growth at 0:17:50.320 --> 0:17:52.040 some point, and maybe that was part of a problem. 0:17:52.160 --> 0:17:55.520 But in the early eighties you had really a lot 0:17:55.560 --> 0:17:58.600 of things change. I think corporate culture changed a lot. 0:17:58.760 --> 0:18:01.360 You know, Jack Els took over from a guy named 0:18:01.400 --> 0:18:05.360 Greg Jones who was very involved at pen where I went, 0:18:06.520 --> 0:18:09.879 you know, a very very different kind of character. You know, 0:18:10.119 --> 0:18:14.520 the the tax law changed. You know, capital gains got 0:18:14.560 --> 0:18:17.560 started getting taxed differently from ordinary income. The tax rates 0:18:17.560 --> 0:18:22.159 got cut quite a lot. Deregulation increase, the kind of 0:18:22.160 --> 0:18:24.800 pressure on unions, you know, Reagan breaking the Air Traffic 0:18:24.800 --> 0:18:29.040 Controllers union, the ability to buy back stock, even the 0:18:29.119 --> 0:18:32.639 sort of theoretical notion of you know, what is a 0:18:32.640 --> 0:18:35.720 company for, right, Milton Friedman said, the company's sole purposes 0:18:35.760 --> 0:18:38.600 to make money. You know. Professor at Harvard Business School 0:18:38.640 --> 0:18:42.000 named Michael Jensen wrote all these these stories or analysis 0:18:42.040 --> 0:18:44.840 about why, you know, you had to maxim my shareholder 0:18:44.920 --> 0:18:46.960 value and you can't serve two masters, so that has 0:18:46.960 --> 0:18:49.320 to be the only thing you're you're trying to do. 0:18:49.400 --> 0:18:51.280 And you know, and he had this long running debate 0:18:51.320 --> 0:18:53.800 with my first boss, Marty Lipton, founder of Walked Out 0:18:53.800 --> 0:18:56.639 Lipton about you know, should a company serve you know, 0:18:56.920 --> 0:19:00.639 the community its employees, it's customers, et cetera. And that 0:19:00.840 --> 0:19:06.000 all those things mixed together really made for a tremendous 0:19:06.040 --> 0:19:09.760 focus on transactions. How do you maximize values with more 0:19:09.840 --> 0:19:13.080