In Praise of Jargon

CHAKOBSA: the so-called “magnetic language” derived in part from the ancient Bhotani (Bhotani Jib—Jib meaning dialect). A collection of ancient dialects modified by needs of secrecy, but chiefly the hunting language of the Bhotani, the hired assassins of the first Wars of Assassins.

— Frank Herbert, Dune

Normally, O Dearly Beloved, I am a fan of author and commentator Steven Poole’s witty takedowns of the silly, pretentious behavior humans get up to on occasion. I think I discovered him in medias res, skinning, gutting, and flambéing the “foodie” culture while it yet lived, and the amusing screams of pain and outrage emanating from his victims still echo satisfyingly in this non-foodie’s ears.

But his latest screed on what he calls “management-speak”—the jargon common to corporate businesses and their environs—falls rather more clangingly and less persuasively from his pen. In fact, it comes across rather like Mr. Poole and his pals from the Drones Explorers Club just burst through the forest wall into some Papua New Guinea clearing in 1920 and are pointing and jeering at the bewildered natives in ceremonial costumes:

“My God, Bertie, that chap has painted his entire body with mud! And the Missus isn’t wearing any clothes! Ahahahahaha!!”

It is perhaps fortunate that the corporate world is widely understood to hold a position of social and economic power, else Mr. Poole’s little exercise in cross-cultural satire might get slapped with a libel suit and be investigated for evidence of a hate crime against the underprivileged.

For it is blindingly clear that not only does Mr. Poole beg the question of the purportedly stultifying and spirit-sapping nature of management-speak—stipulating it as true rather than demonstrating it—but also that he has a remarkably ill-informed grasp of the jargon he criticizes, a desperately poor understanding of the way such language is used, and a surprisingly tin ear to boot. If I were a less charitable man, I might suggest that Mr. Poole is a culturally blinkered scrivener who has never set foot inside an actual business meeting or participated in business communication beyond giggling at press releases¹ and watching satiric corporate soap operas on the BBC. If I really wanted to score points, I might accuse him of flogging sloppy, tendentious nonsense designed to provoke the anti-business and anti-elitist prejudices of a certain class of fellow Brits so they will go out and buy his new book. But I wouldn’t want to be accused of being culturally insensitive to the species Homo authoriensis, so I won’t even mention it.

* * *

So, in the spirit of cross-cultural understanding, let me reach my hand across the gaping divide between those who work for a living and those who cannot understand why they have to to proffer a little gentle education. Mr. Poole’s list of the ten worst offenders among management-speak will stand as a serviceable roadmap for my purposes.

1. Going forward
Yes, this phrase does indeed stand in for “from now on” or “in future,”² as Mr. Poole suggests. But while he catches its rhetorical intent—which by the way is common to much management-speak and business jargon—he is too busy alleging progress can never be made in business to notice the source of its rhetorical power. For, unlike the anodyne, directionless vagueness of “in future,” going forward implies motion, action, and, most importantly, direction. There’s a reason the preferred coinage is not “going backward.” While I do not mean to freight this modest phrase with unwarranted profundity, the idea of purposeful action and progress is central to most management and business communications, for even the dullest businessperson realizes the biggest risk in any large organization is inertia. “In future” implies no imperative. “Going forward” does.

2. Drill down
I hope Mr. Poole’s other writing is not as drab and inventionless as his literal equation of “drill down” with “look at in detail” implies. If so, I’d probably find reading Her Majesty’s Government’s telephone directory more thrilling. Drill down is a wonderful metaphor, incorporating geological and investigatory overtones of impressive metaphorical power. Drill down implies there are layers to penetrate, mysteries to uncover, complexities to map. Drilling down requires energy, focus, and effort, and drilling attempts to uncover both buried history and the structure under the surface. Drill down is a term of due diligence, where the intent and practice is to gain a deeper understanding of a business or other phenomenon you do not already understand. Drilling down is not what some passive paper pusher with an eye on the clock does; drilling down is what an explorer does. Mr. Poole’s puerile metaphor of drilling as sexual penetration doesn’t even come close. Nobody I know who has used the term has ever used it with such a leer in their voice.

3. Action
I cannot disagree with Mr. Poole that “verbings” are anathema. My personal bête noire is that horrid specimen “to impact.” (As far as I am concerned, only teeth get impacted.) But I would note that verbings are not restricted to business. And, unlike many forms of jargon or specialized argot, verbings do nothing to enrich language with metaphor or rhetorical power, and the real English phrases they replace are not much longer, if at all, so they provide no useful economy or speed of expression. In almost every instance, they are just evidence of linguistic (and mental) laziness. A pox on them, I say.

4. End of play
Not being a native of the Sceptered Isle who learned what bubble and squeak was at Mary Poppins’ knee, I cannot say whether “end of play” is truly a corporate Britishism or merely a phrase Mr. Poole misheard from his friend in the steno pool at British Land. In any event, it sounds much more to me like a phrase from sport, which, if Mr. Poole had ever spent time in a corporate environment, he would recognize as one of the prevailing metaphors of business. While I myself am skeptical that sport provides useful or revealing metaphors for business, I find it odd to associate it with childhood or “infantilized workers.” Unless Mr. Poole thinks the billions of pounds at stake in the Premier League are somehow childs’ play.

5. Deliver
Honestly, what does Mr. Poole have against delivery? Was his uncle a disgruntled Royal Mail employee? Delivery, while itself being inoffensive to most human beings, carries the useful implication that the person delivering the goods is often not the person responsible for their production, which many times takes place at different places at the hands of different individuals. And yet—as we may surmise by the fact that real individuals, including non-businesspersons, pay real money to postal services and parcel express carriers to deliver items they themselves did not produce to arrive on time and in good condition—the act of delivery itself carries value and merits attention. Finally, as service providers such as Yours Truly occasionally use the term, “deliverables” is a useful abbreviation for all sorts of preliminary, interim, and finished work products (yes, I went there) that are due at specified times in specified sequence in a complex process involving multiple parties over an extended period of time. I would much prefer to use the all-encompassing abbreviation “Deliverables” than an exhaustive laundry list like “Teaser, Non-Disclosure Agreement, Confidential Information Memorandum, Buyers List, Process Letter, Definitive Agreement, and Closing Schedules, if, as, and when appropriate” in everyday communications with an M&A client, for instance. Can you blame me?

6. Issues
How typical for a Brit to identify the generous, inclusive, and expansive term “issues” with “problems.” I remember how revelatory I found it early in my career to discover that many natives of Old Blighty would respond to the proposal of almost any new business idea or process with the prefatory throat clearing, “Ah. The problem is...” It could be the national anthem. Yes, “issues” can be euphemism for problems, but it can also mean consequences, implications, outcomes, preconditions, or almost anything else upon which there might be differing opinions or which should be discussed. Business is complex, business is riven by ineluctable uncertainty, and business is riddled with myriad issues. Not every issue is a problem, but, by its very nature as an issue, every issue must be addressed. This, by the way, is what the quotidian practice of the business world consists of: the identification, discussion, and resolution of issues. “Problems.” Pshaw.

7. Leverage
Yes, I suppose I and my fellow baby seal murderers in the financial profession are responsible for the glamorization of “leverage,” if not directly for its introduction into non-financial contexts. What can I say? Leverage is indeed a powerful concept, based, strangely enough, on the mechanism of the lever (to which Mr. Poole alludes), which the last time I checked my high school physics text meant a hell of a lot more than “use” or “exploit.” Application of a lever—like a corporate capability, say—in certain contexts can generate far more powerful outcomes than the application of brute force. It depends on the context, specifically the presence of a fulcrum. In certain circumstances, certain corporate attributes can be far more effective and powerful than a simple evaluation of their standalone properties might suggest. Of course, in finance the identification of the lever and the fulcrum is simple and comes prepackaged in the capital structure (where the presence of debt enables a much smaller quantity or force of equity to perform much more effectively than by itself). I suspect the identification and exploitation of coherent levers and fulcrums is more problematic outside of finance than in, but is that not why they pay corporate executives the big bucks?

8. Stakeholders
Bleeding heart anti-business lefties should be delighted that businesses at least pay lip service to the notion of stakeholders. The concept really means all those individuals and organizations who have an ongoing stake in the performance and actions of a corporation, including employees, customers, vendors, suppliers, governments, and yes, even security holders. The concept that a firm has obligations to all of its stakeholders is real and serious enough that the gimlet-eyed archons of capitalism on the Delaware Court of Chancery have specifically enjoined corporations to support it and protected them from ravening shareholders and plaintiffs attorneys when they have. “Stakeholders,” of course, replaces the archaic notion that only the interests of equity shareholders—the nominal “owners” of a corporation—matter to the conduct of a firm. It’s a good word, and an important concept. The fact that certain firms use it as a smokescreen for less savory behavior is less a criticism of the neologism than one of bad actors.

9. Competencies
Okay, I concede this one. “Competencies” is just lame.

10. Sunset
Again, Mr. Poole projects a monochrome shadow of a living word on a blackboard and complains the image is flat and uninteresting. Sunsets are slow, gradual, and predictable. Sunset implies that a project will tail off gradually over time, dying a slow and natural death as resources are consumed or withdrawn. Sunsets are not sudden and violent deaths. Only a business tyro would think that every business project either continues full strength or is taken out behind the chemical sheds and shot. Business projects have life cycles. Pace its deplorable construction as a verbing, sunset is a perfectly acceptable and descriptive metaphor for a common business action. We are not all Mother Teresa or the Terminator.

* * *

In fact, Mr. Poole’s jeremiad is in general a deplorable exercise in sneering incomprehension. He seems to have no insight or understanding whatsoever that the metaphors embedded in management-speak are not incidental but rather central to their purpose and continued usefulness. He glances passingly at the notion that they might be primarily rhetorical devices, but then he ignores this key insight for childish cheap shot-taking. His principal objection to the professional argot of an occupation he does not share seems to be that it offends his sense of linguistic and literary propriety.

Sure, like any language—English, for example—management-speak can be used “to deflect blame, complicate simple ideas, obscure problems, and perpetuate power relations.” But that is a function of language. And make no mistake: bureaucratese is its own language. Or, to be more precise, its own idiom. Idioms evolve organically among the members of a group sharing common interests and concerns to better communicate those very interests and concerns. This can take the form of abbreviation, where a commonly understood word or phrase can convey an entire sentence or conversation; motivation, where a word or phrase is understood to inspire action; or community-building, where the word or phrase triggers thoughts and actions of allegiance and commonality among its audience. These all necessarily exclude people outside the in-group, but this does not need to be a sinister thing. Try to follow a conversation among particle physicists in the Cal Tech lunchroom one day if you doubt me.

Human society is complex and highly specialized. It should be no surprise that we have erected our own Tower of Babel of mutually incomprehensible idioms, even within the English language, in order to cope. If nothing else, management-speak and other specialized idioms thrive because they are efficient: they save lots of time which conversationalists would otherwise waste in trivial itemizing and explication of concepts, notions, beliefs, and the like which they already share and understand. Business speak, like many other idioms, shares the additional motivation that it is primarily a rhetorical device, designed to summon and direct the energies of hundreds, thousands, or even hundreds of thousands toward the pursuit and execution of common goals which the rest of society does not necessarily share. Its practitioners really don’t care what unwashed outsiders think about it.

Perhaps Mr. Poole fails to understand that management-speak is not directed at him, nor at any other person not invested in the success of the organization which uses it (which probably includes many of the clock-watching wage slaves in its employ). Like the costume of the Papua New Guinean mud man to Bertie Wooster, our argot may appear harsh, awkward, even ridiculous to him, but that is simply because he cannot understand its true import and meaning. Saying business jargon is awkward is like complaining that white lies are untrue: accurate, as far as it goes, but it misses the entire point.

Besides, Steven, we all have our little communications quirks, innit?

Related reading:
Steven Poole, 10 of the worst examples of management-speak (The Guardian, April 25, 2013)
Hail Mary, Full of Grace (May 26, 2011)


¹ An easy and deserving target, I am careful to admit.
² I would not dream of criticizing the eccentric British tendency to drop prepositions and definite articles willy nilly from common phrases for some inexplicable classist motive of their own: “go down [to] the pub,” “in [the] future.” So I will just move on, silently.

© 2013 The Epicurean Dealmaker. All rights reserved.

What Infinite Ocean

“Men, finding no answers to the sunnan [the ten thousand religious questions from the Shari-ah] now apply their own reasoning. All men seek to be enlightened. Religion is but the most ancient and honorable way in which men have striven to make sense out of God’s universe. Scientists seek the lawfulness of events. It is the task of Religion to fit man into this lawfulness.”

* *
“Much that was called religion has carried an unconscious attitude of hostility toward life. True religion must teach that life is filled with joys pleasing to the eye of God, that knowledge without action is empty. All men must see that the teaching of religion by rules and rote is largely a hoax. The proper teaching is recognized with ease. You can know it without fail because it awakens within you that sensation which tells you this is something you’ve always known.”

* *
“Religion must remain an outlet for people who say to themselves, ‘I am not the kind of person I want to be.’ It must never sink into an assemblage of the self-satisfied.”

— Frank Herbert, Dune

With our cities and our lights, pale and ridiculous reflections of the heavens above, I fear too many of us have cut ourselves off from one of the greatest and most beautiful reminders of our own insignificance.

It has been too many years since I have lain out shivering under the stars on a clear, dark, cold night, far away from the city’s glare. Lay there long enough, and I remember feeling pressed against the ball of the Earth, suspended above an infinite ocean of stars with no sensation of up, down, left, or right. Only clear indigo emptiness stretching away forever beyond my reach, out there.

I never look up from the pavement anymore. I miss the stars.


© 2013 The Epicurean Dealmaker. All rights reserved.

Weekend Interlude

Berndnaut Smilde, Nimbus D'Aspremont, 2012

IV. DEATH BY WATER

Phlebas the Phoenician, a fortnight dead,
Forgot the cry of gulls, and the deep seas swell
And the profit and loss.

A current under sea
Picked his bones in whispers. As he rose and fell
He passed the stages of his age and youth
Entering the whirlpool.

Gentile or Jew
O you who turn the wheel and look to windward,
Consider Phlebas, who was once handsome and tall as you.

— T.S. Eliot, from The Waste Land

As that other inevitability approaches tomorrow, do not forget the Boatman. Nobody ever said on his deathbed he wished he’d spent more time preparing taxes.


© 2013 The Epicurean Dealmaker. All rights reserved.

How Can We Know the Dancer from the Dance?

Henri Matisse, La Danse, 1910

I.
πόλλ' οἶδ' ἀλώπηξ, ἐχῖνος δ'ἓν μέγα

The fox knows many things, but the hedgehog knows one big thing.

— Archilochus
II.
Science is the characteristic product of our culture. Similarly, understanding where science fits in – metaphysically, epistemologically, morally, aesthetically and otherwise – is our characteristic philosophical problem; we’ve been working on it since Descartes. As of now, the hardest part is to reconcile a physicalistic ontology with the apparently ineliminable multiplicity of discourses that we require when we try to say how things are. Wilson thinks this appearance of tension is unreal. He suspects that if we resist consilience, that’s because we’re suffering from pluralism, nihilism, solipsism, relativism, idealism, deconstructionism and other symptoms of the French disease. Well, maybe, but I for one plead not guilty. It seems to me that scientific Realism is quite compatible with the view that events fall into revealing and reliable patterns not just at the level of micro structure but at many different orders of aggregation of matter. The heterogeneity of our discourse would then correspond to the heterogeneity of levels at which the world is organised, and both might well prove irreducible.

Everything is physical perhaps, but surely there are many different kinds of physical things. Some are protons; some are constellations; some are trees or cats; and some are butchers, bakers or candlesticks. For each kind of thing, there are the proprietary generalisations by which it is subsumed, and in terms of which its behaviour is to be explained. For each such generalisation, there is the proprietary vocabulary that is required in order for our discourse to express it. Nothing can happen except what the laws of physics permit, of course; but much goes on that the laws of physics do not talk about. It would not be entirely surprising if the explanatory apparatus that our higher-level theories require in order to say the sorts of thing that physics doesn’t, cross-classifies the taxonomy that physical explanation employs. Maybe this kind of picture is a viable alternative to consilience. Or maybe it’s not. Or maybe both are wrong. Or maybe it’s still too soon to tell.

— Jerry Fodor ¹
III.
However, the point which is most significant in the present context is that all these laws of nature contain, in even their remotest consequences, only a small part of our knowledge of the inanimate world. All the laws of nature are conditional statements which permit a prediction of some future events on the basis of the knowledge of the present, except that some aspects of the present state of the world, in practice the overwhelming majority of the determinants of the present state of the world, are irrelevant from the point of view of the prediction.

— Eugene Wigner ²

Physics in particular and the natural sciences in general constitute a remarkable intellectual accomplishment of the human race. While they are by definition neither invulnerable to challenge nor complete, they allow us to describe and predict a broad range of physical phenomena with astonishing accuracy and precision. They have enabled tremendous industrial and technological development, as well as allowing us to express the baser part of our natures with distressing power and efficiency.

But as Eugene Wigner explains, their success in large part depends on laserlike focus on only those phenomena which can be described with the explanatory apparatus they possess. Physics and the natural sciences succeed by ignoring particulars they deem irrelevant to their purpose and focusing on a limited number of real or hypothesized invariances which they can understand and manipulate. The present location of a carbon atom does not matter to particle physicists’ prediction of its mass, regardless of whether it resides in a coal seam thousands of feet underground, an air molecule exhaled from an athlete’s lung, or a patch of pigment on the surface of a Matisse painting.

And yet, outside the laboratory, factory, and classroom, the class of particulars which physics and its brethren ignore make up the vast body of phenomena and things which human beings experience every day. Variance is the main concern of our waking lives, not invariance. Variance is what most of us seek to understand, explain, and manipulate most of the time.

The natural sciences’ ability to describe the infrastructure of the world—what matter and energy do, and how we should expect them to behave—is a triumph of our species, and undeniably useful. But physics and chemistry and cosmology stand mostly mute before a painting or a concerto. They reveal the physical origin, composition, and interaction of the components, and how certain photons or sound waves propagate from the pigment or instruments, but they can explain almost nothing that really matters ³ about a work of art. Nor, what is more, about an election, a culture, or a civilization.

* * *Science is our best shot at explaining the constraints of our universe: what is possible, and what we should expect when events occur. Science may even be able, one day, to explain the origins and functioning of consciousness. But unless you believe the entire history of the universe, including all the thoughts, decisions, and actions of conscious beings everywhere, is completely and ineluctably predetermined by the physical facts of our universe, science will never be able to predict or explain the workings of our will. And our will, arising in an as-yet unexplained fashion from electrochemical reactions inside the spongy matrix of our physical brains, is what in turn affects and even alters the physical universe itself. Physical Matisse assembled physical objects to create that painting, then, in that fashion. Why? What does it mean to us? To you? How will that historical fact about that created physical object affect you? What are you going to do about it?

And if you don’t think a primitive figurative painting by a long-dead Frenchman matters much in the scheme of things, consider the atom bomb. Men and women decided to make that, too. Science tells us virtually nothing about why they did so, other than the relatively trivial fact that they could.

Many scientists scoff at philosophy, psychology, and cognate disciplines as empty gibberish, obscurantist mumbo jumbo.⁴ This is a mistake. Such disciplines are humans’ attempts to describe, explain, and, on occasion, even predict the constraints, facts, and nature of our consciousness and how it interacts with the world. This is not a trivial or misguided undertaking, for our consciousness affects the world, too.

Writing on science, Thomas Henry Huxley said,

To a person uninstructed in natural history, his country or sea-side stroll is a walk through a gallery filled with wonderful works of art, nine-tenths of which have their faces turned to the wall.

Do not make the same mistake about the life of the human mind. Otherwise, you will pass through life incapable of actually seeing any of the paintings turned toward you.

Related reading:
Sovereign Triviality (November 19, 2011)
Pixels Don’t Breathe (May 17, 2011)


¹ “Look!,” London Review of Books, Vol. 20 No. 21 (29 October 1998), pp. 3-6.
² “The Unreasonable Effectiveness of Mathematics in the Natural Sciences,” Communications in Pure and Applied Mathematics, Vol. 13, No. I (February 1960).
³ Yes, that is a value judgment. Explain value judgment to me using science. Comprehensively. I’ll wait.
⁴ Mind you, some of it is. There is bad philosophy and bad psychology, just like there is bad science. It comes with the territory of being human.

© 2013 The Epicurean Dealmaker. All rights reserved.

Curriculum Vitae

Such a clever Toad.

Nec species sua cuique manet, rerumque novatrix
Ex aliis alias reddit natura figuras.
Nec perit in toto quidquam, mihi credite, mundo,
Sed variat faciemque novat: nascique vocatur
Incipere esse aliud, quam quod fuit ante; morique
Desinere illud idem; quum sint huc forsitan illa,
Haec translata illuc; summa tamen omnia constant.

No species remains constant: that great renovator of matter
Nature, endlessly fashions new forms from old: there’s nothing
in the whole universe that perishes, believe me; rather
it renews and varies its substance. What we describe as birth
is no more than incipient change from a prior state, while dying
is merely to quit it. Though the parts may be transported
hither and thither, the sum of all matter is constant.

— Ovid, Metamorphoses, XV, 252–258

It occurred to me the other day while trimming a pensive cigar, O Dearly Beloved, that, while I have slain (or hopefully at least severely incommoded) many dragons in these pages and sacrificed many billions of pixels on the Altar of Knowledge for the benefit of your education and illumination, I have perhaps been remiss in one important respect. I have written at length as to how (and why) a hopeful supplicant might enter the grand and glorious vocation of investment banking, and I have dilated at even greater length on what grizzled old veterans such as myself do once we have achieved our cushy sinecures therein. But I have distinctly overlooked the steps by and through which an eager young tadpole fresh from the leafy groves of academe transforms him or herself into a hoary old bullfrog barking orders and swilling scotch from a gilded lily pad.

This, I freely confess, is a lamentable oversight. For the metamorphosis through which said tadpole transforms itself into said bullfrog is neither simple, obvious, trivial, nor pain-free. Many (most, really) are the novitiates entering the holy precincts of my industry who never take their final vows, and few indeed are those who manage not only to climb the slippery pole to the even slipperier platform of Managing Director but also, mirabile dictu, to stay there. A young tadpole, just starting out, would be wise to learn the path lying ahead of her before she chooses to undertake such a harrowing journey. Let this post, then, serve both for my penance and your edification.

* * *

So, let us say our aspiring tadpole has done everything right in her first 22 years, developing sufficient proof of intelligence and superhuman extracurricular talents and activities to have persuaded both an elite university and subsequently a prestigious investment bank to welcome her into their ranks. She, being both a clever reader of these pages and allergic to onion cheeseburgers for breakfast, elects to join the corporate finance and M&A department of her bank, rather than the boys’ locker room on the sales and trading floor.^1,2 After submitting to the usual hazing rituals of fingerprinting and her bank’s formal training program, our heroine collects her building pass and makes her way to her cubicle as a newly minted

FINANCIAL ANALYST

Now the actual specifics of our novitiate’s duties and day-to-day activities will depend quite heavily on her bank’s organization and practices when it comes to Financial Analysts. Some will put her directly into a dedicated product group, like mergers & acquisitions, where she will be tasked with supporting senior M&A bankers in executing transactions alongside other bankers. Others will place her in an industry group, like Healthcare or Energy & Power, where her job will be to support industry-focused bankers who originate and execute all sorts of deals for their clients, including M&A, capital raising, and the like. Still other banks will put her in a large analyst pool, where she will be one of many analysts loaned out on a case-by-case basis to support bankers from different groups across all of corporate finance and M&A.

In general, however, these minor details don’t matter for our purposes here. A Financial Analyst’s job is to support senior bankers, from Managing Director on down, and to do whatever they ask her to do. Most of the time, this involves doing research, maintaining and updating various databases, creating or modifying financial models for specific transactions or a range of related companies (known as “comparables”), and editing and producing tons and tons and TONS of presentation books. Analysts work under close supervision by Associates (the next rung up) and sometimes Vice Presidents, who supply the content of each presentation or related work product (at the direction of their superiors) and who check the Analysts’ work for completeness and correctness. Analysts, being bright-eyed, intelligent, but largely clueless young things who usually look like deer in headlights or zombies on Adderal, almost never travel and rarely get to attend client meetings. When they do, they virtually never speak and are only there to hand out the presentation books to other attendees. At the biggest banks, an Analyst may only see her Managing Director once a year in the distance, like some mythical unicorn, and only read about her clients in The Wall Street Journal.

Analysts tend to work the longest hours, are in the office late every weeknight and most weekends, and rarely see the light of day. If shit flows downhill, Analysts are the ones at the bottom collecting and processing it every day before they hand it back up the chain of command, hopefully prettier and less aromatic than when they received it. Analysts are cannon fodder.

Now, because of this, you can see that a successful Analyst must have several important traits. She must be intelligent, patient, hardworking, relentless, unflappable, diplomatic, self-sacrificing, and forbearing. She must always maintain her equanimity, even in the face of a spittle-flecked Associate berating her for not correcting his misspelling of the client CFO’s name in a presentation book or a Managing Director who looks at her blankly when she asks how the meeting she skipped Christmas Day with her family to prepare the book for went (the client cancelled). It helps if she is a wizard with Excel or Powerpoint or Capital IQ and is a great stickler for detail (like saving her misspelling Associate’s ass). It is extra good if she is innovative and comes up with new ideas for doing things, better financial models, or even a clever suggestion for something even her MD has not thought about on a deal. Taking initiative and asking for more work is like whipped cream with a cherry on top.

What she is not expected to do is come up with the ideas her seniors pitch, cold call new potential clients, manage transactions, or sell. Most Analysts are hired for a specific stint of two years, after which they are encouraged to move on. Most do: some back to business school for an MBA, some to clients or other industries, and a few—usually the most proficient modelers and most eager deal junkies, natch—directly to private equity, where they will trade client service kneepads for a spot on the bottom rung of a financial sponsor and the dream of becoming another Steve Schwarzman or Leon Black. Increasingly, many banks have begun to encourage their top Analysts to stay on for a third year, and sometimes even a fourth plus a field promotion to Associate, if both they and their seniors are willing. It makes sense: why lose your best-trained, most competent people to business school or the competition?

* * *

The next rung up the investment banking ladder for our aspiring tadpole is

ASSOCIATE

In large part, the Associate’s job is very similar to that of the Analyst, with the exception that the Associate has both the authority to delegate and direct Analysts in their work and the responsibility to get the output right. Associates tell Analysts what to do, when to do it, and check their work when it is done. They take their marching orders from Vice Presidents and above. Associates are, to mix another metaphor into my bloggy blender, the corporals of the investment banking world. Sure, they have authority over the privates, but they spend their lives taking fire in the same foxholes the Analysts do. If an Analyst is not available or cannot do the work, the Associate does it herself. Associate hours look almost indistinguishable from Analyst hours. They spend their early years neck deep in the same shit.

The difference is that most Associates are hired into banks straight from business (or other graduate) school. This often leads to the amusing situation where a newly-minted MBA without prior banking experience, like Yours Truly in his early years, is supervising a highly-trained second-year Analyst who knows approximately 500% more about every topic, tool, and method we are supposed to be using for an assignment than I do. In such cases, a certain humility and facility for fast learning is indispensable. An Associate must also learn to manage up as well as down. It is the Associate who has to tell the frantic Vice President or imperious Managing Director that, no, spreading the entire S&P 500 over the weekend is neither possible nor a good use of overstretched junior resources, no matter what they think Warren Buffet might like to see (if only they could get him on the phone). Associates are also expected to participate in more client meetings and the occasional travel, while still keeping their mouths shut, so they can begin to absorb industry knowledge and sales tips and tricks from their betters. Plus carry their superiors’ bags.

Associates, of course, are the most junior investment banking professionals who have actually taken final vows. Unlike Financial Analysts, many of whom sign up for a two-year stint to get a prestigious job on their résumé, make some money, then light out for the territories never to be seen again, Associates are expected to be lifers. Unlike Analysts, they usually start their careers specializing in a particular product area (like M&A or Leveraged Finance) or industry coverage group. They are expected to learn not only how to make flawless pitch books and financial models and manage the Analysts supposedly doing the work, but also the ins and outs of their groups’ business, clients, competitors, and transactions. Depending on the size and staffing of their banks, they may be asked to interact directly with lower-level employees at their clients’ companies on routine relationship or deal matters. They normally take first-line responsibility for making sure all the endless minutiae of investment banking transactions, both internal and external, move as planned.

In order to succeed, our Associate must make sure everything she is asked to do comes out perfect and on time. She must take the initiative to look for more work, since there is always more work to do, and she must begin to learn enough about her profession to offer intelligent, insightful observations and suggestions when they are helpful. She must learn to manage a very wide range of high-strung personalities under conditions of extreme pressure. The Associate must aspire to be (and be seen as) the ultimate safe pair of hands. Associates do not have responsibility for maintaining existing client relationships or developing new ones, and they have no sales or revenue responsibilities, but they are attached to the success of their group and their department in a way no Analyst is. The Associate is responsible for both her performance and the performance of her subordinates, but Associate is the first role in my industry where a professional is expected to grow out of her role and into the next one. Being an Associate is the first real step on the ladder of apprenticeship in my business.

* * *

If all goes well with our tadpole’s development, sometime within four to six years she should be promoted to

VICE PRESIDENT

Vice President, as the rather pompous title implies,³ is the first time a banker is truly expected to become a real expert in something: an industry, a product type, a set of clients. In exchange for insulation from the day-to-day grind of shit farming in the trenches with the Associates and Analysts, a Vice President is expected to start coming up with ideas for her group’s clients, start writing most of the group’s presentation materials, and start supporting her Managing Director much more closely in sourcing and originating deals. A Vice President is expected to attend most client meetings and begin to contribute meaningfully in many. A VP is also expected to take lead execution responsibility in-house and out for active deals, and is usually the point person a client CFO interacts with daily during a live transaction. While it is unusual for Vice Presidents to source new client relationships or live deals, it is entirely expected they will assume an increasing share of the burden of maintaining existing ones. Vice Presidents often become the glue for their groups and act as clearinghouses for administrative tasks as well as growing into more of a sales role in support of their MDs.

Vice Presidents are not expected to do basic research, program or update financial models, proofread presentation materials, or nitpick production details like fonts, color schemes, or graphics formats. In other words, they are not expected to do Analyst and Associate work. However, like all investment bankers, they are responsible for the work produced under their watch, so if a VP’s Analyst and Associate produce crap work, it is up to the VP to fix it, even if that requires her to pull an all-nighter doing so. (In which case, the Associate and Analyst better watch their asses.) Vice Presidents are also not expected to generate revenues independently, although their performance getting and executing deals in support of their MDs is important enough that they can begin to enjoy meaningful performance bonuses in line with the group’s success.

Because the nature of the job shifts so dramatically from anal-retentive, in-the-weeds detail mongering to actual independent thought, interpersonal relationship cultivation, and growing sales responsibilities, the transition from Associate to Vice President is the most fraught for many investment bankers to manage. The very intellectual and personal qualities which make you an attractive and effective candidate for Analyst or Associate become increasingly irrelevant, only to be replaced by interpersonal skills and predilections which are often fundamentally at odds with your prior role and responsibilities. For this reason alone, we see substantial attrition, both voluntary and involuntary, in Vice President ranks across my industry. It is not for nothing my fellow Associates and I made fun, shortly after we arrived, of an aging Vice President at my first firm, who could not seem to make the transition. We dubbed him amongst ourselves a “very, very good Associate.” He did not last long.

I have said it before: the higher you get in my business, the more it becomes pure sales. Vice President is when a banker really begins to see the truth of this remark for herself, and it is when she (and her bank) must make the determination whether she has the goods to continue.

* * *

Finally, after four to seven years of flogging herself and her bank as a Vice President, the successful frog finally breaks through and becomes a

MANAGING DIRECTOR⁴

At this level, which is mine, the job morphs completely into pure commodity sales. Managing Directors’ one and only responsibility is to bring in revenue, in the form of deal fees, and they do it any way they can. Some of us become product experts, like M&A or Leveraged Finance gurus, who have no clients of our own but who are indispensable to MDs who do have clients that want our products. We execute transactions which generalist MDs cannot, and we get to split the fees and the credit for our efforts. Some of us get to know an industry backwards and forwards, making ourselves better informed about the strategy and operations of that industry’s participants than any one of them could possibly become themselves (since competitors, duh, don’t talk to each other). Others of us cultivate and maintain new and existing relationships with paying customers, wining, dining, and schmoozing the drunken sailors who weave across the landscape, dispensing dollars, pounds, and euros for transactions large and small. Such MDs’ highest and only purpose in life is to be relationship bankers. At the biggest banks, these MDs act as concierges for the product and industry experts in their ranks, introducing their clients to the people who can actually execute the deals in question. At smaller banks and boutiques, relationship bankers usually pick up the tools and execute the deals themselves, as well.

It doesn’t matter. The only rule for Managing Directors is to bring in the simoleons. That is our job.

As you might expect, we don’t pay attention to the details of our presentation materials or the day-to-day minutiae of live transactions. As soon as we land a new deal, we are off, looking for the next one. We don’t get paid for hand-holding, relationship building, deal-doing, or advice-giving until and unless said activities result in legal tender clearing our employer’s bank account. Of course, some of us do pay attention to such non-revenue trivialities, if only because we play a long game in which delivering on your promises, providing good quality service, and sticking to your word actually affect your ability to make money in the future. But the point is we do not proofread our presentation books the night before the big pitch, unless something is seriously wrong. The best investment bankers don’t need presentation books to win deals. The best meetings I have had have been ones where I did not even open the book. Yes, I am that good, but, no—too—the printed materials really aren’t that important. After all, if I wanted to sell glossy presentation books I’d work for Kinkos.

* * *

Of course, above my rank there are Group Heads and Department Heads and Division Heads and the Executive Committee of the bank—not to mention the C-suite—but that is not an arena in which I am really interested in playing. Above the revenue-generating Managing Director level, your job becomes one of politics first and foremost, not finding, developing, and serving clients. Some people love that shit, and some are very good at it. Not me.

But if you are one of those people whose life ambition is to become Jamie Dimon, you don’t need or want my advice anyway. In fact, it was probably you who slipped the knife between my shoulder blades while I was writing this.

I thought I felt a twinge.

Related reading:
A Corporate Finance Bestiary (March 13, 2010)


¹ Those among you who are in fact fond of onion cheeseburgers or who have other reasons to prefer the generally faster-pace and shorter hours of the trading floor will likely have to look elsewhere for your education on what the evolution of a new recruit into a senior salesman or trader looks like. While the titles and the raw material are largely the same, the day-to-day job and career paths are foreign enough to my experience that I would do you a disservice if I pretended to know what they are like. Sorry.
² By the way, I’m not making up the bit about onion cheeseburgers for breakfast just to be a prissy corporate finance asshole (although I’m probably that, too). Michael Lewis relayed it as a key plot point in describing Lew Ranieri and his mortgage-backed securities traders in Liar’s Poker. Look it up. To be fair, I haven’t smelled one on a trading floor in years, so those dietary habits may no longer exist. You never know, though. And it is a great dig.
³ It is no coincidence that the investment banking role which first entails meaningful client contact bears the title Vice President. After all, VP actually means something in the real world of non-financial corporations, where Vice President posts tend to be relatively rare and occupied by seasoned professionals. It is my industry’s sop to the poor 55-year-old Chief Financial Officers who have to talk daily with our 30-year-old VPs in the course of billion dollar IPOs and ten billion dollar mergers. At least they can kid themselves that they have the ear of a senior officer of their bank. (There are approximately umpty billion Vice Presidents in my industry, and approximately none of them have signatory authority.) We learned this trick from the commercial bankers, by the way.
⁴ Often (usually? why would I care?) there is a transition step between VP and MD entitled Director, Executive Director, or Principal. All you need to know is that this role is a hybrid between Vice President and MD, with hybrid responsibilities and characteristics. Just mix the two in your mind, and I’m sure you will be able to follow the plot. After all, you’re a clever person: just interpolate.

© 2013 The Epicurean Dealmaker. All rights reserved.