Scott Bok Explains What Investment Bankers Actually Do All Day

There's obviously a lot of talk these days about AI and possible destruction of white collar jobs. Intuitively bankers might be expected to be victims of this. But before we can answer whether AI can disrupt an industry, or a line of work, we have to know what the job actually entails. What do investment bankers actually do, and why are they paid for it? To answer this question, we speak with Scott Bok, the longtime former CEO of the investment bank Greenhill. Scott is also the author of the book Surviving Wall Street: A Tale of Triumph, Tragedy, and Timing. We discuss how the industry changed in his career, what type of people thrive in it, and how AI could change the nature of the profession. Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 0:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:08Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:52Speaker 02

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:07Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:12Tracy Alloway?

  And I'm Tracy Alloway.

• 2:13Joe Weisenthal?

  Tracy, how good at Excel are you?

• 2:16Tracy Alloway?

  Um, not good compared to a lot of people who listen to this podcast, I would imagine. I mean, I can do some basic stuff like autosum and, you know, so some, no, it's not. That's like literally clicking a button. I can write like a couple formulas in the little command prompt, but I think everyone can do that.

• 2:33Joe Weisenthal?

  I can write some really rudimentary formulas, but I never really like got good at it to the degree that some people are. But the good news is I saw that.

• 2:41Tracy Alloway?

  We don't have to learn it anymore.

• 2:42Joe Weisenthal?

  We don't have to learn. I saw that Claude code they have, or Claude, they have some extension where you just talk to Excel in English and you say like, you know, build this kind of formula and make these changes and import this. I haven't played around with it, so I'm not 100% sure it would work. And to be honest, because of my limited Excel skills, I wouldn't even be able to verify if it worked in the first place. But my sense is, you know, that maybe that seems like, maybe that's changing.

• 3:06Tracy Alloway?

  I would guess that it works pretty well. And imagine if you're someone who's been working probably in finance for like 20 years and you became known as not, and I don't want to say Excel spreadsheet monkey, Excel spreadsheet gorilla. Like, you know, someone really admired for their Excel skills and suddenly you've been disrupted.

• 3:25Joe Weisenthal?

  Totally. Well, sometimes you see these things online where like they show this stuff like, oh, the investment bank, investment analyst or junior analyst just got put out of a job and like, there's, I'm pretty sure there's more to the job. So I do know that like building models and so forth, there's an important thing in finance and Wall Street in various capacities. I'm pretty sure that's not the entire job. I'm pretty sure automating Excel is only part of it. But nonetheless, technical skills are technical skills. And if that changes, who knows, maybe the job could change.

• 3:56Tracy Alloway?

  Well, the question I've always had about Wall Street is how much of it is driven by your own personality and sort of client facing skills versus I am a brilliant analysis who is not only able to come up with amazing ideas for mergers and acquisitions, sort of. You know, working girls style where like Melanie Griffith is in an elevator and is like, I know what your company needs to merge with whatever versus like, I'm just really good at hobnobbing with executives.

• 4:26Joe Weisenthal?

  It's probably a mix, right? That would be my guess that there's someone is really good at, oh, this company that owns parking lots of this, uh, this city could buy another parking lot company and so forth. And then another person who's really good at staying out and taking the clients to a nice dinner. I don't think you could really, or I don't really want to have a conversation about the degree to which AI is going to disrupt all of these white collar jobs until I have a better handle what the white collar jobs are in the first place. I feel like we should start there.

• 4:54Tracy Alloway?

  How important are Excel skills actually in this business?

• 4:56Joe Weisenthal?

  What is the sort of distribution of skills that it takes to thrive in some of these capacities? Anyway, very excited to say, uh, we really do have the perfect guest to talk about some of this. Someone we talked to last year, and that was about sort of the history of investment banking over the last several decades and the sort of connection between global capitalism and investment banking. We wanted to have him back on the show because as an investment banking veteran, someone who could maybe talk about the inside and how, how people work and how the culture changed and how technology changes. So we're going to be speaking with return guest Scott Bach. He is the former longtime CEO of the investment bank Green Hill, the author of the recent book, Surviving Wall Street, and comes back on a lot. So Scott, thank you so much for coming back with us.

• 5:39Speaker 04

  It's great to be back. Thank you.

• 5:41Joe Weisenthal?

  What do you, for, uh, for listeners who, in case they didn't listen to the previous one, which they should, uh, what did your career span on Wall Street? When did you first get into it? And, you know, how, what, give us the sort of the 30 second Scott Bach career bio.

• 5:56Speaker 04

  Well, I, I feel like I started at the very beginning of really the explosion of the investment banking business. You know, as I said in my book, when I graduated from Wharton, I did not know what an investment banker was. I knew exactly one person from our entire class who got a job on Wall Street. So it was a very small place back then. M and A was, you know, very rare.

• 6:15Joe Weisenthal?

  What year were we talking about?

• 6:16Speaker 04

  1981.

• 6:17Joe Weisenthal?

  Okay.

• 6:17Speaker 04

  You know, see your interest rates peaked. It's the, you know, stock market was, had been flat for more than a decade. You know, private equity is a phrase that didn't even exist. Hedge fund didn't exist. I mean, it was a very, very different world. By the way, it wasn't even legal to buy back your own stock back then. That that happened a year later. It was viewed as market manipulation to do that. So the whole thing of sort of playing with balance sheets, putting companies together and so on. I mean, there'd been a bit of that in the 1960s, mostly around building conglomerates, which I think in part was because they couldn't buy back stock. Because if you're generating cash, what are you going to do with it? You could be ITT, a big industrial company and say, well, I think I'll buy the Hartford, a big insurance company. You know, today, people would think that's a crazy idea. But that was kind of the predecessor to what became,

• 7:01Speaker 04

  you know, the M and A and transaction business around, you know, maximizing shareholder value. That that really began, I would say, right at the beginning of my career.

• 7:10Joe Weisenthal?

  Perfect.

• 7:11Tracy Alloway?

  This is already a fascinating conversation. I have to say.

• 7:14Joe Weisenthal?

  I have a million questions.

• 7:14Tracy Alloway?

  So I imagine this dynamic would have changed throughout your career. But how much of the investment banking business is the bankers approaching clients and saying, we have an idea for you versus the clients coming to the bankers and saying, we have a problem such as we have all this cash and we can't, you know, buy back our shares or we want to do something with it to reduce our cost of capital or whatever.

• 7:39Speaker 04

  You know, that changed an awful lot over time because at the beginning, there were lots of companies and very few investment bankers. And so they so they didn't get a visit all that often. And so when they did, the banker would try to bring, you know, ideas that maybe they hadn't heard before. You know, now there's thousands and thousands of investment bankers, many, many different firms of many different types. And they're all maintaining relationships. So it really turns into more of a dialogue where where you don't. You don't just, you know, you never met the client before you show up and say, hey, I think you should buy this company down the street. And wow, that's a great idea. I hadn't heard that before. And and they do it. It's more like you have an ongoing dialogue with a client. You figure out what they want to do, what their, you know, kind of what their appetite of their board is, what their balance sheet's like, how their business is going, how they feel about their share price,

• 8:24Speaker 04

  you know, what what they think is kind of the next big thing for them. And over time, you come to an idea almost mutually, I would say.

• 8:32Joe Weisenthal?

  What were you good at in the early 80s or the people that you went to work with very early on? What would you say you had in common? Why why did, yeah, why was it a fit for you?

• 8:43Speaker 04

  For me, I was probably a little bit different since I came from a legal background than some. I mean, there were some people who were, you know, the XL. And by the way, XL wasn't even around then. It was Lotus 123, who are the, you know, the XL jockeys who built these, you know, enormous models and so on. And I did a bit of that myself. I think my strength was more in sort of structuring, conceptualizing, negotiating, you know, marketing, talking to CEOs and boards. It was more of that kind of, in many ways, the qualitative skills. The math, you can pick up what you need fairly quickly. And, you know, as I sometimes tell, you know, people of like my, my son's generation, he's, he's 30 years old. I tell his, people at his peer level, I say, you know, the great Rubicon to cross in the world of, you know,

• 9:27Speaker 04

  Wall Street and related fields is when you get to the point where there's somebody smart working for you.

• 9:31Joe Weisenthal?

  Right.

• 9:31Speaker 04

  You're, you're, you're no longer.

• 9:32Joe Weisenthal?

  Oh, is that, yeah.

• 9:33Speaker 04

  You're, you're, you're no longer the one, you know, training some complete newbie. You're no longer the one doing it all yourself. You're the one who's doing a bit of conceptualizing and giving it to a very smart person who's going to stay late at night and build you a beautiful model.

• 9:46Tracy Alloway?

  I want to ask you what it was actually like working as a sort of junior banker in the eighties. But before I do, what's with all the people with legal degrees going into banking in the 1980s? Because you weren't the only one. I think there were a few other famous compatriots at the time. Lloyd Blankfein, for instance, stands out. But what was it about having done a law degree that translated into banking back then?

• 10:09Speaker 04

  There, there were many who made the move. And as a matter of fact, while I was interviewing, the New York Times Sunday Magazine had a cover story called Lawyers Becoming Bankers.

• 10:17Tracy Alloway?

  Oh.

• 10:17Speaker 04

  I mean, it really was a big phenomenon. And I think literally the reason was the business exploded. Suddenly, there's just massive amounts of transaction activity. There aren't that many investment bankers. You're not just going to hire more people who are 22 years old and train them. You need someone who's 26 or 28 or 30 years old, who actually has kind of been around the business. They may have some skills to learn, but they bring other skills to the table. And so they brought in the lawyers, including myself, as kind of a way of sort of ramping up the, this, the scale of the team, rather than just saying, we're going to just hire more 22-year-olds and train them. But you didn't have the time for that. You know, there was so much, such a growth in transaction activity. That's why a lot of lawyers made that move.

• 10:57Joe Weisenthal?

  Well, you mentioned just now, you're like, okay, it's nice to be in the position where you can conceptualize something. And then the really, you know, the smart whiz kid stays up all night building the model. Why are they staying up all night? Like, this is the, this is sort of one of the big questions that people have is like, what is it about the business that demands these sort of, in some case, extreme hours late into the night? Why can't they just do it during the day and like clock out at five?

• 11:25Speaker 04

  Very good question. You know, I think one, and this, this kind of relates to, you know, the future of AI and efficiency and investment banking and so on as well.

• 11:33Speaker 04

  I, I think maybe the dirty little secret of the industry in terms of how the sausage is actually made is that the actual building of the model, the creation of the math that says why it makes sense or doesn't make sense to buy something at a certain share price, that, that, that takes a limited amount of time. The, the fiddling with the PowerPoint pages that express that information. So it's makes just the right points and just the right way and just the right color theme and, you know, just the right things in italics and other things in bold and things like that. You know, bankers tend to be perfectionists.

• 12:06Joe Weisenthal?

  Okay.

• 12:06Speaker 04

  And so they will fiddle with that for a very long time. And a lot of times, I mean, if you ask people who were in the early part of their careers, like, what are you really doing when you're there late at night? It's very often, it's fine tuning, uh, math that was done long ago.

• 12:21Tracy Alloway?

  There's also a schedule, um, misalignment, I guess, because you get the feedback from your boss at like five or six PM, right? And like at the end of their day and then you have to stay up really late to make all the changes and get them on their desk in the morning. But, okay, perfectionism, long hours, was that the case when you were initially entering the industry in the eighties?

• 12:43Speaker 04

  Very much so.

• 12:44Tracy Alloway?

  But not with PowerPoint, with something else?

• 12:46Speaker 04

  Well, it, that's true. I mean, it literally was, uh, I don't know, it was, I'm not sure it was called anything. I think it was like a typed page, you know, of numbers, you know? It was kind of the early, the, the early version where there wasn't all the software that put it in, in pretty pictures and so on. But, you know, look, that, that came along with the, you know, pie charts and bar charts and things like that, you know, fairly early, but it wasn't nearly as kind of, uh, beautiful, is it? And I mean, now it almost looks like, you know, what, what Vanity Fair magazine used to look like, right? You open it, it's got beautiful color and pictures and charts and, uh, and, and all that sort of thing. But people always worked very long hours. That, that was always the sort of ethos of the industry, that there's a lot of work to be done. We want it to be perfect. And hey, if you can make it a little bit better by staying another half hour, you stay another half hour.

• 13:31Tracy Alloway?

  So how much of that do you think was driven by genuine client demand in the sense that, you know, a client presumably would be not very impressed if he saw that a bullet point was slightly misaligned in a PowerPoint presentation or something like that versus driven by the institution itself and a sort, I don't want to say hazing culture, but there is a sense that, you know, we all have to work long hours. I worked long hours at the beginning of my career. It's expected that now you are going to work long hours yourself.

• 14:00Speaker 04

  I think if you go back to the beginning, really the 1980s, I think it grew initially out of neither of those things. I think it grew out of the fact that business was growing so fast and you had a limited sized team and you had twice as many deals to work on as last year and next year you had 50% more than that. And I mean, it was a really extraordinary growth. And so there just were like weren't enough hands on deck that you could, you know, go home at seven o'clock at night. Now, over time, that generation of bankers, including myself, you know, they bore the scars of those years throughout their careers. And so, yes, they probably there probably was in the industry, some element of, hey, I worked like this, you're going to work like this. But initially, it was just a genuine business issue of, hey, there's so much business to do. So few of us here to do it. We have

• 14:45Speaker 04

  to work very late to get it done.

• 15:03Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee. So search Barclays Brief wherever you get your podcasts.

• 15:29Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 16:10Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 16:52Joe Weisenthal?

  What about the element of essentially banking, like many other fields, including academia, but also law? You know, there's like a pyramid element where there's like a very small number or relatively small number of extraordinarily good/remunerative jobs at the top and a large base of junior analysts and so forth. And how much is it a sort of emergent competition amongst? The junior bankers or whatever, such that it's not even necessarily some directive to put in crazy hours, but there's a big field of people and they want to get up to the next rung and there's fewer spots to the next rung and that creates that mechanism

• 17:36Joe Weisenthal?

  of intense competition.

• 17:38Speaker 04

  The desire to sort of over please, you know, to just go over the top and yeah, that's, that certainly is there as well. I remember back, I don't know why I remember this, but back, you know, kind of in the late eighties, I was probably late twenties at that time, not even a vice president yet at Morgan Stanley. I remember we had this meeting once with the head of investment banking at Morgan Stanley, a guy named Joe Fogg, very, very, sort of, very sort of tough guy of that era. And, and we're sitting around the table, I don't know, there must have been, I don't know, 20 some associates in New York at that time, something like that. And people are asking the question, hey, you know, we have someone, you know, who covers the retail industry, someone who covers the industrials, someone who covers, you know, insurance companies, like what, what, what are we going to grow up into? You know, what are the roles going to be for us? And so people

• 18:21Speaker 04

  did try very hard to differentiate themselves. Now, of course, what none of us around that table knew is this business was going to be like a hundred times bigger. So, so it wasn't like, oh, we have somebody to cover the retail industry. So I guess that's not an opportunity for me. No, there was going to come a day when you'd have 25 people covering the, the retail industry. But there's always been that sense of, you know, few opportunities at the top, even when it wasn't true, you know, even when there was going to be more opportunity.

• 18:47Tracy Alloway?

  So I imagine quite a bit of the work you were doing in the 1980s is what we would now characterize as pretty rote work in the sense that, you know, we, we didn't have computers, we didn't have Bloomberg terminals that would show the share price or a bond quote. You would have to like actually call someone up and get that information.

• 19:06Speaker 04

  The Quotron, which, which I don't even know who owned that company, but Bloomberg put it out of business a long time ago.

• 19:11Tracy Alloway?

  Shout out to the Bloomberg terminal, I guess. But, you know, you went through a wave of disruption, basically, and yet it seems that the work of physically going somewhere to find corporate papers or physically calling someone up to get a share price quote, that was replaced with work of a different kind. Can you explain how that substitution kind of happened?

• 19:33Speaker 04

  I think it was replaced with going from the sort of very intermittent meetings with a limited number of clients to talk about ideas to a place the industry is today where you go very, very regularly to almost every company on the planet of any real size, right? Someone is there and you're there with analysis of their industry, their performance, their stock price, their competitors, what's for sale, what might be for sale. And so it's more like a saturation coverage. It's a little bit, I think investment making is very, very different from consulting, but where it has some similarity is this kind of this attempt and desire to sort of almost get inside the business and really know your

• 20:18Speaker 04

  client's business. And that was not something that was even attempted back in the 1980s. But that's what all those people are doing with all those extra hours now.

• 20:25Joe Weisenthal?

  You mentioned you, in the early 80s, you couldn't have anticipated that the industry was going to grow 100 fold or whatever it was. And this is one of those things where perhaps many of the people, many in the public are like, why is finance so big? Why is there so much money in this area? Finance doesn't produce anything. Why has this grown so much? How would you articulate that to someone? Why fundamentally there is just so much demand for financial services at the corporate level and so much more than there was, say, 40 years ago or 45 years ago?

• 20:59Speaker 04

  Look, I think there, it's no exaggeration to say that there really was an epochal change, that the world of sort of post-World War II, you know, big companies, building conglomerates, you know, work at the same place for 35 years like my father did and, you know, not a massive amount of intense competition, not a lot of mergers, kind of stable, stable companies. And, you know, maybe that meant slow growth at some point and maybe that was part of a problem. But in the early 80s, you had really a lot of things change. I think corporate culture changed a lot. You know, Jack Welch took over from a guy named Reg Jones, who was a very involved at Penn where I went.

• 21:43Speaker 04

  A very, very different kind of character. You know, the tax law changed, capital gains got started getting taxed differently from ordinary income. The tax rates got cut quite a lot. Deregulation increased, the kind of pressure on unions, Reagan breaking the air traffic controllers, union, the ability to buy back stock, even the sort of theoretical notion of what is a company for, right? Milton Friedman said the company's sole purpose is to make money. A professor at Harvard Business School named Michael Jensen wrote all these stories or analysis about why you had to maximize shareholder value and you can't serve two masters, so that has to be the only thing you're trying to do.

• 22:27Speaker 04

  And he had this long-running debate with my first boss, Marty Lipton, founder of Wachtel Lipton, about should a company serve the community, its employees, its customers, et cetera. And that, all those things mixed together, really made for a tremendous focus on transactions. How do you maximize value? So with more shares outstanding or less outstanding? Is it combining with this other company? Is it spinning off a business you've already got? Maybe this year it's spinning it off, maybe four years later it's buying it back. This game, really, in a way. And hedge funds grew up to sort of play that game, to bet on that game. And investment bankers grew up to really drive the transaction activity from that.

• 23:10Speaker 04

  So the industry that, again, was very, very small back in the 70s and as you turned into that Reagan era when all those rules changed, just really exploded. And the number of transactions has been very, very high and growing for a long time. I think the interesting question is, does that go on forever? But it's not like it was there forever. If you're the age I am and you started what I did, you sort of feel like it did. But if you look just a tiny bit further back in history, you realize, no, this is all new.

• 23:40Tracy Alloway?

  This might be a dumb question, but in terms of the urge to do something as a corporate manager or executive, did you notice a difference between public and private companies? Was that urgency or pressure more apparent at publicly traded ones?

• 23:57Speaker 04

  Yes, because they had, you know, there was this thing that became known as the market for corporate control, right? If you, if you don't buy into my mantra of maximizing shareholder value, and therefore you don't, I will bid for your company and I will maximize shareholder value. And the difference between the value today and the value later is going to be mine. And so there was pressure on public companies. Of course, private companies, you know, there were a lot of sort of family-owned companies that had a longer-term point of view and some that are still there, you know, the Mars family, you know, some companies like that are huge, Cargill, some really big ones that have remained, you know, kind of steadfastly private. But today, of course, private company really means private equity-owned company, you know, and that has grown, you know, what, 30,000-plus companies owned by that sector,

• 24:42Speaker 04

  a bit of a logjam right now, but, and they really are the masters of that universe. They're the masters of trying to maximize shareholder value.

• 24:49Tracy Alloway?

  Actually, we should talk about that because this is the other thing that's happened in investment banking is you have had the rise of private equity and also hedge funds, which are in some ways, you know, competing directly with bankers. One of the things you sometimes hear, actually, when it comes to the junior bankers actually working really long hours is this idea that, well, we all know they're going to go join Blackstone in like two years anyway, so we have to squeeze out as much as we can from them before that actually happens. How did that actually change the business? And I guess, like, how much pressure did that generate on the banks to respond? And I guess retool their own offerings in response?

• 25:27Speaker 04

  Well, private equity really became the biggest client base for the whole industry, right? And that also was a very, very small nascent industry. You go back to the, you know, the early days, like Morgan Stanley had its first private equity fund. It was, I can't remember exactly, I think it was like a 40, four, zero million dollar fund. And you go back to KKR's initial fund, I mean, people used to do leverage buyouts with like, you know, buy a $10 million company with $100,000 down and buy, and buy, buy the rest with, with debt.

• 25:54Tracy Alloway?

  We could do that.

• 25:54Speaker 04

  You know, they, right.

• 25:55Tracy Alloway?

  I feel like we could put 100K together, yeah.

• 25:57Speaker 04

  I think you may have missed the opportunity. Unfortunately, prices went up from there. But, you know, these things kind of fed, fed on themselves, had some early success, and so really in the 19- Eighties beginning, then you had the rise of the private equity industry. You know, these huge players that for a long time, you know, did very, very well at taking companies private. You know, kind of doing a number of things to boost their returns and then putting them back out into the public. That that has also changed quite a lot where the industry is looking into, you know, all kinds of private capital, right? I mean, you know, Blackstone really pioneered this model of, oh, let's do real estate. Let's do hedge funds. Let's do private credit. And so you're expanded to so many different fields, but that that really fundamentally changed Wall Street.

• 26:39Speaker 04

  Because the rise of the private equity industry created a client that was kind of in the kind of permanently in the transaction business, right? Not like a public Fortune 100 or 500 company that might do a deal every year or two or three. You know, these were firms that did, you know, 10 or 20 deals a year. And so they were became the most important clients.

• 26:59Tracy Alloway?

  Their their raison d'etre is raising raising money, I guess.

• 27:04Joe Weisenthal?

  That's a good one.

• 27:05Tracy Alloway?

  Thank you. I still I stole that from Lloyd Langford, actually.

• 27:08Joe Weisenthal?

  Oh.

• 27:08Tracy Alloway?

  I feel bad. I've been reading his book, which is why I keep mentioning him.

• 27:11Joe Weisenthal?

  That's a good one. Okay, you get a little bit further into your career and you be get a sort of role where perhaps you get to think a little big picture. And you have to more junior people are the ones staying up late, etc. Talk to us a little bit about recruiting. And I admit, this is an area, of course, today, that there's probably a lot of anxiety for people going into the biz. But talk to us a little bit about like, okay, some things obviously can be taught. Math can probably generally be taught. Put aligning bullet points on a PowerPoint. I think that can probably be taught, though fastidiousness and attention to detail, maybe inherently, maybe not. How would you talk to us a little bit about how you how you found people at the right Fed? How you what that process was like?

• 27:53Speaker 04

  Well, that also, of course, has changed dramatically as the industry has grown. If you go back to the early days, we recruited a very few schools. I mean, it really was sort of the Ivy League and maybe a few others. And it was for a small number of jobs, so there were plenty of students there for that. Now, when the industry really exploded, they those schools weren't producing enough people. And I can say in the early days of Green Hill, we had in terms of like what knowledge these these young people. Had we had a little bit of a strategy of, you know, let's take half of the class be just just kids who are really smart, you know, but they can do math, they can speak, they can write their. They just got great grades all the way through. They're really, really smart and and let's take the other half as people who actually have some substantive knowledge that's useful.

• 28:34Speaker 04

  You know, they went to Wharton, there are other great business schools, University of Virginia had one, we recruited a lot from University of Texas, Indiana University, University of Michigan. And so we'd kind of do half and half and figure, you know, the kid who majored in finance at Wharton can teach the kid who majored in English at Yale. Now today, what's changed is that the typical student, wherever he or she sits as they're in their senior year of college, I mean, they've had like four internships by now. They've taken various online courses. They come in so ready to roll, even if they majored in something that's completely unrelated. To what Wall Street actually does. So you're getting you're getting someone who's almost trained before they even arrive. Now you give them a lot more training, of course.

• 29:17Speaker 04

  But it's not the kind of thing where you bring in an English major, you know, as we did in the early days and teach them like here, here's what a. Stock is and here's what a bond is, you know, these students have been working on that since they were in high school. Maybe I'm sorry to say, I think they should probably doing other things in high school, but you know, it's become a very, very competitive world, right? Even though there's many, many more opportunities for students to get a job on Wall Street today as they come out of college. At the same time, it's very, very competitive.

• 29:45Joe Weisenthal?

  Was there like a point where you started noticing that or like around when that changed? Because it certainly tracks that you like meet young people and they're just like, oh, my God, like, how do they know all this stuff and about things that? Maybe it's the internet or something, the things that I certainly didn't know about when I was in high school, really even college in many instances. But I'm curious when you started, when you started noticing that.

• 30:05Speaker 04

  I think maybe in the sort of the post dot com bubble bursting, kind of in the. Early 2000s when business really started to pick up again and you had those several great years leading into what, of course, became. The financial crisis, but there was such an increase in opportunity then and there was and now everyone was in on the seeker, right? I mean, they could read about the industry that could understand. Stand the, you know, compensation structures and the potential for for themselves to to get ahead in life. And and so these students started kind of working backwards like, OK, I want to get a first year analyst job. How do I do that? What what internship should I get after, you know, freshman year? Well, you can't get a very good one then, but maybe you can get something tangentially. You know, does your, do you know, somebody who works as a stockbroker? Can you be a, you know, work in the mailroom there or something?

• 30:50Speaker 04

  Well, after sophomore, maybe you can do a little better than that. After junior year, maybe you can get, you know, something better than that. And by the time you show up, you know, as a college junior, looking for that first year analyst job at Goldman Sachs. You know, you've got like five names on your resume that look like, wow, this this person's been around the industry a long time, even though they're 21 years old at the point, at that point.

• 31:10Tracy Alloway?

  Scary. Do you think as many people are going to want to go in finance? Given that, I mean, we've already been through shifts in the popularity of finance as a career. So at one point, it was the place that you wanted to go to if you were like a Harvard grad or whatever. And then it became tech for a little while. And and now there's all this anxiety over AI disrupting particularly analytical jobs. Do you think it's going to be as popular a choice?

• 31:36Speaker 04

  I think it will, it will evolve and fluctuate and probably decline over time. Just the industry is all about cycles, right? Markets are all about cycles. I mean, we've had an incredible run, incredible run. OK, the, you know, COVID was a little bit of a hiccup, right? Where markets sort of plummeted and things slowed down. But then, you know, it exploded in activity in just a matter of months later. So it's been a long run really since the financial crisis of, you know, really wonderful times largely on Wall Street. And, you know, at some point, there's going to be, you know, a retrenchment from that. There's going to be some kind of decline. Who, you know, who knows, maybe, maybe, maybe a war, you know, turns things around. Maybe a private credit problem turns things around.

• 32:19Speaker 04

  But something will happen, I think, and sort of dampen the interest again, just as happened, you know, with the dot com crash or the financial crisis.

• 32:43Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 33:25Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 34:06Joe Weisenthal?

  Let's talk a little bit more about technology and the technological changes that you saw in your career. So, okay, mentioned like you're using Lotus 123 in the beginning, which I have some memory of Lotus 123, and ease of data retrieval is so much, uh, is so much different now. But talk to us about, okay, 2024, what are recent years and some of the other ways, like what, what other technological innovations came out? What time-consuming activities did they shrink to near zero? And then what new things did people do on top once, okay, the technology is here, you don't have to allocate your time to this? You're now going to allocate your time to that. Talk to us, what else you saw there?

• 34:48Speaker 04

  Sure. Yeah, I mean, look, in the early days, like even companies weren't even that aware of their own share price, right? I mean, not everybody had a Bloomberg terminal or CNBC, you know, screen on their, on their desk. If you're sitting in Dayton, Ohio, so you didn't know. As bankers, you know, you could bring very little information and it was new to the client. It was interesting to the client. You know, over time, we used to do a lot of laborious work to create sort of a comparable companies analysis. Here are the 10 companies in your business segment, you know, you trade at this PE multiple or this EBITDA multiple, and here's where the other guys trade, and here's how their leverage is different than yours, and here's how their stock has performed. And that used to be a tremendous amount of work. You know, now really a machine can largely do that. And a lot of the other kind

• 35:32Speaker 04

  of creation of sort of standard charts on, you know, on what's going on in the industry, even what's going on in your company can be done very, very quickly. So I think, you know, the pyramid, I have to think is going to get less fat at the bottom, because you're going to be really leveraging technology to do a lot of things that used to be somebody sitting up all night, not up all night trying to find out, you know, what PE multiple Coca-Cola was trading at. And now, you know, it's, you can get it at the touch of a finger.

• 36:00Tracy Alloway?

  Does the edge in that scenario, you know, if, if it's not about how much knowledge you're accumulating and can share with your client, is the edge more on the execution side of things? Just the, the knowledge or the client's belief that you out of everyone else in the IB business is going to be able to execute like a smooth deal?

• 36:20Speaker 04

  I think that's true to some degree, and you know, particularly amongst sort of the so-called independent firms like Green Hill was for a long time, and, and many others are today. But I think among the larger, you know, group of competitors, I think a lot is going to come down to what else is in the relationship, you know? Are you, are you in their revolving credit facility? Did you do their bond offering? Are you doing equity research for them? Are, you know, are you touching them in just every, are you doing their hedging? Are you, you know, talking to them about currency, talking to them about commodity prices? And so I do think it, it may... That's why I think sort of the one stop shopping is kind of a little more appealing again because if if nobody, if nobody really has the magic anymore, right? The magic is now at fingertips.

• 37:06Speaker 04

  And you know, and even a lot of things like you can, you can, you don't even need to do the Excel model. I mean, you can say into a in the AI, if you have this stream of cash flow, so this period of time, this discount rate, what's the number? I mean, it will give it to you without you typing a single number onto the page. But I think that with everyone having access, equal access to that information, I think it will come down to, yeah, maybe are you smarter than the other guys? Can you execute better? But probably in most cases, you know, what else are you doing for me? And hey, I could give this to anyone, but I'm going to give it to you.

• 37:37Joe Weisenthal?

  How much, and Tracy alluded to this at the very beginning, but you know, how much of the job is being a good hang, being a good hang at the golf course, knowing, being able to get a good dinner reservation and seriously, no, for real, like this is like, I don't want, you know, this is where I, when I think about if I were in this, I don't think I'd be very good at that. I like start looking at my watch or yawning or so, mostly I start looking at my phone and start looking bored, et cetera. The endurance to stay.

• 38:05Tracy Alloway?

  This is true. It's very obvious when Joe is bored talking to you. I speak from experience.

• 38:09Joe Weisenthal?

  This is not, this would not be my field, but talk to us about that element and just the sort of people skills and all that.

• 38:17Speaker 04

  They're, now of course that's at quite the high level, right? It doesn't matter how, you know, how fun you are to be with as a senior associate at JP Morgan. That's not necessarily going to win the business, but maybe your boss's boss, you know, whether he's in the right golf clubs and inviting clients and get, you know, getting to know them on a personal level. Look, there, there's always going to be that element to the business, but that, that's a pretty small piece. And of course, everyone has that too, right? I mean, you can one up others. You can bring somebody to the masters. You can, you know, rather than to a, you know, a country club in Long Island, you know, you can, there's, there's different levels of sort of client entertainment. But you know, that, that, look, it's important to build relationships. It always is. I think what

• 39:00Speaker 04

  You know, whether you're talking about sort of personal wealth management or corporate financial management, what the what the advisors have to realize is like everyone in the world is calling on this guy and trying to get, you know, either his personal money to manage or trying to manage his corporate affairs and help him do acquisitions and so on. I mean, it's not, that's another thing really that changed a lot in the industry. It used to be that people, you know, firms had clients like, like, no, that's my client and this one is your client.

• 39:29Joe Weisenthal?

  Now everyone.

• 39:30Speaker 04

  Now they're just all clients and.

• 39:32Joe Weisenthal?

  Everyone's clients of everyone.

• 39:33Speaker 04

  And right. And it's a kind of a free for all where you've got a lot of parties out there, you know, and you being special because you invite somebody to, you know, something and get to know them better. I mean, everyone else is doing that, too. And as a matter of fact, if you don't have the relationship, you're probably more prone to do that because you're trying to break in, you know, get to know them.

• 39:53Tracy Alloway?

  You mentioned this word earlier in the conversation, but can you explain culture to us? Explain all culture to us. No, the investment banking culture, because this is one thing that we hear all the time from, you know, especially executives, former executives at investment banks, this idea that, well, we have a culture that is different to someone else's culture. And whenever you hear them summarize the culture, it's almost always like, well, we're client facing and it's all, I've never heard a bank say, it's not about the client. Actually, our culture is about something else. What does culture mean in investment banking?

• 40:28Speaker 04

  I think it's probably fair to say every firm aspires to the same culture, right? You aspire to be driven by excellence and attention to detail and client service and and you produce that great coverage through teamwork and training and mentorship. I mean, everyone aspires to all that. There are, though, different cultures. There are some places I think are much harder to work than others. Although I think the industry has become a little more in common. I mean, I think there was, there was a day when, you know, the difference in culture between like a Morgan Stanley and a Bear Stearns was was vast, I would say.

• 41:06Joe Weisenthal?

  Say more about that. Like, what would have been the difference?

• 41:08Speaker 04

  You know, there were some firms that sort of, you know, the word scrappy sometimes gets thrown around on Wall Street, right? And if you're, if you're the elite firm, like say, you know, back in the day, Morgan Stanley and Goldman Sachs were, of course, they're still elite firms in many ways today. But, you know, as opposed to someone who's kind of scrappy, trying to get business that maybe you wouldn't do. I mean, there was a day, one of the interesting things, not to bring up the Epstein files, but, but, you know, there was a day when, when the firms had a lot of rigor over who they would do business with, you know, and I know that, you know, Morgan Stanley, that was the case, I think at Goldman Sachs, that was the case. I mean, look, in the law firm business, there were, there were firms that didn't like hostile takeovers. You know, they thought that, oh,

• 41:52Speaker 04

  that, that's kind of unseemly for us to be trying to buy somebody else's business on a hostile basis. And so these firms that, you know, you could put in the category of scrappy, were the ones that were trying to be a little more like, hey, if the client wants that help, I'm going to give the client that help. Or if the client has a little bit of a sketchy background. Three dollars are still grand. That's right. And, and, well, and also by, you know, maybe doing a transaction for someone as a client that maybe of, you know, back in the day, Morgan Stanley or Goldman Sachs wouldn't have worked for. Now you've got a credential in that industry. Now, now you've done a media deal. Now maybe you can do the next media deal. Maybe you can swim upstream toward the more prestigious clients. So, so I think at one point, the cultures were a lot more different than they are today. It's sort of flattening now, right? It's kind of flattened. I think, you know, it, look, this is probably a, a function

• 42:37Speaker 04

  of, of scale of activity and of things like technology and of things like, you know, just so much open information on everything. You know, everyone can sort of copy everyone else, right? It's pretty obvious what a good, good culture is. Hire smart young people, train them well, treat them decently, and they'll grow up to be, you know, good, good bankers, you know, pay attention to your clients, have integrity, you know, et cetera. You'll, you'll, you'll build a good business. But that, those aren't secrets, right? Everybody knows those.

• 43:03Joe Weisenthal?

  I have a question. It's sort of this longstanding puzzle within finance. It might be relevant this year because there are some very big companies that might come public. Why does the IPO process as we know it exist and persist? Because this is one of the longstanding academic things is, why is there frequently a pop? Why did the companies have to pay large fees to underwriters, particularly given you'd think the internet could just have an auction, right? An auction out the allocation of shares you want and then get the market price instantly and so forth. And yet, this has been tried for a very long time. And going back to the dot com era, there have been attempts to disintermediate the traditional IPO process with almost no

• 43:43Joe Weisenthal?

  success. SPACs tried. That seems to be sort of not a particularly a counter signal, perhaps. How would you describe the persistence of the IPO?

• 43:53Speaker 04

  Well, you know, first of all, start with public companies, right? That's what you have after you do an IPO. You know, that market really has shrunk. I mean, it fell in half. The number of public companies in America fell in half in the 25 years or so that our firm was an independent firm. So that I don't think that's a good thing. I think it's a good, positive thing to have more companies in the public realm where there's more information and more transparency to what they do and so on. But I think to go from the world of private, where nobody really knows much about your company to public, I think having a lot of, you know, a lot of sort of activity around that, you know, a big, almost like PR campaign, you know, lots of information.

• 44:34Joe Weisenthal?

  I sort of think it's like a corporate bar mitzvah, kind of. You like stand up there on the thing and like, you grow up.

• 44:39Speaker 04

  Choose a DJ.

• 44:40Joe Weisenthal?

  Yeah, exactly.

• 44:41Speaker 04

  It is a bit like that. I mean, I remember for our own IPO back in 2004, we had like 60 something one-on-one meetings as well as big group meetings in places like New York and Boston and so on. But if you're trying to get known by a lot of investors in a real hurry, you kind of need to go through something like that. And you know, and it's not like the industry has been some sort of a, you know, where the fees are fixed and there's nothing you can do about it. I mean, for a long, long time, an IPO was, I remember it was 7%. That was an underwriting commission. You know, I remember we were And advised Visa when it did what was then the biggest IPO in 2000, probably seven or something like that. And that was like a fraction of a percent, you know, so, so the end it is, it sort of succumbs to competition, right?

• 45:25Speaker 04

  And somebody says, okay, yeah, if I'm doing a classic early year Silicon Valley IPO and we're raising a hundred million dollars. Yes, I think a $7 million fee is fair for that. And probably your competitors feel that way, too. It's a lot of work. It's a little bit risky. But when you're doing, you know, an IPO that's in the hundreds of millions, the billions, and maybe today the tens or hundreds of billions. You know, the fees will be very, very small and driven by pretty ferocious competition, I'm sure.

• 45:51Tracy Alloway?

  Did you say Green Hill IPO'd in 2004?

• 45:54Speaker 04

  Yes.

• 45:55Tracy Alloway?

  So that's kind of late, right? For, well, certainly in the context of like some of the larger investment banks. Cause I think by then even Goldman had had gone from a partnership.

• 46:04Speaker 04

  In 1999.

• 46:05Tracy Alloway?

  Yeah. So what was the sort of push-pull process of actually going public for you? What were the considerations?

• 46:11Speaker 04

  Well, for us, it was that there had been a long, I mean, obviously some bigger firms like Morgan Stanley went public in 1986. And I think Goldman in 99 or something like that. But, you know, for a firm like ours that was kind of a smaller, more focused firm, the long history of that was that you normally sold the firm. And, and even in its fairly early days, you'd kind of build something, you know, prove you had a team, prove you had a brand, prove you had some clients. And you'd go out and sell the firm. There were many, many cases that happened. And, you know, we viewed the IPO as an alternative and IPO as a way to, to realize the value you had created. But also keep the, what you thought of the special culture, to go back to that word. You didn't want to change things. You didn't want to give up control, et cetera.

• 46:54Speaker 04

  And so that, that was really what drove us to go public and I think many others as well.

• 46:58Tracy Alloway?

  So when, but also in an IPO process, you're raising capital, right? What, what does capital actually mean for a boutique advisory firm like Green Hill?

• 47:08Speaker 04

  You know, you're often, that used to be the case. That was the original idea, that you go public to raise capital. And to some extent, that's still true. But you look at, even take these mega, you know, technology companies, do they, do they need capital? They can raise all the capital they want in the private markets. So it really has evolved from that to wanting liquidity, I would say. You want to have, you want to have a marker that says, here's what my company is worth. And you want to have the liquidity to be able to transact at that price on any given day. So I think that has driven more IPOs in recent years than the, kind of the earlier notion of, wow, we need to build a new factory, or we need to, you know, invest a lot to build an overseas business, or launch a new brand.

• 47:52Speaker 04

  So we need to do an IPO to raise money.

• 47:54Joe Weisenthal?

  Has something changed on the IPO front? No, and just, maybe I missed it. But I feel like several years ago, maybe in the mid 2010s, I still used to hear, read a lot of stories about so and so won the Uber deal, right? Or so and so, and this would be a big thing. And like, they're flush left on the S1 or the prospectus.

• 48:15Tracy Alloway?

  Morgan Stanley getting Facebook or something like that.

• 48:17Joe Weisenthal?

  Yeah, and stuff like that. You used to, and now I feel like I don't, has something changed there?

• 48:21Speaker 04

  No, that's still a thing.

• 48:22Joe Weisenthal?

  Okay, that's still.

• 48:23Speaker 04

  That's still a thing. You still want to be on the left. And, but you know, what, but also, again, the industry became very, very big, very, very competitive. And so, you know, it used to be like, there was one lead underwriter. And then you got into, well, you're the global lead, you're the co-global lead, you're the lead left.

• 48:38Joe Weisenthal?

  Massive lead inflation.

• 48:40Speaker 04

  Like, everyone gets, everyone gets to be a lead. It's, it's like getting an A at Harvard. I understand.

• 48:45Tracy Alloway?

  Participation trophies for investment bankers.

• 48:49Joe Weisenthal?

  The Uber one, like, wasn't there, there was a banker who became an Uber driver for a while.

• 48:54Speaker 04

  Yes, there was. Yes, there was.

• 48:55Joe Weisenthal?

  Remember that? Because he wanted to show that he, and like, I get it. It's like, that's cool. He like, really like, got it. He really took the job seriously. And he drove for Uber and stuff like that. But still, in my mind, I was like, Does this really make a difference from Uber as they're just selling some shares that they're moving on like I mean it's cute.

• 49:11Speaker 04

  Like people used to do that sort of thing. Uh, I think by the way, I can't remember his, his name. He was kind of slightly after my time, I think, but he is that banker is still at Morgan Stanley and is, uh, I'm sure going to be the one driving the pursuit of Elon Musk's large IPOs to come.

• 49:27Tracy Alloway?

  Um, we should talk.

• 49:28Joe Weisenthal?

  Michael Grimes, that's who it is.

• 49:29Tracy Alloway?

  Oh, Michael Grimes, of course.

• 49:31Joe Weisenthal?

  Yeah, he became, he was also, he became the Uber driver, he became an Uber driver for a while.

• 49:34Speaker 04

  Yeah.

• 49:34Tracy Alloway?

  He was a, he was a big deal at that time.

• 49:37Speaker 04

  Yeah, and I think he's definitely in the mix today with some of these big potential IPOs.

• 49:40Tracy Alloway?

  We should actually talk about league tables though, because I feel like this is sort of perhaps an inordinate amount of, um, of what an investment banker's life is actually about. And back when I was covering the banks, the league tables were the things I probably got called up about the most, you know, lots of banks explaining to me why the league table rankings were not in fact an accurate reflection of their business. How much do those actually matter?

• 50:06Speaker 04

  I think whether you're frankly, if you're number one or number four, number seven, you, you know, or number nine or 11 even, you, you probably have a pretty equal chance at, at pursuing something, but look, the bankers do, you know, do aggressively fight to try to be number one in, in some, in something, right? As and but, but again, with the, with the increase in just availability of information and transparency, I mean, it used to be that, you know, there was a lot of gamesmanship around the league tables, you know? You'd, you'd say, well, we're number one in, in, uh, you know, in, in IPOs and you'd look into the footnotes and it would say, you know, this includes all deals for, you know, radio stations with a market cap more than a $250 million. And, you know, if you're trying to pitch some immediate deal or something and you'd

• 50:51Speaker 04

  always have some way to slice and dice like US IPOs, UK IPOs, this industry, this deal size, uh, now it's kind of all out there and it's, uh, you know, there, but there's, there's 10 or a dozen firms that, that are very, very competitive and, uh, the fact that one ranks number one versus four is not a big deal.

• 51:08Joe Weisenthal?

  It's hilarious. Michael Grimes, he not only drove for Uber, he mastered the online game Farmville before Facebook's IPO. They spent hours like that. And hey, if that paid off for him, good for him. And now he is back because it looks like he'll probably be involved.

• 51:23Tracy Alloway?

  A lot of people master Farmville for free with no expected payout.

• 51:26Joe Weisenthal?

  That's right. He turned it into something. And I guess it's likely to be involved or perhaps positioning himself for a potential role in the SpaceX IPO. Final question for me, but I'm just curious. So like, okay, we don't know what the future is going to look like, but I'm curious like people you're talking to or things you're seeing, the AI question, and there's some obvious things today. Anyone knows that you can do a very good comp analysis already with with almost no knowledge. Like, what are some comps here? And well, maybe that's not the kind of output that you would show to a client, but it might get you 95% of the way there. And so that's extraordinary. And we talked about Excel files and stuff like that. What else? Like, what does it feel like AI is going to do to this

• 52:09Joe Weisenthal?

  space? Or what would be your guess? Or where today, would you imagine we're already seeing AI change the nature of the job?

• 52:16Speaker 04

  No one really knows the answer to that question, of course, because it's such a fast moving technology. But look, I do think it will change a lot about how bankers interact with clients, because the information now is going to go from, you know, from kind of available, but you have to sort of work to dig it out to available, just literally your fingertips. And by the way, not just to you, the banker, but also to your client.

• 52:37Joe Weisenthal?

  Yeah.

• 52:38Speaker 04

  So I think differentiating yourself as a banker inside one of these firms or as one of these firms relative to your peers, trying to win the IPO, trying to win the M and A deal, trying to win the bond offering, is going to be more complicated. You'll have, you'll be more efficient in preparing your materials. You'll be more efficient in communicating with that client and delivering, you know, interesting, insightful information to them. But a lot of that information is going to look, it's going to be commodity like.

• 53:05Joe Weisenthal?

  Yeah.

• 53:05Speaker 04

  And so the real challenge is going to be, you know, if a client has accessed all the information you do, and they're getting all the feeds of, you know, various data they like and so on, and you have a one hour meeting with that client, how are you going to use that meeting, that one hour meeting, you know, they already know a lot as you're walking in there. So how do you use that? It's got to be more about, you know, the human dimension, the tactics, why this company may be more amenable to a deal now than they were in the past, you know, things like that, that are more about psychology really than about math.

• 53:37Tracy Alloway?

  I feel like the trend is towards extroverts with large balance sheets, I suppose.

• 53:43Joe Weisenthal?

  Yes.

• 53:44Tracy Alloway?

  All right.

• 53:45Joe Weisenthal?

  Scott Buck. Thank you so much for coming back on the podcast. We love catching up with you and we gotta do it again. I would love to. It was great fun. Thank you.

• 53:51Joe Weisenthal?

  All right.

• 54:05Joe Weisenthal?

  Tracy, I love talking to Scott.

• 54:06Tracy Alloway?

  Yeah, it's great.

• 54:08Joe Weisenthal?

  I'm glad we I'm glad we met Scott. I think the just this idea, and it came up at the very end about the information asymmetry just being gone. And it feels like, you know, that's not something that is just true with AI now, right? But it feels like there is a version of this story that you could say going back for the last 45 years in which degradation of the information edge that a bank would have had over its clients for all kinds of different largely, you know, technological changes since then.

• 54:38Tracy Alloway?

  Yeah, I mean, I found that conversation fascinating. I guess the the two takeaways for me are the the first technological revolution in investment banking and the idea that, well, we don't have to spend as many hours like actually pulling physical SEC filings or something like that, or looking up quotes on a Quotron or whatever. And what replaced that work was more meetings.

• 55:02Joe Weisenthal?

  Yeah.

• 55:02Tracy Alloway?

  Right? I feel like humans can always.

• 55:05Joe Weisenthal?

  Find a reason to meet with each other.

• 55:06Tracy Alloway?

  Exactly.

• 55:07Joe Weisenthal?

  Humans love meeting.

• 55:07Tracy Alloway?

  I know. I know. It's crazy, isn't it?

• 55:10Joe Weisenthal?

  Ridiculous. Humans just love touching base. And anyway, am I maybe I'm revealing my own.

• 55:17Tracy Alloway?

  Your own biases.

• 55:17Joe Weisenthal?

  My own biases of how humans use their time.

• 55:20Tracy Alloway?

  I think it's very good that we have an extrovert and an introvert on the show. We got both sides of the story. But the other thing I was thinking is the trend towards. Bigger, bigger balance sheets, more services, the one stop shop idea. And, and it feels to me like, okay, if, if you can't have an informational edge anymore, and if you do have this sort of flattening of culture for various reasons, because everyone's getting smarter and smarter about what a good culture actually looks like, um, and they're able to sort of execute on it in various ways, then it is, it feels to me like it's very much going to be fought just on size and scale.

• 55:58Joe Weisenthal?

  You know, I don't think, uh, share buybacks are evil the way a lot of people do, but it is interesting. We could just go back and ban them.

• 56:05Tracy Alloway?

  That was so interesting.

• 56:06Joe Weisenthal?

  Like, I always forget that, that they haven't been around that long, that they were seen as market manipulation at one point. We could just ban them. I mean, the fact that capitalism worked fine for a very long time without share back, share buybacks would probably be, probably wouldn't be the end of the world.

• 56:22Tracy Alloway?

  We should do another episode on this, but that reminds me, the other thing I was thinking was this idea that like, well, we had an entire, I mean, multiple industries really that grew up whose entire sense of purpose was about doing transactions, right? So you have the traditional Wall Street banks, but then you had private equity and private credit. And so you just have this explosion in, in deals.

• 56:46Joe Weisenthal?

  I wonder if Michael Grimes is gonna ride on a rocket to get the, uh, to like, to nail down, he's gonna, he's gonna do a little, uh, space joyride. So to get that. We do this one thing. Oh, you know what I thought was also very interesting? And I think this says a lot about culture in general beyond just banking. The idea that at one point, for better or worse, and maybe for better, and that there were like, uh, clients that the banks wouldn't touch, that they end, uh, that they're like, no, we, we're above this. This is not what we do here.

• 57:16Tracy Alloway?

  Well, some of them had investigators like on staff to go out and investigate potential clients.

• 57:21Joe Weisenthal?

  I think that's really interesting and a certain level of, you know what? We're gonna leave some money off the table because this is not what we do here. We have standards and so forth. And I do feel like these days, it's just money. It's just, uh, across the board. It's just accumulating more and more money. And so the idea of some money isn't good enough for here. Like it does not feel like that's a thing anymore. And maybe. Well, I think a lot of people would say in retrospect, people, they should have had better standards about who they do business with.

• 57:55Tracy Alloway?

  Yeah, it feels much more amoral now. And I mean that in the sense that like, there's a possibility that people hide behind that and say like, well, we shouldn't be making qualitative decisions about our clients. We're just here to, you know, share the good gospel of capitalism. All right, shall we leave it there?

• 58:12Joe Weisenthal?

  Let's leave it there.

• 58:13Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 58:18Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at TheStalwart. Follow our producers, Carmen Rodriguez at CarmenArmond, Dashell Bennett at Dashbot, and Kale Brooks at KaleBrooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where the daily newsletter and all of our episodes. And you can chat about all these topics 24/7 in our Discord, discord.gg/oddlots.

• 58:38Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about the business and culture of investment banking, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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