With a long weekend upon us, ConvergEx's Nick Colas takes the opportunity to wax a bit philosophical. The question for the day: "How do you survive middle age while working on Wall Street?" After polling a few friends of a similar vintage to his own 25 year history on the Street, he has come up with a Top 10 list of dos and don’ts. At the top of the list is "Don’t get stale" – what you did to become successful is not necessarily what will keep you competitive. Other dictums include “Be efficient”, “stay in touch with your clients”, and “the answers are never just in the numbers”. The key take away from all these thoughts is pretty simple – the journey never stops, so keep investing in yourself, your friends, and your allies. These may not guarantee success, but ignoring them surely leads to failure.
In the 1980s, there was no better managed American automaker than the Ford Motor Company, largely due to the leadership of Chairman and Chief Executive Officer Donald Petersen. Ford was the closest domestic manufacturer to the Japanese in terms of efficiency and quality, thanks to his push for incremental investments in manufacturing and R&D. He championed a radical new design for a mid-sized car, the Taurus, that proved wildly successful and showed American car companies could gain share in the segment. The Ford family was happy with him, the unions liked the jobs that came with new products, and the Street saw Petersen as a disciplined operator and good steward of capital.
Then, in early 1989 after 40 years with Ford, Don Petersen unexpectedly quit. His contract wasn’t up for 18 months. He handed the reins to a longtime lieutenant by the name of “Red” (Harold) Poling and rode off into the sunset. His explanation: “It’s time to repot myself”. Press accounts at the time and later pointed to some disagreement at the Board level over succession planning, but industry insiders I spoke to in 1991 – including Red himself – said Don was being honest. He wanted to do something new.
That story has stuck with me through the years, and there are two takeaways relevant to today’s note. The first is that you’re never too old or too powerful to essentially burn out and need a new challenge in your life. The second is that I’ve been on Wall Street for a really long time. I can relay a conversation with a CEO I had in 1991 while employed as an auto analyst for a bulge bracket firm. Also, you can tell I am old because I use the term “Bulge bracket”. I also call a radio a “Wireless”.
Putting the two thoughts together, I got to thinking about how one manages the middle part of a Wall Street career. For the purposes of this note, consider that timeframe to be between the ages of 40 and 60. If you’ve only worked at hedge funds, back that up to start at age 30, just like a 5 year old dog is 35 in human years. I jotted a few thoughts and then spent the morning calling a few friends in the business of similar vintage.
We came up with a Top 10 list of “How to survive and thrive when you’re not the youngest one in the hive”. In no particular order, here they are:
1. Stay close to your sources of information. No man or woman is an island on Wall Street. We all need constant interaction to stay current and informed. If you are an analyst, for example, these are your companies, industry contacts, press relationships, and anyone else with whom you have a productive dialog. Recognize that 5-10% will leave your sphere every year and need to be replaced with new contacts.
2. Stay even closer to your clients. As Bob Dylan famously said, “You’re gonna have to serve somebody.” We all do. For the sell side, it is our money management clients. For the buyside, it is your sources of capital. No conversation or in fact any communication with a client is ever a waste of time. That, by the way, is why we write these notes every day, 200+ days a year.
3. Mentor as many younger people as you can. The old saying “To teach is to learn a second time” holds here. Plus, if you hire the right people they will eventually be far more successful than you. At that point they will hire you as a consultant out of gratitude for giving them their start and let you take their jet on vacation. At least that’s how I see it playing out for me.
4. Be efficient. My personal mental model of success is essentially a DuPont return on investment framework. There are two components: your “Margin” (i.e. how smart you are) and your “Asset turns” (how efficient you are). Past a certain point there’s not much you can do with margins. You can read little more, talk to a few more smart people, listen to a few more companies, etc. But you aren’t going to bump your IQ by enough to make a difference. Improving your return on personal investment comes down to increasing your efficiency. Don’t be rude, but don’t waste time on people who don’t merit your attention. The same goes for all the stupid little time sucks through the day. Get rid of them.
5. The answer is never in the numbers. The four most dangerous words in finance are “I have a spreadsheet”. Any analysis worth the name is really about how you consistently and realistically assemble the numbers in a financial or economic model. It’s the narrative, not just the numbers, that define insight.
6. Balance personal and professional life. Sometimes clichés exist because they are true. “Don’t pet a barking dog”, or “never start a land war in Asia” are good examples. Challenging jobs can lead straight to divorce. And that’s a whole lot of no fun.
7. Don’t make big mistakes. This one is uniquely true for middle aged finance executives. Early in a career you can bounce back, because future employers or sources of capital will chalk up even a sizeable error a youthful error to inexperience. Past the age of 40, you should know better and big screw ups can be deadly. Missing part of the upside in business or investment idea is OK; getting all the downside in a failure is not.
8. Don’t allow yourself to get stale. If you make it 20 years in this business, you’ve clearly done something right. Now here’s the catch: it isn’t the same thing that will keep you on top for the next 20. My first mentor used to call Caterpillar dealers all over the world, every quarter, to keep up on business trends. When his competitors started copying that, he began offering clients conference calls with his contacts. When that got to be routine, he began to offer road trips. Always keep innovating. Old themes (in this case, industry contacts) are OK; old approaches are not.
9. Set long term goals and work backwards to the present. Sometimes success is a curse, because you can’t imagine what’s beyond any particular near term accomplishment. Imagine where you want to be at 60, or 65, or 70 and define the steps needed to get there. It’s too easy to get caught up in your day to day and wake up one day to say “This is not my beautiful life”.
10. There is a huge and interesting world available to you when you leave finance. Or if it leaves you. Wall Street is one of those careers where it quickly becomes unimaginable to work elsewhere. Yes, that’s partly the money. OK, it’s mostly the money. But remember that there are many fabulous places in the world where it doesn’t cost $50,000/year to send a child to school or $100,000 for a beach house rental. Maybe you will make it to 65 working on the Street. And maybe you won’t. As long as you realize either path leads to happiness, you’ll be just fine.
I am sure I have missed many helpful hints for the 40-60 year old set; these are just a starting point. At the end of the day, whatever works for you is the right thing to do. Just remember to share those nuggets of wisdom with your friends and colleagues – we will all appreciate it. And don’t be afraid to repot yourself a few times.
