Morning Coffee: The trauma of the 20-year-old applying for the $200k finance job. Jane Street’s FTX sorrows
It may sound like a rich person's problem and to be fair there probably is a fair overlap with problems in that category, but it is also the problem of the person trying to be (comparatively) rich. - Applying for a banking job when you're a newly elite university student is hard. When your aspirations are contingent on a faceless Hirevue interview, you can feel disempowered.
The Financial Times' Lex column has found students experiencing these sensations. They are at the Wharton School in Pennsylvania and possibly therefore fall into the Excellent Sheep category of exceptional young people who jump perfectly through hoops without considering why, as defined by former Yale professor William Deresiewicz. The Wharton students are not having an easy time. They are "anguished", says the FT. Their time is spent refreshing LinkedIn to see whether classmates have announced how "excited" they are about their investment banking internship at JPMorgan next summer yet.
Aside from LinkedIn boasts, a lot of this has been going on for years. But this year, it's worse than it's been for a while because internship applications have opened so early. As we reported in October, banks haven't just been hiring for summer 2023 internships, but for summer 2024. This means first year (sophomore) students who might otherwise be joining cheese societies or drinking beer are having a harsh indoctrination to the investment banking recruitment process, and an early introduction to the unfamiliar horrors of failure.
To have any chance of internship application success, time that should be spent studying must be spent ingratiating oneself with senior bankers at recruitment events and preparing for interviews that include technical questions on accounting, valuation and modelling even though you haven't actually studied any of that stuff yet. Merely achieving the interview is a near impossibility. Getting an interview for a graduate job at private equity firms marks you out as the sort of spectacular person everyone wants at their party (except there are no parties because everyone's so busy refreshing LinkedIn).
Yes, it's motivated by money: entry level banking jobs now pay $200k, points out the FT; in a few years that can double. But it's peer pressure and fear of failure too. It's "madness" says one student. It's all over by the time you're 21: you've either got the internship, or you haven't.
Separately, the other traumatized people on the fringes of finance right now are allegedly to be found at Jane Street, the algorithmic proprietary trading firm. Two of Jane Street's alumni - Sam Bankman Fried himself and Caroline Ellison were running FTX and Alameda Research respectively, meaning the firm is being mentioned in the same breath as the blow-up of the crypto exchange and its trading arm. There have been claims, for example, that SBF developed his habit of going barefoot during his time there.
Jane Street hasn't said anything directly, and neither SBF nor Ellison have worked at the firm for at least four years, but Autism Capital the Twitter account associated with "based" news on FTX, purports to have unearthed someone familiar with the ways of Jane Street insiders. They are, allegedly, not happy.
Genesis was looking for a $1bn loan before it suspended redemptions. (WSJ)
From the new CEO of FTX: "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented." (WSJ)
There was no daily reconciliation of crypto positions. A software backdoor “conceal[ed] the misuse of customer funds”. User keys and critically sensitive data were sent around the group by an “unsecured group email account”. (Financial Times)
Houses for employees were bought with company funds, expenses were approved with emojis, there wasn't even a list of employees and no one really knew who worked there. (Bloomberg)
'Essentially, in his own words, SBF’s internal compass here put his tolerance for risk on a given bet at about 5 times that which Kelly bet sizing would say so — an immense appetite for risk, and an immense appetite for coinflips.' (JoeJedwards)
Sam Bankman Fried switched up his lawyer and now has a Stanford law professor rather than your average legal type. (Semafor)
It's not easy losing your job in technology now. "In good times, they likely believed they could leave a job, take a few months off, care for themselves, and still be snapped up within a day." (Business Insider)
Elon Musk gave Twitter employees until 5pm yesterday to sign a form accepting that they would need to be "hardcore" and work at “high intensity” over the next few months, or accept three months severance pay. Employees say it's unfair: "I shouldn’t have to chose between my job and seeing my children at night and on weekends.” (Bloomberg)
Twitter employees have been worrying that Musk is tracking how long it takes them to click. (Platformer)
Evercore hired Richard Hoyle from Lazard to cover TMT in London. (Bloomberg)
UK financial services jobs are lower than they should be. There would be about 91,000 more jobs had growth in financial services employment kept pace with the rest of the UK economy since the Brexit referendum. (Financial Times)
Angelo Scasserra, Credit Suisse's co-head of banking in Australia resigned. (Bloomberg)
Robots with LCD eyes are being used to deliver coffee, meals and packages to overwrought staff in busy offices in Korea. (New York Times)
Someone bought Steve Jobs' old Birkenstocks for $220k. “He was simply convinced of the intelligence and practicality of the design and the comfort of wearing it. And in Birkenstocks he didn't feel like a businessman, so he had the freedom to think creatively." (Bloomberg)
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