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'The financial sector is not rocket science. You have to be willing to put in really long hours – it is an endurance game'
At the manager's suggestion we are meeting for a beer at one of his favourite pubs, a traditional English outfit near his office with wood panelling, pub quizzes and a roof terrace where he can have a smoke. He is in his early 30s, from east Asia. His accent is American, absorbed over years spent in New York and international schools across the globe. Dressed in jeans, he keeps a suit in the office in case he has to meet a client.
"Let me tell you, the financial sector is not rocket science. There is a lot of lingo, I mean a lot, and you have to master all that jargon. But you don't have to be brilliant to work in finance, you have to be smart enough. And then you have to be willing to put in really, really long hours. And be competitive. It is an endurance game, in part.
"I read my email as soon as I get up, see what has happened in the time I was asleep – I don't like to be caught unawares. At 7am I'm at the gym, 9am in the office. A typical day … I have lots of meetings, essentially. Some are in person, others by phone or on Skype. Meetings can be one on one, or conference calls. We've got offices in the US and in Asia, and a working day involves a good deal of co-ordination – making sure people know what others are doing. Mine is a people job, working with people all the time, mostly the account managers who deal with our clients. By 7pm I am out of the office – that is one huge advantage over my previous job in mergers and acquisitions (M&A) for a 'bulge bracket' [huge] investment bank: the work-life balance.
"The firm I am now working for is what you might call a kind of broker for highly specialised information. Say you are researching Coca-Cola. We cannot put you in touch with people at Coca-Cola itself. But we may have somebody at Pepsi, who will be able to tell you lots of interesting and important stuff – obviously Pepsi is following its rival extremely closely. This is called 'mosaic theory' in financial investing. It is like collecting all the pieces of a puzzle except for the one at the centre – which is your target. Even without that final piece, having all the surrounding bits can give you a very good idea of its shape and size.
"So my firm connects supply and demand of highly specialised information. We have a vast and growing network of experts, and we have a list of clients in need of information: mutual funds, hedge funds, private equity firms. Our clients call us for an expert in the field they are interested in, or we call them, making suggestions.
"What we are offering is a very clear legal framework that distinguishes between public information and insider information. The latter is illegal, you cannot trade on the basis of information from inside a company that is unknown to other investors – you can go to jail for that, it's insider trading. But public information is relevant stuff that does not necessarily come from inside the company you are interested in.
"My job also involves looking at movements in the market and going: in light of these developments, which of our experts might be interesting to which of our clients? Or I go over a portfolio of clients with the account manager: client X has not used any research from us for two weeks, what's going on, what can we do?
"One reason there is growing demand for our research is the decline in the quality of research at the big banks. Traditionally, banks employ scores of analysts who research companies, interview their management, et cetera. They put their findings into research. Over time, banks have started passing this research on to their clients for free. In other words, banks are not making any money directly from their research, and for several years they have been cutting back from investing too much in it. Also, if you're a smart analyst at a bank, you get some experience and then move out to a hedge fund. In this climate many investors are looking for a second opinion – to validate a hypothesis, or answer a technical question, or sometimes to explain the dynamics of what might be a niche industry. We provide that.
"I had been working in M&A for a while, and I remember getting enveloped by the mentality there, the corporate culture of hubris. And don't forget the internal competition at those banks. That can be brutal. People put deals on their CVs, like: 'I did that X billion acquisition of company Y by company Z.'
"I went travelling for six months because I had always wanted to do that. It gave me perspective and I remembered that I had always wanted to start my own business. So when I came back I went to work for the firm I am now with. My current job is helping me develop people skills, and see up close how you build a growing company. If I hadn't gone travelling, I am not sure I would have taken that step.
"Don't get me wrong. M&A was a really useful first job. It steels you, like the army. Much of it is drudge work. Really monotonous, quite simple tasks: compiling figures from open sources, fidgeting with spread sheets and columns and so on. They have tried outsourcing a lot of the more repetitive tasks, but that has led to complaints, as by losing control you also lose quality.
"M&A also teaches you precision. You have to go through a 70-page document about a company's operation and spot each and every irregularity or anomaly. Each page is full of figures and key numbers, and when it says about a particular aspect of the company's operations 4% on page 28, but 3% on page 67, you are expected to spot it. Or you discover a different font in a footnote – what does that mean? Has that been added later, or revised? And why?
"I feel people outside the industry have a pretty warped idea of investment bankers. My friends who still work there, they are basically honest people."
Joris Luyendijk
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