My grandfather was a chartered accountant. He was laid off. My other grandfather worked in a bank. He was laid off. My father was COO at PWC. He was investigated by the ATO. My only successful uncle was a charted accountant. A family full of finance bros & CA degrees. Nice!
It seems like a lot of moderately high iq people go into finance. Not high, high-iq people because they genreally find it fairly boring. But probably one tier below that. I began wondering why that was, so did a decent amount of research into the different strands of it, how it impacts the world.
This essay will cover 2 things:
(1) an outsider's perception on the different roles in finance & the companies that are built as a result of that. Genreally this includes the actual role itself, career progression, salary, what you actually do on the job, genreally benefits & critiques of the job & it's utility for society
(2) Why so many people do it, Why they shouldn't do it & Who should actually do it
The dorks. Chartered Accountants. KPMG/Deloitte/PWC/EY. Typically your ~105 IQ grad roles except for Jono Lai. These people are typically either less intelligent or less conscientious than people that go into IB or Management consulting. You don't have to have gotten overly great marks, you get $40-50k lower salary. The Big 4 was probably once prestigious, but seems to be getting less so the more time passes by.
Typically, career progression looks like: analyst for a couple yrs → senior analyst for a couple yrs → senior consultant for a few yrs → managerial roles for a few years, then ultimately you become director & then partner in your mid 30s. Honestly, there are so many layers of management, there's no point trying to abstract them. But it's the typical: partners are the rainmakers & own all the deals, directors assist them in their deals, managers are project managers like Hurl was and your juniors do all the modelling, excel work = GPT-type stuff. A lot of people around the senior analyst mark will do some external qualification (because a lot of other people do them); they'll do a CFA (30% pass rate), or CA (~50% pass rate) or a CPA.
Honestly, I don't have much to say about this category. It seems like quite a low IQ, low-ambition option. My dad stayed for 25 years, earned $200-400k until age 35ish. Then, earned $1-2M for 10 years, and then $2-5M for 10 years. After tax, he bought a $2.7m Bronte home + $1M renovation, $3M Woollahra home + $500k renovation, spent $1M on holidays when we were younger ($100k 6-7 times), my mum didn't have to work, spent $600k post-tax on our school fees all up & $100k/yr on our living expenses. It's a decent, even good life. Most of his gains are the fact that Woollahra property would be worth $8M and Bronte would be worth $10M. Maybe he should've been a property investor instead.
But ultimately, if you want to earn proper coin as a finance bro, you go into Investment Banking or Private Equity — the rain-makers. If you want more WLB & are intelligent, you do management consulting at MBB; the c-suite execs there earn $15-20m. In some ways, you make this choice at 22ish and don't have that much context on the world. But, you can switch at any time with a little research about who actually makes money in the world.
The other option is a cushy in-house job after you work for big 4 for 5-10 years.
MBB are big firms. you make pretty powerpoint presentations for big S&P 500 clients as they conduct big moves in their business e.g. launching into new places, acquiring a new company, GTM strategy as a whole, improving profit margins etc. You start as analyst doing the grunt research -> then go to associate managing the people making the slides & determining how the slides should look in conjunction with the above person -> there's probably a VP position who is effectively the project manager of the pod, determining who does what projects etc -> then you have the partner who is the rainmaker of the org. they do the sales.
Typically most deals come inbound or via connections, essentially you're waiting for people you know to move into high positions in the S&P and therefore use your firm as the consulting firm. that's why most people reach partner at 30-35ish when you can begin to sell. though, most consultants also fulfil the work they sell, but typically offload a lot of the grunt work to the people underneath them and just sell the overall vision.
You earn $100-120k straight out of uni at MBB, and probs more like $60-100k at some boutique consulting firm. it's pretty useless work overall because your work may not even be implemented, it's up to the person, most firms just use it to get advice & may/may not ever use it. more consultants become founders though because they understand a little bit about certain industries & conduct quite rigorous market research. 18% of unicorn founders came from a management consultant type background from MBB.
My intuition is that they'd do a lot of research online + more importantly conduct a lot of surveys, customer calls which is proprietary data & cannot be replicated by other firms. say if AGL wanted to improve profit margins or expand, they'd interview 100 potential energy consumers to assess if this was a viable strategy. however, in the main, consulting is typically directed at huge huge firms that can pay huge huge retainers for ongoing consulting work. S&P 500 firms pay 10s of millions, but average $10M ebitda place may only pay $50-100k for it (ala hormozi mgmt consulting) and so most consultants live far too much in the abstract. powerpoints thaat are only relevant for huge businesses because the average small business just needs to get customers & deliver a good product/service. for instance, just because you can assess the ability of a $100M ebitda supplement company to go to vietnam or amsterdam, doesn't mean you understand
Other smart people go into IB. tier 1 students that are summa cum laude, magnum cum laude go to goldman, morgan stanley & JP morgan. tier-2 kind of people in aus go to macquarie & barrenjoey. and then everyone else goes to deutsche, citigroup and whatver others. bankers are similar to consultants: analyst for 2-3 roles → associate for 2-3 yrs → vp for 5 yrs or indefinitely and then become an MD.
Typically, IBs help other big companies raise equity/debt, perform M&A of other companies, help them float on the exchange or LBOs for private equity firm e.g. KKR buying alinta. you are charging 2-3% fee for this act. hence, why as an IB you can make bank if you take a % of profits on the deals — most banks do 25% of the total deal amount that you do. that IB dude helped Frank Greff sell Realbase for $180M and took $2.1M from the deal. he would personally get $525k. and so, you don't even need to have that many deals go through to actually make a lot of the money.
Dom said that Macquarie gave a $20 allowance for dinners. tldr; they're frugal shmucks that care deeply about $$$. they work till 1-2am most days doing the spreadsheets for the bosses, though, most of the work is just sitting there waiting rather thna actual productive output.
In theory, it is a helpful craft as it helps the technology companies — the ones actually driving societal value to produce good/services at a cheaper rate by giving them the necessary capital to do so. it is a specialised skill that you only really need to do once/twice in your company's history and therefore don't need anyone internally to have that role.
however, 2 slimy things are 1) MDs just randomly change the models to get more $$. if the valuation is $1.5BN, they have incentive to make it $2BN so they're 3% slice becomes bigger. beautiful, theoretical models are usually avoided for this fact. "make it $2BN" is what macquarie dudes often say. 2) they take no risk & yet demand 3% to get out of bed. just up the rates to make more cash. plus. it's sort of weird that the skill of an MD is literally sales. you sell people doing an LBO, DCF or whatever else.
Take a 2-3% clip of the total deal amount and go away. but it is fundamentally a sales job. but when you're lower, you're not making cold-calls or sitting on sales calls, refining that skill, you're doing LBO analysis and DCF analysis.
the top guys at top firms make bank $10-20M. most people leave after 2-3 yrs it seems; you don't see many people that stay at Goldman for 20 yrs. rather, they use it as credentialing to launch into VC like John HU, or PE where carry and upside has historically been a lot bigger. to be honest, if IBs are actually good at DCF & LBOs, they really should be in PE. if you can actually financially engineer a company, you'd just run a fund. most dudes that here exist only in IB land, some of them run m&a advisory or PE firms, but the skills aren't really that transferable beyond capital allocation into assets, not capital allocation within a company.
Here's where the big-boy plays. typically, these are the finance bros that are dumber than hedge funds, but above most other finance bros barring maybe management consultants.
Typically, Private Equity guys start in investment banking, and management consulting to a lesser degree. They typically work in IB at Goldman, JP, MS for ~10-15 years or firms alike. They can also go the route of IB/Consulting into a PE firm, stay for 1 carry (8 years). Orlando Bravo did this at his own fund. They then try to raise a fund from an institutional investor like pension funds, HNWI, university endowments etc. when they start most of them are ~40ish years old. Schwarzman worked at Lehman Brothers till 38, then raised a $800M fund at age 42; he also had a great reputation as a rainmaker.
PE essentially takes an existing business & attempts to operationalize it, increase EBITDA & ultimately sell for more $$$. They get paid a 2% management fee and 20% carry, and therefore, they make most of their money on the businesses they eventually sell. PE firms basically do DCF analysis all day on various businesses to assess the economics on making the business profitable & making it work.
The way PE firms invest differs at every level: the biggest ones (KKR, Carlyle, Apollo & Blackstone) all do LBOs: leverage huge amounts of debt onto the company with moderate interest rates, put 20% equity in, operationalise by firing staff or growing EBITDA & eventually sell it within 4-6 years. This is why they get the term scumbags a lot because you sell businesses for more by reducing risk which typically means ensuring that the EBITDA is more year on year. You can either do this in a very slow, foundational way (a) improving culture, improving staff retention, diversifying lead flow, reducing revenue reliance on big customers or you can (b) slash operational costs & fire anyone that doesn't contribute to revenue. After 4-6 yrs, they typically sell the business to a bigger private equity firm, or to a bigger conglomerate in that industry. They then payout the institutional investors & then take a 20% carry. If they bought for $10M EBITDA at 10x valuation, sold for $20M EBITDA at 15x valuation with 20% equity. They, more or less excluding interest, paid $20M of their own cash & sell for $300M. They then get $60M profits from it; 3x what they even paid of investor money. Do that with $10BN conglomerates and you make serious cash. Though, you do have a hurdle rate of 8%, so if you don't clear that, you don't make any $$$.
You also have smaller PE firms like Thoma Bravo or Vista Equity who mainly blew up as they invested in software during the 2000-2020s boom. Also people like Shore Capital Partners who primarily operate in the roll-up space and put together 200-300 vet clinics in a certain location, and assimilate back-end operations. New age PE firms have also looked like hold-cos. Inspired by Berkshire, entrepreneurs like Hormozi, Brent Beshore, Codie Sanchez & Sierra from Enduring Ventures and even Peter Kang. All different types of hold-cos. It'll be interesting to see how these goes. Interestingly, they do have better distribution than the average PE firm. Though, maybe that only targets smaller businesses between $1-5M EBITDA. Though, typically, a "moat" doesn't last particularly long for many business models barring industrial conglomerates (why buffet was able to do it) & the therefore the idea of a holding company for $1-5M EBITDA businesses seems suspicious. Also, why not keep trying to grow that one? Diversification risk? Return on capital is greater with other companies? You don't need to continually invest excess EBITDA to get good returns? Some of these guys run a search fund initially like enduring ventures. They raise a couple million & then they buy one business and continue to do so. Beshore's $50M initial fund was a good example of that, as it was followed by a $500M fund with a 37 yr vesting period. My guess is that this will become the dominant model in PE.
Private Equity also extends more broadly to real estate & credit. Most of the biggest PE funds do both of them in due-time. Only 30% of blackstone is from buying businesses, and their credit is by far the most popular. Credit funds act like a bank but can take on different debts like Mezzaine, High-yield, low-yield etc & Real Estate buy properties, use a developer, and then make passive income on the rent. PE is notoriously cyclical — carry happens once every 8 years, so the recurring income provides a more stable base. You also get PE firms like Stonepeak w/the Australian dude who focus on infra.
Technically, capital is a commodity. It's very difficult to raise, but once you have it your $100 is the same as another $100. So, PE firms are incentivised to talk about operational transformation via digital to make it seem they'll greatly help. Most of the merit in PE is from financial engineering, deal structuring & selling founders that you will take it over well.
You don't get to raise capital until you're old. Nobody is giving a 22 year old $$$ to start a fund. It's not happening. Maybe you can get a small fund & have 1-2 rounds to give a few small checks. Perhaps, you start as a search fund and go from there after 5-6 yrs in IB/Management Consulting. This could become a lot more common. You do get stories like Graham Weaver who raised capital at 30, but typically, big funds are raised in your late 30s. You need to network with LPs, but also you need to have quite good pattern recognition across deals which takes time. Investors look for this. You have to look at tonnes & tonnes of markets, look at tonnes of balance sheets, took to plethoras of founders & ultimately buy lots of businesses to get a sense for what businesses are worth buying, beyond the DCF. It's also a factor about leverage: you could raise $5M, but ultimately you give away lots of equity & you need to keep stacking funds to be bigger & bigger, so you'll probably end up in the same spot raising a $1BN fund by age 55-60.
In short, long hours with long career & produces the richest people: Schwarzman, Kravis, Black, Rubenstein, Ishbia, Weaver and on and on. But, they are all old, you don't get rich quick.
This is for the geeks. Essentially, if you're not a maths/com sci geek, you probably shouldn't go into hedge funds. Rooms full of quants for Citadel, Bridgewater, Point72, Susquehanna, Jane Street. Carnevale said it was nearly as bad as Eftsure's SDRs cold-calling.
They get paid similar way to PE: 2% management, 20% carry above 8% rate of return. Their money is far more liquid though. Making millions every single day making the market more efficient & smoothing over inefficiencies in the market.
Various strategies are used in HF: long/short, macro cycles, quantitative trading based on market signals, activist investing & distressed investing are the other two as well. All basically investing over short-term and getting rewards.
To be honest, this path is only accessible for people with IQ above 135. If you aren't top 1%, this just isn't going to work. Maybe, you could be extremely good at math without having a high IQ, but you get the point. This is not majority of finance people because they aren't smart enough. Generally, this is quite zero-sum by definition: someone else losing, means you win & vice-versa.
Arguably, most people that are extremely good at math/cs should probably be in tech/engineering. The world would get by without hedge funds. They are some of the smartest people in the world hired out of best unis like Ivy-League, Stanford, MIT etc & don't use it for good.
Funds startups. Typically ran by ex-startup founders or people interested in tech and the future of humanity. 2% mgmt & 20% carry above 8% — the usual stuff. Typically build firms by writing angel checks, having them work after 5-8 years & then running a fund ala a16z, kirsten green, thiel etc. They want proof, as do all LPs.
VC work is pretty derivative. Not actually doing the building or the work. Different types of VC work including pre-seed (idea), seed investors (idea + MVP), series a-d. You get all types of companies: founders fund in deep-tech, a16z in growth equity/ai/crypto, YCombinator in small gimmicky startups.
95% of startups fail. They just don't suceed. Most of them never get off the ground effectively because no-one cares about your idea. Investors work of power-law distribution where the one decacorn in the mix where you invested $4M for 8% equity (non-dilution) at the start makes up for all the others ones that go to 0.
Generally, it's hard to break in as an employee. They don't really need more partners/funds & they rarely open up new slots. Partner roles typically go to people who founded tech companies before. Grinding up from associate/analyst roles is typically a bad idea because there is little churn from staff & the career trajectory is unstable.
It's also a pretty bad way to make money for most people. It's based on success of others. It's more about future thesis, than on verifiable economics. Most VCs underperform public markets after investor fees. You'd be better off investing in the S&P 500.
Harry Stebbings often says being a VC is just like being an SDR. Cold message after cold message. Lots of content to build brand ala YC. Australian VC Firms: Square-Peg, Blackbird, Airtree
Generally, ambitious people either pursue (1) Technology Startup where they are founding something into existence (2) Copying an existing business model, optimising it, scaling it with sales & marketing and a good product over a large period of time (3) Going into prestigious career in either IB, VC, Big-Tech and occasionally you get relatively intelligent people that go into either law or medicine, but typically they are just intelligent, not ambitious.
I want to discuss why a lot of people opt for 3 & not 1 or 2.
These are run by founders. These businesses inherently have technical-risk & idea-risk; the idea might not be wanted because it is not currently in the market (Uber, AirBNB) OR it might be wanted, but seem impossible to achieve (Optimus, FigureAI).
Most startups fail. In fact, ~90% of startups fail. But, the actual amount that make $$$ is even slimmer; 70% of seed don't make series A, 50% of series A don't make series B/C, 35-40% of Series B/C/D don't make it further. Yet, even if you become profitable, make it through all the funding rounds because of things like 1) non-dilution rights for VC where 2) dilution in general meaning you own 5-10% of the company. You can end up making literally no money even if the company was generally a success. You have to hit quite high valuations for it to work.
Therefore, a lot of banker-types see this as high-risk and prefer to stack odds in their favour and play low-risk games (like Hormozi). When you stare at this fact directly, you understand to be a tech-builder you either have to have extremely high iq & naturally fall into it or you have to be driven by impact-status, rather than external validation status. When measuring in EV, finance bros basically always beat tech bros. It's easier to make $100m in PE, HF, RE, Credit than it is in Tech. It's easier even to make $1-10BN in finance for most people by compounding over a 40-year stretch I'd argue. Not many get past $10BN: only really Schwarzman & Buffet, but nevertheless if you're moderately intelligent, read a-lot, value-investing has high-upside. Even low-level investing in operationally-efficient service businesses like trades, agencies, accounting firms, coaching businesses; running a fund from this is quite low-downside after running an initial business for a decent while.
To some extent, everyone has to be interested in acquiring resources. Even those that say they aren't have to be. You have to pay for shelter in the form of mortgage, rent, housing commission. You have to find clean water. You have to pay for weekly groceries. If you are extremely frugal, this will cost $30k per year. For a entry-level job that would be 1500 hours of work: 4 hours of work per day. Therefore, if you have no other interests or hobbies, this becomes the default one.
When you turn 18, start thinking about living outside of home & looking at city rent prices being $500+ per week and $26k post-tax per year you understand why so many young people live at home until they're 25ish in Sydney. So, finance bros naturally take this to the extreme; pursuing resources for the sake of resources. I don't buy the narrative that above $100k AUD salary, your happiness doesn't increase (in a city, you cannot have kids, a family, even a moderately nice apartment). However, I do think that value of money reaches an asymptote.
However, because these investment banker types don't have any hobbies/interests like filmmaking, AI, energy, physical movements like gym, running — their interest becomes money for money's sake. It's fine. In the main, however, this makes them less likely to start ambitious companies because how can you try to disrupt energy or AI or healthcare if you do not have a thesis or care for the world. It's hard to be impact-pilled or even want to bring the wooly mammoth back to the tribe if you are not curious because you don't go into enough depth on certain topics to appreciate what might be broken & how the world could potentially be a better place.
They simply don't have the agency. If you go to a private school or generally get good marks at any school, the finance path is literally laid out in front of you. Go to university & do a commerce/economics degree and get 80-90 WAM, do a few internships by sending LinkedIn messages, applying to prestigious internships & then working as an analyst by passing IQ/Reasoning tests at MBB or an investment bank. The path is literally there. You do not need to deviate, it is a well-trodden path that you can literally follow to a $130k salary if you have IQ of 115+.
To do something else is to divert from the path. To think for yourself. To take some semblance of risk. This is too much for most people to bear. They want a wife & 1-2 kids. They want to watch 10 hours of TV shows each week. They want to spend somewhat lavishly & have continuous continuity from their middle class upbringing. It's all part of the plan. A life curated for them before birth that they follow; an NPC.
Hormozi businesses are simply businesses that have already been done before. Basically in every category, there are businesses that have $100M enterprise value: marketing agencies = NPD, WPP, Omnicom, Publicise. Accounting = Big 4 as the most extreme started as Rob Coorey's type of firm. Gym = Fitness First/Anytime. Construction = Lend-Lease. Home-Services = Jim's Group ($500M). There are $6BN recruiting firms. Chiros are the same. Med-Spas are the same. There are tonnes of coaching businesses as well. Literally, just take a simplified business & taking selling it via outreach, ads, content or affiliates & start delivering the service. Even, some product businesses arguably count as this: Vitadrop is just a derivative from US businesses. Even big investment banks These businesses do take time: typically 10 years in that industry building authority because even ones like NPD that are worth $200-300M after 10 years were in SEO industry since 2006 building SAAS. They also are incremental-optimisations i.e. you just keep tweaking the ads, keep tweaking the SOPs, keep tweaking sales scripts & keep compounding the content. This can mean they are boring, but ultimately, they scale in any niche: publishing, recruiting, pool-building, marketplaces simply by optimising all functions and understanding the niche very very well.
There is a argument you get far more leverage by doing 4 years at university then 4 years at MBB or Goldman doing analyst/associate work; they think they can run a search fund & sky-rocket from there. Honestly, I generally disagree & even if that were true, if you put that effort into a reasonably boring service-based business, you would probably get further ahead & be able to buy other businesses, raise a small fund & then a bigger one on top of that like Brent Beshore. The same effort spent networking inside of GS would probably just be spent networking outside + posting content to build authority.
You do gain signal from being at these big B2B finance firms. People immediately assume you're intelligent & diligent if you're from MBB or GS, JP, MS — it's rightfully so. The testing process is very rigorous & you can only get in if you are actually intelligent (above 115 iq+ imo) & also work very hard in university & usually high-school — this means you get Magnum or Summa cum laude, 85-90 WAM & ace their testing. People believe you are intelligent because they believe in the testing process, not necessarily that you are capable of great, unconventional work.
20% of unicorn founders were previously management consultants. A lot of banker-types go onto to start interesting companies, roll-ups. I'd argue this is correlation not causation. It's not that management consulting necessarily helps to disrupt an industry more than actually working in that industry, but a lot of people end up doing it because they have relatively high-iqs. I don't see how doing slide-decks for S&P 500s on expansion into other countries or doing DCF/LBO excels could help you understand a problem, tinker with it & build it. That doesn't make a whole lot of sense to me.
Overall, you would be as well credentialed by (1) spending that time networking on your own by building small projects, having run a service business (2) learn more about specific industries, economics behind them by actually working in startups disrupting them, or service-based business to learn how to grow a business.
Most skills you learn aren't actually that useful, nor transferable in the main. HF, Big 4 are intuitive, but consulting/IB seem like you learn a lot. But actually, the activities where people make a lot of money in the field is networking hard, having dinners with people, having a high net-worth phone book & generally being charismatic + good at sales. Perversely, what gets you promoted is having high attention to detail, being dilligent, working extremely long-hours, being a 'Yes-man' + being very good at numbers. In the main, intimately understanding the product/service you are selling helps you to sell. But, these seem like antithetical skill-sets. Therefore, the argument that "I'll go into finance to learn for a bit" is generally a lot of rubbish because you learn more about networking, rather than industry-specific problems, how to get customers & how to build good product.
Obviously, finance merely rearranges capital in the market. There is X amount of resources and it alters you X goes to. It is largely zero-sum & does not equate to more good & services to to the average consumer. It does not push forward the production possibility frontier in any meaningful way. When a PE firm slashes operational costs & increases EBITDA, the average end-consumer doesn't accure more value. Tech bros subconsciously or otherwise understand this fact. Technology pushes forward the frontier. Technology is what pushes people out of poverty. It's how we progress society forward.
Not everyone is suited for technology, but if we actually prioritised hires in technology or even better service-businesses for more affordable pricing over increasing the amount of bureaucrats at KPMG, the world would be a better place for it.
Technology is the only action that pushes humanity forward. Everything else pales in comparison. Even, charity is a waste of time. It is a short-term fix until there is technology that progresses it in a long-term way.
Some would argue that you can get richer from finance, than service-based businesses. This is generally true. There are plenty of $50-800M net worth entrepreneurs in boring, service-based businesses. And, PE moguls are far richer: Schwarzman, Kravis, Ishbia, Black, Rubenstein, Rob Smith, Bravo all have net worths $5BN+. These only people that have that from boring businesses are the Indian IT service moguls: owners of TASA, Tech Mahindra, Infosys, Wipro & retail people that own Panda Express, Subway etc etc. Though, what is the point of $5BN. After $100M, the things you can buy are superfluous anyway. Sure, until you have $1BN you cannot buy $100M houses, or $200M yachts. But they don't really matter anyway and are just status signals, and do not positively add to your life.
On top of that, typically these PE guys are 70 years old & 3 vesting cycles in before they actually make any sort of money. Who wants money when their 70? It's irrelevant by then. What's underrated is having more money for a greater portion of your life. The reason is the living standards difference after $1M is so minimal, but from $100k to $1M is ginormous because society is built to incentivise people to climb to that range, but no so high that people become demotivated to try in the first place. It's better to have $20M net worth at age 28 and end up at $100M at age 70 as opposed to $300k/yr salary from ages 20-40, or maybe $1M at best in your 30s and then ultimately make $40BN at age 80.
When I was running the website-design business, it was fairly cruisy. If I ran the whole thing, I'd probably have to work 8-10 hours for 6 days per week. After that, it would be for enjoyment, additional learning but the returns on increased effort would subside because ultimately 2 more $8k websites doesn't do that much. I could earn $400-500k running that business. After 2-3 years, if I had done google ads & SEO instead, I could probably take out $1-2M at age 21-23. Some things would have to go my way to create enterprise value: getting large/enterprise clients on sticky contracts, finding a strategic buyer, low churn of clients, likely gaining authority through social media. But, ultimately, with some care & diligence, this business could certainly hit $100M over 20 years assuming marketing is not wiped out by AI.
I could be 38 with a $100M net worth, never have to work again. Having too much $$ that I don't know what to do with it. Sabri Suby has been going for 12 yrs has $60M net worth & is well on his way to do. Suby won't end up with as high as the PE guys, but he:
(1) Didn't have to work 100 hour weeks doing excel sheets from ages 22-28
(2) Didn't get paid $25/hr for the first 6 years of his career
(3) Got to wake up at whatever time he wanted, went to sleep when he pleased
(4) Gained status as the man of his firm
If I were forced to pick, I'd pick Suby over Schwarzman. Though, for very intelligent people, I can empathise with picking Schwarzman. That applies to very few people.
One could argue about what I'm doing & whether that is the same as finance bros. Maybe it is. I'd argue differently because Hormozi-businesses & Finance bros have the same ultimate goal: make tonnes of cash, not impact the world & the career trajectories can be judged alongside one another. Startups want to impact the world. Therefore, the work is the means, not the end.
Individuals that genuinely love finance. They read balance sheets for fun, they love talking about M&A, company valuations, deal-flow. They talk about it over dinner, they read it for fun, they'd do it even if they were forced to do a different job. This is not that many people; most people see this area as quite dry.
I can genuinely understand how people froth over this. It's quite interesting. I almost guarantee all the greats genuinely love analysing the valuation of companies, and will happily read 500 pages of 10-k reports everday. Dalio always says that people start for the money, but after 10 years you have all the salary that you could ever want & the marginal returns of a greater salary is so small that it truly weeds out mercenaries from enthusiasts because the mercenaries stop because the woolly mammoth was fat enough.
Basically everyone else shouldn't do finance. They'd probably enjoy their life more if they ran a Hormozi business, had more freedom, thought more for themself, gained volition over their life.
- An arrogant dude - Seemed to be visibly annoyed that I - Cannot work in finance without degree, 4 years at a bank like Goldman JP Morgan → MBA with honours → Managing director at bank or Buy-Side @Private Equity - Glorified EA role at a M&A Advisory Firm — not a good use of time - Banks have professional training programs to help you learn financial engineering, valuations, complex models etc - PE = as cutthroat as it gets. Billions of dollars in management - LPs need really big credentials and huge team for this to work well - Delayed gratification when investing in private markets, compared to public markets. 5 year investment period and 4 year harvesting period before seeing returns on capital - Contrary to public markets where money is always liquid - High resilience threshold — pain is very high - 1% start and finish - one of his pupils: 99.90 → 3 yrs at UBS → 2 yrs at Goldman Sachs. - To get into corporate finance: - Zero Alternative; Top UNI → Advisor/Associate at Bank → Bachelor Degree w/honours → Clients won’t let you …. - Meryl Lynch as a PA — 30% pass rate on CFA - diagnosed with chronic immune condition - Hard as I needed to do - Now is broken forever - Just loves investments - Need to understand basics & fundamentals to know what to prompt and to correct the technology - Doesn’t understand accounting, corporate finance, EPS accounting - AI = Lots of questions - Agentic AI/LLMs/Gen AI - Reduces ability for alpha - Picks/Shovels - What Sizes - Benefits of platform - Less — Price Risk in public markets - Fewer Junior Hires - More - Private Markets - Leverage points to make decisions