The higher a monkey climbs,
the more you see of his ass.
—General Joseph Stilwell
Within an investment bank there is a strict hierarchy. It’s a pyramid, with each level of the pyramid resting on the shoulders of the level below. The further down you travel into the pyramid, the more primitive the species of banker becomes. Remember who built the great pyramids of Egypt? That’s right, it was a bunch of sunburned slaves in loincloths.
The senior managing directors are at the pinnacle of the investment banking pyramid. They’re the guys on the front line. They source business. They scour the world looking for ways to make fees for the investment bank. They approach companies in order to sell them on doing an IPO or raising money through a bond underwriting. They ask companies to buy other companies or to sell themselves. Every managing director’s prime concern is to attract clients and bring fees into the bank. That’s why they’re paid the big bucks. Imagine a handsome gentleman in a twenty-five-hundred-dollar suit. He’s neatly shaven, nicely manicured, and his shoes cost more than most people’s living room furniture. That’s the managing director.
The senior vice presidents are the next level down in the pyramid. At some banks they’re called junior managing directors, but their role is the same. They attempt to bring in some business in order to justify their high-paid existence, but much of the time they simply process the deals. They inherit the business from the managing directors and with their team they process the hell out of it. They make sure that whatever deal was promised to the company is done quickly. Sometimes they even make sure it’s done correctly. All the t’s are crossed and all the i’s are dotted. They are so close to the brass ring that they can taste it. Imagine a used-car salesman wearing a polyester leisure suit. Maybe he hasn’t shaved for a couple of days and he’s starting to smell a little gamey. That’s the senior vice president.
Next come the vice presidents. The vice presidents are a crew of processing robots, few with any life outside the office. The vice presidents are making roughly half a million bucks a year, but they don’t have any time to spend it. When and if they do get out of the office, they sleep. This turns them into a hapless bunch of angry young men and women who can’t understand why they’re so frustrated. They want to have relationships and become functioning members of the human race, like their friends outside of the investment banking realm, but they don’t have the time. Usually, the only dates they can get are with the gold diggers who want to get their claws into a piece of that healthy paycheck. The nice boys and girls in the city, the ones that the vice presidents wish they were dating, are busy screwing the unemployed artists and musicians who have no money but plenty of time.
The vice presidents are making too much money to change careers because no other organization, with the exception of another investment bank, will hire a vice president and pay him half a million dollars a year to process deals. The vice presidents don’t really take any financial risks. If they’re willing to shamelessly kiss every upper-level ass they see and run around all night churning documents, they know that they’ll continue to get a fat paycheck. The problem is that the vice presidents are making all this money, but they’re not content. They’re a miserable crew because they’re trapped. Like caged animals. Imagine a prisoner of war kept shackled in a moldy basement for five years with no light, nothing but shoe leather to eat, absolutely no bathing privileges, and occasional doses of electroshock therapy. That’s the vice president.
At the next level in the pyramid are the associates. Lots of them. The associates’ lives suck. The vice presidents take out their aggressions on the associates all day and all night. It doesn’t end until the associate either becomes a vice president, leaves, or commits suicide. The associate kisses the vice president’s ass because the vice president helps determine the associate’s bonus. Here’s how it works: the managing director says “Jump” and the senior vice president says “How high?” The senior vice president then perpetuates the panic attack by sending a voice mail that conveys a false sense of urgency to the vice president. He basically kicks the dog. The vice president looks at the associate, takes a hot poker, and shoves it up the dog’s ass. The associates are barely human but at times are brought to client meetings and are expected to act human. The associates are the Cro-Magnon men. They live in caves, have trouble walking upright, and have a lot of hair on their backs. Usually, they communicate by grunting. Those are the associates.
Finally, there are the analysts. Monkeys. Tons and tons of little monkeys. Not humans, just monkeys crawling all over each other and pulling lice out of each other’s fur. Those are the analysts.
With all these different kinds of investment bankers, the investment banking department appears to be a huge place. It is. Goldman Sachs, Morgan Stanley, and Merrill Lynch each have their own investment banking army with thousands of soldiers. Then there’s Lehman Brothers; Bear, Stearns; and First Boston. The list goes on and on. In reality, though, the investment bankers are just one small part of the broader investment house. They’re just one little cog in a much grander machine.
Within each investment house there are capital markets desks, an institutional sales force, a trading operation, a research department, and a retail brokerage arm. Each department has a function, and they all work together. First, the bankers go out calling on companies, looking for the ones that need to raise some money. Once they find one, the bankers call up the capital markets desks and tell them to get the wheels rolling. The bankers tell the capital markets guys, “Look, man, we gotta raise some dough. What’s it gonna take?” The capital markets desk tells the bankers, “We can raise your money. Here’s the terms our buyers are gonna want.” After that, the capital markets desk calls the institutional sales force and tells them to round up some customers. The institutional sales force then begins calling the mutual funds, the hedge funds, the pension funds, and the university endowments—any and all institutions that control money that needs to be invested. These customers give the investment house some money to buy the new securities, the investment bank keeps a piece as their cut, then they pass the rest on to the company. A few weeks later the research department writes a report on the company that extols the virtues of the newly issued stocks or bonds. Eventually, the retail brokerage arm gets into the picture, calling on the retail investors with their latest and greatest investment idea—those same newly issued stocks and bonds. It’s a profitable operation.
There are many other types of financial institutions in the Wall Street universe as well: clearinghouses, hedge funds, mutual funds, commercial lenders, and commodities trading operations. The investment houses are just a small part of the greater Wall Street universe. The associate is smaller than a piece of dust on a wart on the ass of a large male African elephant. The inside of the cheek of the ass, not the outside.