bluntlysaid

You have got to check out this Business Week article “Meet your New Recruits—They Want to Eat Your Lunch” written by Aili McConnon and Jessica Silver-Greenberg. The article describes these elite investment clubs at top tier undergraduate universities, such as Harvard (no surprise), Yale (a little surprising) and Tufts University.

Undergrads compete to get into these extracurricular clubs because it gives them a chance to invest money in a group setting, a mini Hedge fund of $30k or so. I see the merits of working in these clubs:

• Investment exposure: How to identify and research an idea
• Investment management: How to manage existing assets, exit bad investments, etc
• Teamwork and consensus building: How to convince a group of people that investment XYZ is a good idea
• Leadership: This applies to club officers, who can demonstrate to future employers that they are natural leaders
• Resume: It looks good…I’ll admit it.

However, as a liberal arts major myself with a decent career to date, I have to agree with the three executives interviewed that disagreed with the value add of these investment clubs.

• Michael J. Mauboussin, Chief Investment Strategist for Legg Mason Capital Management—”If you are specialized too early, there is a risk you will be less innovative because you have fewer building blocks to combine in new ways.”
• Carly Fiorina, Former CEO of Hewlett-Packard—Majored in Medieval History and Philosophy at Stanford.

Undergraduates grossly overestimate the intellectual rigor required to work in investment banking or consulting. That is, you definitely have to be smart to do well on the job, but only because you have to learn quickly on the job. You are not expected to know how to value a company, you will learn on the job. You are not expected to perform in depth competitive research from day one, again, you will learn on the job. Any knowledge on these matters that you have walking in the door will serve as nothing more than a 3 month lead on other analysts that start learning on the job. So, the real value add coming out of college is a different perspective, a fresh look at things, an innovative approach…outside of the typical moves a banker or consultant may pull.

My career is nothing impressive. I have not made a lot of money nor have I been promoted in any unusual ways. However, I have played a key role in several billion dollar investments—not M&A “should we fund this deal” stuff, but real investments like when a company decides to penetrate (or avoid) a new market and absolutely revolutionize the field as a result. The sort of work that is priceless in experience, despite a mediocre salary.

I was given a role in these projects not because I studied real estate finance in college, but because I bring a really unique perspective to my surroundings. The research skills I grew interning at a magazine one summer, logical thinking strengthened the summer I spent screening calls/mails for a Civil Rights Group for potential new cases, and leadership skills gained from running a student organization have been INFINITELY more useful than anything I learned in college. My most innovative ideas applied at work are a result of cool conversations with friends from all different backgrounds. With that said, the big picture thinking that became second nature as I wrote my history, literature, and econ papers has been useful…These skills are the ones that allowed me to have more impact than my peers from day 1.

I can imagine these kids at work…the kids who look up with eager eyes and wait for a lollipop just because they finished their valuation model 60 minutes before the other equally smart kid that made a model for the first time. You don’t get a lollipop in banking or consulting, and there are way more job openings than people like to admit so you can bet that the other student who is driven (in other ways) and accomplished (in other ways) will likely get an offer from Goldman/CS/JPM or whatever too.

I commend the iniative these kids take, the dedication, the hard work they pull on top of their homework. I respect that…but there are other ways to “be impressive” without starting your job before graduating from college. See, work isn’t that fun so they might as well maximize their time at school and spend their time building something outside of the 9-5 (9-2am banking hours) field of vision. It will add more value later on because the students who take the “creative” path invested in something that no one will be able to match unless they participated in that activity during college. Now, that is a competitive advantage.