Morning Coffee: 28 year-olds working 20 hour days for $450k salaries decide to quit. The biggest egomaniacs in banking
The junior employees of top-tier private equity firms have generally jumped through a lot of hoops to get where they are. In order to join the ranks of associates at Apollo Global Management, you probably had to start working the moment you got your acceptance letter to an elite university, spend all your summers in investment banking internships, get the offer from a bulge bracket bank, and then almost immediately start on another rigorous selection process, to find the PE job you really want at the end of the analyst program.
Having committed that much time and effort to the search, people don’t give up the prize easily. So the fact that, according to Business Insider, seven out of the thirty associates at Apollo in New York have left in the last three months means that things must have got bad. On the one hand, we can be pretty sure they haven’t left for bigger firms, because there are hardly any. On the other hand, an unnamed Apollo executive’s suggestion that “some associates who had resigned were underperformers” isn’t very credible either. These were the stars of their intake at Goldman Sachs and JP Morgan; people like that don’t turn into lemons overnight.
What seems to have happened – making allowances for the fact that people are speaking anonymously and may have an agenda – is that the sheer physical and emotional discomfort has finally reached the limits of even the most ambitious kids on the Street. Apollo seems to have had an official policy of protecting half the weekend from Friday to Saturday evening, and of encouraging everyone to take two weeks off in August and two in December. But it also seems to have had an unofficial policy of doing absolutely nothing to sanction senior executives who ignored or undermined the policies.
Business Insider has amassed an array of anonymous statements to reflect this. Apollo promotes partners who are "incredibly hungry and literally always online," according to one employee. "If you're willing to work 20 hours a day and get deals done, you will be told to be nicer, but it won't impact your career," said another. One who quit in the past two years said you're "paid to grind," and that even Apollo's huge pay ($450k in the first year, incremental increases of $100k a year after that) isn't worth it.
In many cases, having the employee-friendly policy and ignoring it can be worse for morale than not having it in the first place. Effectively top management are sending out the message that they know what they’re doing is damaging, but are continuing to do it anyway. When faced with that sort of disrespect for their time and health – which has apparently been compounded by a perception that a blind eye is turned to dealmakers who act “like a jerk” – it’s not surprising that the associates have turned to gallows humour.
According to one recently departed associate, “What made the job tolerable was most associates are nice and good to be around…having 10 people in the room with you at 3 a.m. is better than being in a room by yourself at 3 a.m”. But is it? If all ten of you are swapping stories about how near you are to collapse, this isn’t really a healthy environment. And if there are ten of you, then you can be sure that it isn’t a temporary sprint or a single team.
Apollo denies things are this bad. A spokesman claims that “some level of attrition is natural, and we are equally proud of our talented alumni”, but the firm’s reputation has taken some heavy hits this year, and the more people there are on the Street with bad things to say about them, the worse it will be in the long term. It’s possible that if they don’t start taking the issue a bit more seriously, the problem of having too many live deals will solve itself.
Elsewhere, Raoul Weil, the former global head of wealth management at UBS, seems to be sick of being polite about the bankers he used to manage. You can hardly blame him; he was fired in 2008, one day before his 49th birthday when Bradley Birkenfeld started to testify as a whistleblower against UBS, and he seems to have spent most of the last thirteen years under threat of imprisonment for alleged tax crimes committed by the staff of his previous employer.
In a French courtroom, he’s now described the bankers as “animals”, “always egomaniacs”, “territorial” and said that “they get into arguments, that’s their nature”. He’s also described the 00s business model of Swiss banking as “like if you go to a bar, you pick up a girl and then when she becomes your girlfriend you hand her over to your best friend”. So far Mr Weil has been cleared of all charges in both the USA and France – the current hearing is the French prosecutor’s appeal against his most recent acquittal – but we get the sense that at the age of 62, his patience, if not his stamina, is running out.
“Unquestionably, the most feared private equity firm in the world”. A new book, “The Caesar’s Palace Coup”, gives some indication of what those overworked Apollo associates are actually doing with all those hours. (Institutional Investor)
As it scrambles to keep up with the flood of clients and orders generated by all of the publicity, Robinhood has acquired Binc, a recruiting firm, in order to get hold of 80 headhunting staff and accelerate its own talent acquisition. (Reuters)
Possibly the ultimate “hold your nose and buy” value investment – former Goldman MD and Bitcoin speculator Michael Daffy has bought Jeffrey Epstein’s New York house. He’s presumably working on the assumption that if he commissions a “complete makeover, physically and spiritually”, and wait for the name to recede into bad memory, he’s taken advantage of everyone else’s yuck factor and picked up an $88m house for fifty million dollars. The money’s going into the restitution fund for Epstein’s victims. (New York Post)
Sophie Christiansen, a software developer at Goldman Sachs, is also a CBE and holder of eight Paralympic gold medals for dressage. Apparently she takes unpaid leave to compete, but her managers are good at helping out when she’s struggling. (BBC)
Steven Mnuchin has an older brother, Alan. We hope there isn’t too much sibling rivalry, as that could take the shine off what would otherwise be an impressive banking career and the launch of a $400m SPAC. (Reuters)
Nicole Maddox, head of talent at Coinbase, has spent the pandemic living – and working – in an Airstream trailer. (CNN)
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