M.B.A.’s of 2001 Line Up at Investment Banks and Consulting Firms

A little over a year ago, the acronyms B2B and B2C stood for

a lot more than the Internet business models they referred to. The implications

of the terms “business to business” and “business to consumer” went far beyond

the executive summaries of the Internet business plans they defined. In those

byte-sized symbols, neatly wrapped around a number, was all the potential of

the Internet: interconnectivity, communication, commerce, a level playing field

and, of course, numbers , exponential

numbers … big, beautiful numbers!

Now, B2B and B2C have new meaning. At Harvard Business

School, Wharton Graduate School of Business and others, students who have

invested $100,000 in the belief that an education still counts for something in

the business world have redefined B2B and B2C in the form of a joke-albeit a

joke that, like many jokes, is more true than funny:

B2B, B2C: “Back to Banking, Back to Consulting.”

This is how the top business students are defining their job

search in the current economy. Investment banking and consulting jobs, which a

year ago seemed staid, boring and, yes, low-paying compared to dot-com land,

are once again really hot.

The same generation of students who not long ago were

blowing off Morgan Stanley & Company’s campus presentations are now hoping

that the bankers and consultants they once scoffed at as risk-averse company

drones-mere salaried employees-will find their own limited experience

interesting enough to merit a 30-minute interview. The bankers and consultants,

in turn, are enjoying the reversal of fortune, as well as a certain degree of

prestige that disappeared along with yellow ties and slicked-back hair.

“Last year, when I came to Goldman, I was, like, the stupid

loser,” said a Harvard Business School graduate from the class of 2000, now an

associate (and recruiter) at Goldman, Sachs & Company in New York. “People

were like, ‘Ooh, poor bastard, he has to go to Wall Street.’ This year, it’s

the opposite. People are like, ‘Oh, wow! Congratulations.'”

“Last year, it was a good year to be a student,” said Bob

Bonner, director of M.B.A. career management at Wharton. “This year, it’s a

good year to be a company.”

At least in terms of recruiting, the firms now seem to be

holding the cards.

“If the pendulum swung

toward the dot-com world last year,” said Caitlin McLaughlin, vice president of

M.B.A. recruiting at Salomon Smith Barney, “it has clearly swung toward investment

banking this year.”

And consulting. “While it’s premature to declare victory in

the war for talent,” said Andrew Giangola, chief spokesman for McKinsey &

Company, “interest in McKinsey is certainly surging. This partially reflects

some changes we made internally, as well as the external environment. Dot-com

work has lost some of its allure. Talented people who were looking for a chance

to change the world have now had a dose of reality.”

Sure, the comments are self-serving.  But the students looking for jobs are

confirming these assertions. Suddenly, the prospect of 80- or 100-hour work

weeks, superiors, pitch books, discounted cash-flow analyses, operational

analyses and, yes, a biweekly paycheck seems pretty attractive when one

considers the alternatives.

Whereas last year, “anyone who could spell his name could

get a job at an investment bank,” at least a second-tier one, this year the

banks, as well as the consulting firms, are able to be a lot more selective,

the Goldman associate said.

It’s hard to gauge just exactly how selective, since firms

and business schools are generally reluctant to release hard figures at this

point. But the numbers available do confirm, if somewhat murkily, the trend

being described by students, career

counselors and recruiters.

A spokesman for Salomon

Smith Barney said that applications for investment-banking jobs have doubled

over the last year, and that the yield of students who have accepted offers

from the firm has jumped from 50 percent last year to 73 percent this year for

full-time offers and 86 percent for summer-associate offers. This means the

firm can make fewer offers to fill the same number of slots. Morgan Stanley is

rumored to have received 150 résumés from Stanford Business School this year,

compared to 25 last year (the firm declined to comment for this article).

Combine increased demand

with the softening market (Morgan Stanley, Bear Stearns and Credit Suisse First

Boston have all started downsizing, or at least publicly talking about it;

Mercer Consulting and Blackstone Group, among others, have scaled back

on-campus interviews), and the numbers no longer seem to be in the students’

favor.

“If you haven’t worked

in banking before business school or over the summer, you better come from

McKinsey,” the Goldman associate said.

And if all you’ve got is

a dot-com degree, forget it.

“The dot-com veterans

are a bunch of 23-year-olds left with beer money and a dubious experience

base,” sniffed a senior banker at one of the Big Three firms.

 “We would hope to have our entire new

associate class come from ex-analysts and summer associates,” he continued.

“We’re basically recruiting nobody. We do it to keep up an image on campus, but

we don’t hire that many people.”

“Last year you felt like

students were kind of thumbing their noses at traditional things,” said

Wharton’s Mr. Bonner. “This year, you feel like firms are kind of thumbing

their noses back.”

Indeed, bankers and

consultants-who tend to get A’s in school, who cross their T’s, dot their I’s,

and shine their shoes-have had a lot to swallow during the last couple years as

they watched their long-haired counterparts, who flew by the seats of their

chinos, pile up the paper pay. While the investment bankers had plenty to do

with all the absurd valuations of the Internet bubble, their cut of the

commission fees seemed like mere cab fare compared to the paper wealth reaped

by their clients. More than one Merrill Lynch banker has been known to complain

about how former colleague Halsey Minor, who left Merrill to found Cnet Inc.

and make millions on paper, was a mediocre analyst who, one pointed out, was

often late to work. Mr. Minor responded through a spokeswoman that he finished

in the top 10 percent of his analyst bonus pool and that Merrill Lynch helped

fund his company and lent him office space. Now Cnet’s stock price has tanked

84 percent in the last year, and Mr. Minor has been replaced by Shelby Bonnie

as chairman and chief executive. So there’s no need to be jealous anymore.

“We don’t feel poor

anymore,” the senior banker said. “Very few people actually made money on the

Internet, so it does kind of make you feel better about banking.”

Of course, with the

economy tanking and with all the layoffs and downsizing, the bankers may soon

find themselves on the sell side of the interview circuit with all the

dot-commers they have gleefully watched flame out.

Meanwhile, the exodus is

reversing direction. Ex-bankers who left for dot-coms, both failed and

successful, are trying to come back to Wall Street.

“She’s an aggressive,

driven, impressive person,” the senior banker said of one, who actually made

some money off of her Internet venture. “Hopefully, we can make her an offer.”

“Investment banking is

probably what I should have done to begin with when I graduated from school,”

said a Harvard Business graduate who spent four years at CSFB before school and

feels lucky to have gotten a job at Merrill Lynch after a brief stint at a

failing dot-com.

“At business school, we

all got really wrapped into Internet world. It sounded like a lot of fun to

work at a start-up-we’d have a lot of responsibility and, you know, create big,

grand businesses. Clearly that was not what it’s about.”

 “Technology sucks,” the senior banker said.

“There’s no money. People are going back to traditional safeguards.”

It’s not just about the

money, however.

Job hunters fed up with

the unorthodox management styles of the dot-com world are craving structure, as

well as the professionalism and “general ability to get things done”, as the

senior banker put it, that characterizes bankers and consultants, most of whom

hold M.B.A. degrees. One Harvard Business School student who worked in

investment banking before school opted not to return to either of the dot-coms

she worked at this summer, even though they were arguably legitimate ones: “The

person I reported to at Amazon.com was someone who knew a lot about dot-com

business in general, but she herself had limited business experience. I felt a

little frustrated by not being trained by or working for someone with more

experience and more management skills.” She also found her experience at

Firedrop, the Kleiner Perkins Caufield & Byers, Vinod Kjosla–funded

start-up which “shifted its business plan 180 degrees” while she was there,

somewhat unsettling.

She’s going to work for

Goldman Sachs after graduation. “The thing I like best about the firm are the

people,” she said. “They’ve recently graduated from Stanford or Harvard.”

Investment banks and

consulting firms are also starting to enjoy the benefits of the efforts they’ve

made to make themselves more attractive. Faced with the brain drain of recent

years, they took steps to address quality-of-life issues, promote high

performers more quickly and make “a general commitment to professional

development,” one Harvard student observed. Whereas consulting jobs were once

characterized by parking-lot-option analyses in places like Cleveland, firms

now have diversified their client work to reflect the challenges of the New

Economy. Many firms have venture capitalists as clients, as well as in-house

incubators; as a result, employees can enjoy the education and exhilaration of

the entrepreneurial experience without all that risk. At McKinsey, they’ve

created the associate-partner position, designed to give the firm’s young stars

more responsibility and more money-at least that’s what they’re telling their

recruits, while junior associates at the firm are reportedly doing pro bono and

internal projects now that business has slowed.

It’s true that firms

have gotten better at marketing themselves. Take this interview “question” from

one of the top banks, surely designed to make the associate job sound a lot

more interesting than it actually is: “Pretend you’re Michael Eisner. You’ve

invested a huge amount of money in theme parks in China in a joint venture with

the Chinese government. At the same time, your film division is getting ready

to release a film on the life of the Dalai Lama. The minister of finance in

China calls and says. ‘I understand you’re going to release this film. We

understand its content is going to make us look bad. We’re going to nationalize

the theme parks if you release the film and take away your interest in joint

venture.’ What do you do? What are the key things you analyze?” (Supposedly,

this question was loosely based on a real-life situation involving the release

of Seven Years in Tibet .)

The abusive “stress interviews” of the past seem to have

become more or less obsolete. While math questions like “How many degrees are

between the hour hand and minute hand on a clock at 12:15?” are still fair game

(answer: less than 90, as the hour hand moves slightly past the 12), a scenario

like this one at Lehman Brothers, chronicled by Michael Lewis in Liar’s Poker in 1989, probably wouldn’t

fly today: “Your first interview might begin with the interviewer asking you to

open the window. You were on the forty-third floor overlooking Water Street.

The window was sealed shut. That, of course, was the point. The interviewer

just wanted to see whether your inability to comply with his request led you to

yank, pull and sweat until finally you melted into a puddle of foiled ambition.

Or, as one sad applicant was rumored to have done, threw a chair through the

window.”

As job and stock options

proliferated in the late 90’s, students at the top schools, and their advocates

in the career-services offices, were able to demand better behavior from

potential suitors.

“Harvard’s pretty good

at preventing hardball tactics,” said Brian Shortsleeve, a second-year student

at Harvard Business. “Everybody talks here-so if a firm pulls a weird stunt,

the whole class will know a day later.”

Consequently the firms,

once desperate for talent, have learned how to rein in their big egos and mind

their manners.

But now, they may not

have to try so hard. The roles have been reversed. Like the fat girl who

returns to school from summer camp 20 pounds lighter, recruiters are enjoying

their newfound popularity and sensing their advantage. Once again, they’re in a

position to play hard to get.

“To be successful, they

want to see you’re hungry to work at that firm,” said Regina Resnick, director

of M.B.A. career services at Columbia Business School. “If at any point you

take them for granted and think, ‘Oh, they’re dying for me’… you just can’t do

that.”

One second-year Harvard student noted that some of her peers

got axed from the process this year because they demanded too much going in.

Whereas last year, students who had worked in banking prior to business school

could get themselves hired as second-year rather than first-year associates

(read: as much as 50 percent more in bonus money), that was not really an

option this year. “If you start indicating that you’re not going to be happy

unless you’re a second-year,” she said, “it may be something they don’t want to

deal with.”

“I didn’t appear all that hungry going in,” said one of her

classmates, who is headed towards consulting after being rejected by all the

banks. “I think on some level, at the end of the day, I wasn’t going to do

banking, and they might have figured that out before I did, so that’s why they

dinged me.” He paused a minute before admitting, “But I’m sure that’s my ego

talking so I can save face.”

Indeed, the recruiting experience has become in some cases

so painful that some are exploring other options. Take Alex Ambash, a senior

majoring in computer science at Yale College: He applied to more than 35

companies, only to land one offer he didn’t want. Mr. Ambash said he’s fed up

with the process, having endured the “asshole” from Credit Suisse and the

“bitch” from Salomon Smith Barney-not to mention the scorn from his more

successful friends.

“As a result of this experience,” the undergraduate sighed,

“I may become a doctor.”