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Morning Coffee: Buysiders are burning out from attending terrible parties. “Brutal” revelations for Credit Suisse bankers at UBS

Everything is awesome and nobody’s happy.  That’s apparently how things are in the world of venture capital at the moment.  The VC industry has a particular culture, according to employees at all levels speaking anonymously to, and one key element of that culture is that everyone needs to exhibit a constantly positive attitude.  Which can be wearing enough when things are going well – in a bear market, it means that VCs, particularly at junior levels, don’t have the sort of gallows humour and good-natured grumbling which investment bankers have historically used as coping mechanisms. 

Since most VC firms are small and don’t have well-resourced HR functions either, they often don’t have any other coping mechanisms – mental health policies, protected time or even parental leave according to some of the people quoted.  It’s possible to feel very alone indeed if you’re feeling the pressure.

And the pressure can be brutal.  Unlike hedge fund managers and analysts, who can change their mind and, as the proverb has it, “sell and sleep well”, a venture capital fund is stuck with its decisions for a period of years.  The VCs will have built relationships with the founders, and are usually quite personally accountable for the decisions they have made.  They have to “attach themselves to a company in a way that’s much more personal than a hedge fund analyst who buys Google stock”, according to one London-based VC.

They also have to originate deals, and build up a personal network of contracts.  This means going to “all the best parties and events”, and in context it appears that “best” means “most insufferable”.  According to one analyst, it’s not unknown at industry networking events for people to ask which fund you work for before asking your name, and then “If they don’t recognise your fund, or you’re not from a certain tier and you can’t give them dealflow, it’s like [something rude]”.  If they do recognise your fund, it’s not much better; you end up being bothered senseless all evening by people wanting to get to the money you represent.

The money ought to be at least some kind of compensation.  But if you’re at the partner level, you might have taken out a personal loan in order to make a meaningful investment as part of the 2.5% “team contribution” to your fund.  Seeing that investment dwindle with every valuation is unlikely to contribute to a happy and collegiate atmosphere in the office, and nor is the growing realisation that there aren’t going to be enough partner spots for all the non-partner employees whose life plans were dependent on getting one.

In other words, it’s just as miserable in European VC as it is in California right now.  But young and disgruntled VCs ought to remember that they’re not alone.  When everything seems bleak, it’s worth remembering that there’s always someone worse off than you, and they’re on the sell side.  Even better, they’re always happy to listen to your problems. If everyone else is tired of hearing you complain, remember what your coverage bankers are there for.

Elsewhere, however bad the VCs have it, there’s no equivalent to the situation that Credit Suisse bankers are in right now.  It appears that the early rounds of discussions about overlapping roles have been “brutal” and that although UBS might be looking to make upgrades in roles where the incumbent bankers are underperforming, by and large “only a very small number of Credit Suisse senior bankers who have strong client relationships will be retained”.

It's been known since March that Colm Kelleher wants to impose a “culture filter” to keep the more aggressive elements of Credit Suisse away from the merged bank.  But it also seems that UBS is sceptical about the ability of some of the CS people.  One UBS source has apparently suggested that because UBS doesn’t lend to potential clients, bankers might find it a lot more difficult to maintain their track record when they move across.  Which in turn demonstrates that there’s more than one way to stitch up your enemies in an internal battle, and the Credit Suisse bankers shouldn’t underestimate their opposition.

Meanwhile …

Is this the last word in managerial cowardice, or a thoughtful gesture to give people space at a tough time?  Either way, it’s more likely or not that some banks will pick up on the trend next time they have big layoffs.  North American employees of Meta/Facebook have been told that there will be large job cuts across the company announced on Wednesday, but that they should work from home if possible that day “to process the news”. (Bloomberg)

Lawyers continue to take advantage of the fact that you can say what you like about Credit Suisse in the last days of its independent existence.  CS is suing Softbank over some matters related to the Greensill affair; they have responded by saying “after more than two years of attempting to shift blame for its own poor investment decisions, Credit Suisse has finally made a claim” (FT)

Another group of SVB bankers reaches a lifeboat – twenty mid-market tech bankers, led by Bob Blee, are going to MUFG, which is aiming to build up its TMT franchise. First Republic, which bought SVB on the basis of its having “the deepest bench of experts serving the innovation economy” are still putting a brave face on the departures. (Bloomberg)

Don’t ask hypothetical questions if you want revealing answers, concentrate on building a culture that will attract good people rather than spending your energy searching for them, and don’t get distracted by brand-name resumes.  That’s the advice from “talent whisperer” Geoff Smart, who provides hiring advice to Citadel and Blackstone, among others.  He also says that “did you play ice hockey in college?” is a really bad interview question. (Business Insider)

Japanese banks are being accused of “gender-washing” their diversity disclosures by giving female employees managerial-sounding titles that don’t really correspond to their job or seniority. (Bloomberg)

Unsolicited advice for David Solomon, which makes the interesting point that it would be really painful for Goldman if they lost the top spot in M&A league tables; as of Q1 23, they were still there with Dealogic, but were number 2 after JPMorgan in the Refinitiv rankings. (Business Insider)

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AUTHORDaniel Davies Insider Comment

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