As I’m reminded by my younger friends, it’s that time of year. The time when college students across the country start jockeying for the summer internship of their dreams. For many, that’s a summer analyst position in investment banking. The trouble is, most students have no idea how to prepare for investment banking interviews, and even less of an idea what the job would entail if they were hired. So in the spirit of “passing it on”, I’d like to offer some of the most valuable advice that was given to me when I was in college, and a few tips and commonalities that I picked up myself. The below is distilled from my time as an investment banking analyst and summer intern, as well as the over 40 interviews with at least 15 different banks that it took to land my full time job and summer internship. It’s specifically targeted at college juniors interviewing for internships, though much of the advice is equally applicable to those interviewing for full time analyst positions.

What will I really be doing as an intern at an investment bank?

A lot of people don’t have a good grasp of what investment bankers actually do. There are a ton of definitions out there, but a simple summary is that investment banks help companies to raise capital (through debt or equity offerings) or sell themselves (M&A). In both cases, bankers prepare all the marketing materials and help to broker the deal (similar to a real estate agent selling a house). As an intern, your job is to help out with things like industry research and PowerPoint slide creation, with occasional runs to pick up takeout or coffee for the team.

Are the hours really as long as I’ve heard?

That depends what you’ve heard – and it also depends where you work. Your hours will vary a lot based on the deals you are staffed on, and some groups at some banks are notorious sweatshops. However, most full time (post-college) investment banking analysts will spend between 70 and 90 hours each week in the office. That’s roughly equivalent to 9am-midnight on the weekdays (65 hours), and then variable hours during the weekend depending on your workload. When a deadline is looming, hours can get crazy – I once caught an hour of sleep sitting up in a bathroom stall at 4am before returning to my desk to finish cranking out a pitch book. As an intern your hours might be a little shorter, but never leave the office until you’re sure the analysts you’re working with don’t need any more help, and never complain – you’re there to work for the summer and get that return offer, not to see the city (sorry).

What questions are they going to ask me in the interview?

A lot of students freak out before interviews for an investment banking internship, expecting to be peppered with technical questions about bond math and fixed charge ratios. The reality is that your interviewer knows you’re still a junior in college and haven’t been exposed to a lot of this stuff – they’ll tailor their questions accordingly. The key things you want to demonstrate are an understanding of the job, a strong work ethic, and that you’re a generally normal and social person.

However, since I know you want more specific details, here are three questions you can be almost certain will come up:

Q: Why are you interested in investment banking?
A: If the best thing you can come up with is “I want to make a lot of money” you might as well cancel your interview now. The correct answer here is dependent on the group you’re interviewing for (M&A, industry coverage, etc) but the thesis is the same. The key is to convey an understanding of what the job entails – contrary to what you may see in the movies, it’s not all power ties and screaming pit traders. One of the most interesting things about investment banking is the opportunity to learn a ton about your clients – in an M&A group, you might spend 3 months selling a defense contractor, then the next 3 months diving into the quick oil change industry. If you’re interviewing for an industry coverage group, make sure you emphasize your interest in that specific sector.

Q: Why do you want to join our firm specifically?
A: Here’s another one where you need to have done your homework. Now’s a good time to parrot back some of the things you learned about the firm in the information session (you did attend their information session didn’t you?) You can also prep for this question by using your career services office to contact alumni that work at the bank – ask them what makes their firm unique.

Q: What are 3 ways to value a company?
A: Ah, finally a “technical question”. Despite what you may have heard, this is about as hard as it’s going to get for internship interviews. You covered the first valuation method in your introductory finance class – discounted cash flows. Use the time value of money to obtain a present value for the firm’s future cash flows. If you’re a little rusty on this, click here for a refresher.

The other two methods are comparative – we’ll compare the company you’re trying to value with others that are similar to it. There are two different types of yardsticks – public comparables and precedent transactions. “Comps”, as they’re called in the industry, are publicly traded companies that are similar to the one you’re trying to value. “Deals” are completed acquisitions of public or private companies. These externally validated valuations give you an idea of what your similar company is worth. The key concept to understand here is called the “multiple” – you don’t compare the values of the comps and deals directly, you compare their EBITDA multiples. Divide a company’s market capitalization (comps) or sale price (deals) by its EBITDA, then apply that multiple to your company’s EBITDA to get the expected valuation.

What part of the interview do students mess up most often?

Far and away, the most common reason prospective interns get dinged is for personality. Even if you nail all of the above questions, you’re not getting the spot unless you click with the interviewer. It sounds unfair, but it’s true. If I’m going to hire someone and then spend 90 hours a week with them, we need to click personality-wise. More students just need to relax and be themselves – connect with your interviewer and show them you’re a normal person who’d be fun to have a beer with. That’s the secret that career offices never tell you.

Wrapping It Up

So there it is prospective junior masters of the universe – get the above concepts down cold, and you’ll be more prepared than 99% of your classmates (assuming they haven’t also read this post). Make sure you grasp basic financial concepts, and relax. The most important things are to show a genuine intellectual curiosity for the job and to connect with your interviewer on a personal level.

Hopefully this helps a few people out – I’m more than happy to answer additional questions in the comments.

How is entrepreneurship like skydiving? As they say, the hardest part of skydiving is jumping out of the airplane. I think entrepreneurship is the same way.

I believe that the key to success in life is overcoming your fears and eliminating the excuses that keep you in your comfort zone. Action almost always brings more fulfillment than the status quo. “Ready Fire Aim” (the title of this blog) is an expression of that ethos. I also believe it’s very applicable to entrepreneurs thinking of starting a company – the starting is often the hardest part.

Think of all the “armchair entrepreneurs” in the world – everyone has an idea. And yet nobody executes. There always seems to be a reason to delay actually starting an entrepreneurial venture. I don’t have enough startup capital. I need to refine my idea a little more. I should save some more money first. I need to finish college first. I don’t know if anyone will use it. There are one thousand and one excuses for putting off starting until tomorrow.

So why do we do this to ourselves? What is it about human nature that makes us manufacture endless justifications for inaction? I want to mention two authors who’ve written about it specifically, one classic and one contemporary.

Sigmund Freud called these nagging doubts the Death Drive, or Thanatos – the destructive force inside human nature that rises whenever we consider a tough, long-term course of action that might do good for ourselves or others. The opposite of Eros (the drive for life), Thanatos is the natural drive in all of us to give in to the status quo and seek a state of calm, non-action, and death.

Stephen Pressfield (author of “Legend of Bagger Vance” and “Gates of Fire”) has a wonderful contemporary description of Thanatos. Pressfield calls it “Resistance” in his new book “The War of Art” and defines it this way:

Have you ever bought a treadmill and let it gather dust in the attic? Ever quit a diet, a course of yoga, a meditation practice? Have you ever wanted to be a mother, a doctor, an advocate for the weak and helpless; to run for office, crusade for the planet, campaign for world peace, or to preserve the environment? Late at night have you experienced a vision of the person you might become, the work you could accomplish, the realized being you were meant to be? Are you a writer who doesn’t write, a painter who doesn’t paint, an entrepreneur who never starts a venture? Then you know what Resistance is. Look in your own heart. Right now a small voice is piping up, telling you as it has ten thousand times, the calling that is yours and yours alone. You know it. No one has to tell you. And you’re no closer to taking action on it than you were yesterday or will be tomorrow. You think Resistance isn’t real? Resistance will bury you.

So how do we overcome Resistance and accomplish our dreams? To put it simply, “JFDI” (think Nike).

People and ideas have inertia. That which is at rest tends to remain at rest, that which is in motion tends to remain in motion. I think the key to starting anything is to actually start. Take the tiniest first step. Get off the couch. Put out an ad for a web designer on Elance. Draw out a mockup in pencil. Make that first phone call. After you’ve started, I think you’ll find the second step comes much more easily. Make that inertia work for you.

The truth is that the only way someday turns into today is by getting off your butt and starting. Starting makes things real. Starting builds momentum. Starting gets you excited. Starting eliminates all your excuses and all the reasons you’ve invented in your head to rationalize your inability to overcome your inertia. Starting makes you an entrepreneur.

I also want to point out that in order to succeed with a “JFDI” philosophy, you must also excel at correcting course along the way – what some call pivoting. It is the final and most important term in the phrase “Ready Fire Aim”. Too often we all forget to aim. Most successful business are not perfect incarnations of the founder’s first business plan, they require a lot of adaptation along the way. Very rarely is it purely a brilliant concept that makes a startup successful. Success is a sustained, long term drive, and that’s far rarer than a good idea.

Twitter is a perfect example – it started as a side project inside a company called Odeo (also founded by the Twitter guys). They soon noticed that Twitter was far more popular than Odeo’s main product offering, a podcasting web app. They scrapped the Odeo idea entirely and focused all their time on Twitter, which now has over 150 million users. Good aim.

In summary, success is action plus agility. Get the ball rolling, put inertia to work for you, and correct course along the way. Jump out of the airplane. I’d like to leave you with a quote from Machiavelli that I have printed out and hanging above my desk. Hopefully it helps remind you to go out there and JFDI.

“All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.”
— Niccolò Machiavelli

Many of you are familiar with Tim Ferriss, author of the excellent “4-Hour Work Week“. Tim is a personal hero of mine (one of his productivity tips is mentioned previously in my post “The Urgent vs. Important Matrix“) so naturally I’ve been eagerly awaiting the arrival of his sophomore effort “The 4-Hour Body“. The new book promises to be “An Uncommon Guide to Rapid Fat-Loss, Incredible Sex, and Becoming Superhuman” – a bold claim indeed.

Tim has written about fitness before, posting two articles with similarly outrageous headlines on his blog – one called From Geek to Freak: How I Gained 34 lbs of Muscle in 4 Weeks and another titled How to Lose 20lbs of Fat in 30 Days – Without Doing Any Exercise. These two posts together give us a glimpse of the principles Tim fleshes out in “The 4-Hour Body”. Is it really possible that Tim has cracked the code on fitness? One year ago, I decided to find out by combining Tim’s published writings into a comprehensive fitness plan and measuring my results. My goal – to determine whether Tim’s methods actually work in real life. This is what I discovered.

Let’s set the scene – back in high school I was an athlete and in decent shape, about 6’1″ and 180lbs. After 4 years of college and too many beers, I graduated in May 2008 at 205lbs and started a job in investment banking. The next 18 months of takeout dinners and 90 hour weeks at a desk pushed me up to 217lbs, with had back pain, acne, and very low energy. I regret now that I didn’t have my body fat analyzed, but I expect I was pushing 30%. I needed to make a change, and quickly. And so in November 2009, I began “The Ferriss Fitness Experiment” to see if Tim could deliver on his promises.

The fitness plan I developed is based directly on Tim’s posts, which are themselves a modification of the Paleolithic Diet (Tim’s modified version is called “The Slow Carb Diet”), combined with exercise methods based on The Colorado Experiment. For the Cliffs Notes crowd, Tim’s methods can be summarized in 4 bullets:

• Avoid white carbohydrates. If it is white or can be white (bread, noodles, rice, cookies, crackers, etc) – cut it out completely.
• Focus your diet on lean proteins (chicken, fish, sirloin, etc) and vegetables.
• Don’t drink calories. No sodas or juices. In combination with the above, that also means (gasp) no beer. We’ll allow wine and hard liquor (straight or with diet soda) because a guy’s got to have a life.
• Exercise to exhaustion. Two or three 30 minute high-intensity workouts are more valuable for building muscle mass than 5x weekly moderate sessions.

I’ll break down the diet and exercise strategies in a lot more detail below. If you’re impatient, you can skip directly to the results of my experiment.

Diet – “Eat Real Food, Not Too Much. Mostly Vegetables.”

The basic idea behind Paleo eating is to consume only foods that our ancestors from the Paleolithic Era had access to (lean red meat, fish, shellfish, eggs, nuts, vegetables, fruit, etc), and exclude foods that developed in the more recent Neolithic, post-agricultural era (processed grains and dairy, sugar, and other “fake” foods). Focus your diet on proteins and vegetables, avoid processed carbohydrates. Volumes of literature have been written about the reasons this makes sense, particularly the ways that carbohydrates and simple sugars are metabolized – they are literally killing you by spiking your insulin, damaging your small intestines, and more. If you want to dig into the science behind how carbohydrates are digested, read this article by Robb Wolf on Tim’s blog. Robb is the former review editor for the Journal of Nutrition and Metabolism, so he knows his stuff.

One note – this is not the Atkins diet. You don’t have cart blache to eat anything as long as it’s not a carbohydrate. Ribeyes are delicious, but if you think you’re being “healthy” just take a look at an uncooked ribeye – it’s nearly all marbling (fat). Beef isn’t off limits, but be aware of what you’re eating. Hamburger meat is rarely, if ever, a good idea. Focus on lean cuts (filet, sirlion) or other lean meats like buffalo or pork.

Tim and I both make an exception to the above diet so it is both less miserable (more sustainable) and more practical. I allow for 1 “cheat day” each week when I can eat whatever I want. No only does this help keep me sane and disciplined the other 6 days, but spiking caloric intake once per week increases fat loss by preventing your metabolic rate (thyroid function, etc) from down-regulating due to extended caloric restriction.

Exercise – High Intensity, Elevated Heart Rate

Now let’s discuss exercise. The two things you’re shooting for are consistent elevated heart rate and lifts to failure. You can accomplish this with cycle training – begin with 15 minutes on the treadmill to get your heart rate up, then move around the gym lifting several muscle groups to failure, with no rest in between. Do all your sets slowly (5 up, 5 down cadence) and to failure. It will burn, but you’ll build muscle mass very quickly.

During your workouts, make an effort to focus on compound movements like squats, pull ups, bench press, lunges, etc. People avoid these exercises because they hurt, but there’s a reason they burn – all of the above target large muscle groups in your body. When your muscles are torn down and rebuild, they release testosterone, which helps build extra muscle, puts hair on your chest, and is generally beneficial for a lot of other reasons. Larger muscle groups release more testosterone. Your biceps is a tiny muscle, you’re not burning many calories or releasing much testosterone doing curls. Do an ass-to-ankles squat on the other hand, and you’re activating your entire lower body, as well as your stabilizing core.

Another benefit of a high intensity workout with minimal rest is that you can be in and out of the gym in under 45 minutes, including locker room time. Do this 2-3 times a week, and you’ll get maximum impact with minimum gym time. This was a huge benefit for me while working in investment banking, when I didn’t have the time to fit in long workouts.

The Results – Do Tim’s Fitness Methods Really Work?

So now we come to the important part – results. Do Tim’s fitness and diet methods actually work? Tim promises his methods can result in either a 34lb muscle gain or 20lb fat loss in 30 days. So how did a combination of the two turn out for me?

When I began my Ferris Fitness Experiment, I tipped the scales at 217lbs. After 3 months of Slow Carb/Paleo eating and 3x weekly 45 minute workouts, I was down to 200lbs. My skin was clear, and my energy level was noticeably higher. After 3 more months I was at 180lbs, with no lower back pain at all, and in the best shape of my life at 15% body fat. Because pictures are worth 1,000 words, I’ve included before and after shots (click the picture for full size). On the left is me at 217lbs before the start of my “Ferriss Fitness Experiment”, and on the right is me in the same outfit at 180lbs. A dramatic improvement.

Based on my own experience, Tim’s methods blow away every fitness plan I’ve ever tried. I lost 37 pounds, 4 inches on my waist, and reduced my body fat by over 10%+ in 6 months. While that’s significantly longer than the 30 days Tim promises in his posts, I recognize that I didn’t singularly focus on weight gain or fat loss – I aimed instead for general fitness and overall health by combining high intensity strength training with the Slow Carb diet. All in all, I highly recommend Tim’s methods to anyone looking to improve their health and fitness level. If the content of Tim’s blog posts on fitness so far are any indication, “The 4-Hour Body” is a must read – you can order your own copy here.

As a former investment banker, I have a very, well… unique relationship with my email. For those that aren’t familiar with the life of a banking analyst – email is treated as IM, text messaging, and a pager all rolled into one, with a 24/7 expectation of response. I once had an actual nightmare about that blinking red light on my Blackberry. Accordingly, I developed somewhat of a compulsion about checking email at all hours of the day and night, an affliction I feel is shared by many in corporate America. Many of us keep our Outlook open all day and our Blackberries at hand all night, just waiting to be interrupted by that little “New Mail” popup or blinking red light. Not only is that stressful, I think it’s killing our productivity.

A study by Microsoft showed just how lethal interruptions are to productivity. The researchers taped 29 hours of people working in a typical office, and found that they were interrupted on average four times each hour. Sounds like a day at most offices. Here’s the kicker – 40% of the time, the person did not resume the task they were working on before the interruption. The more complex the task, the less likely the person was to resume working on it after an interruption. That means most of us are getting derailed from our work four times each hour, maybe more if you work in a high email traffic office.

So how do we get back on track? The answer lies in a concept called the “Urgent vs. Important Matrix“, which I was reminded of (and inspired to write this post) when I read fellow Coloradan Devin Reams‘ excellent post entitled “Instant Email is Good for Nobody” (agreed). Most of us have grown up considering “urgent” and “important” to be the same thing, but that is not always the case. An issue can be both urgent and important (a heart attack), urgent but not important (a telemarketer is calling), important but not urgent (that big project you’re working on), or neither (surfing the web). As such, we need to develop the ability to quickly identify urgent and important interruptions that need to be dealt with right now, and file the rest away to be dispatched at regular intervals when they will not interrupt us from the tasks we are focused on completing. Be particularly wary of “urgent but not important” tasks – these often masquerade as top priority items and steal attention they don’t deserve.

In Tim Ferriss’ fantastic “4-Hour Workweek” he discusses his method for handling email interruptions. Tim checks email once at 11am and once at 4pm – that’s it. It’s called batching, and it helps not only to reduce interruptions, but also decreases the time spent switching between tasks (28% of your day, according to the Microsoft study).

Since I’ve left banking and been working with Hosting.com, I’ve tried to turn over a new leaf in email management. I’m no Tim Ferriss, but I try to only check emails once an hour and I completely turn off the alerts on my iPhone during things like dinner, movies, and social time with friends. Not only has it made me more productive, it’s drastically reduced my stress level. Additionally, people learn that email is not a viable option for getting ahold of me instantly. If something is both urgent and important, I get phone calls, which are totally fine and welcomed. My boss operates on the same principle, and it actually creates a great work dynamic in our office – urgent/important things get personal phone calls or face to face conversations, while non-urgent items get dropped in our email boxes for handling at the appropriate time. We both know that if our phone is ringing, the other has considered both the importance and urgency of the task before dialing the number. If you can get everyone in an office or on a team working under this principle, it really does dramatically increase efficiency and decrease stress – I highly recommend it.

I travelled back to my hometown for Christmas this year and took the time while I was there to enjoy the company of old friends over drinks in familiar pubs. I spent one such night with a former colleague and great friend whom had always provided me with a sounding board and personal “level” during our time together in banking.

As we sat alternating rounds at one of our old haunts, he described to me a renewed outlook he had developed over the past several months of particularly long hours at work. He had come to the realization that in addition to professional success, personal zest for life was an equal contributing factor to one’s happiness. Accordingly, he resolved to inject some life back into his waking hours, and that began with a definition of what living meant.

When he sat down to define the things that make us happy, it became apparent that so many of us think that happiness is defined by “having”. That is to say having a 56″ TV, having a nice car, having an arbitrarily high account balance. What my friend realized is that “having” is a poor substitute for “doing”. Thinking back, I realized he was right. The happiest times in my life have not stemmed from things I had, but from things I did. The state championship my senior year of high school. The spontaneous overnight drive with roommates to Florida for a weekend in college. A wild weekend in New York City with my brother and a close friend. Experiences pay dividends far richer than possessions.

So, rather than medicating with shiny toys, we resolved to spend money “having” remarkable experiences with friends. We sat down to write out 30 things we each wanted to experience while we are still young and relatively unencumbered by family, mortgage, and age. We made plans to accomplish at least three of them in 2010 together. My list is titled “30 by 30″, and these are the things I wrote down.

1. Travel to Las Vegas and witness a title fight from the good seats.
2. Learn guitar well enough to play cover songs for tips one night in a bar.
3. Ski the back bowls at Vail without falling. DONE
4. Headline the local paper just once, for something positive.
5. Get lost for a summer weekend in the Rockies with only a tent, sleeping bag and camping stove.
6. Chop down a tree for firewood.
7. Soak up the tropical weather and several mojitos in Miami.
8. Learn mixed martial arts.
9. See the Sox play at Fenway, curse at visiting team with local Bostonians.
10. Travel through Europe for several weeks without a defined itinerary.
11. Become “first name basis” friendly with a celebrity I admire.
12. Climb to the peak of a mountain tall enough to be an accomplishment (more than a day hike).
13. Attend a Hollywood party – with an invitation.
14. Pick up a girl who is way out of my league. DONE
15. Rent a Ferrari and drive the Northern California coast.
16. Learn to snowboard. DONE
17. Live like a king for a week in Buenos Aires.
18. Become a recognized expert in a topic of my choosing, however narrow.
19. Grow a real, outdoorsman-caliber beard.
20. Sail for a week in the Bahamas, on a rented boat, without a guide.
21. Become a good enough sailor to achieve #20.
22. Attend a party at a rooftop bar with a view in New York City.
23. Climb to the top of the Eiffel Tower. DONE
24. Experience the neon and culture shock in Tokyo.
25. Become a regular at a local bar. Enjoy free drinks.
26. Beat one of the old men in the park at chess.
27. See Billy Joel in concert.
28. See Journey in concert.
29. See John Mayer in concert. DONE
30. See The Goo Goo Dolls in concert.

An ambitious list for sure, and one that will probably not end up fully marked off by my 30th birthday. However, if even half of the items do get accomplished, they should provide some excellent fodder for reminiscing next time we share a pint at Christmas. To those following along at home – what things would you put on your “30 by 30″ list? If you’re over 30, what are some things you still want to experience before retirement (i.e. things you don’t want to put off)?

Also, if this is a topic that interests you, make sure to read Paul Graham’s essay “Stuff” which discusses the “over-stuffing” of America. Take the money you would spend on “stuff” and spend it on something that’s actually going to increase your happiness level – life experience.