Looking back on 2 years with McKinsey

I've added tags to almost all of my posts now to make it easier for readers to browse my posts by subject. Just now, I browsed through all my posts about my time at McKinsey before coming to London Business School. It was beautiful to look back and think about what a crazy and enriching experience it has been, and also to think about all the friends I made there. I also think most of the things I am enjoying and looking forward to now are thanks to my time there - the benefits I earned through hard work, the brand name, the trainings, the coaching by Managers and Partners - in a way I can engage on a new path now and the path is much more rosy thanks to the effort I put in there. I was remembering what our global head Ian Davis said at one training:

"Being successful at McKinsey doesn't mean making partner. Being successful means that whenever you look back on your time with McKinsey later in life, you think it was the right thing to do at that moment of my life and I'm glad I did it"

But reading through these posts, you will also understand how different my life is now. I play tennis in the sun almost every day, I play football with the women's team, I go to Richmond Park, Hyde Park, Regent's Park a lot, I am planning lots and lots of holidays around the world, I enjoy trying out new restaurants, I sleep a lot, I have new friends from all over the world ... this definitely beats working 17h days!

Going to... Chicago GSB!

The exchange results are out. I have a place at the University of Chicago! Though it will be sad to leave London for 3 months, I still think I will go for it! My main reasons to go for Chicago GSB were:

- the academic quality, particularly in Finance and Economics
- the opportunity to take electives at other departments - particularly, I hope to be able to take a course in International Relations with John Mearsheimer - I highly recommend his book "The Tragedy of Great Power Politics".
- it's a really beautiful city with great shopping and outdoor opportunities
- my sister lives there

... what more reasons do you need? If there are any readers here from Chicago GSB class of 2008, please get in touch! I have a lot of questions :-).

Is spring term really almost over already?

I have no idea how or why, but spring term is already drawing to a close. It hasn't really started yet and I feel we haven't done much, but it's over, and so is another chunk of my MBA. Time is racing ahead. How could spring term pass by so fast?

- Well, the first weeks were blurred due to the marathon of job interviews. We managed to squeeze in classes between one interview and the next, and half the classroom would be empty. Nobody really paid attention to classes. The only class we cared about was Finance, since we discussed Mergers & Acquisitions, Options and Foreign Exchange just in time for the interviews
- Then, the weather has also become quite mild and sunny in recent weeks. I went out a lot, running in Regent's Park, strolling around Hyde Park and walking around the East End
- Since we don't have classes on Fridays and had few assignments, many people went away over the weekends, so it has been quieter at school than in the first term

Wrapping up this term, I want to pick up on my first impression of spring term courses.

In classroom learning
Finance: as I said before, it was a great class and I look forward to Finance 2 next term, which will be more focused on options & futures, so it's a bit more abstract and I like that. Sometimes I wonder if I had been better of doing a PhD rather than an MBA since I realize I like the abstract stuff more than the applied practical stuff, but then I enjoy learning about a broad range of subjects, which you can't if you do a PhD

Discovering Entrepreneurial Opportunities: the cases of start-up companies are great, since they give you a great feel of the insecurity surrounding entrepreneurship. I especially enjoyed the Spreadshirt Case, it seems to be a very cool company and I am happy they are succeeding. I am somewhat drawn to entrepreneurship, though I prefer to do it in 5 years rather than now

Marketing: I'm not sure how much I would learn in Marketing with an experienced professor due to the subject matter, but unfortunately I haven't gotten anything out of this class. My curiosity about Marketing may be of a more critical or sociological nature - I find it quite interesting to observe how advertisements reflect gender stereotypes, success stereotypes, how they promote "stupid consumerism" and so on. But this critical angle seems to be out of place in the classroom.

Managing Organisational Behaviour: again a course that could be extremely valuable but has disappointed so far. The cases are actually quite interesting, but the learning is a bit limited so far.

Decision & Risk Analysis: the teacher is quite good, but in the end the class is little more than applied logic and statistics, so if you know your probabilities and have worked with Excel before, you are unlikely to get much out of this course. One important learning I have gotten out of this course is the value of modeling in general though. Previously, I think I always considered modeling as a sort of lesser activity and avoided it whenever I could while I was working at McKinsey. In fact, I managed to spend two years there as an analyst without ever building a complex financial model. Whenever a new project was announced as "advanced excel modeling skills required", I would avoid it. Now, I really see the value in models, and believe they can actually be very useful for investment decisions. It may be obvious to most of you, but coming from a social science background I was quite skeptical about the usefulness of modeling before, and this has changed completely.

Out of classroom learning
I have enjoyed for the amount of spare time I have this term to pursue other interests and read myself. I am especially grateful to Patxi for recommending me the book Rich Dad, Poor Dad (Rich Dad). I wish I had read it 10 years ago, but it is never too late, and it is helping me tremendously seeing personal finances from a different angle. Since I know I will need to improve my financial modeling skills for the summer, I was happy to encounter the bookFinancial Modeling Using Excel and VBA (Wiley Finance) by Chandan Sengupta. It is one of the few books I have found that are actually useful for self-study, and I feel I can really use it to teach myself all I need. Another book that I would count among one of the best non-fiction books out there is Flow: The Classic Work on How to Achieve Happiness by Csikszentmihalyi.

Other than that, I enjoy lunching and dining with my friends from school. Now is a time that you know who your friends are and you have had enough time to get to know each other closely. I have a lot of friends from other streams unfortunately, which makes hanging out a bit more difficult. Additionally, we know that time is passing too fast and that we will soon be working in different places over the summer and then many of us will go on exchange, so we don't actually have that much more time to spend together anymore, surprisingly. Luckily, some of the nicest people from my course are going to spend their summer in the same bank as me, and many more classmates will be somewhere in the City, so it will be easy to catch up over lunch and dinner :-).

What is left of spring term? Not much. We'll have three exams or so, but they are in the softer subjects, so there isn't really anything to do. My main aim for the next weeks is to get ready for MBAT in Paris in May, so I want to play a lot of Tennis in Regent's Park. I also need to get fit very fast because I will go surfing in Canary Islands over the Spring Break, and last time I did surfing I was horribly unprepared physically, as I underestimated how fit you need to be to surf a couple of hours per day. Now I have no excuse and really need to get ready.

Happy New Year of the Pig

One of the things I love about London is how international it is. I don't know how it feels for the indigenous minority here, but I love walking around the City or Trafalgar Square and hearing dozens of different languages. This weekend was Chinese New Year of the Pig and the Chinese Association of London hosted celebrations and fireworks in the centre. It was VERY crowded but a nice experience.

Other than that, tomorrow London Business School holds a new session of the Breakfast Series. These are free breakfasts hosted by the school where they invite interesting senior speakers (sometimes alumni, sometimes others) to share their personal experience. Tomorrow the CEO of a Nigerian investment holding company and alumni of our school is coming for breakfast and as you might have guessed I am going there to find out more about investment in Africa.

After a class in Decision & Risk Analysis, I will head to the City with some classmates to a lunch hosted by our summer employer, or specifically an Argentinian director of the bank who is also an alumnus of our school. After that I will meet one of my first round interviewers for coffee as it seems I have now found a team to work with over the summer. They do very interesting projects in infrastructure investment and all the people I've met from the team are extremely friendly and sociable, which I like a lot.

I have also just booked a flight to Barcelona where I will carry out an "organizational audit" of a company. We have to do this for our Managing Organizational Behaviour class, and since one of my study group mate's family has a large chemicals business in Barcelona, we decided to carry out our project with his company and enjoy some shopping, good food and the sun "on the side" (of course, the project will come first ;-) ).

So things are good except for most of the classes this term. I'm not getting much out of them. The only great class we had this term was Finance but this is over now and there are only some fluffy classes left - and though I have nothing against fluffy classes in general, specifically now I'm not getting anything out of Marketing or Organisational Behaviour. This term is great for lots of other extracurricular reasons, but in terms of academics it is quite disappointing. The good part is that there is hardly any serious work and I can enjoy my spare time for now. So taking everything that is happening into account, it seems to be true what the Chinese are saying - the Year of the Pig seems to be a lucky year.

The future of business schools in Africa

Shortly after writing my last blog entry on investing in Africa, I received an e-mail from the Africa Club of London Business School to attend the event "Building Business Leadership in Africa" that was hosted in our school today. I went there without really knowing who would be there and was impressed by the high profile of the speakers and audience.

The panel was made up by many Deans of the top African Business Schools (including "The LBS of Nigeria", the Lagos Business School (finally I know why my school has the domain london.edu and not lbs.edu!)) and also representatives from the Association of African Business Schools. In the audience, there were many African students or alumni from London Business School, as well as Africans working in London investment banks and consultancies, and locals from London interested in investing in Africa, including some fund managers. The panel discussion highlighted some of the issues facing African business schools that I want to mention here.

Whom do we serve?
Most African business schools are closely connected to state universities and were originally set up to serve the public sector. Over the last ten years, they have had to change to cater to the needs of multinationals for the training and development of their local staff. Additionally, the skills taught at business schools should be useful for local entrepreneurs. Depending on who your target group is, course content and style need to be very different, and it turned out most schools tried to do everything (as in the West) without a clear strategy.

Who is our competition?
There was an additional discussion of the level of aspiration African Business Schools should have. Should they try and emulate Harvard or London Business School? Is the the right model for them? Many in the audience as well as the panel agreed that doing business in Africa is not the same as doing business in the US (I especially liked the LBS Dean's joke that "just in time in Nigeria often means just in case"), and therefore the business schools should focus on providing content that is relevant for people who will do business in Africa. One useful suggestion from the audience was that instead of trying to learn from Harvard or Columbia, African Business Schools should cooperate closely with business schools in India or China, similarly countries in terms of growth (BTW did you know 7 out of the 10 fastest growing countries in the world are in Africa?) and other problems they face (corruption, bad infrastructure...).

What is our role in society?
This wasn't actually discussed directly but you could read between the lines that this wasn't very clear, and it might be tied to the lack of clarity on who the target group is. In the West, business schools are just there for people who want to go into business and make money to get their degree, learn something, expand their networks and move on. In the developing world, the same schools might be faced with much higher expectations. When people discuss business or entrepreneurship in Africa, it is always about increasing prosperity, making the countries better, improving efficiency, combating corruption etc.. That is the official story, but the question is if you serve mainly public sector workers and employees of multinationals, are you really working on the right side? Or should you build up entrepreneurial skills of the poor so that they can increase productivity and independence of the country? As I said it wasn't discussed, but I would like to know more about how these Deans actually see themselves and their roles in their country.

How do we improve teaching quality?
A large part of the discussion was centered on how to improve the quality of teaching, especially in terms of relevance for the private sector. It appeared that the links between business schools and the private sector were still quite weak (obviously there are huge differences between the schools). One idea implemented already by the Institut Superieur de Management Senegal is to exchange teachers between the African Business schools. They talked of their intents to get Western teachers to teach some courses but had not yet worked out the funding. It seems that there is no "finance professors without frontiers" organization yet. I can't believe there are no good finance professors out there who wouldn't volunteer to teach a great course in Tanzania on Kenya for a few weeks for free. Actually, the Dean of LBS mentioned that it is easer for Tanzanian or Kenyan business schools to attract volunteer professors when compared to Nigerian schools. But there was also consensus that depending on donations and aid from outside wouldn't help. So the main conclusion was that the only way improve quality was to strengthen the ties with local entrepreneurs and tailor the program and the case studies to the realities of business in Africa.

Weirdest questions from hedge fund and ibanking interviews

I have one final round interview to go tomorrow morning in the City, but am pretty relaxed since I already have two offers :-), so I feel like the recruiting is over and can safely share some of the funniest interview questions I got.

HEDGE FUND
I already shared my favourite brainteaser from a hedge fund interview. Overall I found the hedge funds much more innovative in asking questions, while the banks ask the typical brainteasers that everybody who has prepared a little bit already knows (can you believe I was asked "why are manhole covers round?"!!!). My next favourite question, also at a hedge fund was:

- "I have to ask you... do you like money?"
I looked the guy straight in the eye and said
- "yes, of course I like money".

He sighed in relief "that's good, because in the end this is all about making money, and if you care more about the details of the company than about the money, this is not the place. You look at a company, you buy, two weeks later you sell, you move on."
The question was tricky because every vault guide says in ibanking interviews you should never admit to being interested in money - you are supposed to care more about client service, industry trends etc.. Luckily I went with my intuition and turned out to be right.

The other interesting question from the hedge fund interviews were
- "okay, I have seen your CV, tell me about yourself but without mentioning anything on your CV, tell me who you are beyond your CV"

BANKING
The banking questions were more mainstream in a way but nevertheless there were quite challenging or at least interesting ones

- "Imagine you have a client who tells you he always only decides based on price. If you quote him the lowest price, he will do business with you, if not, he will take his business somewhere else. What would you do?"

- "We have invited 15 of your classmates for the final round. Why should we take you and not your classmates?"

- "Tell me about a time in your work when you really felt the power of a team and what a team can achieve" (I thought this was a much nicer question than "tell me about a time when you worked in a team...")

- "What do you think is the next big investment opportunity in the markets that can offer spectacular returns?"

All the other questions were pretty standard I believe -
- why do you want to do this?
- why do you want to leave consulting?
- draw me the US yield curve.
- How do you calculate forward rates?
- where do you think interest rates are going?
- where's gold?
- what do you think determines the oil price
- what's happening in Venezuela?
and so on, just checking awareness of the markets

Overall, I enjoyed most of the interviews since they were challenging, but I am very happy it is over we don't need to answer such questions any more :-).

By the way, for those preparing for sales & trading, global markets or hedge fund interviews, I found the following books helpful to get an overview of the industry and also to learn about derivatives - even for the summer positions they do ask a lot about options and it really helps to understand their background:
Inventing Money: Long-term Capital Management and the Search for Risk-free Profits
This is a great book to learn about derivatives and the story of the brains behind the derivatives industry, as well as the pitfalls of relying on formulas to invest billions.

Hedgehogging (Penton Audio)
This is more of a fun read from the founder of hedge fund Traxis Partners, Barton Biggs. It gives a great insight into the more long-term macro-level thinking that characterizes successful investors.

Practical Speculation
Another great book on investing by former George Soros partner, Victor Niederhoffer. He writes about interesting myths and tricks in investing and about market psychology. It's good to read some of these broader books in case you are asked what kind of things you have read on investing or how you would invest your money, as these books give you some creative ideas on how to think about investing money.