On September 22, 2021, I had the opportunity to interview Brett Barna as he was invited by Professor Han Lin to participate in an NYU graduate class, ‘Chinese Financial Markets’. Mr. Barna has a fascinating career in the finance industry with an outstanding commencement at Lazard, an investment bank that has its name dated back to the 1800s. Subsequently, he transitioned into the asset management business and started his own family office in Shanghai, seeing tremendous potential in the Chinese markets after accumulating significant industry experiences with various asset managers. In this interview, the focus was mainly on career development for early professionals as many undergraduate business students are interested in careers in the finance industry. Relevant topics such as Evergrande and recent developments in the markets were also discussed.
Interviewer: Thank you for agreeing to participate in this interview. I want to begin with how you initially started your career. What sparked your interest in finance and investment banking?
Barna: I don’t think I knew about investment banking until I was a junior in college. When I was in the Midwest, there weren’t that many investment bankers in my home state, Ohio, and I thought I was going to be a math professor. I had some abstract idea that people could use math to interface with financial markets, which seemed intuitive and interesting to me. However, I didn’t know much more than that. My initial entrée to finance and economics was via academics and several books I read. I remember when I was a freshman in high school, I read some books written by Professor Joseph Stiglitz who is famed for writing about the merits of global trades, which caught my attention initially.When I got into college, I joined a professional business fraternity. I wasn’t in the business school at UMich [University of Michigan], but there were business students in the fraternity and they were talking about working in the finance industry. It got me exposure to the ideas of working in finance. When I was a junior I started interviewing but it was pretty late. I had trouble originally because my resume has math written all over it and people would question my motives. I had to figure out how to answer the question ‘Why didn’t you just want to be a math professor?’. Between my junior and senior years, I interned at a regional investment bank in Cleveland, Ohio called National City Investment Bank, which was the only place that I could convince that I wanted to be an investment banker. I think they just liked that I was from Ohio since other kids wanted to work in New York or San Francisco. They thought that I would stay. I think I got lucky that they gave me a chance to gain some relevant exposure and credibility. That’s how I initially got my foot in the door.
Interviewer: How tough was the investment banking lifestyle? What are some advantages and disadvantages of working in this industry? Was it worth it or not?
Barna: I would say it is definitely worth it. I viewed it as a boot camp. It is a branding piece in that people know you have gone through it. It is like having gone to a great institution like NYU. At least people know there is some minimum qualification this person has. Same thing for banking.
I probably learned eighty percent of what I learned in banking in terms of technical skills in my first four months. That was building a thousand-line long operating model with three financial statements linked to each other. I struggled with modeling for a while, having associates1 point out that I made certain classic mistakes and this experience was very valuable to me. But after four months, the technical aspect was more or less the same.
In terms of quality of life, the good thing about it is that everybody else is going through the grind as well. You build a kinship with people. The guy I sat next to in banking is going to be a good friend of mine for the rest of my life, no matter what. I can go years without talking to him and we are still going to be good friends. The relationships I built with peers in banking are very worthy to me and that is a lot of my professional network even to this day.
Working long hours sounds like a big deal, but in the scope of your life, it really isn’t. If you are a forty-year-old, with three kids and sick parents, as well as all the other externalities you can have, working that many hours when you are young isn’t honestly that bad. When you are sub-thirty, you just grit your teeth and do it for a while.
Regarding the worst period I had in banking, I had one awful experience where I couldn’t go home for Thanksgiving and I worked 120 hours that week, and I could not have been more miserable. When I look back on it now, I know exactly what I would have done differently. We were doing a deal related to Berkshire Hathaway, Warren Buffet’s firm. My VP, who was two levels above me, told me to look at all the deals Berkshire has done and do a quick analysis on these acquisitions. I only found a handful of the big ones from news searching and I was looking through different databases, but I just couldn’t find a comprehensive set. I wasted three days in a row when everyone else was on vacation and I was afraid to contact them. But now, knowing what I know and having made requests like that to people, if I make that request to a 22- year-old, I wish they would just email me and ask for help. And that for me was probably the difference between working 80-hour weeks and working 120-hour weeks as asking for help was within my control. There were instances where there was a super hot deal, and you just would never know when you were going to be bombarded with something that was not in your control. But if you have an exit option on the buy-side2 in mind, just know that there is light at the end of the tunnel and this would help your mental state a lot.
Interviewer: Or you just keep climbing the ladder in investment banking and the amount of grunt work at the MD [Managing Director] level is greatly reduced.
Barna: Exactly. I think these guys who are senior bankers live a pretty good life, making millions of dollars a year. However, the cost they pay is that they are always on the road to win new businesses. You might be the most elite investment banker at your firm and you might make 25 million bucks a year because you are the biggest telecom rainmaker3, but you still have to fly to Idaho to pitch deals. This is kind of exciting but it also means you might miss your children’s dance recital and stuff like that. I think that is the struggle these people go through. The same is true for private equity because it is this deal-making business and when you are trying to buy these businesses wherever they are located, people might not know your firm regardless of how well known the company is in the finance world. You just gotta fly to Iowa and tell the guy what your firm is and sell him. The fact that you have an MBA from NYU might carry more water than your whole pedigree from your whole career. Whereas in hedge funds, you just sit in a room with your screen and you trade stuff. You don’t necessarily have to be on the road. Being on the road is one lifestyle cost in the deal-making business.
Interviewer: Since my audience mainly consists of young professionals, I would like to get to know your advice for people who just got their foot in the door. How do you build up your credibility and reputation as you advance in your career?
Barna: The best advice that people gave me when I was really young is to try to find something that you know more about than anyone else. When I was literally in my first few months of being a first-year investment banker, someone would offload what they think was a burden on me, but it became something even senior people would come over and have to talk to me about. It was a large and complicated comps set4 of all the automotive companies and I kept it up. Every quarter, I pulled up the financial statements and updated all the numbers in the comps set. When we were pitching one of the auto suppliers for restructuring business, I was the source of authority that people turned to when it comes to questions related to the comps set. And as you get more senior, the most important thing is whether you make money for the firm.
Interviewer: You talked about M&A5 [Mergers and Acquisitions] deals. What are some ways to look into these deals for students that want to work in the deal-making business?
Barna: If you guys have Bloomberg Terminal here, you can type in the command “LEAG”, if I remember correctly. It shows you the league tables and from there you can click around to see deals that different banks are undertaking. One thing that I would do as an analyst if I was looking at companies is to pull up the companies on Bloomberg and hit “CN” for corporate news in order to look at news articles related to M&A activities and see how things develop. Dealbook and Dealbreaker are other databases that I would use back in the day.
Interviewer: That’s awesome and thank you so much for providing me with tremendous insight into the banking career. I want to shift our focus to current headlines in the markets and get your opinions on certain events. First of all, what is your take on Evergrande?
Barna: Good question and this is a hot topic internationally. The Evergrande downfall is actually healthy for the Chinese market in the long run. It is impossible to always have state guarantees and bailouts, which creates agency problems6 and moral hazards. However, this is a painful lesson for Evergrande’s management team.
People have been writing essays on shorting7 Evergrande for 10 years. But the idea that Evergrande could trigger a financial crisis globally is also misleading, because the assessment framework that works in the US might not necessarily apply to the Chinese markets. The story of [the] Lehman Brothers might not occur in China. I believe that Chinese regulators know what they are doing. One possible outcome is that Evergrande could dig itself out by selling some part of the business. The company would not be allowed to operate the same way it used to; there would be a prolonged rundown and reduction of business in the next 10 years or so.
(Credit: JinJin Li, NYU MSQF ‘22 also contributed to the write-up of this question)
Interviewer: Since we talked about Evergrande, I want to dive deeper into the investable nature of the Chinese markets. Recently, a lot of people on Wall Street are being very skeptical about the Chinese markets. George Soros said it is a “tragic mistake” for BlackRock to double down on its investments in China. Moreover, we are seeing headwinds such as the Evergrande crisis and government crackdowns that significantly damaged certain industries. People on CNBC are getting more pessimistic about China. What is your take on this entire situation and what would you say to these China bears8 in the markets?
Barna: People love a good, old-fashioned panic. A good example of this is Jim Cramer screaming at retail investors on CNBC. He said what China has been doing now is the reversal of everything the country has done since Richard Nixon. This is a pretty wild exaggeration. In terms of Soros’ statement, he is not necessarily speaking from an economic return standpoint. There are a lot of these market participants in the USA over the age of 65 who have this cold war mindset. The idea of “authoritarian regimes”, however you define them, is always bad and liberty is always good. Now, all the news headlines in the US are really focused on additional regulations and restrictions in China that are “anti-liberty”. This feeds into this dialogue of fear and makes the markets nervous. But these are very fickle short-term opinions people have. If this kind of thing conspicuously falls out of the news, and let’s say it’s a year from now and positive developments related to China start to emerge, people would go right back into the Chinese markets in the blink of an eye. By the way, [it was] the same thing for George Soros: he was writing articles like this criticizing what the European Central Bank was doing during the crisis in the 2010s and he was the biggest buyer of European financial paper in 2014. He will change his mind just like that (snaps fingers). The same is true for all the other guys on television talking about this, at least in the public markets. However, in the midst of all this, earnings growth in aggregate is a much better barometer. You can tell all these wild stories and sell clicks online, but what really matters is earnings growth.
Interviewer: Thank you, Mr. Barna. This interview has been extremely insightful and would definitely help out students here that are thinking about breaking into the finance industry.
Barna: Thank you!
It was truly a pleasure interviewing Mr. Barna as he was amicable, insightful, and knowledgeable. As young professionals, we can all learn a few things from this interview despite the directions we are headed towards as we can see the value of hard work and resilience to Mr. Barna’s career. For our future bankers, just bear in mind that you might have to work multiple 100-hour weeks in your career. It is going to be tough, but hey, when the going gets tough, the tough get going. Take care of the work and the work will take care of you.
Glossary:
1. Associate, VP, MD: Associate is the rank that is one level above analyst in banking, VP (Vice President) is one level above associate, and MD (Managing Director) is two to three levels above Vice President.
2. Buy side: Financial institutions concerned with buying investment services and financial products. Private equity funds, mutual funds, pension funds and hedge funds are the most common types of buy side entities.
3. Telecom rainmaker: A rainmaker is a senior investment banker that brings in clients and generates tremendous income for the firm. A telecom rainmaker is a rainmaker that does business with companies in the telecommunications industry.
4. Comps set: A set of metrics used to evaluate comparable companies (usually in the same industry) often in the the form of Excel spreadsheets.
5. M&A: Mergers and acquisitions. Also referred to as “deals”.
6. Agency problems: A conflict of interest that occurs when the agents don’t entirely act in the best interests of their principals.
7. Shorting: A strategy used by short sellers who bet on the fall in prices of certain financial assets.
8. China bears: Investors who are pessimistic about the Chinese economy and markets. Generally speaking, bears are pessimistic investors while bulls are optimistic investors.
