Morning Coffee: Elon Musk thinks he’s a coverage MD. The other winners from this year’s bonus season
He sends emails at two-thirty in the morning. He demands 80 hour work weeks and affirmations of loyalty and doesn’t like being talked back to. He won’t tolerate working from home and seems to relish the prospect of firing people who he considers to be lazy and entitled. It seems like the only way that Elon Musk could behave more like a stereotypical senior investment banker might be if he were to send his programmers a picture of a blue tick with the message “pls fix”.
To the likely consternation of bankers who are responsible for syndicating $13bn of Twitter's acquisition debt, right now it doesn’t look like this approach is working very well. The chaos at Twitter throws something of a light on the working practices of the investment banking industry itself. If all Elon’s doing is acting like a banker, why isn’t he getting the same results as a bank?
The main reason, of course, is that bankers expect to be treated this way. Junior bankers are recruited on the basis that they can say goodbye to sleep and human relationships for a few years, but that once they’ve made it out of the associate ranks, things will calm down and they’ll be the ones sending the midnight emails. Twitter’s staff are sleeping in the office and they didn’t sign up for this, and don’t have the same expectations of progression. Elon has suggested that top performers will be well rewarded in stock, but as bankers know, that kind of compensation is only worth having if you expect to be around to get it. And given that the debt is apparently only finding buyers at sixty cents in the dollar, people might not regard equity in Twitter as much of an incentive anyway.
More importantly, investment banks don’t rub everyone’s nose in it. Senior bankers do send grumpy emails asking people to be available at 3am, but these are usually followed by apologies and statements that “this does not reflect our values”. Bankers don’t criticize the boss in public in the way that Twitter employees seem to, but then banking bosses don’t usually run their staff down in public either. A bit of decorum helps; people can put up with a lot if they feel like they’re being respected.
And so does a bit of team spirit. Elon gets one thing right from a banker’s point of view; he leads by example and doesn’t ask people to do things he wouldn’t do himself. He's sleeping at the Twitter office, and in a recent trial he described his average vacation as “emails with a view” rather than real time off. But where a good banker who was trying to calm things down after a hostile acquisition would be ostentatiously talking about commitment and sticking together, Musk has confirmed that he doesn’t really want to be CEO and plans to make an appointment as soon as possible so he can get back to his other companies. It’s hard to think of anything less like Rich Handler’s famous “leadership letters”.
But perhaps most of all, banks tend to have a look at the hiring climate before deciding how mean they’re going to be. Tech workers are still in demand, and senior Twitter staff are apparently particularly well regarded and likely to be hard to replace. Unfortunately, this is where the analogy becomes a little painful. Elon’s problems are coming from the same place that the junior banker rebellion of 2021 did. If market conditions for techies were like they are for bankers now, he might have got away with it.
Elsewhere, London employees of big US and international firms that do their global budgeting in dollars are beginning to notice a potential opportunity. Although bonus pools are likely to be down this year, the 20% devaluation of the pound sterling relative to the dollar gives quite an opportunity to make the money back. Different firms have different policies with respect to this; some of them will smooth the currency fluctuations and some will attempt to make the exchange rate gains accrue to shareholders rather than employees. But some banks just let the forex effects flow straight through.
This sort of gain is partly illusory – if you’re a US expat with student debt and a mortgage to pay back home, it doesn’t help so much. But for bankers with sterling expenses, not too many tastes for imported goods and who holiday in Cornwall and the Cotswolds rather than Dubai, this year might have a silver lining.
Meanwhile …
The US-based employees of FTX were apparently not in the loop to anything like the same extent as the inner circle in the Bahamas. When they heard the news that it was declaring bankruptcy (and that in many cases their own savings were lost), the co-chief executive of FTX US actually vomited. (WSJ)
Meanwhile, another psychiatrist writes about the alleged use of ADHD drugs and stimulants and their potential side effects. (Astralcodexten)
Some banking careers are more exciting than others, but you probably don’t want to have a career that’s so interesting you find yourself arguing that the US authorities have a hidden motive and want to question you about “individuals in Russia and Ukraine”, rather than the Brazilian bribery scandal that’s the subject of their extradition request. (Bloomberg)
After 27 year of maintaining a strict “no bankers” policy, Nick Jones is stepping down as CEO of Soho House. (FT)
BNP Paribas is still intending to grow through the deal drought, hiring Matt Randall from Liberum to be an MD in its UK team with a focus on corporate broking. (Financial News)
If you want to live much longer, do press-ups, inhale low-oxygen air and take loads of funny pills, but not vitamin supplements, according to the attendees of a “Longevity Investors Conference” in Gstaad. Alternatively, just go to loads of investment conferences, and whatever time you have left will seem much longer. (MIT Technology Review)
Sometimes you just have to fire a client. New York real estate brokers tell their stories of why, and how, they did so. (WSJ)
Surely this must be the bizarre unsolicited Sam Bankman-Fried interview to end them all? (Vox)
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