When a top TV show ends, it is sad.

All our favorite shows will end one day.

In this case, it is Succession that has done so.

Succession ran for 4 excellent seasons, but no more.

Now it is over.

And now I am sad.

But unlike Connor Roy at Lester’s funeral, I can write a real eulogy via my final review of this show.

This is the first time I’ve ever reviewed a book, movie, or TV show multiple times.

But it is just that good, and if you haven’t seen it yet, you need to watch it ASAP.

It is not only the best finance TV show or movie but also one of the all-time great TV series.

I’ll explain both these claims, say whether it stuck the landing (yes), and admit a few weaknesses if you watch it for the “educational value.”

This review will be spoiler-free beyond the pilot episode because I hate when people ruin shows for me:

Succession Review: The Show Explained

If you haven’t seen it or heard anything about it, Succession could be described as “Game of Thrones meets corporate America.”

The series follows the Roy family, owners of global media conglomerate “Waystar Royco.”

The Founder/CEO and family patriarch, Logan Roy, turns 80 as the show starts, and he runs into health problems, which leads his children (Kendall, Roman, Shiv, and half-brother Connor) to battle for control of the company.

The surface-level conflict concerns which one will “win” and become CEO.

But the deeper conflict is that their father doesn’t love them, and they’ll sacrifice almost anything for his love and attention – even though it’s a bit like Charlie Brown and Lucy’s football.

The four seasons see the children scheme, plot, ally, and backstab each other – ostensibly in pursuit of power, but in reality, in pursuit of validation.

It’s equal parts comedy and drama, and the writers frequently execute 180-degree tone shifts in scenes and somehow make it work.

The characters feel more like real people than in anything else I’ve watched recently, and you get a sense of their strengths, flaws, and quirks in seconds.

They are not “likable,” but they are interesting, and your opinion of each one flips back and forth over the episodes.

The show is also highly relevant to finance because entire seasons revolve around mergers, acquisitions, private equity, and shareholder revolts.

And yes, there’s even a plot point about debt covenants, of all things.

Bankers and other financiers play a major role in everything that happens on screen, from setting up buyouts to staging activist campaigns.

The details of some of these “finance plots” are unrealistic, but they still give you a great feel for the world.

Succession vs. Other Finance-Related TV Shows and Movies

The two most recent comparable shows are Billions and Industry, and if you go further back, you could even add Mad Men, Suits, Silicon Valley, and House of Lies to this list.

And… the only one in the same league as Succession is Mad Men.

All these shows can be entertaining, but the writing quality isn’t the same.

Taking Billions and Industry as examples, the characters feel more like caricatures or, at least, far less dimensional.

Sure, we get some sense of Bobby Axelrod’s family and life outside of his job as a hedge fund PM… but it doesn’t factor into the show’s stories in a major way.

Also, the character motivations are a bit weak.

Yes, they all want to get rich or stay rich, but what else is there on an emotional level? We understand their wants but not their needs.

Industry has similar issues (at least from what I saw of Season 1): it’s a fine portrayal of what you’ll do at a large bank, but it feels very work-focused.

Succession works because it effectively combines the corporate/finance world and the characters’ emotional journeys.

Without the big corporate events, it would feel more like a soap opera; without the emotional journeys, it would be incredibly boring.

Succession vs. Other Top TV Shows (Breaking Bad, The Wire, etc.)

Now that it’s over, I feel comfortable saying that Succession should rank as one of the all-time TV greats, in the same category as Breaking Bad, The Wire, and The Sopranos.

These shows all have their strengths and weaknesses, and in some ways, they’re better than Succession.

For example, I would argue that Breaking Bad has a better, more focused story, and that it’s more exciting to watch.

Meanwhile, The Wire covers deep themes about society, education, politics, and the criminal justice system that no other show has come close to matching.

Succession stands out by doing two things extremely well:

1. Conveying nuance in each character’s interactions and dialogue.
2. Making every character, even minor ones, feel dimensional (i.e., they have plausible contradictions).

Imagine that you put 20 people in a room, showed them Breaking Bad, The Wire, and Succession, and then asked them to write essays about the characters in each one.

You’d get plenty of good essays about Walter White, Omar Little, or Stringer Bell – but most of them would say similar things.

They’re all great, well-developed characters, but their motivations for Decision X or Action Y are usually clear.

By contrast, with Succession, you’d get essays with completely different interpretations of the characters.

Why did Greg betray Tom in this one scene? Why did Roman choke up at the last minute? Why did Shiv change her mind about a major power play? Why did Kendall self-sabotage himself?

No two people would offer the same explanations for these because the show spells out very little.

It drops hints and implies motivations, but it’s up to you to connect the dots.

All great writing uses subtext to some extent, but Succession uses it more effectively than almost any other show.

Body language, facial expressions, and unspoken words often ring louder than any piece of dialogue.

As Kendall Roy even said in one episode:

“Words are just, what? Nothing. Complicated air flow.”

Succession Review: Did It Stick the Landing?

As anyone still upset over Game of Thrones can tell you, TV endings are hard – and a bad ending can ruin an otherwise great show.

I’m happy to report that Succession’s final season (#4) was its strongest and that the final episode was satisfying.

I wouldn’t say it was amazing, but it was a solid conclusion that logically wrapped up the main characters’ stories.

I’d put it in the same category as the Breaking Bad finale: good, but mostly predictable with a few smaller surprises.

Some people might be disappointed because their favorite character did not “win,” but anyone rating this a 1 / 10 is media-illiterate or didn’t understand the show.

Succession Review: Flaws and Weaknesses

With all that said, the show does have some weaknesses.

As I mentioned above, the characters and the acting are stronger than the overall story.

You can see this in a few issues throughout the show’s run:

1. Repetition – Some people found the betrayals and scheming repetitive, and they do have a point: one of the Roy children attempts to take over the company at least 3 times throughout the show. Each attempt uses a different strategy and rationale, but his goal is always the same.
2. Uneven Start – It took me a few episodes to get into the show and connect with the characters, and in Season 1, it felt like it was still finding its footing.
3. Contrivances – Some of the events and corporate/financial details around M&A deals and deal processes are not realistic and occasionally took me out of the story.

As one example, there are several important Board votes throughout the show.

Many of these votes conveniently happen to be tied until the final person – always one of the lead characters – gets to vote.

When this happens, we get a dramatic scene or argument, and everything changes based on this decision.

As another example, many M&A deals in the show have a convenient habit of falling apart or almost falling apart at the last minute.

M&A deals fall apart all the time in real life, but when there is a signed agreement and a fiduciary duty to vote “yes,” last-minute changes and cancellations are unlikely.

On that note, although I thought Season 4 was fantastic, the timeline felt contrived because each episode takes place in a single day, and the entire season spans only 1-2 weeks.

The problem is that many very important events happen in this short period: an election, a major deal close, a family wedding, and more.

On a character level, this works well because it forces different people to interact under stressful conditions.

But looking at the bigger picture, there’s no real reason why all these events had to happen so close together.

It seemed like drama for the sake of drama, which is fine for the character work, but a bit unrealistic for the plot.

Why You Should Watch Succession ASAP If You Haven’t Already

I don’t know if I can say that Succession is “better” than the other all-time greats I mentioned above.

But I can say that it is my favorite show and the most entertaining and relevant series around if you’re interested in finance.

Its real weakness is not anything I wrote about above, but the fact that it’s very much a “now” show.

If you think about the year 2050 or 2100 and assume that human civilization still exists, people will still watch The Lord of the Rings trilogy or the early seasons of Game of Thrones.

They’re relatively timeless stories about consistent human struggles, and they’re set in alternate timelines and universes.

But Succession is a product of the late 2010s and early 2020s, with Big Tech and digital media rising and legacy-media companies sinking.

And the sooner you watch it, the more you’ll appreciate the broader context, the corporate maneuvering, and all the big events.

As a bonus, you might also walk away glad that you weren’t born into a multi-billion-dollar family fortune.

The Roy kids all were, and it didn’t seem to help them much.

The post Succession Review: The Best Finance TV Show and One of the Best Shows of All Time appeared first on Mergers & Inquisitions.

After all, he explained, 90% of your long-term success was about earning promotions and higher compensation.

Everyone was obsessed with breaking into the industry, but winning an internship or job offer meant nothing if you couldn’t last.

I told him this was a fine idea to help junior employees but a bad idea if he wanted to make money.

In most markets – financial modeling, fitness, dating, furry fetish enthusiasts, etc. – beginners spend most of the money.

My friend ignored my advice and wrote a solid book but never published it.

But someone else assumed the mantle, approached this task from the investment banking side, and authored an excellent book about this topic.

It’s called The Way of the Wall Street Warrior: Conquer the Corporate Game Using Tips, Tricks, and Smartcuts, and if you’re interested in advancing up the ladder, I highly recommend it.

The Author

The author is Dave Liu, a 25-year investment banking veteran, with experience co-founding several companies in his post-banking career.

He quickly rose to the Managing Director level, stayed there to grow his franchise, and then left banking in his early 40s to preserve his sanity.

A mutual connection referred me to Dave and his new book, and while I don’t read many “career guides” – I prefer sci-fi and fantasy – I was intrigued enough to read this one.

What Is The Way of the Wall Street Warrior About?

I’d describe this book as a combined memoir, recruiting guide, and career guide, and it succeeds to varying degrees in each of those roles.

The first ~25% of the book is about how to “get in the game,” or how to network and interview successfully.

The next 50-60% explains how to advance from entry-level roles to mid-level ones and eventually senior roles.

And the final segment explains how to thrive when you’ve reached the top and how to know when it’s time to move on.

He’s very honest about the downsides of becoming an MD or Partner in investment banking; one of my favorite quotes from this section was:

“Being an MD is like being a pro athlete: highly paid, short half-life, and someone always gunning for your seat on the team.”

Strengths: What I Liked

Unlike many career guides, this one is written in a lively, entertaining style with many pop-culture references throughout.

Each chapter starts with one of the author’s cartoons, so you can decide what to read based on a quick scan.

The greatest strengths of the book are:

1. Focus on how to move up the ladder – Which group should you pick, and how do you know when it’s time to switch teams? How do you know if you’re about to get forced out? And how can you decide if you’re being paid fairly beyond the online compensation reports?
2. Many memorable anecdotes – You’ll read about the “no socks guy” interviewee, the MD who complained that he earned “only” $2 million one year, and one Analyst who lied and cheated his firm out of $12,000, bragged about it, and then ruined his career as a result.
3. Discussion of “the game” at the highest levels – How does an MD think about which companies to work with and which to avoid? Why does one banker who generates the same fees as another banker get promoted more quickly? What are the top three superpowers you need to be a great MD?
4. How to succeed as an outsider in banking – If you’re not a white male, how can you overcome bias in the industry and get promoted anyway? What if you didn’t attend private schools funded by a wealthy family, or what if you have a disability? Are banks even serious about “diversity”?

My favorite part was probably the one on compensation (Chapter 19).

He describes the entire process of discussing and ranking people and explains why heated arguments often break out.

And he tells a great story of how he ingratiated himself with the Group Head one year, which led to him managing the spreadsheets that tracked the bonus pools.

Talk about having a more accurate read on the numbers than the average comp report or online discussion!

Weaknesses and Areas for Improvement

This book tries to do a lot, and while much of it is insightful, other parts don’t stack up quite as well.

For example, the first ~25% on recruiting goes into the “necessary but not sufficient” category for me.

Dave gives good advice about cleaning up your social media presence, writing effective cold emails, and standing out in interviews via cultural fit.

I agree with all these points, but this advice is not enough to be competitive for IB internships and full-time jobs in today’s environment.

You need the right sequence of internships, the right networking action plan, and a good command of technical and fit/behavioral questions.

And you need to deal with nonsense such as pre-recorded HireVue interviews.

I realize the author avoided these topics because he didn’t want to make the book 1,000 pages long and because he wanted to make it applicable to non-finance careers as well; you don’t need to walk through a DCF to get a marketing job at Google.

But if that’s the case, perhaps he should have skipped the recruiting bits and focused on advancing up the ladder.

With a title that includes “Wall Street,” I’m not sure how much it will appeal to people outside of finance anyway.

I have one other minor quibble: throughout the book, there are quotes from the author’s industry contacts in banking, private equity, venture capital, and other industries.

It’s nice to get other peoples’ perspectives, but I don’t think these quotes added much to the narrative; they mostly repeated common-sense advice.

I would have preferred more stories, whether from the author or these other professionals.

The Way of the Wall Street Warrior: Key Career Takeaways

It’s difficult to summarize everything, but a few of my favorite takeaways were on the following topics:

Practicing and Improving Your Communication/Presentation Skills

This one’s similar to practicing for job interviews: do the real thing as much as possible in lower-stakes settings.

Sure, you can record yourself and listen to your responses, and you can do mock interviews with other students.

They both help, but in my experience, you get most of the gains from practicing in real settings.

The author explains how he often set aside extra time on business trips to pitch lower-probability prospects that had no interest in hiring his bank.

He didn’t expect to generate fees from these efforts, but he did improve his presentation skills.

If you can pitch a lukewarm company without getting slapped in the face, legitimately interested prospects will be easy.

There’s even a section where he explains how to use anchoring and physical distances in presentations to get people to pay attention and stop playing with their phones.

Moving Up from VP to MD

Throughout the book, Dave writes about the steps required to advance from the mid-levels to the senior level (Partner or MD):

1. Get a lot of practice cold calling potential clients and pitching lukewarm and even hostile companies.
2. Spend as little time as possible at the SVP / Director level because it’s quicksand! If you get trapped there too long, you’ll sink.
3. Always leave a “paper trail” for important deals and contribute the last word in all interactions with clients and co-workers.
4. Win a competitive offer from a rival bank and make sure people at your firm know about it (this was the final step that led to his faster-than-normal promotion).

A few articles on this site have touched on this topic before, but there’s far more detail here, and it’s backed up by firsthand experience.

Empowering People Below and Above You

Bankers have a reputation for being terrible managers.

Just search the internet for “investment banking horror stories,” and you’ll find everything from sexual harassment to pointless all-nighters.

Some amount of horror is native to investment banking, but Dave took a very different approach on his way to the top.

Rather than humiliating his junior bankers, he identified their strengths, figured out what they wanted beyond money, and gave them options so they’d feel some sense of autonomy.

And if a team member wanted to suggest an idea in a meeting, he would let them – and then course-correct if the client’s reaction was bad.

These junior bankers had no say in his bonus, but they often ended up at client companies or PE or VC firms, so the relationships could be valuable for a long time.

On the opposite end of the hierarchy, he made the senior bankers above him, such as Group Heads, feel that they were benefiting from his deals.

Sometimes, this meant sharing “revenue credit” with these other bankers, even if they played marginal roles.

As it turns out, some bankers wouldn’t approve good deals unless they also benefited.

Yes, you need to generate a certain amount of fees to reach the MD level, but results alone are not enough.

You also need to be visible and make sure everyone likes you for different reasons.

How to Become a Wall Street Warrior

I stand by what I told my trader friend a long time ago: writing a book about advancing on the job is not a good way to make money in the mass market.

But that’s not always the goal, and in this case, Dave is donating the book’s proceeds to charity.

I also earn nothing from this review/recommendation since I’m using a generic Amazon link.

If you want a long-term career in finance, especially in investment banking, I strongly recommend reading this book.

You may not become a warrior overnight, but you’ll have the tools you need to climb the ladder and defeat your enemies on the way to the top.

Want More?

You might be interested in my review of Succession, one of the greatest TV shows of all time.

The post Book Review: “The Way of the Wall Street Warrior” appeared first on Mergers & Inquisitions.

I’m not a typical banker – people usually assume I work at a tech company – and I fell into this career accidentally.

But that also gives me an advantage because I can look at things from a neutral perspective.

I’m fine with reading books that are critical of the finance industry, and I don’t take it personally because many of these critiques are justified.

That thinking led me to Goliath: The 100-Year War Between Monopoly Power and Democracy by Matt Stoller, which re-tells U.S. history through the lens of corporate and financial power.

If you’re reading this site to get recruiting tips, this book has nothing to do with resumes, networking, interviews, or financial modeling case studies.

But it does have a lot to do with long-term career planning and the potential outcomes for different industries:

The Short Version of Goliath… and the Author

Goliath is a long and detailed (600+ page) history book that re-tells U.S. history as a fight between monopolists and anti-monopolists.

It starts in the late 19^th and early 20^th centuries, with figures like J.P. Morgan and Andrew Mellon, and it traces the struggle through the Great Depression, New Deal, World War II, and the post-war period through the present.

The book’s thesis is that concentrated corporate and financial power does not arise “naturally,” but rather because of specific policy decisions made by governments and regulators; such concentration harms most people via slower wage growth, worse products and services, and fewer advancement opportunities.

Concentrated power may appear to provide some benefit at first (e.g., lower prices from Walmart or Amazon), but the disadvantages only become clear in the long term.

To limit or reverse concentrated power, the government must take an active role in the economy and ensure competitive markets by breaking up monopolies, outlawing predatory pricing, and funding competitors (yes, the U.S. government did this to fight Alcoa’s aluminum monopoly in World War II).

And if the company operates in a market that tends to produce “natural monopolies,” such as utilities, it must be regulated.

Parts of the book go into academic debates over the economy, but more pages are devoted to the key personalities, such as Wright Patman, Andrew Mellon, Ralph Nader, and yes, even junk-bond king Michael Milken.

The author, Matt Stoller, is a progressive Democrat working at the American Economic Liberties Project with previous experience in Congressional committees, but he cares more about economic issues than cultural ones.

It’s a fairly non-partisan book in that he criticizes politicians from both parties while praising others.

It’s less about party affiliation and more about the specific policies the politician implemented.

Your Greatest Strengths

Overall, I enjoyed the book and agreed with many of the arguments (though not everything).

My top three favorite bits were:

1) Learning About Overlooked Characters and Recontextualizing Others

I studied U.S. history in high school, but I don’t remember reading about 24-term (!) Congressman Wright Patman at all.

But he’s effectively “the protagonist” of Goliath: the political leader who led the anti-monopoly fight by establishing minimum prices for retail products, nearly impeaching Treasury Secretary Andrew Mellon, and restricting the power of large banks.

He successfully fought against a government bailout of Penn Central in 1970, and I’m sure the 2008 bailouts had him rolling in his grave.

In other cases, the book presents familiar figures in a different light.

For example, history textbooks often portray Theodore Roosevelt as a “populist trust-buster,” but this is not quite correct.

T.R. did initiate some anti-trust efforts, but he favored big business as long as the federal government controlled these big companies.

The author also argues that figures like Ralph Nader, known for “protecting consumers,” actually contributed to concentrated corporate power in the modern era.

Nader and others in his movement reasoned that it would be easier to protect consumers from a few large companies than thousands of smaller ones, so why not embrace big companies?

2) Learning About Lesser-Known-But-Very-Important Policy Changes

Especially among right-leaning and libertarian economists, there’s a perception that “things just happen” in the economy.

So, if large corporations take over markets, they were more efficient or out-performed smaller firms.

Goliath challenges this view by pointing out the specific laws and enforcement policies that resulted in chain stores and other monopolies forming.

For example, “fair trade” laws enacted during the New Deal set minimum prices on retail products.

These rules prevented companies like Walmart from entering markets and selling products below-cost to drive out smaller competitors.

But in 1975, Congress repealed these laws, and it’s no coincidence that Walmart’s growth exploded in the following decades.

3) All This Has Happened Before, and All This Will Happen Again

You might think that industries such as private equity and hedge funds are new(ish) and innovative…

…but their precursors have existed for over a century.

For example, long before “roll-up” strategies became popular, “trusts” in the late 19th century allowed financiers to acquire competitors and do the same thing.

In the 1960s, “conglomerates,” in which one company acquired other companies in different markets, came about specifically to evade anti-trust laws.

Another example is how politicians have often campaigned on emotional, cultural issues while giving large corporations even more power.

In the 1960s and 1970s, this took the form of protesting the Vietnam War while looking the other way regarding banking regulation and monopolies.

I’m not going to explain the form this takes today because it will spur a bunch of angry comments, but anyone with a brain can see what’s happening.

And Your Greatest Weaknesses

The overall balance and pacing of Goliath seemed “off.”

For example, Stoller spends a lot of time discussing Chicago School economists like Milton Friedman and how their neoliberal ideas seeped into the mainstream.

But then he rushes through the past few decades, including the rise of the tech giants.

I’m guessing that modern audiences probably care more about Google, Facebook, and Amazon than they do about economists arguing with each other in the 1960s.

Also, reading this book in 2021 felt a bit “dated” because it was first published in late 2019, just before the pandemic.

I realize that the author and publisher had no control over this, but I hope a future update will address some of what has happened since March 2020.

The ridiculous interventions by governments and central banks have shifted even more power to tech monopolies, although there are signs of push-back.

My biggest issue with the book, though, is that it’s too narrow because it sticks so closely to its narrative: that concentrated corporate and financial power, alone, explain virtually everything wrong with society today.

As I read each chapter, I kept thinking, “OK, he makes some good arguments, but what about the counterfactual?”

Sure, concentrated power plays a role, but what about globalization, labor unions, and monetary policy?

Can you blame monopolies for 100% of wealth and income inequality when the Fed is effectively providing welfare for the wealthy?

And sure, you could blame the government for allowing Facebook’s acquisitions of Instagram and WhatsApp, but wasn’t the company already slanted toward monopoly status due to the built-in network effects?

I would have liked some discussion of alternate explanations and why the author felt they were not compelling or simply part of the same big issue.

Finally, the book touches on interesting ideas throughout but doesn’t always develop or support them with data.

For example, the author repeatedly cites a link between the rise of fascism in Germany and the concentration of various industries there, but he doesn’t offer data to back it up or explain the link in more detail.

Key Takeaways for Careers in (Corporate) Finance

I’ll now attempt to make this book review more relevant for the general content of this site:

1) It Takes a Crisis to Regulate and Break Up Companies, but Regulations and Enforcement Wane Gradually Over Time

In the late 19^th and early 20^th centuries, large corporations and financiers gained more and more power until a serious crisis struck: the Great Depression.

That enabled a new government to come in and start restricting corporations and financiers, and laws that would have never passed in 1920 were easily passed in 1935.

In the decades after this crisis, regulations and enforcement persisted for a while, but they faded throughout the 1960s and 1970s before giving way to the excess of the 1980s (and everything since then).

But there was no single event or crisis that killed regulations and anti-trust.

So, I doubt that anything major will change in today’s finance industry anytime soon.

When another crisis rolls around, though, who knows.

2) Investment Banking Will Probably Be Around Forever in Some Form (Other Industries TBD)

While New Deal regulations greatly reduced the power of banks and large companies, M&A deals and capital raises still took place.

The deals were smaller, bankers earned less, and the power dynamic between bankers and companies shifted in favor of companies, but the industry still existed.

Regardless of whether an industry has 1,000 companies or 10 companies, some of those companies will still need to raise capital to grow.

I’m more skeptical about the future of other sectors within finance, such as private equity and hedge funds, as they don’t necessarily “need” to exist.

3) Institutions Are Useless Without the Right People in Charge

Woodrow Wilson attempted to limit corporate and financial power in the 1910s, but he kept making implementation mistakes.

After establishing the Federal Reserve, he allowed the private bankers running it to have too much power, and when he took the U.S. into World War I, he allowed the monopolists to benefit far too much from wartime production.

You see this today with agencies like the FTC: no one took it seriously for years (decades?), but with Lina Khan now in charge, the tech companies are starting to realize they’re at risk of being broken up or regulated.

So, even if the finance and tech industries get regulated more heavily, it will be more complicated than a “Here’s how Industry X died” story; there will be spurts of competency and incompetency and periods of strict vs. relaxed enforcement.

So… What’s Next?

Last year, I thought the pandemic itself might force serious economic changes.

Instead, it reinforced the status quo: growing wealth and income inequality and mega-corporations becoming even more “mega.”

As a bonus, controversial policy decisions around lockdowns and mandates encouraged normal people to view other normal people as “enemies” while distracting them from the elites grabbing power and money.

So, I think there will have to be another crisis for anything meaningful to change.

I don’t know if this next crisis will be Covid 2.0, Great Depression 2.0, Stock Market Crash 7.0, Climate Change 1.0, Aliens Land on Earth 1.0, or something completely different.

Until that happens, you’re probably safe applying for finance jobs in the near term.

But if the aliens arrive sooner than expected, you might want to read Goliath to get some ideas about what to do next.

Want More?

You might be interested in my review of Succession, one of the greatest TV shows of all time.

The post “Goliath” Book Review: The Best Explanation of the Modern Economic, Financial, and Political System? appeared first on Mergers & Inquisitions.

Crowdfunding across various asset classes – real estate, peer-to-peer lending, and tech startups – has exploded over the past decade.

But is it worthwhile?

Should you allocate a percentage of your investments to this new asset class, or is it a waste of time and money?

My short answer would be: “Angel investments can be worthwhile in specific situations, but only once you have a substantial, traditional portfolio first. Also, the quality of the crowdfunding platform often matters more than the underlying asset.”

And here’s the longer version, with my experience on AngelList since 2014:

What is Angel Investing, and How Does AngelList Work?

Traditionally, “angel investors” were wealthy individuals who invested in early-stage startups with a high risk of failure, in exchange for equity or convertible debt.

As an asset class, angel investments have an even more skewed risk/return profile than venture capital: the vast majority of companies will fail, but if you invest in one that becomes 100x or 1000x more valuable, you could still earn a high overall return.

The average amount invested by individual angels spans a wide range, from $5K to $100K, but the median is $25K.

At those levels, angel investing was previously only viable for the wealthy.

AngelList launched in 2011 as a platform that allowed “normal people” to invest directly in startups, but you still had to be an accredited investor (AKA: well-off, but not necessarily “wealthy”).

And it allowed startups to raise money via crowdfunding instead of the traditional route (friends and family, wealthy individuals, and VCs).

Since that time, the site has expanded to offer job boards, social networking, recruiting, and even promotions for new products and services.

I’ve never used any of those features, so this review will be about investing.

How and Why I Used AngelList

In early 2014, I was sitting on a lot of cash and wasn’t sure what to do with it.

I had several crises in the early years that made me paranoid about the survival of this business, so I was extremely conservative and didn’t put much in the markets.

But I couldn’t keep doing that forever.

Even back in 2014, the S&P 500 seemed expensive, so I looked at alternatives, and angel investing came up as one option.

I liked the idea of helping companies grow and potentially earning well above what the public markets could offer.

So, I started investing in both individual companies and funds, such as the Consumer Fund I and Enterprise Fund I.

I also joined a few syndicates, which are groups created by individuals who invest in many startups each year.

They invite you to invest in individual deals, and you can join or pass on each one.

As of 2020, it looks like almost everything on the platform has moved to syndicates or funds, with few opportunities to invest in one-off deals – which is probably a good thing.

AngelList Fund Performance

I’m not supposed to disclose detailed performance data, but at a high level, I’ve earned a ~15% IRR and 2.1x multiple according to the platform.

However, those numbers include unrealized gains, so take them with a grain of salt.

Some early-stage startups need 10-15 years to exit, so it will be tough to judge real performance until 2025 or 2030.

AngelList now has an “Access Fund” that lets you invest in a broad startup portfolio that they select.

They report the following performance data for their past Access and Select funds:

1. TVPI and IRR include unrealized gains. In the “Total Value to Paid-in-Capital” (TVPI) metric, Total Value includes cumulative distributions and the “residual value” of the fund, and estimates for this “residual value” vary widely.
2. This is fund-wide data for a huge portfolio. You are unlikely to see similar numbers if you put smaller amounts of money into individual companies. And the minimum investment for these funds is quite high (usually over $100K).

AngelList Review: The Good

I’m not too active on the platform anymore, but when I used it more often in 2014 – 2018, I liked the following points:

1. Opportunities – You will find some companies here that would be impossible to back outside the platform. Individuals still can’t gain access to the top VC funds, but they can access some of the best companies via AngelList.
2. Your Capital Stays Locked Up for Years – Yes, I view this as a positive. The #1 mistake retail investors make is too much buying and selling, often at the wrong times, so anything that forces you to stick to a plan is worthwhile.
3. You Can Legitimately Help Portfolio Companies – Especially if you participate in follow-on rounds, they might reach out and ask for help with hiring, business development, marketing, and more.
4. Relatively Low Minimum Investment for Individual Deals – When I started, it was around $1,000. It’s now between $1K and $10K per deal, depending on the syndicate. The minimum amount is much higher for funds, and some syndicates and funds also require a “quarterly subscription.”
5. The Companies Are Generally Well-Vetted – Yes, they are early-stage startups, so many will fail. But AngelList does a much better job vetting deals than many other crowdfunding platforms, such as RealtyShares, which went out of business.

Recently, AngelList also added an “Investor Dashboard” that displays your overall portfolio value, multiple, and IRR.

It’s not perfect because the valuation estimates are so subjective, but it does make it easier to see everything in one spot.

AngelList Review: The Bad

I’m no longer so active on AngelList because of issues with angel investing and the platform:

1. Investing in Individual Companies is Accessible, But Not a Good Long-Term Strategy – Even if you’re plugged into the startup community, you will have almost no informational advantage in any of these deals. Sure, you could put $100K into 100 different companies, but you could easily lose money if you miss that one company that produces a 50x return.
2. Investing in Funds is a Much Better Idea, But Minimum Investments Have Risen Greatly – Originally, you could invest $10K to $25K in funds set up by individuals or platform funds like the Enterprise and Consumer ones. But the minimums are now much higher – above $100K in most cases, and the “Access Fund” appears to require a minimum of $200K per year.
3. You Can and Will Get Diluted Very Easily – Let’s say you invest $10K into a company raising money at a $1 million valuation. Then, the company exits for $10 million… so, you’ve turned $10K into $100K, right? Wrong! If the company raised additional money in between, you’d own far less by the exit. On average, expect 20-30% dilution in each subsequent round of funding. And if there’s a 2x or 3x liquidation preference, good luck getting anything at all.
4. Reporting and Updates Are “Infrequent” – I receive quarterly updates on exactly one company in my portfolio, and it’s only because I invested in the company off-platform in a follow-on round. Funds on AngelList issue periodic updates, but they usually only give high-level stats.

To be clear: most of these are issues with angel investing itself, not the AngelList platform.

If you invest $1,000 in a company that’s worth $10 million and has institutional money behind it, you have no right to expect detailed quarterly updates.

And dilution is always an issue, even for the best investors in the business.

But the point about the minimum investment size in funds is specific to AngelList, and they could broaden the platform’s appeal by making the funds more accessible to normal people.

AngelList Review: The Ugly

And now to the main reason why I became less active on the platform: K-1 forms.

If you’re not familiar with them, K-1 forms under U.S. tax law are used to report distributions from partnerships and LLCs, such as the entities that invest in startups on AngelList.

In theory, if you’re a U.S. citizen or permanent resident, you should receive a form each year for every company you’ve invested in.

In reality, some companies never issue them, other companies may issue them late, and only funds seem to issue them reliably each year.

But even the funds often issue “corrected” versions afterward, and they’re often late as well.

So, you’ll almost always have to file for a tax extension each year but still pay estimated taxes in April.

The K-1 issue turned into a giant headache for me because I made the mistake of investing small amounts in individual companies rather than going with funds 100%.

It also makes tax preparation more expensive, but the main problems are the delays and waiting around for paperwork.

AngelList Review: Final Thoughts

I would recommend investing via AngelList if specific conditions are true:

1. You have been working full-time for at least 5-10 years in a relatively high-paying job, and therefore qualify to use the platform.
2. You already have a substantial portfolio in traditional asset classes.
3. You allocate a small amount (5-10%) to funds on the platform rather than individual companies (or maybe to a syndicate that does many deals each year).
4. You do not need to access this money for at least 10-15 years.

Unfortunately, AngelList has made it more difficult to follow this strategy because minimum investments in funds have risen substantially.

So, it’s probably best to find a few active syndicates and allocate small amounts to their deals consistently, so that you end up with dozens or hundreds of companies in your portfolio.

I don’t regret using AngelList.

It is a good platform, especially next to many of the less-than-reputable crowdfunding sites out there.

But I’m not going to put in additional money unless they make some of the funds more accessible or make it easier to invest in an “index” of startups.

For Further Reading and Listening

• “Why I Stopped Angel Investing (And You Should Never Start)” by Tucker Max
• Recent Discussion with Me on the Strategy Chain Podcast [Comments on angel investing and startups start at 1:30:32]

The post AngelList Review: Should You Add Angel Investments to Your Portfolio? appeared first on Mergers & Inquisitions.

That black hole resembled the exit opportunities available to mid-level investment bankers, but was even less entertaining.

There were plenty of shows about dragons, drug dealers, and advertising agencies, but nothing about hedge fund managers, traders, or private equity titans.

But the TV landscape changes quickly, and in the past year alone, there have been at least three new or continuing shows set in the finance industry.

Those shows are Billions (Showtime), Succession (HBO), and Black Monday (Showtime), and I liked all of them, to varying degrees.

Here’s my mini-review for each one – but first, a word about the challenges that all finance TV shows face:

Finance TV Shows: Got Emotional Stakes?

Back when we were thinking about producing Season 2 of Cost of Capital, I met with a writer who had worked on Law & Order to brainstorm story ideas.

He explained why the producers on that show often avoided financial stories:

“You’re doing something challenging here. On Law & Order, they tried to avoid stories with purely financial goals/desires because it was too difficult to establish the emotional stakes. And it’s hard to make people on either side of a conflict about money sympathetic.”

Most books, shows, and movies attempt to solve this problem with one of the following:

1. Make the protagonist a “fish out of water” who comes from modest means and is trying to break into the world of finance (e.g., the original Wall Street).
2. Make the story about oddballs and quirky characters who have their own problems and who then try to take down the system (e.g., The Big Short).
3. Take a character from privilege/wealth, remove the character’s advantages, put him in a different setting, and see what happens (e.g., Trading Places).
4. Or, go the “drugs and hookers” route and film a bunch of crazy people stealing money and doing cocaine all the time (e.g., The Wolf of Wall Street and Boiler Room).

These techniques help, but if a show or movie is overly reliant on them, they can come across as clichés.

In light of these challenges, I judge finance TV shows based on:

1. Characters: Do I care about the characters? Are there stakes beyond “make more money”? If the characters are not likable, are they at least interesting (ex: Tony Soprano)?
2. Story: Is the story surprising but logical? If the story is strictly “logical,” it’s often boring, and if it’s too “surprising,” it often has glaring plot holes that take you out of the world. The best stories surprise you initially but are obvious in hindsight.
3. Learning: Do I learn something new about the finance industry by watching? Or does the show at least present well-worn themes through a new lens?

And now to the mini-reviews:

Finance TV Shows: Billions (Seasons 1 – 3)

If you haven’t seen it, Billions is about a hedge find titan, Bobby Axelrod (played by Damian Lewis), and an up-and-coming U.S. Attorney, Chuck Rhoades (Paul Giamatti), who goes after him for insider trading.

Of course, the U.S. Attorney’s wife also happens to be a “performance coach” at Axelrod’s hedge fund (Axe Capital), which creates the initial conflict.

Season 1 of the show was OK, but came up short in the “Characters” department.

Chuck Rhoades is a spoiled rich kid who irks everyone he meets, and Bobby Axelrod is a billionaire who made his fortune through shady-to-illegal activities.

Not only were they both unsympathetic, but they also weren’t that interesting.

Season 2 and 3 improved upon this premise by fleshing out the main characters and also by introducing an up-and-comer in the hedge fund world (Taylor Mason) who has a talent for investing but a naivete about the business.

I won’t spoil story details here, but by the end of Season 2, one character makes a “sacrifice” that makes him/her more sympathetic and adds depth by forcing him/her to make a tough choice.

By the end of Season 3, another character makes a major decision about how to deal with an “enemy” that shows this character is flawed, but still has some redemptive qualities.

Meanwhile, the series resists the urge to play out the same situations and conflicts over and over again – unlike police or medical procedurals.

Instead, character relationships keep shifting as allies become enemies and frenemies become friends… or regress to enemies.

That said, Billions still does a few things that drive me crazy:

1. Dialogue filled with elaborate metaphors, as if people constantly reference Greek mythology or Yankees infielders from the 1978 World Series when speaking to friends.
2. Stories that require a high suspension of disbelief (think: “Look at this clever strategy I just used to win – but I had to know in advance that Events A, B, and C would happen for it to work”). They’re surprising, but the logic is sometimes questionable.
3. Stereotypical characters and social commentary. The Attorney General, “Jock” Jeffcoat, is particularly bad on this count. A gun-toting conservative from Texas who uses dead coyotes to make points to his subordinates… right.

Season 4 starts on March 17^th, and I’m looking forward to it.

I might even make a drinking game out of it and take a shot every time a character makes an obscure cultural reference.

Finance TV Shows: Succession (Season 1)

You could describe it as “Game of Thrones meets modern corporate America.”

The series is about the Roy family, owners of a global media conglomerate (Waystar Royco) who fight for control of the company when the founder and family patriarch, Logan Roy, runs into health issues.

The Roys are inspired by real-life media-conglomerate families like the Murdochs, Redstones, Hearsts, and Maxwells.

Logan Roy is a cutthroat and competent executive, while his kids are… not so competent.

One is a “former” drug addict, one has the attention span of a 5-year-old on a sugar high, one is a consultant to “professional liars” (i.e., politicians), and one lives as a man-child on a ranch in New Mexico and dreams of starting a podcast on Napoleonic history.

The finance industry comes into the story in a big way because a private equity firm gets involved with the succession struggle and attempts to make a power grab, starting with the acquisition of a minority stake in Waystar Royco.

Amid this struggle, there are affairs, backstabbing, secret plotting, and even a Bernie Sanders-like politician who goes after the Logan family.

When I heard the premise for Succession, I was extremely skeptical.

“Oh, great,” I thought, “yet another show about unlikeable people betraying each other. After The Sopranos, Breaking Bad, and Game of Thrones, do we need more of this?”

But the answer turned out to be “yes” because I ended up really, really liking the show.

It works because it’s funny; it’s more of a black comedy than a pure drama, with equal parts satire and serious conflict.

Also, even though the characters are initially unlikable, they become more likable and interesting over time as the show demonstrates that wealth and power do not resolve fundamental human issues.

Watching the episodes, Tolstoy’s famous line from Anna Karenina came to mind:

“All happy families are alike; each unhappy family is unhappy in its own way.”

Despite their wealth, the Roys are just another unhappy family – and each episode reveals a new dysfunction that makes them unhappy in a different way.

On the negative side, I’d point to:

1. Story Leaps – There were a few corporate maneuvers (think: hidden loans, giant scandals covered up over decades, etc.) that tugged my “suspension of disbelief” strings.
2. Dreariness – The comedic aspects did not come through quite as strongly in the first few episodes, and I kept thinking, “OK, can we please get one sympathetic character… just one, please.”

But, overall, I was pleasantly surprised, and I’m looking forward to Season 2.

Finance TV Shows: Black Monday (Season 1 in progress)

This one stars Don Cheadle as Maurice Monroe, or “Mo the Marauder,” who heads a prop trading firm called “The Jammer Group” in the 1980s.

The series follows the traders at this firm, who were somehow responsible for Black Monday in October 1987, when stock markets around the world crashed by 20%+ in a single day.

Along with Don Cheadle are Andrew Rannells as Blair Pfaff, a fresh grad from Wharton who has developed an amazing trading algorithm and is leveraging it to win job offers, and Regina Hall as Dawn Darcy, the top trader at the Jammer Group.

Black Monday is a fun, completely over-the-top portrayal of the 1980s on Wall Street.

If The Wolf of Wall Street were made into a TV series, it would resemble this show.

It’s not at all surprising that Seth Rogen and Evan Goldberg directed the pilot, as it’s a tonal match for many of their films.

If you’re easily offended by sexist, boorish, and completely ridiculous behavior and comments, you should not watch this show; it’s set 30 years before the #MeToo movement, and it feels more like 300 years before.

You’re unlikely to learn much about finance by watching this one, but you will learn about the atmosphere of the industry in the 1980s.

That said, I still enjoyed the six episodes of Black Monday I’ve seen so far.

In a comedy, you can get away with almost anything as long as the audience laughs, which explains this show’s appeal.

There doesn’t appear to be much substance at first, but that changes a few episodes in as the series begins to address issues like the glass ceiling, the underrepresentation of women, and the computerized and automated trading that would eventually disrupt the whole industry.

My favorite quote is spoken by Maurice to Blair, as he explains why the fresh grad lost $50,000 trading on his first day:

“Your little algorithm doesn’t work so well against real traders, huh? Pro-tip kid – computers, don’t make trades, okay? Men do.”

If only he could steal a DeLorean time machine from another 1980s movie and see what trading is like today.

Finance TV Shows: Top-Tier Television?

It’s difficult to compare these shows because they’re all quite different, despite sharing topics and themes.

And, not to be a TV snob, but I wouldn’t consider any of them to be “top-tier series” – i.e., do not go in expecting The Wire, Breaking Bad, The Leftovers, etc.

But they’re all enjoyable shows that improve from start to finish.

If you want an authentic flavor of the hedge fund world and you don’t mind ridiculous dialogue, check out Billions.

If you want a black comedy about a dysfunctional family that’s entertaining but sometimes a bit too dreary, check out Succession.

And if you fantasize about doing cocaine at the office and buying expensive cars, start binging Black Monday.

Finance TV shows have come a long way, and they’re not nearly as bleak as exit opportunities for mid-level bankers anymore.

I’d say they’re almost up to the standard of Associate exit opportunities, and with time, they might even reach the Analyst level.

The post Finance TV Shows in 2019: The Full Round-Up appeared first on Mergers & Inquisitions.