CUUNJIENG Depth vs breadth and the pace of change
discussion. Even beyond the valuation, what is used to measure success and comparable metrics between companies in that space uses terms I was not previously familiar with. Like LTV/ CAC given TAM. That is not loan to value but lifetime value ( of the contract) over cost of acquiring the customer ( so account profitability and cost) given total addressable market ( so market share and how much that market is growing). Then there is ARR which is annual recurring revenue, given most of the enterprise software companies have gone from license to subscription. Something I can discuss another time.
This illustrates that depth of knowledge one needs to be a tech industry banker and even tech is already further specialized into many further sectors. Same way financial institutions also specialized over a decade ago. The banker covering commercial banks is separate from insurance companies to asset managers and so on.
Quality over quantity
Given the need to really dive deeply and be knowledgeable on the specifics of each unique industry one is seeing increasing specialization which emphasizes depth of expertise rather than breadth. Practices are changing. Twenty years ago it was common for large IPOs that listed in more than one exchange to have a global coordinator. Then some pretentious bankers tried to appropriate the term for their deal even if it was only listed on one exchange, which led to calling one a global coordinator in addition to lead underwriter and issue manager something of a joke. Now that term is passé and investment bankers are amused when some of our colleagues belatedly try to use that title when it went out of fashion over a decade ago having only gotten into fashion the decade before that. That kind of change is amusing and slow by today’s standards.
My boss and mentor in New York is considered a Wall Street legend and the most astute banker I have had the honor to meet, much less report to. When he hired me in 2009 after I made the only career decision I regretted, which was to leave Salomon in January 1996 where he was head of investment banking, he told me it was because even when I was at Salomon, he had noted my hustle and flexibility but most of all the depth of my relationship with some key clients. He said he would rather have someone getting the bulk of the business of a few clients than a small amount from several. He further explained someone with deep relationships can develop the same with others as he knows how to earn their trust and be creative and flexible to win more than his share, while someone with shallow but broad relationships will stay a secondary banker to most clients. I was flattered and told him I would strive to be worthy of his view. He lives that, and I cannot even aspire to an iota of what he achieves yearly over my career.
That need for depth has only become truer now. Beyond trust and capability of the employer, a senior banker also needs creativity, flexibility and notably, deep expertise and industry knowledge.
Put another way, today quality is even more valuable than ever before over quantity. That is just to stay competitive and relevant. Or like the Philippines and Vietnam, expect to be overtaken.
Lastly, yesterday was Henry Sy Sr.’ s birthday. My condolences again to his family. I greatly miss someone who was so kind and generous to me with his business but even more with his time and advice.