Capacity Questions in an interview

Capacity questions seek to answer the question, “Can you do the work?” As a
general rule, recruiters ask fewer of these questions of associate candidates
who have already excelled in investment banking analyst programs before
business school. If this describes your background, interviewers will typically
assume that there is little need to probe your ability to do the job, and they’ll
instead focus on the areas of demonstrated strength (as well as opportunities
for professional development) that characterized your analyst performance
reviews.
If you don’t offer prior banking experience, however (and this is the case for
the vast majority of analyst candidates), be prepared to convince every prospective
employer that your achievements outside the world of investment banking
will translate into success within it.
Examples
The following are examples of capacity questions:
• Tell me about a time when you worked on a highly quantitative or analytical
project. Describe the context, the project, and the outcome.
• What is the greatest challenge you’ve faced to date? How did you overcome it?
• Describe a typical day for you.
• Describe a time when you achieved a goal that required significant personal
sacrifice. How did you stay motivated to achieve the goal, despite the
hardships that it involved?
• Judging from your resume, you must be extraordinarily busy. What do you
think is the key to successfully juggling so many different activities, all while
maintaining your high GPA?
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Popular Destinations
• I’m looking at your transcript, and I’m noticing that your two lowest grades
were in introductory accounting and intermediate economics. Why should I
be comfortable with your quantitative aptitude given your relatively low
grades in these classes?
• I noticed that you haven’t taken a single class involving numbers during your
first 3 years of college. How can you convince me that you’re good with
numbers?
• Give me an example of a project (either academic or work-related) that
required significant attention to detail. Do you consider yourself a detailoriented
person?
What They Tell Your Interviewer
With enough preparation and forethought, your answers will convince your
interviewers that you’re a good corporate athlete who can consistently produce
a quality work product regardless of the level of complexity or time pressure
involved. Whether you focus on the hundreds of statistical analyses you performed
while working at the Federal Reserve, or whether you spend more time
discussing your experience on your university’s rowing team, recruiters will
hone in on the extent to which you have demonstrated the following:
• Exceptionally high performance standards
• Considerable intellectual curiosity, quantitative aptitude, and analytical ability
• Willingness to work extraordinarily long (and often unpredictable) hours
• Willingness to do unglamorous and tedious grunt work
• Ability to learn quickly and work efficiently
• Consistent attention to details, even under significant time constraints
• Ability to stay calm and productive under pressure
• Capacity for juggling several complex projects (at various stages of
development) simultaneously
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Popular Destinations
Why They Matter
When we asked insiders what attributes make a successful banker, one phrase
came up again and again: a willingness to “run through walls.” There’s a reason
that this expression arises so frequently; it’s the sensation that most closely
approximates investment banking at its worst—unnecessarily harsh, physically
painful, seemingly impossible, and simply not worth it. Unfortunately for
recruiters (and fortunately for job-seekers), there is still no reliable way to
simulate the challenges that a junior banker faces in the context of a 30-minute
interview. There’s no good proxy for determining whether a prospective analyst
can consistently crunch perfect numbers regardless of the number of consecutive
sleepless nights he endured the previous week. To make recruiters’ jobs
especially difficult, relatively few candidates (particularly at the analyst level)
have extensive prior experience in investment banking when they apply.
With relatively few data points available to accurately predict your on-the-job
success, recruiters are left to infer your tolerance for hard work based on your
other endeavors. As a candidate, your job is to convince your interviewer that
you’ve demonstrated the same skills before—either in an investment banking
context or in other pursuits. Former athletes are particularly effective at
positioning themselves in this way, since they can credibly say that they’ve
devoted a considerable amount of time to a single endeavor, made significant
personal sacrifices to succeed, and endured substantial physical discomfort
along the way. Further, former athletes typically possess a competitive spirit and
a determination to excel, both of which translate well into investment banking.
Capacity questions test not only your willingness to work hard, but also your
ability to learn quickly. Although investment banks devote substantial resources
to training their incoming analysts and associates, training programs cover a
considerable amount of material in a relatively short period. Deal teams are
lean relative to the volume of work to be done, time frames are often tight, and
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Popular Destinations
there is little tolerance for missing deadlines. To add value to the transaction
team, junior bankers must learn quickly and work efficiently, often with little
supervision. Since senior bankers’ time is both valuable and limited, they
appreciate analysts and associates who only need things explained once.
Rules of the Road
Rule 1: Be prepared for confrontation.
Because your interviewers are assessing your fundamental ability to do the
work, questions in this category (along with commitment questions) tend to be
the most confrontational. Be prepared to discuss your C-plus in macroeconomics
or accounting, the curious absence of anything financial or quantitative
on your resume, or the three consecutive summers you spent lounging in the
Caribbean. (Even if you don’t have any low grades or low-key summers to
worry about, don’t be complacent: One of our insiders was asked about the
single A-minus among the sea of straight A’s on her transcript). Regardless of
your background, you may encounter a series of rapid-fire multiplication
questions or a wacky brainteaser designed to rattle your cage and test for an
allergic reaction to numbers. Come prepared and stay calm—the wrong answers
won’t disqualify you, but tears most certainly will.
Rule 2: Imply—but don’t state directly—that your previous achievements
prove that you’re highly capable of doing the work.
Recall our discussion above: The more directly comparable experience you
have, the more comfortable recruiters will be in your ability to do the analytical
heavy lifting on each of your teams. As you prepare for your interviews, keep
the profile of an analyst or associate’s responsibilities in mind. If you’ve worked
as a summer analyst for an investment bank, written highly analytical papers in
college, crunched numbers for a government agency during a high-profile
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Popular Destinations
internship, or excelled in athletic endeavors, be sure to discuss these topics
(enthusiastically) during your interview.
Conversely, don’t belabor the point for less relevant pursuits. Trying to convince
your interviewer—through excruciating detail—that the summer you spent
working on a Montana dude ranch is highly applicable to investment banking
may not achieve the desired outcome. Particularly in the case of seemingly
unrelated pursuits, it’s best to let your interviewer draw conclusions about your
capability (unless, of course, you’re asked). If you make this leap yourself, it’s
likely to come across as forced, canned, and presumptuous.
Rule 3: Remember that “capacity” refers to more
than just raw intellectual horsepower.
Particularly at the junior levels, a “can-do” attitude counts for as much as
analytical aptitude. Regardless of your academic training or work experience,
don’t forget to highlight experiences that suggest you can learn quickly (perhaps
you taught yourself Italian in your spare time and are now fully conversational),
work well under pressure (don’t forget the summer you worked as a short order
cook in Cape Cod), and have a healthy attitude toward grunt work. One insider
describes her interview with a senior VP and business unit manager at a leading
Wall Street firm: “This guy had the final say as to who was hired into the group,
and he had this thing about hiring people who had waited tables. He’d ask
everyone he interviewed —analysts, MBAs, lateral hires—whether they had ever
waited tables. If you hadn’t (and I hadn’t), you’d better be able to describe
something you had done that proved you weren’t opposed to doing tedious,
unglamorous work.” Investment banking may be a white-shoe kind of
profession, but as a group, bankers like people who aren’t afraid to get their
hands a little bit dirty.

What Are Interviewers Seeking?

Similar to their counterparts in virtually every other industry, investment banking
interviewers can take an interview in a number of directions depending on the
candidate’s unique background, his or her own style, personality, and (often
times) mood on the particular day. Nonetheless, seasoned interviewers (often
senior bankers or recruiters who have watched generations of junior bankers
come and go) mention the same “critical success factors” over and over again.
Not surprisingly, demonstrated excellence in one area can often compensate for
apparent gaps or deficiencies in others. For example, if your resume, transcript,
and work experience suggest that you’ve never met a number you didn’t like,
you can expect your interviewer to place less emphasis on your quantitative
ability in the interview. Also keep in mind that certain firms, groups, and
individual interviewers assign greater relative importance to some attributes
than others.
However your interviewers choose to slice and dice them, these are the qualities
they’re looking for:
• Interest in (and commitment to) investment banking
• Intelligence
• Energy
• Exceptional stamina and drive
• Quantitative/analytical ability
• Interest in financial markets
• Enthusiasm
• Poise
• Attention to detail
• Humility
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Interview Roadmap
• Self-awareness
• Judgment
• Maturity
• Multitasking ability
• Can-do attitude
• Resilience
• Confidence
• Teamworking ability
• Interpersonal skills
• Cultural fit with firm/group
The Shortest Distance?
If the list of attributes above seems like a lot to remember as you try to navigate
your way through EBITDA and DCFs (all the while minding your Ps and
Qs), take heart. We’re not suggesting that you try to convince your interviewer
that you possess all of these qualities in the course of a 30-minute interview.
Your task is much more straightforward: Regardless of the way these characteristics
add up in each candidate, all recruiters are looking for three basic things
when they interview you:
• Whether you’re capable of doing the work
• Whether you really want to do the work
• Whether they think your prospective colleagues would enjoy working with you
As a general rule, the early rounds of interviews will focus on the first two
questions, while later rounds will devote proportionally more time to answering
the third. Through our conversations with recruiters and recently hired insiders
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Interview Roadmap
alike, we’ve identified five primary categories of question on which interviewers
rely to make these assessments:
1. Self-awareness questions
2. Capacity questions
3. Interpersonal aptitude questions
4. Commitment questions
5. Technical questions
Our insiders report that interviewers typically have a top-ten list (or, perhaps
more realistically, a top-three or -four list) of all-time favorites in each of the
categories listed above. We’ve compiled those favorites into a master list for
each of the five categories. But we haven’t stopped there. In each of the five
sections, we’ll also tell you what these types of questions really tell your
interviewer about you, and (in case you were wondering) how on earth they
relate to your ability to succeed on the job.
In addition to the specific attributes that these questions are intended to assess,
recruiters will be on the lookout for evidence of other qualities—otherwise
known as intangibles—throughout the entire interview. For example, do your
eyes light up with enthusiasm when you talk about discounted cash flow? Do
your answers sound heartfelt and impassioned, or is it blatantly obvious that
you’ve answered these questions hundreds of times and could probably recite
them in your sleep? Are you comfortable and self-assured talking about your
background and accomplishments, or does self-confidence quickly disintegrate
into self-consciousness as soon as you step into the interview room? Interviewers
don’t measure these intangibles through specific questions, but rather
through their well-honed intuition. Whether they admit it or not (or whether
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Interview Roadmap
they’re conscious of it or not), recruiters subject you to two “tests” as you
navigate the interview:
The CEO Test
As we’ll discuss later, recruiters quickly dismiss candidates who assume that
they’ll be advising CEOs on their first day of the job or who cite CEO
interaction as the primary reason for pursuing a banking career. Nonetheless,
associate candidates will ultimately be expected to build strong relationships
with their clients, and even junior bankers are highly likely to interact closely
with the CEO or CFO of one or more clients over the course of their 2- or 3-
year analyst tenure. As such, your interviewer will want to ensure that you
wouldn’t embarrass the team or tarnish the firm’s good name if you had the
opportunity to interact with a client’s senior executives. As you answer each of
his questions, the recruiter will be looking for evidence of maturity, credibility,
judgment, tact, and diplomacy. Of course, he’ll also be assessing whether your
presentation style is polished, the extent to which you are both articulate and
thoughtful, and whether you mind your manners and observe the rules
governing interview etiquette.
The Cubicle Test
If you’ve done a fair bit of research before picking up this guide, we probably
don’t need to elaborate on this one. As we described in Beat the Street, every firm
has its own version of the Could I Get Along With This Person? test. Our
counterparts in the world of management consulting, for example, refer to this
as the “airplane test.” It goes something like this: If your interviewer were
seated next to you on an airplane for hours on end, what would happen by the
time you reached your destination? Would your interviewer want to adopt you,
or enroll in a witness protection program to avoid you? In the investment
banking ranks, the confined space in which you’re more likely (in fact, certain)
to find yourself is the cubicle, but the underlying principle remains the same.
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Interview Roadmap
Even if you convince the interviewer that you possess every other attribute
critical to success at his firm, you probably won’t secure an offer if prospective
colleagues can’t imagine that they’d enjoy working with you. Investment bankers
know all too well that their colleagues—to a greater extent than deal flow,
exposure to senior management, or their firm’s “brand name”—will drive their
experience at the firm. Because of this, your interviewer will be on the lookout
for humility, generosity, approachability, friendliness, and a well-developed sense
of humor. Would you be an entertaining and sympathetic office-mate for 100-
plus hours per week? If the analyst in an adjacent cubicle broke down at 3 a.m.,
just as you were packing up to go home, what would you do? Would you stay
the extra 2 hours to help him out, even if it means sacrificing precious sleep? A
strong team orientation (and a generally positive attitude) is of critical importance
in banking, and recruiters have a sixth sense for detecting it during
interviews.