◼ FINANCE Bloomberg Businessweek October 14, 201930
itmore efficient, and improve the end result.
Starting with the next class of MBA applicants,
PJT will consider scores generated by Suited’s
algorithm. Initially, some of Murray’s colleagues
joked that “the robots” were taking over. Now, he
says, they’ve come around.
Every employer says hiring well is import-
ant. That’s especially true in investment banking,
where there’s no killer app, only people. A financ-
ing or merger mandate can generate millions of
dollars in fees, and bankers are compensated
accordingly. The typical full-time analyst makes
upwards of $125,000 a year. Senior rainmakers
pull in seven or eight figures. “Our franchise is
only as sustainable as our ability to find and pro-
mote new talent,” says Michele Miyakawa, one of
the founding partners at Moelis & Co. “I can’t tell
you the number of hours we spend on recruiting,
from the top leadership down.”
Limiting the talent pool to familiar colleges
may miss a lot of potential stars, but it makes the
effort manageable. All roads lead to Philadelphia,
home to the University of Pennsylvania’s Wharton
School, and a few other B-school hot spots. No one
has to stop in Omaha or Milwaukee.
That doesn’t mean the process is optimal. Matt
Spencer came up with the idea for Suited soon after
starting as chief human capital officer at Houlihan
Lokey Inc., an investment bank based in L.A. It was- As a former M&A banker deeply involved in
the firm’s recruiting efforts, he’d witnessed the
huntfortalentdevolveintoanindustrywidecir-
cusofpredatorytactics,absurdlyhighsalaries,and
“exploding”joboffersthatexpiredafter 24 hours.
Lookingfora betterapproach,Spencerand
Suitedco-founderSamFogartyassembleda team
ofvolunteers,contractors,and,eventually,staffers
withexperienceindatascience,AI,softwareengi-
neering,andindustrial-organizational(I/O)psychol-
ogy,thefieldspecializinginworkplacebehavior.
HoulihanLokeyencouragedSpencertopursuethe
projectandraiseventurecapitalfunding.Heleftin
MarchtobecomeSuited’schiefexecutiveofficer.
Inonlya fewmonths,morethan10,000job
seekershavefilledoutSuitedprofiles.Spencer,
whostudiedeconomicsatVanderbiltUniversity,
hasopenedtheplatformtoapplicantsathundreds
ofcolleges,wellbeyondtheusualinvestment-
banking targets. He wants to expand into other
areas that put a high value on human capital, such
as sales and trading, commercial banking, asset
management, and law.
One risk in bringing AI to recruiting is that it
could reinforce biases instead of eliminating them.
After all, Suited’s data is culled from employees in an
Analysts on the lookout for China’s next financial
shock are training their sights on the least regu-
lated corner of the nation’s sprawling “shadow
banking” system.
Their concern centers on independent wealth
managers, which have expanded rapidly in recent
years by selling high-yield products to affluent
investors. Largely untouched by a government
clampdown on almost every other form of shadow
banking—that is, financing that takes place outside
ofconventionalbanks—theindustryhasbecome
a major source of fundingfor cash-strapped
Chinesecompanies.
The worry now is that the products arranged by
the wealth managers will face mounting losses as
China’s economic slowdown deepens and corpo-
ratedefaultssurge.Confidenceintheindustryhas
plungedsinceJuly,whenNoahHoldingsLtd.said
that3.4billionyuan($477million) of credit prod-
ucts overseen by one of its units was exposed● High-yield products backed by company
loans could falter as the economy slowsWealth Managers in
China Stir Up Risk
industrywheresome73%ofsenior-levelmanagers
are white men. Spencer is conscious of the hazard.
He says every one of the company’s models is tested
rigorously for discrimination by race, gender, and
age group before it can be used by a client.
Moelis is still training the model to pinpoint
candidates whose attributes correlate with those
of its best bankers, such as warmth and curiosity.
That means feeding it more profiles and validating
the results. “It’s early days,” Miyakawa says. The
firm plans to use Suited as a supplementary tool
starting next spring.
It’ll be years before banks can tell if candidates
who scored well in the Suited algorithm really do
fit in better and perform at a higher level. For
now, they’re embracing the principle. If data sci-
ence can improve everything from online sales to
radiology, perhaps it can do something good for
WallStreetrecruiting.�ErikSchatzkerTHE BOTTOM LINE Investment banks rely a lot on campus-
based recruiting at a handful of top schools, which makes them
susceptible to a “like-me” bias in hiring.“But when ...
our bankers
can see the
data, suddenly
they’re asking,
‘Oh, how did
this person
score?’ ”