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Happy Sunday, future bankers!

Hope everyone is doing well!

🚀 Let’s get into it.

🔢 Technical Question

What are the two main ways to create a revenue model? How do they differ?

In the context of investment banking, the two main ways to create a revenue model for a company are the top-down and bottom-up approaches:

1. Top-Down Approach: This method starts with the big picture, focusing on macroeconomic, national, or market-level factors. It looks at the company’s revenue in the context of the market as a whole. For instance, an analyst might start by looking at the total market size for a product, then estimate the company’s market share to forecast its revenue.

2. Bottom-Up Approach: This approach starts at the foundation level of the business, such as production capacity, hours available for services, or other drivers, and uses that to predict revenue. It involves breaking a business apart into the underlying components that drive its revenue generation, profits, and growth. For example, an analyst might look at the number of units a company can sell and the price per unit to forecast its revenue.

The key difference between these two approaches lies in their starting point and the level of detail they require. The top-down approach begins with the general market and works down to the specific company, while the bottom-up approach starts with the specific company and expands outward. The bottom-up approach is often more time-consuming and granular, but it can provide a more detailed and potentially accurate forecast.

🗣 Behavioral Question

Tell me about a time that you made a decision without all the information that you needed.

Why Interviewers Ask This

Investment banking relies on making informed decisions with sometimes imperfect information. Interviewers ask this question to assess:

• Decision-making: How you approach challenges with limited resources.

• Risk assessment: Your ability to weigh risks and rewards of a decision under pressure.

• Proactive Approach: Whether you actively seek information or passively wait for it.

• Learning from Results: If you can analyze the outcome of a decision and adapt for the future.

Best Practices for Your Response

1. Choose the Right Situation: Select an example showcasing your analytical thinking and initiative, even if the decision didn't have a perfect outcome. Appropriate scenarios involve:

   • Academic projects

   • Student organization leadership

   • Previous internships or work experiences

   • Extenuating personal circumstances

2. Structure Your Answer (STAR Method): Use the STAR method to tell a clear story:

   • Situation: Briefly set the scene of the challenge you faced.

   • Task: What was your responsibility in this situation?

   • Action: Describe the process you took to analyze limited information, the factors you weighed, steps you took to gather further data, and how you ultimately made the decision.

   • Result: Quantify the outcome whenever possible. Focus on what you learned, even if the result was less than ideal.

3. Key Themes to Emphasize:

   • Analysis under pressure: Demonstrate you didn't freeze from the lack of data, but actively worked to get the best outcome.

   • Calculated risk-taking: Show how you weighed the potential risks of your decision against the rewards.

   • Initiative: Highlight actions you took to gather more information. This demonstrates you don't sit passively.

   • Growth Mindset: Discuss how you'd approach a similar situation differently now based on what you learned.

🗞 Industry News

🎯 Target’s New Membership Program

Target, the popular discount retailer, is revamping its Target Circle loyalty program, offering three new membership options: a free membership, a retail card option, and a new paid membership. The latter, known as Target 360, launches on April 7 and includes perks like same-day delivery and access to Shipt’s catalog of over 100 retail partners. This revamp is part of Target’s broader focus on delivering a more affordable and cost-effective shopping experience to its customers.

Target’s new offerings position it to compete with Amazon Prime and Walmart+ in the home delivery market. The launch of Target 360 comes nearly two decades after Amazon announced Amazon Prime, known for its free and unlimited same-day or two-day shipping services across the US. More recently, Walmart unveiled Walmart+, a subscription and membership plan that includes benefits like unlimited free shipping and free delivery from your store. It’s clear that Target is stepping up its game in the competitive retail market.

Read more about this story below.

Thanks for tuning in today! Best of luck to everyone working through recruiting right now. If you sign an offer, reply to this email and let us know about it! Like seriously, do it—we’d love to hear about it!