Christopher Reichert, MOT '04, and Sam Epee-Bounya, MBA '03, talk about debt investment. An engineer by training, Sam discussed how he transitioned into banking after his time at Sloan.
Sloanies Talking with Sloanies is a conversational podcast with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today. Subscribe and listen on Apple Podcasts, Google, and Spotify.
Christopher Reichert: Welcome to Sloanies Talking with Sloanies, a candid conversation with alumni and faculty about the MIT Sloan experience and how it influences what they're doing today. So, what does it mean to be a Sloanie? Over the course of this podcast, you'll hear from guests who are making a difference in their community, including our own very important one here at Sloan. I'm your host Christopher Reichert.
Christopher Reichert: Hi, I'm Christopher Reichert.
Sam Epee-Bounya: Hi, I'm Sam Epee-Bounya.
Christopher Reichert: And welcome to Sloanies Talking with Sloanies. Thanks for coming in today.
Sam Epee-Bounya: Thank you. Love to be here.
Christopher Reichert: So tell us where you're working now and tell us about what you've been doing these last few years.
Sam Epee-Bounya: Sure, my name is Sam Epee-Bounya. I'm a class of 2003 MBA from Sloan. Right now I'm working at Wellington Management. I focus on emerging markets and specifically on debt. I don't have to tell you that the last few years and especially 2018 have been rough, but it's fun. I love it. It's complex. It's a difficult area, but I believe that we are trying to allocate capital to places that need it the most, so that's what excites me about it.
Christopher Reichert: And I see as a true financial market person, you have your pink Financial Times right here.
Sam Epee-Bounya: Yes, I do.
Christopher Reichert: So tell us about debt versus other market vehicles and what makes it particularly difficult?
Sam Epee-Bounya: What I'll tell you is that debt investors—and sorry if a debt investor gets offended here—but we are a depressed bunch. We always think about the downside because our upside is limited, right? So you lend money to a company and you expect the principal back plus the interest. Not really exciting, theoretically. Unfortunately in EM, companies and countries have a habit of taking money they’re not willing to pay back.
Argentina comes to mind and other countries. But what I love about debt investing is that at least in emerging markets you try to allocate capital to companies that are transforming lives in these countries. So yes, the upside is cap and if you compare that for example, to equity, but I feel like for the most part, it helps governments and companies diversify their source of funding in a way.
Christopher Reichert: So this is at Wellington. So what is the difference between...and please forgive me because I know nothing about this, and I'm hoping there are other people out there that don't and are thinking, “Please ask these questions.” So here in Boston I would go to a bank if I wanted to borrow money for a business or my house or whatnot. So what is the difference between that and Wellington? Where does Wellington fit into all this, particularly with emerging markets?
Sam Epee-Bounya: That's a very good question. So for those not aware, Wellington Management, is an investment management firm. You may not know Wellington as well as Fidelity for example, because we manage money on behalf of an institution. So for example, the MIT endowment or a school pension, and the way we manage the funds is we have the institution asking us to invest their assets, their cash into emerging markets and specifically debt. We are responsible for managing the money on behalf of our clients. And the way we get the return is to invest in emerging market countries and companies, and that's, in essence, the job.
Christopher Reichert: I noticed prior to Wellington you worked in high yield bonds, which is also a risky part of the market, right? With a cap on the return. So what I'm getting to is why you chose this area to work in. Was it personal interest?
Sam Epee-Bounya: Honestly, I've done some introspection because you look back, I mean this year was our 15 year reunion from Sloan, and we all get older and wiser, and you're trying to understand the torturous path towards where you are right now. And I would say for me, first of all, it's a love of emerging markets. The way I would explain it is it's in my DNA. I grew up in a country called the Ivory Coast in West Africa, and I can tell you when I was seven or eight, I already knew what the IMF was all about because when the IMF was—and for those that don't know, the IMF is the International Monetary Fund—and at an early age, you know that when those guys come in town, that means austerity measures. Parents are not happy around the table. And as a child you wanted to better understand how the world works.
How come my country is in a position where they have to ask for help? And that has always been in the back of my mind solving that problem, understanding this. And that led me to engineering first. So I did chemistry as an undergrad and then got a master’s in Chemical Engineering in the quest of understanding how an industry works. And then finally I said, “I want to have a bigger impact.” Not just the industry, I want to understand how a country’s companies work, and this is why Sloan was instrumental in making that switch.
Christopher Reichert: So tell us, prior to Sloan or in the years leading up to Sloan, when you were thinking about going to business school, how did you choose Sloan and what prompted you first of all to get an MBA given your chemistry background?
Sam Epee-Bounya: My first love was engineering, solving problems, but I realized that even when you want to solve an industrial problem, the solution may require some funding, some resources, right? And I would say, as an engineer, I always had a soft spot for MIT. Maybe in my younger days, I wasn't smart enough to do the undergrad at MIT, but in all seriousness, it was first the engineering and MIT as a whole. Two, I really believe in the mission of Sloan. It's the only school I applied to and people thought I was nuts. They're like, “Okay, the acceptance rate is 5 percent, Sam, and you're only going to apply to one?” And I said, “Yes.” I said, “It's a huge investment. The opportunity cost is really high. It's Sloan or nothing.” It was a huge bet but this is how passionate I was about Sloan. So I would say engineering first, the mission to develop principal leaders, and I know the mission was clarified later. I felt when I visited Sloan, I was impressed by the energy and people wanting to make an impact in the world. It was not about who's going to get the next big job. It was “How are you going to have an impact in the world?” So I love that mission-driven type of vibe here. And then honesty, when I visited, people were really nice, very humble, and extremely smart. And that combination, just confirmed why I wanted to be here and 15 years after my graduation, I can tell you it was the best decision in my life.
Christopher Reichert: And were you married at the time? Did you have children at the time? What role did your partner play in choosing to go back to school and choosing Sloan?
Sam Epee-Bounya: Yes and yes to those questions. I was married, and I'll tell you a little story here. My wife and I, we are high school sweethearts. So we've been together 30 years, I'm young by the way. We've been married 21 years, but we've been together 30 years. So truly, we grew up together. But I can tell you the day I received my admission letter from Sloan, we were just coming back from a trip out West, and my wife is a physician, and she had a post at Stanford, and she's like, “Well let's think about this. Sunny California, beautiful Palo Alto and then you want to do what? Come to frigid Boston?”
So she's been an unbelievable supporter. While we were at Sloan, we already had our first child, Menelik, who was adopted by the rest of the class. He was 18 months when I started, and he went to MIT daycare, and honestly that family support was incredible, incredible. And I tell you, my wife and I—beyond the academic and intellectual tools you get here—we have made friends for life at Sloan. To this day some of our closest friends are Sloanies.
Christopher Reichert: Yes, I've heard that a few times from people that community is really important. So we all know that when you go to business school or in Sloan that your classes are going to fill your brain with new ideas and models and frameworks and whatnot. But were you conscious while you were doing that, that your classmates would be just as important to you as you move forward?
Sam Epee-Bounya: I have to make a confession here. When I joined I was like, “Okay, I want to make a switch to solve bigger problems. So I need to deepen my business acumen.” But I was an engineer, so Sloan really helped me ground my skills in finance and accounting. Believe it or not, although, it’s what I do for a living now, but the first time I read a balance sheet or an income statement was at Sloan.
Christopher Reichert: Well, that's intimidating.
Sam Epee-Bounya: Yes, it is. But when you ask about community, this is where Sloan shined. The way people were helpful. They say, “Okay, this is a smart guy, but he's an engineer. He hasn't done accounting. He hasn't done finance.” And you had former investment bankers, former accountants helping me. And I'll tell you a little story. When we were interviewing for a position post Sloan, some of the recruiters were frustrated because as the interview schedule progressed during the day, the students were getting better. Because—I would call it co-opetition—people were just happy to tell you, “Okay, this is what to expect. This is why I fail.” Everybody was rooting for somebody else's success, and that's incredible and very powerful.
Christopher Reichert: I'm curious to know if you could have a do over for a class or really anything else at Sloan, what would it be?
Sam Epee-Bounya: I have to make another confession. I think I'll do the same thing and I'll do the same mistake again.
Christopher Reichert: And the mistake being?
Sam Epee-Bounya: I took, as any Sloanie would admit, I took up too much my first semester. So you come into a very intellectually stimulating environment, and my brain couldn't stop. And the school basically allowed me to experiment. So as a first year I came in and I was like, “I don't hear anything about Africa here—that makes no sense. It's a continent; there are almost a billion people, why are we not talking about it? Maybe because people don't know? So I'm going to organize the first ever MIT Sloan trip to Africa.”
Everybody told me “You're nuts. This is core semester. You're not going to compete against the well established trips. It takes too much time.” I have to say that during the process there were times where I regretted it. I was like, “This is too much. Why did I do this to myself?” So sometimes you're like, “Okay, maybe I should have handled this better.” But no, I love the fact that I stretched myself. At times you struggle a bit because you take on too much. But I think this is why we came, right? To experiment and go beyond what you thought you were capable of.
Christopher Reichert: So as you move through that first year and moved towards the summer, did you start planning that evolution? Were you evolving in that first semester to what you thought would be next for you after Sloan? And how did that affect what decision you made to do in that summer?
Sam Epee-Bounya: I had a clear sense that I wanted to do finance and gradually gravitate towards EM, but I looked at my resume, I said, “Okay, chemical engineering, then four years of consulting, it's going to be hard to do that as the next first step. So the most important thing is to get an opportunity.” And I was lucky. I was hired by a local bank, called Fleet, and I happened to work on the biggest deal ever in banking where we sold Fleet to Bank of America.
Sometimes being lucky, they were like, “Oh, you just came from Sloan, you have to be smart, this is a big deal that we're going to work on.” But that was the luck. And the second luck was the fact that they were selling some assets in Latin America. And I love EM, and I communicated clearly that I don't mind going to Brazil, I don't mind going to Argentina. I they said, “Okay, this is yours.” So in a way, you have to have a bit of luck. But because I had a clear sense of where I wanted to end up, I gradually built the path towards that.
Christopher Reichert: So I want to come back to your childhood a bit more later, but do you see any parallels or lessons learned where you can correlate between where you grew up and the challenges in Sub-Saharan Africa and your experience in Latin America and watching those economies evolve?
Sam Epee-Bounya: Absolutely, all the time. First of all, I think you know, you have a better appreciation and I'll use this opportunity for a shout out to Professor Rigobon because he basically changed my life, right? Because I sat in his macroeconomics class and he makes it very entertaining. But it was very powerful because I finally understood the interplay between macroeconomics and microeconomics and how decisions at the top affect how the country functions and even companies, and to this day the lessons from this class help me make better investment decisions.
Now when it comes to Africa at that time, I see similarities where you have countries that are heavily dependent on commodity. And I remember I talked about the IMF and growing up knowing, and the reason why the IMF was showing up in my country regularly is that we are the largest producer of cocoa beans in the world. 40% comes from the Ivory Coast. So for those chocolate lovers out there, you have to thank the Ivory Coast for supplying the chocolate.
But nevertheless, those are very cyclical. So you have a cycle of boom and bust and you see that also in Latin America. I would say the common thread in terms of weakness in those countries is governance. You have a lot of corruption and you don't have a robust institutional framework. Those to me are the similarities that you see. But honestly, as an investor now in EM, and I do Latin America but also Africa, I think those early childhood lessons in being able to understand the macroeconomics and also have a bit of empathy for people.
Christopher Reichert: When you're struggling in the system.
Sam Epee-Bounya: Exactly, and now it's become a bit more prevalent in financial circles, but I've always been pushing the companies that we invest in to be good citizens. And what I tell them is, “If you're not doing right by your communities, your business is not sustainable.”
Christopher Reichert: So how was it? You grew up in Cote d'Ivoire and how did you end up at American University? What was that transition? It’s certainly not a bus commute.
Sam Epee-Bounya: No, no, I was...You know, sometimes they say your first break in life is your parents, and in my case that was it. I was very lucky that my parents love North America. I was born in Montreal. You may not know that, my parents were studying in Canada and my father was doing his PhD at the University of Montreal in economics. What's interesting about that is that he won a scholarship from an American Institute, a random institute in New York that was providing scholarships to very talented Africans to come study in the US in the 60's.
So he came as an undergrad. He went to Miami, Ohio and then went to do his PhD at the University of Montreal. I mean those are the, I call them “the Obama's father's generation.” They all came in the 60's to do those PhD's. So keep in mind that I grew up in a French speaking country that was colonized by France and most of my peers went to France for graduate school.
Christopher Reichert: Hence the Montreal connection.
Sam Epee-Bounya: But I was one of the few that was set on a different path because my parents were familiar with the North American education system and believed, and I thank them every day, that it was a better fit for me.
Christopher Reichert: And so are you an American citizen now?
Sam Epee-Bounya: Yes, I am.
Christopher Reichert: So that makes it easier. How did that come to be?
Sam Epee-Bounya: Yeah, so I've been in the US for 27 years. As I said, I did my undergrad in Washington, DC, in chemistry then did a master’s in chemical engineering. And then I was lucky to be sponsored by a company to have the green card and after a number of years became a citizen, and I'm happy to say that all my kids were born in the US. We tease them all the time. We say, “You have to understand you are multicultural, right? That you have ascendancy in Africa.” My wife is half Ivory Coast, half French, and they roll their eyes and say, “Yes, we know, but we're from Boston.” So they're Bostonian now. But we are happy, love being in Boston, working in Boston, living in Cambridge. Honestly, since my MIT days, I haven't moved a mile away from here.
Christopher Reichert: From Sloan. So tell me about your work on the MIT Sloan alumni board. I know you're working on the diversity and inclusion initiative this year.
Sam Epee-Bounya: Yes, so I've been on the board for two years, and I head up the community and resources subgroup if you like. And I focus on diversity and inclusion. This is a topic that's very close to my heart for a number of reasons. First, I'm of African descent. Two, As I explained the story of my family, my Dad's scholarship came from the African American Institute of New York in the 60's. So I always had a soft spot for diversity and inclusion, and in fact, my experience at Sloan amplified that experience because there were people from all over the world.
And finally my wife and I set up a fellowship fund to increase the number of African American and African students at Sloan because I honestly feel like we could do better. And this is why I'm passionate about the project I'm working on on the board. I think MIT Sloan Admissions and the school is doing a fantastic job addressing those gaps but they recognize there are gaps. And I would love for Sloan to have a student body that reflects the world, and that's the mission and I feel like it's an opportunity for the school to do so.
I think with the help of fellow board members, we are working hard to come up with good ideas to increase the pipeline of underrepresented minorities and ensure that those that are talented can have an admission offer to Sloan, and end up Sloanies.
Christopher Reichert: Wow, what an amazing journey. From Sub-Saharan Africa to working in emerging markets. So do you have any departing thoughts for anyone who's listening to this, whether they're thinking of applying or to fellow alumni?
Sam Epee-Bounya: So it's a Sloanie to Sloanie talk, maybe the admissions office in Sloan will not like this message because what I want to say is, follow your passion. If you are interested in changing careers or if you want to make an impact in the world, I think Sloan can give you the tools. So I think they will like that message. But the second part of the message is stay humble. Be patient. Because that's one thing that I feel like, maybe it was our generation, we're just coming out after the internet bubble, right? The crisis in 2000 so I graduated in 2003 so I entered in 2001, it was difficult, but when we came out things were starting to look up and honestly we felt, rightfully so, that we would change the world.
But changing the world takes time, and I wish that message was driven home a bit more because I think that there's a risk out there for the folks who are applying to business school to think that, “okay, you're going to have the magic wand.” I'm sorry to tell you this, but it's hard. You will be equipped with the tools to attempt this, but it's a lot of work and I think when you come out, when you're 25, 27 you may not have that patience. And I can tell you now that I'm wiser, I didn't say older. Wiser. It takes time. And so people have to go into their line of work, even if it's a passion, even if it's a startup, it requires a lot of energy, some patience, and of course passion.
Christopher Reichert: Excellent, wow. Thank you very much to Sam Epee-Bounya for leaving us with that thought. Humbled but still ambitious. Thanks very much for coming in today.
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