The All-Powerful Niche

Finding a niche is a piece of advice that I don't often hear given to aspiring investment bankers. But, I think it's one of the more important things that any ambitious professional or aspiring company can do to get ahead.

It's funny, actually. I think that most people are attracted to jobs in investment banking, and private equity precisely because they don't want to find a niche. Junior professionals in the industry are positively terrified of being pigeon-holed in a role that they don't care for.

However, I'd argue that finding a niche that you can get behind is a powerful method for achieving exceptional results in your career. I also believe that owning a niche is a powerful strategy that startups and small companies use to grow into major players.

Let's have a look at the pros of finding a niche and how one can use it to their advantage.

First, I want to again touch upon what I feel is an aversion to niches that exists amongst junior finance professionals. I do feel that there is some validity to the fears of being pigeonholed. Few among us want to be known as the "back office finance specialist" or the best damn internal IT guy at a bank. People are attracted, in large part, to investment banking and PE because it allows them to act purely as business people, with a broad set of skills that are applicable to most general corporate environments.

With that said, finding a niche that you can feel strongly about and excel in is going to be key to your own advancement. Let me share a couple of examples, one from my own time as an Analyst and one of a friend of mine who is currently an Associate at a bulge bracket bank, and let's take a look at how they helped us succeed and stand out in our positions.

My Niche - Becoming an Industry Expert:

Back in my Analyst days, I worked in a group covering Aerospace and Defense companies. While that spans an assortment of sub-industries, there were two particular sectors that just happened to be poised for immense growth and sectors that I found extremely interesting. Unmanned Air Vehicles and Cyber Security.

I was already a strong Analyst with a few deals under my belt, but knew that I could do more to stand out, attain a high ranking (and bonus), and increase my knowledge base in subjects that were both interesting and useful to my group. So, I set out and became something of a subject matter expert. Working alongside a VP, I built out industry-specific pitch books for the UAV and Cyber Security industries and grew intimately familiar with the major players in each field. Beyond showing off my top shelf PPT skills, I was able to join my VP and an MD on a slew of pitches to private equity firms with an interest in the spaces, thus giving me increased exposure both in and out of my firm.

To say that doing this went a long way for me would be an understatement. I got to learn about two industries of interest, got exposure to potential future employers, and was, eventually, rewarded for my extra efforts when bonus time came around.

The Associate - Diving Into a Niche Product to Accelerate Advancement Up the Ranks of the Firm:

While I focused on a niche industry, my friend decided to focus on a niche product within the bank. Mid-way through his second year as an Associate in leveraged finance, he was tapped to join a very specific product group, focusing on asset-backed loans in the middle market. While this may not sound like the sexiest group at the bank, it certainly has some upsides. Namely, a promise of an early promotion if he continues to perform at the high level he has throughout his Associate program.

Already knowing a bit about the product and having an interest in mid-sized companies, the move made perfect sense. While other friends of ours are cranking away at b-school apps, hoping that they'll have something to do after they finish their PE program, he'll be getting promoted, making bank, and working cushy hours.

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Startups and smaller companies, by their very nature, need to find and excel in a niche.

Because of their size, startups can move swiftly in attacking niches in ways that bigger, established companies can't. Without bureaucracy, a young company can make moves and pivot on a dime, target specific end-markets, and respond to customer demands with ease.

Look at Google. What is today an internet giant was once a company with one mission - to make internet searches better. By dominating in that niche, it put itself on a path to become one of the biggest companies on the planet.

Or look at one of the many companies at Y-Combinator's latest demo day, many of which are attacking niches in truly innovative and disruptive ways.

While this mainly applies to startups and new business ventures, it's worth stating that it's possible to go too far when choosing a niche. For instance, while a website like WSO works wonders because its niche has broad appeal, one wouldn't necessarily want to go to a site that only targeted middle market investment banking analysts.

I'd argue that the same goes for many new companies that have been popping up lately. One company that presented at Y-Combinator's demo day, for instance, called imgfave, touts itself as a hybrid of Imgur and Reddit in hopes of becoming the place to "explore interesting images" and share them online. How this provides anything different or better than imgur, reddit, buzzfeed, tumblr, 4chan, 9gag, etc., I fail to see it.

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Anyway. I hope some aspiring monkeys or budding entrepreneurs amongst us take this advice to heart and seek out a niche they can call their own.