Am I Insane for Leaving a MF
So I am a little under a year at a MF (BX, KKR, Carlyle, Apollo) in the Real Estate group. This is my first job out of school. I have liked what I am doing and my team is great. We obviously work long hours but it’s a great culture so it’s all good. However, I have the chance to take a Growth role at a startup in an industry I am passionate about. My base is currently $110K with an undisclosed bonus, this role would pay me ~$85K plus equity. Startup is a little over $900M in funding at Series C. The role is also fully remote and I don’t care for NYC at all. What would you guys do? Am I insane for leaving a MF? This is a role I am so blessed to have but besides prestige, what else would I be leaving behind if I left the job? Appreciate any and all responses.
You can always go that startup whenever you want; you won't necessarily ever be able to go back to your MF if you leave.
Stay at your MF IMHO
Have they raised $900mm or valued at $900mm? How much equity have they offered?
one thing worth considering re: NYC is that you’ve been there during COVID times. Not saying you might not prefer another city (I live in one) but just food for thought
They have raised about ~$900 million and are offering ~2,000 shares to me
I can tell you're in real estate lmao
As a rule of thumb, start ups will use whatever number makes them look bigger. So we can conclude it's a 900m valuation
Talk to a real, senior mentor you trust - going to get pretty biased responses here between the hardos on one side and the salty burnouts on the other.
Will definitely be doing that. But thought it wouldn’t hurt to get an opinion or two and maybe some funny comments lol
Okay. Well then for the sake of playing along, no I don’t think it’s crazy to explore it as long as 1) you’re truly as passionate about it as you say you are and 2) you’re comfortable doing this even if that equity becomes zero and this does damage your career slightly. Not saying #2 is true, but that’s what you have to be comfortable with.
personally think it feels relatively safe given you’re young and don’t have a family yet so the low pay might be fine unless you have a ton of student loans. And as others have said easy to come back via mba (might be better placement since not sweating it vs other PE cohort) or I even see the possibility to swing into a solid UMM at the analyst (MAYBE associate) level after a year that specializes in that industry.
Hilarious, but true.
Also to echo the OP, 2K shares in a startup with $900M in funding is insanely small. I work at a micro-VC for reference. There are *most likely* upwards of a billion shares + more being added on for each funding round.
Are the shares RSUs or stock options?
100% leave. You have the MF name and this startup role sounds like something you want to do. Can always come back to finance.
OP: I don’t think it’d be possible for me to come back into Finance. I’m in the real estate group so it’s not like I can join some investment bank because I’m kind of pigeonholed and no MF would take me. Maybe I can join some small firm but definitely not a MF.
1. There are no absolutes. There is always a way.
but if you really want to come back to finance (you won’t, but alas), can always go get an MBA.
You're not really pigeonholed. I always find that concept strange. If you can show that you are competent and passionate about an industry vertical, tons of places would take you. Especially when you're only 1-3 years out of school...
HFs are also possible. The fund that I'm going to have exits into activist HFs, L/S, CMBS, etc.
How passionate are you about this startup? If I were you, id pass on the startup, stick with MF for another year while being in tough with the startup and eventually reconnect with them a year later..
It’s real estate technology. I like it but not overly crazy about it but I don’t think I’d be insanely passionate about anything. I really just work to secure the bag. Unless it’s the NBA, if I get the chance to work for the NBA, I’d do it no matter the pay cut and no matter the title.
From MF RE to Startup RE switch or even to any other startup wont be that hard even later down the road. Stay where you are.. thats my honest opinion. The only reason I am saying this is because I personally know a good friend of mine who graduted in 2015 and was lucky enough to join a MF/UMM fund in the RE Debt group right after undergrad. He was on accelerated path and is now an MD. He is making banks at age 31-32 with a decent buyside work life balance...
Guarantee you could apply to the NBA and get a job in Finance / Marketing / Strategy / etc. if you're half competent and as passionate as you seem to be about it.
If you’re just concerned about securing the bag definitely stay where you are.
My boss did it but he'd already hit 9 figures at that point to be fair.
The fact it can be fully remote is a nice bonus. You could move out to the booneys and live like a king while pouring your time into the work which could be massively beneficial from both a option and savings perspective. Life is short. I'd say do it.
I tend to disagree with most of the people above. You're in your first year as an analyst at a top real estate investment group. I think your career upside is much higher if you stick around for at least another year or two, vs. if you were to jump now to a low level at a "start-up" that's already raised $1bn. That extra experience is viewed very favorably - just like banking, each year is worth several in-house years and you'll be able to jump over to the next place at a much higher level.
These other opportunities will always pop up, and you'll have your pick. Your interests will change as well. Cut your teeth, learn as much as you possibly can, collect a nice paycheck along the way, and it'll all work out
Is your goal to get rich? Because if so, look -- you only get rich through equity. Income just doesn't cut it, no matter how much you get paid at a MF.
You want to get into the top 1% of wealth? That's a ~15mm net worth. Even if you were (i) magically promoted to the Principal level to pull in 500k/year, (ii) paid 0% taxes on that 500k/year, and (iii) had a savings rate of 100%, you would still need to work 30 years straight for the math to work out.
Income just doesn't cut it. You need equity.
Your brain is telling you to stay at the safe MF role, but your heart is clearly elsewhere. You know which one to follow. Good luck.
Uh does MF REPE not get carry?
Not sure on the specifics on how carry works at their fund, but I'm guessing it would keep him strapped at the job for ~decade or more for everything to pay out in full (3-4 years to reach carry level and then another 5ish years for a fund close). And that's *if* the fund remains successful.
You definitely know more about carry than me so would love to hear how it breaks down on a yearly basis. I've seen this comment which outlines carry around 1m for a couple funds at the Director level at a top tier (?) shop, so we're still talking a decade plus in the industry. Looks like a lot of dominoes have to fall in place to exit with +15mm at the end of the day?
Damn if only you could invest your income and let it grow over those 30 years… that would be sick
See, this is just poor advice overall and ignores the situation at hand. OP is a first-year analyst at a great firm and group. He / she is not going to get any "richer" by jumping now to get a handful of shares at a very late-stage private company. There's just not much upside left, and you’re unlikely to make a big enough impression at this level to move up more quickly than you would if you had a couple more years of MF experience. If your goal is simply to "get rich", I'd argue that in 99% of cases it makes sense to stick it out longer at your firm and build your knowledge base and experience. That will set you up for better long-term success. TLDR: this doesn't sound like a unicorn opportunity, and seems like you're still figuring out your interests. Try to stick it out for a little longer, unless you simply can't bear it.
once you're an MD, you can make $15M within 3-5 years. also you can make return on your salary if you invest it well.
also who cares about being in top 1%. will you hate your life if you are in top 5%?
We are all stupider for having read this comment
take the startup role. give it 3 to 5 years and see where it goes (the equity may turn into something substantial)
after 5 years, if it doesnt work out like you wanted (a very real possibilty) you have on your resume:
1. MF experience
2. Growth role at a startup
At this point you are a PERFECT candidate for a top MBA. If it doesnt work out at the startup in 5 years you can enter biz school in late 20s, and take your career wherever you want (back to finance, consulting etc).
Get into the start-up only if you 100% agree with "this start-up will fail but I will do my best until then". If not, stay where you are. This cuts all the romanticism about the start-up industry and also is a good way to weight if you value comfort and a clear career progress or if you value creativity and adventure on the expense of the first two.
If I were into your position I would get into the start-up just to have some interesting memories when older and not regret that I did not explore other industries. Sounds naive, but that's just me.
Something to consider on fully remote/location: my new job is in a low COL city (didn't know anyone here before moving) and also partially remote, so I wfh at my parents' place once a week. Tbh it's not all that - sure, you save some money, but your social life takes a hit that I had totally underestimated. Also, being at home so much makes me feel like a teenager - suddenly my parents seem to have way more control over my life than before. This may be different if you're very close to your high school friends ofc or would move somewhere where you have friends already
Hi everyone,
OP here. Thank you everyone who commented and gave their two cents. It truly helped me reach the decision that I feel content with and at peace with. WSO has helped me tremendously in the past and this post is just another example of the way it continues to help me.
I have decided to stay in my role at MF. The biggest thing for me is that while this is cool role at a cool company, there is nothing really special about it. If I stick it out at my firm, and finish the Analyst program, I will have plenty of opportunities like this one that will likely lead to a pay bump and title bump. And if they don’t, then I’ll have more money in the bank and more credibility.
Thanks again everyone!
what % of the FDSO are you getting for 2,000 shares (are they RSUs or options), and how much headspace from a valuatoin perspective can this company run? i.e. is it going to be a 5-10x return over the next 3-5 years? your equity will appreciate significantly especially if options if you have potential to return 5-10x; otherwise i suspect it wouldn't be that huge of a return. are you at Series D/E i.e. late stage deal where possibility for massive price appreciation? from an equity perspective the disproportionate value creation has probably already ocurred if they have raised $900M (assuming that there has been decent equity return to date)
if you stay at the MF for 1-2-3 more years, you could jump ship at the director level into a Series B or C start-up where you have the potential to actually have FU money with your equity.
Not too sure on all those specifics as I was given a verbal offer that I already declined. From what I read online, they’re Series C and raised $150M in Sep-21 and have about ~200 employees.
My analyst program is a three year program. I seriously doubt I could go from Analyst -> Director unless you’ve seen that to be possible?
OP, saw your post and wanted to add in my two cents. I'm an incoming Analyst at a global MF REPE as well and have been reading a lot on startups and entrepreneurship lately.
1) You're less than a year into the workforce. Think about what you really enjoy. Do you really enjoy real estate, or are you passionate about the industry that your startup is in? Obviously we all want that dough, but in finance your big money isn't made in 2-3 years of working. So think if you are really passionate about real estate investing, investing (in maybe another asset class), or want to become an operator at the startup.
This is something I have internal conflicts with. A part of me really enjoys real estate investing and the thought process behind picking asset classes, markets, and deal structuring. However, I don't think an acquisition adds as much value to the world as creating something like Uber.
There's definitely money in both. During an internship, I worked on a deal where an industrial developer was going to make 7x his money on a brilliant deal (highly levered but rightly so) in less than a year.
Startups obviously have the kicker with the equity, IF it works out. Just because it's valued at $900M right now doesn't mean it can't flop or drop 50%+ in value (watch a recent Adam Neumann video on some WeWork employees having options at a $45B+ valuation). Then there's also brilliant startups that exit in less than five years, making the cofounders and employees millions.
Point is, figure out what you think you'd enjoy more because there is money in both. Forget the hours, because when the going gets tough, you will work hard in a startup too (maybe not series C, but if you're an early employee for sure).
2) Once you've found your passion, figure out if it's the game worth playing (especially in the startup). Is the company an industry leader in its niche and is there strong market growth? Then the startup could be worth exploring more. The megafunds are industry leaders and very favorable for fundraising growth going forward (read recent fundraising reports -- LPs favored continuing to invest in their new products). So not a bad idea to stick there too.
3) If you choose going the startup route, whether this particular one or another entrepreneurial endeavor, I would recommend reading "The Star Principle" by Richard Koch before making your move. This will help you have a good framework on deciding whether this is the startup you want to move to when giving up a golden investment seat (yes the golden handcuffs and prestige are real mental issues I know).
Good luck!
P.S. I just have to say I'm pretty sure you're at BX given the pay and the other funds you mentioned hardly hiring any analysts for RE. If possible, would love to get your bonus figure (% and $) as a comp for my own salary negotiations!
What industry does this startup occupy? $900M in funding total by series C? Sounds very capital intensive which may prove it’s own struggles in a very rigid defined market. I'd do some digging into that business model, their offering, the competitive landscape, and their finances before anything
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