Q&A: 2 years MBB -> VC

Have some free time, so thought I'd do one of these. I am currently in my second year at Bain and will be leaving this summer to start an associate role at a VC firm. Happy to answer any questions, although I'd prefer to stay anonymous, so I may decline to answer some that would make it easier to identify who I am.

 
Best Response

That's a question that I could give a pretty long-winded, complicated answer to, but the short version is that I was interested in start-ups, but didn't want to jump directly into a role at a start-up. I looked around at start-up opportunities, but realized I didn't have a good sense of a few things:

1) What type of role I wanted: do I want a project-based role where I'm looking at one-off situations like whether to acquire a company or open a new office or do I want a functional role where I'm in charge of something like customer acquisition for a region?

2) What stage of growth I wanted to jump into: do I want to be employee Number 5 at a company still trying to get their product to market or do I want to join a company that has traction, just got Series B funding and is looking to scale?

3) What type of company am I most interested in: am I more interested in being part of a consumer-facing e-commerce business or a B2B SaaS company?

I had partially formed answers to these questions, but still had a lot of figuring out to do, and I think that going into VC and working with and being exposed to a wide variety of different start-ups will help me develop better answers to those questions. In the meantime, a large part of my role will be working with portfolio companies that we've already invested in, so I'll be continuing to build my skillset and only making myself more marketable if I still want to jump into an operating role down the line.

 

Congrats on the new role. How did you overcome the lack of entrepreneurial experience typically required for VC positions (at least as far as I've seen) and convince the MD's/Partners that you were a good choice? Thanks!

 

This firm was specifically looking for a consultant for this role, and they'd hired several consultants in the past. This firm likes to be hands-on with their portfolio companies, and this role will focus more on working with portfolio companies on growth initiatives as opposed to positions where sourcing is a larger component of the job. As a result, the classic consulting skillset of driving to insights through data analysis, communicating them to management and getting recommendations implemented is a very natural fit.

I also studied engineering in undergrad and read TechCrunch and other websites/blogs often enough to be at least somewhat knowledgeable about what's happening in the space, and I think those things may have helped on the margins in terms of convincing my interviewers that I was legitimately interested in tech.

 

I had no prior VC experience. MBB firms, with rare exceptions, don't work with early-stage, high-growth companies.

I did have a 6-month stint in Bain's private equity group (PEG), and that was definitely something I was able to point to as relevant experience during the interview process. As for how I was able to do that, Bain does a lot of private equity work, so it was pretty easy to make that happen. It's very rare for people who want to do PEG not to get the chance at some point.

 

1) No, I don't think it did. Bain doesn't have as many smaller regional offices in places like Cleveland and Philadelphia as McKinsey and BCG do, so there's far less of a disparity across the system in terms of competitiveness. But I guess I can't really say for sure, because I'm not privy to the selection criteria they were using when evaluating my resume.

2) The pay is better than it would've been if I'd stayed at Bain. As for hours, I haven't worked there yet so I can't for say sure, but my expectation is that they'll be slightly longer than my hours at Bain on average.

 

In my year and a half on the job, I've done a 6-month rotation in PEG, a 3-month cost-cutting case for a tech company, and a 4-month pricing case for an retail company, with some beach time filling in the gaps. My time in PEG has definitely been the most interesting. Thinking about a company's value holistically is a very cool experience and the tight timelines force you to get a lot done in a very short period of time. As a result, the pace of learning is incredible.

 
  1. What's the split (approximations are fine) of ACs that leave after their initial 2 years vs. being promoted to SAC and doing 3 years?
  2. Pretty curious to know why you chose to leave, especially since it sounds like you will be continuing to build a similar skillset in your new position (instead of doing more financial modeling at buyout PE)? Can you speak to pros and cons of consulting vs. VC?
  3. I have heard Bain PEG is a higher octane environment than most other cases. Does it actually help as far as exit opportunities to the buy-side? Would you do it again?
 

1) It varies year by year, and I can only speak to what I've seen in my office, but I would estimate that 70% of ACs stay for SAC year. I've heard through the grapevine that it's a lot lower in SF particularly because of all the cool tech jobs out there, but that's second-hand knowledge.

2) So, again, a lot of potential depth to this question, but it boils down to being interested in tech and companies in an early stage of growth. I was never too interested in buyout PE; building financial models seems boring to me, and if I'm going to be working 70+ hour weeks, I want to be doing something I find intellectually stimulating and enjoyable, at least to some extent. I actually really like the work I do at Bain. For me, it strikes a really good balance between high-level strategic thinking, diving into data for insights, and pulling up and communicating those insights to key stakeholders. I would've happily stayed at Bain for my third year, if not longer, if something hadn't come up that I was really excited about.

For me, the opportunity to do similar work to what I'm doing at Bain and build off of the skillset I'm already developing while focusing on companies that are, to me, in a more exciting stage of growth, was something I couldn't pass up. I'd rather work on customer acquisition strategy for a fast-growing SaaS business than do a cost-cutting diagnostic for a large oil and gas company.

I'll also get to start building domain-specific expertise. Being a generalist and working in a variety of different industries and functions can be fun and exciting, but then you look back and realize that you spent a lot of your time learning very nichey industry-specific knowledge that's really useless going forward. I think you can be a lot more dangerous and valuable by picking a lane.

Another pro of working for an investment firm as opposed to a consulting firm is that I'll get to be a little more answer-focused. When you work at a client services firm, there is a certain degree of CYA work you have to do. I won't miss doing things like formatting sources slides and building appendix slides that have a

 

Would a person who worked in sales at venture backed startups (from funds like Peter Thiels, etc) worked their way to VP of Sales and then wanted to get into venture capital have a shot if they can show their financial grit?

What would you say is the best way to mold a startups sales career into a venture capital position at one point? MBA after years of ops in startups, or just kick ass, network and apply?

"It is better to have a friendship based on business, than a business based on friendship." - Rockefeller. "Live fast, die hard. Leave a good looking body." - Navy SEAL
 

Sorry, but I can't comment on this based on personal experience. As I mentioned above, the firm I'm joining was specifically looking to hire an ex-consultant.

Based on anecdotal things I've heard, you would be well positioned, particularly at early-stage VC firms, where financial acumen is a much less relevant skill compared to demonstrated experience and passion for technology. I also don't think MBAs are valued too highly by VC firms. If you've worked your way up the ladder at well-known startups, I would imagine you have a pretty good network in the tech community, so I would start there.

 

There generally isn't "on-cycle" recruiting. Each firm tends to run their own process based on their own timing/needs, so it's not like LBO shops where there's a mad rush for a week every winter.

For me, I began the interview process in December and was tendered an offer in late January for a start date this summer. I think this is about as much lead time as you'll see. Most VC opps I've received from headhunters have said "for Spring/summer 2016 or immediate start".

 

Thanks for answering my last question.

Regarding interviewing for a new job, how do you do this while working full-time/traveling? Are the interviewers/recruiters flexible with your schedule? Is it usually conducted via phone?

Even though a lot of people leave consulting after ~2 years is it better keep it in on the down low that you're shopping around?

 

Thanks for doing this and congrats on the offer. I would certainly appreciate any insight into the following questions

1) Assuming you are leaving as an associate consultant, do folks ever make a similar jump at the EM/associate/team leader level? And if they do would they go in as a 1st year VC associate as well? 2) Are most VC interviews case/consulting based? Or do some test financial modeling skills?

 

1) Sort of. I know one Consultant who left to join a VC firm that a friend of his was starting up. I also know a manager who left to join the portfolio group at a large growth equity firm.

There's a pretty standardized process for pre-MBA folks in consulting to jump to buyside jobs. In VC, it's a little less standardized, but the "path" doesn't deviate too much. At the post-MBA level, things tend to be much more unique across the board. As such, it's hard for me to comment on what's "typical". I do think that if you were to make a jump, you would get comp and a title commensurate with your experience/tenure.

2) It may sound trite to say this, but interviews tend to be reflective of the role you're interviewing for. Because my role is focused largely on working with existing portfolio companies, the interviews were predominantly case-based through the lens of "here's a situation with an existing portfolio company, what would you recommend based on the circumstances".

If you were interviewing for a role that's heavy on sourcing, I would expect a lot of questions like "tell me a vertical you like and why" or "tell me about a company that you've heard about that you would want to invest in". Those questions are designed to test whether you're capable of thoughtfully bringing in deal flow.

As such, I wouldn't expect to be tested on financial modeling skills unless the role involved a lot of financial modeling. Because VC firms invest in early-stage companies without too much in the way of historical financial data, it's rare for a role to involve a lot of financial modeling. But if you were interviewing for a role more focused on late-stage investing, then maybe it would.

 

They focus more on later-stage investments. You could call it growth equity, but they'll do some late Series A/early Series B, so they blur the line a bit.

I did think about interviewing with other firms . I only got serious with this firm and a couple other places that I'd classify as growth equity, but I thought about a wide range of potential firms, and probably would've cast a wider net if this hadn't worked out.

I did focus on roles where I could be pretty hands-on with the existing portfolio companies, because I knew that long-term, I wanted to move into an operating role as opposed to staying in investing.

 

Thoughts on the difficulty of non MBB consultants breaking into VC? Currently working at non MBB in digital strategy and user experience. Sitting in probably the best group in terms of exit oops and highest exposure to clients. I know this may not give enough info to work with but anything helps! Also, do you think 2 years is enough to gain experience to try and lateral?

 

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