What would you do - milk the cow or dig in?

Suppose you currently worked 45-55 hours per week as a buy side equity research analyst and have been in this position for 2-4 years, making well above-Street compensation. You don't feel like you are learning from the people around you, but you are able to push yourself enough to continue learning at a moderate pace since you have hands-on coverage responsibilities (e.g. sourcing new ideas from A to Z) and no real boss directing your workflow. The firm's performance is struggling, and you ultimately don't believe in its investment process or people.

You come across an offer to join another fund with ~$100M AUM vs the $3+ billion fund you are currently at. The expectation is to work 75 hours per week and take a 35%+ pay cut. The founder is very impressive compared to the people you currently work with and has a strong performance track record since inception. His strategy aligns well with your investment philosophy. You would come in as a junior analyst - less influence than at your current fund, more entry-level tasks (but all research-based; e.g. cold call former employees at target investment company to go deeper on the story), and significantly more stress / deliverables / expectations, but you are arguably in better hands to learn how to outperform. The fund is located far away from most other firms in the state, so you would not have many opportunities to build out your network - you are really banking on the founder and his strategy to be successful and ultimately treat you well if you exceed his expectations and the fund grows / performs. There are 2-5 employees here vs 20-80 at current firm.

Would you stay in your current position, milking the cow until the perfect pitch came along (e.g. wait for a name brand fund with better performance to have an opening)? Or would you jump ship for the $100M fund while assuming risks of much worse work/life balance, lower compensation, few networking opportunities, and risk of the fund going to $0 if performance starts to suffer?

Assume you are in your mid-20s and have been on the buy side since graduating college. You can afford to take some calculated risks the next few years but are believe you should leave your current firm in the next year or two.

Thanks for the input!

 

I would not do that...working more hours in a more junior position for less money for a smaller fund which little networking opportunities will get very very frustrating quickly, no matter how much you believe in the founder or whatever. I would wait for a better opportunity, they are bound to come up. And we are heading into the end of the year, I would wait till Jan (when do you get bonus?) and look what's on offer early in the year.

 

No, unless you're getting a percentage of the upside, one that should be at least triple what you're getting right now in order to compensate for 1) remote location, 2) significantly longer workhours, 3) risk you're taking on, 4) position you're quitting. If you've been working in buyside since undergrad, I imagine it'd be hard to suddenly kick in 70+ hours for lower pay without significant motivation (i.e. a cut of the profits).

 

Thanks for the feedback. I think I keep lingering with the idea of joining the $100M firm for reasons that shouldn't drive the decision - I am growing tired of the constant excuses for poor performance from the people at my current firm, and the $100M firm would cut my commute time by 75% while offering potential upside not possible at a larger firm. Ultimately, it does seem to make more sense to wait for something else to come up and eventually explore a similar small-firm opportunity when I could come in at a more senior level and have an existing network to fall back on in the event of failure.

But gosh, everything starts to sound good when you want out of a current job! Especially when there seem to be very few managers in the area with (1) good performance and (2) strong fit with my investment philosophy.

 
Best Response

Grass is always greener on the other side. I wouldn't take it unless you really liked the people (PM specifically) at the smaller fund. The main red flag is that you should be coming in at a more senior role. I have a similar choice though the $100mm firm in my case has considerable upside, is fewer hours and more seniority + ownership.

I totally agree with working hard in your mid 20s, a chill 45-55 week job is really more suited for reitirement age in my opinion, but there absolutely needs to be upside in a more stressful job, including equity/higher comp, etc.

However, not believing in your current firms investment philosophy is really bad, I would consider reaching out to headhunters and trying to jump elsewhere.

 

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