Interview With ThePillowPocket Founder Chad Riddersen, Pt. 1
Good morning monkeys,
Hope you all had a fantastic holiday weekend, full of face-stuffing dinners, football, brews, and friends.
Last week I had the pleasure of speaking with Chad Riddersen, a former Investment Banking Analyst turned entrepreneur with a unique story and a true drive and passion for business. Chad worked as a Big 4 Audit Associate before making the jump to Investment Banking, and has been working on two ventures since completing his Analyst stint -- The Pillow Pocket and a web-based film.
Part 1 of this interview will focus on Chad's experiences in Big 4, banking, and why he decided to take the entrepreneurial route, while Part 2 will focus on his ventures and what he has learned so far as an entrepreneur.
Q: So why don't you take me through how you got into banking step-by-step -- I know you were at USC, did audit for a little bit, then switched over to banking -- how did that happen?
A: I graduated early from USC, and decided that a little later in the game. It was in part a financially-driven decision, but also partly just because I could. I was in the accounting program at USC, which was a nice tangible skill-set to pick up, and I was debating whether to go for a CPA, which for me basically acted as my "fourth year" of school. The CPA was also really a sign of the times -- in '08 when I decided to graduate early, there weren't as many jobs in banking, not to mention the fact that while USC is a competitive school in terms of recruiting, it's not really a core target for most banks.
The transition towas a pretty easy one, so I did that for a year and knocked out the CPA tests over the summer. Then I contacted a friend who was at Revolution Partners (now ) over in San Francisco, and I was at the right place at the right time. I would say now, if you've done Big 4, you have to really "explain away" the audit experience...it's obviously easier to try to go banking right out of undergraduate, because the "well, why did you do audit first?" question is always looming. 2008 was a different era for banking in a lot of ways, and it was more common to grab people from audit maybe in years following, but now I would recommend doing everything possible to get into banking straight out of undergrad.
Q: Fair point, having transitioned from a completely unrelated field to banking, I can certainly say that it would have all been easier if I had just done it straight out of undergrad. But since you went through the recruitment process for both Big 4 and IB, how would you say they are different? Everyone likes to say IB recruitment is really hard and really competitive -- how about Big 4?
A: Well, Big 4 recruitment is very "soft" compared to banking. It is almost entirely focused on soft skills, whereas banking focuses more on technical knowledge. I was off-cycle when it came to banking, however, so keep in mind that my interview process was a bit different from the standard "" recruitment procedures. But if you're transitioning to banking from something else, off-cycle is basically the only way to do it, which definitely affects the interview process -- sometimes they need someone immediately at a boutique, whereas a bulge-bracket firm rarely has that need.
Q: So for Big 4, they don't really ask you technical questions about accounting during the process?
A: No, not really, though I mostly skipped that process because I interned there...but I don't really know anyone who worked in audit that got grilled heavily, or at all, during the interview process.
Q: So you were at Revolution Partners (now), then switched over to . in Los Angeles, focusing on tech. Were you also focused on tech at Revolution?
A: Yeah, it was tech, but there was also a semiconductor team that I worked with a little bit, which was really tricky without a computer science or electrical engineering background, so it was tough to see much opportunity for advancement coming from an accounting background. Montgomery, on the other hand, had a media group and a tech group -- the media group does a lot of internet deals, and the management team isn't the typical investment banking MD team that you'd expect to see. They have a lot of diverse backgrounds and are a very solid team in e-commerce and advertising, and because there aren't a lot of banks in LA right now, Montgomery is able to fill that void when interesting new companies pop up in the area.
Q: Okay good deal, so let's transition a little bit to your experience with the banking lifestyle. 100 hours a week -- is it a myth, is it fact?
A: Nope, not a myth. At first it was a badge of honor...a lot of people even seek out the heavy work weeks at the beginning. Banking is a very physical experience as well as psychological, there are many times where you are literally fighting and rationing out sleep. For certain tasks, it becomes very difficult to do them when pulling all-nighters, and you just have to sleep to get your head straight. The key is to sleep so that you wake up when the sun comes up -- while this sounds obvious, a lot of people will procrastinate and wake up before sunrise, and that'll really screw up your body clock.
Q: So if you need to get an hour of sleep, are you doing that in the office, or did you have the luxury of living close by and being able to run home to snooze and grab a shower?
A: I lived about 2 blocks away, which was great, but anything under an hour, I'd stay in the office, but that only happened about a dozen times in 2 years. But ultimately there were a lot of really interesting transactions that I really enjoyed, so it wasn't too hard to put up with the hours and push your body to the limit.
Q: So the 2 year Analyst stint is widely-accepted, and most do PE afterwards, and that's something you didn't seem to want to do after banking. I guess the big three exit opportunities would be VC, Entrepreneurship, and PE -- talk me through how you started making the exit decisions.
A: I would say that entrepreneurship became a reality for me once I started working with many entrepreneurs at a boutique banking firm. VC, for example, is tough to break into, but I would say that a lot of boutiques prepare you well for transitioning to VC. Mainly, however, working at a boutique means that you're not working with huge F100 companies in most cases, but with companies where one guy is often the CEO, COO, and CFO. That means you get the chance to wrap your head around the entrepreneurial process a bit better, and this is a lot more common in boutique transactions.
Personally speaking, being a jack-of-all-trades and being able to accept failure are things that are both important to me, and you really only get the chance to do both as an entrepreneur.
Q: Okay, so you're in banking for 2-3 years, you've got some money saved up, the 2-3 years are about to expire on you, and there are some opportunities to move to the buy-side OR to start your own thing...that's a tough decision to make, right? If you do become an entrepreneur, there's not that safety net of continued earnings, you're burning into your savings, etc. Walk me through what's going on in your mind when you're making that decision about "the next step" as it were.
A: Well, think about it this way: as I get older, I will have more dependents, which changes my risk profile significantly. I felt that my skill-set was there, and transferring 100 hours of doing banking into 100 hours of working on a venture doesn't seem that daunting after actually being in banking...and if you think about it, if you spent 100 hours a week doing any one thing, you would get REALLY good at it. There aren't many people out there who can dedicate 100 hours per week to something, whether you are doing that to play piano, or to start your own company. For me, the timing was right, and I learned that I had to embrace the risk and in some ways even ignore it a little bit if I wanted to move forward.
That's all I've got for now folks, stay tuned next Monday for Part 2 of this interview, focusing more on Chad's ventures and what he's learned so far as an entrepreneur. Thanks to Chad for being available to speak with us!