Hey WSO,
In the past, I worked in hedge funds / prop trading for 4 years (equity long short, global macro) after a 2-year stint in M&A. Afterwards, I took a risk and tried to start a company for 1.5 years with some success, but ultimately this was a failure. We raised a bunch of money, had 1,000s of customers and learned hard-won lessons, but at the end of the day we failed. I am in the process of shutting the company down and I have two options... and I wanted WSOs feedback on which option is better.
Option 1 is to liquidate the company then immediately find another job at a hedge fund or a prop trading firm right away. I have a lot of issues with the finance industry as a whole, the major benefit of this option is that I like being an analyst more than being an operator. Analyzing companies is sort of fun to me and I have a highly-valued skillset / career path (built through blood, sweat and tears) that I don't want to lose by being away from it for too long. The other benefit is that my pay would likely be $500-550K (which is likely more than what I would make with the other option) and that I'd continue down a lucrative career path. The story you'd say in a future interview in this case is something like "I tried this thing I cared about and failed while learning many lessons, but now I'm back to the HF industry with a fresh perspective of having been an operator / entrepreneur."
Option 2 is to be acqui-hired and work at the acquiror for 1 year, before (hopefully) finding a similar job at a hedge fund or prop trading firm. An acqui-hire is just getting a job at the acquiror with good terms - that's it. Even if it is pitched to the press / public as a "acquisition" - it's really just a job with a modestly larger signing bonus and equity package than normal. The benefit of this option is that I can point to press / news articles saying that I was acquired by a Series A venture backed startup with 30-50 employees for an "undisclosed sum" (the reality is the sum is laughably small but, like with many acqui-hires, others will not really know that) and became a Vice President (which is a real title at a startup unlike in finance) at the acquirer (which otherwise would be really unlikely for me to ever get in an operating non-finance-related company). After year 1 my total compensation with the "signing bonus" (which is sort of the acquisition premium being paid in this case) would be $400-450K cash and ~$300K in vested (though highly illiquid) stock. My year 2 comp would only be the $220K base (since the signing bonus does not recur). This is a massive pay package for a startup (which would be the appeal for most people), but its still less than I'd make if I went back to working in finance right away (especially in year 2). Like I said, I'd still want to work in finance after a year or so after joining the acquirer (and so perhaps I could pitch it as kind of like the PE associate that gets a year of operating experience at a PortCo to get operating experience, but with the added benefit of looking like I was sort of successful at it rather than a failure.)
What would you pick if you were me and why? Would it be an easy decision or no? What story would you tell in finance interviews if you took the former vs later option? I get that these are TOTALLY different options from one perspective so it's an apples / oranges sort of situation. But over the long-run I would still plan to return to the finance industry either way - it's just a 3 year total detour in one option vs. a 2 year detour in the other.
Take the acqui-hired.. You'll most likely never get the chance to put that on your resume. I've been in the game for a long time and have seen this a few times on peoples resumes. You will always have it and it will always be notable. As long as you have a real offer to do this- then I would. If it's a hypothetical question-then liquidate and take the job now as things are going to get even tighter soon and the chances of finding a buyer are getting slimmer and slimmmer.
Very helpful thank you! It is a real offer, albeit one given over the phone after chatting for a month (and knowing the counter-party for well over a year).
How much of a positive do you see in having an "acquired by X" on your resume? I agree with your sentiment, by the way. The main benefit of taking the offer is that it's a badge of distinction that says at least this wasn't a total absolute failure.
It looks like you work in venture somewhere. When you see founders or potential venture colleagues have this on your resume, how do you weigh it versus other factors? It's probably hard to quantify this or give color, but anything would help.
It's a sign of success. That tends to be the end goal of starting a company. Congratulations. You don't even need to put the Series-A details as part of the description. Sorry for short answers- super tired. Feel free to PM and we can chat later if it's helpful.
In my opinion, putting down the crack pipe of entrepreneurship is incredibly hard. It's why so many guys keep going even after making $10m - $20m+. Nothing comes close to the highs and lows you get to experience.
The only thing I can see coming close is an HF role like you described where you are able to put on substantial risk.
So just to be clear, what would you do in my shoes? Take the acqui-hire?
how busy will the the new company keep you and do you have sense for what they'll have you working on and will you enjoy it? any performance hurdles to achieving the $300K stock vest? how much do you believe in acquirer company's stock value potential over time?
i'm doing some side hustle for a company that just listed and we did an acquihire of 8 developers a few months ago. the deal was heavily equity comp based and tied to keeping them around for 3 years.
based on what you've shared - i'd pick option 2 if i were in your shoes - you're not giving up too much cash comp in 1 year, you've got decent equity upside and if you hate the new employer you can do the bare minimum while recruiting for the new HF job to coincide with 1 year mark and potentially do the HF as a side gig during the interim
I know this is an old post but I'm curious about what you learned from starting a company. What were the "hard-won lessons"? Any advice for someone trying to go down this path?
1) there is literally no way that elite finance jobs prepare you to start a company. There is no skill set overlap. The exception is if you start a financially oriented company or if you meet cofounders at an elite MBA you got because of your elite finance background. Don’t think for even a second that covering software companies as a pod analyst makes you understand how to start a software company. Or covering health tech makes you know anything relevant to starting a health tech company. Your knowledge isn’t specific enough and it’s useless.
2) your bias as an analyst is to look before you leap. As a founder you need to get over this. Just leap. Don’t model things - your models don’t matter. Great is the enemy of good in early stage startups.
3) a lot of the mental models you learn in finance don’t apply for early stage startups. You need to be really open to changing fundamental views. This can be hard if you think your value add is “understanding business.”
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