Long Only Opportunity Straight from College
Hey guys,
Hope everyone's doing great!
I'm in an interesting situation and would appreciate experienced opinions on the path forward. I'm a sophomore at a non-HYP Ivy and very sure that I want a long-term career in public equities. I was lucky to stumble across an opportunity for Summer 2024 (and beyond).
It is a long-only fund based out of the West Coast focused on small/micro-cap. It's only 2 very senior people at the moment. Their pedigree is impeccable and the founder is worth a couple hundred million $ himself (started off at McK/Bain/BCG when it was a 20-person company, former partner at ~1.5B VC firm, very politically connected, leads the board of a few public investment funds). Returns over the past 5 years have been decently good (~27% CAGR)
They are both from a H/Y/P so I wasn't expecting the opportunity however in my first interview we developed such a good rapport that they offered me a position right then. They've been incredibly warm towards me since (sending me a goodie box for my birthday, making me speak with HNI LPs, etc.)
They also mentioned to some of these people how I'm gonna be the 'next Warren Buffet.' (I know it doesn't mean much and that idk anything about anything yet) This is all to say, I could go on to work there full time. Over the next few months, I have a decent chance of landing a 1/2 BB offers. I'm wondering if choosing this over them would be too much risk this early on.
For context, I'm privileged enough where I don't need a job for the salary and can afford the risk (financially). My only concern before was that I was hoping to go to b-school and would need a name brand for that but the founder is a named donor at a couple of top b-schools so it might help. From a learning perspective, this is a no-brainer over IB if I know I want to end up on the public equity side of things, but it's a very unique opportunity so would appreciate any thoughts/warnings you may have...
Thanks a lot for any help!
My gut says take the offer. Just my $0.02.
No brainer, take the offer.
Only downside is you won't have an analyst class to network with and it might feel a bit lonely working with just 2 older dudes. But you can adjust for that if you feel the need by going to business school after a couple of years.
You could also propose to these guys to let you take an IB internship your Junior-year summer "for the training". You will indeed learn some good stuff and it will give you a good sense of how it would compare vs the LO opportunity.
Del
Thanks for your reply!
I've been thinking along the same lines and the founder even said that they would help place me elsewhere if I think it isnt the best place for me
In your opinion, would AUM be very relevant here? They're large enough where they have some stakes that give them board seats in micro-caps but at the same time it isn't > $1B
Don't want to look a gift horse in the mouth but just trying to cover my bases. Thanks, once again, for the detailed advice!
I think working directly under 2 established senior guys like this is invaluable. In terms of learning, in terms of the network they will open to you.. Who knows what they saw in you, but it sounds to me like a great set-up. In that context, AUM matters very little.
And… if this opportunity really takes off then why does he need to go back to business school? People go to business school to change careers or give them a leg up at advancing their career, which would be unnecessary if this opportunity rocket ships to the moon.
Worst case he hates it and finds another job 1 year in. Not a big downside.
Actual footage of how OP's interview went (first guy)
I wouldn't be too dismissive about the importance of brand name especially at the start of your career - chances are you're not going to stay in your first job out of college forever so it is important to make sure you have the optionality to move up. Yes the founder may have a great pedigree and like you but you need to ask yourself when push comes to shove is he actually going to throw his weight around for you to get you a job at the funds he's on the board of or get you into H/S/W/CBS/Booth. Or alternatively, is his reputation alone good enough that you can land an even better opportunity if/when (most likely when) you need to. There are heavyweights with this kind of profile for whom an investment firm is more of a vanity project and their reputation doesn't necessarily carry over, not a perfect comp but e.g. Scaramucci's Skybridge or Thiel's Clarium back when it was active come to mind.
RIP to Chamath's Social Captial.
That's definitely how I was originally thinking about it. But incrementally, I don't have much of an inclination to move up the ladder (tiger cubs, pershing square types etc.)
I'm originally from a country that is currently booming (think peak USA markets in the 80s/90s) and my family is decently established in the public market there. So the idea has always been to go back or have a hybrid set-up managing money cross-border. Very faintly outlined plan, of course, given my age and naivete – things are subject to change but the bigger/better/more prestigious platform climb is not something I find myself interested in...
bruh please don't waste your time and suffer in IB if you're a nepo baby, take the opp, pad the CV, build your network then go back and start clipping them coupons...
If he's say applying to Stanford MBA I'm pretty sure he'll have better essays, recommendations, and a better shot at admittance than as the 56th Morgan Stanley IB analyst applicant with the cookie cutter letter of recommendation from his no-name 32yr old MD.
FFS, read again. The guy's family is well-off, he's curious, and doesn't need the warm blanket of a $120k salary, he can afford to pursue more interesting things than spend 2 years formatting pie charts.
Indeed, hence my revised comment after OP clarified their family situation - IMO it makes a big difference that his family is well-established in the industry which wasn't in the original post. My $0.02 was just that firm brand name counts for something too and this firm being 1B, SMID cap-focused and not your typical HF/AM spin adds some risk. But acknowledge you are more experienced and agree that given OP's family background absolutely no need for them to waste time in IB.
As long as they can pay everyone's base salaries and cover trading expenses without dipping into the performance fee you should be golden. Roughly speaking the sweet spot on 1/10 fees is about $100M AUM. Without more info the opportunity looks good to me and superior to any kind of IB analyst position. good job on the network!
Thank you very much for your thoughts. It really helps given your experience since I've been struggling a little bit with FOMO for not going down the beaten path.
You're pretty much on point. Fee structure seems to be close to 2/20 though, only that performance fees are calculated by slab (x% on every dollar between a% and b% in returns and so on)
This requires 0 thought. Take the offer. People dream for this sort of opportunity + the warm reception from the GPs sounds awesome. Congratulations!
Agree with what everyone else has said and just wanted to add that it is a pretty intense environment in HF / LO / Alpha Generation space which can breed a ton of unkind and outright bad people. It is rare to find people who genuinely care about you / your development / will pull strings to help you succeed. It makes the world of difference and it sounds like you found some great people with whom to work.
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