Sole analyst at new pod vs 10th analyst at established pod?
Context: very young, early 20s.
I currently am deciding between two opportunities. One is a new pod launch, 500m AUM under tenured PM (10 years at brand name funds) where I would be the sole analyst. Obviously the sky is the limit with this offer, I’ll be drinking from a firehose and getting huge responsibility very early on.
The other is a very established pod (very well known), but I’ll be the 10th analyst (junior analyst working under senior analyst under junior PM). Not much upside here, but brand name is unmatched.
What would you do in this scenerio? Again, I’m in my early 20s so I can take a lot of risk without worrying about a family to support.
Do you know what risk limits the established pod has? Sometimes a very established pod may have looser risk limits by virtue of the experience and long track record of P&L that the head PM has. Also a more established PM will have a process and track record of making it through difficult periods / drawdowns. Learning his process and risk management may help your future career.
For the tenured PM - sounds like he has 10 years of experience at multiple brand name funds. You need to figure out if he is really making money or whether he has been lucky churning through funds before being cut for not making money.
In general, I probably would pick the PM with a stronger P&L track record and who I think I can learn more from his process. Some of the legendary pods PMs have been at one single firm for years and have had multiple junior PMs spin out to form their own pods (probably because they have learned a good process).
del
I fully agree with all of the points the other poster already made on considering the risk limits, learning an established process, etc.
For context I had a similar choice out of school… I chose the new launch. Since then years have passed, and I’m now at a large, established fund working under a tenured/well known PM so I have somewhat seen the development process and pros/cons of a junior on both sides.
I think you also have to give serious benefit to the fact that the tenured PM has proven he can manage a big team while performing well under the tight risk limits at a pod. The new PM might not have that experience, so that may translate into weak people managing skills while he/she is stressed about the daily vol and pnl. As a junior, your first few years will shape how you think, work, and even your LT career goals… so you 100% want to be around someone who can be a great mentor while teaching you a scalable process, not someone who lets you run free with 0 mentorship… despite the latter being a great experience for you, it’s not great beyond that seat.
While you will have no doubt a great learning curve at the new launch by being the sole analyst, I wouldn’t dismiss the learning curve at the eatablished pod. Being #10 doesn’t matter if you scale up quickly and can prove you’re a money maker… 9/10 times the tenured PM is more likely to reward that than the new PM. I’m surprised you say you don’t have much upside with the tenured PM. I would even go a step further and say that the new PM might skimp you on the comp in a big year because his mindset might be such that you’re young, have no credibility, and he’s taking all the risk of managing the pod.
Even though new PM has a past brand name record, so do many people in this industry (including my old PM at the new launch)… it still only takes being on the wrong side of 1-2 trades to blow up. If you were to blow up, consider how easy will it be to find another seat in an ever so increasingly competitive industry. If you blow up at the established funds, recruiters and hiring PMs will know what to do with you, they might not know what to do with you/be concerned about the transferability of your skills at the other one. I know it’s obvious but brand name buys you huge credibility early in your career… not only will you have the brand name but also benefit from the network of the tenured PM by virtue of having worked under him. Without it, people will be discounting your experience heavily because they don’t know about the transferability of the process/skills you learned.
I think as an exercise you need to map out the EV of this career step and think about the long term impact of this next step. Too many people worry about optimizing for the n+1st step.
del
Insane advice
Stage of career also plays a large role - if you've already worked on an established team for 3-5 years and aren't seeing growth, the startup opportunity makes a lot of sense. But when you are just starting out the structure, stability, and brand of a larger team are immense assets.
In this industry, early 20s are the worst time to take a lot of risk, you want to be creating solid experience to fall back on if things go south. Mid to late 20s are the best time to when you have a better idea of what you're doing but still don't have significant life obligations.
i thought mid to late 20s would be the worst time? that’s when i plan to start to settle down, buy a house, start a family, etc
Most I know in this industry (and other high achieving ones) did that in their early 30s. But everyone is on their own path.
If this is your first buy side job, take the large tenured pod. Hands down.
I’m going to be crass: who gives a sht if you and the other pm are from similar backgrounds. I think that’s a very immature way of thinking. The moment you are actually in the trenches, it will not matter if you guys are from the same village. If he has to choose between you or him, it will not matter if you guys have the same favorite foods. At your stage in your career, you need to learn how to do the job properly. Working for good people is the single most important thing. If you build a good foundation, you will have plenty of upside later. Who cares about some marginal upside now. Better to have a small cut of a big and durable pie vs a bigger cut of a small pie. News flash: you don’t need to be the sole analyst right now. If you’re just starting off you won’t know how to do anything and will make tons of mistakes, so having more responsibility then you can handle is a detriment
del
Since you’re new in the industry you’re a bit starry eyed but I’d be a bit wary of people making these statements… very few people actually follow through on their promises. Fwiw, I was told this at the my old shop (new launch) upon joining… it was true until the fund blew up and I saw the reality which was everyone fending for themselves because the PM didn’t give a crap about us.
I have met extremely nice people in this industry that turned out to be great mentors / help w/o expecting much in return.. but those are rare. Who knows maybe your PM is like this but I’d discount it heavily for now and not make an important decision solely based off his comments
Hearing this the PM sounds like one to avoid. A good boss and mentor should only be telling you how excited they are to have you join at this stage, especially when you are a strong enough candidate to have the more established option available. Saying that they are taking a monumental risk by hiring you is the last thing you want to hear.
My first PM was like this, and would later bring up how lucky I am to be in the seat every time I wanted more responsibility, comp growth, etc. down the line. If they are saying things like this when trying to close you, imagine what it will be like when you need something.
In my experience, that PM is better off hiring the person with 5+ years of experience and should go down that path. My bet is the real reason for the offer is they are struggling to find anyone great with that profile, so they are rolling the dice on a junior (but after making the hire, will act like they had a lot of other solid options available). Not a great place for you to be.
del
Am i the only one that thinks it's weird this PM is learning how to trade / model stocks in subsectors he's supposed to know from a college grad?
Which would you choose, a junior position at a prestigious brand-name pod or a new ~$500m pod with significant responsibility?
Appreciate all the insights shared so far
This is a no-brainer: take the established pod. Build a foundation and reputation for the next 4 years, then take risk with your career.
If a new PM is getting a single hire, he still hasn’t proven himself to the platform, which means he’s on a tight leash. They also are likely in their new seat because they couldn’t become a franchise PM at their old shop.
Process: The veteran PM with 9 analysts clearly has a process that works. Many new PMs have no idea what they’re doing from a management perspective. This is a process game, not a intellect game. You don’t need to be that smart to be a good investor. Good process = good mentorship / team dynamics / happy team.
POS: PMs of big teams are better set up for success. They’ve had years to build their tools, databases, internal relationships, etc., which enables them to focus 100% on PNL and managing the book. New PMs have way more on their plate: they have to build models, they have to build databases, they have to build relationships internally with risk, management, bd, and they have to mentor analysts, etc. It’s just a lot of work to take on.
Career Stability: The veteran PM will also have more rope due to his track record and ability to navigate firm politics in bad years. All things equal, the veteran PM will be cut last. And trust me, a lot of analysts will get cut when their PMs are cut (it doesn’t matter if you are a rockstar).
Brand: From a branding perspective, being a part of a franchise PMs team is more valuable than your actual skills. A lot of pod shops would rather hire a mid analyst from a pedigreed team with no experience taking risk as a PM than even entertain a top decile analyst with experience running a portfolio that unfortunately worked on a few teams that blew up for reasons outside their control control.
Unless there’s some article about how the new PM got poached for 100mm payout or you are confident their performance is good (2+ sharpe over multi year period - and you need to hear this from multiple people because many people in the industry will find a way to massage the numbers), you’re much better off with the established seat.
how good is 1.8 sharpe over 3 years?
I thought you said in your first post that the newer PM has 10 years experience at brand-name funds. But yet he only gave you a 1.8 Sharpe number over 3 years? Does that mean he has only 3 years' experience being a PM or is he maybe only giving you a curated / massaged Sharpe Ratio over a time period that suits his narrative?
If you are in touch with any brokers/sales, highly recommend you to talk to them for feedback on the PM. Sometimes sales can give you better feedback on the PM's performance and how he behaves when performance is not great (i.e. tends to blame analyst for his mistakes, inconsistent track record etc).
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