80% chance of making 20 mil
Hi,
So I stumbled across an article written by an ex-banker who gave it all up for internet entrepreneurship.
http://www.businessinsider.com/banking-on-a-startup-life-2010-9
He claimed that going into banking gives one an 80% chance of making 20 million within 20 years. I know this cant possibly be anywhere accurate, but what if it is? Do you think its likely to attain such a massive net worth, just by sticking with the traditional IB route? Where do bankers usually end up when they're 42? Id really love to hear your thoughts.
Thanks
No, it's not anywhere near accurate; in fact, it's probably one of the most idiotic things I've ever seen posted on a major newsfeed - but then again, this is Business Insider.
Take someone who makes 500k/year (which most people won't end up making) and let's assume they're taxed at ~40%. Remember, this tiers, but it's still a lot. Then take out living expenses and voila...you can see how hard it is and how long it takes to stack up that much money. It'll also grow if you re-invest it but yeah...you get the idea
Assuming you get every promotion along the way? I suppose it's possible, but even then it's no where near 80%.
The number of MD's is definitely not equal to Analyst-pool * 0.8
But neither is the # of analysts gunning for eventual MD slots. Not to say the principle doesn't hold.
If you are successful in advancing up the ranks in banking, or, more likely on the buyside, there is a small chance you will make $20MM cumulative, pre-tax over 20 years. The chance that you will amass a $20MM fortune net of taxes and living expenses is virtually zero.
Typical wantrepreneur bullshit. They're typically full of rhetoric about what they "gave up" to pursue the dream of a billion-dollar Internet startup. They're the guys who sit across from Stanford coders they deceived into working with them, telling them that they deserve a majority equity stake because they're the "idea people" and can get venture financing and execute to perfection.
They're the ones who don't bother learning to code at an early stage company and instead spend their time writing "business plans" and "pitch decks" for their VC "connections" that amount to that dude they met from Kleiner at that MS event that one time, or the junior analyst at Insight they were frat bros with while in college.
One year at MS and he's 80% convinced he's worth 20 million dollars in banking. Seriously? And he says that pursuing a startup is priceless?
How naive. When he's broke and on the floor crying because his angel investors have given up on him and his coders have left for Palantir and Google, we'll see whether or not he regrets his decision.
Plenty of valid points but if you have ever been through the process you quickly realize that an idea and technical ability are worthless without an introduction and plan. People underestimate the difficulty of building a plan and actually getting funding.
if I had an 80% chance of getting to 20mm by 40 and a 80+% chance of being homeless by 30 (entrepreneur), I'd probably stick with banking.
sad when BI's smut is considered headlines
well, it's bi dot com...which is not really news, and secondly, he no longer works at "the ladders", and third, just do the math.
20mm accumulated wealth = ~33mm pre-tax earnings. we can assume that you're "comfortably" making 150 175 200 as an analyst, 250 275 300 as associate, and 400 450 500 as a vp...
that means you're going to have to make ~2.7mm per year over the next 11 years to get to ~33mm...
and the biggest factor isn't that the numbers are right or wrong, it's the fact that the chance you hit the big leagues is not 80%.
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