For context, I will be starting full-time in banking next summer. I am interested in PE but am trying to make a more informed choice on what I want to do in 2-3 years, rather than going with the crowd and jumping into recruiting without much thought.
For those who have worked in both PE and consulting, in which did you feel you learned and developed the most skills that would be pertinent to pursuing entrepreneurship, a strategy role, or just general business acumen?
Alternatively, could those same skills be attained by staying in banking?
For purposes of this discussion, forget about money, hours, preftige, all of it. I'm simply wondering about the long-term value of what you learn in each of these careers.
Not exactly the same, but I worked in VC for a year before starting at MBB, so take what I say with that bias/grain of salt. I'll say "VC" instead of "PE" here but I'm sure you understand that there is a lot of overlap between the two--not that it's the same, but much more overlap than consulting.
For Entrepreneurship, VC was better because of the ecosystem that you're in as well as the way that you're taught to look at companies/opportunites. The things that you hear walking around the VC office are about ideas people have, ways to look at companies, sourcing ideas, etc., but at MBB, you're hearing a lot more about how to structure communication, market information, organizational information, etc.
As far as a strategy role, Consulting >>>>>>>>> VC/PE, not even a question. MBB teaches you how to think and frame and get the right information in the right format to make decisions, something that I didn't find in VC as readily. Also, the caliber of people that you're around is going to be similar, whereas in VC, I honestly didn't feel that. Could be better in PE, but not sure. MBB will teach you so much more about how a company ought to work and how to make it better than PE/VC ever will, simply because the job itself is inherently different: PE/VC is going to be placing bets on companies and perhaps doing some things here and there to improve them (if you have enough influence/control), but in consulting, that's literally the entire job.
As far as business accumen, I'd say the same thing as above, Consulting is going to get you a lot farther.
I'd also strongly caution you against Banking. I know many banker and I know many consultants, and without question, I'd rather have a consultant on my team than a banker, 10 times out of 10. There's an enormous circle-jerk that takes place because of compensation and prestige which inflates the positions and work to something that it's simply not. Banking isn't the way that you learn business--banking is the way that you learn banking and finances. Everyone on this forum will have a bias towards the financial side of things (which is fair, tbh, it's about banking and it's very important), but consultants are just better at business skills. Hard stop.
Hope that's helpful!
Best,
KHC
Edit: feel free to message me if you'd like to get more info. Happy to help.
Edit 2: Wow, LOTS of salty bankers. Looks like the group-think and circle jerk has really gotten into your heads. I'd recommend putting the Kool-aid down and thinking for yourself rather than following the lemmings off the cliff smh
Thanks for the detailed response. From your experience in VC, do you think you learned things that would be instrumental in starting your own company that would otherwise be unattainable in either buyout PE or consulting? VC sounds exciting to me, as it does with just about everyone, but after spending nearly 3 years with an angel group, I've become somewhat disillusioned with startup investing from seeing dozens of frivolous companies backed by founders with meaningless credentials like being accepted into some accelerator that accepts anyone with a pulse, Forbes 30 under 30, or some similar BS. Also, I'm wondering if VC associate work would be primarily around sourcing, and if the analysis (if any) would be highly subjective and meaningless in the big picture.
Hey fuzzy_stocks,
Two big things that I learned:
1) Team is so, so, so, so much more important than the DD process suggests. When you build a team, you're creating a stacked bar chart of the company's total value. You multiply that value against the value of the idea/company, but let's be clear: good ideas area a dime a dozen: good teams are worth 10x their weight in gold. I'm bothered by the fact that we spend so much time looking at market, trends, idea, etc. when DD is taking place for VC: If I was running my shop, 80% of the memo would be breakdown of why we think the team will succeed (based on our interactions with them, not stupid glamour shots like Forbes lists), and 20% everything else. If I started my venture, I would bet that my roommate probably isn't the next Zuckerberg and I'd look for someone more qualified, make a juicy options pool with hard targets to vest, and be ruthless about who I bring on and let go, because that's the engine, and you don't win a race with an engine firing on 2 cylinders.
2) The above being said, a rising tide raises all ships. Sometimes the market is right for something, and everyone that is in it will be killing it, even if they're an idiot. Be ready to jump on an idea that you think is going to explode upwards, because there's only so many explosions during a lifetime.
“I’m a career consultant, here’s why consulting is better than banking”
I'll add a perspective. I started at MBB and am now in PE.
When you talk to people who went MBB -> PE like I did I think there's going to be a natural bias for them to say they learned more in consulting, but I don't know if that's necessarily a function of the specific job itself. I think what's more true is you learn more in your first high-caliber job than you do in most subsequent jobs (at least tangible learnings you can point to) because you're essentially a blank slate. At MBB I learned how to structure my thinking, how to write a coherent email, how to communicate effectively in meetings, why color coding in excel matters, how to make small talk with someone 2x my age in a professional setting, and whole host of other things that I would classify as "How to be a high-functioning business professional." Those things aren't unique to MBB though - my peers who started in banking learned them and I'm sure Analysts who went direct to PE learned them too.
If you strip all those things out and focus on core learning from the job specifically, I think I could make a strong argument I'm learning more in PE. In Consulting a lot of my project experience was narrow (i.e. Helping a manufacturing company improve X process, helping an account sales team determine which accounts to prioritize, etc.) so I felt like sometimes I wasn't being exposed to the whole picture. I don't think I could tell you what core strategic issues kept the CEO up at night for any of my clients. In PE, I'm focused precisely on those core issue. I both get super broad in terms of thinking about how market dynamics will play out 5-10 years down the road, but also super granular in understanding why a specific product offering is preferred by a particular subset of customers vs. a competitor. To me this work is far more interesting and I feel like I'm learning more and becoming a better thinker/analyzer of businesses as a result.
I would look at firms that hire former consultants (even if you're not one), as they tend to have their Associates do that kind of thinking in addition to just being a model monkey. Some good firms to look into would be H&F, Bain Capital, Berkshire Partners, Golden Gate Capital, New Mountain Capital, etc.
I’m going to show my bias here as someone who came from an alternative background and ended up in operationally-intensive PE (ie LMM where our management teams are typically pretty lean and have litte-to-no intermediate infrastructure).
I think this thread dramatically underestimates what you can learn at PE shops that actually work hands-on with PortCos. I’ve learned a ton about how to dissect data to find underlying root causes, how to build out a business plan to respond to problems, how to evaluate people and determine their strengths and weaknesses, how to pitch a recommendation to get a team on board with our strategy so that they actually believe in it and execute well, etc.
There’s a reason some shops target consultants - there can be a ton of skill overlap, and for some PE firms you actually get involved in execution as well. I won’t deny that we do plenty of rote process management as well, but the universe of PE is a lot broader than that
PE and it’s not close. Your skill set is incredibly broad business, finance, operations, legal, communication etc etc
95% of PE guys don't know their ass from their elbow when it comes to operations