Do you think PE has actually helped you become a better entrepreneur?
To anyone who’s done a year in PE minimum, do you think the operating experience has actually helped you think like a business owner? I wonder if this part of PE is overblown or it’s true to the core.
In other words, do you think PE will help you become a better entrepreneur later?
Yes and no. Certainly more sophisticated, but also more cautious/calculated. The latter can be hurtful. Most successful entrepreneurs I know are retardmaxxers. And that isn't a diss.
100%
I'm a serial entrepreneur that runs a small PE firm and IMO...it doesn't help much.
Most of the time it makes you too stupid about risk. You spend too much time calculating things when you should just get in there and know you will find alpha.
I know that sounds retarded to people, but it's the truth.
In a lot of ways, PE/finance guys are huge midwits. Many can not accept risk and try to derisk too much but they don't realize it cuts their upside dramatically.
That's fine IF you're an employee, nothing wrong with that.
But it doesn't work if you want to be a successful entrepreneur.
And let's define successful entrepreneur as making at least ~4x - 5x what you would have made otherwise in a salaried role.
100% agree. Spending too long in PE makes you too process oriented and risk averse which is doing yourself a disservice if you want to be successful as an entrepreneur (unless you want to launch your own fund).
Agreed. Co signed.
Notarized,
PE Midwit
But Im bout to run it up on you hoes
Not personally attacking you, but I think “4x -5x” more is a complete joke. That thought process is asinine and rather textbook like; in the real world it never works like that.
Maybe in 20 years you can make 2-3x… maybe but even that will be hard
In this life, you have to be willing to try, what if you make 1.5x what you would’ve made in a job, but you create value for your community and can enjoy some agency over your diary and a coffee with your wife at lunchtime…
To me that’s worth it, I’d take that offer every day of the week, and twice on Sunday
Have you been an entrepreneur? It's incredibly stressful and not worth it unless you making FAR more than you could otherwise.
Doing PE today, especially MF PE may actually make you a worse entrepreneur lol. It’s a very hierachal job and corporate. It’s designed to make you a coporate investor. As someone who was an entrepreneur since middle school I was kinda grossed out at the stuff I would have had to spend my time on working in MFPE. The only way it could help is giving you some capital and some network. Maybe you’ll learn a bit. Meet some investors etc. but for those who are going to be the best entrepreneurs, I know a rare few who came out of PE. It happens but it’s rare. More common to find good entrepreneurs out of YC or tech or whatever. Maybe a HF even. Different skill and mindset
I’ve done 6 years of PE. I think I’m much more professional and understand politics, the importance of funding and capital structure and legal risk/docs much better.
At the same time I earn a lot of money so the odds of actually doing my own thing is reducing quickly
Almost none of those things have any value as an entrepreneur though? What good is understanding politics lol.
I think the lack of politics is one of the single greatest things about entrepreneurship.
I started in finance (and was a horrible employee; check my account I got PIP'd out of my industry lol), private credit instead of PE, but still have some insight as I've spent a bit of time on the VC side as well:
Finance arguably makes you a WORSE entrepreneur. The most impactful skill you can have as a business owner is to just TRY stuff, and see if it works, then evaluate and move forward. In finance, you do the exact opposite, literally: you model everything out on paper before trying, you spend months strategizing, and then get upset when a ridiculous edge case ruins your whole plan.
As an entrepreneur now (almost 2 years full-time, somewhat successful and growing quickly), I've spent MAYBE 20 hours total on financial stuff. The only thing that matters, especially early-stage, is getting your taxes done and maybe keeping your books clean. Cash flow becomes important too as you grow, but if you're bootstrapping like most businesses on the planet, kiss that type of work goodbye.
You need to learn to SELL!!! Sell, sell, sell. Everything is sales. Ken Griffin knows it and swears by it, if you don't believe me.
Current An1 pretty disillusioned with IB with a sales opp at a unicorn - should I leave IBD for sales at a growthy fintech if I know i want to be an entrepreneur/prefer vc and growth style investing?
Definitely, as long as you’re okay with a one way door. You’re not getting back into IB after tech sales, and IMO that’s fine. If you wanna coast, making 400k as an AE at 45 hours a week is easy in 5 years. If not, you’re gonna be a killer business-side founder.
What sort of business have you started?
Tech-enabled distribution/supply chain
sales is the only skill that matters in life, no matter if it's for career, relationships, pitching the broccoli to ur kids, etc... so fully agree
I think PE can make you a better business person, but not necessarily a better entrepreneur. You learn a lot about capital structure, how investors think, what makes a business attractive, and how to look at risk without getting emotional. Those are all useful once you actually have a business to run.
The part that can hurt is becoming too comfortable with analysis before action. In PE you can spend weeks modeling a decision that an entrepreneur sometimes needs to make in a day, test it, and adjust. The biggest thing I’ve had to unlearn is waiting until I have enough information. In a startup, you usually never have enough information, so execution and selling matter a lot more than having the perfect model.
It will depend on which part of the PE right? I would like to think that in a LMM or MM you will be learning more relevant things as an entrepreneur - the ability to work with imperfect info, build rapport, sell ideas and most importantly, the opportunity to speak to founders and learn from them. Agreed the larger it gets, the more of a finance/corporate role it becomes and skillset is completely different. Also you pay much better there that it is unlikely for you to decide to leave, or at least the opportunity cost is much higher. Don’t underestimate this either.
Wrong. This is logical on paper but not how it works in practice. See other replies.
Spent 12 years in PE, rose to Principal at UMM, did not see path forward at my firm so left to find a better role closer to home on the East Coast. Ended up becoming an independent sponsor with the backing of a enormous SFO, and now do hybrid Sponsor/Platform CEO role...and while my PE experience is/was helpful for all things deal and risk related, it is of zero use to being an actual entrepreneur and dealing with real business issues. I learned so much about being an entrepreneur in the the first year of actually owning and operating. Doing actual things vs. directing KPMG or your CFO is not operating.
I don't think your average PE partner could run an ice cream shop profitably.
Yes and no. If you are bootstrapping and business in traditional industries (think boring) like real estate, franchise, mom and pops then yes. It’s good to understand wants a good business and the potential to deploy a roll up strategy and have someone else run the business. Pretty much like a search fund. But for startups like tech it actually makes you worse. You don’t want to create a profitable company in a niche market where the TAM is small. You want to enter the massive market with large incumbents and players who are doing a flavor of you idea and outcompete them. You do that by sell, sell and selling + building a solid product for a big pain in the butt problem. The finance skill will only matter 10% of the time and come in handy when you are thinking about fundraising and sometimes decision making. The larger the company the more your finance skills will kick in.
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