Been a poster on WSO for quite a while now (over a decade lol, good lord I feel old) and made a comment in this thread here about going back to PE after leaving at the end of 2020 to join a Series C startup on their Finance team (not corp dev). There was some interest in me doing a Q&A so here I am - given how popular of an exit this is becoming, hopefully this will be helpful for some people here.
Background:
- Non-target -> MM IB -> PE -> Series C Startup -> PE
Why I left PE to go Corporate:
- Was honestly just a bit disillusioned w/ the world of traditional finance. Too many sharp elbows, didn't necessarily feel that I was "adding value" to society (cliché I know), and honestly had a really bad experience in PE after some leadership changes at my prior shop
- Related to above, wanted to experience working w/ non-finance people for once
- Wanted a better WLB, was tired of constantly working 80+ hour weeks. Knew I'd take a big pay cut, but was ok w/ it since I've never been somebody that has made it a life goal to own a Lamborghini, fly private, own a vacation house in the Hamptons, you get the idea
- Having done IB and then PE, wanted to try a role that wasn't super transactional where you're constantly moving from deal to deal, company to company. The idea of focusing all my time and energy on one company was pretty interesting to me, which I felt could be potentially more meaningful
- Honestly just wanted to try something new and expand my skillset / background. Knew operating experience was missing from my resume and felt that this was the right point in my career to do so, and if I stayed in PE it would be tough to make the jump until I was much more senior, at which point you'd leave to be VP of Finance or CFO somewhere. Figured worst case, come back to PE and use my corporate experience to help me become a better investor
Why a Startup, and How I Picked the Company I Joined:
- Knew I'd be too bored at established F500 companies such as MSFT or AMZN, and joining "startups" such as FB or even Airbnb / Uber / Doordash, you're already going to be too siloed in what you can do (a lot of times you're only supporting 1 business unit or what you do is super narrow even if you're looking across the entire company), with less of an opportunity to really make an impact
- Also didn't want to go too early where there are no processes in place and don't have the risk tolerance to do so anyways. Felt Series B-D was perfect in terms of being able to work on a large variety of projects and have a more flexible day to day. Also more exposure to senior management and greater opportunity to be external facing w/ investors
- Targeted only places w/ a product or service I would use / strongly related to, or one I felt was actually solving a real world problem. So no, wouldn't have joined electric scooter startup #43
- Also didn't want to join a company that only did enterprise SaaS. Great business models, sure, but really not that complex and didn't think I'd learn as much
- Thought about each company from the perspective of an investor and whether I thought it had the potential to be a truly enduring business with significant upside (after all you do want your equity to be worth something)
- Targeted places w/ more experienced management teams only - people who I thought I could really learn from vs. some random Stanford grads at their first startup for example
- Looked at finance teams that were led by ex-bankers or investors. Those that were led by career FP&A professionals or ex-accountants were a lot less interesting since that meant you probably were focused more on just doing reporting and consolidation work which is super boring, vs. working on projects that could actually be impactful / drive strategic direction of the business. You want to be on a finance team that's a tier 1 citizen, not a team where finance is viewed as purely back office
Why Corporate / Strategic Finance, Not Corp Dev:
- Thought corp dev would potentially be too transactional still, which was one of the main reasons I wanted to move away from PE
- Wanted a true holistic lens on the company where you're able to learn how all functions of a business truly work together in tandem, which I didn't think would be as possible in corp dev
- Most companies at the size / scale I was targeting didn't have dedicated corp dev teams anyways
Roles & Responsibilities at My Startup:
- Fully owned financial model and all forecasting responsibilities
- Fundraising - raised multiple hundreds of millions in multiple rounds of funding. Everything from materials creation and pulling together marketing / DD materials, to investor calls and legal negotiations / structuring
- A bunch of standard FP&A work like monthly reporting, budgeting, headcount planning, etc.
- Did some software systems implementation projects and building out new processes that touch finance
- Various ad-hoc projects to better understand unit economics, analyze if we should shift our pricing model, which markets to enter / leave, where we could find efficiencies in the business, etc. Lot of cutting / analyzing data to better understand the business and make new recommendations
Rationale Behind Returning to PE (In No Particular Order):
- Lower comp - this one is obvious. Yeah sure if your equity hits you could be rich, but that's such a toss up. Point below is directly related to why the lower comp ended up being an issue
- Startups aren't all sunshine and roses in terms of hours. Hustle mentality is real and I didn't love being paid 35% less for only working like 5-10% less (though to be fair I wasn't at some super chill SaaS company, mine was more operationally intensive and a lot more complicated of a business model). Especially during fundraising was hitting 80-100+ hour weeks at times, which is definitely an outlier case vs. most startups. But just because you're joining a startup, don't expect to work only 40 hrs / wk
- Quality of talent you work w/ is a lot lower and can be really frustrating at times - might come off as douchey, but it's the reality. And I'm not just talking about like how "smart" people are, but also work ethic
- I miss the external relationship aspect of investing more where you're constantly interacting w/ people outside the business vs. only working w/ the same people internally all the time (other than during fundraising really)
- It was really cool to dig super deep into a single business and focus all your time and energy on one thing instead of jumping around from company to company / deal to deal, but after a while that got old for me. The incremental insights just weren't as interesting to me as constantly being exposed to and learning about different industries and business models like in PE (and talking to different people per point above)
- Realized that CFO track wasn't what I wanted long-term. Sure investing also involves a lot of less glamorous tasks, but some things in the corporate world I just never want to do again and have literally 0 interest in (the idea of having to do another annual budgeting process makes me want to shoot myself, anything involved w/ audits, etc.)
- Started getting bored and felt I was really plateauing from a learning perspective. Yeah investing is process oriented and you often follow a playbook for each deal, but at least you're hopefully learning about a new business with every new deal for example. Doing a 3rd budget cycle for example I don't feel like I would materially get anything out of it at all for instance. Even if I switched to a pure strat fin role, just felt it wouldn't be as good of a fit for me at the end of the day
- New addition here is that the tough part for me was knowing that if I stayed corporate, knew that at some point whatever company I was at would become too big / bureaucratic for me and you start being more siloed or get more and more high level. It's why I was targeting Series B-D in the first place and obviously if the company is (hopefully) successful, it'll really start to scale up to a point where I'd lose interest, and the prospect of then later on in my career jumping from company to company was not very compelling
Recruiting Process to PE:
- Reached out to all the old HHs and people in my network letting them know I was looking to return to investing. This isn't too uncommon of a story so it didn't require a lot of explanation or anything which was nice
- Did have to do quite a bit of brushing up on interview prep and self-studying to get back into prime interview shape. Definitely got a bit rusty on some of the technicals because it's really a different world (like I did some valuation work, but that's such an afterthought at the end of the day really)
- Interview process took 3-4 months between initial outreach to finally securing an offer
- Came back at the same level that I left at. A bit disappointing, but at over 1.5 years out of investing I recognized that hey, you take what you can get especially in this economic environment, and I did really enjoy my time at the startup. Had some potential roles to jump up a level to VP, but cared more about team / culture, WLB, and overall opportunity of the platform vs. chasing comp and prestige only
- New gig is non-SF / NYC
For the purposes of this discussion want to focus on why I left PE in the first place to join a startup, and process / rationale on why I'm now back in PE. Ask away!
Kind of curious what your interview processes were like. Were they all standard fit + model/case? Reason for asking is I left PE as a newly minted VP, working on some of my own stuff now, curious that if I chose to return in a year or two what that process would look like from a more tactical perspective.
2nd question, do you feel like you got credit for having some "operating" experience? Lots of firms firms like to say that they value operating experience, but curious if you found that was the case, or if they really just cared about your PE experience and abilities.
Would you do it the same all over again? Was it worth the experience and time off from PE?
On team / culture, I would allude to this when explaining my background during interviews. I'd explain that I left because I wanted operating experience and it was the right time in my career to do so, but that there was also a large cultural shift on my prior team after new leadership changes. And then when I explained why I was looking to go back into finance and why I'm interested in the place I'm interviewing at, I'd also drop in that I'm looking for an environment that's really collaborative with a strong culture (like how I felt my prior shop was before the leadership changes) as what I've always valued the most are the relationships and friendships I've built throughout my career. Now I wouldn't straight up trash my old firm, but more just hinting that yeah, culture mattered to me because I've experienced what happens when it changes for the worse. Was this the best thing to do if I was solely focused on getting a job? No. But I figured if anybody cared that I was bringing this up, that probably wasn't the place I would want to be at anyways.
On WLB during Q&A I'd ask what people did outside of work - if they gave something generic like "oh just hanging out with friends when I have time off" and couldn't really give any tangible examples, that probably wasn't a great sign, vs. if there were actual hobbies and things that maybe take a bit more time, and if they talked about being able to spend time with their partners or families. This would also be helpful at times to figure out team dynamics since you'd sometimes hear about people hanging out together outside of work, which I always took as a good thing. Asking "what is your favorite part about working at x" would also help me get a sense of what it would be like to work there. Also relied on off-sheet references as much as I could, mostly looking for existing connections that knew of the firms or people I was interviewing with (bankers / placement agents / HHs are actually great for this since they see so much), but also did some cold LinkedIn outreach to see if former employees would be willing to share their experiences working there. Then taking everything above together and layering in some personal intuition / gut feel.
At the end of the day team and culture still mattered the most to me - I'd rather be on a really supportive team where everyone helped each other out and enjoyed working together cranking out 80 hours per week, vs. working 60 hours per week w/ people I hated.