Major Decisions

Hi all, 

I have to make some major decisions over the next couple of months and wanted this community's input. I am 6 years out of school and am a more senior Associate at a top 10 MF and recently got into a top three MBA program (H/S/W). My role is cradle to grave, but focused on a popular but more niche asset class. My goal is to become the best investor possible and my fear is my current role is leading me down a path that will make me far too specialized. My options are as follows and I wanted to see if the community has any advice:

1) Stay the current path and get promoted in one year to VP, which I have been told is close to 100% likelihood. I think this further digs me into a hole of being the go to guy around the niche asset class and recruiters have already said that my background is going to be harder to sell for "generalist" roles. 

2) Go to MBA. Sounds like it would be a blast and a great way to meet some new life long friends/connections. Not to mention, some time away from the desk would be great, but I got no scholarship $ and the thought of spending $200k+ hurts. I see myself in the real estate investing industry long-term and would recruit for post-MBA REPE investment jobs - my biggest fear is winding up in a first year Associate role and effectively wasting 2-4 years in career progression, while also needing to work longer hours at an older age. 

3) Recruit for jobs. I am doing this actively, but the job market for investment roles is extremely dry. I am in processes for 2-3 roles at the moment, but they seem to be moving at a snails pace and I need to make a decision by June. 

Apologies for the long-winded post, but I would really appreciate any advice I could get. My friends have said that you can't really go too wrong with any of these paths and although I think they are right, I just want to optimize for the best outcome. Thanks!

 
Most Helpful

First of all, congratulations. It is not a small thing to do well at a top company and get into a top MBA program. While the decision you face is certainly major, whether you keep kicking ass and get a promotion, find a new job, or go to one of the best business schools in the country, your friends are right - there's no wrong answer here. You're making decisions from a position of strength, which is always good. 

What I would do, in your position, is work backward from your destination. Where do you want to be in 5 years, in 10 years, and in 20? Now, route your way toward that destination. What paths did the people who achieved what you one day hope to take? Do most of them have top MBAs? Your first decision point is MBA or not, because 1 and 3 don't have a deadline as much as 2 does. 

Will you ever find yourself in a position where Harvard, Stanford, or Wharton on your bio may open some doors, either in leading large existing companies or raising money for your own fund? Will the friends and network you make in two years of business school make you even more successful down the road? Would the H/S/W stamp of approval give you a return on the $200k you're investing? Also, the only way you come out of a top MBA with 6 years of experience in an Associate 1 role is if you limit yourself to that. 

That said, do you ultimately see yourself being an expert in your current niche asset class? (Which you should DM me because I'm intrigued.) If so, not being able to go after more generalist roles doesn't matter, and you'll certainly gain more asset specific expertise in two years of working than you will in two years of school. If not, you may be correct in not wanting to be overly specialize. Likewise, these 2-3 roles you're recruiting for - are they the "next step" toward your ultimate goal, or are they just a title & pay bump? 

I try to put myself in the position of people asking these questions, even if that isn't always an accurate barometer. If I had 6 years experience at a top firm, and the chance to take two years off of the grind and cement my resume as an all-timer, I'd take it because of what that could open up. The only thing limiting you after all of that is your own ambition, and $200k won't be that big of a deal if that ambition succeeds. For me, having Harvard on my resume instead of a random state school would give me some extra credit with potential investors. 

You you said your goal is to become the best investor you can, but honestly you can do that in any of these routes. If you think hard about what you want to achieve and route a path to get there, I'm betting the correct decision will reveal itself. And if you end up making the wrong decision, fuck it - if you're the type of person who can get a job at a top megafund and into a top business school, you're also the type of person to make any of the three choices work for you. Trust that future you will make the most of whichever route you take. 

Commercial Real Estate Developer
 

Omg the best comment honestly! Great advice. I would personally choose to do an MBA. Agree with all of your +/- mentioned, but life is more than just a job. Go and get that expedience (new friends, new networks, new business ideas). Who knows, maybe one of your classmates will create the next Uber and you will have a chance to be a pre-seed investor. That’s probably a rare time in your life when you can meet people outside of REPE industry. As for the job after MBA, I have no doubts that you will be able to land in BX and the likes at senior associate / VP position.

 

A few things to ponder from someone older who has seen a lot of different paths play out:

1) if I take a look at a short list of the best investors I personally know - none of them have an MBA.  To become a better investor an MBA likely won't do much.

this short list - includes 1 person who was a founder of a +$50B investment firm, 1 person who built a CRE fortune worth upwards of $1B, and 1 person who hit a homerun on a turnaround to the tune of +$100M in personal liquidity.

2) people get paid for adding value.  the most sure-fire way to add value is to become an expert in a certain area.  becoming an expert is not something you should look at that pigeon-holes you - it should be looked at as your superpower that you should continue to build on and monetize.

as a younger professional, I was very focused on becoming well-rounded.  well, i know for a fact that I would have progressed my career a lot more if I was less concerned with being well-rounded.

3) based on #1 and #2 above, if i was you i'd stick with your current role/niche - with one big caveat....

If you don't like what you do, if it doesn't motivate you when you wake up in the morning GET OUT NOW.  Ultimately, you'll be most successful in the long run working a job you get energized for.  And the sooner you find that - the better off you'll be.

4) My MBA was among the 2 best years of my life.  But I'd say 95% of MBA grads would say it wasn't worth it from a financial standpoint (in 95% of cases -- the career progress doesn't overcome money paid for tuition + living as well as income lost).

 

Thanks. Could you elaborate on the backgrounds of each of those shortlist archetypes? 

 

first person started in IB analyst, got an investing seat at the bank back when they could take more risk and has parlayed that investment philosophy all the way to founding a huge firm

second person, is an older generation - but was a complete bootstrap real estate investor, started with college duplexes and kept on building

3rd person went from a no-name MM IB to a distressed debt investment firm (well known) - did very well, but capped out mid level at the investment firm - took a big risk at a turnaround situation and had a huge huge payoff

i'm leaving out one person I know actually who has a great investing record and DID get an MBA

this 4th person started as an analyst at a MF PE - did HBS - then rose through the PE firm until he started his own (with other partners).  i'd venture to guess this person only got the MBA bc it was expected at his firm.

the common thread on all the above is they found a good area of expertise and built upon it (and built and built).  they did not go in search of well rounded experience.

 

But despite the personal examples you know or don’t know, wouldn’t you say there are many top tier investors that do have MBAs from elite institutions? Look at Barry Sternlicht or Steve Scharwzman.

 

You can def point to examples of top tier investors with MBAs

I think a younger cohort (people in 40s instead of 60s or 70s) is going to be more instructive though.

And I was pointing to people I know because - the younger cohort are less household names than the old guys.

 

I'd consider why exactly you want to be a "generalist". There are not that many generalists positions out there. I have one of them, and I often wish I was specialized. The people I know really crushing their careers are all specialized to their asset class. That's how they know it in-and-out and see every opportunity that comes by and are able to move quickly and scale. While I can shift through asset classes and have a better sense for risk adjusted returns than my peers, I simply do not have enough time in the day to be staying up to speed on all the product types I cover which is a hinderance to scaling. 

I'd also ask yourself why you want the MBA. I personally don't think it adds much value to your career besides having the stamp on your resume if you're going for a career path which requires one (and while there certainly exists firms that do, I think it's largely unnecessary in CRE when you have the right experience which you already do). Another way to think of it is that you're going to give up two years of deal flow experience as a VP to get that MBA. I'd say 2 years of deal flow at the VP level is a way greater learning experience if you're sure you want to be in CRE

 

My recommendation is go for the MBA (full time at Harvard, Stanford, Wharton).  You don’t know what you are missing.  

My background has some similarities with yours: MF acquisitions and a stint in a niche sector pre-MBA, post-MBA real estate development, eventually specialized and went back to the pre-mba niche sector and branched off into other somewhat related niches that were in earlier innings and then cashed out.  I did my MBA part time at Berkeley, so I maximized time, opportunity costs, and got a nice bump in pay while going to school.  I was married and took care of my dad so I had limited time for the fun stuff of grad school.  So, I think we are different there, and I think you currently have better corporate ladder momentum than I had at the time.
 

Some things to consider:

  • you have a long time horizon, potentially 40+ years of working to amortize those two years 
  • the big bosses (CEO, VP of Development, two MD’s) at my last employers had MBA, MSRE or Masters of Finance.  It’s still a ticket you can punch.  
     
  • Here’s where I’ll challenge the term generalist vs specialist.  Because you are in a niche sector (assuming you want to do that post-mba - Big IF), having a top MBA; investment and eventually development experience; startup experience, etc makes you more and more unique as a specialist.  While the MBA itself is general, that combined with your niche and other skills makes you stand out.  
  • Your niche sector will become less unique and attractive over time as more competitors increase supply.  It becomes less of a niche.  Think about when the Golden Era of your niche was (I’m guess since you’re at a MF doing the niche, so the golden era is in the past).  Are you being blinded by a short term halo and foregoing developing yourself (long term)?  What’s stopping you from coming back to your niche like I did, but later with more complimentary experiences?  If the niche sector isn’t as attractive 3 years from now post-MBA, is it worth your personal sacrifice?
  • If you like the mega fund LP life, I can see why you’d just stay at the firm that’s going to grow you. I didn’t have that option so the choice was easier for me. You can have a really great life where you’re at.  But I’m going to guess, where you’re at, even as a VP, you probably have a 20% chance being a lifer there.  Just guessing.  If you’re going to be that niche specialist there, somewhat insulated, then you could have a longer tenure.  
     
  • There is risk moving from associate to VP that the Peter Principle happens and you fail in your new role (more sourcing, more internal brokerage with funds).  Most MF with niche department do a lot of asset management.  Less of a risk as a niche specialist.  But you sacrificed an opportunity to grow you - for your imagined path.  Is that what you want?  You obviously took the time and hard work to apply, and now you have to make the decision.  In fact, you made the decision several months ago.
  • I’m a bit jaded.  Screw believing you are the golden boy, you’ll be taken care of for life.  Employers will say what they need to until you are replaceable. 

You want to be the best investor possible?  You need reps.  Helps to have a diversity of experiences.  I mentioned on WSO, you will likely be involved in 2-3 niche sectors in your career.  The newest niches will be mash ups, or rely on tech/processes that was not possible or available 5 years ago. 

Have compassion as well as ambition and you’ll go far in life. Check out my blog at MemoryVideo.com
 

Some really good points here, thank you odog808 @MemoryVideo.com.

I do see myself potentially coming back to my niche, but I think getting complimentary experiences would make me better at evaluating opportunities more broadly and within my niche. The technology in this niche is way behind where it should be, and although there have been large capital inflows into the space, I think it will take 10-15 years to get to "full maturity." I also have spent most of my career focused on said niche, so think getting exposure to 2-3 other niches could give good diversity of experience as you had alluded to and there is ample time to come back and capitalize on my strong knowledge base. 

I am definitely not the golden boy at my firm, but have gotten to the point where I am well respected for meaningful past contributions. I think if I restarted from square one somewhere else, I could become the golden boy and part of me wants that opportunity. As you can probably tell, I am leaning towards finding a new job or going the MBA route. 

How did you cash out of the niches that you joined? Did you do something entrepreneurial or did you have equity/carry and were investing in said niche spaces? 

 

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Have compassion as well as ambition and you’ll go far in life. Check out my blog at MemoryVideo.com

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