AMA: From Sellside Research to Strategy & Finance at Rapid Growth Start-up

wc7850's picture
Rank: Baboon | 124

Pre-MBA Work History:
I attended a non-target public university in the Northeast, majored in Economics and Math, and joined a bulge bracket bank in Equity Research, covering an industrials sector (keeping it purposely non-specific). During the four years on the team, I also passed all three levels of the CFA and was promoted to Associate.

Unfortunately, I hated working for my manager and thankfully, got into an M7 business school. My initial focus was going to the buyside as investment analyst job. But as my time and exposure to the world of tech and corp management increased, I found myself gravitating more toward learning the skills needed to run and grow a business, and not just analyzing them as an investor.

Post MBA Work History:
For all the skills that Research afforded me, I still lacked operational finance experience. That led me to reach out to a F-500 company in the sector that I had previously covered, and convinced the finance team there, which included some ex-research sellsiders, to take a shot on me on the FP&A team. Given my previous experience dealing with the Street, I also ended up formulating the quarterly talking points with public investors with our head of FP&A, head of strategy, and CFO.

The FP&A role was a good stepping stone in corp finance, but it did get dull pretty quickly, so I ended up leaving after about 1.5 years, and found a healthcare software start-up that was looking for an ex-Wall Street type to round out the finance team, especially as it related to fund raising. It didn't hurt that I had FP&A exposure as well.

I've been with the start-up for about a year now. While my primary role was initially investor relations (dealing with Board), I've worked on go-to-market planning, corp development, and can be dialed in on almost anything else (ops or strategy) that comes up, especially when a more analytical lens is required.

AMA:
I can answer questions about pivoting career focus and the differences between each of mine (Research to Corp Finance / Ops to Start-up finance), networking and interviewing, making and planning for career moves, getting an MBA, earning a CFA, dealing with rejection and failure, career and development advice, importance of mentors, or just about anything else.

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Comments (21)

Sep 13, 2019

Hi wc7850,

Appreciate you taking the time to do this AMA, especially since I think we come from similar professional backgrounds.

I started in corp dev at a highly acquisitive biotech company for 2 years and transitioned to an FP&A role at a FinTech company. Like yourself, I found myself gravitating towards the operational side to round out my skillset, but found that the learning curve plateaued rather quickly. I'm eager to get into FinTech corp dev as my medium-term goal, but want to make sure I'm not dismissing my current role too soon.

* When you found the role getting dull, what sort of learning experiences did you seek out to try to re-steepen the learning curve?

* From a resume standpoint, what sort of FP&A 'bullets' would you emphasize for a potential transition into corp dev? I believe I have the investing 'bullets' from my prior role, but want to show that the FP&A side can add value as well

Thanks in advance!

    • 3
Sep 14, 2019

To answer your first question, when the role began to drag, I did two main things. To give you context, where I worked had recently undertaken major M&A and by time I arrived, had owned the acquired business unit less than a year. Naturally, that prompted a ton of action to better integrate that unit and develop a better reporting and analytics.

A) Got more involved with developing and automating reporting using Business Intelligence (BI) tools - teamed up with a BI analyst and a data scientist to churn through daily operational KPI data, set up dashboards, and automated email reportsto give corporate more context into the Daily KPI reports we were skimming (but had no real feel for). Mechanically, this took me deep into understadning our transactional level KPI data, how that was stored (data warehousing), and analyzed, showing discrepancies vs GAAP. Operationally, we could understand how daily, weekly, monthly trends looked vs historical performance, instead of relying on the unit CFO (very long served) to dig into his memory and give us context. We had our own view, and naturally, could accelerate our decision making cycle because we short circuited the need to always ping the CFO for insight.

b) This was more thrust upon me, but budgeting for our finance team for the next fiscal year really illuminated how slow and crappy the process is, but how necessary it really is to make sure the org is sizing up its capabilities and performance. There are numerous iterative discussions, nuances to understand for each team, dealing with different types of leaders and styles - don't get me wrong, it was not analytically rich or stimulating in the moment. Instead, it stressed soft skills - expectations mgmt, feedback loops, and at the end, a clear / succinct presentation. I didn't do very well on my first try, but ultimately, was a tremendous learning experience that I would repeat again.

To answer your second question, I will give you what I think is rote FP&A - collecting financial inputs, rolling them up, budgeting against them, and then reporting out performance vs budget every month to a unit lead or CEO. It's mechanical and mind-numbing after the third or fourth time if that's all you do. *But did you reduce the time to crank that info and to report (i.e. improve process timing), and increase accuracy of reforecasts off that info? Are there better ways to budget or forecast that you're not considering? Are there pockets of costs that could be better optimized based on what you're seeing from a cost performance perspective? Did you flag finance underperformance early based on your insights and prevent a big whiff in the qtr? *

An even more dynamic FPA partner also gets involved with their business partners to understand their challenges within the framework of the company' financial constraints and goals. Helping them size up initiatives, resourcing, project phasing and the ultimate impact on your company's P&L all are great ways to not look just another FP&A reporting jockey. Happy to elaborate more.

Sep 15, 2019

When switching to your most recent gig, did you receive any equity? If so, how do you go about negotiating what percentage you should receive as a non-founding employee? Also, what industries do you think are most ripe for buy-side types (transactional, research type folks), to step into as entrepreneur/operators - I realize this last one may be a difficult one to answer but curious if you had any thoughts. Thank you!

Sep 15, 2019

Hi, yes I did receive equity in the company though as employee no. 70-80, it wasn't a crazy amount (as % of my base). Negotiations for equity is not my strong suit since I only had to do it once so far, but in my opinion, it largely depends on your seniority, your role's mission critical-ness, founders' attitude about relinquishing equity, and your own risk appetite for the ride with the start-up.

So in my case, I was coming in mid-level, not having a mission-critical role in that I wasn't coding the software nor was a key sales or customer-facing role, founders having a relatively stingy view of handing out equity, and not knowing as I do now about our business/products, I was OK with the opening offer of equity (~20% of base). Instead, I pushed for a higher base salary. In hindsight, with what I know now, I should have pushed for more equity in addition to the salary. Some start-ups will top up your equity every year in addition to salary raises with promotions, but ours is closer to 2 years.

To your 2nd question, I don't think about it as an industry play per se; philosophically, smart financially-oriented managers are necessary in any industry to help maximize performance and value for investors. The rub tends to be can every industry offer the dynamics of growth, intellectual stimulation, and financial reward that attract buyside types - probably not. I think the start-up world offers a lot of those dynamics, but unfortunately, buyside types tend to lack true functional skills (technical, sales, operational) that early start-ups really need, instead of doing just deep analysis. An interesting middle ground for such types that I've read about and know people who have done is the Search Fund route, which I will not dive into here but is industry-agnostic.

Sep 15, 2019

Do you think it's possible to break into ER from FP&A? Currently in an FP&A role for a F500 company after graduating from a non-target this spring. While in undergrad I was a analyst in my schools investment fund and have experience with writing research.

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Sep 15, 2019

Yes, I think it's quite possible to get into Research from a corporate FP&A job, particularly if you have some feel for the role already from prior college experience like an investment club. I don't know how high quality your experience was, but at least it means you know what research looks and feels like, from an industry analysis perspective as well as the financials.

What will be ultimately more challenging is finding a role to apply to and being noticed in the pile of resumes that will appear for it. There are some possible ways I can think to focus such a search for max likelihood of conversion like showcasing knowledge in a sector (or avoiding certain sectors that can require unique industry knowledge like biotech). You might need to brush up on your writing skills for clarity... your last sentence had a few grammatical errors that were pretty glaring so if someone asked you for a writing sample, it wouldn't reflect well.

Sep 16, 2019

Hey, thanks for the thread very informative. Im in a similiar position myself, I have been in BB ER for ~5 years and recently got my CFA, will likely breakout some coverage on smaller names in the next 6 months but also looking at B school very seriously, What was your GMAT and where did you end up going for B School?

Sep 16, 2019

My GMAT was 750, which helped with getting me into an M7 school school in the northeast that historically has been well represented on Wall Street (keeping it vague on purpose). Hopefully, you've thought about who would write your recommendations and your 'story' to the schools since there are plenty from the BB's who apply every year. I applied to only three schools, and ultimately, went with the one that many of my friends and folks who I looked up to attended.

Sep 16, 2019

could a prop trader do what you are currently doing?

what skillset did you acquire in your prior career / MBA that has been required knowledge for your current role?

just google it...you're welcome

Sep 17, 2019

If a prop trader applied for my job now, I'd be very alert to what other experiences he or she has had that can complement the trading experience to be successful in this job. Being able to put together an analysis quickly, present to senior mgmt, and then to action plan based on that, drawing upon relationships and collaboration does not strike me as how traders are valued in the market. To me, in a gross oversimplification, a trader is aware of and processes info flow, market sentiment and how to act on that to make money.

In terms of skill sets, hard/technical ones would be the excel modeling, financial analysis, industry analysis and frameworks are core parts of why I'm a valuable member of my company. On the softer side, I've spent enough time dealing with senior mgmt types that being able to boil down hard / complex topics into several digestible talking points and to present them confidently is another key skill I've come to prize. Lastly, being able to reach out to folks across my company, across functions, and across geographies to build working relationships and confidence are all part of my broader skill set and make me an effective finance professional to a tech start-up. I'd be skeptical if a trader doing solely prop trading gets exposure to all these facets.

Sep 17, 2019

Do you feel you would have been able to do what you did without the MBA?

a FT M7 MBA is a high cost, I'm trying to evaluate if I myself can get by without it. Nontarget background too so the major plus is that it would give me a lot more credibility. I work in IR myself looking to do something more strategic in the near future tho.

Thanks in advance.

Sep 17, 2019

From a functional perspective, yes, I could do this job without an MBA; the MBA didn't teach me much in terms of of new things or skills, it helped me hone my finance and strategy analytical skill. More importantly, it gave me time to explore whether being on the buyside is truly for me, instead of something that I pined for constantly working on the sellside. Lastly, it gave me exposure to tech in a way that I would've never been able to gain as a merely an outside looking in; my school offered a ton of opportunities to hear fellow students, business leaders, and academics talk about the industry and the landscape.

And then there's the network / branding aspect of it. I fully understand that I did not become smarter because I got my MBA, but I do have a cohort of peers who are remarkably driven and ambitious who will provide me access and opportunities that most people won't see. This current job is a direct byproduct of someone in my MBA section, who I'm close to, alerting to this role and giving me the inside scoop and being an advocate for me with my current boss. The cost of it is not a joke, and from a pure ROI perspective, being less than five years out makes it hard for me to really evaluate whether it was "worth" it financially. However, I tell myself, partially to ease the financial pain, that I play for the long tail of my career in terms of this network and visibility into a world of high flyers and sophistication that being on the sellside didn't provide exposure into.

  • Intern in Other
Sep 23, 2019

I appreciate the thoughtful response. Currently on the buy side and have sell side experience and ponder going the more operational/strategic career path longer term. Therefore, I have debated the value of going back to school for an MBA or just keeping my ears open for operational/strategic opportunities as they arise over time.

I understand that you valued your MBA for the network and for giving you exposure to industries that you would have otherwise not have seen. But do you ever look back and think you could have easily have gotten that F500 fp&a role straight from the sell side and saved yourself ~$400k (Mba cost and forgone salary) and 2 years of time? While maybe you wouldn't have come across the exact opportunity you have today but at least something similar. I ask not to disparage, but because this scenario that I run in my head.

Ultimately I understand I will not know the value of an MBA without getting one. But based on anecdotal research I've done it seems like people fall in two camps about MBAs and a recent wsj article (and the comment section) prove that those that get an MBA generally feel it was a worthwhile investment and those that don't think they are a waste of time and money.

    • 1
Sep 17, 2019

CFA - how much has it actually helped you in your career progression? When applying to MBA, did having CFA give you an edge? Thanks

Most Helpful
Sep 17, 2019

To be frank, it has not helped greatly, but it hasn't hurt either. In hindsight, the CFA confirmed that I'm a finance nerd at my core and I find the stuff very interesting and stimulating, but between the corp finance job and my current start-up role, no one bats an eye about it.

I feel like at this point, the CFA has been so taken for granted that people expect Wall Street buyside and sellside types to have it, but it doesn't confer some edge that makes you smarter or sharper. I could imagine a scenario where if my company goes public or approaches large PE to entertain an acquisition, someone might not think I'm a complete pushover at first glance. But I really hope that they do underestimate me so that when I forcefully refute that notion, it'll be all the more satisfying and be helpful to reveal their character.

For MBA admissions, honestly you should ask an adcom whether they care or not. As another dude coming from a BB with strong recs and GMAT, it didn't hurt but I'm confident that it didn't confer me an advantage either. I feel like the majority of my buyside-minded classmates don't have one and/or didn't have one going into the program if that's your angle.

Sep 24, 2019

What skills from SS ER have you found to be most helpful and valued by your employers in the interview process and on the job? Are they the same for or different for the FP&A and start up roles?

Also for MBA how is a research background viewed? I've heard you kind of get bucketed as "finance" but obviously your skills and experience will be much different than the IB and PE types

Sep 25, 2019

This is my purely my case: for FP&A, the industry that I covered and being familiar with the various operating models in our industry helped enormously, especially relationships between different stakeholders like suppliers and customers, helped me scale the learning curve. My boss, head of FP&A, didn't know the industry but he did know how to run an FP&A org so we were able to complement each other in that way. More broadly, having an understanding of the disconnect of GAAP financials from the cash flow generation of our business units also helped enormously; it helped me frame the story for a month or quarter for wall street. Being able to summarize and condense complex sequence of events and frame them in Powerpoint also went a long way in my organization since that's how most communication was done. Excel modeling not so much as I didn't handle our company model but I did have to know how to navigate it since I pulled data and other inputs to do various analyses.

For the start-up, it will ultimately on the need on the start-up, its maturity, and frankly, the sophistication of the founders or CFO. For me, being able to quickly get up to speed on a new industry, learn the important drivers of how business is conducted (i.e. big players, regulatory framework, consumer interactions, long term trends etc) helped me understand the industry vertical that we play in and become well versed in conversations with banking advisors we brought in 6 months into my job. On the modeling front, since I do own our long term company model, it helps enormously to be able to build and maintain a model that I have modified a lot as my understanding and ability to forecast business drivers of revenue and costs have improved. But more importantly, the ability to communicate with a senior audience in written form (slack/email) and in person, goes a long way toward building credibility with my leadership team. My willingness to work smart and to work hard and long (when needed) doesn't hurt either.

For MBA admissions, I think you're giving too much credit to how much admissions knows about Wall Street roles, especially those coming out of undergrad. Frankly, it's up to each person to sell their accomplishments because I can definitely see a case where a savvy ER person upselling the heck out of their 2 years whereas a less attuned IB analyst who worked really hard and cranked away but can't summarize for the lamen audience why their work mattered or had an impact. In most people's eyes, including my classmates (consultants, tech backgrounds, etc), they don't care about the distinction so long as you can wield an Excel model and read financial statements. For adcom, I'd assume they have a similar bias; your ability to be a financial whiz is circumscribed by your ability to sell yourself and your skills; being in IB or PE in of itself doesn't mean all that much.

  • Intern in Other
Sep 27, 2019

Thought I'd ask the obligatory comp question for ER FP&A and start up. Ranges are fine.

What are your personal long term goals, stay at current start up or help grow smaller companies?

Also curious your thoughts given your background on the current press of private co valuations not being well received by the public markets? I think one of the best points I saw made is that since there are no short sellers in the PE/VC world only the optimists prevail while an investor that doesn't like a story simply doesn't get involved.

Thanks

Sep 28, 2019
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