Breaking into Private Equity after being a Product Manager for 3 years?

Hi Everyone - 

First time on this forum! I'm currently a Product Manager at Microsoft and I've been so for the past 3.5 years right after undergrad (I graduated from Harvard). I never really gave finance a look until recently when I started becoming really unhappy with my job and started asking some of my friends what they're doing out of college. 

PE seems a lot more interesting with much more leadership/upside than PM-ing in tech. The thought of doing/leading deals, really understanding a business from how they're run to what they're doing, and growing companies is so much more interesting than what I'll ever get to do in my entire career as a PM. The money is also something that's drawing me too I won't lie. Tech salary is terminal once you're senior at 350-400k, and even if you get promoted to principal, it caps at 600k. I'm not too interested in VC but could consider it, and am also not considering start-ups because they're super risky in my mind. 

So I'm here to ask, is it possible for me to break into PE after being a Product Manager for so long? I've read a lot of the posts and it seems that the only route is MBA --> IB --> PE, which is already a pretty tough path and there isn't a good change. Is MBA --> PE even remotely likely? Can I even work for free at some of these PE firms and get some type of experience? I would really appreciate the advice before I start studying for the GMAT, get into an MBA (hopefully), then end up never getting PE. Is there another path I could follow? Literally any insight you have would be really valuable. 

To also give back, please feel free to ask me about my experience at either at H, Product, or at Microsoft in general. I've also done 2 software engineering internships if others are interested in knowing more about that! Thank you so much in advance!

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Comments (45)

Feb 26, 2021 - 1:35am

I think your odds are long but not zero if you're really serious about doing all the hard work it will take to get there. My two cents is you should look for a good tech banking analyst job, then recruit for PE associate roles from there. People will consider you with that resume, assuming you land at a good firm. I'd skip the MBA in your case. It will suck being the older guy and seeing your friends further in their careers, but that's what you're signing up for if you think this is the right long term path for you. You won't care in 20 years if you are ultimately successful in this line of work, but maybe you will if you're 30 and just washed out of an associate program unsure what you want to do in life.

Feb 26, 2021 - 9:10pm

From what I've seen, most people don't stay in this industry long term and the biggest breakpoint is at the associate level. Some of that is voluntary, some of it is involuntary. If you're smart, you work hard and you have decent soft skills, you'll probably get a mid-level seat somewhere. Beyond that, you have to actually be good and perform; not as black and white as a public market investor's P&L but it's definitely a performance industry.

Feb 26, 2021 - 5:03am

I think you are thinking about the highest probability path (MBA>IB>PE) in the most realistic way.

I know of others that entered the PE track slightly later in their career. As the person above said, you have to be prepared to be "behind" vs your peers.

The project management aspects of your PM experience will come in handy as a lot of PE is managing the process tightly. However, unless you have contacts there isn't really a reason for a PE fund to pick you (sorry) over highly trained 2-3 IB analysts/associates.

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Feb 26, 2021 - 9:51pm

The alternative path, which it sounds like you are less interested in, would be early stage venture investing. Your PM skills could probably translate (I don't gave PM or early stage venture skills) more easily into picking SaaS businesses and there is less of a requirement for an MBA. Also there isn't much to model and it's more a bet on what the business could be / will it survive long enough to get to the next round.

Suggest trying to meet with a few investors who do this to discount this properly.

Feb 26, 2021 - 1:59pm

Grass is always greener on the other side. Leading a deal is not as fun as it sounds. It's more about building relationships to win a process and managing 3rd party consultants than understanding a business/investing itself.

Most people don't make it past associate/senior associate ($250-350K) working 60-80 hour weeks in PE. It's also an up-and-out culture so there's no such thing as terminal/coasting at $350K-400K like you have in tech. 

Feb 26, 2021 - 8:47pm

Thanks for the comment! I know I asked someone else on the form, but how difficult/likely is it to hit associate? What's the typical number of people you see leave and is it for other reasons or that they just couldn't hit VP?

Feb 27, 2021 - 11:12am

I suggest you read some of the basic PE forums. Associate is typically the entry level job of PE, but requires target experience (usually 85% of hires have IB analyst experience, 14% consulting, and 1% other). After 2-3 years of being an associate, majority of PE firms will kick you out and the most popular path is then getting an MBA

There are very few seats going up the ladder, so associate level is the primary choke point.

Feb 26, 2021 - 4:50pm

I think if you did an MBA at a reputable school it would be very doable to land at an LMM or MM tech focused fund? Growth equity is another option. 

  • 1
Feb 26, 2021 - 8:49pm

Thank you for the reply - even without IB experience do you think it's possible? I'm hearing a lot in these threads (I think I've scoured all the threads that could be similar to mine) that most people even with pre-PE experience can't re-enter PE after their MBA.  

Mar 3, 2021 - 8:25am

I think the above poster is wrong--maybe at HBS / GSB it's different, but as someone from a different M7, it's very, very difficult to land a post-MBA PE role without previous PE experience. It happens occasionally, but usually it's at a first-time fund and it's far from easy. As you mentioned, it's not a lock for people with PE experience to get a role.

I would say the significant majority of people with pre-MBA PE experience do land something, though, if they're serious about returning. 

Feb 26, 2021 - 5:03pm

This is funny because I know people in PE who are looking to move to PM because they want to really understand a business from the inside and feel like they're contributing to the growth of the company... guess it's all a matter of perspective.

I think your background lends itself really well to portfolio operations... as far as the deal team goes, VC and growth equity will probably be the most receptive, but it won't be an easy transition. I'd probably try to make a direct move into a tech-focused growth equity or LMM buyout shop; failing that MBA -> IB -> PE is possible if you're open to a wide array of funds (large-cap / UMM is near zero chance). MBA -> PE is even harder, but it does happen. There are a handful of funds that will take pre-MBA interns or summer associates from H/S/(maybe W). Many don't convert to FT, but it could be enough to get you a FT interview

Feb 26, 2021 - 9:02pm

Thank you! PM-ing can help you understand how a business works if you go for a start-up, but if you're at a bigger place for example Microsoft, Google, and maybe FB, most of the decisions are top down and you really don't get to see and understand the business that much. You become a product owner in your very limited area, but that's it. There's also a lot of corporate politics in those PM roles, but I bet it's also political in PE too but it may be different. 

When you say portfolio operations, like in PE or as a separate career all together?

I looked up growth equity and it also seems interesting - how do I break in directly? Connections, LinkedIn, anything? I'm find going into a wide variety of funds so that doesn't bother me - would rather go to a smaller one anyway. Again thank you for the advice (if your friends also want any advice on PM-ing please feel free to ask away too)!

  • Analyst 2 in IB-M&A
Feb 26, 2021 - 11:05pm

Thank you. In PE right now and interested in learning more about the PM side of the world. Can anyone comment on what comp is like for an entry level PM and how that scales with seniority? Thanks!

Feb 27, 2021 - 4:25pm

Sure I can do that! Interested to know why you want to leave PE as well, but here's what I know for PM:

The comp varies depending on where you are going, and I'd categorize it as either FAANG/Microsoft, medium public companies, and then start-ups. Each of these will hire PMs at different levels based on your previous experience (I do see a lot of PMs coming straight from finance who end up as PM2s or Senior PMs), but in general here is a breakdown:

FAANG (Maybe also Lyft/Uber, etc) - APM and PM1 comp (Associate PM typically come straight out of school):

  • Base comp: 100-125k (depends on location)
  • Bonus: 10-15% of your base salary
  • 120-150k stock vesting over 4 years (you get 1/4 of it every year and that stock can grow from when they initially give you the grant)
  • TC ~150-180k per year

FAANG PM2 salaries (also around entry level):

  • Base comp: 120-150k (depends on location)
  • Bonus: 10-15% of your base salary
  • 150-200k stock vesting over 4 years (you get 1/4 of it every year and that stock can grow from when they initially give you the grant)
  • TC ~180k-200k per year

There is also a sign-on bonus which is like 20-50k depending on your interview performance. levels.fyi is decent for learning about the different salaries (glassdoor is not) and potentially blind if you download that on your phone. I unfortunately know more about what the corporate/FAANG companies pay PMs than what startups pay, but expect them to give you what they call 'paper money' instead of the RSU/stock, otherwise the base pay and bonus is the same. 

I'm fairly open about what I make but as a PM2 at Microsoft, I make around ~210k/year because the stock did super well. It's best to start looking at other companies when your stock cliffs (after the 4th year) because some companies don't give you stock refreshes. 

As a senior do look at levels.fyi but expect a wider range, maybe like 280-330/year TC for senior, and then the next level (principal at MS) maybe around 300-450k TC depending on where you land. As you can see the comp doesn't grow significantly but you can coast at senior in these places typically. Hopefully that is helpful!

Most Helpful
Feb 27, 2021 - 12:54pm

You need to invest more in preparing yourself for this industry if you want better odds of succeeding in your goal of finding your way in.

There is a broad array of discoverable facts available that would help you make more informed asks and decisions.

Research the difference between venture capital, growth equity, and buyouts. Learn the difference between the two flavors of growth equity (late-stage venture versus non-control buyout-type investing). 

You can think of these as a spectrum following the lifecycle of a company: venture, growth, (other) growth, buyout. 

You have a fairly on-model or compelling profile for the first flavor of growth equity.

I like to be honest with people. You have a very low chance of getting into traditional private equity. This is the 'flagship' strategy of most of the brand-name firms that come to mind when you think of the industry. Blackstone, KKR, TPG, etc. all have a multi-decade record of raising successively larger funds for bread-and-butter buyout. Every aspect of the business processes there are fairly calcified. That includes the hiring process.

There are two recurring channels: pre-MBA associate and post-MBA associate. In the former, they are recruiting people coming out of an investment banking analyst program, or less frequently, the equivalent from management consulting. In the latter, they are interviewing during the second year of business school (or depending on the firm, during the first year for people who will intern over the summer between the two years in the hopes of returning after graduation) the people who have done the entry-level investment banking program (again, or consulting) followed by a pre-MBA associate program at a different investment firm.

There are two other channels. One is a more recent third recurring channel: some firms offer an analyst program for a few people to join directly out of undergrad. The other is ad-hoc hiring, which people refer to as 'lateraling'. This is where someone working at a competitor firm wants to switch firms (usually because they don't like the culture at their current place, or the industry focus, or the deal sizes they work on, or the geography they're located in).

You can see that you fit none of that. No one is lying to you when they say that greater than 95% of people in the industry got their job through one of those channels.

This doesn't mean you're dead in the water. It simply means that specific path is very low likelihood for you.

Earlier I referred to late-stage venture (or growth equity as some refer to it). I can't comment on your subjective view on early stage venture other than to encourage you to reconsider it. I can say that for the first two phases of the spectrum I outlined, your background will get you conversations.

Your PM experience will be viewed favorably by the firms who invest in teams at the earlier stages of their company's lifecycle ... because you have a very informed view on how to interrogate their product. 

After 4-6 years of growth-stage investing (which you could do at two different firms without it being viewed unfavorably), you would be able to have natural conversations with the firms that practice the other definition of growth equity.

[That is very similar investment analysis to buyout, but the difference is in transaction structure. Because you don't own a majority of the company, you aren't using leverage. This means you're investing based on your view on the company's growth prospects as the driver of your investment returns, rather than financial engineering (transaction structure).]

This would mean that in less than a decade, you'd have been successful in transitioning to the type of investing you say you're interested in. You aren't in early stage venture, you aren't in flagship buyout, but you're doing very similar analysis for the same type of target companies. 

You won't get there with an MBA. You'd only be able to recruit for banking, and the abysmally low number of banking associates who've successfully transitioned to private equity says it all.

All in all, you need to do more research to make yourself more informed. You should spend months doing that before reaching out to people to start conversations, otherwise you run the risk of either making yourself look bad or failing to pick up on things that were actually available to you if you were able to be more heads-up.

Good luck, it's doable.

I am permanently behind on PMs, it's not personal.

  • 11
Feb 27, 2021 - 3:03pm

Excellent comment. Completely agree on forgoing the MBA. Some of the other commenters here are suggesting that as a viable path, but the cost (both $ and opportunity) for someone who's already older is unattractive. There are firms that will like your background coming out of a banking analyst program as a 27/28yo with more maturity and work experience or as a 30yo with some earlier stage investing experience, not many will like your background as a 30yo banking associate with no investing experience. Very, very rare for post-MBA banking associates to get a good PE role.

Mar 1, 2021 - 11:52pm

Thank you again for the comment (sorry I know you answered another question of mine before): it looks like the 2 paths are via growth equity or potentially (this is something that's being suggested) becoming an I-banking analyst. Do you have suggestions on how I can find a banking analyst job since I'm already in the industry? I looked at a bunch of threads and besides networking there isn't much to offer. Is my only shot boutique banks? I don't think BB will look at me. 

Feb 27, 2021 - 11:26pm

This is an awesome comment thank you so much - I'll look into the different sectors much more and figure out exactly what makes sense for me because you're right, I don't want to start reaching out to people without full clarity on what route I want to take. I really appreciate the honesty here as well. Thank you (both) again!!

Feb 28, 2021 - 8:33am

Wouldn't late stage VC just be VC?

Always thought GE referred to minority-investments into sustainably growing mature companies and late-stage VC was just VC (i.e. extremely high growth, rarely super profitable yet) but later rounds.

My understanding is VC can be split into:

Pre-Seed

Early-Stage (Institutional Seed + Series A)

Late-Stage (Series B-E+)

Array
  • Business School in PE - LBOs
Mar 3, 2021 - 7:56pm

1) There's a big difference between late-stage VC and early-stage VC, so thinking about them separately is an important distinction

2) Growth equity is even more distinct from early-stage VC and often looks a lot like middle market PE. But then again, the line between growth equity and late stage VC also blurs and many firms do both.

Bottom line is that labels aren't always perfect and it's more accurate to think of this stuff as a spectrum of vs. distinct categories with firm boundaries.

  • Business School in PE - LBOs
Mar 3, 2021 - 7:50pm

This is a super helpful comment and I agree with most of it. The one thing I would push back on is waiting to reach out to people before doing more homework. No reason you can't parallel process and do both at the same time, and the sooner you start actively networking, the better IMO.

I hear what you're saying on doing more research to look more informed, but I think it's pretty damn hard to really understand the nuances of all of this stuff without talking to folks. I certainly wouldn't have the level of knowledge you're expecting OP to have if I hadn't worked in PE myself.  

I do think it's important to be thoughtful when reaching out to folks and yes, there's a risk of alienating people by not doing your research first, but if you reach out with humility, respect and courteousness, I think most people will be forgiving. Sure a lot of people might blow you off, and it's always better to be more prepared, but it's not the end of the world to have a conversation that goes poorly as long as you don't say anything particularly egregious.

I recently went through the recruiting process going back into PE/VC after leaving the space to go to business school and I spoke with somewhere between 70-100 folks in the industry during my search. Most of those conversations went reasonably well, but a few went poorly - I definitely could've done a better job preparing for some or finding ways to build a connection at times. But that's the game - you're not going to click with everyone no matter how hard you try and the conversations that went poorly were opportunities to practice and get better at this stuff. 

It's true that you only get one change to make a first impression, but you're not going to get blackballed from the industry by making a couple mediocre impressions. Better to start getting reps sooner rather than later IMO.

  • Prospect in IB-M&A
Feb 27, 2021 - 8:06pm

Like others have said, your best options are VC and growth equity. Here's a thread with the "most helpful" comment being particularly useful on getting into VC. Your best course for now is to get well acquainted with both fields, know all the terms and all that jazz, and reach out to Harvard people in funds that look interesting/possible to get into. Don't discount your Harvard badge, the industry loves its pedigree. 

Feb 28, 2021 - 3:03am

Highly suggest you heavily target technology groups. Assuming you're in the Bay Area there's a few solid tech groups out there that you should start networking with. Not 100% sure what you did as a PM at MSFT right out of undergrad but I'll assume it was something cool and preferably a technology PM vs. marketing PM. I've seen people from very average MM banks move into nice PE shops after some solid deals under their belt. Start networking now, training the street/wallstreet prep for modeling, and leave your role in 1-1.5 years if you can land a job. You mentioned building companies in your post and it made me think more along the lines of startups/VC. Just my 2 cents but if you're passionate about building then an early Seed/A series startup would be a much easier and more logical next step then move into VC. If you like the finance side more then try to get in with later stage funds if you like the building/operator side more then an early seed & A series fund could be more fun. Also if you truly love building I've seen some VCs support their portfolio companies and help build alongside the founders. Saw Rex Salisbury coding for one of his portfolio companies on GitHub recently. Just a thought.

Feb 28, 2021 - 6:17pm

Thank you for the comment and the advice! I'll look into those trainings. Agreed on the tech firm part - I realize that's probably the most natural next step. I'm actually in Seattle so I'll start looking at places there and perhaps transition to the Bay if need be. 

My one concern about VC and early stage startups (I've been looking into Growth Equity/VC after some of the comments on here) is that they seem super risky, so I thought Private Equity for more established firms was a better fit. I will however start re-considering and start thinking about what aspect of the investing speaks to me. Thank you again!

Mar 1, 2021 - 1:59pm

Just out of curiosity, any other drivers for wanting to leave a PM role other than what you mentioned about bureaucracy and comp ceiling? I have post-MBA VPs at my current MM fund pining for your job (they are in search of a role with ownership of a full product lifecycle, more linear workstream vs. jumping from deal to deal, etc etc), so curious what else is going through your head in terms of rationale to leave. 

Mar 1, 2021 - 11:48pm

Hi there! For me (this CAN vary from company to company but this is my experience at MFST and what I've heard my other PM friends at other companies say), it's the following:

  • You only own a small piece of the product - Only if you hit VP of Product or Group Product Manager (which is very hard to get - it's more of the right place right time thing) will you truly start to drive product strategy. Most of the teams at Microsoft I've been in have a very top-down strategy. There's very little direction that you create outside your own product scope. This seems to be a similar experience across the board for larger tech companies like Google, Facebook, LinkedIn, and even to some extent Amazon (I have friends also in these positions and they have the same feeling). If you however join a startup, that's a different story, but I'm not very risk averse so it's not something I considered (which is also why I'm wary of VC). I guess this is partially a bureaucracy thing but I felt this should be called out
  • Promo ceiling - It's not just the comp that stagnates: your ability to actually become like the VP of Product, a Group product manager, or whatever typically is a result of being at the right place at the right time. It's almost always never due to your great ideas, your initiatives, etc. 
  • There's a LOT of administrative work a PM has to do that has nothing to do with actual product - I feel like this one is definitely more a Microsoft problem and because I'm a more junior PM (PM2), but I would say 50% of my job is real product management where I'm trying to figure out the direction of my niche product, and 50% of my time is dedicated to Program Management, which is managing the project, making sure conversations happen, ensuring the engineers are on track, making sure marketing gets the wording and announcements done correctly, making sure you transact your dependencies across multiple teams, etc. I feel like this is somewhat similar to the admin work you do in finance but it's mind numbingly boring. You probably spend more time on product later in your career however.
  • WLB for a GOOD PM job - There is no doubt that you can find a PM job at Microsoft or Google where you work 40 hours a week no questions asked, but if you are working on a hot product (I somewhat am) and you really want to learn as a PM, expect 60-80 hour work weeks, which is what I'm pulling now. Those seem like normal PE hours from the threads I've read. 

Again, a lot of what I wrote above is my own experience. I have had PM friends love what they are doing, but I just feel like it's not something that interesting to me anymore. Feel free to have your friends connect with me if they want more information on my experience or on other people's experience. I hope that helps!

  • Business School in PE - LBOs
Mar 3, 2021 - 8:02pm

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