Easy Road or Growth Company
Hello,
I have followed this site off and on and there is some great advice out there. I am not necessarily of the "wall street" track, but have a career decision that I think WSO members could shed some light on. I work for a large fortune 100 healthcare company. I am pretty much locked in to get accepted to their executive training program. I am one year out of B-school (non ivy state school). I am doing well in my current role, get along with senior leadership, etc. Basically if i kept up at this pace which is not that hard, I will be a lock for a great position with a fat paycheck and reasonable hours in 10 years or so. There is no down side and significant upside.
However one of the companies that I came across while working here is a small 4 year old "growth stage" company. Some private equity backing, former IB guy running it. Pretty beefed up board. All and all not a pyramid scheme, broken business model, or anything like that. They only have 2 real "corporate" employees. The current IB guy who is doing their business development was impressed with some data analysis I did for him and some thoughts I had on how they could grow their business. He wants me to join them. Thing is they won't pay much. Basically a decent base salary (I'm thinking 75-90ish), and then the rest would be equity or some sort of performance based compensation. Not bad, but again I just have to be a warm body at my current company and would be making 250,000+ in 10 years. With options and tenure you're talking 500-700 for the later part of your career. So the long term pay cut at least with the uncertainty of going the growth company route is sizable
Anyway, kicker is the big company isn't really blowing my hair back. Not that much strategy involved, bureaucratic, have to deal with office space bullshit. This growth company would be me and probably half a dozen other guys just figuring out the business and really cutting our teeth. Taking share and trying to get a bid by the market leader some years down the road.
I am just unfamiliar with the PE/growth company world, so I don't know where this leads me career wise. Likely if I do well it would position me for more operating positions with other PE backed companies. Again this would be very fun. I like innovation, growth, and figuring out the puzzle if you will. Large organizations are so clunky and its hard to think strategically and when you do some turd is telling you it can't be found in the handbook. :(
Any advice would be appreciated.
Depending on how much equity you get and how growth is likely to be it may be worth it. Are you risk adverse? Do you have obligations you couldn't meet if the growth company ran into issues? Married? Kids? All of that has to go into your mental calculus.
Single, 28, some student loans but nothing a decent salary couldn't service. Growth of this company is not explosive, but their business model is solid. For example the market leader is doing insane amounts of acquisitions. That's essentially the strategy of this company - beef up until the market leader starts looking at them. I don't know whether I am risk adverse, but I know that large bureaucratic organizations may not be my cup of tea. I like the idea of figuring out how to grow. The big factor I am having trouble with is that the "easy road" would allow me to accumulate a lot of personal wealth, and there will always be future start-ups out there once I am a bit more comfortable, but you know where the "shoulda, woulda, coulda", crowd typically ends up - doing exactly what they didn't want to end up doing.
"Life is what happens when you're busy making other plans"
-John Lennon
Try and figure the equity upside and a likely maximum value if you're going to make the jump.
Stop trying to do what you think is best for you and do what feels right. Essentially, go with your gut. What's challenging, exciting, fulfilling? I have seen way too many friends go a 'safe' route only to have a mid-life crisis later. The money justs lets them have better toys.
it really depends on what time of growth company you are talking about. is this a biotech, spec pharma, med tech, healthcare services, healthcare it?
sounds like a cool gig though, this may or may not be your lottery ticket but it will open up a lot more doors to the start-up or growth stage world. you will certainly get more experience at a smaller company. i would try to negotiate a salary/bonus structure on par or higher than your current job to compensate for the higher risk you will be taking on.
my biggest concern would be how much potential does this company actually have. the healthcare industry is set to boom in the next 2-5 years with the aging population, more people having access to insurance, baby boomers getting old, specialized medicine, unhealthy lifestyles, diabetes, obesity...etc. But I would do you own DD on how the company specifically is taking an approach to it, commercial strategy, regional focus, who are their biggest clients, if any alliances with big healthcare companies, does management have a good track record, and who are their investors and if they have a solid track record of growing/exiting companies. shit like that.
I'm in a similar situation... Fortune 100 Bank, easily climbing the corporate ladder quickly, office space mentality. The problem is that being in a BIG business takes away the "business" aspect (if that makes sense). You become a soldier in an army where all you can do to excel is do your job and do it well. At a small company your ideas are heard and easily acted on. I am going to make the move to a small firm (after bonus payouts) and see how much I can accomplish!
It sounds like you have future PE ambitions and mindset. I would say take the leap!
Another option to consider; spend a few years in the executive training program, network with investment bankers and look to find a role in a healthcare industry group.
'Safe' companies are rarely as safe as people think they are. Just because there are warm bodies collecting decent paychecks there now, it doesn't mean that will be true in 10-20 years. GM, Xerox, and Hostess were all considered the safe option for many, at some point.
If you go the growth company route, you need to figure out how much equity you are getting and under what circumstances it can be taken away or diluted. Read the operating agreement very carefully and have a lawyer review it as well. This is like the Constitution for the company. You don't want to be in a situation where you hit a grand slam and have nothing to show for it. Also, expect there to be a large disparity between what the founder thinks the equity is currently worth and what you think it's worth.
You need to have a clear path towards (larger) profits. Revenue growth is usually not as good as the founder expects, so you need to do your own assessment of the situation and not just believe what this guy tells you.
I would spend time with the current employees before accepting anything at the growth company. Unlike a big company, there's nowhere to hide from co-workers you don't like. You need to be able to trust these people virtually 100% in order to have a good chance of success. Small companies can have their own bad politics.
I have started a company and spent a lot of time drafting our operating agreement and have faced all of these issues. I can't emphasize enough how important it is to carefully read the operating agreement, do your own research, and get to know your co-workers before signing on.
Great advice everyone.
Growth company details: medical device and some services. In orthopedics and spine (high growth)
Backed by serious healthcare investment money that has proven track record of success. Very proven actually.
It's ultimtately the dilemma of climb the mountain now (growth company, PE stuff, etc) when you're all full of piss and vinegar or hang out with the elders in the fortune 500 for 5-10, make contacts, then climb that mountain later. Not sure. Great thing about business is that you have all of these options.
I do have the entreupenurial spirt. Most people I work with read trade group magazines about the same shit we deal with everyday at work. I'm reading books about disrupting markets, checking my risky stocks, and reading Entreupeneur magazine.
To some of the other comments - it is amazing how large orgs take the "business out of business". Honestly working at some large companies has nothing to do with "business" in the true raw capitalism sense. I think that's why so many on these forums want to go to PE/Trading/IB - you get that thrill of "eating what you kill" as opposed to collecting seeds and berries and lumbering around in large organizations.
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