Fork In the Road: Finance or Startup

Sorry for the long post. Big decision. Any input would be appreciated.

Here's the deal. I am at the nexus of essentially starting a new career. Moving out of corporate finance at a fortune 500. My initial plan; which i have not thrown out by any means was to move into Investment Management down the road. I am about to begin the process of interviewing at mostly large buy side firms: Fidelity, State Street, Black Rock. Since i developed my career path my sophomore year of college I envisioned Equity Research>PM>HF. I have had a true passion for investing and structured this career path accordingly. THE CATCH...Although i have a true passion for investing, my specific interest is in fundamental analysis of companies. I enjoy watching company's grow. This is a basic result of being born an entrepreneur. I don't know if i can explain it any better than that. Those of you that have the same mentality know what i mean. Those that don't share this mind set will most likely think i am crazy from here on out. My mind is constantly producing ideas for new company's, and over the years i have literally collected a box full of b plan drafts for these prospective companies.

Which brings us to my main point. Do i take the plunge and launch a start up? I have a great idea and alot of passion. I have registered my domain name and drafted a b plan. I am torn on whether to take the plunge. On the verge of applying to the Mass Challenge startup incubation program as well as the Y Combinator program. These would run this summer. I would walk away from my current job.

Although nothing in life is guaranteed, I feel that i can at least predict to some extent how my finance career will pan out/ what kind of life i will lead and the potential upside. The startup is pure uncertainty.

This Startup may entail being broke for a while, which i can handle. The real question is, worst case scenario, I take the leap with the startup and FACEPLANT. Will this be something i can put on my resume and continue my career in Finance??

I feel that logically I have to fully commit to one or the other in order to succeed. Only I know the real answer, but hearing input from like minded individuals might help. Thanks in advance.

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Comments (25)

Mar 9, 2012 - 12:19am

Go for the startup. This country needs more entrepreneurs, not financiers. And I need that buy side gig. Even if your startup bombs you'll have a great story for b-school apps.

Mar 9, 2012 - 12:19am

If you get a spot in one of the more established incubators I would suggest taking it. We're at a point in time where if you were to successfully finish a term with Y-combinator you'd all but guaranteed a sizable seed round. More importantly you'll be grow your network of entrepreneurs and VC firms immensely. You may not the right idea but you have a chance of meeting someone who does. Finally, if that route doesn't work you've given yourself an edge in breaking back into finance as a VC which may combine both your passions.

Mar 9, 2012 - 12:26am

Hahaha. Great Response. I agree, with you, but to be honest, I'm not really an idealist. I am a capitalist. I'm sure i don't have to do much explaining on here, but although entrepreneurship is definitely commendable, that is not what attracts me to it. Creating growth/Value is what i am interested in. Whether that be in a future portfolio or a future company.

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Mar 9, 2012 - 12:52am

I appreciate the encouragement. But unfortunately after having worked as a financial analyst as well as always being passionate about investing, i have been tainted in a couple ways. For one, i cant help but analyze both opportunities and asses the potential risk vs return. As a value investor, the finance career is the obvious choice (Steady Growth in income, Structured Plan) . I wish i could shake this mentality but because I have immersed myself in this world it is hard sometimes to step back. The other bit which i have realized is most disturbing is that I find myself thinking that I am throwing away a path to "Guaranteed" (obviously bullshit, but definitely perceived) "wealth". I have obsessed over becoming a PM @ a HF for a while now, Obviously when you study these guys incessantly your perception of money and compensation can really become distorted. (I.e. The last book I read "More Money than god") . I am struggling with the anxiety of throwing away this path, although entrepreneurship may be the "right" thing to do.

I am sure other older members have probably dealt with similar feelings. Maybe they are gone from this site now because they chose to jump. But for the ones that might have made a similar decision, I, and i think others, would appreciate your input on the matter. Thanks again.

Mar 9, 2012 - 1:10am

I would agree with above posts - go for it. If you succeed, you can make more money (and faster) than by going HF way. In the case you don't succeed, you will still get very valuable experience, which will be helpful not only for b-school applications, but in other jobs as well. Of course, following entrepreneurship road will be difficult - nothing is guaranteed. However, you are young and you seem to have a good plan. You don't need to provide for a family, I assume, so your responsibilities are limited.
Besides, if you are enjoying watch companies "grow", you might be more of a VC material than HF, especially if you have background in tech or biotech... Your own venture may ultimately lead you to VC.

Mar 9, 2012 - 1:24am

I don't have a family to support, only thing tethering me is student loans from undergrad. (I understand the concept of undergrad debt is frowned upon here, but it was a necessary evil to get me to where I am from where I came from)

You bring up a point which is really one of the main sources of my hesitation. "You seem to have a good plan". This is the crux of the problem. I do have a good plan, and I have always told myself, stick to the plan, work hard, and you will succeed. This start up would be going totally away from "The plan".

Also, on a side note, I have always been interested in VC work but only have surface knowledge of how they operate. On the other hand, I have done alot of research and reading about buy side investors/ HFs and therefore that is were my interest stems from. Big fan of Julian Robertson and the Tigers.

However just as big of a fan of Elon Musk: Paypal/Tesla/Space X

Please do not interpret these negative responses as lack of enthusiasm for my potential company, but like I said, I am very analytical. This kind of feedback and discussion is really helping me work out the kinks before just taking the plunge.

Mar 9, 2012 - 7:24am

Guy here who's facing the same problem--entrepreneurship vs. a corporate route. It'd be a clear first choice EXCEPT for the fact that I also have a lot of student debt so I don't know if I can pick a career with such a high Beta...

So I recommend you gauge how well your start-up is going to be. Develop a prototype and customer validate. Figure out the execution to scale your business (because an idea is fucking worthless. It's all about bringing it to market and staying afloat vs. the competition). See exactly how viable doing entrepreneurship really is off the bat, because the truth is debt needs to be cleared off the table.

If realistically you can't execute it yet, do VC/consulting, pay off your debts, and jump back into it down the line if you really think you can be a value-add. Just my 2 cents.

Mar 9, 2012 - 9:56am
try to imagine the last moment of your life. looking back, what would you rather have done?

This is stupid. If you're thinking about work or a decision you made about your career in the last moment of your life you've already failed. The more appropriate way to think of it is thinking about the decision 20-30 years from now.

Personally, I would apply to the big incubators. Once you find out if you are accepted, that's the time to make your decision (I'd probably go). If you don't get accepted you can pursue this in your spare time or just scrap the idea.

What I would likely do is stay at your current role and bust your ass. Then, if you decide to go to an incubator tell them that this is just an opportunity that you can't pass up and leave on very good terms. If the startup doesnt work you should be able to get back into your current company. Bust some more ass their again and then continue down your "path". In this scenario your downside to a failed startup is probably a 2 year delay on your "path" and an awesome/unique experience.

btw - if you have business plans that are viable and not overly difficult for someone else to execute, but you aren't going to pursue I know a few people who have bought concepts. Even more appealing for both sides could be a royalty arrangement. PM me if this would interest you.

twitter: @CorpFin_Guy
Mar 9, 2012 - 9:06am

Can't you do both? Work a job during the day while you work on the company at night? If the company takes off, then you run with it? I understand you have a business plan and ideas and this and that, but you've got to actually start putting the plan in motion. So, if you can do that at night / during the work day / on weekends / whenever, I say do both. That way, you'll have something to fall back on.

Mar 9, 2012 - 11:34am

As of this morning I have decided to apply to both the Y combinator and Mass challenge programs. I will have to wait and see as to my admission into either. From there I will figure it out. If I get in I will go and spend the summer trying to get this company off the ground. If not, i will continue with the process of moving into ER. I really appreciate the input from everybody. I will keep you guys posted as to my progress.

Mar 9, 2012 - 9:29pm

Sounds like you've already made your decision.

"For what shall it profit a man, if he shall gain the whole world, and lose his own soul?"
Mar 10, 2012 - 10:34am

If you have an idea that you believe in, you think it can work after proper due diligence, and the entrepreneur lifestyle is what you want...then go for it. I'm having this debate too.....I'm currently working at a BB and saving money to partly fund my business. I'm pretty much there and about to jump into the new life...I'm very excited. I have ran through A LOT of scenarios in my head for my personal situation....and everything points to a better life with my start up. This is very specific to me though...most people are probably better off staying the IBD path but I have little faith in other people so that is mostly a disclaimer.

Mar 10, 2012 - 8:09pm

Not trying to discourage you, but Paul Graham won't even look at your YC application unless most, if not all the co-founders have a stellar tech background. Same goes for Tech Stars, 500 Startups, DreamIt or any baller incubator. Just something to consider. I can somewhat relate to what you're going through right now- I too have rather aspirational goals of running a macro fund and having been quite involved with 'entrepreneurship' since HS it may not be surprising that I am deeply fascinated by the startup world, and as a consequence I have been in touch with some prominent tech founders and VC investors over the past year. Ideally I would like to lead a leveraged life by being involved with both, and rest assured I am working toward this goal. Go for the kill, take eccentric risks, and never look back.

Mar 10, 2012 - 8:11pm

Thanks for the input. I am aware of this issue. Y combinator stresses the importance of a tech based founder. Fortunately mass challenge, an incubator out of Boston does not. I have a passion for tech but my language/coding ability is primitive. I have prepared wireframes for the site using Balsamiq. However I happen to have 5 good freinds who have tech backgrounds and currently live and work in palo alto/bay area. The real challenge is selecting a cofounder who is right for the company and not just a Freind. Also I have to convince one of these kids to fully commit to the idea ahead of time. I have until the end of the month. I am also still doing due diligence on realistic startup costs as well as potential revenue projections. We will see. I will know by the end of April if I have been admitted to any of the programs. Any Programmers/developers on here that are interested pm me and I'll shoot u the mockups/b plan.

Mar 10, 2012 - 8:15pm

^ Don't send the mockups or bplan to anyone unless you wish to get Zuckerberg'ed. It would be far more beneficial if you were to grab coffee with your potential co-founder while being vague about the concept. If their eyes light up and they 'get it' (i.e they're really enthusiastic but not faking it), then proceed.

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