Getting promote in deals

I went from a large institutional national lender that did almost all property types to a small, local REPE firm strictly focused on one property type.

I met the principals through my network during a casual social event. They happened to be looking for extra help and I happened to be at a career stage where I was open to change. The value I brought was 1) personality fit -- ambitious but not overly aggressive, easy-going but hardworking (I guess it's like dating -- there's either a good/bad first impression), 2) financial chops -- underwriting deals, financial modelling, Excel skills, general business common sense (which I learned later on is in short supply), finance degree, relevant work experience in RE finance. I took a 'pay cut' in the sense it was the same base, but arranged the compensation in a way that bet on myself and went up based on performance. I pretty much worked really hard the first year. Now I would say I'm fully caught up if not ahead.

The main difference is the work culture: a lot more entrepreneurial and less bureaucratic. At the large firm, I was a widget who had a very rigid role with a narrow scope of work -- underwrite deals, try to originate some new deals. I didn't have a lot of high-impact decision-making to do--just high deal flow but not a lot of skin in the game. The career path and the organizational hierarchy was also very clear and predictable. You start at the analyst level, get very good at Excel, financial modeling and underwriting quickly/accurately. I felt I was at a crossroads -- if I kept at it I could start originating my own deals and start making much more money. I think it did feel 'safer' career at a big firm. But some of the senior bankers I knew -- yes they were making of lots of money, but it felt like once you establish your book, you kind of just coast through the work. So it felt like the end goal was you had a cushy high-paying job, but at the end of the day you would still be an employee. Nothing wrong with that. But I thought about my own values -- while the money/salary feels nice, what about personal fulfillment? What about the feeling like you were making a real difference, making decisions, learning and growing your skillset and widening your experiences, taking calculated risks in life? 

When I moved to a small shop, my scope of work expanded dramatically. I think I had to quickly learn to shed the 'corporate' mentality where it's all about managing risk and quickly learn to be flexible and make decisions faster. Whereas previously there were entire teams and departments dedicated to one specific function -- now I was wearing multiple hats on functions I hadn't done before. Now I am asset managing, costing budgets, project managing, finding loans, equity-raising, handling investor relations, working on acquisitions/dispositions, underwriting, directing property managers. When I wanted to hire someone, I had to do all the recruiting, scheduling, interviews, and budgeting whereas 'HR' used to handle everything. You work with less resources, personnel and capital. One moment I am doing the fun, high impact work of strategizing the company's business plan and chasing/structuring/negotiating deals to make them work, next moment I am scrubbing a P&L for capex, doing compliance work, sending paperwork to lenders/investors, figuring out mind-numbing tax returns/distributions, and doing Excel data monkey work. You feel like your opinion and voice matters more. So basically you kind of feel like a janitor and CEO at the same time. The career path is a lot more uncertain but has higher potential through the promote/co-invest. The organizational structure is a lot leaner and flatter. Hopefully if the company grows in AUM or deal size/volume then my compensation rises proportionately through the promote structure.

I think the people you work with are generally very smart and hardworking regardless of firm size. I think the main difference in terms of people you work and interact with is their outlook and appetite for risk, for uncertainty, for opportunity. Growing up with parents who were small business owners, I think I just naturally gravitate towards and enjoy the entrepreneurial side of things more.

Plus I think I learned more in a shorter amount of time on so many things at a small shop than if I had stayed at the large firm. 

Hope this helps.