I did a drone start-up and now I want to go back into finance. AMA

I am a long-time lurker but I wanted to do a reddit style AMA. I figured some people in banking/finance might wonder if the other side of the grass is really greener in a startup.

Little background on myself: I am currently COO/CFO at my startup. My company does drone technology, notably in FPV (first person view) drones. Our customers are general consumers who use these drones for entertainment and education purposes. Before that, I graduated from a west coast school (top 3 UC) and a top Chinese university (Tsinghua, Peking, etc.). Before startup, I have worked shortly for a tech giant in Silicon Valley. I also did some internships for a major brand consulting company, small PE, and a big financial market research institution in China. I have also previously interviewed with JPM and GS to no avail. I've also been let go from a sovereign fund internship due to my nationality after working for one day.

An overview of my jobs and duties include but are not limited to the following:
Manage e-commerce store, office, warehouse
Manage organization structure, inventory, customer support
Business development, marketing, future strategy, negotiate contracts and agreements
Cost control, bookkeeping, find investors
Clean up and buy snacks/lunch for employees. (This is actually very important to preserve a company culture and morale when resources are limited)

Obviously, I can't do all of the above myself, so there is also a lot of delegation.

My company has been around for 3 years but I joined halfway. Within the FPV drone industry, our company is a rising star. However, there is still a lot of unseen risks, sacrifices, difficulties that our company has been through and are still facing that people don't know or cannot see. Without giving too much detail away, I'd like to share as much as my personal experience for everyone who is thinking about doing startups to help decide if this is the right path for you and why I am thinking about going back into finance. You can ask by commenting below or PM me.

EDIT: I am a bit busy so it may take some time for me to reply. But I will reply to all of your questions! Thanks!

Comments (9)

Mar 6, 2019

In your opinion, what is the best way for a finance professional to find these types of early-stage opportunities?

Most Helpful
Mar 6, 2019

I can't speak for everyone else but from my own personal experience, I did it through my network and personal contacts. I knew the CEO since college but we didn't start working together until last year when he told me he's in search of a COO. When I was in Silicon Valley, I attended a lot of startup pitches, events, parties, etc. and have developed a lot of network and ideas that would help me professionally doing a startup -- I know several guys who found their startup positions via these events too. Some people I know also used Angellist to find their job in an early-stage startup. Also, if you have a great idea yourself and are super passionate about it, why not start a company yourself and then find other equally passionate/capable people to join you? Ultimately, joining/starting startup is not only about your skillsets but also the fit -- which is how passionate you are about this project becoming reality. If you can demonstrate this to people/company that shares your passion, then you would have a better chance of joining one. Hope this helps!

Mar 6, 2019

Your career path is very interesting... it seems like you have tried out a lot of things which possibly gave you many insights to run a startup. However, do you know what you want to do in finance and how're you're going to get there? Not to sound judgmental but it seems as if your work experience could be hard for you to transition into finance right now despite you have interned at some financial institutions and interviewed at some big banks. I'm just genuinely curious.

Mar 6, 2019

Since I studied in China and seeing the big economic downturn lately, I asked around my friends who work in both buy side and sell side and I found out one of the most stable place to be in finance regardless of economic booms or busts is M&A. Thus, as crazy as it sounds, I really want to get into IBD M&A. So far, I'm just networking with all the friends that I know in finance and banking and networking with their friends. I'm based in SoCal but I will be flying to NYC once every 1 or 2 months over the weekend to attend events and to just show face with people who are in the industry. I'm about to start cold emailing. I figured out how to use hunter.io but still trying to figure out how to find the people I want to cold email. I know that I could leverage my China experience to get into some geographic-specific teams e.g. Asia equity sales. But I still want to ultimately get into M&A. In anyways, any input from the WSO community is welcome! I know the community is very helpful and I would really appreciate any help!

Mar 6, 2019

Thanks for doing this!

1) Has your company raised any financing yet? What stage are you all at (Seed, Series A etc.)?
2) Were you in charge of developing the marketing materials and scheduling investor meetings? How did you structure your pitch deck, your actual pitch, and what types of questions did you prepare for?
3) What metrics do you guys track? Do you use software to track them or good old excel?
4) What equity did you get coming into this startup?
5) Did you join pre-revenue? How do you guys go about marketing your products? How did this differ from when you started (presumably early stage) and now?

Apologies for the large amount of questions, I'm contemplating the startup plunge myself.

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Mar 7, 2019

No Problem! And thanks for asking these thoughtful questions.

  1. Our company currently has some seed money -- funded by the CEO's family. It was enough to get ourselves going since we didn't have any crazy ideas when we first started this company. We just want to be part of the industry, build up as much business and product experience that we can leverage, and then adapt as we find better opportunities and bigger markets. This is actually kind of nice for us because our business plan/model has shifted so much during the last 3 years since the company started. I don't think we will be able to adapt so fast and shift our focus if we sold much equities and told all investors that we have a rigid plan/idea we want to see come true. Our current market is very competitive and the profit margins have been driven very low so now we're moving into customers in education and industrial use, leveraging all the product experience, network and brand value we have accumulated over the years. In all honesty, I think my company moves pretty slow for a startup but we are constantly searching for new ACTUAL demands and reinvesting our profits to make something that would capture the market. However, I think this is also one of our strengths because we only make products that have an actual market. From what I observed, one of the reasons why startups fail even with a lot of backed money is because there is no actual demand for their product/service. I believe this is the most important message to all startup founders or who wants to join a startup.
  2. When I pitch ideas and companies, I would address the problems we're trying to solve very succinctly and in numerical terms (especially for those ex-IB VC investors). Get straight to the point and address that market size and how the company can solve it. Investors need to know that if they invest money right now, would they have the potential to make 10x of what they invested and how long it would take so you need to make that point pretty obvious to them. However, ultimately you still need to sound passionate about your own work and convince them that you've thought very carefully about everything - the risks, the potential, the reality, etc. and you're in this for the long run. Oh, and taking public speaking classes would help tremendously too.
  3. Returning customer/purchasing rate, return rate, operational efficiency, net profit. As you start using more leverage: billing period. Net revenue or net income per employee. A general rule of thumb is that one sales need to be able to generate enough revenue to pay at least 3 employees, including himself for the business to operate without loss. (Think of it like one front office guy needs to generate enough revenue to cover one middle office and one back office guy's salary in order to successfully keep the business alive and functioning well.)
  4. Yes, I was offered vested equity. I highly suggest anyone joining startups to really ask for as much as possible without being viewed as too greedy. The reason is that doing a startup is hard and you're going to be broke for possibly the first 3 years and if you're not in for the final reward of being part of something and sharing those profit, the salary and time you put in would not justify themselves.
  5. So the company itself broke-even when I joined -- we were doing something that had an actual demand. Marketing in a niche industry is very different. When we first started, the company was still in a hobby/enthusiast market so our marketing was done by community building, instagram, sponsoring micro-influencers. Now, we still do a lot of instagram but we also do videos, attend important trade-shows and conferences, SEOs, and word-of-mouth marketing.

Sorry my responses were very lengthy too. Hopefully they help!

Mar 6, 2019

What do you dislike the most about the tech startup world? What made you change your mind and decide to change careers?

Mar 8, 2019

I dislike most about the egos. Mostly because many of them won't listen when people tell them that even if their idea is good, they still need to learn how to sell or cater to the market where there is actual demand, or else their company will fail. A lot of the founders I met have very technical background and is somewhat out of touch with reality unfortunately.

I want to leave because I feel there is too much uncertainty. I also OT most of the time and I thought if I'm working so much for something uncertain, getting paid below the market rate, and would one day fail, wouldn't it be better if I work very hard for something that I know will guarantee certain financial reward?

Mar 8, 2019
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