Of course there's the "never say never" caveat, but for the time being I'm only going to work at big companies for the foreseeable future. I've spent the past 3 and a bit years working at 2 small (less than 25 employees) firms and although there have been some upsides, there have also been some very considerable downsides:
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Little to no chance of career progression. There's nowhere you can really be promoted to if the company is so small, there's usually no level above you that you can grow to (or if there is a level above you, it's a senior director with no real steps in between)
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No chance of giving more menial work to juniors because often times you might be the only analyst/associate/VP person in the entire firm. Just the other day I spent quite some time collating data across different files (copy pasting spreadsheets basically), something that would normally be given to a junior analyst. Yet as no such person exists, then I'm still doing such stuff after nearly 7 years in finance....
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You'll always and inevitably get dragged into all sorts of boring admin work, as there simply is nobody else to do it. It takes up time, doesn't add to your CV, but your bosses expect you to do it.
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Your bonus/pay package can be determined by the emotions of one person. I've literally been told by a director that they needed to catch the owner 'in a good mood' before discussing bonuses. At least in a bigger company there are more checks/balances/procedures in place that lessen the impact of people's moods on my income. Once I was even paid out a bonus while on my notice period as somehow the big company's HR systems didn't all link up to one another.
So what are your thoughts, working at big vs small firms?
Before I joined my current HF, I was up for a job at an emerging markets shop. Fairly small and I was to be the whole legal dept. Big hedge fund or small shop to be my own boss? I was tempted to take the smaller firm and then I did some digging. Turns out they had cut massive corners all over the place, traded in high risk jurisdictions and employed several people with hefty fines and sanctions from regulators.
Point I'm making - always go with the bigger company.
Agreed. It's not my first exposure to it either. I spent time on secondment at another firm, and later discovered that they'd been breaking SEC rules for almost a decade without being caught. I actually had no clue how it wasn;t discovered, considering it took me 4 months to find out.
Your first point can also have a flip side
In my experience, there will be faster career progression but that often translates to a inflated title and not so much in pay.
Also, in a way, you are taking a similar risk as the entrepreneur/owner of the shop without the upside. If the small company goes under for whatever reason, you are out in the streets. I feel that if you are going to work at a small firm you need meaningful upside or at least a clear path to the said upside for it to be justifiable.
^ This 100%
Having started immediately after the 2008 crash at a small firm, since it was all I could get, I 100% agree with OP. A large firm has its own quirks for sure, but at the same time, you're not entirely at the whim of 1 person. The only small firm I'd ever consider now would be my own, should I start one.
Don't bother at a small firm unless your an owner in some form or another.
^This
Would you translate this into 'get a share of the firm you work for as quick as you can'?
Don't bother with grammar unless your owner cracks the whip at you at your small firm.
I share the sentiment, having gone from a midsize firm to a small. Granted it was from MM IB to PE, there were many days I thought about going back to Banking just to have more ppl around
All else equal, bigger firms are always going to be a more stable path. There's less opportunity for surprises at a more established place. But for a more entrepreneurially minded person, a big place can be stifling too. Harder to carve out your own path.
I somewhat disagree, I have a lot of stories about folks getting let go from big(er) banks as a result of not hitting earnings, etc. This won't happen at a smaller bank because they can't afford to lose you (assuming you don't suck).
There's always nuance. BTW not sure you've controlled for the fact that bigger banks have more people to begin with and thus more layoffs . . as a % of staff I'm not sure they lay off more people. But maybe they do and maybe you're right. I was just saying that in general, a large firm is going to be a more predictable experience and even that isn't always a great thing.
I had a very similar experience to this working at a small commercial real estate brokerage. We had high splits, but the deal flow was so low it was insane.
Another thing I noticed is that people at smaller firms tend to be more loners/ outsiders. I worked at a shop with maybe 16-17 people by the time I left, and I didn't even know everyone's' name. I could literally go 2-3 days without talking to anyone else in the office besides the receptionist. It was really weird, everyone mostly kept to themselves, a true 'door closed' kind of environment.
I came to this same conclusion in the summer of 2017 when I, the head of our $1 billion portfolio's analytics, was asked to create a FedEx label for my boss. I knew the admin functions were getting out of control and that it was time to move on from my ~10-man shop. So much admin work taking up time.
Only join if you can get equity, and even in that case, be cautious of vesting requirements
I think a lot of your examples have flip sides, such as the the fact small firms have no official HR manuals, so they can promote you, give you a raise, etc. whenever they want. Many of the negatives you point out, especially your bonus package being determined by one person, exist at large firms too. One MD or the SVP of corp dev doesn't like you? You're screwed come bonus time. Don't think HR or someone below the MD/SVP is going to fight for you on this.
I think a lot of the small firm vs. large firm comes down to where you are in your career and where you are headed. I started a six-person IB boutique and then lateraled to a MM. I would suggest anyone in IB start at the best firm they can, preferably a EB or BB, because they provide much better training and have had hundreds of analysts go through their program. Past that, it really depends on where you are in your career and what you want out of it.
you started a boutique or started at a boutique?
Started at.
I think the key point that is being missed is whether the small firm is set for rapid growth or not.
Yes, you could be employee #26 at the next Apple, but, seriously, what are the chances? Alternatively, what are the chances that, as soon as you walk in the door, the company loses a major revenue stream or goes tits up?
I don't think it has to be the next Apple... I have worked at various companies of different sizes, and at the small to medium one I worked at (circa. 500 people I think) I was left quite astounded by the number of incompetent, useless people in senior positions. They ended up in these senior positions as a consequence of tenure and the growing nature of the firm. I contrast this to the larger firms I have worked at and it is evident that the calibre of the people on the whole is much higher, and the growth slower, making it harder to reach the more senior positions.
I would always advocate that a fresh graduate start off in a brand name company, cut their teeth and learn the business, then take that knowledge to a smaller company they are willing to bet has solid growth potential. Why fight a war of attrition to get to the top when you could move to a firm where the sea could part in front of you? Fine, it's a bit riskier, but the upside is materially better. If you want safety, become a dentist or an accountant.
My view has been confirmed by some very senior people I have met who were formerly at large PE firms/Sovereign Wealth Funds and then made the change, which has given enough conviction to back my position with my own career at least. The first chance I get to move to a smaller outfit that I see having asymmetric upside, I'll be straight out the door.
I think it depends on the line of business.
I work in PE, and have worked at small and large firms, and by small and large firms, I mean the investment team has been relatively the same size (most tend to be in the 5-15 person investment team anyway in my sector). The difference is whether the overall firm was your product only (small firm), or had other business lines/products (large firm).
I much prefer the small firm, everyone has the same common goal, you don't have to worry about a lot of extra BS with other people who are involved in your day-to-day business. In a large firm the Investment Committee process tends to be a bit more cumbersome; you're always inclined to send out useless presentations for non-team members, etc etc.
My thoughts for most of this are that there is a flip side to most of these.
Little or no chance of career progression? The opposite could be easily said. If you're a monster, you can get promoted very easily and end up running shit in very little time at all. There aren't dozens of mid level employees ensuring that you need to put in your time to climb the ladder. I guess if your attitude is you want steady, predictable career progression regardless of your production, than you're probably right.
Your second point seems a little... I don't know, entitled? If you're in this because you want to be able to look down at someone and hand them the crap you don't want, you probably aren't in this because you're passionate about the field. It's part of the job. It's great to have someone else do it for you, but what are you getting paid for if not to get shit done?
This is true, and sucks.
This is ridiculous. As if this isn't the case anywhere else? As others have said, one director or SVP who hates yours guts can absolutely wreck your compensation at a bigger firm. Moreover, the major difference is that while your downside may be capped by general firm practice, so is your upside. At a small firm you have a lot more leverage to demand bigger bonuses, because presumably, if you leave, no one is replacing that production very quickly. At a bigger firm, it's much easier to slide people in and out. Of course, if you're not producing, you're replaceable - but in that case, why complain?
Long story short, the major upside of working at a small firm is equity. If you have a couple points of the company, then complaining about bonuses being off by a couple grand because the boss was in a bad mood, or having to do admin work, is disingenuous. Your payout is the equity. You should bust your ass because making the firm more profitable makes your stake worth more. If you don't have carry, then yeah... go work somewhere else. Climb the corporate ladder at BAML. You'll make a million dollars a year, comfortably, and have decent job security as long as you do the minimum. You'll never hit it big though. The way you become extremely wealthy is by gambling that a small company makes it big and takes you along for the ride. Doesn't have to be Facebook... but there are plenty of companies worth mid-9 figures. Owning a couple points of one of those could be worth $10mm
^This.
In my experience thus far (which isn't much), I have really enjoyed working at a smaller firm. I did my internship at a 15-20 man IB shop, and now I moved laterally into a similar size shop to go full time.
All of what has been said has not held true for me at all. Granted, I have not made it to higher seniority positions in which many of these complaints have come from.
I think going to a small shop, especially for someone from a non-target like myself can be a really good option to get your foot in the door at least.
Just my two cents.
I totally agree with you, but I think it depends on the type of experience you're after. If you want an equity stake/want to drive a ton of growth in the company then a small firm could be good as others here have said. I've interned at smaller companies so far and am looking forward to joining a much larger firm this summer. I think there's certainly a point where a company is too big though. Just going through the interview process with a large F100 I felt like there was a lot of "bloat" throughout the process and don't see myself in an organization like that.
There seems to be a few missing upsides to working at a smaller (5-20 man) shop. I'll get us started. - more informal dress code and office policies including vacation allotment, time you get in, etc - usually little to no facetime. get your shit done and leave - much more nimble decision making, less bureaucracy. you want to offer a half turn more to get the deal done? takes a minute to decide rather than days - like your boss at a small company? life is pretty great. you get a new boss every couple weeks at a larger company (ie different deals and projects) and that could suck - much less internal shit that needs to be produced. - lot less "crap" that needs to be produced in general. every work product done is needed and worthwhile - opportunity for rapid advancement. You only had 2 years as an Associate? Here you go with your VP title anyway - much more responsibility and chance to grow. Good luck doing that as an Associate who reports to a VP who reports to a Director who reports to an MD - much more impact on the firm. You're not just a cog, you're helping to build the business - potentially more job security since you're not in an "up or out" shop - potentially more informal and frequent feedback to help you course correct, as opposed to one formal review a year - opportunity to be heavily involved in hiring decisions. There should be at least one more junior guy to you once you get into the 10 person range
Absolutely agreed that there are upsides, it's never one sided. And I think a lot of the up vs downsides can be specific to a person, i.e what's positive for someone is negative for someone else.
I do have a few counter points to some items on your list.
If anything, vacation times in large companies are more relaxed than at small firms. At a small firm you might be the only person or one of 2/3 people doing something and therefore it's difficult for the firm to truly let you be away. Both small companies I've worked at have told me that there are specific people who I can't be on vacation with at the same time. Furthermore a large company in my experience can let you truly switch off more easily, while as a small one wants you to be constantly on emails.
In my experience (albeit this could be company specific), bigger companies are more relaxed about working hours and facetime (partially because in a huge office, your managers won't always see you whenever you're in) while as small companies are a bit more insistent on it.
Title inflation is rampant in small firms and most people can see through it. The title means very little and you won't necessarily get a big pay bump to correspond to you suddenly being named 'associate director' or something.
I find that bigger companies are more hesitant (in fact very hesitant) to let people go, small firms chop off staff all the time.
Regarding feedback, at least large firms have feedback systems. The small firms I've worked at have no real feedback going on (either formal or informal) at all.
The other upsides however I do agree on.
Both you and Kickball123 have great points. It seems like the devil is in the details since this is not only firm-specific, but also relates to the idiosyncrasies of the people you work with on a day to day basis.
A vast majority of the generalizations in this thread are company-specific, not company-size specific.
I moved from a big 4 to a 12 person boutique IB and let me tell you I agree with all of your points especially being the only junior person. I work on live deals with just me and an MD being the deal team and it gets super frustrating at times. Need help on something? Better youtube it until you figure it out. Plus its kind of terrifying that no one does quality control on models etc. I also very much miss the training programs given at the Big 4.
That's the real world mate. I get big 4 auditors completely half assing their audits of my investments - tell them two lines of bulls shit and they go home happy. There is a reason why Enrons happen all the time. As for the smaller firms, same same - no one has any idea what they are doing. An investment will do well not because you are smart or you manage it well, more to do with timing and luck in the market. You'll be disappointed in life if you look for competent people, most just chance it.
If you don't like it, leave. There's a line of hungry folks, many of whom are on WSO, waiting to do your job better for less pay.
Much prefer my life here vs. the big 4 I was simply stating what I don't like about small firms. The whole "willing to work for less" argument only damages the power of the workers within the industry FYI.
I don't know about small companies per se, but my experience has certainly been that privately owned companies - especially those where a considerable portion of the equity and therefore executive power rests with just one partner - are the worst. Often, said partner gets away with being excessively tyrannical and generally behaving in a manner that, even for the most senior MD at a BB, would not fly. I will certainly never work for any such firm ever again.
I know you're just dying to use the phrase "[said partner] acts like he owns the place!"
I mean, read what you're writing. If I literally own a company, you can damn well bet I'm going to act like it. It isn't a democracy, or a public company. That partner owns everything. Your paycheck is coming out of his pocket. Any overhead? He's paying for it. He's the one putting (or was putting) personal guarantees on loans. He's the one who risked his former career or whatever it was to go out and start a business. You're hopping on in a position of no responsibility, once the place is up and running. Why do you think you deserve a say in how he runs the place? Of course MDs and wouldn't get away with it; they're employees like you, just better titled and paid. I'm sure if the CEO of a BB came down to your floor they'd be acting a lot more like your current boss than an MD.
Think you're being a bit harsh on YoungDumbFullOfRum. I think the point he was trying to make was that such an environment is unpleasant to work in, not that they're somehow entitled to something more from the CEO/owner. Yes of course if you own the place, you can do whatever you want (I've experienced a situation like this myself), but the consequences may be that people will just leave because of your behavior.
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