Medicine to VC/PE via MBB or MBA?

Jfive67's picture
Rank: Chimp | banana points 10

Greetings from another discontent doctor....

TL;DR: i'm an anesthesiologist/pain medicine doc. After two years of private practice I'm looking for a route to VC or PE. On a whim I applied for a job at MBB and got an offer for a post-mba equivalent position. Would this be a decent path to VC/PE or would an MBA be a better route?

For more background: Graduated from an Ivy with engineering degree in operations research, went to mid-tier med school, graduated top of my class from top-tier residency. I have no debt and I'm currently earning just under 500k which I could probably stretch to 600k if I cut back vacation time. 600k would likely be my earning ceiling unless I sold my soul to the devil and entered the world of pain medicine. (My earnings in medicine are in no way guaranteed with obamacare, reimbursements going down, etc...). That being said, I was a little let down by the compensation offered from MBB (post-mba salary). Partner mentioned that if i was truly overqualified i would be promoted rapidly. From my research that would not be more than yearly and it would take 5 years to get back to my current earning levels. Some friends in PE/VC suggested looking directly for PE/VC jobs, but I havent gotten any traction since I have no work experience outside of medicine. I've also considered applying for an EMBA from NYU or Columbia but my post-MBA friends are equivocal about the utility their MBAs. Ive got a week to decide about the MBB offer so any input would be helpful. Thanks!

Comments (10)

May 1, 2018

The good news is I've seen ex-practicing physicians in investing roles, both PE and VC. You'll likely be limited to healthcare roles, given your background, but that might be what you're looking for anyways.

The bad news is you're going to have to put in the work to get back to your current comp. Investing is obviously a different world from medicine and you will need to pay your dues/learn the ropes, just like you did with residency. Best case you'll be a senior associate/VP at a fairly small healthcare focused fund. You're looking at 50-60% of your current cash comp and maybe a bit of carry that won't start to pay out for a few years or more.

As for the best path, I'm guessing you're a bit older than most business school graduates so your chances of placing out of business school will be low given: 1) you have no investing experience, 2) you'll be presumed to have more family obligations that would make it difficult to manage a junior/mid-level workload and hours, 3) PE recruiting in business school is tough for most given the number of roles vs. people interested.

If you really want to be an investor long-term, you're going to have to suck it up on the comp front for a few years. I'm not sure what your specialty is, but your lifestyle could be worse as well. Do some research, look for firms that have MDs on the investment team (not operating partners), reach out to those people and ask for advice/try to get an interview.

May 1, 2018

Thanks so much for the input. Very helpful all in all. Any thoughts on if this consulting offer from a MBB firm would be a good step for me to start getting work experience outside of medicine? I'm having trouble finding even entry level PE roles that don't require prior IB experience...

May 1, 2018

If you really want to leave medicine, it's a good opportunity. Like you pointed out, you're going to be taking a pay cut and be in a junior role for a number of years. But if your priority is to leave medicine at any cost, then the MBB offer is a good one to have. However, I wouldn't presume that it will open up doors to PE for you any time soon.

I think it just comes down to how badly you want it. My personal assessment is that your chances are not great and will require you to make meaningful sacrifices; but then again I've seen people with more non-traditional and less impressive (on paper) backgrounds hustle and scrap their way into a lasting, successful career in PE/VC. Will you be happy at 40 making less money than you make today, reporting to someone 10 years your junior? Based off what you wrote in your original post re: comp and promotion timeline, I'm not sure I see that - but maybe I'm wrong.

May 1, 2018

It's going to be extremely hard to find your way into PE While definitely not impossible, it's a path that very uncertain, will require significant sacrifice and definitely doesn't have any certainty of success. Giving where you are, I think it's more a question of thinking why do you want to leave your practice and why do you want to get into private investments.

Also note that generally speaking, your medical knowledge and experience will be way more valuable to a VC than a PE firm. Why, PE only invest in mature, proven companies and will hire a whole suite of advisors when looking at a deal so they need their investment professionals to know how to evaluate businesses. VCs on the other hand invest in ideas / compagnies that are young and looking to develop a product / service that don't necessarily exist or has been developed yet and it can be extremely hard for a non-medically trained person to properly assess those projects.

I've done a fair bit of healthcare investing (mostly services and MedTech) and gained a pretty thorough understanding of the market in general, regulatory environment, key players etc and now that I have a couple deals under by belt, I feel completely at ease looking at healthcare deals and do not believe that having some medical training would really significantly improve my ability to find good deals and evaluate them. If someone comes to pitch a novel solution to cure cancer, I'd have zero basis to properly assess that solution, I most likely wouldn't even understand how it'd work so even though I have ton of investing experience, I would be somewhat useless in evaluating this opportunity and that's where having medical training would be a huge help because it is almost a requirement.

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May 1, 2018

You would be batshit crazy to give up mid six figures comp for a chance to hack it on the buyside. At the more senior levels you might make what you are currently making, but that's 5 years of opportunity cost difference between your salary as a physician vs. what you would be making as a junior investment professional. After your residency, I'm sure you're no longer a spring chicken, and you're talking about HUGE downside risk to quit your career in hopes of the <10% chance you'll be able to somehow land a partner track buyside role, with very low risk adjusted upside

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Best Response
May 1, 2018

I second a lot of what @Entendu wrote in his first comment.

The way to look at it is to analyze your total future earnings across the paths in front of you.

Your first option is to stay in medicine. I'm not super familiar with the career path, but as I understand it, you have high cash comp all the way until you retire, but you face a real ceiling. Your only option to juice your income as a medical professional is to open your own practice, but that varies by specialty (e.g. is it even possible to be an independent practitioner as an anesthesiologist?), and even then, your "exit" is challenging unless you've managed to build a robust enough practice that the client base sticks with the practice even when you retire or sell it.

Your second option is to pursue the path of MBB to investing, or alternatively, find a way to get directly to an investing role.

In the first, you're going to get $500-600 a year (with adjustments for inflation) until you decide you're done. You have a very attractive floor but a very unattractive ceiling.

In the second, you have a much less attractive floor (realistically, you're looking at cash comp around half of what you're earning now), but if you can successfully transition to an investing role, no real ceiling plus an attractive probability of seven-figure annual income a decade or so down the road (lumpy carry payments amortizing across the years you work).

Here's the thing about an MBA. E-MBAs are not the same as a traditional MBA. I am not knocking the program, they are valuable on the dimensions they're strong on. I am saying that the mental picture most people have of an MBA is not matched by what an E-MBA offers.

An MBA is primarily a recruiting tool. Secondly, it's a network supercharger. After that, it's a re-branding tool. Seriously. You use it to get the type of job you want (or the job that positions you to get the job you actually want), and you use it to upgrade your overall pedigree.

An E-MBA doesn't give you the first: the recruiting opportunities simply do not exist the way they do for traditional MBA students.

Opinions will differ on the second point; some people feel they get a really strong network, others don't. My take on it is that the type of person who feels "lucky" to have gotten into the Columbia E-MBA is the type of person to feel that their classmates are an improvement on the people they were already socially proximate to, whereas the person who is doing the same Columbia program as an established mid-career professional earning well and ticking the box to get the degree just to have it to their name won't feel the same way.

On the third (branding), it tends to even out over the long run. Your bio on a fund's team page is going to read "earned an MBA from Columbia Business School" the exact same way a colleague's bio with a traditional two-year MBA would. I have seen some people go out of the way to mention that they earned it through the executive program, and each time I wonder why they'd voluntarily dilute the strength of their bio. What I'm trying to say is that in the first 5-10 years after graduation it may seem like an E-MBA doesn't have the same cachet as a traditional MBA, farther down the road no one will know unless you intentionally disclose it. Headhunters, nonprofits, and corporate boards of directors evaluating you for a board seat will assume your MBA is the same as everyone else's.

In light of your situation, I wouldn't recommend either MBA option. You're too "old" for an M7 program to love your profile, and the E-MBA isn't going to do anything to help you since the only reason you should consider an MBA would be the recruiting opportunities it affords (and the E-MBA doesn't help on this dimension).

If I'm you, I take the MBB role and look to move after the second or third year. Start having conversations with funds you'd like to work for after being at the MBB firm for 18-21 months.

You won't get traction without any work experience. The MBB brand is going to make you less of an uncertain entity, and if you can get into a groove as the 'PE diligence specifically for healthcare' guy, you will find that people will be receptive to chatting with you informally. Do 3-9 months of those chats with people and you should have a broad enough set of relationships that you can start a process with multiple funds to try to move out of consulting.

Once you're in an investing seat, you'll probably pull $250-450 in base depending on what title someone gives you (Senior Associate vs. VP). Again, it will vary on the fund, but you should be granted some carry as well, and that's where you're really going to earn over the long run.

All of this is assuming you find your current work to be too boring to do long-term. Conventional advice would be that you're insane to leave a high-paying, in-demand job to chase a tougher career path that few people make it to the top of.

Another route would be to try your hand at angel investing in medtech (digital health, medical devices, biotech) startups. You could write four $25k checks a year for three years and run a portfolio of 12. Within two years after that, you'd know how they performed overall.

If half of them went on to raise a later round (or more than one) and you had been on a couple of their 'advisory boards', you would be surprised how many funds would be very amenable to a conversation about you joining.

That could take three forms. One, you could join the investment team in a normal way. You're probably looking at a 'principal' title in venture, or if you were joining a growth equity / buyout firm, senior associate or VP. Two, you could join as a Venture Partner (in venture) or Operating Partner (in buyout). This is where you'd effectively be a full-time consultant across the whole portfolio. They'd welcome any sourcing efforts you make, but your job is to help companies the investment team (which you're not on) already chose perform well. Three, you could join as an EIR. This is where they agree to a set period (usually 12-24 months) where they pay you a very comfortable salary with the understanding you're hunting to find an idea you care about enough to launch a new company around that the firm will fund right out of the gate.

Good luck.

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May 1, 2018

It is hard to predict the future. Maybe medicine isn't as risk-free as we are assuming...

May 1, 2018

This is a major issue for me - with reimbursements and salaries declining in most specialties I can help but get that "sinking ship" feeling. When I applied to medical school in 2008 it was somewhat in response to the financial crisis but now the stability of medicine is questionable.

May 2, 2018

Before I opened the thread I thought something like option 3 would be amazing. As long as it does not distract you from the day to day that's something I'd strongly consider.

I'm sure you already know this, but it's human nature to feel that grass is always greener on the other side. I'd take a hard look on what you have right now, and also talk it out with your family.

May 4, 2018