I occasionally snoop on LinkedIn and recently learned how to do advanced searches. EG I will search for former employees of certain private equity funds. This is helpful as you can see where employees land if they don't move up the ladder at that fund. Recently, I've come across a few guys whose profile looks like the following:
-
Investment Banking Analyst (2 years) - MS / GS or other Prestigious Investment Bank
-
REPE Associate (2-3 years) - highly prestigious REPE Fund
-
REPE Associate / VP (2-3 years) - prestigious REPE fund but maybe marginally worse than the previous fund
-
Independent Consultant / CEO / Advisor (1-4years) - Either the guy started his own company and is trying to broker deals, is doing side gigs, or is working a tiny company no one has heard of. Point is it's a massive step down from previously being a VP at a legit PE / Hedge fund
What causes this steep decline? I feel like I've seen variations of the above several times - it doesn't always follow the exact path, but there is certainly a theme. Starts very strong out of college, and gradually moves downward in terms of "prestige" and eventually there is a steep dropoff. I'm aware that moving to smaller funds as you progress is normal, but why the steep drop off to starting your own "advisory" comapny at 29?
Does anyone know someone like this personally? Do you think this happens because of personality issues? In my head, I always imagined that if you failed out of one of the major PE funds, there's always a smaller fund that could take you on so you could continue moving up. It appears that this isn't the case for some mid-level guys, To me, that outcome is frightening since I don't want to do anything entreprenurial until I'm in my 40s.
Would be interesting to hear stories if anyone knows someone that took a similar path
maybe the advisory companies are making bank or have better upside or have better work life balance
This. I can only speak to Australia, but the unheard of boutique corporate advisory firms tend to make far more money (on an individual level). This is typically through equity exposure, being paid with options instead of cash and so on. Plus small advisors focusing on small companies, tendto be more volatile than established blue chip companies.
Think about it this way, if you start advising a private small cap company, obtain seed in the company, do a pre-IPO round of financing (which includes shares/options to you) and then eventually IPO (or RTO) the company - think about the seed shares, performance shares and (very cheap) exercisable options alloted to you as advisors. This would be a bigger deal, typically 2 years in length from start to finish - but can see millions being made advising companies that are relatively unheard of.
The small cap market has some peculiarities though, such as only having a base salary for two years before moving to a commission "bonus only" model. This might sound unusual, but I have heard of (and seen firsthand) young guys (these firms aren't as hierarchical) hit low 7 figures over a 3 to 4 year period, in which case they don't care about not receiving a fortnightly pay stub.
Oh and on the topic of hours, 40/week during a quiet lull, maybe approaching 60/week during a busy period. Very comfortable, all else being considered. There are plenty of downsides too, due to the nature of the work, exiting to a bulge bracket is more or less unheard of, only being as good as your last deal, lumpier income etc etc.
I've had friends move from IBD to the Australian market. What you describe sounds more like people who have local connections on the ground and are able to source deals for buyouts. Or are you talking specifically about advisory work? I have seen small family business that people are trying to exit and 'boutiques' buying them out. Its lucrative if you can source good businesses but that's very difficult in a thin market.
on some level I could say I fall into this category. I was at a highly-selective ibank rotation program as an associate (10 people chosen out of 2000 applicants and then rotated thru ibanking, REPE, PE and equity research. Then I went to one of China's top PE funds, then went downhill from there. I'd say my flaw is staying in Asia, where I'm no longer nearly as relevant given the rise of local talent (eg. native Chinese) and failing to find a way to adapt. I'm still fighting, still hungry, but it's not so obvious to me how to navigate. How's that for keeping it real?
What do you do now? And were you forced out at the Chinese PE fund?
Yes, I was forced out at the Chinese PE fund. They gave me a transitional period, but ultimately it was an up-or-out situation, and I wasn't getting staffed on local deals (and PE is a very local / relationship-driven business). I went on to co-found a PE fund w/ a famous Wall Street guy, but it failed to get to the scale he had envisioned (ego issues) so we sold it to an investment bank. After that, I went to work for smaller PE shops. It's been more difficult to get back to mega-fund footing. Now I'm working as a venture partner to a mid-sized startup PE fund, and am pondering my next move. I guess 'venture partner' could be the equivalent of consultant ;)
Wa hen youqu. Jiayou bro
This seems like something only someone from the little red dot would say. Is that your nationality?
OP - this is a great question and one that has many answers.
But the short answer is a lot of “consultant” free-lance whatever advisors are just unemployed people. It’s to put something on the resume so you don’t look lazy/out of touch. Many of them do plenty of things with their time off or while looking for a job but often employers don’t care or value it. Ex-PE guy decides to go to India to work on a hunger prevention program for free or volunteer at an inner city school in St. Louis for two years? Don’t care. Not relevant. That’s nice. NEXT. So the same person has to do the odd “advisory” work to sound current and relevant and they will be advised as such to “put something, anything relevant sounding” on the LinkedIn/resume. HR and headhunters are usually the worst of the lot when it comes to this level of filtration.
Burnout in this industry is super high. From the (often unnecessary) pressure, long hours etc. remember that many people at “top jobs” have never had a break. Acing school and college and doing all of those extracurriculars took time and energy, as did interviewing, then actual job. In short many people have never had a break. It’s not healthy. Literally.
Some get canned or laid off. Markets turn, patrons get cut by rivals, politics happen. Any game in long term finance is one of survival.
Life happens. People have kids, family issues, health issues, pick up new hobbies, decide they want to do something else or that they have enough money.
The skill set that makes you excel at the junior levels is different from that at the mid level which is different from that at increasingly senior levels so it is best to remember that as well.
This is just a start but I hope illustrative. I shall leave to others to elaborate further.
Good Luck
I agree with this.
my cousin did something like this..made decent money, saved most of it...and then used it to become a developer / owner of a mini real estate empire.....he owns and rents out property...uses the proceeds to pay off the mortgages on his properties..and the excess to buy more property....guy is now worth millions...only works for himself...and makes more than he did as an employee of a fund...while his ownership stake in his properties grows as his renters pay off his mortgages.
sounds like a great guy to know and learn from!
he started by flipping houses (which he also still does)...lives in florida....looks to buy the 2nd-3rd smallest house on the block (because the other nicer bigger houses pull up the appeal of the neighborhood)...works with a number of contractors to renovate the house and significantly increase its value...then sells the house (occasionally he rents them out if rental demand is high enough to warrant that). He started with one flipper house...he now has 300 rental units (15 years later). During the boom of 2006 he refused to buy property because it looked like a bubble (i tried to convince my whole family to sell their houses and rent until the crash so they could buy back cheaper). Then in 2009-2010 he went on a buying spree and maxed out leverage. He's in the same situation now...not buying properties at elevated prices unless its for a quick flip...waiting for the next crash.
You too can learn to flip houses just like him by attending his free 2-hour seminar!!
The American dream.
This is my goal, also waiting for a crash
Fall off the map? I work with these types all the time. They take a fee on 1-2 deals a year through their own gig and collect $300-400k.
Establish the relationships/skills through VP level, then leave that 60 hours a week for a semi-retired lifestyle.
In the sole example of this situation where I know the guy personally, he was fired before going out on his own. I believe that people do this by choice, but I’m more concerned about those who didn’t and what caused it. Could they have gotten hired elsewhere or did they see that as less attractive than starting an LLC and working from home
I was in a banking group when young, earned my MBA, went back to banking (I'm a glutton for punishment), and then ran corp dev for a privately held co for 3 years.
Wasn't sure where I'd end up professionally when the wife and I decided to leave the tertiary city we were in and head back to the east coast.
Randomly came across a deal through an old relationship of mine (a lawyer) that I met with to re-integrate myself back into the local scene. Ended up meeting with the owners of his continuing education company client and did a deal with them as an independent sponsor - we sold to a larger continuing ed company. I rolled most of my fee as equity, took a deal sourcing/consulting role and closed one other deal before exit 18 months later.
This led me to talking to a lot of deal sources (corporate finance guys at CPA firms in Kansas/lawyers/PWM/etc) and gave me access to a bunch of random deal flow (99% sub $5m EBITDA cos).
Found a telecom products distribution co and partnered with a family office to acquire it. It was $17m/$2m when we bought it and we've closed a further three add-ons. It requires 10-12 hrs/wk of my time on average.
I spend another 10-25 hrs/wk sourcing and evaluating deals.
Since my $60k/yr board/management fee isn't keeping my wife in diamonds and furs, I do some advisory work in addition to continuing to source my own deals.
The PE firm that owned the continuing education company has me on retainer for two of their port cos as a corp dev resource and those gigs take another 10-15 hrs/wk of my time.
Guys and gals I knew in my banking days (who are now PE execs, corp dev execs, small business owners) also throw some work at me, everything from commercial due diligence work in industries I have expertise to turnaround/profit improvement projects (lender had a media company that was over-leveraged and I spent a month kicking the tires on their business plan and made recommendations for improvement) to serving as a quick hit finance resource (contact bought a $7m manufacturing co in Illinois and I got it setup on quickbooks, built a KPI dashboard, built a budget/forecast model, etc).
I occasionally need to get on sparehire and hourly nerd (or whatever they've been rebranded as) for help with projects, but I'm very much on my own and definitely DO NOT carry the prestige of somebody at a fund with $20B AUM. **I am 100% somebody that would be described as 'falling off the map'** by people that are concerned with titles and the prestige of banks/PE/consulting/etc.
No large fund or 'prestigious' bank is ever going to hire me at this point in my career (I'm 40-ish), and I'm more than ok with it.
Will I become a billionaire? Nope.
Will I ever be on the front page of the WSJ or a frequent contributor on CNBC? Nope.
Am I the envy the of the name dropping, league table reciting 23 yr olds on WSO? Nope.
But I've carved a nice little niche for myself and I'm quite happy with it. I had an early score as an independent that netted me a handsome sum. I own a stake in another privately held company that is worth seven figures. I've invested in two privately held energy companies (one in O&G in OK and KS, the other in utility/infrastructure in the US & Africa). I invested with family members in buying over 40 houses in the Rust Belt city I grew up in during the financial crisis (avg. price ~$20k) that kick off fat dividends. I've averaged $160k in board/consulting fees in the four years since I 'fell off the map.'
If I stay on track and stay conservative, I'll have lived a life free of personal debt, will have owned multiple businesses, and will leave $10+m behind for each of my heirs. Not a bad run if I do say so.
The dream
Honestly the life. Take 1-2 deals and chill and coast.
$300-400k is still PLENTY of money to live on even with a family.
Success =/= a job title at a prestigious firm
I'm not sure if this applies to the person or people you've looked up or not, but I do find it interesting that you this this progression is a "steep decline" or that this track shows that said person has "fallen off the map" by "starting his own company" or "working a tiny company that no one has heard of."
Perhaps it is because I believe there are far stronger ways to acquire prestige than your email extension and business card logo, but nothing about what you listed makes me see that person as a failure.
If they spent two years at Goldman, they're clearly pedigreed. 2-3 years at Carlyle or Blackstone only enhance that. Then, that person was probably bored and faced with a choice of sticking it out in hopes that they are promoted even though the pipeline ahead of them is clogged, so they picked a promotion, and most likely a large increase in pay, ahead of "prestige." Finally, with an iron clad resume, and now leadership experience, that person went out on their own to chase the American dream or at least further progress in income and responsibilities.
I'll take it a step further and use myself as an example instead of being theoretical. In graduate school, I interned at a top, nationally ranked multifamily developer. They weren't hiring, so I had to look elsewhere, and my two main options came down to an asset management position at a very highly pedigreed location or a development position at a no-name firm owned by two people who worked their way through your progression at very pedigreed firms before starting their own business in order to be entrepreneurs. As acquiring direct development experience was my goal as opposed to acquiring "prestige," this was a no-brainer. The development role also paid much less, but had significantly more upside, and as I sit here three years later I'm happy to report that the upside came through and then some.
I find myself at a similar choice today as I look for what's next. The hierarchy ahead of me at my current firm is completely clogged, so as I see what else is out there I have noticed that my options more or less break down along two lines - a lateral move to a massive, name brand firm or a step up at a smaller company. There are massive benefits to both and I'm sure I'll be weighing them before long.
Hopefully between 5 and 10 years from now, I will be the "guy starting his own company." You will certainly have never heard of it and will most likely barely know it exists for quite some time, if ever. If some guy in the future thinks my LinkedIn may look less impressive as a result, I doubt that will influence my decision. If I take a year off between my last employment and starting my business in earnest, perhaps because I saved wisely and want a break before jumping full into the neverending grind of entrepreneurship or because the market just isn't at a point where I can start successfully but I no longer have interest in clocking in every day, I doubt I'll care if someone sees the consulting business I did on the side that year so I can still have some money coming in as me "falling off the map."
Going from assumedly Undergraduate at an Ivy League School to Analyst at Goldman to Associate at Blackstone to VP at CIM, Crow Holdings, or Greystar puts a person in an absurd position to make money for themselves once they tire of the rat race. People make career choices for many reasons, only one of which is "prestige." Perhaps you didn't mean it like that, but I'm a bit surprised to see this mentality in the real estate forum of all things.
my cousin now owns 300 rental properties....using the rents to pay the mortgage and associated mgmt expenses, he end up with 10k profit per year, per unit (on avg). thats 3mm profit per year...IN ADDITION to his renters paying off his mortgages (took 15 years to get here).
How do you like them apples?
It sounds like he made the right choice for his bank account instead of his LinkedIn.
I say this as someone who is trying desperately to exit the real estate industry--I can't think of a less fulfilling job on planet Earth than owning and renting out residential real estate units. Maybe $3M/year is enough cash flow to compensate for the boredom of asset management and buying and managing real estate, but not for me. More power to him. Same thing I say about my best friend that makes about $1 million per year originating residential mortgages--there isn't a dollar figure big enough to get me back into that industry.
This is it.
I've made similar comments about peers as well, "wow, X has disappeared" or "oh, he's off doing his own thing"
Its a weird transition from interacting with someone regularly, seeing their name in Real Estate Alert, share panels at broker/bisnow stuff, to not seeing them at all. But most of what makes people/shops prestigious is circle jerk shit anyways.
But prestige and name recognition can go jump off a cliff when it comes to $$$. Sure fall off the map, at cocktails parties its less impressive to say I own SHB LLC rather than VP at BK/KKR/Carlyle but someone who consults or owns their own shop only has to do a couple deals to make more with less work than they would have made in years at a more "prestigious" firm.
There are tons of no name developers/consultants/advisors in no name places making more money than 99% of this board ever will. Can't get caught up in names.
At the same time entrepreneurship isn't for everyone. My brother started 3 companies before he turned 30 with some tough times and good times. I've done the brokerage side and the equity side and I like my salary a lot. I'm not sure I'll ever be entrepreneurial (even though one of my two major's is Entrepreneurship), but I respect the shit out of anyone who has the chutzpah to give up their salary to do their own thing. Its a drive I wish I had, and had when I was younger, but have since lost.
I think there’s some confusion here. I’m NOT knocking losing prestige to do something more entrepreneurial.
As I said in another post, the one personal example I know of this, the guy was fired and is trying to do his own thing. Based on their age, what they were doing before and what they’re doing now, it’s pretty safe to say they were forced out and their career trajectory has declined. I don’t want to link peoples LinkedIn, but I’m confident you would agree with me if you saw.
More interested in why people who were pushed out pursue entrepreneurship rather than finding another job
Also keep in mind there are plenty of small, successful development shops given the local nature of the business. This is less common in brokerage / PE / Investment Banking where a smaller group of firms run the show
Edit: Removed some useless argumentative stuff
That's fair - apologies if my post came off as a rant.
It's hard to talk about a specific person as opposed to people in general because there are always specific instances with that human being, but there are a couple of possibilities:
That person changed, either willingly or unwillingly. Monkeyrella talks about wanting kids and a family, which is a fantastic example of something you value in your 30s that you don't care about in your 20s. A person could watch a parent die and resolve to value living live, or their health, more as a result. A person could reach a point where they have been financially successful enough to no longer need a massive salary and all of the stress that comes with it - the FI/RE movement is full of them. Or, in a darker way, that person could have unresolved mental issues, like anxiety and depression, that come on stronger when the work is more stressful. The person could have a drinking problem that has finally progressed from "wow that person likes to party" to "it's 9am - why do you smell like booze?" People aren't static throughout their life.
The personality traits and skills required to succeed at the higher levels of business are often very different from the traits and skills required to succeed at the lower levels. When I think of an Ivy League math wiz with a 4.0 who got into Goldman's analyst program, a certain stereotype comes to mind, and it certainly isn't that of a CEO. There are a lot of nerds and/or tools that get to where they are by following all the rules, turning in their homework on time, and spending 100 hours a week re-formatting spreadsheets. That is so far from what it takes to succeed at the upper levels that only a rare breed can successfully navigate both ends.
Also, there are only so many upper level roles, period. The pyramid gets smaller at every level. Sometimes, you can be the second best person for a promotion, but if you don't get it, you might not be happy to stay where you are, have your former coworker now be your boss, and know that the higher ups don't believe in you. It also gets more difficult and takes much more time to move from position to position the higher up you get. Analyst and associate roles are a dime a dozen, but there are only so many VPs and Directors. This is probably the best answer to "why people who were pushed out pursue entrepreneurship rather than finding another job" - it might be their only option at their level at that time.
this is excellent
As a woman, I fully expect this to happen to me at some point. I have managed to make it to the megafund stage but the line is clogged ahead of me and I don’t know yet if I am willing to give everything to make it to principal and onwards. I have a fiancé who is slowly introducing ideas such as having kids, more reasonable careers, and, although I don’t want to commit to family life right now, I am also too scared of missing out on it. I would rather miss out on the partner track than miss my chance of having a family. So yes, becoming kind of PE entrepreneur, consultant or switching to a less prestigious fund would 100% be acceptable trade-offs in light of the above.
I personally know a few guys who had prestigious jobs and eventually fell off the map. Some of them simply went out on their own to start their own businesses or simply wanted more time with their children.
But 75% of the people I know who followed that path came from money. After a few years of making several hundreds of thousands, and knowing that trust fund payments are coming your way (and also possibly marrying someone who also comes from money), I do believe that some of these overachievers start to lose their motivation. The guys I know eventually bought lake cottages, kept a condo downtown, and started living at a slower pace. I think this kind of situation occurs quite often.
Interesting post and comments so far.
OP you mentioned the assumption that if someone leaves a larger PE shop, a smaller one can pick them up. That's certainly the case in many industries (IB, law, consulting and many others).
But I suspect its not so true in PE. I think the difference is that in most fields, your calling card is a skillset and folks at bigger firms tend to have a stronger skill set. So if things dont work out at the bigger firm, smaller firms are glad to snatch up an A-player.
But in PE, your calling card is a lot more mixed. Skill is a factor, but it may be a smaller one. Relationships may be more important, and your relationships at a MM firm may not translate to anything valuable at a smaller shop that plays in a smaller space.
Agreed. Maybe I should start another thread about how to not get pushed out of a Mid-Level position in PE. That’s the root of my question. It’s scary to think you can be “on track” and end up jobless at a pivotal time in your career
“How not to get pushed out” assumes that one has a lot more control in the matter than is the actual case. Sure we all make mistakes but there are too many other factors to count that can really affect the outcome. People’s priorities also change and often suddenly and without warning.
So much of life is beyond one’s control and I think it is critical to remember that.
this is actually a really interesting observation and I've noticed the same thing...but more in my ~500 or so calls onboarding new mentors and podcast guests, etc ...I've often come across people that have super impressive backgrounds and then are suddenly doing their own thing.
My randome guess based on my impressions: ~50% are "unemployed" and had trouble getting another job on the same "level" so decided to just freelance for a while and explore their options for a while (much easier nowadays), ~20% just had enough and were burnt out ~10% just wanted more time with family and maybe ~20% actually just want to start their own business?
Interesting - I’m sure you have good data based on 500 phone calls
Very interesting stats - not at all surprised as well about how it breaks down. Most of those unemployed people condition themselves so much to get into PE, that unless they are let go, they'll never leave.
I left PE to start my own thing - I had lunch yesterday with a friend who is still in the PE shop I left. He told me I need to get another job and a salary, and just wait until I am past my forties to start my own thing. Go to a smaller shop and shine there and make $$$ in the meantime. I can't be putting this uncertainty over my family's head. Why wait five years? So that I am tired and less hungry? I am about to sell one of my flat for a large payoff - his advice? To re-imburse my current house's mortgage to be "safe". I am looking to gamble with this money and try to make it grow. We are just different people.
It's a question of perspective. PE is a safe bet into retirement, you'll make decent cash, maybe partner. Or you can take a leap of faith, and try your own thing. To be able to afford to do this I had started a side business while working and owning some properties.
OP you mention prestige, but everyone who is anyone thinks you are an ass hole if you work in PE. Same goes if you work in banking. There is no prestige associated with earning a good salary in a safe work environment while being society's pariah. I recently visited a flat where I had to fix something, the girl there told me her housemate told her that I worked in PE - she was surprised that I wasn't a complete dick head when I turned up (her words, not mine). I was never impressed by someone who worked at a company. The two people I respect the most are: one did a couple of internships at GS and at BCG and then decided to say fuck it - went got some money and bought a small $4m company with some backing - today he has transformed this into a conglomerate worth $100m. The other person built a real estate empire, lost it ALL in the asian currency crisis of 1997. He rebuilt it from scratch and now owns the majority of a large city in Eastern Europe.
Neither of those people are PE guys or bankers. Yet make more money than most people in PE. The question is: do you want to take your pedigree from PE and have a major edge when launching your own thing to make something out of your life and potentially create your OWN PE shop? Or do you want to play it safe and just be another PE ass hole?
I chose for myself - also for all those guys leaving PE, it's hardly a leap of faith when you think about it. If I want a job anywhere else I can always get something that pays the bills, at least I'll have a story to tell my kids. I'll also be around to tell my kids the story....
PS: this is my own choice, and the train of thought that went behind me "dropping off" LinkedIn. It's stressful and at times I wonder why I didn't stick to getting a steady salary, but every $ I make today feels amazing.
This seems like a simple question to answer. It comes down to 3 things, 1. There are fewer positions each step you move up the ladder and the people at the top are very protective of their jobs. Each year you're going to lose people no matter what. 2. Hubris. Every year new analysts come in looking to get experience then move to buy side and make vp/partner/md/whatever. Once they realize there's a logjam they move on. Some think they can move up faster at smaller shops, some think they can make it on their own. 3. People are sick of the grind and need to slow down.
People can feel burnt out and just enjoy getting 8 hrs of sleep until they find their next opportunity.
I enjoy reading JSmithRE2010 posts. I relate to this. Leaving the corporate grind, either voluntarily or involuntarily, offers a normally short period of time to try out something different. Ultimately the pressures of making money will get to you.
But the why you see the fall out in career track is the prestige no longer matters to you. Working on big deals most of my career sort of numbed me to money. I just go through my process. Also I noticed that I’m a builder. I’ve worked with people with uncanny talents, wits, aggression. My talent is building. One year working for the firm, pipeline grows to $500MM. Until four years later $2B. Repeat at next job. Work on 40+ REPE and development deals. I take the same approach this time building something more intimate.
You just think, the world will turn without you. The only people who truly care about you are your family. Your work colleagues, aside from a few, are not truly your friend. Having some brands on your resume opens doors; and I’ve seen this with other people more impressive looking than me, but ultimately they/we want to run our own ship be it a company of one (consulting / advising) or something with more scale. Real estate you don’t necessarily need a large head count. We want some control on what kinds of work to work on. It helps to have found a way to make that happen via a niche or relationships.
What I’m trying to say is after 10, 15, 20 years of that corporate life, you don’t care. Things are less mystifying. I mentioned on WSO a few years ago, when I was an analyst 30-50% of my colleagues came from “real estate families” of various sizes. None of them work in the large prestigious companies we once worked.
I will also add that your personality could be one of two types, maybe three. Those who change themselves for the job and firm. Those who can’t change and adapt even if they wanted to so badly (their heart was in it). And those who don’t want to change (me). I’ve always had my ideal deal type, geographical North Star, but loved to work and build, with a team; always was a top performer. Some people grow companies into big companies. What I’m going to say is important, a company has its own life cycle and you might be a fit for part of it. You might thrive on a small team, no politics, everyone in the trenches. You might thrive in a large organization, power and politics, leveraging others. You eventually find where you thrive the best. if you are the big company type, you don’t choose to be a one person advisory firm for long. You are going to look for your next job. Companies change.
I feel one could be an “advisory firm of one” when you have the connections and credibility. You need mental fortitude. Having a working spouse helps a lot. Coming from money helps. Some sense of cushion reduces fear and enhances mental performance (I’m talking about fear of homelessness). Always one advice work for the capital / money. It helps if you came from the investor side. But know that capital is like a faucet, it can shut off (talking macro economically). So timing is important.
Helps to come from money or have money or cushion. It really really does.
You raise a good question and the poster who talked about the narrowing pyramid as you go higher makes a good point. There are just less seats and if you get laid off in your 30s at the VP or above level it can be very hard to make it back. I can speak from the buyside perspective as opposed to PE, but Street culture is similar.
Once you are passed a certain age if you get laid off the head hunters will not touch you for tier 1 jobs, you have to go to tier 2 and 3 shops. The older you are and the longer you are out, the worse you options get and they can smell blood. If you have a family and kids and need insurance and need to just stop the bleeding they can figure out approx what your nut is just to survive and offer you that. I know guys who were solid performers making $600-$1mm who now are working for half that and are one layoff cycle from being off the street completely. Unless you reach a certain level, say head of a desk or senior PM with long track record, you are likely taking a 50% pay cut if you get laid off, and that is if you can find another job. I have seen it banking too. Guys were Directors or MDs but not rock stars with big P&Ls, and they wind up as journeymen at places like Cantor, Stifel, Seaport, Baird Cowen, BTIG or other bucket shops trying to hustle for deals with no balance sheet and 1-2 analysts to support 10 bankers. Its not pretty.
Because there are way more analyst positions available than MD positions and once you get to be 35 - 50 and get laid off you're not very employable. Your analytical skills become outdated by the young gunners/analysts so unless you're bringing over relationships, what use is there for you as an MD level hire? And if you do have those types of relationships, you probably wouldn't have gotten squeezed out to begin with.
I’m currently working for a big development shop. I admit, I do get aroused seeing articles about us after we close a big deal or walking the units of a big building that’s ready to lease, but that’s not my long term goal.
I own a few multifamily properties and will be closing and breaking ground on my first development within a month or two.
Seeing how my father and some of his friends had total control of their lives by owning their own businesses made a huge impression on me. You have one life and I’ll be damned if I spend all of it working for someone else.
I would categorize your mindset under the “coming from a real estate family” mindset (don’t know what kind of business your dad ran. I don’t see many folks with that background staying in corporate (working for someone else, not for themselves or the family business) for longer than 10 years post-college (also rarely pursue a MBA after brand name experience). Depends on your risk tolerance too
It’s hard enough having parents who understand what you are doing for work. But when you do have parents who walked in your shoes and can provide mentorship, capital, and life long experiences and advice, the corporate world is just borrowing you.
I’m also pretty envious. Both my wife and I have great parents, but they were not business minded in the realm of finance.
"the corporate world is just borrowing you" I absolutely love that fucking quote, this is gold. I will be reusing it.
My father wasn’t in the real estate business but he did own a successful private practice physician business. He made good money but worked his ass off for it, not to mention all the work he put in just to get there.
I love your quote about the corporate world borrowing me. I’m definitely stealing that.
Lots of good answers in this thread but I think some of them have overcomplicated what is ultimately very simple. While I agree some people fall off the ladder much to their own chagrin, I'd argue for MOST that it is a very conscious and thought out decision. For sake of improving the discussion, let's speak more broadly than focusing on those who are "unemployed."
Some people's goals and priorities change over time. More time with family, kids, redeveloping hobbies that you tossed to the side ever since for your career, taking charge of your health that you sacrificed, etc. The importance of none of those things, and especially those things in sum, can be understated. This industry blows for the most part when it comes to lifestyle, let's be honest.
On the other hand, there are a lot of interesting & cool small companies trying to solve issues, with greater financial flexibility, whatever, that most of us have and will likely never hear of. Some people would rather be in these types and be in the middle market longer term, with likely better personal/financial upside. WRT PE, levering businesses 4.5x, putting in better management, growing EBITDA and then selling 5-7 yrs later gets repetitive and boring. Maybe people want to pick up a new skill set by working inside a company vs. being a financial engineer forever.
In reality everyone's situation is unique and it's really tough to generalize. Life isn't as black and white HYP>GS/MS>KKR/BX>HBS>Greatness like this site loves to make it out to be. Lives change, priorities and interests change.
The only card which matters is the one you put in the ATM.
This is a more depressing take, but I think it's more often than people leaving top places by choice. A lot of it is because of the nature of the industry and how limited the skill-set is. Unfortunately, in finance, once you reach a certain point, your skill set is extremely limited to just your role in finance. As much as people say banking gives you more opportunities, once you miss that window, you fall into the same problem. So once you're let go from a more senior position, you actually don't have any other skills or experience. It's not like a corporate strategy or product management type role where there are literally thousands of companies looking for people to hire in these roles. It's probably a little better if you're in banking or PE, and exceptionally worse if you're in a trading or investing type role (sell-side or buy-side).
Never settle for getting the job of someone else's dreams.
Maybe the question we should be asking ourselves is less of "why is that former mega-fund dude now doing his own thing?" but more of "what can I do to diversify my revenue streams and skillset so that I am relevant as long as possible, able to pivot if I have to, and able to fund my life if/when my megafund career ends."
One of my buddies was a very hardworking commercial real estate broker. His ability to crush deals kind of dried up, but he bought 16 houses in the Bay Area between 2009 and 2013. He now feels he's had enough of trying to convince clients to buy, and would rather golf 3x per week and mentor his 17 year old son who's about to go off to college. So, while it's certainly worthwhile to invest in one's career, never forget to diversify your income steams and invest for the future.
Basically what happens for a lot of people is you start off in college/recent grad and you want to be "rich and successful". Gone through life checking the right boxes and doing the right things. But ultimately realize that you're not all that into your - insert whatever "prestigious" job - and are sick of grinding for something your not passionate about. Maybe want something more fulfilling, maybe want to have more time for family/friends/hobbies, maybe want to do something entrepreneurial. So after having stacked some chips people decide to get off the path. For people younger in their career this is kinda hard to process but its actually really normal. Usually these people didn't blow up or anything negative, they just are older and more mature and realize the life they created isn't the one they want.
Honestly, I triggered by WSO questions like this. The very question of "why didn't this dude's path progress smoothly and always upward?" It vastly underestimates what life's got coming for ya , and seems to look down on those who took a punch and kept hustling.
There is an implicit assumption in which OP asks --> "why isn't everyone's career path smooth? Why would someone go from good undergrad > good analyst IBD role > good REPE position at megafund > flying solo (what a loser!) ? "
OP vastly underestimates how complicated the path is, and how disjointed and disorganized that path is. Even our best laid plans, good work experience, and previous deals are no guarantee of success. There is no necessary "up-and-right" trajectory.
In fact, the only guarantee is that it WON'T be a smooth or linear path. A million things can happen. The number of people who had a smooth and direct path are dwarfed by those who slugged it out and walked the winding crooked path.
How do you handle it if:
Your rockstar MD can leave your uber-successful fund to join KKR triggering key-man clause and have to freeze all investments (true story!) .
Your MD can decide your work sucks, or you can't get along with others in the nebulous way he envisions.
You inadvertently pissed off someone important internally
Your wife or kid can get sick, and you spend just a little too much time worrying about that than putting in the work hours, so they cut you.
Or hell, you just hit a dry spell and don't bring in deals for a while.
You raise a hundred million USD from a big LP, only to find yourself with a pink slip and no bonus. You find out mgmt only was keeping you around until you finished locking down that cheque. (true story, not mine)
What then? Well you get shown the door. And then what? There's not that many SVP/ED/MD role at megafunds floating around, and if you don't get a new gig in 3 months people wonder if you're damaged goods. And there's bills to pay. So then what? You hustle up some deals and get to fucking work. Put on some Eric Thomas and rise and grind motherfucker. Yeah, you're not at Blackstone anymore. Get over it. It's big boy pants time.
Respect the hustle.
"Nobody is gonna hit as hard as life. But it ain't about how hard you hit. It's about how hard you can get hit and keep moving forward; how much you can take and keep moving forward. That's how winning is done."
-Rocky Balboa
Let's be real. Half the people on this site are kids in uni. Nothing wrong with that, WSO is a great place to learn. But rest assured, both getting into your Ivy League target and acing some tests is nothing compared to what life's gonna dish out for ya. Even if you've made it to IBD analyst. Life - it's coming. Those bright lights might be a train barreling down. You'll want to diversify your skillset, save money, invest wisely in income producing assets, and expect it to be a ball-breaker. That's the only way to power thru. Looking down on those who hustle and grind? [rolls eyes] Please.
The answer to this question is a lot simpler than people think, and I see it as a factor of two things:
1) There aren’t enough jobs at the top for everyone.
2) As you progress through your career, buy-side or sell-side, the ability to source/originate deals becomes critically important. It is simple, you’re not going to get paid the big bucks if you cannot consistently generate opportunities. The first time most people run into sourcing responsibility in their careers are at the VP/Director level. If they aren’t good at it then they do not last long and cannot get hired elsewhere.
For those youngins reading this - if you do not think you’re a good fit for a sales career then I HIGHLY suggest not pursuing the deal side of the business, buy-side or sell-side.
^ This. A million times this. Going thru school, you learn accounting and DCFs. But that sort of modeling can be done by thousands of graduates across the country - and arguably better by outsourced overseas talent in math-smart countries. The harder and more nebulous work is going out into the wild and hunting. Sourcing deals is damn hard. Finding good opportunities that you can pounce on and make money for the firm. They don't teach you how to do that in school at all. And if you can't do that consistently in a highly-competitive environment, you're just not going to make it past VP in most finance industries.
That's the brutal part. I think in many fields like medicine or engineering, experience counts for a lot. You build up a layered skillset. In finance, the higher-up you get the less relevant your earlier skills are, and the more it matters how well you hunt / make it rain.
Not everyone wants to sacrifice to keep climbing Everest. Some people just have families and re-prioritize their careers around family. Some people just get burnt out. Also there's not enough spots at the top of the mountain for everyone at the same time. Had a friend who quickly ascended to engagement manager at McKinsey; expected him to jump to a big PE fund or Director level in corporate finance; but he exited to manager at some no-name tiny company making shipping containers. I was like wtf are you doing. But he seems happier than ever.
Not surprised by this at all. MBB consulting hires HUNDREDS of people each year from MBA programs. According to my best friend, who recently made partner at a MBB, only about 5% of post-MBA hires make it to partner. To make it to that level (this is true in banking and PE as well), you need to have executive level communication skills, be able to build and maintain relationships with high level people, and source and close deals. The MBB interviews are all case based and simply test your analytical and logical skills. That is the bare minimum you need to get the job and do well initially. Making partner, however, is a different beast altogether.
For those who don't make partner, most end up at good jobs like what your friend is doing. There is a myth out there that MBB associates and engagement managers can work wherever they want afterwards, which is simply not true. You will certainly have good exit opps, but much of what you land will hinge upon not just your company name brand but also your specific skillset, background, cultural fit, and other intangibles.
Because WSO is geared heavily towards college kids, it makes sense that people will care a lot about prestige and getting into the best company they can. I think one aspect the younger crowd underestimates is the physical and mental strain of working long hours over a period of time and the increasing importance of family as you get older.
Just to use myself as an example. I accepted a banking job during my 2nd year in b-school. Shortly before I was set to start, my dad got extremely sick. I asked the bank for a sabbatical, but they refused, since post-MBA associates have to go through mandatory training. I decided to go back home to take care of him. I ended up spending more time with my dad than I had up to that point, as he worked constantly to make ends meet, and we had not been particularly close. I learned more about my dad and his character than I had ever known, developing a deep admiration of the man in the process. After his death, I decided to take a job at FAANG, in large part due to better hours and the fact that I was not in the right state of mind to plunge into banking. If I had to be totally frank. doing FAANG rather than banking did set me back in a number of ways professionally and financially, but I certainly would not have done it any other way because ultimately I made the choice to put family first.
Basically, when you are starting out, it is only natural to strive for the shiniest name brand, and I certainly encourage those in school to get the best offers they can. As you get older, life becomes significantly more complex and nuanced, with series of tough choices you make that go way beyond "which banking job should I accept?" And as part of that life calculus, you will be forced to make choices that reflect your core values and what you want to prioritize in life. For some, becoming a partner at a bank/PE/consulting is more important than nearly anything else in life. For many others, they seek balance, resulting in them "falling off the map" professionally. Neither choice is better or worse. Ultimately, life is pretty freaking short, and you never know when you leave.
Why do you think FAANG set you back?
I think you're making a huge mistake by assuming this is a "steep decline." Yes, it is true that some people are forced out or couldn't live to expectations with funds life cycles or up-or-out cultures but, there are people who choose the path of independent consulting/advisory. I know independent advisors who make double than BB MD's or partners and work less than half the number of hours. The question is what you are looking for and how do you define career success. If you're OK with the shiny title at the brand name firm working 100 hours a week, great. I think that’s a shit life...
If you really followed a path like this and made great money, it's really up to you how you come out in yoru early 30's. You could live relatively frugally and enjoy yourself within reason and build up a nice real estate portfolio othat gives you $70k cash flow (for example). Or you can go get trashed on weekends, get bottles, spend money buying user women at bars or the strip club, and buy a car you absltely do not need. There's no reason why you cant live very comfortably in yoru early 30s even if the heyday wall street days are over.
Frugally loool
Why not just make more money and have a good lifestyle.
The whole FIRE movement is soo depressing
Not to hijack this thread, but another weird thing I have noticed through my network is the opposite of this topic. As in, many more people coming from non-traditional/"non-prestigious" backgrounds to leadership roles in high finance. Completely different from what you would think from reading this site.
Do you have an example? That’s something I haven’t seen much of
Most of the senior folks at a lot of MM Buyout funds
Luck and timing play a big role as well.
Personal connection 1: graduated non-target with no internships whatsoever and literally unemployed for 1 year > tech/sales biz dev 3 months > 2 years boutique IB (not EB) > Asso/Sr. Asso at MM Buyout PE (investing role)
Personal connection 2 (related to connection 1): somewhat target school > 2 years at EB IB in top group > got worked to the bone so hard he took sometime off > Tour Guide for 3 months > Elementary school teacher
Both US citizens and 3.5+ GPA
Fuga sunt et vero. Ut ea voluptatem sit. Laudantium rerum quibusdam et consequatur. Laudantium quod nobis vitae.
Porro quis incidunt suscipit tempore esse ad. Explicabo molestiae dolorem ipsam. Natus velit ex doloremque totam aut voluptatibus. Ipsum libero a aspernatur ad.
Et et adipisci ea. Iure est ipsa iure minima voluptas quibusdam alias. Dolorem voluptas eveniet ut provident hic qui in et.
Illo ad et culpa voluptatem dolor. Et voluptatibus dolorem perferendis harum iste. Qui ut iusto ratione quisquam eveniet libero.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Qui quibusdam cumque dolores delectus qui et. Rerum enim dolores ipsum.
Repudiandae non aut porro voluptas. Perspiciatis inventore est temporibus similique aperiam ducimus ut.
Nemo dolorem at ut quam. Et neque dolor nobis maiores ipsam qui. Inventore est dolore soluta cumque. Qui dolor sed inventore id sit magni. Blanditiis eum unde corrupti praesentium placeat repudiandae et.
Doloremque et reprehenderit molestiae eum consectetur. Quis natus ducimus magni ipsa vel. Voluptas atque quod nihil.
Doloribus iste est praesentium quis quis laborum. Nisi minus explicabo rerum ipsam repellendus. Reprehenderit repudiandae tempora quia fuga fuga. Deserunt sequi vel nesciunt atque odio quod et distinctio.
Ut qui eveniet sequi nobis sunt. Soluta dolore vero exercitationem aut placeat. Sit minus ab est explicabo et est qui beatae. Eos vel ut voluptas sapiente dolorem aliquam. Libero fugit aut quaerat. Est non qui cupiditate est maiores facere. Id voluptas consequatur qui iure dolores veritatis voluptatem quod.
Aut voluptas fugiat enim omnis aut. Molestias praesentium quos fugiat est est voluptas. Qui dolore nobis officia fuga.
Ratione facere nihil unde perferendis. Nobis in sunt voluptate vel sit animi consectetur. Sequi deserunt nihil consequatur modi. Error consequatur commodi vitae vel dolores. Dolor natus debitis molestias debitis.
Quisquam eligendi illum in tempora architecto eos. Et ex in culpa ut omnis aliquam ut. Dolorem non quia commodi. Qui placeat modi est tempora laborum.