Does anyone have stories or thoughts on consulting start-ups which form when a few MBB guys decide they want to make their own company?
I assume it's some combination of founders who didn't get the career progression or compensation they were looking for and therefore want to create their own firm with more equity and less overhead costs/bureaucracy. Consulting is a pretty saturated industry with many brand name players competing for business-- but these are generally pretty smart guys so I assume they have some key client contacts to mine or a unique value proposition. It's an interesting choice over the usual progression into industry or partnership at a brand name Tier 1/Tier 2 firm.
Curious to hear your stories/thoughts!
Also interested
Check out Guidewire. It's an insurance software company founded by some ex-McKinsey guys. Company went public in 2012 and is now worth $2.5B!
I'll answer based on my experience interning for two different boutique firms (2-3 partners) both founded by ex-MBBers. I do think branching out to found another consulting firm is totally different from leaving to found a start-up/company. Maybe someone can comment on the latter.
The partners didn't leave MBB (or other industry job) because they weren't getting promoted. In fact, it was the opposite. For all of them, it was a combination of three factors:
1) At MBB, they didn't like that the upper-level managers did more sales/client relationship work than analysis. They all agreed that they enjoyed the first 3-5 years (analyst) of their MBB years because they got to do the dirty work. So they wanted a place where they could be more hands-on with the analysis, and staying on at MBB didn't offer that. 2) They still liked the "working with clients" and "looking at a variety of companies/problems" part of consulting. F500 positions didn't offer that. 3) They wanted to set their own schedule, etc.
Because these shops were so small, the partners did parts of the grunt work that would've been done by analysts at an MBB.
Also, in terms of pay. I wouldn't be surprised if these partners made the same (or slightly lower/higher) than what they would've been paid as upper-level managers at MBB.
The boutique guys usually aren't going up against the Tier1/2 firms--they're in a completely different place. Typically, the small shops are hired by small to mid-size businesses (not F500 or even F1000), with revenues anywhere from $1M to $100M. So I'm not sure how useful the client contacts from the MBB days were. I do think their MBB experience allowed them much easier access to data/expertise through the alumni network or the network from previous projects.
Bain? ...Heard it was started by a bunch of ex-BCG guys that couldn't get promoted :P
Start-ups launched by ex-bankers / ex-consultants (Originally Posted: 01/24/2008)
How many ex-bankers and ex-consultants launch their own business?
What sort?
Any interesting story on mind?
HF's are pretty popular for ex-bankers to start-up. I think a lot of them start up when the bankers realize "hey, I can do this crap better than a bank." I'm sure ex-traders start up HF's as well, but I mainly see ex-bankers which is sort of ironic.
Do burned-out bankers do any interesting stuff other than HFs? Interesting startups?
This ex-banker started a lingerie company (my wife's industry). I know of several other bankers who have started fashion related companies.
How easy/hard is it to raise capital being an ex banker?
How about non-profit? Are they into it afer banking?
I would think that more ex-consultants than ex-bankers end up taking the entrepreneurial route. But there are more bankers than consultants on this board, so that might skew the answers to your questions.
-------- Right now this is a job. If I advance any higher in this company, then this would be my career. And um... Well, if this were my career, I'd have to throw myself in front of a train.
A lot of consultants do consulting with the view of starting their own business, predominantly coming in as associates. Bain and BCG seem to have a much more entrepreneurial bend than the other GMCs but by and large there are a lot of people interested in starting their own firm.
Arguably the consulting network is better for a new firm than the banking network, but honestly the skillset itself is relatively similar.
Sort of finance-related but in a different vein from conventional private equity/hedge funds... hope to share more with the board by the time summer rolls around and I can reveal more.
I know of other ex-bankers who have done non-profit work, taught in different countries, and even one who started a Chinese import/export company!
Not everyone goes to a PE or HF... that's just the default thing to do. :)
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