Turing down IB FT offer to run my startup?

Intern in IB-M&A

Sort of a unique situation here, but would appreciate any insight.

I'm supposed to start my FT IB job in the next few weeks. Want to keep things pretty vague so no one figures out who I am, but I'm supposed to start working at a lower BB/EB (UBS, Greenhill, etc).

However, all through college I've had a startup, but recently during Coronavirus quarantine I spent a lot of time on it and really got it going. Currently, I have ~40k in revenue for the year and am on track to make just under 100k this year. It's a software company, so I could theoretically keep scaling it. I think it's reasonably likely I could grow it slowly- say, I could be doing 300k in revenue in 3 years. There's a slim chance it could grow really fast and get over $1M+ in revenue, and obviously there is also a chance that it blows up and next year I get 0 revenue.

I'm really on the fence about whether I should give up on the startup and go work my IB job. My fear is that I'm working at a non-top bank, so my exit ops will be somewhat limited. On the other hand, going to work at a startup is a huge risk, I'd be turning down a guaranteed $100k+, and if the startup flops I would feel like a complete clown. However, being my own boss at a startup would be awesome, and I think if things work out even somewhat, I could just get an MBA or try to get a VC job if I wanted to go back into the finance world in a few years. I would also need to renege on my FT offer, which I don't think is a huge deal because it's not like I'm going to a different bank, but could this possibly haunt me later if I wanted to go into IB/MBA/other finance eventually? Also, it would pretty much be impossible to keep the startup up and running while working in IB. I could basically put it on hold (and make 0 revenue during my IB stint) and try to get it back up to speed in 2 years, but I worry about competition and if I don't innovate at all in two years I could definitely lose the edge.

Let's say my startup fails in two years- do you think I could get back into IB as someone with 2 years of experience running a startup? I have a reputable IB SA on my resume, but I imagine it would be hard to get back into IB without the help of campus recruiting. On the other hand, I'm worried that this is my one shot to scale this startup and if I go into IB, I might regret it forever.

Would appreciate any advice. Thx

Comments (55)

Jun 29, 2020

Apologies didnt read the whole thing

path less traveled

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  • Intern in IB-M&A
Jun 29, 2020

What is the obvious choice? I think I could justify either decision honestly

Most Helpful
Jun 29, 2020

Dude I say fucking run it. A lot of People do IB so that they can get some of the action your getting now someday. When your 50, you have regrets for the things you didnt do. I really dont know if you can break back in, but I would think weigh the risks and your confidence in your startup. I would run it personally.

path less traveled

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  • Prospect in IB - Gen
Jun 29, 2020

I was about to tell you "don't ruin your life over a shitty app idea", but then I read and it turns out you're actually generating good cash. Grow your startup, sounds fun. Worse case scenario, you'll have a good story to tell for MBA applications. Best case scenario, you hire an investment bank for your IPO.

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  • Intern in IB-M&A
Jun 29, 2020

My fear is that worst case actually means I crash and burn with only ~50k revenue (I have to decide on my FT job pretty soon), and now I have a year I spent running a failed startup and I don't think that makes me super competitive for an MBA.

Jun 29, 2020

So do IB and see during the job. You can always quit.

Array

  • Analyst 1 in IB - Gen
Jun 29, 2020

Reading Shoe Dog, sounds like Phil got off at 6 most days and worked nights and weekends to scale his startup. Maybe it does make sense to choose a different job if time is your number one priority and just need supplemental income right now.

Jun 29, 2020

How much time is needed to run your startup? I know someone that has a startup on the side as an IB analyst, but the guy has 0 social life and barely ever sleeps. And also he doesn't really care about being top bucket.

I think some older PE/HFs guys on the forum also had someone doing this.

  • Prospect in IB - Gen
Jun 29, 2020

Are you even allowed to do that, legally speaking?

Jun 29, 2020

If properly disclosed I believe yes

  • Analyst 1 in IB - Gen
Jun 29, 2020

Go for the startup

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  • Prospect in IB - Gen
Jun 29, 2020

What kind of software is it?

Funniest
  • Intern in IB-M&A
Jun 29, 2020

lol big Zuckerberg energy right here

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Jun 29, 2020

zuckerberg

Will update my computer soon and leave Incognito so I will disappear forever. How did I achieve Neanderthal by trolling? Some people are after me so need to close account for safety.

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  • Prospect in Other
Jun 29, 2020

If you end up doing the startup, can I dm you for the bank you're leaving? Got my full time rescinded a month ago due to covid and in quite a bit of a pickle

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Jun 29, 2020

Mind I ask which bank rescinded your offer right around graduation time?

Array

Jun 29, 2020

"exit ops will be limited because of lower tier bank"
True, the name and group will make life easier to get interviews for great exit opportunities.. However, only qualified candidates are the ones that get the roles. THere's a difference between analysts who can model, and those who can model and understand the big picture. If you present yourself well and understand what you're doing, I highly doubt you'll have limited exit opportunities.

My advice:
Do both. You said there' a possibility that your business will flop and generate 0 revenue. For that reason, I recommend you do IB and work on the start up. If it's something you're passionate about, you'll have the motivation to work on the start up during the weekend, where hopefully, you'll have more time.
If your software company ends up doing really well, and you see that realistically, you can make a steady living off of that for the foreseeable future, you can always quit, or exit into a finance role that has better hours.

What bothers me is you have a risk the start up blows up, and then it'll be very hard to get back into IB without doing an MBA, which will cost you lots of $ in terms of forgone salary and actual cost of attendance.

Array

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Jun 29, 2020

agreed. I would do it nights and weekend while your work IB. Try to automate / outsource as much as possible so you can focus on your day job. Tim Ferriss has a capture on outsourcing in the 4 hour work week. while you said it's impossible, I would challenge you to think how you could make it possible. Be creative.

Entrepreneurs are not risk takers, they are risk managers. Start the IB job and do it for 6 months while working nights and weekends. Use the income to funnel into your business. If it really isn't possible, you can always leave. Take a job with less hours and more flexible hours. Don't go all in and quit a job before it's fully tested and scalable. Manage your risks for all possible outcomes.

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Jul 1, 2020

I whole heartedly agree with AJ_Philips' response. I've interned at startups all through college, had my own for awhile in college, and worked at a Y Combinator robotics startup immediately out of college as an early sales hire. Although I don't have experience running my own startup with similar revenue and upwards potential, I think the most wise decision is the accept the offer and slowly grow the operation on the weekend. Outsource as much as you can and funnel active income via IB into startup. Once you feel the startup requires you to come on full-time in order for it to scale any further, re-assess your risk and opportunity costs. Fortunately, you have an incredibly privileged problem. At the same time, you're essentially attempting to minimize long-term regret. Google Jeff Bezo's "regret minimization" framework to help implement into your decision making. Bezos left an execute position on Wall Street to start Amazon. He shares his personal rationale on videos via YouTube (this is a personal strategy I use today to make life altering commitments). All the best, sir.

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Jun 29, 2020

I say that years down the line when you're 50, if you go down the IB route and are making that sweet MD money you will probably think to yourself "What if I continued that startup"? Maybe you would've been 20 times richer, maybe you would've enjoyed life more, maybe you would've been broke af and ended up settling for a job you didn't prefer so you could make ends meet, who knows.

You already know what life looks like down the IB path. Obviously you aren't going to have cookie cutter progression in IB but for the MOST part, you know (from the lives of those on this forum, whom you've networked with, etc.) how the life of someone who goes down the IB/PE route looks like. You'll KNOW (for the most part) what you missed out on (or avoided, if you end up incredible successful)

If your business flops you'll know what you missed out on, but you can't say the same the other way.. that's just the risk of a startup. If you can afford the risk, it might be worth it to go for the FT offer but it comes down to your personal values and situation. All the best!

Array

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Jun 29, 2020

if I were you I'd 100% stick with your startup. you can definitely come back to IB, and even if it were to flop, I don't think it'd be as embarrassing as you personally think it would be - most, if not everyone, would respect that you gave your business a fair shot and took a big risk over something guaranteed.

stick with the startup, dedicate IB hours to it, and you'll kill it. now is the time to take risks, especially at your age, especially where there's massive upside and very limited downside. I honestly think it's a no brainer

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Jun 30, 2020

Also think pursuing your start-up fulltime is optimal. You will get burned out in IB and I have felt that I have become much less creative and talkative through the years. The endless BS that you have to put up with in IB takes a toll on you. Theres absolutely nothing wrong with a failed start-up. Heck i think a16z only hires partners who have had failed ventures before. As for MBA admissions, I don't think a failed start-up puts you at a disadvantage. If anything it allows you to tell a much more interesting story than having gone through the IB ringer. So many of the best start-ups like FB came out of the last recession - hoping to see yours make it to the big stage soon

Array

Jun 30, 2020

Def don't drop the startup - up to you if you have the time / energy / dedication to do it on the side while in IB or if you want to focus entirely on it, but you can always try to break back in. Can't necessarily say the same of an actual revenue generating startup.

Jun 30, 2020

Why not do the IB job for a few months as a hedge for your resume? That way you can say you quit to pursue your startup instead while getting a bit of branding in.

Jun 30, 2020

Because you could sabotage both opportunities by not dedicating complete time and energy to one or the other--both entrepreneurship and investment banking are frequently all-consuming.

Jun 30, 2020

I don't see how under-performing on the IB job will make a difference if the purpose is to ensure that OP has some name brand experience to fall back on in case the startup blows (it's also hard to judge performance when we're talking short time frame here). I think even a few weeks on the IB job will help down the line for getting back into the job market--at least to my ear, there's a difference between "turned down FT offer and quit FT job to pursue startup." If OP really can't spare even that amount of time because the startup is at a critical point then by all means pursue it with all energy.

  • Intern in IB-M&A
Jun 30, 2020

I thought about this- doing 6 months at IB and then jumping ship, just so I have a few months of name brand experience on my resume. That being said, it would probably be somewhat damaging to the startup to take 6 months off (my IB gig is going to be pretty sweaty, so I won't be able to do things like customer maintenance while working FT), but I think it would survive. My fear is that by trying to do both, I'll end up just sabotaging the startup and pissing off everyone at my bank when I leave after 6 months- I've heard anecdotally people in IB get pretty mad when people don't do their full 2 years, so I feel like I'm burning bridges either way whether I just renege now or do 6 months then bail.

Jun 30, 2020

Pursue your start-up. Unbelievable upside, especially for a software company that appears to have shown proof of concept. If you fail, you will have phenomenal content for MBA applications too. Running a successful start-up, which you have already done, is only a plus in the way of MBA applications.

The mere fact that you found something novel within the software space and were able to bring it to market is worth celebrating in my opinion. Congratulations!

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Jun 30, 2020

I have no view on the matter, as it is really a personal choice that only you can make, but a few thoughts to consider:

  1. You will not be able to do both. Banking as an analyst is an all consuming job, and if you decide to work in that job, the start up will be at best a hobby. If you want the start up to work, put your best foot forward and dedicate the maximum time and effort to it. Trying to do that while working as a banking analyst simply won't be possible.
  2. If your start up goes bust in 1 year, you won't be able to get back into banking directly. I know you've gone to a good school and done an internship, but it doesn't work like that, at least not at the large firms (BB/EB/any decent MM). I don't agree with it necessarily, but apart from laterals (from other similar banks), banks just don't hire at the analyst level apart from their campus / university recruiting programs. If you want to get back into that path, you'll need to likely go and do an MBA. Is it possible you could break into a VC role with your startup experience, yes, but I wouldn't depend on that.
  3. Do you have a back up plan if things don't work out? Maybe some will say you shouldn't have a backup plan, and this could just be suggestive of my risk appetite. But if after a year things don't work out with the startup, what will you do. Business school is an easy thing to say, but most schools have an average work experience of 4-5 years. Not to say getting in with less isn't possible, but if it's 1 year or 18 months, that will be a very uphill battle.
  4. How will you fund the business / what do your own costs look like. Do you plan to live back at home or be in NY (or another city)? Do you need to hire people to grow the business or is it a 1 man operation?
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  • Intern in IB-M&A
Jun 30, 2020

ya these are some great questions

1- I totally agree. I think doing both at once is a recipe to fail at both.

2- agreed. This is definitely a few of mine, especially because VC would probably be the 'best' exit op if I failed, but I know that recruiting for VC is super tough.

3- this is my greatest concern. I truly don't know what I would do in a year if the startup failed. I guess I would try to join another startup or VC? But this is what scared me- if it theoretically went bust in a few months, I would be essentially screwed. I don't think I would be able to do the MBA route unless I was able to do this for a few years and be somewhat successful.

4- business is cash flow heavy because it's software, so I have super low costs and can pretty much keep all the revenues. I estimate I could pay myself a salary of around ~60k first year. I could live at home, but would think about living in NYC anyways. My parents have some resources so its not like I'd be homeless if things went south, but I really don't want to be the college grad that's sleeping on my parents couch. I'd probably want to hire people eventually, but could wait a year or two until we had more cash to burn.

Jun 30, 2020

Having helped launch a business from the ground up before, it takes a lot of work. I spent a year and a half getting a brewery off the ground while working full time. Whenever I wasn't dealing with the day job, my nights and weekends were spent trying to develop all of the corporate strategy, financial and operating plans, market research, etc., and was traveling every other weekend to see my business partners. Even though I was the business guy, I had to know every aspect of the business inside and out. This meant being able to contribute creatively if they asked for my ideas for beer, understand the plant layout and how important facility design is, be able to argue the differences between different methods of distribution, and understand the legal aspects of things (especially in a highly regulated market that has government oversight).

While it's nice to see that your business is making money, I have a few questions. A lot of these are rehashes, but you seriously need to answer these questions before you can get any real advice. How do you plan to fund the business and yourself while getting this off the ground? Do you have any partners in the business? What is your role in particular in the business? What is your "team" like and consist of? Do you trust your partners to handle their business or do you need to oversee them? What kind of software are you developing (high level here)? How competitive is the space? Is this something brand new and never been done or are you doing something novel in an existing space? How much of the work are you doing by yourself versus outsourcing? What do you expect your role to be if you grow the business? How do you and your partners plan to bankroll the company during the early stages? While you clearly have a proof of concept, do you really want to take VC funding or do this organically? If you were to stay in Banking, what would your end goal be?

If you don't feel comfortable answering these questions openly, don't hesitate to PM me. I'd be glad to discuss.

  • Intern in IB-M&A
Jun 30, 2020

appreciate the thoughtful response.

My business is B2B software, currently going after a pretty niche segment but I have plans to expand it once I gain more traction in this space.

Currently, I've been doing pretty well with cash- companies typically pay up front for a year (or more) of the software, so I haven't had any cash shortages. I think ideally I wouldn't want to raise VC funding because assuming things work out decently, I think this could be a business that does ~500k a year in revenue forever and don't want to deal with pressure to grow insanely fast from a VC.

Currently, I have a few members of my team but all are in the same boat as me where we just graduated college and all have jobs, but I could probably convince some of them to join me if I went to the startup full-time. That being said, I don't think any of them are super essential- I did all of the development myself so I'm not super reliant on anyone for tech help, and I do a lot of the sales anyways so losing these partners wouldn't be the end of the world. I would probably need to make some hires eventually, but would primarily just be pretty cheap sales people I think (and I could wait a year until I was doing 100k+ in revenue before that).

At risk of sounding greedy, my goal is just to make a lot of money by the time I'm 50. Previously, I thought IB->PE was my best option for that, but obviously a startup is probably a better shot at huge money than trying to win the PE rat race. However, IB is probably the start of a very stable career with a high earnings trajectory, and even if I end up doing MM PE I can guarantee a decent standard of living for myself. With a startup, there's a chance things blow up and I end up in some garbage career and forever regret turning down my IB job.

Jun 30, 2020

While I commend your honesty, making a lot of money by the time you're 50 shouldn't be a goal. I say that because it can lead to shortsightedness with decision making. I've seen this with startups before trying to pivot on how to generate money quickly instead of really fleshing out ideas fully.

I think that if you have an idea that's working, it might be worth it to pursue this. If you want to stay in banking for one or two years and then leave, I would highly consider delegating responsibilities and outsourcing some of the development on this. If this means bringing in someone to focus solely on sales and an outside developer or two that you can work with, then it might be worth it. This way, you can use your time in the most efficient way and manage both. Though, I'm reminded of Ron Swanson when I say "It's better to whole ass one thing than half-ass two things".

Jun 30, 2020

If you did the development for this yourself, shouldn't you be able to get a SWE job pretty easily / a PM job with some strong effort if this goes belly up?
Knowing you did the development I lean more towards startup FT.

  • Intern in IB-M&A
Jun 30, 2020

double post ignore

  • Business School in Other
Jun 30, 2020

Its very tough to get into a top b-school as an entrepreneur. B-Schools do not respect entrepreneurship.

I'm at an m7 now, but struck out at H/S/W. I was a managing partner/founder in a company that did low 7 figures in revenue that we organically grew. Unfortunately, I didn't see much more growth in the company and had decided to go to B-School.

I took way more risks, unnecessary stress, and worked harder than all my 2+2 peers by going down the path I took. I left a job that would at the very least got me into W and maybe H if I stuck to it.

Please take my word and take the BB/EB offer. Do it for two years and decide accordingly. Your post mba recruiting opportunities are contingent on you pre-mba background.

I would only go down this path if you're confident you can raise substantial venture funding (5 mill+) and have a clear path to exit.

  • Intern in IB-M&A
Jun 30, 2020

Wow, this is pretty surprising to me. Everyone always says entrepreneurs are looked at highly in b-school apps (especially compared to IB/PE people, who are a dime a dozen). I thought H/S especially prided themselves on getting more free thinkers compared to finance types. Do you think there's other factors that impacted your admission (undergrad school, grades, etc), or do you think its really just that two people with identical backgrounds, the IB/PE candidate is preferred by MBA programs.

  • Business School in Other
Jun 30, 2020

Haha, no... its not true. Yes, they are looked highly in b-school apps IF they are a success story (5+ million in venture funding, solid exit, Forbes 30 under 30 etc.).

Running a failed startup that didn't make it to series A or even a traditional business will not cut it for H/S.

I don't want to give my identity away, but I had the "perfect" resume prior to staring my own business.

I do know some "failed" entrepreneurs who were accepted into H/S, but they worked at MBB for 2 years after failing and then reapplying. I could have done the same, but didn't want to waste anymore time or risk not getting in again after 2 years.

Jun 30, 2020

This answer seems short, but that is what it is. Either way, you would need to **actually ** make a decision so don't think too much about it and go with an option.

Choose the path that leaves you with the least regrets. Rather die trying than following the path of least resistance. If entrepreneurship does not work out (and actually not try again), then at least you have a story for IBD/VC/whatever you're interested in. Does not work the other way around as you fall into the golden handcuffs. If you had a kid, what would you advise them to do?

  • Intern in IB-M&A
Jul 1, 2020

This is really good advice. I've been making myself crazy going back and forth on this decision and I know that I need to end up being comfortable with whatever decision I make. That being said, I keep flip flopping back and forth and I honestly don't know what the 'best' move for me is.

Jun 30, 2020

Turn it down and run your company. You'll pick up more confidence as you scale it, aim higher too. $100k ARR is a great start and if you wanted to, I'm guessing you can raise a healthy amount.

Jul 1, 2020

I've interned at startups all through college, ran my own for awhile in college, and worked at a Y Combinator robotics startup immediately out of college as an early sales hire. Although I don't have experience running my own startup with similar revenue and scalability potential, I think the most wise decision is the accept your IB offer and grow your operation during your weekends. Outsource as much as you can and funnel your active income via IB into your startup. Once you feel the startup requires you to come on full-time in order for it to scale any further, re-assess your risk and opportunity costs.

Fortunately, you have an incredibly privileged problem. At the same time, you're essentially attempting to minimize any long-term regret. Google Jeff Bezo's "regret minimization" framework to implement into your decision making once you arrive at this phase. Bezos left his high paying executive position on Wall Street to start Amazon. He shares this framework as the rationale he used to help push him to leave and build Amazon. Find the YouTube video. It's a personal strategy I use today to make scary, life altering decisions to minimize long-term regret. They're often times perceived as "crazy" from the outside in, but life is about your life and your personal dreams.

I am wishing you all the best, sir.

P.S. PM me & let's connect!

Jul 3, 2020

I agree with this. While difficult, you'll absolutely want to at least try and do both. I think you'll realize after a few months in IB that either the startup path, or the traditional finance path is the right one for you. Try to outsource/have your partners commit more time/find new partners to help grow the business...do whatever you can to keep the startup up and running. $40k of revenue in year 1 is fantastic. If you can find $40k worth of customers, you can definitely find $400k of ARR, which you'd be able to run in perpetuity or sell it for low millions.

I personally left a PE job to try and start something (failed), so happy to chat via PMs.

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Jul 3, 2020

Are you developers in LATAM or Eastern Europe -- or you have none and it's already built?

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Jul 3, 2020