Today marks my one year anniversary at TheLadders. I came to TheLadders after one year in investment banking in the Morgan Stanley east coast technology group. Walking in the door on September 14th, 2009, I had very little idea of what I was getting myself into, and my role at TheLadders has morphed about four times in the last 12 months.
Looking back at my experience (or, let’s be honest, the lack thereof) and after fielding the question about 74 times from rising Juniors and Seniors in College, I thought I’d jot down a few thoughts on the similarities and differences between the two experiences. I don’t know if I’ve had anything like a “typical” experience in either case, so I won’t claim that these “lessons” are universally applicable. Still, to the extent that there exists, somewhere out there, someone who is exactly like me, this might prove helpful.
Lesson #1: there’s a difference between business and finance.
Though I knew very little else, one thing I knew for sure coming out of school is that I wanted to be an internet entrepreneur (yea, yea – me and everyone else). I was convinced that going into investment banking, particularly in the technology group, was the best way to get started. Banking promised to open doors, expose me to different types of technology companies at a high level, and teach me the basics of business and finance. Banking met almost all of my expectations.
This is probably obvious to anyone with as little as a few years of experience, but it took me a while to figure it out. Banking taught me how to read a balance sheet, value a company, and build an investor presentation. Banking did not teach me how to inspire and manage a team, how to learn about and build products for customers, and how to identify a market fit for those products. Finance, though an important and necessary part of business, is not business. Though I didn’t know it at the time, equating business with finance is like saying: if you know how to tie your shoes you can run a marathon.
Lesson #2: management and delegation does not equal talent development.
I had a fairly small group at Morgan Stanley – something like 20 people total. The head of our group was a great guy from whom I learned a great deal. The pool of analysts were managed by a “Staffer” who made sure we had roughly equal shares of work. The work was conducted on a project-basis – presentation for client x, analysis for client y. Naturally it made sense for each analyst to own a particular set of clients, and because my group was so small, we each got the chance to work closely with Managing Directors, who owned the relationships with those clients.
Managers at TheLadders spend more time on talent development in a day than I experienced at Morgan Stanley in a year. Analyst programs in investment banking are typically two years stints, at which point most analysts join Private Equity firms or Hedge Funds for better hours and higher pay. The big banks have a really hard time keeping people, and their HR teams have tried all sorts of things to up retention. Unfortunately for them, they are stuck in a vicious cycle.
Since analysts are in and out in two years, and likely only “all there” for 1.5 years (3 months ramping and 3 months of “senioritis”), senior group members have very little incentive to form long-lasting relationships/mentorships (in my last few weeks at the firm, one of the EDs with whom I worked most closely called me James…). Since they don’t typically take the time to develop long-lasting relationships/mentorships, nobody thinks twice about leaving after 2 years – and so the cycle continues.
Lesson #3: love what your boss is doing
When I joined Morgan Stanley, I could see myself as a Managing Director. That lasted about 3 months. There’s nothing wrong with that career path, but I realized quickly that it wasn’t for me. The best thing Banking did for me was put me across the table from CEOs at companies like TheLadders and Rosetta Stone. It soon became clear to me that the jobs of these CEOs was to create value where there was none, and that my job was to help move that value around. This is a worthy calling, but not one that I was particularly fond of.
When I lost interest in my boss’s job, and his boss’s job, and all the way on up to John Mack, I quickly lost interest in my job and started treating it as a means to an end – “I just have to get through my analyst years and then I can do whatever I want.” This attitude it toxic when you’re at the same time asked to give up your nights and weekends.
Lesson #4: “the only financial security you need is the confidence that you are learning more where you are than you could anywhere else.”
This lesson is in quotes because I have no place giving it. It’s certainly not true for all people in all professions, and I don’t even know if it’s true for me. I hope that I’m lucky enough for this to be true.
When I began evaluating opportunities post-banking, I sat down with a number of internet VCs and entrepreneurs and asked them what I should do over the next 5 years to get ready to be an internet entrepreneur. My plan was: go work for a growth capital firm to get exposure to lots of different early stage internet companies, make a ton of money, then in 5 years launch my own company with all the money I had saved.
I met with about 8 people. Every single person, VC and entrepreneur alike, said the exact same thing: “if you want to learn how to run an internet company, go work at an internet company.”
The first 7 times I heard this advice, I shrugged it off. It wasn’t until one VC continued to push me, and followed up with lesson #4, that the idea finally clicked. One year out of college, and I was already beginning to feel the weight of those golden handcuffs closing around my wrists. With lesson #4 I was able to break free of their grip, and haven’t once second-guessed the decision.
For the internet entrepreneur the math goes like this:
20 years working in Finance: $20MM
Probability of being successful: 80%
20 years working for a startup and changing the world: Priceless
Probability of being successful: 1%
= What’s 1% of priceless?
I wouldn’t exchange my experience in banking for anything. I learned a lot and met a lot of fascinating people. Most importantly, it led me to my current job, which is probably the one thing for which I would exchange banking.
When rising juniors and seniors ask me whether they should join a startup or go work for a bank, I tell them that they should go where they are going to learn more than they would anywhere else. The answer isn’t very helpful, but then again neither is the question, which brings me to lesson #5.
Lesson #5: There is no track to being a successful internet entrepreneur – nothing can possibly “prepare” you for creating something where there was nothing before.