Working for a startup (or how I am about to turn my life upside down)

Question for those who work in finance/consulting or recruit in the field: In your experience, is it possible to find a job again in the field if one were to take a 6 month to 1 year hiatus.

I feel it would be harder to break back into finance compared to consulting, but I am curious what think on this issue.

To me, the idea of working for a start-up without a very clear understanding of how equity is built would be a complete non-starter - what's the point exactly? You're signing up with an employer that may well be bankrupt in a year and you're only getting a salary? I would make sure your contract provides for options in various tranches that vest over time and upon reaching specific goals.

Originally Posted by feynmix

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Question for those who work in finance/consulting or recruit in the field: In your experience, is it possible to find a job again in the field if one were to take a 6 month to 1 year hiatus.

Yes it is possible but don't expect any credit for the hiatus year. Depending on the timing of your re-entry in the field, you may even get bumped back a year.

Originally Posted by gdl203

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To me, the idea of working for a start-up without a very clear understanding of how equity is built would be a complete non-starter - what's the point exactly? You're signing up with an employer that may well be bankrupt in a year and you're only getting a salary? I would make sure your contract provides for options in various tranches that vest over time and upon reaching specific goals.



Yes it is possible but don't expect any credit for the hiatus year. Depending on the timing of your re-entry in the field, you may even get bumped back a year.

I am planning to meet two of the partners in Bombay in a couple of weeks. That's when I will negotiate some sort of equity structure or a stock option plan based on specific sales goals.

Well.....Have fun!

So, you want to leave finance to sell lanterns? (Yes, I am being intentionally obtuse)

Also, what do you not like about "risk".
Do you use a lot of your quant math from your MS?
Or are there many diff. calibers of "risk" people?

It sounds like your goal is to accrue a good experience that will get you into b-school and then return to a better job in finance.

Not a bad idea but the b-schools measure applicants on demonstrated, measurable success: promotions, sales figures, salary increases, etc and not the quality of the experience. There might also be questions about your commitment to a career path after taking such a radical change.

Originally Posted by Reevolving

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So, you want to leave finance to sell lanterns? (Yes, I am being intentionally obtuse)
In a word, yes. Work for a startup that sell lamps. I would work as their sales lead, basically driving their bulk sales across india and africa. There will be room for some really creative thinking, starting up some sort of micro-financing programs for the poor, establishing partnerships with other organizations to help with our distribution channels, possibly participate in negotiations with VC funds for potential investments, etc etc. Plus, the real challenge is to do this at the ground level in India, build a team and manage it, and to basically create our own distribution channel in a country where its not all that easy.

Also, what do you not like about "risk"

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My experience with risk so far has mainly been to do various risk management system implementations for clients and usually this means dealing with the corporate risk group of the company. From what I have seen so far, no one really gives a **** about the corporate risk group. The traders certainly don't care, as they have their own risk managers looking after them. On top of that, its a fairly boring part of finance to begin with.

Do you use a lot of your quant math from your MS?

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No....not using much math right now. Mostly a lot of bullshit client management work, supporting the system, and writing code.

Or are there many diff. calibers of "risk" people?

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I believe there are different calibers, but it all depends on the leverage the risk group has within a firm. At some places, they actually are considered valuable while at others, the risk group is just a way to show some sort of compliance and get better credits ratings.

Originally Posted by newinny

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It sounds like your goal is to accrue a good experience that will get you into b-school and then return to a better job in finance.

Not a bad idea but the b-schools measure applicants on demonstrated, measurable success: promotions, sales figures, salary increases, etc and not the quality of the experience. There might also be questions about your commitment to a career path after taking such a radical change.

Working in an area that will allow me to learn and experience some incredible things is one of my goals. I am hoping it allows me to separate myself a little bit from the typical consulting/finance folks who will be the majority of my competition while applying to good b-schools down the road.

In terms of measurable success, isn't that kind of natural? I am up for a promotion at my firm right now (a very small firm) and I am also looking at a pretty good salary increase if I stay with them. But only I know what I am learning at this job right now, and its not much to be honest. The motivation of doing this is to be able to work on something very interesting, work in sales (something I want to try), gain some international experience, possibly make it into an interesting story (whether its successful or not), and potentially work in VC in the Indian markets.

If you are willing to take drastic action (and it sounds like you are) to get into a b-school, there are more "cost-effective" actions you could take for the effort you are willing to put in:
- get a 760+ on your GMAT
- get your CFA
- move to a different, larger shop in risk and then work your way into trading/banking
- start a non-profit or assume a leadership position in a community program

As far as where you are right now, while you may feel you're not doing anything substantial, you can at least spin promotions, raises and other discreet performance related events into a good story.

Once again, I'm just speaking from a b-school applicant perspective. If you're looking to satisfy other life goals, then it sounds like a great opportunity.

Originally Posted by feynmix

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This is exactly what I will try to do. As cchen said below, I can't expect to get an equity stake right away. I think I can, however, negotiate some sort of stock option plan once I reach certain sales targets.

NO NO NO NO NO NO NO

You negotiate the stock option plan/vesting of equity before going in. If you don't meet the targets or timeline, you don't get anything. Thus, it costs them nothing. And at this point, their equity isn't worth much anyway. You'll also want as much anti-dilution as you can get.

To be the cynic, is sounds like they want free/cheap labor, and if you wouldn't have came to SF, they'd already have it.

Originally Posted by crazyquik

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NO NO NO NO NO NO NO

You negotiate the stock option plan/vesting of equity before going in. If you don't meet the targets or timeline, you don't get anything. Thus, it costs them nothing. And at this point, their equity isn't worth much anyway. You'll also want as much anti-dilution as you can get.

To be the cynic, is sounds like they want free/cheap labor, and if you wouldn't have came to SF, they'd already have it.

Sorry if I was unclear. I am going to meet them in a couple of weeks, and that's when I will negotiate with them an initial reasonable starting salary + option plan/vesting of equity. If we can't reach an agreement, I will probably not join them.

I am glad I came to SF, as its always good to hear some perspectives. My decision will hinge on how my meetings go with them and what we can mutually agree upon. Thanks again.

Originally Posted by feynmix

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Sorry if I was unclear. I am going to meet them in a couple of weeks, and that's when I will negotiate with them an initial reasonable starting salary + option plan/vesting of equity. If we can't reach an agreement, I will probably not join them.

I am glad I came to SF, as its always good to hear some perspectives. My decision will hinge on how my meetings go with them and what we can mutually agree upon. Thanks again.

What is your definition of "reasonable"? I am sure that the percentage of equity and other related points such as what class of stock you are vesting (hopefully there is only one class for your sake), etc. depend on the industry and situation, but I think in general you will want some idea of what you should be offered, before the meeting.

Keep in mind that even if you got say 1-2% at first, that percentage is mostly only going to go down as time moves on due to dilution associated with additional rounds of funding. Hence the advice for an antidilution clause.

They may offer additional equity in exchange for investment of your own money into the company. My advice 99% of the time is to just say no, considering that the vast majority of startups fail. I would also advise to not take too much of a salary cut, again because of the high probability of failure. I have multiple friends who have learned that the hard way.

Bumping this up to provide an update.

Met with the partners and this where things are right now: We all got along well and we talked about what my role would be in the company. I would join to fill an integral role for them, that of increasing bulk sales in India.

I brought up equity into the equation: They say that it doesn't make any sense for them to give me equity straightaway (since I don't have the experience or the sales track record), but that they are willing to give me a chance to see what I can do.

They are willing to give equity after a certain time period, if I meet expectations (this is tough to set) and reach certain goals (also difficult to set). Besides, they will probably be backed by a VC by the end of the year and so getting any sort of equity after that would be tough.

In terms of salary, they are willing to pay Indian market rate salary (salary is OK, comparable to say making ~55k in NYC).

I am trying to figure out a way to get some sort of an equity stake into this that vests over time and after specific targets, but how can one make this happen if neither party has a great idea what reasonable targets should be?

The company was just in the news as well:
http://finance.yahoo.com/news/Changi....html?x=0&.v=1

You're being bulldozed. Tell them you want X amount of equity and your stake is to be maintained and not diluted over time. When they balk ask them about how many successful start ups they were involved in. After all they did mention your lack of experience as their reason for not giving you equity.

Originally Posted by newinny

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If you are willing to take drastic action (and it sounds like you are) to get into a b-school, there are more "cost-effective" actions you could take for the effort you are willing to put in:
- get a 760+ on your GMAT
- get your CFA
- move to a different, larger shop in risk and then work your way into trading/banking
- start a non-profit or assume a leadership position in a community program

As far as where you are right now, while you may feel you're not doing anything substantial, you can at least spin promotions, raises and other discreet performance related events into a good story.

Once again, I'm just speaking from a b-school applicant perspective. If you're looking to satisfy other life goals, then it sounds like a great opportunity.

Fair points all but top B-schools look at "crafting" a class and that means not admitting all bankers, consultants, FMCG and the like. They often take a few entrepreneurs to spice up the mix particularly if what they were doing was topical.