Was investment banking experience helpful for a startup job?

29 July 2014

Occasionally I get asked whether I think my experience in investment banking was at all helpful for my job at a startup. If I were working in a more business- or finance-oriented role at a startup, my experience in finance would be more obviously helpful. But, as somebody who has both engineering and product management responsibilities, the link between my background and my current job is more tenuous.

Was banking helpful for me in my current job? It was in the sense that it helped me find my current job and gave me some "soft skills" that help, but in most other ways probably not.

Having banking on my resume definitely helped me find a position at a tech startup. This was especially true given that the co-founders of this startup were both from finance backgrounds themselves; they understand what banking is like and what kinds of skills I developed there. Today, with the sudden flow of talent from Wall Street to tech, it's increasingly likely that there will be a person with some finance background interviewing you for a business or even product role, and to these people banking experience will probably be a plus.

Banking is also potentially helpful because it's a great general signal of your ability to work hard, deal with numbers, communicate thoughts, and (not to be underestimated) be "normal" in social situations. Banks work their analysts hard and tend to select for "fit" in their own interviewing processes, so people coming out of a banking job will all roughly have a similar set of soft skill checkboxes already checked.

The hard skills taught in banking are not as useful for my product role. I still work with numbers in the form of our internal, product-based analytics, and a large part of my role now deals with diving into these numbers to draw insights that can help us improve our product. But, this does not require the kind of modeling I did in banking, and if anything requires more statistics than would ever be relevant in traditional, coverage banking. The financial modeling skillset is definitely not one I would've learned on my own, and while I don't build models anymore for work, the familiarity with Excel and comfort with working with lots of data is helpful.

There is some benefit today of being familiar with company financials and understanding how companies work. I never think about the fairly niche accounting rules and metrics I learned about the industry I covered in banking (regional banks, mostly), but learning accounting is definitely a skill that comes in handy and will probably become more important as time passes. I probably could have learned the accounting on my own, but it would've taken more effort in an unstructured environment.

Some aspects of banking were things I actually had to unlearn when I moved to a startup. The working culture of a startup is obviously much different from that of a bank. At a startup, everyone is expected to participate and to act as stakeholders in the company. At a bank, analysts are often considered to be just the workhorses behind all the modeling and presentation deck building. In many of the meetings I attended as an analyst, I was there just as the note-taker, whereas today I have to contribute and advocate for my own thoughts.

A corollary to this is that I was expected to do much less high-level thinking in banking. In fact, I'm not certain that high-level thinking would've actually been rewarded in my role. The situations we were dealing with in banking often involved a lot of industry knowledge that I hadn't built up yet. Moreover, regardless of what ideas I had, those of the Managing Director on the project would always take precedent, since (s)he would be the one ultimately presenting at the meeting with the client. For my startup job, however, I am constantly challenged to think about the bigger picture and to try to understand the situation both broadly and in detail.

For both banking and startups, there is the possibility for long hours and hard work. For my startup job though, there is a much higher emphasis on efficiency: I am constantly urged to think about the most efficient and high-impact use of my time. In banking, I was basically told what to do and when to do it, which meant that my time was often used inefficiently if others were poor managers.

Socially, the cultures are also completely different. In banking, the well-established hierarchy, along with the wider range of ages of co-workers, meant that analysts generally hung out with analysts, and formed a separate little culture from the rest of the group. Most startups, however, value employee fit and social cohesiveness a lot. The employees at a startup are more likely to be close in age, which helps a lot, but there is a much bigger social component at startups than at banking (and the socializing at a startup is probably less focused around drinking).

A final part of banking that I had to surprisingly unlearn was the extreme obsession with details. For my startup role, some details are important to get right: anaytics that we base a decision on, or the quality of a feature we want to roll out to users, for example. But, details we have to spend time on are always triaged, and the ones that will take a disproportionate amount of effort to get right relative to the reward will not always get done. For example, if we're running a split test on a new feature, we might not work out all the UX or design kinks if one of them will take an inordinate amount of work to fix. Instead, we'd rather move a little faster and gather data sooner, so that we can assess whether the feature is worth it at all.

In banking, detail was paramount for an analyst. Every number had to be right, certainly, but there were also constantly requests for fairly complicated or one-off analyses that were discarded the next day. As a banking analyst, it wasn't my job (or, it seemed, anyone's job really) to question whether a detail was worth getting right, and there were definitely some details that were not worth it. After leaving banking, it was a bit of an adjustment to cost/benefit analyze a task to see if it's worth the time investment, instead of just pouring in time to get everything 100% correct.

So in short, my ibanking experience was great as a signal for my competence and for some of the soft skills. The hard skills from finance are perhaps generally useful in a career, but not necessarily that helpful for your next job at a startup.

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