VIEW FROM THE TOP: TECH Vs FINANCE
Posted in Career Development on 19 October 2015
Since the Crisis in 2007, the financial services industry has inevitably seemed rather less appealing to some individuals.
Naturally of course one sector’s loss is another’s gain, and many have been lured towards the technology industry on the hope of founding the next Facebook, Snapchat, Twitter, or at least aiming to be a part of the revolution.
However it’s still a relatively new trend and one fraught with difficulties as the sector is now saturated with every ‘next hottest start-up’ and a plethora of new kids on the block.
Consequently I wanted to take a look at how some of those individuals had found the move across, and what to expect. I often think many people (including me) head into a new business with an‘eyes shut’ and ‘fingers crossed’ attitude.
Therefore any insight and or advice entrepreneurs are given before taking that leap of faith is worth its weight in gold. I for one know that starting a business and growing it to 20+ people certainly looked a considerably easier prospect before I started.
I have compiled a short series of Q&A’s with individuals who have made the move from finance to tech, and it has yielded some fascinating perspectives. The general consensus is that it is a good move as the interviewees are still in the sector and therefore are resolved to making it work!
The caveat of the below interview is the fact that I am an advocate for the financial services sector and what it offers. As an entrepreneur you ultimately risk everything with little to no assurance of success, which is not for the faint-hearted, and therefore the finance industry does offer a far less risky alternative for achieving great success.
Eirini Schlosser, a former investment banker at Morgan Stanley and founder of Chuz, a social matching app focused on specific curated spots in urban centres (undiscovered / trending bars, restaurants, clubs, etc), kindly gave me 5 minutes of her busy new life to provide a wonderful insight into how she found the move.
What was the initial attraction in leaving your career in finance for a technology start-up?
The initial attraction was the opportunity to build something unique on my own, be creative, manage and motivate my own team, have flexible hours, partnering with my own investors (“bosses”), and travel to and from work anywhere in the world according to my business and meeting requirements.
Have those initial lures become reality and if not, how have they changed?
They have definitely become a reality; 100%. I love what I’m doing for these reasons. In the past 4 months I’ve lived in London, NYC, Los Angeles, and San Francisco. Exactly the reason I first wanted to do my own start-up is exactly the reason I’m continuing with my own start-up, and I wouldn’t go back to finance unless I had to.
For me going back to finance would be a failure. I felt that in finance only the seniors are able to be impactful, and it is not based on creativity but instead just on relationships. With my start-up I build my relationships based on my own creativity and initiative, and I’m not dependent on relationships for any one aspect of the business.
What have you found the most difficult aspects of the move across?
Moving across was the easiest thing I’ve ever done… because I wanted it so badly. I had my start-up idea after appendicitis surgery; – the only two weeks during my analyst years where my Blackberry did not have a flashing red light and I had time to think.
I loved the project from the beginning so, even after coming home from IBD work at 2am or 3am, Iwould actually relish every day going straight onto an hour call with my developers. When I had weekends free I would work on the business plan. This went on for 6 months until we did a test launch party. It went so well we went back for more tweaking and improvements.
After two months I started to speak with investors and develop the business on a more creative side. It was then I realised it definitely wasn’t realistic for me to continue working in IBD. When I quit, my teams were shocked because I truly had been working insane hours so they had no idea how I had been able to devote any time to my start-up to get it as far as I did. If you want something -very simple and easy – you do it.
What are the most challenging aspects of the technology industry and being an entrepreneur within it?
Definitely the most difficult aspect, and potentially the only difficult aspect for me, has been fundraising. The start-up product has a target market of millennials and though, our users completely love and get the idea, it takes a lot of time to get an investor comfortable understanding the concept. Angels who have money are usually an older generation and very set in their ways, so new concepts are often harder to convince them about.
Surprisingly, in Silicon Valley, there are immediate prejudices towards people coming from the finance world. In fact, at a pitch event one investor judge described young investment bankers as “young rich kids with nothing better to do with their time”. It’s a hard reality to face that very few people in the tech industry truly value an investment banker’s multi-dimensional execution and hard-working experience.
Other entrepreneurs struggle with the aspect of building a team. There is a common chicken and egg problem of needing product to get investors, investors to get a team, a team to get product. The way I tell people to break this spiral problem is to recruit the team first. The reason it is difficult for most is because either you have to have $30-40K saved to pay the team or your childhood best friend is a developer (assuming you’re doing a tech start-up).
For me this wasn’t a struggle because I had saved money from banking, and since I’m Greek, I was able to recruit the team in Greece. They are in-house (extremely important, never get outsourced teams because it will end up costing triple the price in tweaks and beta versions), educated, and worked in Europe and the US, but I could pay them Greek salaries.
Has your finance background helped, and in what way?
I would not trade my years in investment banking for anything, I learned an incredible amount.
Firstly the most important skill is managing psychologies. Investment banking taught me this specifically because I was in the M&A execution team, where every task was C-level priority, and when multiple M&A projects were blowing up at the same time under fire-drills, the only thing you could do was manage psychologies and expectations. In order to survive we needed to manage upwards, and keep people calm (whether this was achievable is a different story). Most of the time you could not keep mid-levels (VPs and Associates) calm, but you could keep them “less stressed” and you could keep yourself less stressed.
Being able to keep breathing calmly and just power through under extremely stressful situations has proved incredibly valuable. In the real world outside IBD, stress never reaches these levels, so my team is absolutely astounded on how I handle minor stress peaks with fundraising, cash crunches, launch events, and other deadlines.
Secondly, investment banking taught me how to hack when necessary. What does this mean? When an MD wants something now, you give him a quick solution that is accurate, and then you do the long conventional way later if you need to. Hacking is what gets a start-up off the ground. Hacking means we’ve found quick easy short-cuts on how to get users because we are working with what we have and the time we have available.
I always ask myself when trying to solve a problem: “Assuming that it is possible, there must be an easy way to do it. How can I solve the problem in an easier way? What have other start-ups done? What are alternate avenues through which we can reach these users? What are our users’ daily habits? And where can we promote ourselves with the lowest cost possible and the highest return?”
Lastly, very simply investment banking taught me fundamentally what drives business growth and how it can translate into strategies, operations, and finances. Knowing how a business works from a high level as a consolidated unit is invaluable, as opposed to understanding only its marketing or finance or technology needs.
I would not change my years in investment banking for anything. It was school… or rather like the military. As an analogy, I feel like I did a military tour in Iraq and now I’m working as a CIA agent. For me, launching a start-up has been an upgrade both in terms of work and my quality of life, although the skills I learned in IBD remain invaluable
What advice would you give to someone looking to make the same move?
Save up money, don’t quit your job until the product is “done”, and triple the amount of time that you think is reasonable to do anything. Fundraising will take triple the time, product development will take triple the time, and your thought process will take triple the time you expect it to.
Doing a start-up is not robotic analytical work. You cannot crunch things out by simply executing for 20 hours straight. It requires creative thought. You will find yourself taking a nap in the afternoon, ideas coming up when you’re in weird places like the shower or tube, and work having a whole new definition. Now instead of 20 hour days you have 24 hour days. You will find yourself waking up, having dreamed up a solution to a problem. It’s enjoyable but it never stops – be ready for the difference because things will not get done in the same manner you are used to from IBD.
Triple the amount of time that you think is reasonable to do anything.
What are the key challenges that you face now, and going forward?
Now we are ramping up for launch, thereisn’t really a single challenge. It is more the process of being as prepared as possible and praying it does well. The challenge will be, as it always been, continuing to adapt and pivot when things don’t go well, when users want different things, and then proving to investors that you are worth the investment.
Investors are key because, truly, if you have no money you have no team, and if you have no team you have no start-up… And then you must go back to finance! That is my biggest challenge. It definitely sounds like a “first world problem” but psychologically it is huge to overcome.
Given your chance again, would you have made the same decision i.e. a move into tech from finance?
Definitely. Again and again and again… well I hope I only had to make it once and it is done.
Ed Chamberlain, founder of the executive search firm Altus Partners, was speaking with Eirini Schlosser, Founder of Chuz, an alumna of London Business School and former Investment Banker at Morgan Stanley.
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