Investment Banking or Technology - Which is the better career path for MBA students? (Part 2: Exit Opportunities)

Now, what if you start out in investment banking? Well, you certainly have more options. Here are some of the more common paths taken by post-MBA investment banking associates:

• Stay in investment banking: work their way up the ladder until they become VP, Director, and eventually Managing Director

• Become a buyside investor (private equity, hedge fund, venture capital, etc.): Typically the large megafunds don’t hire at the associate level, but there are middle market and boutique firms who will

• Go corporate: likely at one of the companies they advised as an investment banker. Typically they would start in an area like corporate finance or corporate development (doing M&A in-house), although any of the other roles that MBAs typically target are still possible as well

As you can see, it’s very possible to transition from investment banking into technology (or any other industry, for that matter) if that’s what you want to do. In fact, I personally know multiple former colleagues from my investment banking days who came into banking as post-MBA associates, and are now senior finance executives at Fortune 500 and venture-backed technology companies. They’ve become CFOs, head of corporate development, and head of investor relations, just to name a few. Because they already knew the C-level executives at the company from their days as investment bankers, they often fast track their promotion path once they arrive in corporate. After all, the CEO and CFO would have only poached them from the investment bank if they had thought highly of them in the first place.

Speaking from experience, I’ve also personally experienced how investment banking could accelerate one’s career trajectory in the technology world. When I left Square to go to GitHub, the CFO of GitHub was looking to make his first finance & strategy hire to help him build out the team from scratch. This was an awesome opportunity in my eyes because I would get to go from being a financial analyst on a team of ~15, to being a director level hire who got to hire and manage the entire team. Not to mention, GitHub was already the de facto standard for software developers’ collaboration tool of choice. At its $750m valuation at the time, I thought it was severely undervalued with massive upside.

There was only one problem: the job description asked for someone with 12-15 year of experience. At the time, I only had six and a half years of experience - three in investment banking, two in private equity, and one and a half at Square. Long story short, I applied anyway, got the interview, went to final round interviews where I had to give a presentation on GitHub’s pricing strategy in front of the entire executive team, and beat out 3 other finalists who did have 12-15 years of work experience. Some of my banker friends like to joke that a year in banking is like dog years. Companies value the time you’ve spent in investment banking, and acknowledge that the responsibilities and learnings you’ve had are far above what your peers may have had in a normal 9-5 job.

Now, let’s compare this to starting out in technology. It’s virtually impossible to go in the other direction and transition from technology into investment banking, or into buyside finance roles like private equity and hedge funds where investment banking experience is pretty much a prerequisite. Venture capital might be the one possible exception if you’re coming from a technology company, but typically that only happens if you are coming from a product / engineering background. Also, it’s unlikely they would hire you unless you are already pretty senior, and are capable of coming in at the partner level. In other words, very few people are able to make this transition.

All of this is to say: if you are already certain on what career path you want to pursue long term, then obviously you should just go for whatever that may be. But if you are not 100% certain what you want to do long term yet, then you may want to preserve the flexibility and optionality.

Winner: All else equal, investment banking provides more optionality.

Next week, we’ll be back with part 3 and talk about the work itself and the impact you’ll have. Stay tuned!

About the Author:

Sam Shiah is the founder of Wall Street Mastermind. As a former investment banker (Morgan Stanley, Deutsche Bank) and private equity investor (GI Partners), he closed 14 deals worth $9 billion in transaction value during his career on Wall Street. He is an expert on the investment banking recruiting process and a sought-after coach for aspiring investment bankers. Securing his first role in banking in 2008 despite one of the worst job markets in Wall Street history, Sam has first-hand knowledge of just how competitive and challenging it is to break into the industry, which has a <1% acceptance rate. More importantly, having been a part of the on-campus recruiting team at Morgan Stanley, he has intimate knowledge of how the recruiting process works at top-tier banks and has both screened and interviewed hundreds of candidates from the other side of the table. After his career on Wall Street, Sam worked at several technology startups in Silicon Valley, including Square and GitHub, before founding Wall Street Mastermind.

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