Investment Banking or Technology - Which is the better career path for MBA students? (Part 3: Work and Impact)

Here’s how I would describe the work in investment banking and tech, at a high level:

Investment banking:

• The nature of the work is very transactional, and you’re always working with multiple clients at a time. Some are clients you’re trying to pitch new business to, some are clients you’re trying to maintain relationship with, and some are clients you’re executing live deals for. You get to see a lot of different markets, business models, competitive landscapes, and what makes these businesses work. You’re going wide instead of going deep

• While you deal with a variety of companies, the work itself is pretty structured and rigid. You will always be working on some combination of financial modeling, creating client presentations, market research, and deal execution. Rinse and repeat.

• Each project you work on has its own deal team, usually with 3-4 people, one per seniority level. It’s very hierarchical, but everybody is working towards the same goal (win new business for the firm, or execute the live deal)

• As an associate, you manage the analysts below you, making sure their financial models and powerpoint presentations are done on time and mistake-free. At the same time, you also manage upwards with your VPs, Directors, and Managing Directors, making sure all of their requests are being fulfilled in a timely manner

• You’ll also attend client meetings with the senior bankers, although you’re typically only speaking when spoken to, while your senior bankers and the client do most of the talking. If there is a live deal, you’ll run a lot of the administrative and logistical aspects

Technology:

• You are 100% focused on one company, and one company only, which is your employer. You’re going deep instead of going wide

• Your responsibilities will vary depending on the size of the company you join. The bigger the company, the more narrow your responsibilities will be. At a small startup, you will wear many hats and have all sorts of different responsibilities. Sometimes that’s exciting, other times it might drive you crazy. At a Facebook, Amazon, Google, or Microsoft, you will feel like a tiny cog in the wheel. Sometimes you may feel insignificant or bored, like nothing you do really matters. Other times, you might enjoy the pace

• Most MBAs join tech companies in a product, finance, or business role (i.e. sales, marketing, business development, etc.). This means you’re typically in a support function (the investment banking analogy would be mid or back-office) and you’re typically not the central decision maker. After all, these are technology companies, so the engineers are typically the ones running the show and calling the shots. A lot of the founders for these technology companies also started out as engineers themselves. So this is engrained in the culture from the top down

• No matter what functional area you work in, oftentimes you will have to work cross functionally with lots of different people and stakeholders. It’s not uncommon to have meetings with dozens of people attending, all with competing priorities (i.e. finance says spend less money, market says spend more)

Winner: Depends on your personal preference

And what about impact? When it comes to impact, the common stereotype is that investment bankers aren’t doing anything worthwhile, while technology companies are changing the world for the better. So one common reason that people give for picking tech over investment banking is because they want to work for companies that are working on innovative, world-changing products, which gives their work a deeper sense of purpose. But is this always the case?

Investment bankers get a bad rap for making a lot of money while not contributing to society. But when you think about it, one of the primary purposes of an investment banker is to raise capital for businesses. Capital is the lifeblood of any business. Without access to the necessary capital, businesses fail and cease to exist. When this happens, people lose their jobs. When you think of it this way, you realize the things that investment bankers help companies with are crucially important as well.

As for the technology companies, there are certain many of them building awesome, life changing products out there. Thanks to Apple, I can’t imagine a world where I’d have to go a day without my smartphone anymore. Thanks to Google, any information I ever need is already at my fingertips. Thanks to Uber and Lyft, I can now get anywhere with a few clicks on my phone. Thanks to Facebook, I always feel connected to my family and friends. This list could go on and on...

But are all technology companies this way? Be honest, when was the last time you saw an app for your smartphone and wondered, “wow that is a useless app, I can’t believe someone built that.” The fact is, for every technology company that is doing something useful, you can find a technology company that is not really adding much value to society at all. Many founders start companies because they drank the kool aid and dream of getting that big Silicon Valley payday. They don’t have any good ideas but that doesn’t stop them.

And even the technology companies that are making a difference, the fact is, they need access to capital as well. Without capital, it’s difficult for technology companies to keep doing the amazing things they’re doing, and help move our society forward. So in my opinion, both investment banks and technology companies are important, but they’re just contributing in their own different ways.

Winner: This also depends on what you prefer, and honestly is going to depend on what technology company you work for.

Next week, we’ll be back with part 4 and talk about the lifestyle. 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.