TOP 4 MOST VALUABLE SKILLS THAT CARRY OVER

Banking/PE to startups: What can you contribute, and what do you need to learn? WHERE IT STARTED (TL;DR: I moved from finance into startups, so that I could pick up skills in running a business. This piece summarizes my observations on the skills that translate, and the skills that need to be picked up) When I was in high school, I started reading management books by business titans like Jack Welch. At some point, I decided I wanted to become CEO of a large multinational company. I didn’t have a clue what industry I would like to be in, but I knew I was drawn to the dynamism and the cross-disciplinary nature of such a role. In 2007, I found myself working in investment banking doing M&A deals. I dug deep into financial statements, building financial models and creating presentations with innumerable charts. I loved the work and developed a reputation for being a workhorse. I loved being exposed to senior management of large companies at such an early age — to me it was like meeting Jack Welch without yet having earned my stripes. Soon, however, I recognized that my work was far removed from running business operations. We would interact with the strategy or finance teams, rarely with the front line staff. I started to develop an itch for getting closer to running a business. I decided private equity would be the perfect combination: using the deal-making and corporate finance skills I had acquired, I could work closely with management teams to run businesses. I started started working at a buyout fund in 2011. Buyout funds were my ideal type of fund, because the nature of a control stake allows (in fact, obliges) the fund to make strategic and operational decisions to maximise the value of the portfolio company. I loved private equity even more. While continuing to pick up hard skills in financial modelling and deal structuring, I got to interact with management teams of operational businesses almost daily. I spent much of my time working with the CEO and CFO of a bank that we owned in Taiwan. We dealt with the most unexpected operational problems together. I also worked with founders of companies looking to raise private equity capital. While I was passionate about the work I did, after a few years it still felt like I wasn’t close enough to the business. So, in 2014, I left a seven-year career in finance to explore the world of startups. I did a 6-month stint as CFO with an award-winning clean tech company based in Hong Kong and the US. The company was going through a turnaround and pivot. I spent another few months with a small fashion accessories e-commerce business based in Singapore, working a wide range of tasks including revamping the website and implementing digital marketing campaigns. In early 2015, I joined a health tech start up in Hong Kong where I currently work on strategy and execution, working closely with large insurers to create and launch new products. I personally love health tech and have a silly number of gadgets, so i’m really enjoying my time here. When I joined, we were 20-strong. Today, we are almost 50! Having worked at a range of startups of different sizes, financial positions, and industries, there are various skills sets I’ve discovered that carry over well into startups, and some skill gaps that need to be filled. If you’re a banker/PE considering moving into startups, or if you’re a startup founder wondering if you should hire an ex-banker/PE, this should provide some food for thought. (1) Project Management Doing deals in banking and PE often means leading large teams of people within and outside of the company to execute on projects. Banking/PE trains you to develop great attention to detail, while adopting the belief that deadlines are sacred. These are often under-appreciated traits when you’re still in finance, because they are commonplace among your peers. Outside of banking and PE, however, you will start to appreciate that these are skills and mindsets that are extremely valuable, especially when you’re at a start up, where every day and every meeting could make or break the company. (2) Deal economics and negotiations Developing a firm grasp of deal economics allows you to judge the long- and short-term value of contracts that you sign with customers and partners. Sometimes, that deal that looks so sweet harbors a risk of tying your hands when bigger, more strategic opportunities come along. Running M&A auctions and closing large deals provide a look into high stakes negotiations and how they are played. Whether done across a table or over calls and emails, negotiations is an invaluable skill only acquired through experience. At a small startup, you will find this invaluable in charting the future of your company as your negotiate with partners and customers. (3) Legal know-how I know, you may not be a lawyer at the end of your banking or PE career, but you’ll be surprised how useful your experience with SPAs, term sheets, MOUs, LOIs, SPVs, litigation, etc will be. At most startups, where there is little to no budget for legal fees, this will be a highly appreciated skill set. (4) Corporate finance Not wishing to state the obvious, but many of us take our corporate finance skills for granted. Unless you’re working with a serial entrepreneur (or an ex-banker him/herself), your input on margins and the finances of the company is likely going to add some value. In fact, it’s likely that you’ll be hired specifically for a finance and fundraising role, and you’ll be expected to show off your chops in this function. Bonus: Excel and PowerPoint Doing Excel and PowerPoint quicker than any other human will get you extra sleep when you really need some ;) Office shortcuts FTW! TOP 3 SKILL GAPS TO OVERCOME (1) Working with the ROW ROW = Rest of World. If you’ve only ever worked in finance, chances are your view of the world is *pretty* skewed. Not everyone around you is self-motivated. Not everyone around you respects deadlines. In fact, some people say yes just to get you off their back (separate story on manufacturing in China coming up). On the flip side, not everyone is self-centered and always looking to CYA (cover-your-a55, in corporate speak), so you will need to adjust your attitude as well to avoid being a social pariah. Because the people you work with will come from all sorts of backgrounds, you need to become very street smart and thoughtful about interacting with people, both in the office and outside of. Which brings us to the next skill gap… (2) Adaptability In banking and PE, things often take a relatively straightforward path success. In the startup world, it’s more like a spaghetti mess of trial and error, where adaptability is a key determinant of success. While you may bring a lot to the table, chances are you have a lot more to learn than you know. This means a few things: (a) Be resourceful Stating the obvious here — you will no longer have the resources that were once available to you. Rely on your peers and your own creativity to figure out how to get your job done. Among the best things I’ve learnt: If you can’t find the answer, change the question (more on this later). (b) When things happen in ways that seem inefficient or illogical, try to understand why things are the way they are Working on discrete deals and one-to-one relationships in finance, there are often much fewer factors at play than in the real world. Often choices are made not because it was a great option, but the least worst. (c) Eat humble pie. Eat. It. Everyday. Eat it like you love it. If you want to keep your ego intact, you should stay in finance. This doesn’t mean that you stop having your own opinions. It means that only once you’ve earned your stripes, are you entitled to voice them, and change the status quo. (3) Leadership and marketing These may seem awkward to put together, but they are very much intertwined. In finance, you work with people and problems that are mostly governed by reason. You don’t have to inspire anyone; their year-end bonus and competitive spirit will take care of that for you. At the same time, your clients’ problems are clearly defined and objectively measured with numerical outcomes. As a result, leadership and marketing skills are often not developed until very late in a banker’s career. In a startup environment, you’ll be working with a set of diverse individuals with different goals and constraints in life. You’ll be selling to customers when you don’t yet have the full solution — you may have a beta product, an undersized team, or inadequate financial resources to support the customer. You’ll be trying to hire people that are worth more than you can pay them. The key to overcoming these limitations is the ability to sell your vision to everyone — your customers, your business partners, and your coworkers. You will have to develop leadership and marketing skills. This is probably the hardest skill to pick up, because it is so ill-defined. Find role models, mentors, read lots of literature, go to therapy, practise on your friends. Do whatever it takes, lest this become an handicap! Finally… Transitioning from finance to startups is not for everyone. The lack of structure and clearly defined paths to success may cause an undue amount of frustration — and your coworkers will probably also have to bear the brunt of your struggle during your transition period. That being said, if you’ve survived more than 2 years of banking, it’s likely you possess the grit and resilience to make it past the transition period successfully. As long as you adopt a growth mentality (see more: Learned Optimism by Martin Seligman), you’ll be better positioned than most to make the transition.