The mbaMission Podcast

Ep 62 | How to Get a Job in Private Equity, Venture Capital, or a Hedge Fund

• mbaMission • Season 2 • Episode 62

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As the private equity industry continues to expand, the number of PE associates applying to business school -- and the number of MBA students interested in entering PE post-graduation -- is on the rise. In today's episode of the mbaMission podcast, Harold Simansky and Jeremy Shinewald explore the worlds of private equity, venture capital, and hedge funds. They break down what these roles involve, and how aspiring professionals can successfully break into these highly competitive sectors. If you're thinking about working in PE or VC after business school, this episode is for you!

00:00 Welcome to the mbaMission podcast
01:12 Working in private equity
08:13 Working at a hedge fund
10:38 Working in venture capital
14:39 PE resources at business schools

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What is private equity in its simplest forms? Is people's money going into private companies and then those same people having some sort of control over that company. What about hedge funds? If you want to go get a job at a hedge fund, go get a PhD in astrophysics. Well, I tell folks it's easier to start your own venture capital fund than it is to get a job in venture capital. If they're not going to Harvard or Stanford, these types of careers, private equity, hedge funds, and venture capital, you have to be very deliberate as well as thinking about not just it as your next job, but as job number two, three or four.

As the private equity industry continues to expand, there has been an increase in the number of private equity associates applying to business school, as well as growing interest among MBA students seeking to enter the field postgraduation. Today, we're exploring the worlds of private equity, venture capital, and hedge funds, examining what these roles involved and how aspiring professionals can successfully break into these highly competitive sectors. I'm happy to share some of my own experience working in the private equity and venture capital world. Wondering whether business school can help you get there? This is the place to start. Okay, so PE, hedge funds, venture capital firms, you want to get a job in them. And I tell folks, and I have this conversation a lot. I've worked for startup companies, venture capital firms, private equity firms, all sorts of great this sort of word salad of acronyms. And the reality is, first take a step back. What is private equity? And private equity in its simplest forms is people's money going into private companies and then those same people having some sort of control over that company. So in its very simplest form, it basically means you know friends and family putting money into a startup and then at that point then maybe it gets a little bit bigger. Maybe it's angel investors putting money into the startup and then at that point it gets a little bit bigger. So maybe you have actual investment companies sometimes called private equity companies putting them into a startup. So and then you get bigger and bigger and bigger. The bottom line is how do I get a job in one of these things? And like I think it's worth noting that the biggest funds are, you know, you're saying basically there's a there's a a a chain of private equity of the actual equity going in. But I think when people when when MBAs think about getting a job at a private equity fund, they're generally thinking of like big global funds, right? That um the bank capitals of the world, the Apollo, whatever it might be, that are getting massive amounts of institutional money going from endowments and and even sovereign wealth funds and the like. So, okay. So, we think about those those those huge firms. Yeah. Um, you know, well, I mean, are the I'll give I'll give a softball here. Are the are these jobs open to anyone? Harold, can I just walk in as a speech writer or as a brand manager at um at uh you know, Proctor and Gamble and expect to get a job at in private equity? Uh it depends on how you define private equity. Let me explain. Okay. going getting a job at the bane capitals of the world, TPGs, whoever it is, is very hard to get a job postNBA if you have not been in a role with those companies beforehand. So, you'll look at some employment statistics, something like 17% I think of HBS grads go into private equity after they get their MBA. Well, something like 17% are actually coming from private equity. So, from that perspective, it is actually very competitive to get a job in in these roles. That noted, let me sort of answer it a slightly different way. If you want to get p a job in private equity rit large, meaning in the world that takes people's money invested in private companies and then hopefully makes you know some serious return afterwards, then that is far easier than you think. And let me tell you why. Because there's 4500 private equity firms and there's so many private equity firms that actually people don't even know which one the biggest are and who's the most successful. Um, did you know the Celtics were just bought? Yes, I did. And do you remember the name of the person who bought them? I don't actually to be honest. Yeah. Bill Chisum, I think his name is. Okay. Okay. He runs one of the largest private equity firms in the country, one of the most successful. Um, have you ever heard his name before? I actually haven't. No. No. He was quoted once in the Wall Street Journal and the quote was something like, "Yeah, we think it's a good company." And my point here is not that you're going to grow up and be, you know, that guy, but rather my point is if you're serious about the industry of private equity, there is a place for you. And the place for you is probably in these firms that are actually quite a bit smaller or much more regionally focused, right? So from that perspective, I tell folks, you have to get out there and yes, by all means, interview at some of the top firms, but but there's another world here that you have to get out there and get to know. Exciting news. You can now access OnTrack by MBA Mission for free. Take our two-minute onboarding questionnaire to personalize your learning path. 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I think if you want to scratch and claw and find your way in, if you work hard at it, I mean, I suppose it's true of anything, right? If you're absolutely determined to do something and you keep working at it, right, you know, good things can happen, right? But if you want to work at a brand name firm, um, typically you're talking about IND a brand name firm that that has that recruits on campus or or recruits its own, you know, gives return offers. Um, you know, you're typically looking at a couple of schools that have doubledigit numbers of people going to going into private equity, your Harvard, Stanford, Wharton, and after that it falls off pretty quickly. even even Chicago and MIT um are in single digits and and so you know and it tends to be those who are who are spending two years in consulting or two years in banking being recruited immediately before they start their jobs these days uh into private equity firms then then spending two to three years in private equity and going into business school and again many of them having having either return offers or being part of a merrygoround where they're like oh you know I I was at Apollo. I am now going uh to Madison Jim. We're not making it up this way. Um and uh y and so you know and and also like private equity can can be these also family offices and and um you know some like even the the Canada pension plan has has a has a private equity arm uh that that's very fun wealth funds. Exactly. So definitely it that's that's harder but the path there is itself is not impossible. What I mean by that is look and see where a Bay & Company consultant goes when they leave Bay & Company. A number of them are going to go off and join a private equity firm. Uh go and look and see where an investment banker goes after 2, three, four years being an investment banker. MBA, few years investment banking, which is a far easier job to get than people realize. If you look at some of those schools Yeah. Yeah. You look at some of the schools that are sending people to investment banks, then they can go off into private equity, right? And and again, it's one of those things you never want to pop anyone's bubble, but I I always want to tell folks, if you tell me you want to go to get an MBA, you don't have any background in finance, you want to get an MBA and then go into private equity. Again, sure is it possible. It's really hard. So, you have to find sort of either the back door, the alternate route. There are certainly people who go into one size private equity fund, sort of a regional fund, and then go into a bigger fund. That certainly happens. There are certainly folks who go work for portfolio companies or in the case of uh whether portfolio PE portfolio companies or venture capital portfolio companies and then work their way that way. Right. So if that's truly your end goal and your career is 40 years, I'm pretty confident you can make it. I really am. But you're also a very happy and optimistic person. Right. Right. Right. What uh and so and okay, so we're talking about private equity. What about like what about hedge funds and what about what's got hedge funds and venture capital? Yeah. I mean, listen, I I think first of all, all these things start getting mixed together. So, hedge funds uh sometimes are private equity firms, sometimes they're not. Hedge funds are very hard. And I'll tell you why. Because hedge funds, you have to go in there really having very specific skill they're looking for. If you want to go get a job at a hedge fund, go get a PhD in astrophysics. I mean, that's the type of jobs that they're looking for. So, a hedge fun requires you just to back up, requires you to be extremely analytical. Exactly. um have often have like pretty independent thesis on where the market's going or have some like programmatical skill that will allow you to develop something that will detect small differences in between, you know, two stocks or two That's right. two math major like no such thing as a dumb math major. It's that sort of thing. But at the same point, there are opportunities if you want to get into sort of I would say the edge of finance. You could certainly go work for a, you know, uh, private wealth management. You could go in and work somewhere for that recruits on campus. Goldman Sachs hires a tremendous amount of people through their asset management program. You could certainly start there and then to that point you sort of eventually work for your client or and that would be a hedge fund or something, right? And like I I have a friend of mine who uh graduated from Wharton many years ago. Yeah. He um he had he' done banking and he' done PE for a prestige firm. All he wanted to do was go work for a hedge fund. And and this is, you know, a Wharton guy with like brand name PE experience and he sent out like dozens of letters and stock pitches that like that were detailed and banked on every door and ultimately he got he got one offer from a from from a hedge fund, but that was it. I mean I mean I mean that's great, but it's like they're not always hiring and they're not always hiring on campus like they're No, they're not. And also you have to they tend to be very topheavy and like and like some of them tend to have very few people. Yeah. So yeah I mean that's another thing also there just aren't many jobs generally. I mean there's always these interesting places you can land. Bridgewater Associates it's probably the biggest hedge fun in the world. Ray Dalio um there's they'll they'll frequently hire many different types of people and then sort of slot them in. There are a few firms like that. Bridgewater actually does recruit on a lot of different campuses and and stuff but sometimes and this is more in the case of venture capital. tell folks it's easier to start your own venture capital fund than it is to get a job in venture capital. And I sort of believe that. Well, venture capital is definitely like a really it's it's really it's fluky. It's networking oriented. That's right. It's like you they're not out there. They're not actively hiring that way. They're not just like, hey, you know, we're Sequoia and we're hiring, you know, please apply. um you know just send send like they get inundated with I mean maybe they do that occasionally because it's big enough but but like they would the odds of you get a job it's it's really hard you're again go to if you want to work for Sequoia go get a job one of their portfolio companies and you can find the portfolio companies online I mean that's the easiest thing in the world you go in you take a huge pay cut you walk in there I tell people you know go to that series A company where you at least you'll get paid something you know and at that you start working there and you get to know the venture capitalist from the inside and listen over time and again think about your career for the long term over time actually you position yourself as a venture capitalist and I think that's true I listen I obviously there are different ways to get different places I think this notion for most most people who are particularly if they're not going to Harvard or Stanford these types of careers private equity hedge funds and venture capital you have to be very deliberate I really do believe you can get to these places but you have to be very deliberate as well as thinking about not just it as your next job but as job number two, three or four. Yeah. Yeah. And that is true. Like you don't necessarily have to get there on day one. I know we have an impatient group of uber achieving MBAs but uh Right. Right. Right. But yeah, sometimes it sometimes it takes takes a while to get there. Um I just I just remember one applicant who really reallyworked andorked andorked his entire time while he was in school and and was focused like I'm not going to be distracted by consulting. I've been distract distracted by by banking. I'm just going to get that VC job and uh and talked to anyone who would went to every conference. And like finally he he made it. Did he get a job? Yeah. Yeah. He he went to Colombia and he and he he got a job at at a at a good at a at a very good uh um uh you know very good firm and um you know I should actually look him up. I'm curious how curious how he's doing. Uh you know but it was it was I talked around it was like it's all networking. There's just there just are so few jobs. They're in such high demand. They don't need to come to campus and be saying, "Hey, would you like to work in venture capital like it's not like they need to compete for talent the way banks or or you know, Google might or whatever it is. The jobs are few. People are knocking the door all the time. That's right. It's tough. And listen, you also have to zigg where other people are zagging. And what I mean by that is go to if you want to do healthcare BC, go to Nashville. Yeah. Nashville happens to be, you know, for reasons that I could explain, but it's too boring. Give me talk to me. you know, go for your third man consult. I'll explain to you why Nashville happens to be a hotbed for um healthcare VC. So, if you're interested in healthcare VC and you get sort of serious about it, then go to a place like Nashville. And you can it is far more likely you'll get a job in healthcare VC in Nashville than you will in Boston. I mean, that's just facts. It's so funny. I'm like thinking about this right now. I worked with a with a with a woman who worked at a a small but prestigious BC firm. Yeah. And I'm like, they don't recruit on campus. You can't just send in your resume. She actually did just send in her resume and they're like, "This looks interesting." And she did get an interview and did get the job ultimately, but uh but I mean that was more of a unicorn fluke than anything. It is possible, but I don't you know, but you're I think everyone knows that these days, right? We hired for a social media coordinator, got like 4,000 applications overnight or stuff like that. It's it's pretty hard to to to get that job just by being in the crowd. even for any I mean look for any job at this point in the competitive industry you're going to want to start building your network before you get to school like you're not you don't want to be arriving on campus and saying like oh well now I got to figure out the private equity landscape that's like that's or the hedge fund landscape you're going to be wanting to like cultivate leads before you get there right and also these schools have gotten a lot smarter in terms of preparing their students Kellogg now has this great private equity program I guess that actually in some ways it's really outstanding. I hadn't really seen something as comprehensive as that. Kellogg just started people are interested in private equity go take a look at it. really is like a concentration in private equity and they not only have some classwork around it, some curriculum around it, but they also have these wonderful connections that they can make to people, right? And and we've talked about it on I think other podcasts in actual fact Chicago is a great city for private equity in a way that Cambridge or Pelo Alto is a great city for venture capital or Austin and it's sort of funny and again geographic uh a geographic plan of attack or strategy can actually help you get a private equity job or help you get a venture capital job, right? And uh that's a good point. Yeah. Great. Yeah. No, I think so. Then have we have we exhausted this topic? We exhausted exhausted this topic. Yeah, we're exhausted ourselves. There we go. Yeah. Well, this is a good one. This is fun. I mean, I think this is a, you know, an unorthodox part of, you know, unconventional. You're just talking about the in the inputs as opposed to the outputs, but it's important people understand the outputs cuz it's not all about getting in, it's about getting that job. So, thanks for listening. And this is Harold Sam and Jeremy Shinywell with the NBA mission podcast. If you want to continue this conversation, please call us, speak to Jeremy, speak to me for a free 30-minute consultation, or any one of other 25 or so consultants. If you want to be one of our success stories, sign up for a free consultation with a member of our full-time MBA admissions team. Since we've worked with tens of thousands of applicants over the past two decades, we can give you our honest opinion on your chances and help you put together your very best application that is not a sales call, but rather your first session with one of us for free. We can give you a profile evaluation, answer specific questions about the process, review your resume, talk about your school choices, and so much more. 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