Career Quiz: Should you quit your banking job for a startup?
Do you spend your waking hours in finance thinking of how you could leave your job and set up a startup instead? We're only asking because the poll currently on our homepage suggests that 41% of visitors to eFinancialCareers think about leaving for a startup every single day.
However, life in a start-up is not for everyone. And in particular, life in a startup may not be for people who have so far committed themselves to careers in investment banking. As one ex-trader turned angel investor told us (speaking off the record), you don't see many ex-investment bank employees at startup events simply because the two personality types tend to be mutually exclusive: bankers are conservative and risk averse - they've gone for the safe career option that offers the greatest money-earning potential, start-up entrepreneurs are risk-taking mavericks who are treading path entirely of their own making.
If you're one of the finance workers fantasizing about start-up life, you might want to subject yourself to the following short test to determine whether you're really appropriate for what you'd be letting yourself in for.
1. What is the minimum personal income you need in order to survive?
A. £35k ($58k) or less
B. £50k ($83k)
C. £100k ($167k)
D. £150k ($250k) or more
Comments: If you leave banking for a start-up, you will need to take an initial pay cut. You probably know this, but do you know how much of a pay cut? The website Tech City News says the average pay for a startup founder in London is £35k. In Silicon Valley, pay for male graduates with a professional degree is higher at $140k, but women and men with a Bachelors degree earn an average of $80k or less.
2. How important is it for you that you work with brilliant people who know what they're doing?
A. Not that important. I'm a self-starter.
B. Fairly important, but I can go without.
C. Quite important, I like to bounce ideas off good people.
D. Very important - this is what I like most about working in banking.
Comments: People who work in banking often talk glowingly about the pleasures of being in an environment with incredibly smart, incredibly driven staff. If you work for someone else's start-up, especially one that's fast growing or can't pay much, you may find that your colleagues are mostly recent university graduates or people who've been hired on the fly. Although London-based Facebook employees on the website Glassdoor extol the brilliance of the employees in its engineering department, one complains that the sales team contains several people who seem substandard. Equally, Ovo, the start-up energy company set up by ex-JPMorgan banker Stephen Fitzpatrick has a policy of mostly hiring recent graduates, who are clearly cheap.
3. How tolerant is your spouse/girlfriend/boyfriend of your long working hours?
A. Very tolerant. He/she shares my goals and is in this for the long haul.
B. Quite tolerant, but there are always limits.
C. Tolerant unless I work on holidays or at weekends.
D. It's a source of constant aggravation.
Comments: You might think that if you work for a start-up you'll regain control over your life, but the opposite is likely to be the case. In their book, 'Startup Life: Surviving and Thriving in a relationship with an entrepreneur,' authors Brad Feld and Amy Batchelor, detail the difficulties of maintaining a relationship when you're running your own business. - One weekend, they take a break with friends to Long Island and Brad spends the entire Friday evening reading through papers related to work and making work calls. Amy issues him an ultimatum. Sound familiar?
4. How important is it for you to be able to work in a vibrant office with other people?
A. Not very important, I'm used to working in my own cubicle.
B. Not that important, although I like some human interaction in my day.
C. Quite important, I'd find it hard to work on my own.
D. Very important. I like the buzz of having people around me.
Comments: If you set up a startup, you might need to do it alone. Fitzpatrick set up Ovo working alone at his kitchen table. Meanwhile, the girlfriend of Matt Lombardi, ex-banker and founder of sports website CollegeSpun, has reflected at length on the amount of time he had to spend working alone in the spare room to get the business off the ground. "He stays in the spare bedroom we have, which has now morphed into a nerdy man cave with a big-screen TV, five computer monitors, and an iPad. And there my ex-Wall Street boyfriend Matt works day-in and day-out...in solitude," she reflects.
5. How much do you have in savings?
A. Less than £300k ($500k)
B. Less than £200k ($334k)
C. Less than £100k ($167k)
D. Less than £50k ($83.5k)
Comments: If you've got a good idea, you can always get funding for your startup. But as former headhunter Harriot Pleydell-Bouverie discovered, getting outside investment can involve sacrificing a large percentage of the company. Fitzpatrick reportedly went into JPMorgan with a five year plan - while colleagues were spending their pay, he and his girlfriend lived as frugally as possible enabling him to save heavily for the moment he quit.
6. Would you be willing to downsize your living accommodation for your startup dream?
A. Yes, I would.
B. Yes, if pushed.
C. I don't think so.
D. No, that's off-limits.
Comments: Fitzpatrick had £350k to set up Ovo. Part of this came from selling his house in London and moving to the British countryside.
7. What's your tolerance for New Ageism?
A. High. I'm quite mindful myself.
B. Moderate. I like to think of myself as spiritually open.
C. Low. I prefer facts.
D. Don't talk to me about that rubbish.
Comments: In Silicon Valley especially, New Age style management speak is common. Heard of the Singularity University? Maybe you should familiarize yourself. In the meantime, look at this 1,284 slide presentation from Silicon Valley entrepreneur Ryan Allis on how to live in your 20s.
8. How able are you to deal with financial anxiety?
A. Very able. I'm not a worrier. I take calculated risks and live with their outcome.
B. Fairly able. I like financial security but have lived without it in the past.
C. Not very able. I like to know that I have the money I need to life comfortably.
D. I don't deal with financial anxiety - I do my best to eradicate it from my existence.
Comments: The first year, or years, of a startup can be incredibly stressful. "I'd wake up at 4 in the morning with my mind racing, thinking about this and that, not being able to shut it off, wondering, When is this thing going to turn?", says Bradley Smith, chief executive of California-based Rescue One Financial. To make matters worse, while he was heavily indebted and worried about his future, Smith had to project confidence and optimism to his employees and co-founders.
9. Do you have a special friend who you plan to work with? Has your friendship been tested?
A. No, I plan to do this on my own initially.
B. Yes. I've got a long-established friend who works incredibly hard and knows how bad-tempered I can be.
C. Sort of, I plan to work with a family member.
D. No, but I plan to set up the new venture with a colleague who wants to quit finance too.
Comments: If you're founding a startup, you might be best to follow Fitzpatrick and Lombardi and do it alone. The ructions between the founders of Tindr show how relationships can be stretched in a business context. "Be careful with co-founders," advises Paul Graham. the man who invented Boolean search technology. The best co-founders are those who work incredibly hard, he says.
Mostly As: Quit banking tomorrow, or maybe when the next tranche of your bonus has been paid.
Mostly Bs: You've thought about this, but are you really sure?
Mostly Cs: You are clearly the sort of person who would leave a perfectly good banking job for a job in a struggling startup, only to return to banking six months later.
Mostly Ds: You seem to be a delusional fantasist who will have a horrible shock if you leave your finance role for a startup. Do not go there. Not ever.
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