As those who closely follow this blog already know, it’s been quite some time since my last post. Unfortunately it was over 3 months ago that I last hit the “publish button,” although for me the time has flown by. Preparation for the Level III CFA exam took over any and all free time, with multiple weddings, an apartment move, and of course, my work duties, rounding out my days. However, the insanity is finally beginning to ebb.
In the course of all these extracurricular activities, and since my last post, I also switched roles within my firm. I went from Director, Business Development to Director, Product Management – a significant shift (although, no, I will not be changing the name of the blog). I’m now our product manager for the internal product, which marries technology with the human effort of our analysts, and everything that goes along with that. I spend about half my time thinking and working through problems at hand and the other half designing and iterating on product ideas.
I’ve been pondering what to write after this long break. Given the role change, I thought it most appropriate to provide my thoughts around the differences between the roles and given the title of this blog, also to VC. The point of this post is not just to ramble about some differences, but hopefully to give anyone looking to make a move some insights into the varied roles – the differences, the similarities, and the critital elements of each. As an added benefit, I’ve included Investment Banking, encompassing my entire professional background and hopefully giving someone in any of these roles a glimpse into the other side.
To kick it off, below is a chart that highlights some characteristics of the 4 roles. It’s important to note that 1) this is based on my own experiences and 2) this is relative to an operating business / startup and not reflective of a banker or VC’s efforts in building their own business. On the X-axis is what I’m calling “Strategic Horizon” – the further out you think, the further you are out on the axis. The Y-axis is “Operational Depth” – the higher-level you think, the higher you are on the axis. It’s a crude sketch, not meant to be particularly precise, but I made it in Balsamiq, which I just started using, and so I’m excited to present it.
In my experience in VC, thinking was nearly always long-term, and focused at the industry/market level. We would get to know markets very well – the players, the size and the dynamics – and attempt to invest in the cream-of-the crop management and products. Infrequently did we get into the day-to-day operations of a business, although earlier-stage guys sometimes get more involved. Sitting on, or observing, the Board of Directors provided opportunity to play a role in the business, but decisions were made in a high-level, directional manner. In thinking about investments, strategy was focused on a several-year holding period, with exit expectations set well into the future.
As Investment Bankers, we thought on a Macro-level. Bankers often specialize in specific industries, and get to know them well, but its more “technology-level” versus “enterprise software-level” in banking versus VC. Assignments last a few months to a year, and are therefore not “short-term,” but strategic thinking extends only until the completion of a specific transaction (be it a financing, restructuring, sale or other). As an entrepreneurial banker you may think more long-term about building a book of business with satisfied clients, but this speaks more towards building your own business than in working with a target company (which often occupies the bulk of your time, particularly the more junior you are).
As a salesman (we referred to it at Business Development), my strategic thinking was extremely short-term in nature – limited to the accounts I was trying to close that day, and the new accounts I was going to reach out to tomorrow. Analysis was focused more around the individual sale, although over time trends emerged. However, through simple participation in a growing company, I learned a lot about our business, the products we were providing, the processes of how we did things, and the competitors we faced.
Product Management, on the other hand, thinks on a longer-term basis, and is more “in-the-weeds.” There are of course, times when short-term strategy needs to be implemented, but that’s often driven by the sales team, and always needs to be taken into the long-term context of product direction. No major engineering job is going to be completed in only a day or two, and it takes a long-time to build out all of the features that you envision when you draw up a new idea. Steps need to be taken one at a time to build properly and only after iterating with your engineers and client base and then really thinking about what’s necessary, and what isn’t, do you draw conclusions about your next steps. In this manner, it’s somewhat like Business/Corporate Development (as the terms are traditionally used). Thinking long-term about how the shape of the products, or the shape of business partnerships, will affect competitive positioning and avenues for growth.
In considering the differences between these roles, each has provided a unique learning experience. However, it’s the similarities that I think provide the most insight. The yin and yang of qualitative and quantitative analysis have been persistent across the roles I’ve held, and I believe are relevant to nearly every job in the marketplace.
Qualitative analysis has been a significant knowledge driver for my colleagues and me in every job I’ve held. In each firm I’ve worked for, we looked to learn from people smarter and more knowledgeable than us. As a banker we talked to potential buyers, analysts, and industry experts. As a VC we talked to CEOs, industry veterans, and industry customers. In sales we constantly iterated our pitch against potential and existing customer accounts; and in product management, an open dialogue has been critical to further development of a product set built to meet customer needs.
The importance of quantitative analysis speaks to the ever-multiplying presence of hard data points. It goes without saying, but data points are generated everywhere around us – tracked, tabulated and stored in every transaction, interaction and connection made within the digital world. With applications and platforms like Hashable, Foursquare and Twitter, these data points are even reaching into the physical world. Every bit of this data can be analyzed to provide insights, and the better one becomes at analysis, the better able he or she is to derive answers by contrasting discussions with numbers.
A banker evaluates comparables to determine valuation; a VC attempts to measure market size; the salesman uses feedback loops to determine pricing and targets; and the product manager uses customer & usage data to drive product development. The combination of this quantitative analysis, with qualitative discussions, tells you what direction to point and how best to move your product/investment process/sale process/business/whatever forward. I didn’t mention it above, but even as the proprietor of a student-owned shipping business in college, qualitative and quantitative analysis we’re incredibly important to our success. Discussions with clients helped us to tailor our offerings to better suit our market, and analysis of trends helped us to confirm those discussions and also to find opportunities for efficiency and profit.
At the end of the day, it’s about listening – to data and to people. Whatever your role, if you listen to what the smart people and the relevant data are telling you, it should point you in the right direction.