McKinsey or a startup?
You couldn’t choose two more diametrically opposed paths, and in the end, there is no comparison
I’m trying to figure out what to do next — debating going to McKinsey or joining a startup, what do you think?”
I’ve heard this question 5 times in the last month, which to me signals an opportunity for a good article on the topic. Buckle up.
The circumstances are these. Assume a smart, ambitious, talented individual is about 3–5 years out of undergrad and is lucky enough that this is a legitimate choice for them. They’ve either been working as a “cog” in a prestigious tech or financial firm, have advanced their leadership title by bouncing from role to role, potentially across 2–3 companies over that same period of time, or they’re about to graduate from a top MBA program.
In any case, they realize 2 things:
- Their trajectory isn’t moving fast enough
- Everyone else looks like they’re having more fun
Therefore it’s time for a change, and obviously, McKinsey & Company or the world of entrepreneurship are the only natural next steps that will check both of these boxes.
Having traveled both of these paths, I’m bemused by the questions, because in my mind, there really is no comparison. I’ll illustrate this by subjectively comparing the two across a number of dimensions (Yes, I know).
The case for McKinsey & Company
- Coworkers. McKinsey’s hiring process is world-renowned. It’s highly selective, and does a pretty phenomenal job of hiring talent. Sometimes people like me slip through the cracks, but generally it’s pretty amazing. As a result, you won’t find a smarter, talented, or capable workforce in the market. The people I worked with were far and away the best part of working there.
- Education. Because of the coworkers, you get to learn from literally the best in the world. You’ll have more exposure to more industries, organizations, and leadership in a shorter period of time than you will anywhere else. They have world-class training opportunities and facilities — I had 8 weeks of training during my second year in places like Upstate New York, Duke University, and Italy. Seriously second to none.
- Riskiness. I think the only category of professionals you’ll find who are less risk-tolerant are actuaries. Consultants are some of the least risk-tolerant people you’ll find. Think about their profession — getting paid millions of dollars to advise huge corporations and governments. You can’t make mistakes, or you lose your reputation. Every decision requires thorough discovery and analysis.
- Financial reward. Your starting salary will be awesome, and it only gets better (assuming you can hack it). And you can’t beat the benefits — truly best in class. For instance, not only was vision covered, but I had $500 of annual discretionary spending I could use on any eyewear. It was a small thing, but I loved it — I used to get 2 new pairs of glasses every year just because (I’ve only had 2 pairs since leaving 5 years ago).
- Lifestyle. You will be on the road. All. The. Time. At first, it’s exciting and super sexy, but after a few years that wears, and it becomes exhausting. And it doesn’t get better with time/advancement. As an analyst, you’ll travel every week to your client and live in one place. As a partner, you’ll fly to 4 different clients in a week. You’ll literally forget what city you’re in when you wake in the morning. You can get just about any status you want (airline, hotel, etc.). You work long hours during the week because you have to, and can largely ensure your weekends are protected if you’re smart. The stress is high due to organizational expectations — either you move up or you’re out.
- Trajectory. Your trajectory is very well plotted out, and mostly limited by how quickly you grok the system — specifically, how quickly you understand how to generate value, and can start delivering. I knew people who went from BA to partner in 5 years (that’s fast — it typically takes 8–12). As a partner, you’re hobnobbing with leaders of industry. As a director, heads of state are calling your personal cell phone.
- Where you go next. Literally, just about anywhere you want — if you want to leave at all. Depending on where you step off, your opportunities vary, but I can testify the McKinsey name on your resume will definitely open doors that otherwise wouldn’t be accessible. My friends left McKinsey to be VP’s in industry, partners at other consulting firms, principals at financial institutions, and founders of businesses. It really will come down to what you’re best suited/want to do. The only thing I don’t think you’re well suited to do is found a startup, but that’s another topic for another day.
The case for a startup
For clarity, it makes a huge difference when you join the startup — there is a tremendous amount of difference between founding a company to joining a team with seasoned entrepreneurs to joining after the company has funding.
For instance, joining the “startup” Facebook as the 500th employee will feel very different from joining 3 founders at inception.
For the sake of this article, we’re going to assume you’re the 10th member in a seed-funded company, started by successful, serial founders. Seed is early enough to feel like a founder, but late enough the riskiest stage of the business is past.
- Coworkers. In my opinion, this is the most important factor to key in on — choosing the “who” before the what. Since you’re joining successful, serial founders, there’s a good chance they’re awesome. They likely couldn’t have been successful if they weren’t. However, they could also be demanding jerks that are a pain in the ass to work with, and were successful because they were relentless. Typically some due diligence can vet this out, but regardless, it’s a huge gamble. They’re in charge of their own hiring policies, and didn’t have to pass anyone’s hiring bar.
- Education. Your teacher will be the University of Hard Knocks. The co-founders will do their best to pass on their education, but will likely be so busy themselves that your education will opportunistically come in bits and pieces as situations arise, and you need to be paying attention. You will learn what to do because you’ve already tried everything else and it didn’t work. However, the lessons you learn will be solidly engrained and unforgettable. Potentially to the point of PTSD.
- Riskiness. There is no riskier investment than an early-stage startup. Yes, your team has seed funding, which has minimized your risk to some extent — but by no means is that risk gone. You will make innumerable decisions every single day usually based on imperfect/no data, with only your gut and intuition to guide you.
- Financial reward. Done right, it’s pretty binary. Either the company explodes and because you were involved early, you make out like a bandit — or it goes bust and if you’re lucky you get out with the shirt on your back. If you make a salary on day 1 (that’s a big if), you’ll likely be taking a huge haircut from where you were before (I joined my last startup at a salary 40% lower than what I’d been making at McKinsey 5 years earlier). You don’t join a startup for a salary, you join it because you’ll be instrumental in building something amazing and have the chance of making way more than you would have in your day job.
- Lifestyle. Your lifestyle will be harder than consulting. Consulting is hard because you have a lot of demands and expectations. But you can confront it head-on by making smart decisions, being humble, and working hard. There’s a clear link between effort and reward. With a startup, you can do all these things and still fail. You can work 20 hours a day, 7 days a week, and not make progress. You might not have a vacation for the first few years. In the end, with consulting it’s stressful because you’re trying to meet someone else’s extremely high expectations . With a startup, you’ll be trying to meet the highest expectations there are — your own.
- Trajectory. Advancement in an early-stage startup is non-existent. Either you join as and stay the head of a department, or you don’t move. If you’re delivering value and get the job done, there are no advancement opportunities because you’ll just stay at the top of the organization as it grows. If you don't’ deliver value, someone else will get hired over you, and you’ll stay below them because you weren’t good enough to do the job they were hired to do.
- Where you go next. In the end (after 5–10 years), if the company does well and you stick around for the exit, you’ll be set up to do just about anything you want at another company of comparable size. If it doesn’t do well, you’ll probably need to find a new day job with predictable hours and company benefits — if anything just so you can have time to recuperate.
Which should I choose?
Really, if these are legitimately the two paths your considering, then let me boil the factors down for you, as there are really only two things you need to consider.
The first is your personal risk tolerance.
When I say there is no comparison, it’s because all of the dimensions map orthogonally to each other with one exception: risk. These two options sit at opposing ends of the risk spectrum, and depending on where you sit on the spectrum, it’s difficult to empathize with the other end.
With McKinsey, there’s little-to-no risk. It’s pretty clear from the start, with a high degree of certainty, what you’re getting yourself into once you sign up, across all dimensions.
With a startup, there’s only risk. You have no idea clue what’s going to happen. Even with the things you think you know or are “a given”, you don’t, and they aren’t.
The second is how clearly do you see where you are in the next 10–20 years.
If you look ahead, and the future is clear, then it probably indicates you should go to McKinsey. Not because you couldn’t get there with a startup, but because it speaks something to your risk tolerance and the possibilities you see for where you’re going.
If your personal vision is clear, then the odds of you making it happen are much more realistic. Even if it means starting at McKinsey and going to a startup afterward.
However, if the future is fuzzy, you struggle to articulate it, or you’re open to whatever comes — then a startup is a fantastic option. It will take you places you never dreamed of and will bring constant surprise and discovery on a day-to-day basis.
Either way, I support your decision. Just let me know, and I’m happy to help you take the next steps to make it happen.
This article was originally published by Jonathan Woahn on medium.