HOW TO WIN THE TALENT WAR

And Why Investment Banks Are Currently Winning

Nelson Rogers, Princeton University, Class of ’25

Two friends and I spent a weekend in a library study room in the fall of 2021. The 400
Investment Banking Interview Questions & Answers You Need to Know was our bible. Our super-days at a few banks and private equity shops were that week, and we weren’t the only ones. Those of us who studied economics kept tabs on one another: who was interviewing where and who had signed with which firms. Of course, offers were being extended not for the coming summer, but the summer after. In the fall of 2021, we prepared with the hope of receiving a job in the summer of 2023. The common feeling when one received a coveted offer was not excitement, but relief.

HOW THE BATTLE STARTS. Timelines moving earlier every year is a symptom of competition: banks and firms wanting to attract and lock in the best and brightest talent before the others. It’s only rational. But in doing so, the undergraduates who compete for the prestige and compensation start on a track with blinders on. It’s not uncommon for a promising undergrad to intern with a firm the summer after their sophomore year, again after their junior year, then sign the return offer for after graduation. They probably at no point considered recruiting: they worked for the only firm they ever considered. But with the staggering number of firms and companies that exist today, one has to think they could have been better off elsewhere.

The percentage of the employed Princeton Class of 2022 that went into finance or consulting is astonishing: nearly 40%. If we extrapolate the Princeton statistic to elite universities, it becomes evident that a given company’s greatest need – highly motivated, educated, connected talent – disproportionately chooses finance and consulting over entrepreneurship. Banks are depleting the very ecosystem they serve.

HOW IT CONTINUES. The thought of what could be if these students chose to lead, contribute to, or start businesses instead of serving them is humbling. But among Ivies and elite universities, access to lucrative internships and analyst roles are too easy. (While access is not objectively easy, the process is made frictionless enough that hardly anyone stops to consider other paths.)

What are even more remarkable are the reasons underpinning the phenomenon. Compensation, at least for internships, is nearly irrelevant. If a top bank offered an internship at no pay (in the hypothetical), it would not be conjectured to say most prospective interns would seize it without blinking. To top talent, who know that of themselves, a role is worth only as much as its present value. Paved paths into the core of finance make the task of estimation and discounting easy. And when the protracted value of a position is clear, the exercise of hunting for success becomes novel.

There are corporates and startups with the cultural and economic capital to compete. When the firms that pay the most are also the firms with the greatest reputations, they trap newcomers on both sides – the vice of wealth and prestige. And given the relative surety of a successful career beginning in banking or an equivalent, there exists no rational reasons to leave.

HOW TO CHANGE THE COURSE. Much to the dismay of corporations and startups seeking bright, connected newcomers, I tend to believe the solution lies in values and goals propagated at the university level. There are few who arrive at an elite school with a lucrative career in investment banking or consulting in mind, and there are many who arrive with the desire to work in an industry or a vertical, whether it’s sustainable technology, aerospace and defense, and fintech. Yet these aspirations fall prey to ease and guarantees.

The cultural definition of success at elite universities in many ways is the surety of banking. But without newcomers to business willing to take a “risk” on a non-traditional career path (by which I mean anything but banking, PE, and consulting), business and financial ecosystems suffer. It’s unfortunate especially for startups, for whom volatility is a fact of being. Perhaps there is a way to assuage this fear if startups demonstrate they associate with such reputable firms (but do not rely on them, perhaps contrary to reality).

HOW TO WIN. If you leave with one thought, let it be this, the beginning of the solution: the fear of unimportance and uniformity singly outweighs compensation and reputation. Elite talent joins banks because they believe banks will launch standout careers––careers that trounce even others in finance. Yes, they have wealth and prestige, but they’re in an intern class of hundreds at one of dozens of banks or shops. Appealing to elite talent’s innate desire to do something unique is, as I see it, the only way to punch above one’s weight.

There is something to be said that banks and buy side firms strengthen the financial ecosystem which, in turn, improves life for other verticals and startups. At the same time, if all the best and brightest go to supporting the markets, few of them are in the markets – where they could be imminently successful and drive radical innovation for which they trained.

When a starry-eyed undergrad looks to the future, they want assurance that the investments they’ve made in themselves will be rewarded. If a company or startup succeeds at this arduously difficult task by proving their value lies in their individuality, then perhaps they will succeed. But until corporates and startups leverage symbolic value as much as compensation, the banks will continue to win.

CHARTING THE COURSE TO FINTECH SUCCESS

Financial Planning: How the Big Picture + the Details Can Help Navigate an Everchanging Industry

Maulik Nagri, Senior Manager, FP&A 

In the fast-paced and competitive landscape of fintech, the notion of focusing solely on cash runway months can lead down a perilous road to failure: by looking at the gas gauge and not the road. Runway is undoubtedly important, but it should not be the sole determinant of your fintech business’s success, and it should not represent your plan. By neglecting comprehensive financial planning and failing to chart a clear course for the future, you run the risk of hitting the ultimate dead end in this challenging funding environment.

THE LANDSCAPE. The fintech industry is facing rapid evolution, technological progress, wide adoption, and regulatory changes. To be successful, a company needs a roadmap like a financial plan that amplifies strategic foresight and adaptability, assists in avoiding business failures, and charts its growth. Many statistics from the Small Business Administration (SBA) highlight the significance of financial planning in the highly competitive fintech landscape. SBA Data reveals that approximately 20% of small businesses fail within their first year, and around 50% fail within their fifth year. According to another survey, a staggering 83% of fintech CEOs who had a financial plan strongly recommended it to their peers. A solid financial plan is a suggested best practice but it’s also an instrument to increase the odds of business success. Investors in fintech companies are looking for more than just survival; they seek innovative solutions, scalability, and clear paths to profitability. Generally, companies with robust plans not only maintain healthy cash reserves but also attract greater funding opportunities and foster investor confidence.

TOOLS TO NAVIGATE THE LANDSCAPE. Would you travel in the Amazon jungle without a map? Would you drive through the mountains without a full tank of gas? Hopefully not. A well-laid out financial plan is a map for your business, and its runway is the gas. This comprehensive plan generally includes key elements such as a go-to-market strategy focusing on customer acquisition and profitable revenue growth, a deep understanding of unit economics, an accurate calculation of the cash required to reach crucial milestones, and a thorough analysis of sources and uses of funds. These components will not only provide a solid foundation for growth but also enable you to make informed decisions amidst the everchanging fintech landscape. What if you get lost in the jungle or the mountains – would you use your map or GPS for course correction? Absolutely. Like a map, a thoughtful plan lets you see the full picture and pivot to help ensure the achievement of planned outcomes.

THE BEAUTY OF THE LANDSCAPE. Contrary to common misconceptions, building a financial plan for your fintech company is not an expensive endeavor; rather, it is an investment in your business’s future. The true costs lay in the consequences of starting over from scratch when faced with unforeseen challenges. By dedicating time and effort to create a comprehensive financial plan, you equip your fintech venture with the tools necessary to navigate uncertainties, secure funding, and position yourself for sustainable growth.

Embrace the power of financial planning, and steer your fintech venture toward a bright horizon, and a future of innovation and prosperity. In the end, journeys are most pleasant when looking at the view rather than staring at the gas gauge.