It’s been awhile since our last Life as a Consultant interview. We’ve talked to consultants from McKinsey, Nortel Consulting, and Booz Allen amongst others.

Today’s interview is with a former Bain consultant. His story is particularly interesting given his engineering background and current venture capital role.

Now on to the interview! I’ve bolded a few particularly helpful comments for recruiting and shared my reactions in gray boxes

The views and opinions expressed are strictly those of the interviewee and do not reflect the views of the interviewee’s employers or affiliated entities.

1. For the benefit of readers, can you give us a summary of your background? Education, current job, previous jobs, interests, etc

I graduated from a private university on the West Coast with a bachelor’s degree in Electrical Engineering. In between the summer of my sophomore and junior years, I did an internship at a semiconductor company in their product development department. While I knew that my passion was in technology, I wasn’t sure if I wanted to be an engineer after my summer internship.

In my junior year, I was involved with a student-run consulting group, where I worked with Fortune 500 companies on strategic issues in a small student team. That’s where my interest in consulting really took off. The following summer after my junior year, I did an internship with Bain in their San Francisco office. I enjoyed my experience enough to return full-time in 2006. I worked at Bain for about 2 years, working on projects that spanned a variety of industries including semiconductors, private equity, media, consumer products and health care. I also had the privilege of working in multiple Bain offices including Hong Kong, Shanghai, San Francisco, Los Angeles, and Silicon Valley.

I left Bain after 2 years to join a venture capital firm in Silicon Valley that focuses on tech and cleantech investments.

2. Many readers of MC have an engineering/technical background similar to yours. What advice can you give them about breaking into consulting?

From my experience, engineers tend to do very well in consulting, particularly at a firm like Bain. Consulting is a very quantitative and analytical job, especially at the lower levels. Because a junior consultant does not have years of industry experience to draw upon, in order to stand out, he or she can add value by demonstrating a keen grasp of the numbers and by defending a recommendation with solid financial/data analysis and research.

That said, engineers often fight an uphill battle when applying or interviewing for consulting jobs. Be sure to have a well thought out story about why you want to work in consulting given your engineering background. You will also need to demonstrate that you have done the appropriate preparation while in school to succeed in consulting from the start. This could include taking some business-related classes, such as Financial Accounting or Economics, or participating in a business group, such as a student consulting group.

A good story and evidence of thorough preparation are critical. More thoughts on landing consulting jobs from engineering

3. Bain is one of the most desirable consulting firms to work for. Can you tell us what the recruiting process was like?

Bain tends to focus on top-tier universities for recruiting, whether it is out of undergrad or business/graduate school. Bain works closely with my university’s established career services department every year for the recruiting process. There are usually two cycles for recruiting: once in the Fall for full-time candidates (graduating seniors), and once in the Winter for summer internship candidates (juniors or seniors planning to complete a master’s degree).

Bain follows strict deadlines for resume submissions and first/second round interviews. “Off-cycle” hiring is very rare and is usually reserved for people currently working in industry (i.e., not for students). After the resume submissions, those selected for interviews will go through 2 or more rounds, in which multiple consultants and managers will give case and fit questions. The entire process goes by very quickly; candidates usually find out whether they have made it to the next round in less than a week.

Off-cycle hiring at the top firms is always tough. More on Bain recruiting from an international perspective

4. Based on your summer internship, what would you say are the most important differences between a summer and a fulltime job at Bain?

One great aspect of the summer internship is the amount of exposure Bain gives interns to the projects and the work. Interns become integral members of their cases, and are involved in every team meeting and often in client meetings as well. This gives the interns a real feel for what the projects are like and what it would be like to work at Bain full-time.

One major difference between the internship and the full-time job would be that during the internship, Bain still has the responsibility of “selling” the intern. Social events, fancy dinners, and fun trips are planned for the interns all summer long to make sure they have a great summer and want to come back to Bain after graduation. While the social events are still a part of the full-time job, they do not constitute as large a portion.

Another major difference between the internship and full-time is the amount of responsibility one is given. Interns work on projects for about 8-10 weeks before heading back to school. It is very difficult to carve out a meaningful chunk of work for such a short period of time, although Bain does a decent job at it. With the full-time position, one can work on a project for 3-6 months or more, and can really dig into a piece of work in great depth. In this way, the full-time experience was much more fulfilling, as I felt like my work really made a difference for my clients.

5. Bain is also known as one of the most “fun” firms to work at. Do you think this reputation is justified, and if so, why?

While I can’t compare the experience with working at other consulting firms, working at Bain was definitely a fun experience. One common analogy I hear is that working at Bain feels like being in college, and I would definitely agree with that. Because of the “bottom-heavy” structure of Bain, there are a lot of new college graduates in the office, making the workplace a very social environment.

Bain also promotes a fun office culture through regular, sponsored social events ranging from simple things like happy hours to annual offsites, in which the entire office goes to locations such as Cabo San Lucas or Hawaii for a three-day long party (with a few business meetings here and there).

6. Many people enter consulting because they think it opens doors and provides many exit opportunities. Does this ring true from your personal experience and the experience of your colleagues?

Yes and no. Often the sales pitch is that after 2-3 years of consulting experience, one can go into virtually any industry and choose their job function. This is a bit of an exaggeration and it’s important that readers get a realistic view.

The consulting experience provides people with very rigorous, real-world business training and equips them with the ability to solve business problems with a structured and analytical approach. The experience is better suited toward certain industries/job functions than others. Natural exit opportunities include private equity, venture capital, or corporate strategy, which are not bad options at all.

There are certain other job functions that consulting does not prepare as well for, such as starting your own business which may require some operational experience. That’s not to say that consultants haven’t succeeded in starting their own businesses, as I know plenty of former consultants that have. However, often there are other elements in a person’s career in addition to the consulting experience that have allowed him/her to succeed in such endeavors, such as years of operational experience before consulting or an MBA. Overall, most prospective employers find former consultants highly desirable because of the great training that consulting provides and the high quality talent that consulting firms demand.

I couldn’t agree more – see the series on consulting exit opportunities

7. Can you tell us what it’s like transitioning from Bain to Venture Capital and how the two jobs compare?

In both consulting and VC, I have to be very agile when becoming knowledgeable about a particular company or industry. In consulting, a client who’s been at the company or working in the industry for many years is paying me a lot of money for my advice, so I had better not waste time in becoming an expert. In VC, I look at new investment opportunities across a variety of industries and have to become knowledgeable enough in a short amount of time to make a decision about whether or not to invest.

There are a few major differences, however. The consulting world is a bit more defined. The client and the consulting team together come up with the questions to answer and the deliverables, and the workplan naturally follows. VC is much more vague. The only guidance is to bring in good investment opportunities and make good decisions about whether or not to invest. There are a million ways that I can spend my time and none of them is the best way. I have to be disciplined on my own and monitor how I spend my time.

In terms of the lifestyle, I work fewer hours in VC than I did in consulting (when I was on an active project). VC is also a bit more flexible, as I can set my own hours and work locations to a certain extent. However, with consulting, I knew when I was done. There are specific deliverables and I often got time off in between projects where I didn’t have to think about work at all. In VC, I’m never done — there is always another startup to research and more to do, although there is usually no urgency on the VC side to get things done by a certain time/date.

8. Where do you see yourself in the next 5 years?

I plan to get an MBA after a few years in VC. After that, I would like to stay close to technology and entrepreneurship by staying in VC, joining a startup, or starting my own company. While I really enjoyed my years as a consultant and would recommend it to most people, I don’t think I will go back. I think my passion is in working with new technologies and entrepreneurial people.

9. Any last words of advice to prospective consultants?

Just some food for thought: consulting is not for everyone. My experience was this it was the perfect first job out of college for me. I got great business training that I could use for the rest of my career. However, for me, staying longer than 2-3 years would put me on a path to become a career consultant (which is a great career choice, but not for me). The longer one does consulting, there are diminishing returns to the value the experience adds to future job opportunities in other areas. In other words, the longer you do consulting, the better you get at being a consultant. This is a realization that many come to after a few years in consulting, and it is often a difficult choice about whether to stay or move on, and when is the right time to leave.

That’s it, folks!

Looking for: Current consultant? Interested in sharing your story with readers? Get in touch to setup an interview or become a guest poster!

I’ve briefly discussed consulting exit options before.

This article is part 1 of 2 that will “deep dive” into the topic (with a precise estimate of the percentage pursuing each).

I considered bumming on a beach in Koh Samui when I left consulting, but for more ambitious folk, here are the main paths:

Private equity

Percentage: 12%

Mergers and Inquisitions briefly covers this topic in its private equity recruiting post. Consultants are well-suited for private equity jobs – but they need to pick their spots.

• Most consultants exit to middle-market PE firms that are operationally-focused on portfolio companies and leverage consulting skillsets well
• Most consultants exit to PE firms with a tradition of hiring consultants. Golden Gate Capital is one example. Others include Audax and Capstone (the “consulting arm” of KKR)
• Larger shops like Carlyle and TPG prefer consultants with corporate finance project work or prior banking experience (eg, a summer internship at Morgan Stanley)

What are the benefits of leaving consulting for private equity? PE offers better pay, great prestige, and an opportunity to work on industry-shaping deals.

If you want to work in PE and have the opportunity, take it now. It’s easier to enter the industry before business school than after

What are the best consulting firms to enter private equity? Target the big guys (McKBain Group) and those with a financial sector focus (eg, Oliver Wyman).

Hedge funds

Percentage: 7%

Like private equity recruiting, consultants can break into the hedge fund industry but opportunities are limited. Focus on funds where consulting skillsets are valued. For example, equity long-short and macroeconomic funds emphasize market research and operational due diligence in investments. Specialized funds (such as mezzanine debt) would not be a good fit.

What are the benefits of leaving consulting for a hedge fund? Like private equity, hedge funds offer better pay and industry-changing opportunities. This is another industry where entering before business school is easier than after.

Asset management and equity research

Percentage: 9%

Business consulting skillsets are a great fit for jobs in asset management and equity research. Work for the best consulting firms and target modeling-heavy projects.

With all consulting exit options into finance, your path is made easier by taking a finance job to begin with. Investment banking with prestigious M&A groups offers a better shot at strong private equity and hedge fund exits

Entrepreneurship

Percentage: 16%

Consulting provides a strong platform for entrepreneurs – you’re exposed to multiple industries, complex business problems, and a wide network of business-savvy people. I took this path upon leaving McKinsey.

There are 2 options:

• Start a company – this is common across tenures. In fact, Bain was started by a former BCG partner! A colleague of mine is CEO of GiveReal, if anyone wants to send me a drink
• Join a startup – consulting firms are full of entrepreneurial people, and usually have strong startup communities helpful for recruiting

That’s it for now. Expect the concluding part 2 on Consulting Exit Opportunities tomorrow (topics include graduate school, Fortune 500, and more).

This is an important question for prospective applicants (in particular, undergrad/MBA students) looking for summer internships and fulltime jobs alike.

The decision was easier for me than for most people. The cons of investment banking – the long hours, the repetitive and unengaging nature of the work, the lack of non-finance exit opportunities – mattered far more to me than a 6-figure salary. I seriously considered sales & trading (in fact, I spent a summer at Credit Suisse First Boston in NY), and was tempted to continue in that line of work post-graduation.

Instead of defining the basic characteristics of each job (there are plenty of resources out there for that, including the Vault and Wetfeet Guides), I will address a laundry list of defining differences between the two professions.

Let me caveat by saying THESE ARE NOT YOUR ONLY OPTIONS. People get carried away into thinking that’s all there is.

#1 SALARY

This is the biggest superficial difference. That’s not to imply that salary doesn’t matter. Banking salaries average 50-100% higher than consulting salaries, with the difference increasingly significant as your seniority increases. Consulting compensates with perks that banking does not offer – from better travel allowances to more generous health and retirement packages.

Consultants always like to say this:

“I know investment bankers make more money. But from a cashflow perspective, it’s exactly the same!”

This simply means that consultants and bankers make comparable base salaries, and at the end of the year, bankers are awarded a bonus which can comprise more than 50% of their total annual compensation. Cashflow or not, the extra money is substantial and a defining driver of why many people do investment banking. This is also a difficult issue for consulting firms with respect to employee retention. In my time at McKinsey, easily half the people who left the firm went into the financial world (from hedge funds to PE), and salary was undoubtedly a major factor in the decision.

My advice is this – if after considering all 5 factors I’ve listed here, you still think the pay difference (for 1st yr analysts, averaging between $30-60K/year) would mean a substantial difference in your personal and professional job satisfaction, choose banking.

Further reading: Consulting salaries from analyst to partner

#2 LIFESTYLE

The key differences here are:

-Hours. Bankers work brutal hours, no surprise. They can average 14-16 hours/day but it can get FAR WORSE.

My roommates in New York (both investment bankers at Goldman Sachs) would sometimes go several weeks before we’d even exchange a word. Which meant not only were they getting in after I went to sleep (around 2am), but going back to the office before I woke up (around 7am).

Your second year as an investment banker gets better – in the 10-14 hours/day range but also with unpredictably tough periods.

Consultants average 12 hours/day, with the typical variations depending on client, team goals, etc

-Travel. Bankers do some for roadshows, due diligence, etc but spend 90% of their time in one office until you’re partner-level (this is investment banking; you can expect more travel in private equity and investment management). Consultants – depending on firm – travel anywhere from 25-75% of their time. At the Big 3 (Bain, Boston Consulting Group, McKinsey), you can expect travel 50-75% of the time. I’ve heard of boutiques

-Relationship with coworkers, managers, and firm. This is less discussed but equally important. Consulting firms have a very collegial atmosphere, where the focus is on getting the work done but also ensuring your professional success. This attitude permeates all interactions. Managers rarely yell, coworkers try to help each other out whenever possible, and companies are organized to provide consultants support with training, expertise, etc. Finally, networking is important at consulting firms, and social events are focused on helping consultants build contacts and relationships throughout the firm.

Investment banks, on the other hand, have a more competitive, hierarchical setup. You can expect more tense relationships with your bosses, you’ll probably be yelled at from time to time for mistakes, and coworkers are much less willing to help each other out (they’ve got enough on their plates, and your success means theres more competition for the biggest bonuses). In addition, you’ll have limited exposure across the company to other groups, departments, etc – less ability to network across the company.

Further reading: Consulting travel; Day in the life of a consultant

#3 SKILL DEVELOPMENT

Call me biased, but I received the best years of business training possible in my time at McKinsey. Thorough and at times intense exposure to textbook business principles and practices. In addition, the project team model leads to mentorship opportunities with managers, partners, and coworkers. Finally, you have constant client interaction which develops “client skills” – from managing client teams to running meetings to learning how to navigate different corporate environments.

That being said, here’s a quick list of what you can expect to learn in both fields:

By “hard skills”, I mostly mean software (ie Microsoft Office Suite), analytics (ie financial valuation). By “soft skills”, I mean the interpersonal, qualitative interactions that you have with coworkers, the broader firm, clients, etc

CONSULTING

Hard skills:
1) Microsoft Powerpoint – you will (and have to) become a master at this, and will eventually have the ability to produce presentations quickly, concisely, and meaningfully
2) Microsoft Excel – less exposure than investment banking. Still, “modeling” is a meaningful component of a consultant’s work, and something every consultant is expected to have significant exposure to. Note -firmsodeling” done in case work may not be directly comparable to the financial modeling more common at investment banks
3) Business knowledge – typically broad exposure across different topics like strategy, operations, organization and several areas where you’ll have expertise. This expertise may be as broad as “operations turnaround” and as specific as “benchmarking for insurance companies”.

Soft skills:
1) Client interaction (explained above)
2) Heavy team interaction
3) Presentation skills – this is a cornerstone of consulting work. After all, findings don’t mean anything if you can’t convince the client to believe in and adopt them
4) Project/workflow planning and execution – this is subtle but important. Much of the time at investment banks, you are given incremental work – eg, add these updated numbers to the model, bind these presentations, insert a graph on chart 11. Consulting is focused on you OWNING a piece of the entire project, setting your own deliverables and timeline, and executing against that framework. This helps you develop the ability to be “standalone” in consulting lingo.

INVESTMENT BANKING

Hard skills:
1) Microsoft Excel – clearly you will become a master at this, and is a mandatory for success. You’ll know the ins-and-outs, every keyboard shortcut known to man (and then some), and so forth
2) Microsoft Powerpoint – much less exposure here depending on the focus of your work (for instance, more in Corporate Finance, less in Mergers & Acquisitions). Very little experience in building a presentation from scratch.
3) Financial valuation – self-explanatory. Differs based on group/focus, but at the very least you’ll understand financial statements inside and out, and have strong knowledge of how companies are financed

Soft skills:
1) Work endurance – this is the upside to those 100+ hour weeks, which is the ability to work incredibly long and incredibly hard. Basically, every job you take post investment banking will feel somewhat like a vacation. It’s a great trait to have
2) Seeing deals get done – investment bankers have, at times, better access to the leading business leaders of the day. As a junior banker, you may not have direct interaction but will be exposed through countless meetings, conference calls, etc to these people and see how deals are done and groundbreaking changes in business emerge day-to-day.

Further reading: 5 big mistakes that will get you fired

The last 2 points in this post are shorter, because I plan to write separate entries on each of them in the future

#4 NETWORKING

Less discussed but important. Consultants move on to a vast array of fields – from industry to academia, government to non-profit. Investment bankers do so less – most continue within the financial world. Your professional network and future career opportunities will be heavily influenced by your colleagues and your firm alumni.

In addition – my perspective is that consulting firms (similar to point #2) facilitate more interactions between alumni and current employees as well as future networking between alumni than investment banks. However, bulge-bracket investment banks have a much larger alumni base, and it certainly isn’t impossible for you to build strong connections provided you are proactive and innovative enough.

Further reading: How to get a consulting job in a tough economy; Networking 101

#5 EXIT OPPORTUNITIES

Corollary to point #4, this is influenced by your firm’s alumni and also the following:

-the different recruiters/headhunters that reach out to you
-the different paths your “hiring class” takes and the knowledge and opportunities you share with each other
-the relationships you’ve built with more senior colleagues and the doors they can open for you

When it comes down to it, the conclusion is similar: if you want maximum career flexibility, consulting provides that in spades. If you want maximum career flexibility WITHIN finance (and corporate financial roles), investment banking provides that.

Interested in sales & trading? Click here for the major differences between consulting and trading.