Leigh Drogen has been on every list imaginable for young, aspiring entrepreneurs.
As a Forbes 30 Under 30 founder and a Goldman Sachs 100 Most Intriguing Entrepreneur, Drogen started the data startup Estimize, which uses crowdsourcing to predict accurate market earnings for investors. The startup has since been hailed by Fast Company as a Top 10 Most Innovative Company and by Entrepreneur Magazine as a Top 100 Brilliant Company.
Reflecting on his entrepreneurial journey so far, Drogen has the following advice for aspiring entrepreneurs:
- Do Your Due Diligence on People
“We’re not looking for talent in the right places,” Drogen says, referring specifically to the financial industry, a sector that heavily rewards prestige and your personal network – sometimes at the expense of skill.
Describing the typical career trajectory of a banker, Drogen has the following to say:
“You come from a good background, a good school, work at a great investment bank, get picked to be an analyst at a hedge fund, make friends with this portfolio manager, who then gets you $200 million to manage,” he describes.
“At no point in your career did you actually make a decision and prove the skills needed for the job you’ve just been given. That’s why it’s important that when you look at people in high positions, take care to see that they actually have the skills for the jobs and didn’t just jump through a bunch of hoops.”
2. Don’t Get Caught Jumping Hoops (Only)
Drogen’s advice applies both ways as well. In a rapidly changing industry, there will be a side that is eventually disrupted…and you don’t want to be on that side when it happens.
“There are a lot of people I’d like to call ‘economic terrorists’. They are willing to burn whatever industry is necessary they need to the ground in order to give you something better,” Drogen says, citing fin-tech startups such as the 0-fee stock investment application Robinhood.
In the financial sector in particular, trends such as quantitative and algorithmic investments are making big headlines and bigger returns disrupting traditional incumbents. Renaissance Technologies, the famed quantitative hedge fund, has generated ~$55 billion in profit over the past 28 years, $10 billion in excess of funds run by hedge fund legends Ray Dalio and George Soros. Unsurprisingly, the fund doesn’t employ your everyday Wall Streeter. Instead, computer scientists with PhDs, physicists, and mathematicians run the profitable fund. The fund’s founder himself, James “Jim” Simons, was a Cold War code breaker and contributed to the development of string theory.
While Drogen believes that traditional ways of investing such as active portfolio management and equity research will become obsolete very soon, he doesn’t think it would require astronomers and physicists to disrupt the industry. Despite not being a “math person”, Drogen has been incredibly successful in a career that heavily revolves around finance, analytics, and technology.
“If I can do it, so can you,” Drogen says, emphasizing the importance of constantly picking up technical skills in a world where most forms of manual work can soon be replaced by computers or Artificial Intelligence.
“I know portfolio managers who complete data structure degrees at night,” he says, “so go learn Python, go learn about data, because in a few years these will be the roles that remain in finance.”
Drogen also warns against blindly ascending the corporate ladder rather than consciously building your skill set.
“I see a lot of 30-something year olds coming from investment banks thinking they are bored of making money and they want to start their own thing. They want to be the head of strategy at some startup – but they’re not getting that job, because they haven’t proven themselves yet.”
3. Don’t Start a Company Right Out of College
With everyone trying to start their own company and dreaming of being the next Mark Zuckerberg, the startup space is becoming more saturated. True successes will require better execution than ever as competition increases with easier access to venture capital and technical talent.
In other words, founders will find it harder to differentiate their companies from competitors in an increasingly saturated entrepreneurial ecosystem. Chances are whatever idea you can concoct in your dorm room, someone already built a failed business on a similar idea.
Drogen’s final advice reflect the status quo of the entrepreneurial space.
“The idea that you have (as a college student), whatever it is, is probably worthless,” Drogen warns, “so don’t rush it – go work a few years in industry first, and see if the industry actually needs whatever it is that you think it needs. A large part of building a successful business is validating the product itself.”
His advice, of course, is based on his own experience as a Wall-Streeter-turned-entrepreneur. Drogen started his career as an arbitrage analyst at a hedge fund, after which he leveraged his connections there to launch his own fund and eventually started his current company, Estimize, in the same space.
“The entrepreneur’s life,” Drogen says, “is not glamorous. But at the end of the day, it’s also incredibly fulfilling.”