Louis Nees has pretty much seen it all during his time working on Wall Street, having jumped from one legendary-yet-doomed investment bank to another before reinventing himself and ultimately ending up at a fintech startup.
After graduating in 1983 from Cornell, where he was a varsity football player, Nees got his start on Wall Street at Lehman Brothers, where he would work his way all the way up to managing director over the course of 14 years. He traded all sorts of mortgage products, including derivatives such as MBS, agency CMO, IO and PO, options and prepayment-linked swaps, caps and floors.
In 1997, Nees moved over to Bear Stearns, where he utilized derivatives within structured products or structured investment vehicles and, in 2004, helped to launch and ran the mortgage credit derivatives trading desk. That’s what he was doing when everything started to crumble around him as the financial crisis hit.
“We were having discussions internally, asking each other, ‘Is the whole system going to collapse?’ because that’s what it looked like, and if it does, what was the world going to look like?” Nees says. “It didn’t end up happening, but we came close.
“[During the depths of the financial crisis,] I wasn’t thinking about what my next move is going to be – it was more constantly putting out putting out fires, trying to figure out how are we going to be protected,” he says.
Nees worked at Bear Stearns through 2008 after it was acquired by J.P. Morgan, staying on to lead the integration of the two banks’ mortgage credit derivatives trading desks. He did not stay for long.
“I was only there for six months because the big-bank culture and I did not get along very well,” Nees says. “I didn’t like the bureaucracy – I went from a place at Bear Stearns if you were working on a large significant transaction you could meet with people and get an answer in a couple of days.
“While part of it was the timeframe, with the financial crisis exploding around us, a process that would take days at Bear Stearns would take months at J.P. Morgan, because we had to go through various committees to get sign-offs,” he says. “I wanted a more entrepreneurial environment or a flatter organizational structure.”
In 2009, Nees joined the global capital markets division of GMAC, previously a GM subsidiary that rebranded itself as Ally Financial, where he worked for four years. His next stop was Walter Investment Management Corp., where he ran capital markets for the mortgage company and eventually moved over to run its private real estate investment trust (REIT) up until 2016, when the biggest investor backed out, the REIT closed down and he started his own consulting business.
Earlier this week, Nees took on the role as the head of capital markets at PeerStreet, an Andreessen Horowitz-backed startup with a platform for investing in real estate-backed loans. Why did he decide to make that move?
“Legacy financial institutions are burdened with old systems that make them prone to being left behind by startups coming up with a bigger technological advantage,” Nees says. “I looked at the fintech space and realized that there are a ton of really smart people who are forming these startups, including in the specialty finance space, but a lot of them lacked deep capital markets expertise.
“I thought this could be a really good fit – my background and experience put together with someone who had a great business plan at the right time, and I felt that PeerStreet's was the most compelling,” he says. “Over the course of my career I’ve had to fix things, downsize or ‘rightsize’ teams, but at this point in my career building something out is much more interesting to me."
How to decide between Wall Street and fintech
The industry has changed since Nees got his start – tenures of 10-plus years at a single bank aren’t as common as they used to be. That said, he still thinks the traditional investment banking career path is viable. However, it’s not for everyone, and a fintech startup offers its own unique set of challenges and potential rewards.
“Getting experience at an accounting firm or a big investment bank for a couple of years – that’s great, because it gives you really good grounding – how does this big machine in the finance world work?” Nees says. “In general, that’s a great way to start, but that doesn’t work for everybody.
“Sometimes one of the most interesting things for young people is to join a startup, where you can gain insight on operations and a wide range of things from the very beginning and see how a business survives day-to-day,” he says.