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Forbes 400 Data Shows Paul Graham Is Wrong

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Re: Forbes 400 Data Shows Paul Graham Is Wrong

#41

Post by mmaunder »

I used to work for CSFB (now Credit Suisse) in London's Canary Wharf. It's the most I've earned in my entire career.

Unless you've worked for an investment bank you have no idea how much money they have. It's like a giant gulf-of-mexico-style money gusher that doesn't quit.

How do they make it? CSFB flies on the bleeding edge of what's legal and always have. I was there when Frank Quattrone was involved in the IPO of VA Linux. The share allocation resulted in the US vs Quattrone lawsuit. Imagine you facilitate an IPO and you get to hand out shares at $80 a piece to your buddies on and the first day it pops up to $300/share and you can sell - right then. http://bit.ly/cBMdqb

I was also there when James Archer, Jeffrey Archer's son was found guilty of manipulating the swedish stock exchange and banned for life. http://news.bbc.co.uk/2/hi/business/1459638.stm

In investment banks there is what's known as the Chinese Wall. It separates investment banking from the brokerage divisions to prevent conflicts of interest. Imagine you have a bunch of guys buying and selling stock for the bank's account and another group of guys recommending to customers which stock to buy and sell. They're all in the same building, using the same elevators, the same mens rooms and the same lunch hall. Quick entrepreneurial quiz: Anyone see a business model there?

They take their licks though. I was there when the LTCM fund collapsed and they lost $600M. Also when the Russian economy collapsed and they lost another $600M. Layoffs? Nah - business as usual.

If you're a developer or ops guy and get tired of startups, I strongly recommend going to work for an investment bank. It's very very hard to get your first job - you're going to have to network your ass off or have a seriously hot resume - probably both. But once you're in, provided you're good at what you do, it's very easy to move between banks and promote yourself into better jobs in other banks or divisions.

So what the fk am I doing running a startup? Good question. I ask myself that sometimes. When you look at the opportunity cost from the "I could be in an investment bank" perspective it is scary. I don't have some magic answer or a bunch of bullet points. I guess what draws me to it is the fact that I own my own business. It's also completely honest. Your success is your own and so is your failure. Working in banking feels like cheating. Perhaps it is. But it pays cash and lots of it.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#42

Post by grasshoper »

This is a false dichotomy. The financiers who made this list were all entrepreneurs. James Simons, John Paulson, Steve Schwarzman, David E. Shaw, etc all successfully founded companies. Their companies just happen to be investment firms. The fact that more founders of financial startups have made this list in past decade than founders of tech startups speaks to the dominance of the investment industry in recent years. It says nothing about finance vs start-ups. The Forbes list will always be dominated by those who took an entrepreneurial risk and had that bet pay off. Nobody, finance sector or otherwise, makes this list by being an employee. Not even top employees can reach this level. Jamie Dimon, Lloyd Blankfein, John Mack are not on here.

Now for more modest monetary goals, there's still no better field than finance. The only path to the Forbes list is through entrepreneurship, but finance opens up additional paths to millionairehood. Make it to Managing Director at an investment bank? Become a successful trader? You'll get 7-figures in yearly comp. Wanna do that in the tech world? You'll need a successful exit.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#43

Post by kiiski »

nostrademons wrote: post #28
JacobAldridge wrote: post #16

There's a fundamental difference between 'there are more financiers than start-up founders in the Fortune 400' and 'a greater percentage of financiers in America make the Fortune 400 than start-up founders in America'. Using extreme example to make my point, if 0.001% of all 'financiers' made the Fortune 400 and 5.000% of all start-up founders did, no-one would claim that 211 v 59 means much because of the asymmetric…

That depends a lot what you consider a startup founder. If you consider a startup founder as anyone who quits their day job to start a business, I'd bet that there are many more startup founders than financiers. If you consider only people in the technology field, the numbers drop significantly. If you consider people in the technology field who start a project that may become a business, but don't restrict to those…

"- 17 were from technology." Seems like we only consider technology startups.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#44

Post by cellis »

apsec112 wrote: post #3
pg wrote: post #2

Interesting. Who were the 59 from finance?

I didn't write them all down because that would have taken another hour and it's 11 PM Bay time on a Friday, but here are a few: http://en.wikipedia.org/wiki/Ray_Dalio http://en.wikipedia.org/wiki/James_Simons http://en.wikipedia.org/wiki/Steve_Schwarzman http://en.wikipedia.org/wiki/John_Paulson http://en.wikipedia.org/wiki/Daniel_Och http://en.wikipedia.org/wiki/David_Shaw http://en.wikipedia.org/wiki/Steven_A._Coh…

But that's not quite accurate.

You see, while these guys are in Finance, at least 1/3rd of the above have serious hacking skills, not traditional finance skills;

  James Simons - math, but closer to hacker than financier
  Kenneth Griffin - was financial hacker , not a dealmaker
  DE Shaw - another hacker, a computer scientist/compbio

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#45

Post by hooande »

People can interpret a data set in so many ways. I don't know which people you put into the "technology" and "finance" categories. I just went with the people that Forbes put into the categories of "Finance" or "Investment" vs the people that they put into the categories of "Internet" or "Software". I ran some numbers on the data they provided and here's what I found:

Finance/Investments:

  Total People: 81
  Avg Net Worth: 181.77
  Avg Age: 62.32
Internet/Software:

  Total People: 48
  Avg Net Worth: 321.47
  Avg Age: 45.43
The net worth is in millions I guess, but the numbers don't seem to jive (Bill Gates is worth $85B??)

It seems that technology > finance, in terms of net worth and number of years required to achieve that worth. While a financier may be more likely to make the list, the expected value for a tech entrepreneur seems to be much higher.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#46

Post by pmjoyce »

mmaunder wrote: post #41

I used to work for CSFB (now Credit Suisse) in London's Canary Wharf. It's the most I've earned in my entire career. Unless you've worked for an investment bank you have no idea how much money they have. It's like a giant gulf-of-mexico-style money gusher that doesn't quit. How do they make it? CSFB flies on the bleeding edge of what's legal and always have. I was there when Frank Quattrone was involved in the IPO of…

I've contracted exclusively for investment banks in London for the past 6 years (with the exception of a brief stint at the FSA). The reason I stick with it is the exact reason you specify: the money, or more accurately for me, what the money allows me to do. The majority of the developers I work with have painted themselves into a corner with the money they've made working at banks such that they have no other option but to keep working at banks to maintain the lifestyle they've come to take for granted. The money allowed them to buy large houses, nice cars and good things but it also means they'll have to face a significant downturn in lifestyle if they ever want to move to a different sector not to mind starting a startup.

From the outset I was always conscious of not falling into the same subtle but dangerous trap. I'm not sure why, probably because I never felt 100% comfortable in a corporate environment and knew a some level that I didn't want to be trapped by it. The upshot is that we don't live a lavish lifestyle such that when the income is throttled down the adjustment isn't as severe. We don't own our house, we rent (we're actually quite nomadic so this decision is only partly financially related), no fancy car, we don't tend to spend money on fine dining and entertainment or a lot of the trappings that people often face.

This has allowed me to make choices that were right for me like taking a full 3 months off on the birth of our first child and only going back to work (for an IB I contracted with previously) for 3 days per week for the subsequent 9 months. This really allowed us the time as a family to adjust to our new circumstances. It also allowed me to experiment with a few projects that had been on my mind for a while - nothing significant just the first dip of my toes into the world of startups. Since then we've had another child - again I was able to spend a lot of time with him. I've also been able to try out a few more projects which, although not successful, have allowed me to further experiment and find my feet conceiving and building products. As a result I'm now on the brink throwing myself full time into my own bootstrapped startup which is about to open to beta.

So yes, while I agree that the money to be made from working in investment banks is great, I'd warn against getting too sucked in with the cash if you ever want to keep the door ajar for other things. Well done for making the jump into the startup world, it's a brave move I hope to join you soon. Don't pine for working at a bank, if you value creativity and and the opportunity to strike out on your own (which you clearly do), you've made the right choice whatever the outcome.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#47

Post by phony_identity »

mmaunder wrote: post #41

I used to work for CSFB (now Credit Suisse) in London's Canary Wharf. It's the most I've earned in my entire career. Unless you've worked for an investment bank you have no idea how much money they have. It's like a giant gulf-of-mexico-style money gusher that doesn't quit. How do they make it? CSFB flies on the bleeding edge of what's legal and always have. I was there when Frank Quattrone was involved in the IPO of…

But it pays cash and lots of it

How much? Can you be more, uh, quantitative here?

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#48

Post by rwmj »

mmaunder wrote: post #41

I used to work for CSFB (now Credit Suisse) in London's Canary Wharf. It's the most I've earned in my entire career. Unless you've worked for an investment bank you have no idea how much money they have. It's like a giant gulf-of-mexico-style money gusher that doesn't quit. How do they make it? CSFB flies on the bleeding edge of what's legal and always have. I was there when Frank Quattrone was involved in the IPO of…

Before you start that bank job you should also think about whether what you're doing is moral and right. Whether by doing that job you're contributing to making the world a better place.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#49

Post by swombat »

phony_identity wrote: post #47
mmaunder wrote: post #41

I used to work for CSFB (now Credit Suisse) in London's Canary Wharf. It's the most I've earned in my entire career. Unless you've worked for an investment bank you have no idea how much money they have. It's like a giant gulf-of-mexico-style money gusher that doesn't quit. How do they make it? CSFB flies on the bleeding edge of what's legal and always have. I was there when Frank Quattrone was involved in the IPO of…

But it pays cash and lots of it How much? Can you be more, uh, quantitative here?

Starting salary for typical IT roles (dev, etc) are about £35-45k p.a. in London depending on how well you negotiate. That's straight out of uni. It goes up rapidly as you go up the ladder. Within a couple of years, if you do well, you should be up to £65k or so, and probably start getting a bonus on top of it too (probably about £10-20k or so in IT). It's not that unusual for the salary to go up by about £10k per year if you do very well, which isn't necessarily that hard, because there are a lot of blasé, bored people who don't have any energy anymore (the environment saps it out of you).

If you're on the business side rather than IT, the equation changes dramatically upwards. I have a friend who's 5 years into a front office, commodities sales job, starting from the lowest possible rank, and who's now earning £150k per year plus bonus. She started on £30k because she really wanted the job - so her salary has gone up 500% in 5 years. That's not counting the bonus either.

That's not fuck-you money. Few people earn that even at banks. But it is a very comfortable salary.

It's cheap to get that salary, too. All you have to give up is your dreams. My friend who earns £150k hates her job, and used to tell me that every time I saw her.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#50

Post by alextp »

rwmj wrote: post #48
mmaunder wrote: post #41

I used to work for CSFB (now Credit Suisse) in London's Canary Wharf. It's the most I've earned in my entire career. Unless you've worked for an investment bank you have no idea how much money they have. It's like a giant gulf-of-mexico-style money gusher that doesn't quit. How do they make it? CSFB flies on the bleeding edge of what's legal and always have. I was there when Frank Quattrone was involved in the IPO of…

Before you start that bank job you should also think about whether what you're doing is moral and right. Whether by doing that job you're contributing to making the world a better place.

I do worry about this, when I consider working a few years at banks after graduating to save up some fuck-you money.
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