Forbes 400 Data Shows Paul Graham Is Wrong • Hacker News Board

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#111

Post by erikpukinskis » Sat, Jun 19, 2010, 6:55 PM UTC

ewjordan wrote: post #102

mattmaroon wrote: post #73

Earlier quoted context omitted.

I don't think if I could live with myself if I worked at an investment bank. Most of what they do provides no benefit to humanity, in fact on the whole they're probably parasitic. Shuffling money around senselessly while taking a cut might be extremely profitable if you do enough of it, but it's just a drain on modern capitalism.

Many of the people I know that work in the vast world of "other people's money" feel exactly the same way, FWIW - on many occasions I've had discussions with them about the fact that all the only value they ever create is to shave the odd basis point off a spread here or there, and they have no illusions that it matters one bit. But it's an assload of easy money, and once you're in, it's trivially easy to stay in (it…

How smart are they really if they were sucked in?

The smartest people I know care much more about tickling their brains than about earning insane amounts of money. They are happy with their middling six figure salaries doing quantum computing research and the like.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#112

Post by nostrademons » Sat, Jun 19, 2010, 6:56 PM UTC

erikpukinskis wrote: post #108

yummyfajitas wrote: post #69

Earlier quoted context omitted.

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. The finance industry doesn't need as many layoffs as other industries because they solved the stick wage problem.

What's the stick wage problem?

It's easy to raise wages when times are good, but it's hard to drop wages when times are bad, because it results in the whole office getting demoralized and productivity dropping. So companies will resort to laying people off entirely when revenues drop, because the morale hit from cutting people off entirely is less than the morale hit from dropping everyone's salary.

Finance presumably solves this by paying out the majority of compensation in bonuses, which are explicitly tied to the firm's performance. If the company does well, you do well, if the company does poorly, you knew ahead of time that you'd be taking a haircut, so it doesn't feel as much like a broken promise as when wages are cut.

They're not completely immune from layoffs though - when a firm goes under entirely, most of the employee base is let go by the acquirer. And financial firms tend to blow up completely more than other types of firms, because they operate with more leverage. That's why luxury businesses in NYC took a big hit this financial crisis.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#113

Post by ig1 » Sat, Jun 19, 2010, 7:00 PM UTC

pmjoyce wrote: post #105

ig1 wrote: post #86

Earlier quoted context omitted.

I'd expect the bonus to be higher, 10k bonus is what I'd expect a new grad to get a year out of uni. Although bonus varies a lot by bank, how close you are to the money, and if you get paid out of an "IT pool" or out of the "desk pool". For base I think your figures are pretty accurate, although bases tend to max out at around £100k (in pure developer roles; developer management can go higher). A lot of senior devs b…

I've taken the contractor route and I'm perfectly happy with it. Although I fall within the range you specify I've seen higher for some specialised front office roles in certain technologies. This past week I've seen live positions in the range of £800 - £900.

Yep there are definitely positions in that range, but I think they're outliers rather than the norm.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#114

Post by ig1 » Sat, Jun 19, 2010, 7:11 PM UTC

mvalle wrote: post #97

pmjoyce wrote: post #46

Earlier quoted context omitted.

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 optio…

So you could work for an investment bank, make a lot of money, use as little of it as possible and save the rest, then after a few years, quit and use the savings to fund a start-up? Sounds like a plan to me...

Yep. That's what I'm doing. With the full support of my bank as well (they know I'm working on my start-up in my spare time, they've arranged to pay me in a fashion that's tax efficient allowing me to invest my money in my startup pre-tax, etc.).

There are plenty of people doing it, at any start-up event I go to (in London) I run into current and former banking peeps.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#115

Post by rmk » Sat, Jun 19, 2010, 7:19 PM UTC

richcollins wrote: post #89

dtby wrote: post #81

Earlier quoted context omitted.

I wonder how you square this with your past, as I understand, as an online poker pro? As a former professional poker player myself, it never would occur to me to denigrate the work of financiers or suggest that what they were doing was immoral. I was able to morally justify my occupation to myself.. and, as such, it is orders of magnitude easier to justify theirs.

Online poker is a consentual exchange. Inflating the money supply and taking taxpayer bailouts is akin to coercive theft.

So are taxes for building bridges to nowhere etc. A penny in tax is one penny that cannot be allocated for something else (which is far more likely to be productive).

The money supply was inflated because of the easy money policies of Greenspan and co. Attributing that solely to bankers oversimplifies things.

And let's remember that Fannie Mae and Freddie Mac, two of the groups that originally lobbied for 'increasing homeownership' and thus accelerated the real-estate bubble, are still roaming around scot-free.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#116

Post by ig1 » Sat, Jun 19, 2010, 7:27 PM UTC

mattmaroon wrote: post #98

neilc wrote: post #82

Earlier quoted context omitted.

I know you're joking, but I don't see the moral concern about investment banking. You may not be making the world a better place (although that is very debatable), but you're not making it worse, either.

Are you kidding? It's been what, 2 years since the market crash they caused? http://articles.latimes.com/2010/apr/27/business/la-fi-goldm... Investment bankers created and sold the toxic assets (which they knew to be toxic) that caused the financial meltdown. The top commenter explained a few more terribly evil things they do as well. For more examples, read any book ever written about Wall Street.

That's like saying men are bad because men are responsible for most wars.

You can't ignore the benefits created by investment banks. Without them we wouldn't have had the financial meltdown; but neither would we have had the rapid growth of the last century which has largely been fuelled by financial markets enabling huge amounts of investment. Without the investment banking sector you would have no IPOs, no financed takeovers, no VCs, even bank lending to small business would be close to non-existent. If you want to see the impact of financing, have a look at places which have introduced microfinance in recent decades. It has a transformational impact.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#117

Post by theorique » Sat, Jun 19, 2010, 7:37 PM UTC

erikpukinskis wrote: post #111

ewjordan wrote: post #102

Earlier quoted context omitted.

Many of the people I know that work in the vast world of "other people's money" feel exactly the same way, FWIW - on many occasions I've had discussions with them about the fact that all the only value they ever create is to shave the odd basis point off a spread here or there, and they have no illusions that it matters one bit. But it's an assload of easy money, and once you're in, it's trivially easy to stay in (it…

How smart are they really if they were sucked in? The smartest people I know care much more about tickling their brains than about earning insane amounts of money. They are happy with their middling six figure salaries doing quantum computing research and the like.

People earn $400-600K doing quantum computing research?

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#118

Post by mattmaroon » Sat, Jun 19, 2010, 7:39 PM UTC

ig1 wrote: post #116

mattmaroon wrote: post #98

Earlier quoted context omitted.

Are you kidding? It's been what, 2 years since the market crash they caused? http://articles.latimes.com/2010/apr/27/business/la-fi-goldm... Investment bankers created and sold the toxic assets (which they knew to be toxic) that caused the financial meltdown. The top commenter explained a few more terribly evil things they do as well. For more examples, read any book ever written about Wall Street.

That's like saying men are bad because men are responsible for most wars. You can't ignore the benefits created by investment banks. Without them we wouldn't have had the financial meltdown; but neither would we have had the rapid growth of the last century which has largely been fuelled by financial markets enabling huge amounts of investment. Without the investment banking sector you would have no IPOs, no financed…

Of course they're not all bad. This isn't a movie, nobody is truly evil.

But the problem is the industry has fundamentally changed as it's been deregulated from the useful industry of yore that you mention (helping to efficiently allocate capital and provide liquidity, entirely separated from retail banking) into highly leveraged gambling institutions with a small arm that still provides some of those old services.

The guys inside the big investment banks who do the things you're talking about are more or less insignificant to the results of the big banks. The traders look at them the way a programmer at Google probably looks at the cooks in the cafeteria. All of the money is on the bond floor, and that's where the damage has been (and will in the future be) done.

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#119

Post by VictorHo » Sat, Jun 19, 2010, 7:39 PM UTC

seldo wrote: post #96

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…

It's worth pointing out that this is really only a viable career option if you are a straight, white, anglo-saxon male ready to work long hours, drink hard, and put up with a machismo-dominated culture. The financial sector and investment banking in particular, even in their tech departments, have the kind of corporate culture that sends me running.

Having worked at Goldman Sachs in FIG investment banking, and having very close friends at virtually every bulge bracket as well as 8 of the 10 largest Private Equity firms, I can attest that this is completely false. If there is one industry that bleeds meritocracy (outside of entrepreneurship, which I think is a clear first), it is finance. You are definitely right about the long hours - you must be intelligent and be willing to work extremely hard, and you must also be willing to put up with a great deal of tedium and grunt work at almost all levels. However, the one thing that you don't have to be is white. Minorities are vastly overrepresented, and while I have not done a hard calculation if you take Asians and Indians as a percentage of total front office workers, I would not be surprised if it were near 30%. Include Jews and it's even higher. I currently work at McKinsey & Co in the Corporate Finance practice in New York, and the office as a whole (of 500 front office consultants) is probably 40% Asian or Indian.

That said, there are many downsides to finance as well and there are many reasons I am forgoing a $400k+ paycheck in PE to move back to SF to start a company where I am paid $0 and will have to live off of a ramen diet. The fact that I am not straight, white, and anglo-saxon however does not play a factor at all (and in fact there are running jokes at many banks and top tier consultancies that the above description puts you in the minority).

Re: Forbes 400 Data Shows Paul Graham Is Wrong

#120

Post by mattmaroon » Sat, Jun 19, 2010, 7:45 PM UTC

richcollins wrote: post #89

dtby wrote: post #81

Earlier quoted context omitted.

I wonder how you square this with your past, as I understand, as an online poker pro? As a former professional poker player myself, it never would occur to me to denigrate the work of financiers or suggest that what they were doing was immoral. I was able to morally justify my occupation to myself.. and, as such, it is orders of magnitude easier to justify theirs.

Online poker is a consentual exchange. Inflating the money supply and taking taxpayer bailouts is akin to coercive theft.

That's pretty much it. Any penny I won at gambling did nothing to harm the broader economy. It might harm some other guy who gambled it, but he knew what he was buying into.

My problem with Goldman and their peers isn't that they won money gambling from other people. It's that in so doing they knowingly destabilized the global economy. The actions of investment bankers have harmed every American, most of whom couldn't even spell CDO let alone know why the existence of so many of them led to Joe Average getting laid off.

I'm not some sort of moral crusader by any means. I really did mean I had less against crack dealers (in fact I think drugs should be legalized, but that's another topic entirely) because the person buying crack knows what they're getting. I don't think everyone can or should be saving lives, they just shouldn't be harming people who aren't knowing and willing parties to the transaction. If my playing poker could have caused economic collapse (in fact the opposite happened, poker became a huge industry that provided lots of well-paying jobs) there would have been an issue.