5 ms·

Wall Street Talent Is Moving to Silicon Valley

40 points by buildops 11y ago

oneJob 11y ago
Before Silicon Valley gets all flattered, consider: "Soifer has long studied the proportion of Harvard MBAs who pursue careers in finance; when more than 3 in 10 head for Wall Street, it's time for investors to sell, he says."[1] I used to work on Wall Street. I left because of this issue writ large. There are quite a few pieces of research claiming this trend is a negative indicator. [1]http://www.cnbc.com/id/45030885 http://www.cnbc.com/id/45030885
- chad_walters 11y ago
  Likewise when they start heading to Silicon Valley in droves... Last time around was 2000 -- 'nuff said.
- wpietri 11y ago
  I can't find the reference, but I recall there being a similar phenomenon with real estate agents. During booms a ton of people flock into the field, increasing the problem and hastening the crash.
iamleppert 11y ago
We don't need them. We have automated, or are in the process of automating most of traditional finance anyway. They can come here, but they won't find jobs unless they are willing to put in the time to learn and be competent technically. I'm not holding my breath.
- bradleyjg 11y ago
  No one is automating M&A work. It'd probably take something close to strong AI to do that.
- vonklaus 11y ago
  As long as technology continues to be profitable and money exists, there will be someone lending money and analyzing businesses. I don't, as a rule, hate MBAs. There is certainly a level of skill involved in deep analysis, but I tend to agree that in SV at least, deeply technical people will be more valuable.
hackaflocka 11y ago
A dozen top financial people from Wall St. have taken up financial jobs in Silicon Valley, and this is news?
- busterarm 11y ago
  Agreed... ...and when I think about where the 'talent' is in the financial world, it's on the technical side and all of those people are still there.
scurvy 11y ago
I'll stick my neck out on this and say, the author is right and these are the people who are ruining Silicon Valley. Take a look around at the big named "innovators" and you'll notice that they're really "iterators". People building a "business" around a small, incremental improvement in an previously existing process. I refer to this as the HFT, hedgefund incremental approach. Let's pick up nickels in front of bulldozers while the getting is good(1). Get enough money before the bulldozer hits you. This seems like the premise behind AirBnB, Uber, Square, and every other unicorn. Can't wait 3 minutes to order your food at the cafe? Billion dollar business! Can't wait 4 minutes and chat with your companion while you wait for your dinner check to arrive? Billion dollar business! Creating electricity from small, safe, pollution-free hydrogen power cells? Eh, maybe a few hundred milli tops. Not worth it. It's this kind of quick buck thinking around simple, non-inventive iterations on existing models that are actually killing the Valley. The Valley should be for big ideas and wild bets. Not bets on people to do your laundry for you. These Wall Street/finance people need to pack up and go back east. (1) This was the idea behind Long Term Capital Management (LTCM). We all know how well that worked out.
- supster 11y ago
  I agree with your general sentiment, but I feel like your examples are wrong. Uber has fundamentally reshaped how we view and consume transportation. With the addition of self-driving cars, it has the potential to utterly reshape logistics. Square has completely modernized the dinosaur POS business. As someone who works with a lot of small businesses, I can tell you that Square has really impacted their lives for the better. AirBnB, while I like a lot as a consumer for opening up a whole new genre of places I can stay and feel at home, has admittedly started to devolve into managing a bunch of unzoned hotels. LTCM while insanely leveraged was actually arbitraging an anomaly in Tbills. It was a great business run quite well, right until the Russian gov't defaulted and sent shockwaves through the bond market. That kind of high sigma event is pretty hard to forsee.
  - scurvy 11y ago
    I'm much more interested in the company that brings us self-driving cars (or flying cars) than the glorified taxi company that leverages them. Call me a dreamer. I'll probably die broke and penniless though. Also, comedic if you think that LTCM was well run. They were sniffing their own flatulence and getting high on their own supply. They employed two Nobel laureates and based their model on those laureates....whose work ended up being completely flawed. How many people use Black-Scholes today? Zip (if they have a clue). You really should read "When Genius Failed" if you think they ran a good business.
vonklaus 11y ago
Paul Graham says this often, and I am paraphrasing here: They did a study at harvard, and they figured out that MBA's flock to the wrong industry right before it dies. It was bonds, equities and then silicon valley in the 90s. It was an interesting anecdote which I have heard often, but now am certainly curious enough to try and dig up that article/study. edit: The author seems like an accomplished person, and I don't want to paint in the tech v. finance differences, but to highlight what camp she is from, take a look at the first sentence describing Mor Assia: Mor advised Israel’s global telecommunications billing giant, Amdocs, to choose the right verticals for diversification in their technology acquisitions and launched offerings like Billing for Dynamic Pricing to create new growth opportunities.[0] I mean, sure, I parse JSON data to codify the new web standard leveraging agile tooling like visual basic to fast-follow with a GUI interface which is deployed into our cloud based infrastructure to track the IP address, but I wouldn't write that down in the 2nd sentence of my biography. [0]https://www.iangels.co/team/mor-assia/ https://www.iangels.co/team/mor-assia/ edit: I can not find the video clip. My memory is that the study was done by Harvard Business School, and it found that MBAs were categorically picking the wrong industry. The examples cited by the speaker, I am 90+% confident it was pg restating it, were going to wall street to trade bonds with Michael Milliken right before he went to jail, Silicon Valley right before the bubble burst and one other which I would guess to be real estate or M & A post KKR, but that is just complete conjecture. Don't take my word for it, and I don't want to misquote PG quoting some study, but I am fairly confident for what it is worth.
- firasd 11y ago
  Marc Andreessen: “A very large number of people came out of investment banking, came to Silicon Valley in 1999, cause they thought they were gonna make a lot of money, and in 2001 they all turned around went back to New York and created the credit crisis.” http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2373 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2373
- pcx 11y ago
  Can you please provide source for what you say pg said?
deleted 11y ago
[deleted]
fatman 11y ago
Seems like a good a time as any to break out my favorite anti-MBA story. I took a Masters CS class some time ago, and for our final class project, not knowing anyone else in the class, I got lumped in the "leftover" group with a working engineer and a Wharton MBA student. We meet up the day before the project is due to integrate each of our individual pieces together into a final submission and the MBA candidate shows up empty handed. Turns out he had spent his time trying to "schmooze" the answers/code out of the professor and the TA, who, to their credit, had stood firm. Guess who spent that entire night writing that dolt's portion of the project from scratch.
- ragnarok451 11y ago
  Why did you write his code for him? You should've just told the instructors he didn't pull his weight, I think. With what happened, he ended up with a successful group without doing any work, which is a great outcome for him.
  - fatman 11y ago
    Because I'm a stubborn ass who'd rather suffer a freeloader than hand in an incomplete assignment. In hindsight, I guess I should have finished the project and explained the division of labor.
    - TeMPOraL 11y ago
      > Because I'm a stubborn ass who'd rather suffer a freeloader than hand in an incomplete assignment. And sadly, off the backs of those like you MBAs flourish.
  - beachstartup 11y ago
    yeah, it doesn't sound like much of an "anti-mba story", more like a "pro-mba story". facetime with the prof and the nerds did all the work without complaining!
  - meric 11y ago
    I think the key thing is to identify the "freeloaders" early. I was once in a group for a university project when we had to implement this piece of software for a real world client. There was software that needed to be built, and documentation that needed to be written, as well as content that needed to be provided, e.g. weekly meeting diaries one is required to do in such university projects. Everyone else in the group had difficulty writing working, useful code, and progress was slow, even when I thought it was an easy project. A few days before the first milestone deadline, I sat down and finished the thing in an afternoon. And so, for the rest of the semester in that class all we had to do was the paperwork, and naturally that wasn't my job because I saved everyone so much time. Sometimes BS needs to be written...that's when it's useful to have people who's best to do that kind of thing in your group.
pbreit 11y ago
I was expecting to see a "(1999)" in this headline.
ClayFerguson 11y ago
California is completely out of water. I really doubt that many people are foolish enough to mover there by choice.
- jjoonathan 11y ago
  If it gets really bad they might have to desalinate which will cost... $3 per thousand gallons. Oh, the horror.
  - meric 11y ago
    A single 1g almond takes 1.1 gallons of water to produce. That 1kg packet of almonds is going to go up in price by $1.
beatpanda 11y ago
"Talent"
brianchu 11y ago
There's a glaring error, which makes me doubt the credibility of the rest of the article. Mary Meeker joined KPCB as a partner, not an analyst (huge difference). And this was 5 years ago, so it's old news.

40 points by buildops 11y ago

Before Silicon Valley gets all flattered, consider: "Soifer has long studied the proportion of Harvard MBAs who pursue careers in finance; when more than 3 in 10 head for Wall Street, it's time for investors to sell, he says."[1] I used to work on Wall Street. I left because of this issue writ large. There are quite a few pieces of research claiming this trend is a negative indicator. [1]http://www.cnbc.com/id/45030885 http://www.cnbc.com/id/45030885

chad_walters 11y ago
Likewise when they start heading to Silicon Valley in droves... Last time around was 2000 -- 'nuff said.
wpietri 11y ago
I can't find the reference, but I recall there being a similar phenomenon with real estate agents. During booms a ton of people flock into the field, increasing the problem and hastening the crash.

iamleppert 11y ago

We don't need them. We have automated, or are in the process of automating most of traditional finance anyway. They can come here, but they won't find jobs unless they are willing to put in the time to learn and be competent technically. I'm not holding my breath.

bradleyjg 11y ago
No one is automating M&A work. It'd probably take something close to strong AI to do that.
vonklaus 11y ago
As long as technology continues to be profitable and money exists, there will be someone lending money and analyzing businesses. I don't, as a rule, hate MBAs. There is certainly a level of skill involved in deep analysis, but I tend to agree that in SV at least, deeply technical people will be more valuable.

hackaflocka 11y ago

A dozen top financial people from Wall St. have taken up financial jobs in Silicon Valley, and this is news?

busterarm 11y ago
Agreed... ...and when I think about where the 'talent' is in the financial world, it's on the technical side and all of those people are still there.

scurvy 11y ago

I'll stick my neck out on this and say, the author is right and these are the people who are ruining Silicon Valley. Take a look around at the big named "innovators" and you'll notice that they're really "iterators". People building a "business" around a small, incremental improvement in an previously existing process. I refer to this as the HFT, hedgefund incremental approach. Let's pick up nickels in front of bulldozers while the getting is good(1). Get enough money before the bulldozer hits you. This seems like the premise behind AirBnB, Uber, Square, and every other unicorn. Can't wait 3 minutes to order your food at the cafe? Billion dollar business! Can't wait 4 minutes and chat with your companion while you wait for your dinner check to arrive? Billion dollar business! Creating electricity from small, safe, pollution-free hydrogen power cells? Eh, maybe a few hundred milli tops. Not worth it. It's this kind of quick buck thinking around simple, non-inventive iterations on existing models that are actually killing the Valley. The Valley should be for big ideas and wild bets. Not bets on people to do your laundry for you. These Wall Street/finance people need to pack up and go back east. (1) This was the idea behind Long Term Capital Management (LTCM). We all know how well that worked out.

supster 11y ago
I agree with your general sentiment, but I feel like your examples are wrong. Uber has fundamentally reshaped how we view and consume transportation. With the addition of self-driving cars, it has the potential to utterly reshape logistics. Square has completely modernized the dinosaur POS business. As someone who works with a lot of small businesses, I can tell you that Square has really impacted their lives for the better. AirBnB, while I like a lot as a consumer for opening up a whole new genre of places I can stay and feel at home, has admittedly started to devolve into managing a bunch of unzoned hotels. LTCM while insanely leveraged was actually arbitraging an anomaly in Tbills. It was a great business run quite well, right until the Russian gov't defaulted and sent shockwaves through the bond market. That kind of high sigma event is pretty hard to forsee.
- scurvy 11y ago
  I'm much more interested in the company that brings us self-driving cars (or flying cars) than the glorified taxi company that leverages them. Call me a dreamer. I'll probably die broke and penniless though. Also, comedic if you think that LTCM was well run. They were sniffing their own flatulence and getting high on their own supply. They employed two Nobel laureates and based their model on those laureates....whose work ended up being completely flawed. How many people use Black-Scholes today? Zip (if they have a clue). You really should read "When Genius Failed" if you think they ran a good business.

vonklaus 11y ago

Paul Graham says this often, and I am paraphrasing here: They did a study at harvard, and they figured out that MBA's flock to the wrong industry right before it dies. It was bonds, equities and then silicon valley in the 90s. It was an interesting anecdote which I have heard often, but now am certainly curious enough to try and dig up that article/study. edit: The author seems like an accomplished person, and I don't want to paint in the tech v. finance differences, but to highlight what camp she is from, take a look at the first sentence describing Mor Assia: Mor advised Israel’s global telecommunications billing giant, Amdocs, to choose the right verticals for diversification in their technology acquisitions and launched offerings like Billing for Dynamic Pricing to create new growth opportunities.[0] I mean, sure, I parse JSON data to codify the new web standard leveraging agile tooling like visual basic to fast-follow with a GUI interface which is deployed into our cloud based infrastructure to track the IP address, but I wouldn't write that down in the 2nd sentence of my biography. [0]https://www.iangels.co/team/mor-assia/ https://www.iangels.co/team/mor-assia/ edit: I can not find the video clip. My memory is that the study was done by Harvard Business School, and it found that MBAs were categorically picking the wrong industry. The examples cited by the speaker, I am 90+% confident it was pg restating it, were going to wall street to trade bonds with Michael Milliken right before he went to jail, Silicon Valley right before the bubble burst and one other which I would guess to be real estate or M & A post KKR, but that is just complete conjecture. Don't take my word for it, and I don't want to misquote PG quoting some study, but I am fairly confident for what it is worth.

firasd 11y ago
Marc Andreessen: “A very large number of people came out of investment banking, came to Silicon Valley in 1999, cause they thought they were gonna make a lot of money, and in 2001 they all turned around went back to New York and created the credit crisis.” http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2373 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2373
pcx 11y ago
Can you please provide source for what you say pg said?

deleted 11y ago

[deleted]

fatman 11y ago

Seems like a good a time as any to break out my favorite anti-MBA story. I took a Masters CS class some time ago, and for our final class project, not knowing anyone else in the class, I got lumped in the "leftover" group with a working engineer and a Wharton MBA student. We meet up the day before the project is due to integrate each of our individual pieces together into a final submission and the MBA candidate shows up empty handed. Turns out he had spent his time trying to "schmooze" the answers/code out of the professor and the TA, who, to their credit, had stood firm. Guess who spent that entire night writing that dolt's portion of the project from scratch.

ragnarok451 11y ago
Why did you write his code for him? You should've just told the instructors he didn't pull his weight, I think. With what happened, he ended up with a successful group without doing any work, which is a great outcome for him.
- fatman 11y ago
  Because I'm a stubborn ass who'd rather suffer a freeloader than hand in an incomplete assignment. In hindsight, I guess I should have finished the project and explained the division of labor.
  - TeMPOraL 11y ago
    > Because I'm a stubborn ass who'd rather suffer a freeloader than hand in an incomplete assignment. And sadly, off the backs of those like you MBAs flourish.
- beachstartup 11y ago
  yeah, it doesn't sound like much of an "anti-mba story", more like a "pro-mba story". facetime with the prof and the nerds did all the work without complaining!
- meric 11y ago
  I think the key thing is to identify the "freeloaders" early. I was once in a group for a university project when we had to implement this piece of software for a real world client. There was software that needed to be built, and documentation that needed to be written, as well as content that needed to be provided, e.g. weekly meeting diaries one is required to do in such university projects. Everyone else in the group had difficulty writing working, useful code, and progress was slow, even when I thought it was an easy project. A few days before the first milestone deadline, I sat down and finished the thing in an afternoon. And so, for the rest of the semester in that class all we had to do was the paperwork, and naturally that wasn't my job because I saved everyone so much time. Sometimes BS needs to be written...that's when it's useful to have people who's best to do that kind of thing in your group.

pbreit 11y ago

I was expecting to see a "(1999)" in this headline.

ClayFerguson 11y ago

California is completely out of water. I really doubt that many people are foolish enough to mover there by choice.

jjoonathan 11y ago
If it gets really bad they might have to desalinate which will cost... $3 per thousand gallons. Oh, the horror.
- meric 11y ago
  A single 1g almond takes 1.1 gallons of water to produce. That 1kg packet of almonds is going to go up in price by $1.

beatpanda 11y ago

"Talent"

brianchu 11y ago

There's a glaring error, which makes me doubt the credibility of the rest of the article. Mary Meeker joined KPCB as a partner, not an analyst (huge difference). And this was 5 years ago, so it's old news.