9 ms·

Why do Harvard kids head to Wall Street?

98 points by thesyndicate 16y ago

albertsun 16y ago
This is incredibly accurate. I'm speaking as a senior at a college to which a huge number of firms come to recruit and a huge percentage of the senior class heads into banking or consulting. I'm doing neither, but the draw was definitely there. Especially the part about lifestyle appeal over money appeal. When companies recruit, they never explicitly talk about how much they pay, but their recruiting videos and the demeanor of the recruiters and employees who come to visit say everything needed.
- Alex3917 16y ago
  "Especially the part about lifestyle appeal over money appeal." I heard someone say that during the height of the dotcom boom, Yahoo made over a billion dollars by putting a big purple chair in the lobby. Something about social signaling to attract the right sort of people on the cheap.
- deleted 16y ago
  [deleted]
- whakojacko 16y ago
  Consulting firms actually generally pay relatively poorly for people fresh out of college. I-Banks give you a relatively low salary as well, but of course there is potential for huge bonuses.
karzeem 16y ago
The takeaway line: "The typical Harvard undergraduate is someone who … is driven more by fear of not being a success than by a concrete desire to do anything in particular." To the extent that this is true, it applies equally well to most people who excel in school, and I think there's a point there that the author leaves untouched. And that is that it's emotionally very hard to watch your friends — especially people who appear less intelligent, diligent, or otherwise "worthy" (that's subjective, obviously) — make significantly more money than you. In the long term, that can strain friendships, and I think it's a major explanatory factor in why smart kids go "waste" their talent in finance and consulting. In other words, appearing to be less successful than one's peers is something that few overachievers are emotionally capable of handling.
- megablast 16y ago
  I think you miss the point that they make it very easy to go with Wall Street, they tell you exactly what to do, coach you in interviews, and constantly call you to convince you to come to them. They hound people, make them feel special, wanted and even needed. Difficult to compare that to all the companies I have interviewed at, even when they did want me to work there. So you have the big bad world of the unknown, or this nice bunch of people, who also went to your school, and really want you to come over to New York and hang out with them.
  - npp 16y ago
    I recall Microsoft, Google, and other large engineering companies making very similar efforts (and the tech companies certainly push lifestyle factors much more directly). It's the same in lots of areas, not just finance and consulting. The main difference seems to be that these finance and consulting companies recruit across a huge variety of departments, so are relevant to many more students.
  - lmkg 16y ago
    More than just preparing people for getting hired, these companies also seem to make their hiring pipeline resemble the admissions pipeline for the Ivy Leagues themselves. Despite the fact that it's a hard grueling selection process, that can still make it the path of least resistance for people who went through that process once already. It's not only familiar, it feeds your expectations of what the "next step" is supposed to look like.
pg 16y ago
This seems pretty accurate, and if so it would explain why so few of this type of student start startups after college. A startup is exactly the opposite situation: you really have to commit to something, and you are immediately and uncompromisingly judged by customers. It's the opposite of a decorous way to keep your options open. But of course risk and reward are usually proportionate.
- gmichnikov 16y ago
  I have not seen any data, but I don't think that's totally fair. Students from my class or those within one of mine at Harvard have started Facebook, Scribd, Airbnb, Paperless Post, drop.io, Baking for Good, and probably others that I am not aware of. Granted Facebook was not "after" college. I am also not sure that in this regard risk and reward are proportionate. Again I have no data, but I think a random sample of 100 people from Harvard who went into finance 5-15 years ago may have made more money to date (and taken far less risk) than a random sample of 100 college students who started startups 5-15 years ago. I think the fear of not knowing what else to do, not the money, is the primary force that leads most to finance or consulting. Anecdotally, 0-10% of my friends from college have any concrete thoughts at all about what they really want to do.
  - pg 16y ago
    Considering there are IIRC 1600 students in each undergrad class that probably counts as few. As for the risk/reward ratio, you may be right, or you may be wrong, but since neither of us have any data we should probably default to the assumption that they're proportionate.
- philk 16y ago
  But of course risk and reward are usually proportionate. In aggregate startups should actually provide greater than proportionate rewards as they're not merely more risky, but also more poorly defined and require more internal motivation.
  - joubert 16y ago
countersignaler 16y ago
This is exactly why, in hindsight, I am extremely thankful I did not go to an ivy. I would almost certainly be stuck in a well-paying, soul-sucking finance job. Whew.
- pheon 16y ago
  ive personally found finance is the complete opposite of a soul sucking cushy corporatre gig and infact working in a sme or larger company in the valley the real cubicle soul sucking el dilbert gig. yes your card says * famous web company but in reality all companies primary function is to make money, its just the branding is change the world vs lets make a ton of cash. im going get downvoted like hell for this but saying all finance jobs are soul sucking cushy jobs is like saying your startup, yes YOURS, is the next google/facebook/twitter/blah
rjett 16y ago
Given the financial crisis of the past few years and the reasons behind it, I think the magnetic draw of Wall Street has lessened to some extent. Smart students still have the same fears of not being a success and the same draw to something that promises the possibility of greatness, but they're looking into other outlets. Anecdotally, I've seen a pretty big handful of my non-technical friends applying to Google and similar places. Googlers seem to have a nice lifestyle and the company has done a good job at fashioning their image such that they're seen as an instrument of social change (google.org), innovation, and ethical consistency.
aresant 16y ago
Because of the money . . .
tingley 16y ago
I'm breaking my own personal rule of the internet by saying this, but I went to Harvard in the late 90s, and I was friends with a bunch of math/physics types while I was there. A good number of them went to Wall Street. I think a lot of what this says is accurate, but I think it downplays something important. It's not just that there's a lot of money in Wall Street, it's that it's not a great time to be (for example) a physicist in this country, or at least it wasn't when I graduated. I remember a friend of mine telling me how you were typically looking at two postdocs after your PhD, and then your options were either to be an academic or to build weapons. (That guy, ironically, is the one who stuck with physics.) So apparently a lot of people took the money. Those kids could grind, and it all must have just seemed too easy. I find it hard to judge too harshly. A part of me feels like we failed them as a society, in the way we collectively assign value to human activities. Because their minds are capable of things I can only imagine, but we couldn't think of anything better for them to do than this.
- HSO 16y ago
  I don't think one should judge at all. People take a very broad brush painting Wall Street these days, which is understandable but still wrong. I prefer to judge people, individuals, not categories of people, however defined. Also, why should "we [...] as a society" think of something "better" (who defines that?) for these bright minds? Surely, they know best how to make their own choices (where I'd emphasize _make_)?
  - loganfrederick 16y ago
    But they're only going act out of their own self-interest. If society is structured as such that solving practical physics problems that could improve society through solving engineering problems and raising our standard of living is less valued than only using one's intelligence to game the system to take money from the less intelligent, then this is society's failing, not theirs. Disclaimer: I'm of the opinion that it's better for society's best and brightest to use their skills to improve society for themselves and everyone else in the most universally helpful manner.
  - gizmo 16y ago
waxman 16y ago
I'm a senior at Yale. I'm pursuing a start-up after graduation rather than a banking/consulting job. I'm certainly afraid of what the future holds. I'd be lying if I said I wasn't. And this fear almost had me applying to McKinsey and Goldman (along with 30% of my class). But in the end I realized that doing something I'm deeply passionate about (hacking) far outweighs any of the apparent benefits of a cushy Wall Street gig. I think it's time for me to stop worrying about leaving doors open, and start sprinting through one. Maybe I'll end up choosing the wrong door, but I'm confident that I'll learn more at that pace and with that passion than I ever would have in the monotony of a chic midtown office. I've never been so scared in my life. But I've never been so hungry. We'll see how it goes. (Btw, incidentally, my brother (one year younger) is interning on Wall Street this year. I'm interested to compare notes...)
- megablast 16y ago
  See, now why not take that wall street job for a few years? You would have extra capital to spend time working on your startup, maybe make some good contacts, and maybe seek an insight into a world that could really benefit from a startup-wannabes insights. All the time, you could be looking at someway to make their job easier -> there is your startup.
  - ericd 16y ago
    I would say that this is a good strategy, except that sales to banks is likely to be very high touch, and they are strongly infected with Not Invented Here syndrome. They have extreme security needs and large IT/programming departments, so I think it would be hard to find a niche that they would be willing to buy. I strongly agree with the building up capital thing, though. If you can save up 50k, and you can handle everything yourself, your runway becomes extremely long. Just have to be careful not to get addicted to the salary.
    - jrockway 16y ago
      Speaking from anecdotal experience, this is not true. As an example, I heard some employees from the company I worked at left to start a company to make messaging software. They ended up with a half-broken IRC client with a terrible UI and no features. They then sold it to the bank for millions of dollars. If it's expensive, banks like it. Quality is a plus, but not required.
wooster 16y ago
So, if I'm reading between the lines correctly: * working in finance is bad * working in corporate law is bad * working in consulting is bad * working at a startup is bad * working as a college professor is bad * working a "public interest" job is good I don't see anything here that makes me want to take this person's point of view seriously.
- jrockway 16y ago
  I don't think he said that. He says that your goal may be to save the world by being a public defender, but when you start working as a corporate lawyer with a nice apartment, you stop caring about the goal. What he's implying is that it's "bad" to throw away your life-long ambitions for a bit of extra money. If your life-long ambition is to be a kick-ass corporate lawyer or investment banker, then there's nothing bad about that at all.
  - RK 16y ago
    My only friend who became a lawyer who didn't "sell out" is the one who never planned to become a lawyer. He was an electrical engineer who was hired as a technical expert at a big IP law firm. They eventually offered to pay for him to go to law school. Everyone else I know wanted to save the world and now works for The Man. What the blog author writes is very true in that regard.
philk 16y ago
If you've always been a success it's really hard to do something that carries the risk of failure.
dkasper 16y ago
Can someone please explain to me why HN readers dislike Wall St so much? There are honestly a lot of interesting things to be "hacked" and a hell of a lot of money to be made if you're good at finance. The personality traits that make people a success at startups (perseverance, critical thinking, people skills, creativity, analytical skills, etc) are the same ones that make people a success on Wall Street. A Wall Street job is not a wrong choice, and neither is doing a startup, in fact there are a lot of similarities.
- necubi 16y ago
  Primarily because most of these people aren't really creating things. They're moving money around, but as we've clearly seen in the last few years, they're doing a very poor job of optimizing capital placement in the economy. There's no question that there's lots of money to be made on Wall St., but such activities don't really seem to improve the world or anybody's life other than the bankers. Compare that to people who form startups that can literally change the world for the better. Wall St, with its massively inflated salaries and bonuses creates a huge brain-drain which attracts bright students away from more socially-useful activities. I think anger about that is the primary source.
  - dkasper 16y ago
    can literally change the world for the better There is plenty of software that does not really make the world a better place. How much of the time do we engineers spend complaining about crappy code that doesn't work? Or take video games, sure they provide entertainment, but do they have a net positive impact on society? It's dubious at best (not that I don't love SC2). I don't want to sound too negative, but maybe a lot of finance people aren't adding much value, but neither are most programmers. And there are clearly counterexamples in both industries. Furthermore, try to imagine our economy without the stock market. It would be very different. That's a clear indication that there is some value there. Granted the market is surely not an optimal system, but that's a hard problem that smart minds absolutely need to be working on.
    - 16y ago
sendos 16y ago
The way I see it is: I like to solve difficult problems, which is why I became an Engineer. But now that I'm older I realize that the Wall Street guys are also solving a difficult problem, namely how to maximize your returns. Instead of taking a wireless signal and deciphering what bits were transmitted, you take a stock market signal and decipher where the market will move next. So, instead of solving engineering problems and getting paid decently, one can solve financial problems and get paid much much more. If the intellectual stimulation is there in both cases I don't see why someone would choose to be an engineer any more.
- dkasper 16y ago
  Right on, this is exactly how I see it sendos (see my comment).
- megablast 16y ago
  You miss the point were the Wall street guy gets huge bonuses when he succeeds, and you get a nod. Of course, this can't go on. The Wall Street guy doesn't actually create anything, just uses arbitrage to make some cream off of all the dollars these investment banks move around. Or exploit some foreign imbalance. They are the ultimate middle men. You still need actual people to solve the problems in this world. Or will this all be moved off shore?
  - dkasper 16y ago
    There is a lot more to Wall St than skimming a few dollars office space style off of the stock market. Ever heard of an IPO? It's what software startups dream of! We absolutely need smart minds to go into finance because some sort of economic system must exist and everyone will admit the current one needs improvement. Still, there's not reason to resent people who invest in companies that succeed and make a lot of money doing it. This is almost certainly good for the economy, and I would bet that the majority of people who read HN do the same thing Wall Streeters do on a smaller scale by investing in the market.
    - megablast 16y ago
nlwhittemore 16y ago
Fundamentally, what he nails is the recruitment question. People make decisions based on their sense of what is possible. We hang out on HN and join things like YC to be surrounded by people who reinforce the possibility of our big crazy dreams. College career offices are the single most antiquarian institution on college campuses, and the institution most letting a generation of people into the embrace of the only external groups who are willing to pay for the privilege to be there. Still, there is massive movement against this tide. Teach for America is outrecruiting these firms at many of the best schools - which demonstrates the opportunity for alternative organizations and just generally alternative thinking. But most schools are not Stanford, and most students don't think in terms of startups yet. Finding ways to spread an entrepreneurial culture on campus and connect it to the broader movement towards a new shape of the American business landscape has huge potential to shift what is at the root of this story.
thefool 16y ago
Speaking as a college freshman, what I see wrong with finance is that fundamentally, these people, who have essentially spent their whole lives learning to solve complicated technical problems, are being employed by society to essentially produce nothing. Thats the issue I see with it. I guess only time will show if my perspective changes.
- gaius 16y ago
  Resource allocation in a modern economy is a complicated technical problem. That's the problem investment banking was invented to solve. That it has been corrupted doesn't alter this basic idea.
  - thefool 16y ago
    I could be totally wrong here, but I get the sense that despite that being the intent of wall street, that basic concept has been very much abstracted away into a complicated game of mutual insurance and risk management. All I'm saying is that perhaps society would be better off if the resources were allocated a little less efficiently, but those "best minds" were applied to some other field.
jrp 16y ago
In this thread, it has been said that people on Wall Street aren't creating anything; they are just moving money around, making a profit on arbitrage, etc. I would like to disagree, and recall the second paragraph of this comment by xxzz: http://news.ycombinator.com/item?id=1242980 http://news.ycombinator.com/item?id=1242980
- aliston 16y ago
  When tied to fundamental underlying assets, investing creates liquidity and capitalizes businesses over the long-term. In its current form, Wall Street "investing" is more like high-stakes short-term gambling. Somehow we got to the point where banks were so leveraged that a single incorrect "investment" nearly resulted in the collapse of our financial system. Is that sort of "investing" creating real value?
jayruy 16y ago
I currently work for an investment bank and have worked at a fortune 500 web company. From a technologists standpoint, the cultural chasm between the two is great. This is largely because pure technology companies can succeed by culturally incentivizing good engineering, which is timeless. Banks have much shorter horizons in building systems of comparable complexity, and thus have a far greater need to constantly mobilize and change architectural direction. This is just a fact of the industry: technology advances, finance is cyclical. One of the cultural side effects, which certainly can have sinister implications, is that financial institutions lean heavily on monetary incentives to provide such mobility. There has obviously been a lot of bad press on structured credit, but the basic concept is ultimately a great innovation in risk management. Surely there was excess. But before ye great engineers start throwing stones, consider how much your current occupation is aided by the massive corridors of fiber optics constructed during the tech boom.
gersh 16y ago
All companies are about making money. Wall Street is more honest about it, and does a better job of rewarding its employees. The ridiculous money culture ends up centering around stealing money rather than fulfilling real societal needs. Next, the money gets wasted in conspicious consumption..
hooande 16y ago
My biggest question from this article is "What is the alternative to Wall Street?" What else should our best and brightest students be doing? I feel like the passion and creativity required to do a startup aren't any more common in the ivy league population than they are in the general population. Every intelligent person doesn't have the ability to make things happen. And job in the public sector or for a non-profit doesn't seem appealing, especially not to competitive people. So if you're going to get a regular job, Wall St seems like it's as good a place as any, especially if they're actively recruiting you.
c00p3r 16y ago
It was a good times 10 years ago, but now it is finished, and we (the ordinary people) must somehow deal with all the results of their activity (mounts of debt backed by junk or toxic assets, flawed financial instruments, like CDOs, etc.) So, 15 years ago smart people were making money on Wall Street, while smart techies making money in Mobile and Communication sectors. They were a good opportunities to those, who was smart enough to see them, while the rest of us were coded PHP and HTML (or J2EE - the luckiest ones) for food. =)
jhuckestein 16y ago
Models and Bottles. I'm dead serious. A couple of friends of mine became bankers because of that and I can't say that I haven't been jealous at times.
known 16y ago
Money + Motivation
ig1 16y ago
Without those kids on Wall Street there would be far less kids on startup street. Limited liquidity (no IPOs, no financing of takeovers), no high-risk investment funds, high FX spreads killing international customer and supply chains, etc.
- tybris 16y ago
  The IT industry is not very representative. Most of the economy is in rather quiet industries like construction, manufacturing, retail, refining, etc., where it usually takes about 100 years to get noticed.
  - ig1 16y ago
    It doesn't matter, most firms of any signicant size require financing sooner or later, and generally that tends to come from wall street one way or the other. Go down to your local franchised fast-food shop. Chances are the kitchen equipments been leased from the franchise and financed by a finance lease from an investment bank. The impact of risk-tolerant financing on the economy is huge, it's pretty much everywhere when you scratch under the surface. The same applies for FX spreads. If you're importing or exporting any goods (pretty much everyone these days) then you're benefiting from the tighter spreads created by investment banks that are market making.
tibbon 16y ago
This article has a few weak points. First of all, not everyone at Harvard is going to law school or pursuing law in any manner (including graduate students there). Of my friends who attended Harvard, surely some have moved into the finance field but I think part of it is that it is one of the few fields that can (and will) compensate and challenge them properly. Others have gone to work for Google and Microsoft. Others have gone into consulting firms and others have struck out on their own and ran their own consulting firms and companies. By no means is it a clear pipeline that funnels everyone over. From MIT I see a lot of people going into defense related areas, and not Wall St (more so than Harvard). And while some Harvard (or any) undergraduate students have little experience at 'life' or getting things done, just look at last weekend's ROFLCon for an example of what a handful of recent Harvard undergrads can do in their spare time.
galactus 16y ago
because it pays?
mhb 16y ago
Sutton is famously (and probably falsely) known for answering a reporter, Mitch Ohnstad, who asked why he robbed banks by saying, "because that's where the money is." http://en.wikipedia.org/wiki/Willie_Sutton http://en.wikipedia.org/wiki/Willie_Sutton
starkfist 16y ago
Something appealing about Silicon Valley was that losers like me could bust ass and really make a big difference and get rich on the way. You just needed to hack and hustle. Apple was the model. Two weirdos building and selling really cool stuff. Relatively simple business model: make things, and sell them. If you read the history of Apple, in the early days they hired straight up nerds and dropouts and bizarre people. One of the early guys who ended up designing hardware was self-taught and pulled in from the janitorial staff or mailroom or something like that. Finally a "legitimate" way to make a career for oddballs who would not be able to get an interview for a job cleaning toilets at Goldman Sachs. It's a very different world now where Ivy League overachievers are writing blog posts about choosing between startups and investment banking. Google is the new model. From a weirdo outsider's perspective the Google era startup story sounds very similar to the investment banking path, with a few keywords switched here and there. Elite educations, maybe going all the way back to Montessori school. Please list your GPA and take this quiz for a chance at a week long interview hazing session. Operate under the context of "changing the world" but stay focused on maximizing return in the markets of eyeballs, clicks, keywords and ads. Complicated business models; make something which you don't sell and makes no money, but the data can be packaged into a new form of financial instrument for the online ad market. Sell off the thing in a couple years for a few mil, buy an Audi, try to do it again. Goal is to ultimately hit it big enough so that you can avoid building stuff entirely. Dream about ultimately becoming an investor yourself, coaching other type-A wunderkinds through the difficult life process of choosing one high-paying career over another one, and maybe complaining about taxes and poor service at French Laundry on your blog. It's a little oversimplified, but wanted to bring back the notion that the startup scene also represents a path to success for creative and strange people without otherwise great career options. It's not just a way for Harvard kids to make as much money as they would in banking without having to wear a suit.
- quickpost 16y ago
  Agreed. The ability for an "outsider" to get in and be successful in the startup world on hustle, smarts, and hard work rather than "pedigree" has always been very appealing to me.
tszming 16y ago
Did Jeff Bezos answered this question? http://www.youtube.com/watch?v=jwG_qR6XmDQ http://www.youtube.com/watch?v=jwG_qR6XmDQ
Jd 16y ago
I think the basic motivation for why Harvard kids head to Wall St. are clear enough (and decently explained in this article). What would be more interesting though would be to explain why an ever increasing greater proportion of Ivy League students go into finance/consulting today (as opposed to 20 years ago).
pw0ncakes 16y ago
I can explain in under 200 words how to bring a lot more bright people into technology startups. The following program, sponsored by VCs: VC firm takes you on as a protege. You don't know anything; you're not expected to. There's no guarantee of funding, although the door is open, and you draw a meager stipend (if needed) rather than a salary. You work for startups for the next 7+ years, possibly in the VC firm's portfolio companies, possibly elsewhere. At the end of the 7-year period, you choose between (1) partnership in the firm as a businessman, (2) the same but as EIR, or (3) to remain in startups as a serial entrepreneur. You spend a day per month at the VC firm, shadowing senior partners, but most of your time you spend with your head down coding. I would have loved to have had such an opportunity coming out of school, and would have easily been one of the few most qualified applicants in the country... but this program didn't exist when I was 23 and, as far as I know, still doesn't. VC firms out there need to make this happen for the next generation of young people.
- albertsun 16y ago
  I don't think it's all together clear that startups should be trying to recruit bright young people just out of college.
  - pw0ncakes 16y ago
    This is a good point, actually. The quality of person required by a startup is much higher than what an investment bank needs, and most of the people going into IB/MC wouldn't be qualified. Also: analyst programs are designed to filter for the people with an unconditional work ethic-- people who will cut corners and work 100-hour weeks but simply will not miss a deadline, no matter how arbitrary, and people who will take the most awful work with a smile on their empty faces. This is a bad employee from a startup's perspective, because startups need people who write quality code (hard to do if you're working till 3:00 am) reliably and are willing to question others' decisions.
hugh3 16y ago
Another factor: the big finance and management consulting firms like to vastly overvalue Ivy League degrees. A kid leaving an Ivy League school has been told for years that he's special for going to that school, so he'll be much more comfortable in an environment where that illusion is maintained.
zandorg 16y ago
Because stockbrokers are salesmen, and posh Harvard kids sound posh and make great salesmen.
jacoblyles 16y ago
If it makes the author feel any better, the kids that went off to "save the world" are mostly doing much less good than they imagine.

98 points by thesyndicate 16y ago

This is incredibly accurate. I'm speaking as a senior at a college to which a huge number of firms come to recruit and a huge percentage of the senior class heads into banking or consulting. I'm doing neither, but the draw was definitely there. Especially the part about lifestyle appeal over money appeal. When companies recruit, they never explicitly talk about how much they pay, but their recruiting videos and the demeanor of the recruiters and employees who come to visit say everything needed.

Alex3917 16y ago
"Especially the part about lifestyle appeal over money appeal." I heard someone say that during the height of the dotcom boom, Yahoo made over a billion dollars by putting a big purple chair in the lobby. Something about social signaling to attract the right sort of people on the cheap.
deleted 16y ago
[deleted]
whakojacko 16y ago
Consulting firms actually generally pay relatively poorly for people fresh out of college. I-Banks give you a relatively low salary as well, but of course there is potential for huge bonuses.

karzeem 16y ago

The takeaway line: "The typical Harvard undergraduate is someone who … is driven more by fear of not being a success than by a concrete desire to do anything in particular." To the extent that this is true, it applies equally well to most people who excel in school, and I think there's a point there that the author leaves untouched. And that is that it's emotionally very hard to watch your friends — especially people who appear less intelligent, diligent, or otherwise "worthy" (that's subjective, obviously) — make significantly more money than you. In the long term, that can strain friendships, and I think it's a major explanatory factor in why smart kids go "waste" their talent in finance and consulting. In other words, appearing to be less successful than one's peers is something that few overachievers are emotionally capable of handling.

megablast 16y ago
I think you miss the point that they make it very easy to go with Wall Street, they tell you exactly what to do, coach you in interviews, and constantly call you to convince you to come to them. They hound people, make them feel special, wanted and even needed. Difficult to compare that to all the companies I have interviewed at, even when they did want me to work there. So you have the big bad world of the unknown, or this nice bunch of people, who also went to your school, and really want you to come over to New York and hang out with them.
- npp 16y ago
  I recall Microsoft, Google, and other large engineering companies making very similar efforts (and the tech companies certainly push lifestyle factors much more directly). It's the same in lots of areas, not just finance and consulting. The main difference seems to be that these finance and consulting companies recruit across a huge variety of departments, so are relevant to many more students.
- lmkg 16y ago
  More than just preparing people for getting hired, these companies also seem to make their hiring pipeline resemble the admissions pipeline for the Ivy Leagues themselves. Despite the fact that it's a hard grueling selection process, that can still make it the path of least resistance for people who went through that process once already. It's not only familiar, it feeds your expectations of what the "next step" is supposed to look like.

pg 16y ago

This seems pretty accurate, and if so it would explain why so few of this type of student start startups after college. A startup is exactly the opposite situation: you really have to commit to something, and you are immediately and uncompromisingly judged by customers. It's the opposite of a decorous way to keep your options open. But of course risk and reward are usually proportionate.

gmichnikov 16y ago
I have not seen any data, but I don't think that's totally fair. Students from my class or those within one of mine at Harvard have started Facebook, Scribd, Airbnb, Paperless Post, drop.io, Baking for Good, and probably others that I am not aware of. Granted Facebook was not "after" college. I am also not sure that in this regard risk and reward are proportionate. Again I have no data, but I think a random sample of 100 people from Harvard who went into finance 5-15 years ago may have made more money to date (and taken far less risk) than a random sample of 100 college students who started startups 5-15 years ago. I think the fear of not knowing what else to do, not the money, is the primary force that leads most to finance or consulting. Anecdotally, 0-10% of my friends from college have any concrete thoughts at all about what they really want to do.
- pg 16y ago
  Considering there are IIRC 1600 students in each undergrad class that probably counts as few. As for the risk/reward ratio, you may be right, or you may be wrong, but since neither of us have any data we should probably default to the assumption that they're proportionate.
philk 16y ago
But of course risk and reward are usually proportionate. In aggregate startups should actually provide greater than proportionate rewards as they're not merely more risky, but also more poorly defined and require more internal motivation.
- joubert 16y ago

countersignaler 16y ago

This is exactly why, in hindsight, I am extremely thankful I did not go to an ivy. I would almost certainly be stuck in a well-paying, soul-sucking finance job. Whew.

pheon 16y ago
ive personally found finance is the complete opposite of a soul sucking cushy corporatre gig and infact working in a sme or larger company in the valley the real cubicle soul sucking el dilbert gig. yes your card says * famous web company but in reality all companies primary function is to make money, its just the branding is change the world vs lets make a ton of cash. im going get downvoted like hell for this but saying all finance jobs are soul sucking cushy jobs is like saying your startup, yes YOURS, is the next google/facebook/twitter/blah

rjett 16y ago

Given the financial crisis of the past few years and the reasons behind it, I think the magnetic draw of Wall Street has lessened to some extent. Smart students still have the same fears of not being a success and the same draw to something that promises the possibility of greatness, but they're looking into other outlets. Anecdotally, I've seen a pretty big handful of my non-technical friends applying to Google and similar places. Googlers seem to have a nice lifestyle and the company has done a good job at fashioning their image such that they're seen as an instrument of social change (google.org), innovation, and ethical consistency.

aresant 16y ago

Because of the money . . .

tingley 16y ago

I'm breaking my own personal rule of the internet by saying this, but I went to Harvard in the late 90s, and I was friends with a bunch of math/physics types while I was there. A good number of them went to Wall Street. I think a lot of what this says is accurate, but I think it downplays something important. It's not just that there's a lot of money in Wall Street, it's that it's not a great time to be (for example) a physicist in this country, or at least it wasn't when I graduated. I remember a friend of mine telling me how you were typically looking at two postdocs after your PhD, and then your options were either to be an academic or to build weapons. (That guy, ironically, is the one who stuck with physics.) So apparently a lot of people took the money. Those kids could grind, and it all must have just seemed too easy. I find it hard to judge too harshly. A part of me feels like we failed them as a society, in the way we collectively assign value to human activities. Because their minds are capable of things I can only imagine, but we couldn't think of anything better for them to do than this.

HSO 16y ago
I don't think one should judge at all. People take a very broad brush painting Wall Street these days, which is understandable but still wrong. I prefer to judge people, individuals, not categories of people, however defined. Also, why should "we [...] as a society" think of something "better" (who defines that?) for these bright minds? Surely, they know best how to make their own choices (where I'd emphasize _make_)?
- loganfrederick 16y ago
  But they're only going act out of their own self-interest. If society is structured as such that solving practical physics problems that could improve society through solving engineering problems and raising our standard of living is less valued than only using one's intelligence to game the system to take money from the less intelligent, then this is society's failing, not theirs. Disclaimer: I'm of the opinion that it's better for society's best and brightest to use their skills to improve society for themselves and everyone else in the most universally helpful manner.
- gizmo 16y ago

waxman 16y ago

I'm a senior at Yale. I'm pursuing a start-up after graduation rather than a banking/consulting job. I'm certainly afraid of what the future holds. I'd be lying if I said I wasn't. And this fear almost had me applying to McKinsey and Goldman (along with 30% of my class). But in the end I realized that doing something I'm deeply passionate about (hacking) far outweighs any of the apparent benefits of a cushy Wall Street gig. I think it's time for me to stop worrying about leaving doors open, and start sprinting through one. Maybe I'll end up choosing the wrong door, but I'm confident that I'll learn more at that pace and with that passion than I ever would have in the monotony of a chic midtown office. I've never been so scared in my life. But I've never been so hungry. We'll see how it goes. (Btw, incidentally, my brother (one year younger) is interning on Wall Street this year. I'm interested to compare notes...)

megablast 16y ago
See, now why not take that wall street job for a few years? You would have extra capital to spend time working on your startup, maybe make some good contacts, and maybe seek an insight into a world that could really benefit from a startup-wannabes insights. All the time, you could be looking at someway to make their job easier -> there is your startup.
- ericd 16y ago
  I would say that this is a good strategy, except that sales to banks is likely to be very high touch, and they are strongly infected with Not Invented Here syndrome. They have extreme security needs and large IT/programming departments, so I think it would be hard to find a niche that they would be willing to buy. I strongly agree with the building up capital thing, though. If you can save up 50k, and you can handle everything yourself, your runway becomes extremely long. Just have to be careful not to get addicted to the salary.
  - jrockway 16y ago
    Speaking from anecdotal experience, this is not true. As an example, I heard some employees from the company I worked at left to start a company to make messaging software. They ended up with a half-broken IRC client with a terrible UI and no features. They then sold it to the bank for millions of dollars. If it's expensive, banks like it. Quality is a plus, but not required.

wooster 16y ago

So, if I'm reading between the lines correctly: * working in finance is bad * working in corporate law is bad * working in consulting is bad * working at a startup is bad * working as a college professor is bad * working a "public interest" job is good I don't see anything here that makes me want to take this person's point of view seriously.

jrockway 16y ago
I don't think he said that. He says that your goal may be to save the world by being a public defender, but when you start working as a corporate lawyer with a nice apartment, you stop caring about the goal. What he's implying is that it's "bad" to throw away your life-long ambitions for a bit of extra money. If your life-long ambition is to be a kick-ass corporate lawyer or investment banker, then there's nothing bad about that at all.
- RK 16y ago
  My only friend who became a lawyer who didn't "sell out" is the one who never planned to become a lawyer. He was an electrical engineer who was hired as a technical expert at a big IP law firm. They eventually offered to pay for him to go to law school. Everyone else I know wanted to save the world and now works for The Man. What the blog author writes is very true in that regard.

philk 16y ago

If you've always been a success it's really hard to do something that carries the risk of failure.

dkasper 16y ago

Can someone please explain to me why HN readers dislike Wall St so much? There are honestly a lot of interesting things to be "hacked" and a hell of a lot of money to be made if you're good at finance. The personality traits that make people a success at startups (perseverance, critical thinking, people skills, creativity, analytical skills, etc) are the same ones that make people a success on Wall Street. A Wall Street job is not a wrong choice, and neither is doing a startup, in fact there are a lot of similarities.

necubi 16y ago
Primarily because most of these people aren't really creating things. They're moving money around, but as we've clearly seen in the last few years, they're doing a very poor job of optimizing capital placement in the economy. There's no question that there's lots of money to be made on Wall St., but such activities don't really seem to improve the world or anybody's life other than the bankers. Compare that to people who form startups that can literally change the world for the better. Wall St, with its massively inflated salaries and bonuses creates a huge brain-drain which attracts bright students away from more socially-useful activities. I think anger about that is the primary source.
- dkasper 16y ago
  can literally change the world for the better There is plenty of software that does not really make the world a better place. How much of the time do we engineers spend complaining about crappy code that doesn't work? Or take video games, sure they provide entertainment, but do they have a net positive impact on society? It's dubious at best (not that I don't love SC2). I don't want to sound too negative, but maybe a lot of finance people aren't adding much value, but neither are most programmers. And there are clearly counterexamples in both industries. Furthermore, try to imagine our economy without the stock market. It would be very different. That's a clear indication that there is some value there. Granted the market is surely not an optimal system, but that's a hard problem that smart minds absolutely need to be working on.
  - 16y ago

sendos 16y ago

The way I see it is: I like to solve difficult problems, which is why I became an Engineer. But now that I'm older I realize that the Wall Street guys are also solving a difficult problem, namely how to maximize your returns. Instead of taking a wireless signal and deciphering what bits were transmitted, you take a stock market signal and decipher where the market will move next. So, instead of solving engineering problems and getting paid decently, one can solve financial problems and get paid much much more. If the intellectual stimulation is there in both cases I don't see why someone would choose to be an engineer any more.

dkasper 16y ago
Right on, this is exactly how I see it sendos (see my comment).
megablast 16y ago
You miss the point were the Wall street guy gets huge bonuses when he succeeds, and you get a nod. Of course, this can't go on. The Wall Street guy doesn't actually create anything, just uses arbitrage to make some cream off of all the dollars these investment banks move around. Or exploit some foreign imbalance. They are the ultimate middle men. You still need actual people to solve the problems in this world. Or will this all be moved off shore?
- dkasper 16y ago
  There is a lot more to Wall St than skimming a few dollars office space style off of the stock market. Ever heard of an IPO? It's what software startups dream of! We absolutely need smart minds to go into finance because some sort of economic system must exist and everyone will admit the current one needs improvement. Still, there's not reason to resent people who invest in companies that succeed and make a lot of money doing it. This is almost certainly good for the economy, and I would bet that the majority of people who read HN do the same thing Wall Streeters do on a smaller scale by investing in the market.
  - megablast 16y ago

nlwhittemore 16y ago

Fundamentally, what he nails is the recruitment question. People make decisions based on their sense of what is possible. We hang out on HN and join things like YC to be surrounded by people who reinforce the possibility of our big crazy dreams. College career offices are the single most antiquarian institution on college campuses, and the institution most letting a generation of people into the embrace of the only external groups who are willing to pay for the privilege to be there. Still, there is massive movement against this tide. Teach for America is outrecruiting these firms at many of the best schools - which demonstrates the opportunity for alternative organizations and just generally alternative thinking. But most schools are not Stanford, and most students don't think in terms of startups yet. Finding ways to spread an entrepreneurial culture on campus and connect it to the broader movement towards a new shape of the American business landscape has huge potential to shift what is at the root of this story.

thefool 16y ago

Speaking as a college freshman, what I see wrong with finance is that fundamentally, these people, who have essentially spent their whole lives learning to solve complicated technical problems, are being employed by society to essentially produce nothing. Thats the issue I see with it. I guess only time will show if my perspective changes.

gaius 16y ago
Resource allocation in a modern economy is a complicated technical problem. That's the problem investment banking was invented to solve. That it has been corrupted doesn't alter this basic idea.
- thefool 16y ago
  I could be totally wrong here, but I get the sense that despite that being the intent of wall street, that basic concept has been very much abstracted away into a complicated game of mutual insurance and risk management. All I'm saying is that perhaps society would be better off if the resources were allocated a little less efficiently, but those "best minds" were applied to some other field.

jrp 16y ago

In this thread, it has been said that people on Wall Street aren't creating anything; they are just moving money around, making a profit on arbitrage, etc. I would like to disagree, and recall the second paragraph of this comment by xxzz: http://news.ycombinator.com/item?id=1242980 http://news.ycombinator.com/item?id=1242980

aliston 16y ago
When tied to fundamental underlying assets, investing creates liquidity and capitalizes businesses over the long-term. In its current form, Wall Street "investing" is more like high-stakes short-term gambling. Somehow we got to the point where banks were so leveraged that a single incorrect "investment" nearly resulted in the collapse of our financial system. Is that sort of "investing" creating real value?

jayruy 16y ago

I currently work for an investment bank and have worked at a fortune 500 web company. From a technologists standpoint, the cultural chasm between the two is great. This is largely because pure technology companies can succeed by culturally incentivizing good engineering, which is timeless. Banks have much shorter horizons in building systems of comparable complexity, and thus have a far greater need to constantly mobilize and change architectural direction. This is just a fact of the industry: technology advances, finance is cyclical. One of the cultural side effects, which certainly can have sinister implications, is that financial institutions lean heavily on monetary incentives to provide such mobility. There has obviously been a lot of bad press on structured credit, but the basic concept is ultimately a great innovation in risk management. Surely there was excess. But before ye great engineers start throwing stones, consider how much your current occupation is aided by the massive corridors of fiber optics constructed during the tech boom.

gersh 16y ago

All companies are about making money. Wall Street is more honest about it, and does a better job of rewarding its employees. The ridiculous money culture ends up centering around stealing money rather than fulfilling real societal needs. Next, the money gets wasted in conspicious consumption..

hooande 16y ago

My biggest question from this article is "What is the alternative to Wall Street?" What else should our best and brightest students be doing? I feel like the passion and creativity required to do a startup aren't any more common in the ivy league population than they are in the general population. Every intelligent person doesn't have the ability to make things happen. And job in the public sector or for a non-profit doesn't seem appealing, especially not to competitive people. So if you're going to get a regular job, Wall St seems like it's as good a place as any, especially if they're actively recruiting you.

c00p3r 16y ago

It was a good times 10 years ago, but now it is finished, and we (the ordinary people) must somehow deal with all the results of their activity (mounts of debt backed by junk or toxic assets, flawed financial instruments, like CDOs, etc.) So, 15 years ago smart people were making money on Wall Street, while smart techies making money in Mobile and Communication sectors. They were a good opportunities to those, who was smart enough to see them, while the rest of us were coded PHP and HTML (or J2EE - the luckiest ones) for food. =)

jhuckestein 16y ago

Models and Bottles. I'm dead serious. A couple of friends of mine became bankers because of that and I can't say that I haven't been jealous at times.

known 16y ago

Money + Motivation

ig1 16y ago

Without those kids on Wall Street there would be far less kids on startup street. Limited liquidity (no IPOs, no financing of takeovers), no high-risk investment funds, high FX spreads killing international customer and supply chains, etc.

tybris 16y ago
The IT industry is not very representative. Most of the economy is in rather quiet industries like construction, manufacturing, retail, refining, etc., where it usually takes about 100 years to get noticed.
- ig1 16y ago
  It doesn't matter, most firms of any signicant size require financing sooner or later, and generally that tends to come from wall street one way or the other. Go down to your local franchised fast-food shop. Chances are the kitchen equipments been leased from the franchise and financed by a finance lease from an investment bank. The impact of risk-tolerant financing on the economy is huge, it's pretty much everywhere when you scratch under the surface. The same applies for FX spreads. If you're importing or exporting any goods (pretty much everyone these days) then you're benefiting from the tighter spreads created by investment banks that are market making.

tibbon 16y ago

This article has a few weak points. First of all, not everyone at Harvard is going to law school or pursuing law in any manner (including graduate students there). Of my friends who attended Harvard, surely some have moved into the finance field but I think part of it is that it is one of the few fields that can (and will) compensate and challenge them properly. Others have gone to work for Google and Microsoft. Others have gone into consulting firms and others have struck out on their own and ran their own consulting firms and companies. By no means is it a clear pipeline that funnels everyone over. From MIT I see a lot of people going into defense related areas, and not Wall St (more so than Harvard). And while some Harvard (or any) undergraduate students have little experience at 'life' or getting things done, just look at last weekend's ROFLCon for an example of what a handful of recent Harvard undergrads can do in their spare time.

galactus 16y ago

because it pays?

mhb 16y ago

Sutton is famously (and probably falsely) known for answering a reporter, Mitch Ohnstad, who asked why he robbed banks by saying, "because that's where the money is." http://en.wikipedia.org/wiki/Willie_Sutton http://en.wikipedia.org/wiki/Willie_Sutton

starkfist 16y ago

Something appealing about Silicon Valley was that losers like me could bust ass and really make a big difference and get rich on the way. You just needed to hack and hustle. Apple was the model. Two weirdos building and selling really cool stuff. Relatively simple business model: make things, and sell them. If you read the history of Apple, in the early days they hired straight up nerds and dropouts and bizarre people. One of the early guys who ended up designing hardware was self-taught and pulled in from the janitorial staff or mailroom or something like that. Finally a "legitimate" way to make a career for oddballs who would not be able to get an interview for a job cleaning toilets at Goldman Sachs. It's a very different world now where Ivy League overachievers are writing blog posts about choosing between startups and investment banking. Google is the new model. From a weirdo outsider's perspective the Google era startup story sounds very similar to the investment banking path, with a few keywords switched here and there. Elite educations, maybe going all the way back to Montessori school. Please list your GPA and take this quiz for a chance at a week long interview hazing session. Operate under the context of "changing the world" but stay focused on maximizing return in the markets of eyeballs, clicks, keywords and ads. Complicated business models; make something which you don't sell and makes no money, but the data can be packaged into a new form of financial instrument for the online ad market. Sell off the thing in a couple years for a few mil, buy an Audi, try to do it again. Goal is to ultimately hit it big enough so that you can avoid building stuff entirely. Dream about ultimately becoming an investor yourself, coaching other type-A wunderkinds through the difficult life process of choosing one high-paying career over another one, and maybe complaining about taxes and poor service at French Laundry on your blog. It's a little oversimplified, but wanted to bring back the notion that the startup scene also represents a path to success for creative and strange people without otherwise great career options. It's not just a way for Harvard kids to make as much money as they would in banking without having to wear a suit.

quickpost 16y ago
Agreed. The ability for an "outsider" to get in and be successful in the startup world on hustle, smarts, and hard work rather than "pedigree" has always been very appealing to me.

tszming 16y ago

Did Jeff Bezos answered this question? http://www.youtube.com/watch?v=jwG_qR6XmDQ http://www.youtube.com/watch?v=jwG_qR6XmDQ

Jd 16y ago

I think the basic motivation for why Harvard kids head to Wall St. are clear enough (and decently explained in this article). What would be more interesting though would be to explain why an ever increasing greater proportion of Ivy League students go into finance/consulting today (as opposed to 20 years ago).

pw0ncakes 16y ago

I can explain in under 200 words how to bring a lot more bright people into technology startups. The following program, sponsored by VCs: VC firm takes you on as a protege. You don't know anything; you're not expected to. There's no guarantee of funding, although the door is open, and you draw a meager stipend (if needed) rather than a salary. You work for startups for the next 7+ years, possibly in the VC firm's portfolio companies, possibly elsewhere. At the end of the 7-year period, you choose between (1) partnership in the firm as a businessman, (2) the same but as EIR, or (3) to remain in startups as a serial entrepreneur. You spend a day per month at the VC firm, shadowing senior partners, but most of your time you spend with your head down coding. I would have loved to have had such an opportunity coming out of school, and would have easily been one of the few most qualified applicants in the country... but this program didn't exist when I was 23 and, as far as I know, still doesn't. VC firms out there need to make this happen for the next generation of young people.

albertsun 16y ago
I don't think it's all together clear that startups should be trying to recruit bright young people just out of college.
- pw0ncakes 16y ago
  This is a good point, actually. The quality of person required by a startup is much higher than what an investment bank needs, and most of the people going into IB/MC wouldn't be qualified. Also: analyst programs are designed to filter for the people with an unconditional work ethic-- people who will cut corners and work 100-hour weeks but simply will not miss a deadline, no matter how arbitrary, and people who will take the most awful work with a smile on their empty faces. This is a bad employee from a startup's perspective, because startups need people who write quality code (hard to do if you're working till 3:00 am) reliably and are willing to question others' decisions.

hugh3 16y ago

Another factor: the big finance and management consulting firms like to vastly overvalue Ivy League degrees. A kid leaving an Ivy League school has been told for years that he's special for going to that school, so he'll be much more comfortable in an environment where that illusion is maintained.

zandorg 16y ago

Because stockbrokers are salesmen, and posh Harvard kids sound posh and make great salesmen.

jacoblyles 16y ago

If it makes the author feel any better, the kids that went off to "save the world" are mostly doing much less good than they imagine.