3 ms·
That works out to 8 million per person on average. I'd be interested to see if the Pareto distribution holds here as well, namely that 1% of employees (26) hol
by llm_trw 3y ago
That works out to 8 million per person on average.
I'd be interested to see if the Pareto distribution holds here as well, namely that 1% of employees (26) hold half the wealth ($10b).
- ProjectArcturis 3y agoHedge fund comp is extremely skewed. When I worked at one, in good years my boss made more than 10x what I made, and I made about 10x what my reports made.
- baq 3y ago(PSA: 50/1 is approximately the same distribution as 80/20)
- llm_trw 3y agoIt is the same distribution, just makes the point more clearly.
- infecto 3y ago"Jane Street has 40 “equity unit holders on a full-time basis and in good standing”, with an average tenure of 16 years" - I suspect a large portion of it would come from those 40 but that is purely a guess.
- gruez 3y agoI thought the Pareto distribution was most famously associated with 80-20? Of course you can change α to get whatever ratio you want but this is the first time I heard of the 50-1 ratio being used.
- NoobSaibot135 3y agoSeems like Pareto 80/20 law is not too dissimilar from powers of 2. In binary, most significant(left most) bit is twice the magnitude of the previous bit. So that bit (or person) would contribute and get compensated accordingly. Would also be similar to segment trees with each leaf node having a value of 1 with parents recursively summing the children?
- zmgsabst 3y agoThey’re the same: 20% of 20% of 20% (or 0.8%) of people will hold 80% of 80% of 80% (or 51.2%) of the wealth.
- gpderetta 3y agoA power-law distribution probably describes it better.
- queuebert 3y agoPareto is a power-law distribution.
- coldtea 3y agoThe Pareto can be applied recursively. If 20% of the people have 80% of the wealth, then 20% of them will have 80% of that 80% (64%) and so on
- dchftcs 3y agoIt probably includes the founding partners, so it might be that ~0.15% hold more than half.
- chii 3y agoonly 1 founding partner is still there apparently (from the article). Rob Granieri
- ethbr1 3y agoIt makes you wonder if there's a retirement-encouraged culture for inactive partners. Which is probably what you'd want in a high-performance firm, less everyone look at the absent top level extractors and it turn into a law firm.
- dchftcs 3y agoEquity holders are probably forever, and the incentive problems are a hard thing to solve. But you won't be a founder or early joiner if you're not allowed to keep your equity anyway. Fortunately it doesn't take that much to get top talent, because so many other companies underpay. Jane Street only has to pay out a small fraction of their PnL and doesn't even need to have a non-compete.
- chii 3y agowith a profit margin at 70%, they can afford very high pay. And the equity holders would get diluted a bit when new employees are offered equity, but looking at the rate of profitability, each new employee more than earn their share in equity, even at the high end. Therefore, it is in fact, in the existing equity holder's interest to get diluted a bit to hire these employees, who would produce way more value (and thus increase the total value) compared to the loss in dilution!
- AJRF 3y agoDon't you mean Zipfian distribution?
- mywittyname 3y agoZipf is an inverse power law.