4 ms·

It's vastly easier to become a millionaire in finance than in tech.

by ig1 12y ago

kiyoto 12y ago
I agree. I am an ex-trader in his late 20s, and most of my peers who stayed in finance have at least a million dollars in savings+assets.
- sosuke 12y ago
  Is there a 'too late' to get into finance? I might have to change my focus. All this JavaScript and Objective-C can stay a hobby.
  - michaelochurch 12y ago
    You want to start focusing on low-level programming: learn about C++ and assembly languages and cache behavior. Or possibly get into functional programming. I could see Haskell getting bigger in trading. Learning some statistics and math won't hurt. I don't think there's a "too late", but there's a different skill set you need, especially to get a good job in finance.
  - dashboardfront 12y ago
    I really think it's a bad idea to go into finance for the salaries. You're going to be miserable, and no, you are not guaranteed a million dollars by 25. Obviously, there are many different career paths in finance, but all of the ones that involve making a lot of money include one or all of the following: stress, long hours (80-100/week), and risk (think how many financial crashes tend to happen. guess who loses their jobs?) Of course, if you're willing to persevere through all that, and have very good people and/or sales skills, then sure, you might be able to join the ultra elite who own their private jets and have an island in Thailand. You'll need some luck for that too, though. I think the only people that will 'make it' in finance are those that are genuinely passionate enough to endure the horrible work conditions and lifestyle while possessing the people/sales skills to be successful. Remember, to make it to the top in finance firms, you need to bring in revenue. With the exclusion of trading, this generally involves sales skills. Same goes for management consulting and probably law as well.
  - nerfhammer 12y ago
    There isn't much time for hobbies if you work in finance.
    - sosuke 12y ago
      Eh, not too bad a trade off, I don't have any hobbies right now to lose out on. Trying to make millions either way.
  - ig1 12y ago
    You could always become a developer in the finance sector, there are plenty of finance devs in the $200k-$300k range. If you're a top-tier dev working in front-office/hedge-fund you can make $600k-$700k/year.
driznar 12y ago
Can you elaborate? I'm genuinely interested in hearing from someone with experience in both industries to weigh in on this. Especially once the risks on both sides have been calculated in, since otherwise the comparison is largely meaningless.
- sliverstorm 12y ago
  From my completely non-finance, non-startup, third-party point of view, I gather some finance workers are able to establish a direct link between their work and their pay ("Your bonus is 1% of the profits your software makes"). Startup workers can only make big money if they are lucky enough to get in on a big exit- their personal performance is only weakly tied to payout.
- michaelochurch 12y ago
  Finance is actually more meritocratic than software, these days. That may change. Right now, the douche factor is much higher in software startups that that clouds the game. Of course, many of those douches came from (cough failed out of) finance and management consulting. Traders who top out at $500,000 per year are considered failures. Quants and programmers often get to (and, sometimes, past) that level, but more slowly (maybe 35-45 on average; obviously, there are outliers who get there faster). For a contrast, the mediocre engineer gets such a small amount of equity that it's less than a finance bonus at liquidity. Then there's dilution and cliffing. Sometimes engineers (usually, ones who joined early and were later judged to have "too much" equity) are pressured into non-exercise of options on reputation threats (i.e. "you're fired, but if you don't exercise your options on that 2%, I won't have to give you a bad reference.") Finance is harder to get into, but once you're in, you have a certain status that Silicon Valley just doesn't give to engineers except for a couple hundred with international reputations. There's also much better career planning in finance. Don't make any obvious wrong moves and you will move forward. It might not happen as fast as you'd like, and you probably won't get to the $50M net worth level, but you can make a decent life for yourself and you won't be tossed out like yesterday's garbage at age 40. Finance does have a lot of job volatility. The business is cyclical and layoffs happen. That said, so do startups. Finance compensates you for this risk by (a) compensating you well, and (b) being professional about it when layoffs happen, so your reputation is intact. The slimy tech companies, on the other hand, don't compensate your risk except with platitudes about "changing the world" and, when times are bad for them, hide layoffs with stack ranking and dishonest PIPs. I will probably try to go back into finance in a year or so, honestly. (I'm already putting out feelers.) Tech is a nice idea, but the software industry, as it actually is with the "agile" micromanagement and the stupid startups and the general incompetence of its upper management (I won't call them "leadership" because they're not) is basically a waste of time for talent. At banks, I know that many of the MDs are at or above my talent level, and that almost all of them worked really hard to get there. Non-techs (including executives) in tech companies are basically 95% morons because the capable non-techs generally have better options in other industries. It's hard to go back to finance, from startups, because the typical startup CV has a high jobs-to-years ratio and finance is still pretty bigoted about "job hoppers". (Finance is meritocratic once you're in, if you get a good job, but getting in can be a hassle.) In startups, one job per 2 years is normal; in finance, it fucks you in the ass if you change jobs that often.
cellis 12y ago
I wouldn't say "vastly", at least not now. It is probably easier if you come from a "target" background ( went to a prestigious school, graduated MBA, worked 100-120 hr weeks as an analyst... ). But for the average joe off the street? Tech is "vastly" easier to become a millionaire. That is to say, you have zero chance of becoming a millionaire in finance without the required background, but as someone with, say, an English degree you can start a startup, get it to a series A round and presto, you're a millionaire on paper. Get it to a B round, and you're a millionaire for real.
- ig1 12y ago
  You're vastly overestimating how easy it is to raise a series A - the majority of YC companies don't make it to series A. The chances of an inexperienced non-tech founder raising a series A are small; there are hundreds if not thousands of such founders who try and fail for everyone who succeeds. Investment banking is also far from homogenous, the requirements for being in sales at a mid-tier commodity fund in Chicago are vastly different from being in M&A at Goldman in New York. You can be pretty far down the pecking ladder in banking and still easily bank $1m+.
  - cellis 12y ago
    There is no need to reiterate how difficult it is to build a successful startup. My point was that even after controlling for this difficulty, for the average developer it's going to be "easier" to make $1mm by starting their own startup. The vast majority of finance professionals with target backgrounds won't break 200k in income per year. There are outliers in every profession and sure there are some hotshot salespeople and quants that make 1mm+/yr, but: when I look closely, and from talking with friends who work at namebrand banks and PE groups, it seems they're no more prevalent in finance than successful startup founders are in tech (i'd still like to see hard data on this because there are so many ways to compensate people and most have no incentive to report this, in both industries). Now on to compensation: comparing apples to oranges, a Goldman Sachs VP's total compensation is about 240k, or roughly what a senior software engineer at Google makes. If I were a brilliant developer, I would rather work at Google and make the same amount than going through the meat grinder than is your IB to become a GS VP.

It's vastly easier to become a millionaire in finance than in tech.

by ig1 12y ago

It's vastly easier to become a millionaire in finance than in tech.

I agree. I am an ex-trader in his late 20s, and most of my peers who stayed in finance have at least a million dollars in savings+assets.

sosuke 12y ago
Is there a 'too late' to get into finance? I might have to change my focus. All this JavaScript and Objective-C can stay a hobby.
- michaelochurch 12y ago
  You want to start focusing on low-level programming: learn about C++ and assembly languages and cache behavior. Or possibly get into functional programming. I could see Haskell getting bigger in trading. Learning some statistics and math won't hurt. I don't think there's a "too late", but there's a different skill set you need, especially to get a good job in finance.
- dashboardfront 12y ago
  I really think it's a bad idea to go into finance for the salaries. You're going to be miserable, and no, you are not guaranteed a million dollars by 25. Obviously, there are many different career paths in finance, but all of the ones that involve making a lot of money include one or all of the following: stress, long hours (80-100/week), and risk (think how many financial crashes tend to happen. guess who loses their jobs?) Of course, if you're willing to persevere through all that, and have very good people and/or sales skills, then sure, you might be able to join the ultra elite who own their private jets and have an island in Thailand. You'll need some luck for that too, though. I think the only people that will 'make it' in finance are those that are genuinely passionate enough to endure the horrible work conditions and lifestyle while possessing the people/sales skills to be successful. Remember, to make it to the top in finance firms, you need to bring in revenue. With the exclusion of trading, this generally involves sales skills. Same goes for management consulting and probably law as well.
- nerfhammer 12y ago
  There isn't much time for hobbies if you work in finance.
  - sosuke 12y ago
    Eh, not too bad a trade off, I don't have any hobbies right now to lose out on. Trying to make millions either way.
- ig1 12y ago
  You could always become a developer in the finance sector, there are plenty of finance devs in the $200k-$300k range. If you're a top-tier dev working in front-office/hedge-fund you can make $600k-$700k/year.

driznar 12y ago

Can you elaborate? I'm genuinely interested in hearing from someone with experience in both industries to weigh in on this. Especially once the risks on both sides have been calculated in, since otherwise the comparison is largely meaningless.

sliverstorm 12y ago
From my completely non-finance, non-startup, third-party point of view, I gather some finance workers are able to establish a direct link between their work and their pay ("Your bonus is 1% of the profits your software makes"). Startup workers can only make big money if they are lucky enough to get in on a big exit- their personal performance is only weakly tied to payout.
michaelochurch 12y ago
Finance is actually more meritocratic than software, these days. That may change. Right now, the douche factor is much higher in software startups that that clouds the game. Of course, many of those douches came from (cough failed out of) finance and management consulting. Traders who top out at $500,000 per year are considered failures. Quants and programmers often get to (and, sometimes, past) that level, but more slowly (maybe 35-45 on average; obviously, there are outliers who get there faster). For a contrast, the mediocre engineer gets such a small amount of equity that it's less than a finance bonus at liquidity. Then there's dilution and cliffing. Sometimes engineers (usually, ones who joined early and were later judged to have "too much" equity) are pressured into non-exercise of options on reputation threats (i.e. "you're fired, but if you don't exercise your options on that 2%, I won't have to give you a bad reference.") Finance is harder to get into, but once you're in, you have a certain status that Silicon Valley just doesn't give to engineers except for a couple hundred with international reputations. There's also much better career planning in finance. Don't make any obvious wrong moves and you will move forward. It might not happen as fast as you'd like, and you probably won't get to the $50M net worth level, but you can make a decent life for yourself and you won't be tossed out like yesterday's garbage at age 40. Finance does have a lot of job volatility. The business is cyclical and layoffs happen. That said, so do startups. Finance compensates you for this risk by (a) compensating you well, and (b) being professional about it when layoffs happen, so your reputation is intact. The slimy tech companies, on the other hand, don't compensate your risk except with platitudes about "changing the world" and, when times are bad for them, hide layoffs with stack ranking and dishonest PIPs. I will probably try to go back into finance in a year or so, honestly. (I'm already putting out feelers.) Tech is a nice idea, but the software industry, as it actually is with the "agile" micromanagement and the stupid startups and the general incompetence of its upper management (I won't call them "leadership" because they're not) is basically a waste of time for talent. At banks, I know that many of the MDs are at or above my talent level, and that almost all of them worked really hard to get there. Non-techs (including executives) in tech companies are basically 95% morons because the capable non-techs generally have better options in other industries. It's hard to go back to finance, from startups, because the typical startup CV has a high jobs-to-years ratio and finance is still pretty bigoted about "job hoppers". (Finance is meritocratic once you're in, if you get a good job, but getting in can be a hassle.) In startups, one job per 2 years is normal; in finance, it fucks you in the ass if you change jobs that often.

cellis 12y ago

I wouldn't say "vastly", at least not now. It is probably easier if you come from a "target" background ( went to a prestigious school, graduated MBA, worked 100-120 hr weeks as an analyst... ). But for the average joe off the street? Tech is "vastly" easier to become a millionaire. That is to say, you have zero chance of becoming a millionaire in finance without the required background, but as someone with, say, an English degree you can start a startup, get it to a series A round and presto, you're a millionaire on paper. Get it to a B round, and you're a millionaire for real.

ig1 12y ago
You're vastly overestimating how easy it is to raise a series A - the majority of YC companies don't make it to series A. The chances of an inexperienced non-tech founder raising a series A are small; there are hundreds if not thousands of such founders who try and fail for everyone who succeeds. Investment banking is also far from homogenous, the requirements for being in sales at a mid-tier commodity fund in Chicago are vastly different from being in M&A at Goldman in New York. You can be pretty far down the pecking ladder in banking and still easily bank $1m+.
- cellis 12y ago
  There is no need to reiterate how difficult it is to build a successful startup. My point was that even after controlling for this difficulty, for the average developer it's going to be "easier" to make $1mm by starting their own startup. The vast majority of finance professionals with target backgrounds won't break 200k in income per year. There are outliers in every profession and sure there are some hotshot salespeople and quants that make 1mm+/yr, but: when I look closely, and from talking with friends who work at namebrand banks and PE groups, it seems they're no more prevalent in finance than successful startup founders are in tech (i'd still like to see hard data on this because there are so many ways to compensate people and most have no incentive to report this, in both industries). Now on to compensation: comparing apples to oranges, a Goldman Sachs VP's total compensation is about 240k, or roughly what a senior software engineer at Google makes. If I were a brilliant developer, I would rather work at Google and make the same amount than going through the meat grinder than is your IB to become a GS VP.