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The fact that finance is ripe for (and now rife with) technological disruption is one factor pushing the bankers in that direction, but the primary one since 20

The fact that finance is ripe for (and now rife with) technological disruption is one factor pushing the bankers in that direction, but the primary one since 2008 has been this: it's the gold rush of the decade. A certain portion of the population, including most of the type-As, consistently pursue whatever opportunities promise the most money and prestige in the shortest time for the least work. Until the financial crisis, the best path to that end was getting rich as a trader. Now, startups offer greater risk but even faster and more tantalizing rewards. The exodus of finance towards tech will continue exactly until the next investment winter, at which point it will likely turn into a flight from SV-style tech into yet another sector - my best guess is health and bioinformatics.

sharkweek 12y ago
I think you're right on health/bioinformatics - Seeing a lot of VC money pointed at health/bio, and only expect this to increase. With 58% of VC-backed IPOs in 2014 being in healthcare related industries, there is an allure to invest more there (check out the bottom third of this datagraphic - http://blog.pitchbook.com/a-visual-breakdown-of-vc-in-2014/ http://blog.pitchbook.com/a-visual-breakdown-of-vc-in-2014/) Software exits were still certainly the highest (470 in 2014), but those most commonly occurred through acquisition and far less through IPO. Health/bio saw over 200 exits in '14, with about half of them going public.
Shivetya 12y ago
there is really too much regulation for a true disruption to occur, let alone any disruption might easily be perceived as criminal if the returns are too good either by over zealous Federal regulators or via subtle hints by your competitors to the same
- ethbro 12y ago
  Remember there are both returns and costs. You focus on regulation around returns, and there's certainly some regulation around costs as well (mandatory reporting, etc). However, at seven-figure salaries you don't have to automation much person-work to show up on the final balance sheet.
psaintla 12y ago
I worked in medical tech for a few years, there are a few reasons people aren't going to flood into that sector. 1.) Regulation, HIPAA is a massive pain to deal with, the rules nebulous and require significant process that is expensive and time consuming. 2.) Violations of HIPAA lead to fines and even lawsuits from the office of civil rights. It used to be that Business Associates could hide behind the medical institutions to avoid this but with the Omnibus rules you'll face massive fines that will easily bankrupt any startup. 3.) The entire healthcare sector is extremely risk averse, slow moving and you cannot work around them you have to work with them which means you're going to move slowly too. 4.) You will HAVE to integrate with dozens of other ancient applications that medical institutions use, some of which have no documentation or publicly available source code. I hope you like searching through hundreds of pages of outdated HL7 and X12 documentation to figure out how a specific vendor screwed up their implementation. 5.) Large medtech companies regularly snuff out competition through lobbying and leveraging existing relationships in the medical community. So you've got a killer new medical app that will change the world? Big deal, your competition has three doctors who are leaders in their field(and conveniently board members). They will tell all of their buddies at the next American Cardiology Conference that your app is garbage. I hope you've got some big names associated with your startup and you can pay them handsomely. 6.) The medical field is a data hell. Some of it unstructured and non-sensical, much of it is structured but has no validation. That field you are getting from a third party API for albumin levels which was documented as g/dL, was actually entered in mg/L from the years 06/2004-12/2008, mg/dL from 09/2003-05/2004 and the proper documented g/dL for all other dates. Why was it that way? No one knows. You have to keep track of things like that for one field in one database for a single department in a medical institution with a few dozen departments that don't cooperate. Worst of all, it WILL change on you without you knowing.
- ia 12y ago
  from my experience, this is all 100% accurate. medtech is a shit show. however, from another perspective, it's exactly the type of "schlep" that mints millionaires.
  - psaintla 12y ago
jgalt212 12y ago
> Until the financial crisis, the best path to that end was getting rich as a trader. I think you're pretty wrong on this. There was tons of money to be made as a trader post 2008 as the bonds pummeled by the crisis clawed their way bay to real/inflated levels with the help of the Fed buying everything site. For the most part, HF's grabbed a good portion of these dollars. So the "most money and prestige in the shortest time for the least work" job post crisis has been to be a trader/PM at a hedge fund. Having worked a a start-up in fintech, I can say the prestige is lowish, and the rewards are uncertain at best. There have just not been any insane price exits in fintech at all lately. Forget about a whatsapp style exit, I can't even name a Tumblr style exit. Can you?
jim_greco 12y ago
I don't really think people are leaving finance for tech because it's a gold rush. Most of these guys are making half of what they made as an associate or VP. Even with all the money pouring in, exits aren't exactly that common. Even if they were, most of these people aren't going into executive, or technical or founder roles that they could make that much money off the exit. But you do get to do much more interesting and rewarding work. You get to work in a collaborative and supportive environment You can wear whatever you want and enjoy the SF weather. And the hours are way better.

sharkweek 12y ago

I think you're right on health/bioinformatics - Seeing a lot of VC money pointed at health/bio, and only expect this to increase. With 58% of VC-backed IPOs in 2014 being in healthcare related industries, there is an allure to invest more there (check out the bottom third of this datagraphic - http://blog.pitchbook.com/a-visual-breakdown-of-vc-in-2014/ http://blog.pitchbook.com/a-visual-breakdown-of-vc-in-2014/) Software exits were still certainly the highest (470 in 2014), but those most commonly occurred through acquisition and far less through IPO. Health/bio saw over 200 exits in '14, with about half of them going public.

Shivetya 12y ago

there is really too much regulation for a true disruption to occur, let alone any disruption might easily be perceived as criminal if the returns are too good either by over zealous Federal regulators or via subtle hints by your competitors to the same

ethbro 12y ago
Remember there are both returns and costs. You focus on regulation around returns, and there's certainly some regulation around costs as well (mandatory reporting, etc). However, at seven-figure salaries you don't have to automation much person-work to show up on the final balance sheet.

psaintla 12y ago

I worked in medical tech for a few years, there are a few reasons people aren't going to flood into that sector. 1.) Regulation, HIPAA is a massive pain to deal with, the rules nebulous and require significant process that is expensive and time consuming. 2.) Violations of HIPAA lead to fines and even lawsuits from the office of civil rights. It used to be that Business Associates could hide behind the medical institutions to avoid this but with the Omnibus rules you'll face massive fines that will easily bankrupt any startup. 3.) The entire healthcare sector is extremely risk averse, slow moving and you cannot work around them you have to work with them which means you're going to move slowly too. 4.) You will HAVE to integrate with dozens of other ancient applications that medical institutions use, some of which have no documentation or publicly available source code. I hope you like searching through hundreds of pages of outdated HL7 and X12 documentation to figure out how a specific vendor screwed up their implementation. 5.) Large medtech companies regularly snuff out competition through lobbying and leveraging existing relationships in the medical community. So you've got a killer new medical app that will change the world? Big deal, your competition has three doctors who are leaders in their field(and conveniently board members). They will tell all of their buddies at the next American Cardiology Conference that your app is garbage. I hope you've got some big names associated with your startup and you can pay them handsomely. 6.) The medical field is a data hell. Some of it unstructured and non-sensical, much of it is structured but has no validation. That field you are getting from a third party API for albumin levels which was documented as g/dL, was actually entered in mg/L from the years 06/2004-12/2008, mg/dL from 09/2003-05/2004 and the proper documented g/dL for all other dates. Why was it that way? No one knows. You have to keep track of things like that for one field in one database for a single department in a medical institution with a few dozen departments that don't cooperate. Worst of all, it WILL change on you without you knowing.

ia 12y ago
from my experience, this is all 100% accurate. medtech is a shit show. however, from another perspective, it's exactly the type of "schlep" that mints millionaires.
- psaintla 12y ago

jgalt212 12y ago

> Until the financial crisis, the best path to that end was getting rich as a trader. I think you're pretty wrong on this. There was tons of money to be made as a trader post 2008 as the bonds pummeled by the crisis clawed their way bay to real/inflated levels with the help of the Fed buying everything site. For the most part, HF's grabbed a good portion of these dollars. So the "most money and prestige in the shortest time for the least work" job post crisis has been to be a trader/PM at a hedge fund. Having worked a a start-up in fintech, I can say the prestige is lowish, and the rewards are uncertain at best. There have just not been any insane price exits in fintech at all lately. Forget about a whatsapp style exit, I can't even name a Tumblr style exit. Can you?

jim_greco 12y ago

I don't really think people are leaving finance for tech because it's a gold rush. Most of these guys are making half of what they made as an associate or VP. Even with all the money pouring in, exits aren't exactly that common. Even if they were, most of these people aren't going into executive, or technical or founder roles that they could make that much money off the exit. But you do get to do much more interesting and rewarding work. You get to work in a collaborative and supportive environment You can wear whatever you want and enjoy the SF weather. And the hours are way better.