The Great Career Debate: Google Versus Goldman(inc.com)
inc.com
The Great Career Debate: Google Versus Goldman
http://www.inc.com/kimberly-weisul/the-great-career-debate-google-versus-goldman.html
60 comments
I agree with that. "Saving the world", "Changing the world" and other big words are often recited by Apple and Google. They didn't change a lot in my view. If it wasn't Steve Jobs inventing the PC another guy would have invented it a year or two later. As Linus Torvalds said "If Linux was not released in 1992, probably in 1993 someone would have come up with a similar idea, because at the time it was the natural thing to do". Kids in Africa are still starving though.
When I grew up, "searching for information" meant thumbing through boxes of index cards at the library, scribbling down book titles and Dewey decimal codes, going on a hike down the dusty shelves to hunt down the books (half of which would usually be on loan, in the wrong place or just lost), and then sitting down and flipping through your meager find page by page, hoping that you could find something relevant somewhere in there.
The fact that this alone has changed into "type something into Google, get back relevant results in milliseconds" has already changed the world. (And yes, I know there was Altavista etc as well; but there's a reason Google won the search wars.)
Also, compare these two for kicks:
Google's mission is to organize the world's information and make it universally accessible and useful.
Goldman Sachs: Our goal is to provide superior returns to our shareholders. (http://manonamission.blogspot.com.au/2005/07/goldman-sachs-g...)
The fact that this alone has changed into "type something into Google, get back relevant results in milliseconds" has already changed the world. (And yes, I know there was Altavista etc as well; but there's a reason Google won the search wars.)
Also, compare these two for kicks:
Google's mission is to organize the world's information and make it universally accessible and useful.
Goldman Sachs: Our goal is to provide superior returns to our shareholders. (http://manonamission.blogspot.com.au/2005/07/goldman-sachs-g...)
Which of those two mission statements are more honest? I'm genuinely interested - I can consider it from both sides.
Any company has a fiduciary duty to maximize shareholder value. I just find it interesting that GS seems to have adopted that as its only goal.
I'm torn too. I'm from the Dewey decimal system. I collected a library a reference books over the years, trying
to keep on top of things. I wish I had the Internet growing
up. I'm waiting for a young Einstein type to arrive, and
see how he, she uses the gift of the Internet. And no--I'm
not really impressed with what guys like Zuch are doing(yea,
I kniw it was helpful in overthrowing dictatorships), but
I'm waiting for something really amazing. A gifted, determined kid has the potential to do so much?
Consider who the shareholders of Goldman are. Teachers' pension funds for example. Is it a worthwhile goal to provide them with superior returns so that their pensions are in good shape? Yes. Is it a worthwhile goal to organize the world's information? Yes. Let's not have this silly debate. Everyone should work on what they enjoy and find intellectually challenging and the world will be a better place
This is illogical. You don't show that "they didn't change a lot," only that they did what they did what they did first. That doesn't diminish the achievement of accomplishing an ambitious goal, and it doesn't diminish the effect.
Exactly. If Fleming had not discovered Penicillin, somebody else would have sooner or later. But it was still worth doing.
Just trying to understand your argument: So, you are saying that neither Google nor Apple has really changed the world because their achievements were much more inevitable in a short period of years (<5) compared to potentially stopping starvation? (Which I think we'd all admit is not inevitable at all.)
I can see the logic in that if that was entirely true. But I don't know if I can agree that either Google or Apple's particular takes on various high achievements were actually inevitable at all (search in various forms, and maybe not the PC, but the iPhone, certainly).
I can see the logic in that if that was entirely true. But I don't know if I can agree that either Google or Apple's particular takes on various high achievements were actually inevitable at all (search in various forms, and maybe not the PC, but the iPhone, certainly).
Okay I'll try to make an example: these companies are based usually on other peoples invention.
The originality most people see in Apple's products doesn't lie exactly there. The big thing about the iPhone was the battery life and the hard disk. Not the touch screen interface. A touch screen interface was easy to make and copy for Google, that's why he did so quickly.
Indexing large amount of information (what google does) was or would be a requirement in the years to come. A solution that would be begging for an answer. At the time, no one could foresee how a good indexing vs bad indexing will shape the internet. But a few years later it was clear that we're heading towards big data.
Now, I firmly believe that stopping starvation all over the world, with today's technology is entirely possible. I also believe that this would change the world for the better in a much more meaningful sense. Technology today allows to create abundance, but our society chooses to create virtual demand, where possible.
The originality most people see in Apple's products doesn't lie exactly there. The big thing about the iPhone was the battery life and the hard disk. Not the touch screen interface. A touch screen interface was easy to make and copy for Google, that's why he did so quickly.
Indexing large amount of information (what google does) was or would be a requirement in the years to come. A solution that would be begging for an answer. At the time, no one could foresee how a good indexing vs bad indexing will shape the internet. But a few years later it was clear that we're heading towards big data.
Now, I firmly believe that stopping starvation all over the world, with today's technology is entirely possible. I also believe that this would change the world for the better in a much more meaningful sense. Technology today allows to create abundance, but our society chooses to create virtual demand, where possible.
Perhaps it is a bit exaggerated but I don't think anyone would argue with a straight face that GS does more good in the world than Google.
To me this is a question not of intelligence, IQ, or ability but rather morals and soul. There are so many great individuals who propelled the world forward into a better state because they make a conscious decision to use their gifts for the betterment of fellow human beings.
Goldman Sachs' culture does NOT encourage that. In fact, if you have even a tiny amount of that within you, it will crush it with the power of a thousand black holes.
To me this is a question not of intelligence, IQ, or ability but rather morals and soul. There are so many great individuals who propelled the world forward into a better state because they make a conscious decision to use their gifts for the betterment of fellow human beings.
Goldman Sachs' culture does NOT encourage that. In fact, if you have even a tiny amount of that within you, it will crush it with the power of a thousand black holes.
Not Google, but I did move from Apple to GS. At Apple I felt like I was making toys for first world adults. Nothing I did really did much to improve the situation of anyone unless they were interested in renting movies on iTunes.
Whereas at GS, I was writing software to sell municipal and corporate bonds. Companies and city infrastructure were funded more cheaply as a direct consequence of my work.
There was simply no comparison between the two, my work for GS was far better for society.
Whereas at GS, I was writing software to sell municipal and corporate bonds. Companies and city infrastructure were funded more cheaply as a direct consequence of my work.
There was simply no comparison between the two, my work for GS was far better for society.
You may find the work more rewarding personally but I seriously doubt that GS is due any credit for it. If any good comes from work done by GS it is certainly a by-product that simply can't be helped.
You bring up a good point, though. There's a spectrum of financial industry activity, ranging from stuff necessary for the modern economy to function to stuff that many observers would consider dangerous, irresponsible, immoral, and rent-seeking. Maybe Goldman Sachs touches every part of that continuum, maybe it doesn't - I don't know.
Sounds to me like the same thing happens in politics. At least in Mexico it seems only the greedy and self-interested people get involved in politics, when in fact politics should be an area where people with more interest in the public wellness than their own should be.
Dang. Where can you work when the culture is "we compete to get horribly rich by making the world a better place," then?
If GS does more harm that Google, perhaps that is a reason to go work for, and try to fix, GS?
That is certainly a noble sentiment however from a practical point of view I doubt that you would have any effect considering that they are a massive company employing 33,000 people around the world.
Also, the culture is set from the top-down so unless your plan is to penetrate Goldman Sachs with a fifth-column cadre that would somehow climb the corporate ladder continuously - while miraculously not losing sight of their real goal! - to one day be able to enact change from the top down, I don't know how you could possibly succeed in making even the smallest dent from your position as a corporate 'peon'.
Also, the culture is set from the top-down so unless your plan is to penetrate Goldman Sachs with a fifth-column cadre that would somehow climb the corporate ladder continuously - while miraculously not losing sight of their real goal! - to one day be able to enact change from the top down, I don't know how you could possibly succeed in making even the smallest dent from your position as a corporate 'peon'.
LOL for an "objective" question.
If google self-driving cars project succeeds (and it looks like it will), it will save dozens of thousands of life per year in the US alone.
If google life extension project succeeds, it will be a game changer, better than just saving lives. (Why? Because now humanity is stuck in a short cycle - study till you're 20, work for 40-50 years, spend 0-20 years in retirement. If we can increase the life span, it will all go towards the work phase).
If google life extension project succeeds, it will be a game changer, better than just saving lives. (Why? Because now humanity is stuck in a short cycle - study till you're 20, work for 40-50 years, spend 0-20 years in retirement. If we can increase the life span, it will all go towards the work phase).
and the google life extension project, if it is to succeed, will require a lot of financing. Here is a thought experiment: if investment banks are useless then why do companies, including Google, pay them high fees? The simplest explanation is they have their own role to play
Good point. I was talking to a CEO of a biotech start-up. He is not a huge fan of the banks, but he said "If I decide to do an IPO, you can dam well be sure I'll go with Goldman. I would be leaving money on the table with anyone else."
Goldman PR team has arrived.
Good lord. I'm just relaying a story that is relevant to the topic at hand.
I thought it was interesting because, before talking to this CEO, that all banks were the same. He corrected me on that.
I thought it was interesting because, before talking to this CEO, that all banks were the same. He corrected me on that.
> Wadhwa began by launching into the myriad recent sins of the financial industry: credit default swaps, a housing bubble, and widespread economic meltdown, for starters.
The "financial industry" may not be a brotherhood of saints, but someone who is going to claim that CDS is inherently bad and the housing bubble and economic meltdown were the sole product of the "financial industry" clearly hasn't done his or her research.
> Gregory Ferenstein, a writer for TechCrunch and one of the moderators, then asked if there was any good in the great majority of the finance industry. Wadhwa answered a flat no.
Given that so much of the wealth in Silicon Valley derives from the ability of founders and employees to turn equity into cash, this is an ironic position. I mean, is Wadhwa completely oblivious to the fact that GOOG $1,000 gives Google an even greater ability to recruit and retain the best and the brightest?
> He also claimed that the costs of starting a company have become so low that investment bankers are hardly needed to support them.
Starting a company is one thing, but growing a company is another. Look at the amounts that were (and are being) poured into companies like Twitter, Pinterest and DropBox in their later rounds. It's no surprise that names like Goldman Sachs, Fidelity and Allen & Company are on the investor rosters.
The "financial industry" may not be a brotherhood of saints, but someone who is going to claim that CDS is inherently bad and the housing bubble and economic meltdown were the sole product of the "financial industry" clearly hasn't done his or her research.
> Gregory Ferenstein, a writer for TechCrunch and one of the moderators, then asked if there was any good in the great majority of the finance industry. Wadhwa answered a flat no.
Given that so much of the wealth in Silicon Valley derives from the ability of founders and employees to turn equity into cash, this is an ironic position. I mean, is Wadhwa completely oblivious to the fact that GOOG $1,000 gives Google an even greater ability to recruit and retain the best and the brightest?
> He also claimed that the costs of starting a company have become so low that investment bankers are hardly needed to support them.
Starting a company is one thing, but growing a company is another. Look at the amounts that were (and are being) poured into companies like Twitter, Pinterest and DropBox in their later rounds. It's no surprise that names like Goldman Sachs, Fidelity and Allen & Company are on the investor rosters.
> Wadhwa began by launching into the myriad recent sins of the financial industry: credit default swaps, a housing bubble, and widespread economic meltdown, for starters.
The "financial industry" may not be a brotherhood of saints, but someone who is going to claim that CDS is inherently bad and the housing bubble and economic meltdown were the sole product of the "financial industry" clearly hasn't done his or her research.
Sorry, but I see that as entirely true. When they say the industry I understand, the industry's giants along with smaller players. And the Industry Giants were the ones that gave Triple A to Lehman Brothers (Moodys, Fitch, S&P). Lehman was owning on toxic assets, Goldman Sachs made a hostile take over with the help of the US Gov, who choose to go against all sorts of neo-liberal preaching to save GS because it's too big to fail. I see that industry as inherently bad for the USA and our planet!
And GS might be the worst example of corporate bullying, unethical acting and government infiltration (by far), but European banks are acting with the same disregard about anyone else except themselves.
So I don't think it's not far-fetched to say that: The financial industry is the root of today's world trouble.
Sorry, but I see that as entirely true. When they say the industry I understand, the industry's giants along with smaller players. And the Industry Giants were the ones that gave Triple A to Lehman Brothers (Moodys, Fitch, S&P). Lehman was owning on toxic assets, Goldman Sachs made a hostile take over with the help of the US Gov, who choose to go against all sorts of neo-liberal preaching to save GS because it's too big to fail. I see that industry as inherently bad for the USA and our planet!
And GS might be the worst example of corporate bullying, unethical acting and government infiltration (by far), but European banks are acting with the same disregard about anyone else except themselves.
So I don't think it's not far-fetched to say that: The financial industry is the root of today's world trouble.
I firmly believe that Google "is Evil". But not that-evil. Nowhere near Goldman Sachs[2]. GS is the Master of Puppets[1].
Quotes like "Finance is the place you can make your mark on the world. It has to be a personal commitment, because you won’t get credit for it. . . But you will know inside that you have made things happen on a bigger scale than you could at Google." are plain ridiculous. I can think of several good things done by Google. Maybe not for the good of man-kind or some other honorable cause, but I can't recall a single finance giant acting for the good of ANY community.
Stiglitz and Krugman wrote many articles (and books) describing how wall street is heavily flawed, praising arrogance and malpractices by paying huge totally undeserved bonuses to people who never did any real work in their lifespan.
Working in finance, is like saying that you create money out of thin air, because that's what you do actually. The better you are at convincing people that shit is gold, the better you are, the more money you make and so on...
[1]: http://www.youtube.com/watch?v=WEL6_SuQCu8 [2]: http://www.rollingstone.com/politics/news/the-great-american...
Quotes like "Finance is the place you can make your mark on the world. It has to be a personal commitment, because you won’t get credit for it. . . But you will know inside that you have made things happen on a bigger scale than you could at Google." are plain ridiculous. I can think of several good things done by Google. Maybe not for the good of man-kind or some other honorable cause, but I can't recall a single finance giant acting for the good of ANY community.
Stiglitz and Krugman wrote many articles (and books) describing how wall street is heavily flawed, praising arrogance and malpractices by paying huge totally undeserved bonuses to people who never did any real work in their lifespan.
Working in finance, is like saying that you create money out of thin air, because that's what you do actually. The better you are at convincing people that shit is gold, the better you are, the more money you make and so on...
[1]: http://www.youtube.com/watch?v=WEL6_SuQCu8 [2]: http://www.rollingstone.com/politics/news/the-great-american...
but I can't recall a single finance giant acting for the good of ANY community.
Consider another interpretation. I don't think Shiller is saying that finance acts altruistically. I think that Shiller is claiming that finance does add intrinsic value to world.
personally, I think that most banking professionals can't clearly articulate the value of finance. But there is clearly huge value to society of having skilled financial professionals.
The trouble is its usually intangible. The invisible hand and all.
To think up one hypothetical example ... say we had ethical and talented bankers who foresaw the housing bubble and therefore steered their banks away from financing home development in the Nevada desert. That could be immensely valuable and could have saved society billions of dollars that was wasted on homes no one wants.
Consider another interpretation. I don't think Shiller is saying that finance acts altruistically. I think that Shiller is claiming that finance does add intrinsic value to world.
personally, I think that most banking professionals can't clearly articulate the value of finance. But there is clearly huge value to society of having skilled financial professionals.
The trouble is its usually intangible. The invisible hand and all.
To think up one hypothetical example ... say we had ethical and talented bankers who foresaw the housing bubble and therefore steered their banks away from financing home development in the Nevada desert. That could be immensely valuable and could have saved society billions of dollars that was wasted on homes no one wants.
I guess I'm uniquely qualified to comment on this, having moved from Apple to Goldman Sachs.
At Apple I made toys for rich people. The only people I helped where those who rented a movie on iTunes.
At GS I wrote software to help sell corporate and municipal bonds. My work at GS directly made corporate expansion and city infrastructure cheaper to fund.
Without a doubt, my work for GS was far better for society.
At Apple I made toys for rich people. The only people I helped where those who rented a movie on iTunes.
At GS I wrote software to help sell corporate and municipal bonds. My work at GS directly made corporate expansion and city infrastructure cheaper to fund.
Without a doubt, my work for GS was far better for society.
[Edited] You mean, you helped make rich people richer ..
As well as financing the construction of municipal infrastructure. Get over yourself.
I think it is sad that our some of our brightest minds are hard at work trying to get people to click on advertising links.
For most of human history, the brightest minds were hard at work coming up with new ways to kill people. (No, I'm not trolling you. For every brilliant mind in science, there were scores in warfare.) Advertising and finance are progress.
I agree that it would be better if those people were working on clean energy and cancer research, but I don't think the situation is that bad, compared to the historical norm.
I agree that it would be better if those people were working on clean energy and cancer research, but I don't think the situation is that bad, compared to the historical norm.
This needs to be traced:
http://slashdot.org/comments.pl?sid=3891677&cid=44076497
An important information from the "confidential" studies here for example would be what kind of monitors were tested.
http://slashdot.org/comments.pl?sid=3891677&cid=44076497
An important information from the "confidential" studies here for example would be what kind of monitors were tested.
One good point made on the finance side is that you have a huge impact because of the size of the deals involved. The scale is much bigger than Google.
It also takes a certain viewpoint on free markets that most people lack, to see the good that finance does. For example, buying a company with a low share price and liquidating it would be a net plus, but seeing this relies on rejecting common falsehoods, eg that jobs are an externality.
The best argument I saw for working in tech came from a promotional video for an investment bank! One analyst is being interviewed, and she says how she spends all her time analyzing companies, but it would feel more "honest" to be actually doing the work that these companies do. While finance does add value to the economy, being so far removed from the coalface may feel less rewarding.
It also takes a certain viewpoint on free markets that most people lack, to see the good that finance does. For example, buying a company with a low share price and liquidating it would be a net plus, but seeing this relies on rejecting common falsehoods, eg that jobs are an externality.
The best argument I saw for working in tech came from a promotional video for an investment bank! One analyst is being interviewed, and she says how she spends all her time analyzing companies, but it would feel more "honest" to be actually doing the work that these companies do. While finance does add value to the economy, being so far removed from the coalface may feel less rewarding.
Both Google and Goldman are corporates. How about adding Pfizer to the mix? The result doesn't change. It doesn't matter what they do, their priority is not saving the world, even as a side effect. If you want to save the world, you are on your own. Non-profits? Maybe. Or a tiny company where you can have influence on the company's direction. But, not in a corporate, unless you drink your Kool-Aid everyday, then it is a different story.
I'm glad you threw Drug companies in the mix. I used to
think that was the one industry that followed scientific
principals--boy was I wrong.
I would have to disagree about Pfizer. Success in the pharmaceutical industry is based on bringing real benefit to patients, otherwise you don't make any profit.
Sure you can argue that pharmaceutical advertising is boosting those profits beyond what they would normally see, but the fact remains that these companies are still providing therapies that improve patients' lives and health.
Sure you can argue that pharmaceutical advertising is boosting those profits beyond what they would normally see, but the fact remains that these companies are still providing therapies that improve patients' lives and health.
And, in spirit of the HN: of course, starting your own company that will do good, is the best option, if you can.
Quants are a small fraction of the overall finance jobs landscape. At a finance feeder school, like the LSE, there's not much overlap between those who could work at Google and those who could work at a bulge bracket investment bank. Most simply don't have the technical skills for the former.
Most people here disdain finance. However, it seems to me finance is still a pretty vital industry. It's not only about making money out of "thin air" or a game of greedy shallow minds equipped with social capital. I will defend for it that it's also a means of the society to distribute the limited resource to where it sees the most promising future and payback. It's the people in finance decide that if a billion dollars will be invested in a luxury hotel or DNA sequencing research. Why do you want to leave these vital decisions to those greedy and ignorant people instead of those brightest students who may make a change with their knowledge and make wiser decisions for the society?
I may be biased (being a Google engineer in the New York office) but if you actually want to contribute something--anything--to the world, if you want to enjoy your job, then Google wins hands down.
I have a finance background and previously worked for UBS and in retail and wholesale stockbroking. I fully understand the role of, say, market makers in the financial system (ie providing liquidity).
I hear those same arguments being used for HFT but honestly they don't really stack up (IMHO). I don't really see HFT doing anything harmful however so ultimately I don't really care. I can see the appeal from a technical background of being a quant. It must be a challenge and I'm sure you can make a lot of money, which is fine, but it doesn't really contribute anything to the financial system.
The real problem I have with Goldman (and their ilk) is the serious crises they've instigated all the while banging the drum of contributing to the financial system.
This includes the subprime crisis [1] [2]. Goldman wasn't as guilty as some but its hands weren't clean either. You'll often see the "don't hate the player, hate the game" defense here. Sorry, no sale. You're accountable for your actions regardless of the incentives.
More disturbing is that Goldman (and their ilk) is killing people in the name of profit [3] [4]. Sorry, but that's morally reprehensible no matter how you look at it.
Now US regulators have made at least five mistakes (IMHO) when it comes to financial regulation:
1. 30+ years ago allowing investment banks, once partnerships with unlimited liability, to incorporate and have limited liability for their actions;
2. Not allowing investment banks to fail ("too big to fail" like Merrill Lynch). Bailouts of investment banks could reasonably be described as welfare for investment bankers;
3. Allowing banks to take positions as well as operate as market makers. There really should be strict separation here;
4. The carried interest tax treatment of hedge funds that mean executives pay less tax (as a percentage) than most of the population. Congress really has been bought and paid for here, most notably Sen. Chuck Schumer (D-NY) who has steadfastly broken with party ranks to resist carried interest reform [5]; and
5. Strict regulation on commodities market to separate speculators from hedgers. Driving up food prices causing untold misery even death should result in criminal liability for the organization and key personnel.
So work for Google. Don't work for Google. Whatever floats your boat. Ultimately (IMHO) I think Google has a net positive effect on the world.
Whatever you do, as an engineer, I strongly believe you should stay away from investment banks and hedge funds as you're actively contributing to misery in the world at this point.
[1]: http://dealbook.nytimes.com/2013/08/12/in-one-bundle-of-mort...
[2]: http://money.cnn.com/2010/04/24/news/companies/Goldman_Senat...
[3]: http://www.theguardian.com/commentisfree/2013/may/23/goldman...
[4]: http://www.fool.com/investing/general/2013/07/23/how-big-ban...
[5]: http://www.nytimes.com/2007/07/30/washington/30schumer.html?...
I have a finance background and previously worked for UBS and in retail and wholesale stockbroking. I fully understand the role of, say, market makers in the financial system (ie providing liquidity).
I hear those same arguments being used for HFT but honestly they don't really stack up (IMHO). I don't really see HFT doing anything harmful however so ultimately I don't really care. I can see the appeal from a technical background of being a quant. It must be a challenge and I'm sure you can make a lot of money, which is fine, but it doesn't really contribute anything to the financial system.
The real problem I have with Goldman (and their ilk) is the serious crises they've instigated all the while banging the drum of contributing to the financial system.
This includes the subprime crisis [1] [2]. Goldman wasn't as guilty as some but its hands weren't clean either. You'll often see the "don't hate the player, hate the game" defense here. Sorry, no sale. You're accountable for your actions regardless of the incentives.
More disturbing is that Goldman (and their ilk) is killing people in the name of profit [3] [4]. Sorry, but that's morally reprehensible no matter how you look at it.
Now US regulators have made at least five mistakes (IMHO) when it comes to financial regulation:
1. 30+ years ago allowing investment banks, once partnerships with unlimited liability, to incorporate and have limited liability for their actions;
2. Not allowing investment banks to fail ("too big to fail" like Merrill Lynch). Bailouts of investment banks could reasonably be described as welfare for investment bankers;
3. Allowing banks to take positions as well as operate as market makers. There really should be strict separation here;
4. The carried interest tax treatment of hedge funds that mean executives pay less tax (as a percentage) than most of the population. Congress really has been bought and paid for here, most notably Sen. Chuck Schumer (D-NY) who has steadfastly broken with party ranks to resist carried interest reform [5]; and
5. Strict regulation on commodities market to separate speculators from hedgers. Driving up food prices causing untold misery even death should result in criminal liability for the organization and key personnel.
So work for Google. Don't work for Google. Whatever floats your boat. Ultimately (IMHO) I think Google has a net positive effect on the world.
Whatever you do, as an engineer, I strongly believe you should stay away from investment banks and hedge funds as you're actively contributing to misery in the world at this point.
[1]: http://dealbook.nytimes.com/2013/08/12/in-one-bundle-of-mort...
[2]: http://money.cnn.com/2010/04/24/news/companies/Goldman_Senat...
[3]: http://www.theguardian.com/commentisfree/2013/may/23/goldman...
[4]: http://www.fool.com/investing/general/2013/07/23/how-big-ban...
[5]: http://www.nytimes.com/2007/07/30/washington/30schumer.html?...
> I have a finance background and previously worked for UBS and in retail and wholesale stockbroking. I fully understand the role of, say, market makers in the financial system (ie providing liquidity).
> I hear those same arguments being used for HFT but honestly they don't really stack up (IMHO). <snip> It must be a challenge and I'm sure you can make a lot of money, which is fine, but it doesn't really contribute anything to the financial system.
These two statements stand in direct contrast. If you understand the role of market makers then you should understand that the most popular HFT strategy is to be an electronic market maker. It's about competition for liquidity provision which tightens spreads which reduce the cost of trading for everyone.
> 2. Not allowing investment banks to fail ("too big to fail" like Merrill Lynch). Bailouts of investment banks could reasonably be described as welfare for investment bankers;
This would have caused the collapse of the global economy. Google would have suffered mightily from the following depression. Companies like ML might "deserve" to be punished and that process is now working it's way through the courts, but that bailout cost a lot less than 25% unemployment.
> 3. Allowing banks to take positions as well as operate as market makers. There really should be strict separation here;
By it's very definition, a market maker must take proprietary positions.
> 5. Strict regulation on commodities market to separate speculators from hedgers. Driving up food prices causing untold misery even death should result in criminal liability for the organization and key personnel.
Hyperbole. There's never been any evidence that speculation on commodities is "driving up food prices" let alone causing "misery event death".
> I hear those same arguments being used for HFT but honestly they don't really stack up (IMHO). <snip> It must be a challenge and I'm sure you can make a lot of money, which is fine, but it doesn't really contribute anything to the financial system.
These two statements stand in direct contrast. If you understand the role of market makers then you should understand that the most popular HFT strategy is to be an electronic market maker. It's about competition for liquidity provision which tightens spreads which reduce the cost of trading for everyone.
> 2. Not allowing investment banks to fail ("too big to fail" like Merrill Lynch). Bailouts of investment banks could reasonably be described as welfare for investment bankers;
This would have caused the collapse of the global economy. Google would have suffered mightily from the following depression. Companies like ML might "deserve" to be punished and that process is now working it's way through the courts, but that bailout cost a lot less than 25% unemployment.
> 3. Allowing banks to take positions as well as operate as market makers. There really should be strict separation here;
By it's very definition, a market maker must take proprietary positions.
> 5. Strict regulation on commodities market to separate speculators from hedgers. Driving up food prices causing untold misery even death should result in criminal liability for the organization and key personnel.
Hyperbole. There's never been any evidence that speculation on commodities is "driving up food prices" let alone causing "misery event death".
"the crises they instigated" - this is just silly. Periodic crises is a feature of a capitalist economy. Look at the 2001 dot com crash. Yes, it happened not to dramatically affect the rest of the economy this time. But would you say Pets.com instigated the crash?
If HFT isn't doing any good, and is extracting money from the system, then isn't it necessarily doing harm? It seems to me that if you are making money and not doing anything useful, then you must be basically stealing from somebody somehow.
This Apple iPad Air commercial is timely. (Yes, I'm lumping Google and Apple and all engineering companies together.)
http://www.youtube.com/watch?v=o9gLqh8tmPA
Somebody should juxtapose this quote with this ad right after.
Somebody should juxtapose this quote with this ad right after.
I had a girlfriend in college who couldn't wait to put on the pants suit and become a money manager. Whenever I get
nostalgic I check out her corporate picture, and cringe.
She used to say if she was a man, "people would encourage
my desire to rise to the Top!" Yes dear, but don't expect me to be hang around. On the other hand at least she didn't
wear emo glasses and hide behind some phony non-profit.
Yes--how you make your wad does matter. Just because it's
legal doesn't make it copacetic.
What was your point?
False Dichotomy.
Bright people should start their own companies.
Bright people should start their own companies.
Bright people should start their own companies.
Yeah, I'm a real fan of that search fund made available to everyone with a 140+ IQ at age 23. I would have taken part, but I was too busy shitting golden unicorns that weekend.
Yeah, I'm a real fan of that search fund made available to everyone with a 140+ IQ at age 23. I would have taken part, but I was too busy shitting golden unicorns that weekend.
I don't know why, but I have noticed,in my world, it's the
average guy, with the average IQ that thrives. A rich father helped too. Many great minds, or creative minds
seem to lose their way? I always laugh at movies that
round up the smartest guys in the world in order to save it;
a pizza delivery man is always in the mix. It's ironic, but
true.
Interestingly, the largest employer of mathematicians in the world isn't Google or Goldman Sachs.
It's the NSA.
It's the NSA.
I'd rather they become politicians and create a new order of technicrats.
I suggest googling "Goldman Sachs starvation".
Why not go meta?
Sure, a company like Google directly does more good than Goldman. (Although, trivially, you could argue a taco stand does something arguably more important than inverse-indexed search) Non-trivially, though, in order for a company like Google to get financed, it needs to have investors. Now, you'd be right that this doesn't necessarily require bankers, but it does present an interesting problem.
When an investor makes an investment, she wants to make more money than she put in. Else, why do it? Ok, so the simplest possible way to get more money than you put in would be to just let the invested business produce cash from profits and receive distributions over time. Ok, great, but what if that takes 20 years and you need the cash sooner?
The other option is to sell the stake to someone else. But the second you do that, in fact, the second you even offer to do that, the person on the buying end has the same worry. The only possible way for this to work is for there to be a bunch of other people who are willing to buy or sell at a certain amount at a certain price. That, my friends, is a market.
But what if there's no one out there to buy or sell your stake? Or what if there's very few? You need a market but there is none. Well, what if a person could somehow make a market for you? Someone, who, because of their deep knowledge of your company, companies like yours, the way markets work generally, and a view of the future state of markets could come in and say, "Hey, listen, I know there's not a lot of people out there right now who are willing to buy or sell, but I'm willing to buy X shares of your company at Y amount and sell X shares of your company at Y + Z amount." You, as the investor, are loving it since you don't have to tell someone upfront, "Hey, I'm saying my entire stake, what's the price?" Because that would be extreme adverse selection and would lower your price. And further, you don't have to say, "I'd like to double my share," thereby hinting you know something and the price should be higher. A market is made: there's a standing price to sell at X, and a standing price to buy at Y.
This actually happens all over the place. Facebook, amazon, google, et al. make money by being platforms for other people to create content. Facebook as a platform is obvious. For google, they are really the platform for the internet itself. No matter what firm w're talking about, the only way for content-creators to be willing to share is if there are enough people to consume/listen. And for there to be enough people to listen, there has to be someone who aggregates. And for someone to aggregate it necessitates a huge amount of upfront investment. Meaning, for example, that Facebook had to build itself before a billion people used it. Yes, this was in stages. But at each stage, it required a huge amount of risk before other people were there to use it. The same with google. Same with amazon. You see, these firms are underwriting the act of sharing content. Their knowledge of the eventual payoff allows them to buy the time, commitment, etc before there is an obvious customer. They have made a market.
Now, while Google, Amazon, and Facebook are doing this for things on the internet. Goldman is doing it for the Googles, Amazons, and Facebooks themselves. Goldman is providing a platform for the businesses in general. And, not only that, for anything that has substantial future cash flows!
It might seem that anybody could do this. Like why not Tim Ferriss on Angellist-Underwrite? That isn't so clear. The only reason Goldman can afford to post a bid and offer (i.e. make a market in cash-flows generally) is to have a better idea of the value of that something than whomever they are transacting with. Goldman has to think, "Ok, we'll buy/sell at x/y price because we know the real price that is z and so we can make money by offering the spread x - y." And guess what? In order to know that, they have to spend what seems like a life-wasting amount of time getting into the minutiae of esoteric financial knowledge. Because, remember, it's not that the market-maker is just connecting buyers and sellers. The market-maker is actually fronting the money--bearing the risk, by posting a bid and offer--in order for there to be a guarantee of the market. So the stakes are huge.
Now, in the future, it will be Tim Ferriss on AngelList-Underwrite. But he will hire 10 guys/gals to help him analyze markets. And then will he will get a lot of software to help aggregate information. And then he will want to be near the action, so he'll get an office in SF. And before you know it, he will be Goldman Sachs in jeans.
In the end, the only way for a platform to exist of any type is for someone somewhere to bear the initial risk on an unconditional (not knowing if a person is buying or selling) basis. It doesn't matter if it's a Facebook, a taco stand, the Hoover Dam or asset-backed securities. Goldman (and the other mega dealer-banks) are facilitating a platform for the entire world to unload cash-flows: the platforms' platform. And if you pick Finance as a career, it will be thankless, often boring, hard and people will likely not understand what you do and will demonize you for it. But you will know that you are doing something special: you are building the platform for everything.
Sure, a company like Google directly does more good than Goldman. (Although, trivially, you could argue a taco stand does something arguably more important than inverse-indexed search) Non-trivially, though, in order for a company like Google to get financed, it needs to have investors. Now, you'd be right that this doesn't necessarily require bankers, but it does present an interesting problem.
When an investor makes an investment, she wants to make more money than she put in. Else, why do it? Ok, so the simplest possible way to get more money than you put in would be to just let the invested business produce cash from profits and receive distributions over time. Ok, great, but what if that takes 20 years and you need the cash sooner?
The other option is to sell the stake to someone else. But the second you do that, in fact, the second you even offer to do that, the person on the buying end has the same worry. The only possible way for this to work is for there to be a bunch of other people who are willing to buy or sell at a certain amount at a certain price. That, my friends, is a market.
But what if there's no one out there to buy or sell your stake? Or what if there's very few? You need a market but there is none. Well, what if a person could somehow make a market for you? Someone, who, because of their deep knowledge of your company, companies like yours, the way markets work generally, and a view of the future state of markets could come in and say, "Hey, listen, I know there's not a lot of people out there right now who are willing to buy or sell, but I'm willing to buy X shares of your company at Y amount and sell X shares of your company at Y + Z amount." You, as the investor, are loving it since you don't have to tell someone upfront, "Hey, I'm saying my entire stake, what's the price?" Because that would be extreme adverse selection and would lower your price. And further, you don't have to say, "I'd like to double my share," thereby hinting you know something and the price should be higher. A market is made: there's a standing price to sell at X, and a standing price to buy at Y.
This actually happens all over the place. Facebook, amazon, google, et al. make money by being platforms for other people to create content. Facebook as a platform is obvious. For google, they are really the platform for the internet itself. No matter what firm w're talking about, the only way for content-creators to be willing to share is if there are enough people to consume/listen. And for there to be enough people to listen, there has to be someone who aggregates. And for someone to aggregate it necessitates a huge amount of upfront investment. Meaning, for example, that Facebook had to build itself before a billion people used it. Yes, this was in stages. But at each stage, it required a huge amount of risk before other people were there to use it. The same with google. Same with amazon. You see, these firms are underwriting the act of sharing content. Their knowledge of the eventual payoff allows them to buy the time, commitment, etc before there is an obvious customer. They have made a market.
Now, while Google, Amazon, and Facebook are doing this for things on the internet. Goldman is doing it for the Googles, Amazons, and Facebooks themselves. Goldman is providing a platform for the businesses in general. And, not only that, for anything that has substantial future cash flows!
It might seem that anybody could do this. Like why not Tim Ferriss on Angellist-Underwrite? That isn't so clear. The only reason Goldman can afford to post a bid and offer (i.e. make a market in cash-flows generally) is to have a better idea of the value of that something than whomever they are transacting with. Goldman has to think, "Ok, we'll buy/sell at x/y price because we know the real price that is z and so we can make money by offering the spread x - y." And guess what? In order to know that, they have to spend what seems like a life-wasting amount of time getting into the minutiae of esoteric financial knowledge. Because, remember, it's not that the market-maker is just connecting buyers and sellers. The market-maker is actually fronting the money--bearing the risk, by posting a bid and offer--in order for there to be a guarantee of the market. So the stakes are huge.
Now, in the future, it will be Tim Ferriss on AngelList-Underwrite. But he will hire 10 guys/gals to help him analyze markets. And then will he will get a lot of software to help aggregate information. And then he will want to be near the action, so he'll get an office in SF. And before you know it, he will be Goldman Sachs in jeans.
In the end, the only way for a platform to exist of any type is for someone somewhere to bear the initial risk on an unconditional (not knowing if a person is buying or selling) basis. It doesn't matter if it's a Facebook, a taco stand, the Hoover Dam or asset-backed securities. Goldman (and the other mega dealer-banks) are facilitating a platform for the entire world to unload cash-flows: the platforms' platform. And if you pick Finance as a career, it will be thankless, often boring, hard and people will likely not understand what you do and will demonize you for it. But you will know that you are doing something special: you are building the platform for everything.
The OP is more about which is socially more useful. Fuck that. It's not an individually relevant discussion. It's for people who are comfortable, and that's not our generation, not yet. People in their early 20s need to concentrate on things like getting paid, making contacts, what they'll learn, and building the credibility necessary to do what you really want to do, as soon as you can get there. If you're not at the point of being able to change the world for real and on your terms, then don't settle for the indirect substitute of working for a macroscopically "world-changing" company (but likely in a subordinate role). Instead, go and get what's right for you. No one should feel ashamed just because he works in finance-- this is especially true for the young, who have no real influence anyway.
Who wins between Google and Goldman? If you're coming into Google without any contacts or a pre-established national reputation, you better head to Mt. View. Anything else is like working in Goldman's Atlanta office (if they have one). Also, get your project allocation before you sign the offer letter. If you land on the right project-- one with new development (not legacy maintenance) and interesting work where promo every 2 years (up to Staff) is common-- then Google's a pretty good option for people who know they want to be in tech. It will set you up very well to have 4-5 years at Google with good projects and promotions.
On the whole, though-- taking this discussion away from company specifics-- I'd advise young people to go with finance if they can get it, at least in their early 20s. Why? If you do tech, you only gain credibility if you work on the interesting projects. If you do bottom-half crap work in technology, you're a nobody, and after 10 years, you'll be shat out. On the other hand, if you have Goldman or RenTech on your resume, you have a credibility that can't be taken away. (In New York, at least, most startup founders did their 20s in finance.) If you got assigned crap work, you can say "that's why they pay so well." You aren't seen as a loser if you were assigned crap work in finance, because you can blame the industry; whereas if you worked at a software firm and were assigned junk-pile work and never got beyond a junior role after 4 years, you're cooked. Relatedly, everyone will assume you made a lot more money than you actually did.
Working in finance builds credibility, and that's really fucking important when you're starting out.
Who wins between Google and Goldman? If you're coming into Google without any contacts or a pre-established national reputation, you better head to Mt. View. Anything else is like working in Goldman's Atlanta office (if they have one). Also, get your project allocation before you sign the offer letter. If you land on the right project-- one with new development (not legacy maintenance) and interesting work where promo every 2 years (up to Staff) is common-- then Google's a pretty good option for people who know they want to be in tech. It will set you up very well to have 4-5 years at Google with good projects and promotions.
On the whole, though-- taking this discussion away from company specifics-- I'd advise young people to go with finance if they can get it, at least in their early 20s. Why? If you do tech, you only gain credibility if you work on the interesting projects. If you do bottom-half crap work in technology, you're a nobody, and after 10 years, you'll be shat out. On the other hand, if you have Goldman or RenTech on your resume, you have a credibility that can't be taken away. (In New York, at least, most startup founders did their 20s in finance.) If you got assigned crap work, you can say "that's why they pay so well." You aren't seen as a loser if you were assigned crap work in finance, because you can blame the industry; whereas if you worked at a software firm and were assigned junk-pile work and never got beyond a junior role after 4 years, you're cooked. Relatedly, everyone will assume you made a lot more money than you actually did.
Working in finance builds credibility, and that's really fucking important when you're starting out.
> if you have Goldman or RenTech on your resume
RenTech is in a completely different league from Google and Goldman. I've never met a single person to even get an interview there.
RenTech is in a completely different league from Google and Goldman. I've never met a single person to even get an interview there.
Yep the financial system has a whole host of problems that everyone knows but "saving the world" is just meaningless marketing mumbo jumbo for SV - lets be clear that Google is not saving the world nor is any other SV company. We by and large push ads in exchange for information - its a valuable business model but lets get over ourselves.