Founding a startup with zero revenue is better than working for Goldman Sachs | Hacker News Reader

Founding a startup with zero revenue is better than working for Goldman Sachs

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287 pointscjg144 comments

That's quite interesting:

" At the risk of getting sued, let me throw you geeks a bone and part the Goldman veil a bit. The Goldman Sachs risk system is called SecDB (securities database), and everything at Goldman that matters is run out of it. The GUI itself looks like a settings screen from DOS 3.0, but no one cares about UI cosmetics on the Street. The language itself was called SLANG (securities language) and was a Python/Perl like thing, with OOP and the ORM layer baked in. Database replication was near-instant, and pushing to production was two keystrokes. You pushed, and London and Tokyo saw the change as fast as your neighbor on the desk did (and yes, if you fucked things up, you got 4AM phone calls from some British dude telling you to fix it). Regtests ran nightly, and no one could trade a model without thorough testing (that might sound like standard practice, but you have no idea how primitive the development culture is on the Street). The whole thing was so good, I didn’t even know what an ORM really was until I started using Rails and had to wrestle with ActiveRecord. The codebase was roughly 15MM lines when I left, and growing. I suspect my retinas are still scarred by the weird color blue SecDB was by default. "

I think that is one of the more thorough accounts of that system I have seen published. All in one paragraph no less.

Thanks. I haven't seen many published accounts by SecDB. When I joined, there was literally zero. I now note there are some descriptions on Wilmott and the like. Seems like word is seeping out. All of my description is on the Web in bits and pieces.

I've had a number of people tell me this system is why GS won the financial crisis.

During the financial crisis, GS knew their positions and their risks. They could also calculate the side effects of proposed trades as quickly as their computers could calculate it. This meant the people at the top could actively plan what to do next during the day.

In contrast, MS and JPM can only get information like this a few hours after the end of the day, and supposedly Citi just can't calculate such things without massive effort.

If you know and can speak about enough to do a blog post on this, could you consider it? I'd love to hear more about the different systems capabilities and how that affected the different big houses' ability to trade effectively in a storm.

I don't know much more than what I put into my post, which is more or less standard industry knowledge.

One more thing I should mention - this isn't a purely IT-driven story. Goldman doesn't simply have better IT than Citi or the Morgans. Citi has had many mergers and acquisitions (e.g., Vikram Pandit came onboard when Citi bought his hedge fund), whereas Goldman is mostly homegrown. Even if Goldman's geniuses ran Citi, they would still never be able to do what Goldman did.

The issue with real-time P/L and risk calculation is not necessarily IT but your math models valuing your positions in very hard to value securities.

For instance, a liquid stock such as MSFT is easy to value; just look at the last traded price. Chances are, if you are liquidate your entire holding of MSFT (even if you are a big fund or bank), it'll fall roughly in the range of couple of cents of last traded price.

A fairly illiquid stock such as a penny stock or a stock with relative low shares float; if you were to close your position as a bank, you are probably unloading/covering so many shares that it'll affect the price of that stock significantly. So you need to model that into your P/L model.

Things get even messier with a derivative, because let's say you are trying to sell an option position. Whoever your counterparty you sold your option contracts too, probably has some counter-strategy in which they might hedge their option transaction with an underlying equity or with another option spread at a different price whose counterparty might choose to hedge with an underlying equity position. All of which would in term affect the underlying equity pricing and how the options call/put parity is re-adjusted and then in terms, the pricing of the option contracts you just traded. So you need to model that.

So in your derivative pricing model, you might have to consider underlying pricing/volatility/liquidity, options pricing/time-decay/liquidity, futures pricing, currency exchange rates (for an ADR security) and how all of them all interact and influence one another.

And even with the math aside, constructing and consolidating all exchange/quote systems that trade all of these products is a system integration nightmare.

Another issue the other banks (and maybe GS, who knows) have is "internal arbitrage". This is what happens when each desk has their own pricing system; they go out of sync, a trader notices, and then sells from his desk to another desk with an out of date price. The bank loses money, but his desk makes some.

For that reason, creating a system like SecDB is a high priority these days.

There's a tag in most exchange's trading servers that you could include in your orders to not execute if it's a self-trade.

There are a lot of trades that don't happen on exchanges.

@jrockway: I'm curious about this, do you have any links to texts you've read about this or is this from personal experience?

In my experience there are all sorts of reasons why different desks WANT to price things differently. When 2 internal desks cross markets, they trade with each other instead of the broad market. Its advantageous for both internal desks because if the order is crossed internally, they don't have to print on an exchange, they save transaction costs, and they can be incentivized to give internal desks better prices. Its important for them to be able to shift risk from desk to desk so they can properly attribute PnL to the right agent.

edit: jrockway, just read further down that you said you work at a bank, where I'm assuming you had that experience. Ultimately the question is whether it is or should be the case that security XYZ should be considered to have the same price firm wide.

Trading to move deals to particular books/desks is not the same as making money off internal groups. I suspect you're conflating these two points.

What about your HFT outfit, Mesh Capital?

How do you guys do real-time P&L and risk calculations? Given the frequency and volume of the orders you guys pump to the market, I imagine that there must be a latency between when you receive ack/fills from market vs. real time market price of your positions. Given that HFT makes or breaks on pennies, cancel/modifying your orders in sync with real-time market info must be critical.

How do you guys solve this problem, both software-wise and telecom-wise? Via colo, but that solves the issue with only latency to trading servers. What about streaming and constructing your own consolidated quote book (because there's latency on CQS)?

We are a little far from facing citigroup-like scaling issues - they have 100,000x more employees than we do.

It did help. The reason was that GS was able to run the models and pricing on the CDOs (collateralized debt obligations) they held, unlike other firms. CDOs are made up of a collection of asset backed securities, and even running a cashflow model, prepayment model and interest rate model on each of those individually can take up to 10 seconds (Sorry for the financial terms). On top of that, there's thing called OAS (option adjusted spread) which is a type of Monte Carlo simulations and quite intensive. A lot of places were not able to properly price their CDOs due to the intensive nature of the calculations but Goldman could.

To be honest, Buffett's interest in Goldman and his friendship with Obama could have had some play in the government's interaction with them.

The real issue here, is that all the models and ratings on these securities did not correlate the failure of similar bonds with similar underlying collateral. When running the models, they had something like 10% cross correlation between different bonds with extremely similar collateral according to someone who used to work at Fitch. In reality it should have been something like 50 to 75%.

So. This is funny. I actually work at Goldman, work in the system he talks about, and have been doing so for 5 years. You can get numbed by the experience of working here, but you don't have to be. I've become friendly with some of the best hackers I know, and for us, finance always takes a backseat to writing amazing code. Sometimes we succeed. Sometimes we fail, but we try to never say, "Meh. Good enough."

Wall Street is like any other business. Don't over-glorify working for Google and not Goldman: tech companies are in it for money too; so are startups. At least on Wall Street people tell you they're doing it for the money. It's easier to detach that way and remember that what you're doing is just a job.

My understanding is GS is company that wants to "beat the market" meaning someone else in the market is loosing. And Google's goal is to make the worlds information available to everyone and show them ads. Google seems more like a everyone wins company.

for every dollar of ads google sells, that's a dollar their competitors don't get. they are as cut throat as anybody else, they just do a better job of making computer people feel good about it. ask their sales department if they're an "everyone wins" company.

If G-mail didn't exist I would use yahoo. G-mail is much better for me though. I win and Google wins. Yahoo looses. If GS gets in front of Citi on a trade by 2 seconds GS wins and Citi looses, no one else is involved. Unless those two seconds of "efficiency" help someone?

You are assuming all trades are determined by priority, which is false.

If GS got there first, but Citi cuts in line by offering a better price, the customer also wins.

The following is from a talk at the New York Public Library.

ERIC SCHMIDT: But in fairness to those people[finance people], had they come to Silicon Valley in 1999 they would have received a far greater payoff during our little bubble. So who are we to criticize the Wall Street folks for having their bubble? It was just a bigger bubble.

WALTER ISAACSON: Do you think though that Google creates something that’s more real than somebody on Wall Street creating a financial instrument?

ERIC SCHMIDT: To be honest, not really. When I walked into the company, I said, “People pay you for this thing, these little ads?”

http://www.nypl.org/sites/default/files/events/live_2009_11_...

Eh, I don't see how candidness and an eagerness to question his own model by Schmidt changes the value proposition at all. Almost all of the time, an ad click is creating value (or a fractional expected value) where there wasn't some before, unless you have a 0% conversion rate.

Meanwhile, a huge chunk of Goldman's activity as I understand it is simply taking the "dumb money" on Wall St. Nibbling the edges, taking pieces of trades by less sophisticated investors. That's not necessarily value creation, and much of the time it can be straight extraction from the rest of the economy.

Not that ads won't get there of course - they're well on their way already with various exchanges. But presently, they have to actually be creating other economic value via conversions in order to exist.

Everyone wants to "beat the market." For every dollar McDonalds gets, Burger King is not. For every dollar Microsoft gets, Apple is not. There are no group hugs unless you work for a non-profit (and even then, for every dollar your non-profit gets, some other, equally deserving non-profit is not).

This sounds like a very zero-sum model. Do you know, that dollars don't get destroyed by spending them? (And that this doesn't even matter, because it's wealth creation that matters (supply) and not demand?)

I think the point of his comment is to see that viewing trade as zero-sum leads to absurdity.

Certainly, but assuming it can't be zero-sum leads to absurdity as well.

What about high frequency trading? Most of it is zero sum, first one to arb the difference wins. The economy doesn't derive any higher value from it if the difference would've been corrected within a couple seconds (or a few minutes) anyways. It's not the same as buying a burger.

Oh, if you by a burger and sum the benefit over, say, Burger King and McDonald's it's probably constant.

If you sum the benefits of arbitrage over the high frequency traders, it's possible (close to) constant, too.

But the rest of the world can still benefit (or perhaps suffer in the case of a burger).

Hm, I think we're talking past each other although I'd like to hear more exposition on your comment because it doesn't really make sense to me.

I was talking more from the perspective of someone who's generating cash. Burger King pays suppliers for meat and whatever (or raises cows in their own operation) and you pay them for a burger. You get a burger, they get cash, pay people, value creation all around.

In Wall St, on the other hand, theoretically we should see value creation through efficient routing of capital to the right places and the people who make that happen are rewarded for their effort. In practice, I feel, it's often a video game where they manage to nibble a billion little pieces away from the value-based investors who are actually performing an economic function. So in some scenarios, they're a net drain, rather than part of a robust economy. That's where my zero-sum analogy came in. YMMV.

Yes, the difference between theory and practice can be startling in finance. But I am more wary about fleecing the customer than about counter parties in a high frequency trade. [1] And of course there's also always making money by rent-seeking behaviour. E.g. the implicit subsidy banks get in lower borrowing costs on the market once they are to big to fail.

[1] Mutual fund managers or hedge funds who take a lot of fees are probably quite a drain on your their clients returns.

The value investor gets an abstraction over the ocean of algos and traders trying to out-game each other. The abstraction is that there's a market price and a book depth. The deeper the book, the more stock the value investor can move around without being gimped by increasingly undesirable prices. The more traders, the deeper the book.

Finance pundits worry about the implications of traders gaming each other. Let them game each other. The value investor sees a market price backed by millions of dollars of offers within pennies of each other. Should his trades move the market, much more liquidity will spring to life. The value investor feels fine.

> For every dollar McDonalds gets, Burger King is not. For every dollar Microsoft gets, Apple is not.

I'm pretty sure that's not the case. Apple and Burger King would probably never be what they are today without MSFT or Mac. And perhaps vise versa also.

Anything that takes up half of your waking hours shouldn't be "just" anything.

Really? Quality, not quantity. An hour with my wife is more meaningful to me than half my day at work. No job will make up for that, unless I'm changing the world. So yes. It's just a job. Your (not you specifically, but anyone) startup is just a job.

So because your wife give you a 100 happiness factor(tm), you are now indifferent when choosing between jobs that give you a 20 or 80 happiness factor?

Or are you saying that your meaningfulness bar is so high that no job can possibly clear it? What if you and your wife worked together?

For the most part, we get to choose our lives. I reject the idea that time spent working can't be meaningful.

Or maybe he's saying that access to his wife is dependent on the Goldman Sachs job.

If he loses the 20-factor-job he loses the 100-factor-wife.

Definitely not. :)

I'm just saying that - to me - a job is just a means to some end. That end (for me) is providing for my family adequately. That I happen to enjoy what I do is an extra bonus. I'm just saying not to lose sight of why we do what we do. If you start placing too much importance on a job, you let your job define you. IMHO, it's much more empowering to remember that your job is just a tool like any other.

Agreed. My job is a means to an end, not a personal definition. I'm a husband and father first. I love the job I have now because it's just a job. I do interesting programming. I work 40, zero overtime. My time is flexible, I can come or go as I please as long as I put in the time. I can take a vacation day with zero notice.

I purposefully got a job that really is "just" a job so I could not only put food on the table but be there to enjoy it as well.

I'd prefer working where I don't need to detach. That's an option too.

totally agree, its just a job. even if you work with the most hacker-friendly company, you'll eventually rant out the same way someday. Maybe the post should be "Founding a startup with zero revenue is better than a day job" (oh thats a cliche!)

That's the message I get from this site, day after day. Some days I almost feel ashamed to say I have a day job here.

Yep, we should all be crafting personal projects that double as severely frugal boot strapped startups of one. :)

I also work at a bank, but don't like people who think it's just a job. They make my life more difficult and make it harder for the bank to make money.

Our department doesn't hire people like that.

(Also, pretty much nothing in the article applies to most banks these days. Sure, someone may have a burger-eating contest from time to time, but it's not like it's work-sanctioned. It's just a bunch of dudes with too much testosterone. There are bonuses, but it's silly to count on them for anything. Ask for the amount of money you want as your base pay -- they'll probably give it to you. Then enjoy the 20% or whatever as a fun extra.)

It's very much not silly to count on the bonuses. 20% extra? Try 100-300% or more in most of the positions on the trading floor. As you rise in the ranks, it's much, much more. The bonus at every level above Analyst is easily larger than the base, which, as Antonio says, is generally not that impressive. This is true at every big bank on Wall St.

Among my friends, we represented every large investment bank in NYC and many of the smaller hedge funds, so I'm sure it's representative.

Not sure how compensation is in the IT depts. at those banks, though, if that's what you're talking about. IT is probably not representative of why people go to work on Wall St, though, since it's viewed as a cost center in most banks, and it's not what Antonio is talking about in the post.

I worked in IT at GS for a couple years. 15-20% was about right for bonuses there, on average. In 2006, I got almost a 50% bonus, but that was an exceptionally good year.

You can have the attitude of "just a job" and still be a valuable asset to a company. To some people, work is "just work" and sometimes the "just a job" mentality is an extension of that.

If you ask me, its called life balance. It's just a job. It's just school. It's just money. That's just life.

That's cool. I'm surprised you say that finance always takes a backseat to writing amazing code, though.

In my experience, traders don't want cool new snazzy Google Wave. They want Excel. They don't want cool new Web 2.0 streaming quotes/risk calculations/portfolio calculations, they want VBA macros in Excel.

Even if you are working in actual trading/strategy area and write up your backtester with Python. They want your P/L in Excel. To implement the strategy though, they want it in C++.

Wall Street: Excel for life!

Don't confuse "amazing code" with "snazzy technology" (although we do some pretty snazzy stuff).

Also not sure about other places, but Excel usage is frowned upon here, at least on the trading desks that I support.

Rare and refreshing. Too many hours of my life have been spent hacking broken Excel spreadsheets with recorded macros.

Want to get into details as to what kind of "snazzy technology" or "amazing code" you guys are involved in? You don't have to give me corporate espionage secrets, just vague general topic.

Is it a flashy OMS/EMS/reporting/risk/quotes front-end? What kind of technical problems do you guys encounter? In terms of concurrency, security, message processing, bandwidth/latency? What kind of business problems do you guys encounter? In terms of smart-routing, risk calculations and compliance. Just curious what programmers in GS are generally involved in.

Yes. Old = good. New = bad. Tech in finance is about efficiency. Everything else does not matter. The GUIs are usually atrocious. Traders don't care, as long as they make money. Excel is abused beyond belief and there is a whole cottage industry around Excel plug-ins. A good VBA programmer can command a salary as large as a C++ hot-shot. Sad.

You don't have to worry about them over-glorifying Google either. The general attitude on this site is that you're either working on your own startup (by far the best option), working for an early-stage startup (ok, but still second best, since its not your own thing), or you're basically wasting your time (working for "the man").

I find it offensive, actually, but so it goes.

Again, everybody likes to justify their own decisions.

And the more they secretly suspect the other possibility might actually be better, the more they feel the need to poop on it. I don't feel the need to loudly proclaim how much it must suck to be a garbageman, but I do feel the need to loudly proclaim that I sure am glad I'm not earning six hundred thousand dollars a year at a big hedge fund.

Fair enough. I wouldn't mind except reading it so often gives me anxiety about my decisions. This site can be like Cosmo for nerds... I can't stop reading it, but its not uncommon that I walk away feeling 10 pounds fatter.

"Wall Street is like any other business. Don't over-glorify working for Google and not Goldman: tech companies are in it for money too; so are startups. At least on Wall Street people tell you they're doing it for the money. It's easier to detach that way and remember that what you're doing is just a job."

You may try to justify what you do that way, but it's just cognitive dissonance. "Wall street people" tend to make money in rent seeking ways, destroying or merely transferring real value. At least at Google you could be creating value, growing the economy in sustainable ways, and increasing real GDP.

Just to provide a balanced viewpoint: I've worked in corporate America (Fortune 5 company), dealt with banality and bureaucracy, banged my head against the wall over and over again, left, started my own company, grew it to millions, sold it, semi-retired. I love startups and the details of this blog, however, when you want to see your kids, sleep in the same bed as your wife, and have a paycheck deposited in your bank account every other Friday, there's nothing better than working for an established company.

Off-topic: Is it common to get paid every fortnight in America?

Yes.

And you still get checks?

No.

It's mostly "direct deposit" -- electronically from the company's account into yours, appearing on the day it's supposed to in your account. But people still call it a paycheck.

If you want. Most people opt for direct deposit, though.

Most places auto-deposit into a financial account of your choice if you like. Payroll has some historical legislative accidents tied to it, so it's a little slow to change.

I got actual paper checks when I was contracting, when I've worked for small startups that hadn't set up a direct deposit system for payroll, and when I worked at Dairy Queen in high school.

Twice monthly (1st and 15th) is also fairly common. Once monthly is not unheard of but a lot of people can't manage their cash flow that long so they prefer more frequent intervals.

There are reasons to prefer getting paid in shorter intervals other than not being able to manage money. Why should they get to hold it, earning interest, rather than you?

That said, your explanation is probably more often the case.

The things he hated about Wall Street are just as prevalent in SV, too.

Instead of worrying about whether or not he went to an Ivy school, his concern now might be: does he have investors with the "right" pedigree for his startup?

Face time with traders and MDs is replaced by hoping that all the "cool" tech blogs are writing his startup (no? writing a few troll posts on the startup's blog should fix that).

Etc.

Or, he could choose to forget all that and just build his company.

But if that kind of petty and superficial stuff got under his skin before, I don't see why it's going to be any different for him now.

that was very well written.

"It got to the point that some papers had no authors, and had apparently written themselves. So it goes. No longer with the firm."

slightly vonnegut-inspired?

Yes! Glad someone spotted it....

He's not the only one. Every time I see that it morphs in my head to Und so weiter.

Do you mind enlightening me? I've only read a few of his works but don't recognize it.

Breakfast of Champions. Just open the first pages and you'll see it all over.

Which part is BoC? I recognize "so it goes" from Slaughterhouse Five.

I stand corrected--"and so on" is what he uses over and over in BoC. "so it goes" is from Slaughterhouse Five. Thanks.

http://books.google.com/books?id=8Rvbn07LhvMC&lpg=PP1...

> The average salary at Goldman Sachs in 2005 was $521,000

Wow. New title suggestion: "Working at Goldman Sachs will earn you enough money to found a startup with zero revenue."

I'm curious about the author's opinion of Liar's Poker, especially the line I got on a plane to New York within the week. I packed my copy of Liar’s Poker for reference.

I'm surprised that anyone would read Liar's Poker and think of it as a reference to Wall Street on an inspiration to work there. The "gorilla" culture described by Michael Lewis at Salomon Brothers in the 80s sounds very close to what the author experienced at GS in the mid-2000s. At the end of the book, Lewis leaves the firm after slightly more than a year, regarding his pay as obscene for the work he did and wondering about the utility and usefulness of the trading he did.

So, how could anyone read Liar's Poker and come away from it wanting to work on Wall Street? Or does obscene bonus pay blind people to all the negatives?

I don't think Michael Lewis ever intended the book to inspire people to work on Wall Street.

In The Big Short he mentions that although he never intended Liar's Poker to inspire people to work on Wall Street. However, that's precisely how a lot of people have treated it - he mentions he gets a lot of requests from people who read Liar's Poker and want tips on how to get started on Wall Street.

Yes. From the introduction to The Big Short (page XV):

"I hoped that some bright kid at Ohio State University who really wanted to be an oceanographer would read my book [Liar's Poker], spurn the offer from Golman Sachs, and set out to sea.

Some how that message was mainly lost. Six months after Liar's Poker was published, I was kee-deep in letters from students at Ohio State University who wanted to know if I had any other secrets to share about Wall Street. They'd read my book as a how-to manual."

When I visited Egypt, my flamboyantly gay chain smoking guide had a similar experience. He tried to dissuade me from climbing up "Moses Mountain", as it was locally known.

Him: I tried it once, about a year ago. I was showing some healthy mexican girls around, and they decided to climb. But it was so steep, and they just kept walking! After a few hours of pain I just stopped, and shivered on the side of the mountain. It was the worst day of my life.

Me: Sounds awesome. Only 50 egyptian pounds?

Him: It wasn't awesome. I don't recommend it. I'll sleep in the van.

Michael Lewis didn't enjoy Solomon Brothers, just as my guide didn't enjoy a 3 hour stroll up a 1500m hill. Both assumed that an accurate description of the experience would dissuade others. Both simply failed to appreciate the diversity of human preferences.

I imagine the tone of the book had a lot to do with that. If he wanted to discourage people he should have made it a less entertaining read!

it's the same with Wall Street (the movie).

No, he didn't but many took it as such. And I recall in a recent interview that he was disappointed that it was taken as inspiration by many people (as the author here).

Everyone on Wall St (approximately) has read Liars Poker - and, while there's some artistic license being take, the observations are basically dead-on. And people are proud that they work in an industry that has such a compelling book. And they see the characters (or their company's versions) every day.

To pick other examples : 'Wall Street' is a must-see movie for everyone on the Street (though it's completely overblown). OTOH, Boiler Room (while being a decent movie) doesn't resonant much, since the vast majority of the money on Wall St is made by making tiny percentages on large amounts, rather than by ripping off small investors...

I guess that the majority of Wall St think that Liars Poker is a fairly balanced (and interesting) view of what goes on. Michael Lewis has an entertaining and insider-ish blog on Bloomberg (NI LEWIS, if you're in front of a terminal)

And here's an article he published yesterday (really targeted at the Wall St crowd) : http://www.businessweek.com/news/2010-09-13/hedge-fund-man-f...

Mdda is right. What was perhaps intended as a cautionary tale instead became a recruiting anthem. After reading Liar's Poker, I wanted to be right there with the Human Piranha hearing him say 'the fing frogs are going to fing get f*cked!' The swaggering cowboy-ness of the whole thing was so tempting, as was the untrammeled greed. Who wouldn't want to be a Big Swinging Dick?

It seemed like such a different, more exciting world than the petty, effete, and monastic world of academia.

Incidentally, Lewis' column on Bloomberg is the best read on the terminal, in my opinion. His writing is among the best reading anywhere, in my opinion. My piece is obviously a riff on Liar's Poker. I'm only poking along on his well-trodden ground.

Now...you know what would be a unique? A Liar's Poker for startups. That hasn't really been written yet (that I know of). Hmm...there's an idea...;)

Actually, on second thought, Kaplan's 'Startup' might be that. I re-read it again recently, and it's starting to sound a bit dated though.

NI LEWIS, if you're in front of a terminal

Nice. Now I know how I can read blogs at work.

(They try to block the regular Internet ones, but I doubt they even considered trying to censor the Bloomberg terminals!)

Quick tip: hover over the numbered footnotes for some great asides.

Indeed; I love the footnoting style -- look and content -- and will surely copy it for something I write someday.

Read anything by David Foster Wallace than. Not only was he brilliant, but he made copious (perhaps obscene) use of this technique in his writing.

The Django Advent also had a nice footnoting system, which I've stolen for a project of mine. (example: http://djangoadvent.com/1.2/everything-i-hate-about-mingus/ )

My favorite quote is actually a footnote:

"If doing a startup is like rolling a boulder up a hill, then working at Goldman Sachs is like rolling it down the hill: you just have to stay out of the way of the boulder."

In fact, we were basically the trader’s little bitches, and any quant who’s honest with himself realizes that.

I wonder what it is that traders do that they can't be replaced by software? How do they manage to generate more value than quants?

Software doesn't have a frat buddy working at the bank across the street.

Why is that advantageous?

Trading is a zero-sum game, right? So how does having an alliance with a competitor help out much?

Because plenty of deals are negotiated off the market.

What sort of deal? What could the advantage be of negotiating a deal off the market? Deals are zero sum, right? If you and I make a deal where an item is transacted for above market value, or below market value, one of us is going to lose out as a result.

I think it's a matter of being book smart vs being street smart. There's still room for both.

> with the attention span of an ADHD kid hopped up on meth and Jolly Ranchers

Well, I'm very disappointed to find this.

1. One of the more common (and certainly well-known) medications for ADHD is Ritalin, which is methylphenidate. It's mildly related to meth. The long story short is that giving meth to someone with ADHD would not cause them to be able to focus less; rather, to be able to focus more.

2. Studies have shown that sugar does NOT cause hyperactivity in children, whether or not they have ADHD.

I'm saddened to see these incorrect stereotypes about ADHD. As an adult with ADHD, it's part of what makes my life harder than it has to be.

Give him a break and substitute cracked out for hopped up on meth. I also would guess the medical dose of ritalin is anywhere near the recreational meth dosage, but I don't know.

What studies show that sugar doesn't cause hyperactivity in children?

Anecdotal evidence and extensive field work with my brother's kids has shown me otherwise. You feed them a ton of sugar at the carnival and they go wild and then crash a few hours later.

"a ton of sugar at the carnival" - it's the carnival not the sugar.

http://en.wikipedia.org/wiki/Hyperactivity#Sugar_consumption

A quick search found this: http://www.medicinenet.com/script/main/art.asp?articlekey=52...

As far as "giving him a break" - why doesn't he give me a break and not perpetuate inaccurate and hurtful stereotypes?

Please don't take a tiny offhand comment that has nothing to do with the key point of the essay as a personal attack on you. That comment there isn't hurtful or perpetuating anything about you.

I didn't take it as a personal attack on me. And I'm sure it wasn't intended as an attack - just as those that call things "gay" don't mean that as an attack, and those that call things "retarded" don't mean that either.

Doesn't mean it's not unhelpful and nonharmful.

Sure, it was uninformed, but I honestly don't see how that was a hurtful stereotype. He wasn't implying that everybody with ADHD loves meth and Jolly Ranchers. How is the misconception that meth decreases attention span a hurtful stereotype against those with ADHD? I just don't see it.

It was just a passing comparison. He didn't mean to offend or disparage anyone, chill out.

Its the same thing as saying, "the 800 pound guerrilla." Sure, most guerrillas are nowhere near 800 pounds and may take offence to us calling them heavy. But thats not the point at all.

Most guerrillas are not apes, either. (guerrilla war vs. gorilla ape)

Doesn't the expression refer to the 800 lb guerrilla revolutionary? ;)

But if the guerilla were 800lbs, it'd be only 4-5 dudes...

http://en.wikipedia.org/wiki/800_lb_gorilla

I've never heard (or rather, read) anyone using the term "800 pound guerilla".

But now you've inspired me to look it up, and apparently the average male gorilla is in the 300-400 lb range, but obese gorillas in captivity have got up to the 600 lb range. The heaviest gorilla on record was N'Gagi from San Diego Zoo, who died in 1944 and weighed in at 638 lb. So an 800 lb gorilla is certainly the weight range of any observed gorilla, though I assume a really overfed gorilla could easily reach 800lb since even humans can do so (http://www.dimensionsmagazine.com/dimtext/kjn/people/heavies...)

As a fellow adult with ADHD, I don't see how either of these "stereotypes," as you say, are harmful. Not understanding the effects of street drugs on a disease one does not have is hardly worthy of such contempt. If he had said something to the effect of "He was as unemployable as an alcoholic with ADHD," I could understand your indignation, but his remarks weren't disparaging, just mildly uninformed.

If you want to be offended, that's not really my business, but unless someone is responsible for your medical care or claims to know, I don't think it's fair to hold them responsible for this kind of information.

I hope the author visits here and is educated on his misinformed analogy.

On the other hand, giving meth to someone with OCD results in feedback like this.

"There were other characters in this drama. The sales guys were complete tools, with a total IQ, summing over all of them, still safely in the double digits. The traders were crafty and quick-witted, but technically unsophisticated and with the attention span of an ADHD kid hopped up on meth and Jolly Ranchers."

Ok it seems perfectly possible to make a lot of money while being a complete idiot. I'm getting an MS in engineering and since I was studying the last few years I don't have any money (except about the minimum which is required for a living) What worries me most is that many engineering jobs are not well payed, even though they require skilled people. So I wonder how I could turn the hard work I did (and still do) to get my degree into money.

Don't take that description too literally. I really doubt you get to be a trader at GS without having a good brain in your head. Sales is more about working and building relationships than sheer intelligence, but to do it well still requires a lot of work and talent in that direction.

Heh it was written by somebody with a PHD in Physics or so.. but my point was that a lot of highly intelligent people are loosely paid (for example think about a lot of post-doc positions in academia) while some other less educated people get a lot of money it seems..

Oh absolutely. My father had a PhD in chemistry, was very intelligent, but never made more than a modest middle-class income. He worked in academia. If a high income means a lot to you, academia is a hard place to find it unless you are one of the few superstars that bring in a lot of grant money. At if you are, you are mostly a salesman anyway.

EQ vs IQ.

Don't despair. Engineering is a nice lifestyle -- you can work at any size company, you can travel if you want, and you can switch to independent consulting or join a consultancy if you want. You can do a startup at any time, too; engineers create things people want. I don't know of any other background that will give you as much flexibility with your career.

Sudden jumps in income tend to stress people out; the key to happiness is a gradual lifelong rise in income, so you're always comfortable. Engineering will accomplish that for you. Personally, I felt like I'd solved the "money problem" with my first two engineering jobs -- there was nothing I wanted that I couldn't easily afford, and I liked the ratio of business trips to staying at home.

Favorite quote: "But things weren’t all bad! At its best, when the markets presented an apocalyptic Boschian landscape of damned souls torn asunder by hellish tortures, every Goldman grunt, sargeant, or general would close ranks and form a Greek phalanx of greed."

As it turns, my kid likes to eat. So, in my oh-so-unique case of having, uh, responsibilities, it would be better for me to have a paying job (even at Goldman Sachs) than to found a startup with zero revenue.

Of course, that's assuming they are XOR, which they are not.

Don't worry about it. People feel the need to justify every decision they make to the world. The author of this post didn't want to work at GS, he wanted his own company. But he gave up a couple hundred thousand a year to do that, and people made fun of him, so he felt he needed to justify it.

Obviously, there are plenty of people happy collecting their large paycheck every two weeks, or there would be a lot of startups and not a lot of Goldman Sachs.

| Obviously, there are plenty of people happy collecting their large paycheck every two weeks, or there would be a lot of startups and not a lot of Goldman Sachs.

Or their fears and lack of confidence/desire for security overrule their happiness.

Not everyone wants to be a leader. Seriously. It may be hard for you to believe this, as it goes against how you feel, but its true.

I didn't make it a categorical statement. I just have a hard time taking the original author's premise at face value.

Which is exactly what he is doing, justifying and using a third party: "Hey , my kid has to eat" Blind leading the blind.

Yeah, true. I will break the trend and say that I have little-to-no interest in having my own company, and that I like programming and making money. Working for the bank facilitates this.

there would be a lot of startups and not a lot of Goldman Sachs.

There are a lot of startups and there is only 1 Goldman Sachs...

That's quite a literal reading of my statement there.

What I meant to convey was the number of employees that Goldman has (a lot), and how many similar companies there are (BAML, JPM, Citi, ...).

A lot of people have chosen the "peon at a big bank" position, and it's probably not because they think that it will make their life less enjoyable.

Or even peon at a big university. Better hours, less pay.

I was staying with a lady who worked at Goldman Sacks in San Francisco.

She said the 12-14 hour days, writing market reports were normal for her. I'm guessing there was limited schedule flexibility for her. I'm not surprised people would rather found a start-up.

An oddly appropriate (yet completely unrelated) quote from another article currently on the frontpage:

> For all things (that are things I know) there exists a Context in which that thing I know is false

What's interesting is that stories like this have been around for decades but never deterred young ivy league grads from joining Goldman when the industry is popular.

Now so many people is quick to criticize the finance industry. Although it's true that the bailout was a great crime, I don't see how lobbyists, pharmaceutical executives and advertisers are much better. These guys get paid millions too...at least Goldman doesn't screw with people's mind.

>at least Goldman doesn't screw with people's mind.

???

That's a pretty sizeable portion of their business.

What's interesting is that stories like this have been around for decades but never deterred young ivy league grads from joining Goldman when the industry is popular.

If you look, I'm sure you can find stories about how any possible profession or industry sucks to work in. And most of those other professions and industries don't pay $500K+.

With a PhD in physics I could have just as easily gone into quant-land as academia. And while academia is great, it has its own set of sucky problems. Is it really worth the 400+ thousand dollars a year I'm effectively "paying" in order to work there instead of GS? It's a helluva luxury good.

I love this article and after working nearly five years in big brand advertising, I have to agree that the startup way is the better way. Ad agencies may not be identical to Goldman, they have their own fallacies mind you, but the big lumbering giant feeding money does sound quite familiar.

I wonder if the massive amounts of income he made at Goldman helped provide a safety net for launching his zero revenue startup.

Well, I got from the adgrok.com "about the team" page to his sailboat page ( http://svmoksha.com/, good reading). I presume he's quite familiar with the traditional definition of a boat as a hole in the water one throws money at ...

Oh, God yes.

Thanks for reading the sailing blog.

And that's about the cheapest, smallest boat one could non-suicidally ponder a circumnavigation in, by the way. And even then owning it and sailing it is like taking a cold shower and tearing up $100 bills (to quote the old joke).

Eh, no.

I'll echo statistics 101: the mean of a distribution is pretty meaningless when it's a very skewed distribution you're talking about. Those average figures don't apply to me.

And I joined GS at precisely the wrong time. Right at the peak, going into the trough.

i view such stories (emphasizing on controversy) more as link bait than anything else. There are several folks who are perfectly happy working @ GS and other big firms. Dont make bold and brash statements simply for the sake of it. Its a 'To each their own' world out there.

An average salary of $633,000 turns you into a paranoid because of job security fear.

Only if you're dumb enough to live like you're earning $633,000 a year. If you lived like you're earning $100K and put the rest into a savings account, you could quickly overcome all your financial worries.

I doubt anyone is that clever, though, especially if you're surrounded by other folks earning $633K and feel the need to keep up. Entire industries exist for the benefit of those who make $633K and can't think of any sensible way to spend it.

I don't see why you doubt that anyone who earns $600k is clever enough to live cheaply : Banks prefer to hire smart people...

But there's also an element of management preferring their employees to live at/above their means to some extent, just so they have to keep putting in the hours... (This is really true : I employ sales people in a trading room, and it's easy to see that they react to financial pressure by making more money).

Nerd erotica.

> Founding a startup with zero revenue is better than working for Goldman Sachs

until you have bills that come due. then the difference becomes very apparent!

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