> At the end of 2023, Jane Street employed 2631 people
> About 80 per cent of the company's capital comes from employee equity, which has swelled to $21.3bn at the end of 2023
o.O
> About 80 per cent of the company's capital comes from employee equity, which has swelled to $21.3bn at the end of 2023
o.O
I'd be interested to see if the Pareto distribution holds here as well, namely that 1% of employees (26) hold half the wealth ($10b).
20% of 20% of 20% (or 0.8%) of people will hold 80% of 80% of 80% (or 51.2%) of the wealth.
In binary, most significant(left most) bit is twice the magnitude of the previous bit. So that bit (or person) would contribute and get compensated accordingly.
Would also be similar to segment trees with each leaf node having a value of 1 with parents recursively summing the children?
Which is probably what you'd want in a high-performance firm, less everyone look at the absent top level extractors and it turn into a law firm.
Fortunately it doesn't take that much to get top talent, because so many other companies underpay. Jane Street only has to pay out a small fraction of their PnL and doesn't even need to have a non-compete.
And the equity holders would get diluted a bit when new employees are offered equity, but looking at the rate of profitability, each new employee more than earn their share in equity, even at the high end. Therefore, it is in fact, in the existing equity holder's interest to get diluted a bit to hire these employees, who would produce way more value (and thus increase the total value) compared to the loss in dilution!
> The real money is at the top. The bond prospectus reveals that Jane Street has 40 “equity unit holders on a full-time basis and in good standing”, with an average tenure of 16 years. Among those there will be at least a handful of billionaires, even if no Jane Streeter appears on any rich lists.
Sounds like any other partnership. A few people at the top are providing the equity and getting a profit share, and the thousands under them are getting salaries.
The difference is that these thousands also get to invest in Jane Street, which seems a pretty profitable investment (70% margins, etc).
>20% return is quite easy to justify. You're also looking at a 50%-200% annual bonus, mostly leaning to the higher end of the range.
Its a very different world!
Surely this is a HN culture bubble? Very few people can borrow tens of thousands of dollars from family and friends to lend to a hedge fund. Not only would I be refused, I'd damage friendships by exposing the moral vacuum at my core.
So they're incentivized to allow as many of their employees to invest as possible.
In contrast, if you're a prop shop that only accepts employee money, you're already dealing with your employees.
So there's no real reason for JS et al. to set large minimums, in contrast to non-prop hedge funds.
Jane Street shares and profits are proportional to the capital you invest/accumulate.
How do you quantify, or even loosely, determine that?
What about ancillary workers who might not add any significant value to the (e.g. office janitor or HR) but supposing there’s a serious janitor or HR shortage then the org will still have to pay enough to attract someone, but what they pay is outside of their control and unrelated to the actual value to the company. And even in a worker-owned cooperative there’s still going to be in-groups and out-groups, and the in-group is incentivised to pay the out-group as little as possible as to maximise their own returns.
In my books share ownership can be unequal, so long as the bottom rung still have a few shares each.
EDIT: I'm not going to do this work for you and dig through all the places cited at the bottom to see if there's some source with that credible authority that proposes such a definition.
commodities trading houses tend to follow this model too though that is changing a bit.
i remember having this discussion with a friend after he sent me a richard wolff video. nothing about our system stops coops from flourishing. one of my favorite retailers, REI, is a member-owned co-op. publix, the beloved florida grocer, is employee-owned.
Finance tends to pay its workers better than shareholders—most banks’ trading and IB groups pay out more than 50% of profits to workers.
Where it goes wrong is when the regulator fails to stop foul play…