The Great Career Debate: Google Versus Goldman

"Would you rather have your children engineering the financial system creating more problems for us, or having a chance of saving the world?"

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.

> 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.

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...

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.

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.

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.

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.

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?...

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.

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.

False Dichotomy.

Bright people should start their own companies.

Interestingly, the largest employer of mathematicians in the world isn't Google or Goldman Sachs.

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.

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.