Yes, this is what's needed. I like the line about the banks. My biggest peeve with the UK scene is that we lose so much talent to banks and consultancies, especially among graduates; anything to turn that around is a step in the right direction.
The truth is in the UK the only industry paying a decent wage for technical work (not just CS grads, but engineering, physics, maths, etc) is banking.
I am a Mech Eng graduate and my CV has been floating around in various databases for years, and I still get recruiters calling me and offering less than half of my current salary (and I'm no rockstar, just an ordinary worker) to go and work on something mechanical for a big engineering company. It really is a joke.
This is all tied up in the vestiges of the class system, technical people are still thought of as "blue collar" (despite being better educated than most white collar workers) and the management class will never pay us fairly - except in banking where they are quite clear about what is worth what. I gather in the US it's different, they don't have all that baggage holding them back.
I don't believe that's true in the US. Software works seems to be white collar.
But I still make a point of referring to my fellow software people as 'software engineers', since (1) it's how my company styles the titles[1], and (2), it reinforces the idea that we're not "code monkeys", grunting and beating on keyboards for bananas per day (not that I'd turn down fruit if offered :-) ).
[1] I work at a hardware/software company, we have an array of mechanical and electrical engineers as well.
There's two types of boredom: the boredom that comes from inactivity and the boredom that comes from constant frenetic activity of no deep interest or challenge. Coding up a new algorithm every day still fails to be interesting if the only purpose of the algorithm is to squeeze and extra 1e-5 percent out of some transaction to help someone who isn't me make marginally more money.
Not that I have anything against the banking industry, it's just not for me. In Brave New World terminology it's a career for beta-pluses, not alphas.
(No offence, bank workers! Some of my best friends work in banks!)
I shan't mention any specific job titles, but my general feeling is that you should be working on your own initiative, using your big ol' brain to create something.
Create something for the benefit of yourself, or create something for the benefit of all mankind, but don't create something for the benefit of some other jerk, that's just unseemly.
You can be Superman or you can be Lex Luthor, but don't be Senior Vice President of Product Management at Luthorcorp.
What is closer to the truth is that nowadays "average" technical people are way more abundant than ever, mainly because there are ever more and better learning sources (books, ebooks, conferences, video tutorials, chats, forums, certification courses, crappy 2-year colleges and good universities, fancy IDEs, super high level programming languages, frameworks and libraries for everything, etc.) The learning curve is not as hard as it used to be, if you want to be an "average" technical guy.
And it's just basic economics that people (and entities composed of people, such as companies) don't like to pay a lot for something which is extremely abundant and available in their area (logically). This is because when humans are in the process of valuing things they're affected by a mixture of need, personal preference, the scarcity of the things in question, and the moment in time when this process is taking place.
I've been a "pawn" "low life" "technical monkey" developer for a while, and I actually began working as a developer from the start with a secondary hidden purpose of studying the ways companies act (because I was already an economics nerd before becoming a developer), and this is the usual result of my observations (plus studying the history of other companies):
- Technical Monkeys with NO additional nontechnical skills:
They're like the average rock drummer who can keep a beat but other than that is not very useful. They will always earn a lower wage, because there's just too many of them out there: they're not especial. Wage is just another price, remember.
- REALLY GOOD Technical Monkeys with NO additional nontechnical skills:
They are exceptionally awesome and productive, and will get paid accordingly, unless they work for a really stupid boss. They're like the really good session drummer that records albums for all kinds of artists, and as a hobby breaks world records for faster drum fills, longest drum solo, etc. He has no other skills but he's a absolute beast at what he does.
- And then there are those Technical Monkeys who are good (though maybe not the best) at the technical stuff AND have really good business ideas i.e. better management ideas than their bosses do. So they can manage teams AND they can speak technical monkey. They're the Phil Collins. They will either earn a good wage or start their own company.
The key phrase is unless they work for a really stupid boss. Because it doesn't matter how smart and ambitious you are if you're working for the IT department of some megacorp and spend more time filling in Change Request forms than doing real work. All you can do is a) quit and go have fun working for a games company (notorious for terrible pay) or b) go and do the same thing for a bank for 2-3x the salary.
> This is all tied up in the vestiges of the class system, technical people are still thought of as "blue collar" (despite being better educated than most white collar workers) and the management class will never pay us fairly
That got me thinking. I am quite sure this kind of mindset is present in a lot of countries, including where I live (Brazil) :-/
Hard figures - more than half of the graduates from one of the top technical universities in the UK (Imperial) go to work for banks (computer scientists that is).
The reason is that they pay quite a bit more than most software houses do. Notable exceptions include Google which usually can match the starting salaries but otherwise, you're pretty much guaranteed to earn less.
The bottom line is that after several years of student life, a relatively high salary looks compelling and coupled with student loans to pay off, the choice is quite clear at this particular moment for the majority of people.
I went to Imperial (did CivEng) and I can confirm this, lecturers even joked about it.
At one point the people in the class who were actually going to go into engineering were asked to raise their hands - around 1/3 did.
To digress briefly, part of the reason the City likes Imperial so much is that they work you into the ground. If you can survive Imperial then you're likely to do well under city-levels of pressure.
Isn't there something inherently wrong with society when an industry that provides little value to society make so much money that they can afford to pay better than anyone else?
"an industry that provides little value to society"
Whilst this is a nice popular statement to trot out in the current climate, it is simply not true, at least not in fiscal terms. Some facts:
* The financial services industry accounted for 10% of GDP in 2009
* It provides 4% of total employment in the UK (1 million jobs)
* It contributes 28% of the UK’s total exports of services
* It contributed £53.4bn in tax in 2009/10 (11% of total government receipts)
Much as everyone would like to say "sod the bankers, let them go elsewhere", the truth is doing so would likely torpedo the economy.
You need to think a little bigger to properly understand his point.
Humankind is mis-allocating some of its most talented labour to what is essentially an arms race in financial market predictive algorithms. It provides some benefit for humankind - increased liquidity in markets, but the value of the marginal liquidity is small compared to the talent that is wasted.
Salman Khan is an excellent example - he left his job as a hedge fund analyst to start Khan Academy. How many new Khan Academies would we have if the incentives were right to have talented people working on useful projects instead of the financial arms race?
Sure, the incentives are right for an individual or country to specialize in financial markets. Think bigger - an alien looking at what we're doing here on planet earth would say we're wasting a lot of our talent on stuff that just re-arranges the pie instead of making it bigger.
Trading algorithms is a minute portion of what a bank does. The primary function (and activity) of investment banks is to help clients raise money (via bonds issues, shares issues, etc). Some secondary functions include helping them insure against risks (e.g. with futures contracts), and acting as brokers for speculators (e.g. hedge funds), or as market makers to make the markets more liquid so that more trading happens.
I'm missing quite a few things, of course, but my point is: this "algorithmic trading arms race" that you mention is basically something like 1% of what the average investment bank does (and 0% of what retail banks do).
Yes but the question is not whether the banking industry is justified in it's existence. But rather whether they provide a value to society that is equal to what they take out of it.
They absolutely do. Focusing on investment banks (I assume you have no problem justifying the existence of retail banks and insurers, the other two giant topics in financial services), what they do is effectively make the allocation of capital more efficient.
Without efficient capital allocation, most enterprise becomes extremely difficult. Without banks, there would be no stock market. There would be no way for companies to raise large sums of money to grow faster. There would be no one keeping markets liquid, which would encourage people to stick their money under the mattress rather than invest it. There would be no way for startups to exit, and so there would be no VCs, and no angels either (or at least, much more limited ones, making maybe one or two investments to help out a friend). All of this would massively reduce the amount of capital available to work with, and decimate the business world.
Now, you might take the view that "you don't need capital to do business", but that's just a very limited viewpoint that applies in very narrow circumstances, like some small percentage of internet startups. Almost all businesses need capital to get started. There's a good reason why microloans are so successful - they provide capital that helps enterprise. Think of the banking system as an equivalent of microloans for people who need more than $100 (for example, because they need to design and sell new products, build new factories, buy stock, make strategic acquisitions, etc).
I agree but I think it's a little more complicated.
The problem is that we we loosing developers to high paying jobs in the banking industry. I.e. not your average netbank developer but the developer who can develop for those 1% you talk about.
So the problem is that the developers in talk here are the talented ones that goes for those jobs within certain parts of the banking industry that certainly don't provide anything close to the value they extract from the market.
Your argument only really stands if basically every single one of those programmers is Mark Zuckerberg, able to create a $50b company... I don't think that's a reasonable assumption.
My argument is that the startup community is loosing good developers to a specific part of the banking industry which I fail to see provide much value other than to their bosses.
I have no problem with them making more money. I think it's obvious why they make the choices they do.
The problem is that the part of the banking world they go to. That part of the banking industry that can pay the high salaries aren't benefitting society.
A good point - I was looking at things from a purely fiscal perspective, and trying to challenge the prevailing opinion in the UK that banks == bad, but you are right that they suck up a disproportionate amount of talent and skill.
I guess for many graduates the banks seem to offer the best answer to the risk/reward question.
The challenge is how to change that mindset, in a way which doesn't just lead to all the qants leaving the industry to build another social photo-sharing app :)
Economic value is not the only value society lives of.
The very fact that value is a subjective dynamic variable underlines the importance of not getting too focused on the actual fiscal numbers.
You can have societies where the oil industry makes up most of the value for the countries export but where the actual money does not benefit society in general.
And again I am not saying sod the bankers. I am simply questions whether they are making too much money compared to the value they provide to society.
The day that the banks choose to bail out it's customers I might consider changing my opinioin about the value the provide to society. (not saying that they don't provide any)
UK GDP is around 1.5 trillion. Therefore we spent the equivalent of ONE WHOLE YEAR OF OUTPUT FOR THE WHOLE COUNTRY on bailing out the banks. You do not solve a debt crisis with more debt. You do not solve a financial crisis by supporting the financial institutions that caused it in the first place. Northern Rock has no assets other than a bunch of shit 125% mortgages and repo'd Barrats buy to let flats worth cents on the dollar. The idea this could turn a profit is absurd.
I don't know where you get that "little value to society" nonsense from. Asset allocation is a non-trivially hard problem, and the alternative to doing it our way is Five Year Plans and the like, which tend to result - and this is actual, historical fact - in tens of millions of people starving.
You seem to be confusing what is difficult with what is beneficial to society. But if how hard a problem is would be an indication of how beneficial then there are plenty of jobs that is grossly underpaid.
You also seem to be assuming that there can be only two possible solutions to this problem.
No - my point is that countries that have sophisticated financial services industries have historically been extremely unlikely to make catastropic errors of asset allocation resulting in famine, etc.
If we had a group - let's call it The Party - deciding what to invest where, and they ballsed it up, then you get the Great Leap Forward (30M starving to death is half the population of the UK).
I'd rather live in a country with lots of lawyers and bankers than none. And some of these lawyers and bankers are, without question, very valuable to society.
People who look favorably on these industries would probably describe the rent-collection or wealth-destroying activities of these sectors as the regrettable but minor (and maybe inevitable) byproduct effect of an activity that is, on the balance, very positive. We all have these types - high tech has patent trolls (er, innovative technology development partnerships), but nobody would say that the tech sector is a rent-collecting segment of the economy (though many would say that patent trolls are part of the legal industry, not the high tech industry).
Other people like Wooley at the LSE (quoted in the article) take a far dimmer view:
“The amount of rent capture has been huge,” Woolley said. “Investment banking, prime broking, mergers and acquisitions, hedge funds, private equity, commodity investment—the whole scale of activity is far too large.” I asked Woolley how big he thought the financial sector should be. “About a half or a third of its current size,” he replied"
I think there are more than 2 alternatives to the Asset Allocation problem. There's no need to polarise the debate by saying that the alternative to Banker Bonuses (and the rest of the system) is millions of people starving.
John Cassidy wrote a piece for the New Yorker titled "what good is wall street?" that takes a dim view of the economic usefulness of the financial sector (1)
It's a long article, but this is probably the strongest case for banking as rent-collection (or even worth, wealth-destruction) you'll read in the mainstream press (ie., as opposed to academic journals).
(1) not an opposition to banking per se, which he sees as immensely valuable
Yea it's definitely a non trivial problem to rip people off with as much success as the likes of Goldman. IBs are completely socially useless, excessively criminal, and for the most part just exploit clients through front-running etc. I used to work for one, now I work for a startup that actually makes stuff. Happy days.
Yes, there is certainly something wrong with it, but for some reason the entire country is effectively owned by the banking industry at the moment (despite the fact the country in fact owns a good chunk of the banking industry).
Personally I'd quite like to see the government actually tax them at decent rates, and call the bluff that they're all going to up and leave if they have to contribute to the country. The chances of that happening when the current government all made a fortune in investment and banking careers is low though.
Thom, if you're so convinced that the financial industry provides so little benefit to modern society, why don't you try and live in a country without one.
The Great Depression in the US (which effectively wiped out a significant portion of the financial industry here) was the source of much misery and pain. Pick up a book on bond valuation and capital allocation and tell me if YOU would like to do that work for yourself. Finance is hard won and specialized knowledge. Don't dismiss that expertise.
I never said it wasn't of any value. I have repeatedly clarified that I am talking in the context of this article and about certain parts of the financial industry, namely the part can afford to pay better than anyone else. The developers working on your average netbank aren't in question here their salaries are not extreme.
All I am saying is that the kind of developers that the OP is talking about are being lost to parts of the financial industry that aren't providing value to society but primarily to themselves and I find that problematic.
That has nothing to do with my view of other parts of the banking industry.
They aren't being "lost" to the financial industry. They are proving "value" to the consumers of those (valuable) services.
You could make the same argument for home health care workers and cardiac nurses. Potential home health care workers aren't "lost" to the nursing industry. Society VALUES what they provide to a greater degree because it compensates them more.
You seem to be laboring under the assumption that a career in the financial services industry is a guarantee of high-income. The truth is quite different. Life in the financial services industry has its own downsides (insecurity of income, long hours, poor working conditions generally) which you seem to be glossing over to make your argument.
On my last flight to Mountain View, I sat next to a guy who left a job at Goldman Sachs (as a broker) to go do ad sales for Google. His reason: better working conditions and quality of life.
Don't assume that your choices are everyone else's. The high pay in the financial services industry is there because the work is hard and few people can or are willing to do it.
Maybe you should read the entire thread here and see what the argument is all about. You seem to be arguing against claims I am not making.
I have worked with everyone from Bofa to citibank to online trading services to private wealth. I think I have a pretty good idea about who is paid what and what they are paid for.
So again instead of arguing a strawman why not talk about what I am actually claiming.
I see a lot of finance industry bashing in between the lines of your post. You're making an argument about the choices that individuals make based on their own personal goals and circumstances. When you bemoan the choices that other people make under the guise of "what's best for society" you're making a statement that you think differently and that inevitably leads to calls for the state (or some other authority) to involve itself.
Sorry but that is your problem not mine. Whatever you think I am putting in between the lines is up in your head.
As I said, you are attacking a strawman, a position I don't hold.
I have been pretty precise in what I mean and what part of the industry I am referring to. If you can't get paste seeing ghosts then obviously you have a problem, but it's not me nor my post.
"Isn't there something inherently wrong with society when an industry that [b]provides little value to society make so much money[/b] that they can afford to pay better than anyone else?"
Yes you did and if you had just an ounce of integrity you would aknowledge and admit that I actually clarified what I meant in countless other posts removing any possibility of reading in between the lines.
That's great for the graduates who get these jobs but can I add that it seems to me that there's precious little evidence (actually none at all) that their skills result in any kind of improvement in the service offered to the millions of ordinary customers of the monopolized banking industry in Britain.As far as I can see there's been a marked decline.
When I become eyewateringly rich, I'm going to start a nonprofit retail bank. We're going to pay WAY under the market rate for salaries, have no shareholders and instead of profit we're going to give rates of interest on savings accounts WAY over the market rate, and give out loans at WAY under the market rate.
We'll attract talent through my own devastating personal charisma, and by offering people the chance to really really piss off the people working at the proper banks.
I'll make sure to do a Show HN post when it's sorted. See you there!
The good jobs aren't in retail banking. Take a look at Tescos banking plans, btw. And good luck giving loans way under market rate. That worked out great last time. (See: Everyone, everywhere, ca. first half last decade).
You're absolutely correct. Think of it like this - if you're paying a lot of money to get the top people, you'll want to use their brains. Simply put, retail banking does not provide comparable returns on investment than putting the people into hedge funds, trading, etc.
You have to bear in mind that banks (from my personal experience and from my peers) are first and foremost profit oriented, which effectively guides their decisions. Hence, you'll not see those people working on things that directly impact retail customers.
I take your point of course. I would like to know though to what extent the zillions of pounds put into the system by retail customers contribute to opportunities for the investment arms of the bank.Isn't this the $64K question and the reason for much agonizing over future bank legislation?
That's because the graduates don't go and work for the retail arms of the big banks. They work in the investment and trading arms and generally have very little to do with customers. Many of the Banks don't even have retail arms.
And that's not even thinking about Hedge Funds, Brokerages and other Financial institutions that are normally grouped into 'the banking industry'
I spend a lot of time abroad so my experience is almost entirely of internet transactions. I have no complaints about counter service when I use it. Decline in service? One small example: the website has been revamped so now I have no print option for my credit card (as supplied by the same bank) account. I am forced to copy-paste details from the site which they seem to have arranged to make as tricky as possible. The old ‘print account’ option has gone. I did wonder if statistically this might mean that enough folk would make mistakes in repayment to the bank's advantage in interest payments. But that's just my rotten suspicious mind. I mean - as if a bank would ever stoop so low!
I'm curious, whats the avarage starting salary at a financial company in london? Sometimes I see salaries of 23k-25k pound per year (for other software companies) from which you can barely afford an appartment for yourself in London.
I work at a small hedge fund in London, started on £28k (actually might have been less, I literally can't remember now), after 4 years I am up to £40k, with around £5k bonus each year.
I have basically been doing CRUD of various flavours the whole time under a bullying atmosphere, utterly soul-destroying and it's got me stuck in the Stockholm syndrome scenario, my skills ground down to the point where I literally can't get another job to get out of it. Am working very hard to counter it, but it's a big job, probably another year of work to stand a chance of getting a decent software job (I'm not going to try for another internal finance job, if that sucks as much it'll be pretty impossible to bear).
So yeah, I don't recommend it, though it might just me having bad luck here.
I think very few internal jobs, finance included, are even vaguely bearable for hackers - I heard the idea that finance likes to hire overqualified people for monotonous/trivial jobs to make sure they're done right, so you have to be really careful.
I emailed you. In summary: I don't think I'm capable of passing an interview atm, certainly if (as I presume) your place is good. But we can discuss, at least.
With 4 years experience at an investment bank you could be making quite a bit more than that, at a hedge fund you should be getting a risk premium on top of that as well.
It depends. A common scenario in finance here is that you end up maintaining a specific piece of legacy software, often using ancient or unfashionable technology, and it can be very hard to sell yourself to another employer as your useful-to-anyone-else skills erode. Your bosses know this.
There are various tech roles in hedge funds and in finance, and it sounds like the @throwaway___ is in a role that is considered "IT" rather than part of a quant/trading desk, which translates to no real bonus, and to not being considered a source of revenue.
This isn't Silicon Valley. Rightly or wrongly, they just want someone to come in at 9am, work through their assigned bugs and feature requests, get a sandwich at Pret A Manger at 1pm, work through some tickets and go home at 5pm. Nobody's interested in hiring "hackers", experimenting with funky languages, or doing anything remotely unpredictable. If you're on a trading desk it's a different story, but it's definitely possible to work at a hedge fund or an investment bank and get a shit deal.
Edit: Basically, it's your responsibility to maintain your skill set, by any means necessary. Your employers aren't paying you to be a well rounded developer, even if you think they should be.
Yeah it's IT rather than being on a desk, maintaining back office systems largely.
I have been working on my skill set, I know C# pretty damn well, I have taught myself aspects of software engineering + computer science I didn't have, etc. etc. - it's just that there are gaps, lots of gaps and more than that, a complete lack of confidence. This stuff grinds you down so much that it becomes very hard to resurface, that's part of the problem.
I am working hard on filling those gaps, but I think it'll probably take a year before I've sorted it. I went for a bunch of interviews at other finance places recently and the gaps were exposed very clearly there, so this is based on evidence.
Anyway, I don't want to talk much more about this unless stuff starts becoming toooo identifiable.
Working for Deutsche Bank, JPMorgan and the lot, starting salaries for Imperial graduates are upwards of £40k (definitely know people who are starting at £50k).
You're correct, £25k seems to be a ballpark figure for software houses. Looking at it statistically, average salary for Imperial graduates is something like £35k, so you can do the math and infer what the top grads are earning.
Paying £25k (~$40k USD) for grad devs in London is a bit cheeky, when you consider the living costs are higher than in Silicon Valley (http://tinyurl.com/6e8d3th). Clearly, UK students enjoy selling their soul to live in bedsits eating noodles :-)
Agreed, and even many experienced developer jobs are advertised at only about £40k. When you look at the cost of living in London, its simply not worth it. I'm amazed they manage to recruit at all frankly. You could quite possibly have a better material lifestyle by living in a cheaper area in northern england and stacking shelves in a supermarket for a living. I can never understand why so many high tech companies base themselves in London, when they could relocate up north and get very talented developers for much less who will stick around and who will be happy too as a £20k salary in the north actually gives them a chance of buying a house.
London isn't a half bad city to live in. Good luck enjoy the kind of communities we have here (literally hundreds show up for the HN meetups) while stacking shelves in a supermarket up north.
My friend is earning £40k pro-rata for a 10 week internship at one of the big IBs in London, so I'd guess starting salaries would be quite a bit above that..
As a bit of a finger in the air estimate from looking at job ads here, I would probably estimate that a London finance company will pay about 50% more than a "normal" company.
Not sure what a starting salary would be, but I would bet it would be > 30k. After 5 years you would probably be on > 60k, but if you're quite specialist (in terms of finance based skills) you could be earning much more.
Is this the first event of this kind in the UK? If it is kudos to the organizers, would really love to see something similar where i live (Italy, startup environment not mature enough yet, maybe in a few years).
