
Founding a startup with zero revenue is better than working for Goldman Sachs - cjg
http://adgrok.com/why-founding-a-three-person-startup-with-zero-revenue-is-better-than-working-for-goldman-sachs
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d_c
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. "

~~~
yummyfajitas
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.

~~~
jrockway
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desk with an out of date price.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.

~~~
ezl
@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.

~~~
j2d2j2d2
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.

------
VolatileVoid
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._

~~~
jamesseda
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.

~~~
VolatileVoid
_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).

~~~
eru
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?)

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

~~~
jbooth
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.

~~~
eru
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).

~~~
jbooth
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.

~~~
eru
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.

------
mcyger
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.

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

~~~
rdouble
Yes.

~~~
eru
And you still get checks?

~~~
blakeweb
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.

------
dpapathanasiou
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.

------
hubb
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?

~~~
antongm
Yes! Glad someone spotted it....

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

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

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

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

------
davcro
> 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."

------
brown9-2
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.

~~~
arethuza
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.

~~~
bambax
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."

~~~
yummyfajitas
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.

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

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

~~~
Psyonic
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.

------
HectorRamos
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."

------
nearestneighbor
_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?

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

~~~
astrofinch
Why is that advantageous?

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

~~~
Psyonic
Because plenty of deals are negotiated off the market.

~~~
astrofinch
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.

------
daychilde
> 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.

~~~
samtp
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.

~~~
TheSOB88
Most guerrillas are not apes, either. (guerrilla war vs. gorilla ape)

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

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

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

------
nightlifelover
"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.

~~~
ams6110
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.

~~~
nightlifelover
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..

~~~
ams6110
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.

------
klon
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."

------
AmberShah
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.

~~~
jrockway
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.

~~~
runjake
| 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.

~~~
Psyonic
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.

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

------
neurotech1
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.

------
mseebach
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_

------
rchi
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.

~~~
hugh3
_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.

------
jone11
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.

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

~~~
ableal
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
...

~~~
antongm
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).

------
unohoo
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.

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

~~~
hugh3
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.

~~~
mdda
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).

------
fred-r
Nerd erotica.

------
mkramlich
> 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!

