
Wall Street Talent Is Moving to Silicon Valley - buildops
http://venturebeat.com/2015/11/21/why-wall-street-talent-is-moving-to-silicon-valley/
======
vonklaus
Paul Graham says this often, and I am paraphrasing here:

They did a study at harvard, and they figured out that MBA's flock to the
wrong industry right before it dies. It was bonds, equities and then silicon
valley in the 90s.

It was an interesting anecdote which I have heard often, but now am certainly
curious enough to try and dig up that article/study.

edit: The author seems like an accomplished person, and I don't want to paint
in the tech v. finance differences, but to highlight what camp she is from,
take a look at the first sentence describing Mor Assia:

Mor advised Israel’s global telecommunications billing giant, Amdocs, to
choose the right verticals for diversification in their technology
acquisitions and launched offerings like Billing for Dynamic Pricing to create
new growth opportunities.[0]

I mean, sure, I parse JSON data to codify the new web standard leveraging
agile tooling like visual basic to fast-follow with a GUI interface which is
deployed into our cloud based infrastructure to track the IP address, but I
wouldn't write that down in the 2nd sentence of my biography.

[0][https://www.iangels.co/team/mor-assia/](https://www.iangels.co/team/mor-
assia/)

edit: I can not find the video clip. My memory is that the study was done by
Harvard Business School, and it found that MBAs were categorically picking the
wrong industry. The examples cited by the speaker, I am 90+% confident it was
pg restating it, were going to wall street to trade bonds with Michael
Milliken right before he went to jail, Silicon Valley right before the bubble
burst and one other which I would guess to be real estate or M & A post KKR,
but that is just complete conjecture. Don't take my word for it, and I don't
want to misquote PG quoting some study, but I am fairly confident for what it
is worth.

~~~
pcx
Can you please provide source for what you say pg said?

~~~
vonklaus
been looking. It is in a video, so it has been difficult all searches of
Harvard MBA study pull up Michael O'Church rants. Will update when found.

~~~
pcx
Just found that rant too!

I remember him saying Business Schools are good at making MBAs that help you
run a business well. They should do that and leave cultivating
entrepreneurship to folks like YC. But I see that argument in line with this
article's data. These MBAs are trained to get things like M&A right, so
getting them onboard might be the right thing to do and does not necessarily
indicate another crash.

~~~
vonklaus
No way can I parse 10 hours of PG video. Just rewatched the Calacanis
interview and some of Charlie Rose. I vividly remember him speaking about the
study, but can't remember if it was an interview or just a speaking engagement
(possibly Pycon 08).

Here is him talking about MBA's whipping their meek rent-a-programmers during
the interview[0] which is the best I can do. If anyone remembers what video it
is in, or better yet, actually knows the (i believe harvard business school)
study, would be super interested.

[0][https://youtu.be/YMqgiXLjvRs?t=20m30s](https://youtu.be/YMqgiXLjvRs?t=20m30s)

------
scurvy
I'll stick my neck out on this and say, the author is right and these are the
people who are ruining Silicon Valley. Take a look around at the big named
"innovators" and you'll notice that they're really "iterators". People
building a "business" around a small, incremental improvement in an previously
existing process. I refer to this as the HFT, hedgefund incremental approach.
Let's pick up nickels in front of bulldozers while the getting is good(1). Get
enough money before the bulldozer hits you. This seems like the premise behind
AirBnB, Uber, Square, and every other unicorn. Can't wait 3 minutes to order
your food at the cafe? Billion dollar business! Can't wait 4 minutes and chat
with your companion while you wait for your dinner check to arrive? Billion
dollar business! Creating electricity from small, safe, pollution-free
hydrogen power cells? Eh, maybe a few hundred milli tops. Not worth it.

It's this kind of quick buck thinking around simple, non-inventive iterations
on existing models that are actually _killing_ the Valley. The Valley should
be for big ideas and wild bets. Not bets on people to do your laundry for you.

These Wall Street/finance people need to pack up and go back east.

(1) This was the idea behind Long Term Capital Management (LTCM). We all know
how well that worked out.

~~~
supster
I agree with your general sentiment, but I feel like your examples are wrong.
Uber has fundamentally reshaped how we view and consume transportation. With
the addition of self-driving cars, it has the potential to utterly reshape
logistics. Square has completely modernized the dinosaur POS business. As
someone who works with a lot of small businesses, I can tell you that Square
has really impacted their lives for the better. AirBnB, while I like a lot as
a consumer for opening up a whole new genre of places I can stay and feel at
home, has admittedly started to devolve into managing a bunch of unzoned
hotels. LTCM while insanely leveraged was actually arbitraging an anomaly in
Tbills. It was a great business run quite well, right until the Russian gov't
defaulted and sent shockwaves through the bond market. That kind of high sigma
event is pretty hard to forsee.

~~~
scurvy
I'm much more interested in the company that brings us self-driving cars (or
flying cars) than the glorified taxi company that leverages them. Call me a
dreamer. I'll probably die broke and penniless though.

Also, comedic if you think that LTCM was well run. They were sniffing their
own flatulence and getting high on their own supply. They employed two Nobel
laureates and based their model on those laureates....whose work ended up
being completely flawed. How many people use Black-Scholes today? Zip (if they
have a clue). You really should read "When Genius Failed" if you think they
ran a good business.

~~~
nordsieck
I'd suggest to you that incremental improvement is generally more important
than revolutionary improvement, even if it's distinctly less sexy.

~~~
scurvy
That's OK. It just doesn't belong in Silicon Valley. Ship it out to XYZ
Valley/Alley/Prairie.

I'm also a fan of punctuated equilibrium and cladogenesis as opposed to
evolution over millenia. But maybe that's just me.

------
oneJob
Before Silicon Valley gets all flattered, consider:

"Soifer has long studied the proportion of Harvard MBAs who pursue careers in
finance; when more than 3 in 10 head for Wall Street, it's time for investors
to sell, he says."[1]

I used to work on Wall Street. I left because of this issue writ large. There
are quite a few pieces of research claiming this trend is a negative
indicator.

[1][http://www.cnbc.com/id/45030885](http://www.cnbc.com/id/45030885)

~~~
chad_walters
Likewise when they start heading to Silicon Valley in droves... Last time
around was 2000 -- 'nuff said.

------
fatman
Seems like a good a time as any to break out my favorite anti-MBA story.

I took a Masters CS class some time ago, and for our final class project, not
knowing anyone else in the class, I got lumped in the "leftover" group with a
working engineer and a Wharton MBA student. We meet up the day before the
project is due to integrate each of our individual pieces together into a
final submission and the MBA candidate shows up empty handed. Turns out he had
spent his time trying to "schmooze" the answers/code out of the professor and
the TA, who, to their credit, had stood firm. Guess who spent that entire
night writing that dolt's portion of the project from scratch.

~~~
ragnarok451
Why did you write his code for him? You should've just told the instructors he
didn't pull his weight, I think. With what happened, he ended up with a
successful group without doing any work, which is a great outcome for him.

~~~
fatman
Because I'm a stubborn ass who'd rather suffer a freeloader than hand in an
incomplete assignment. In hindsight, I guess I should have finished the
project and explained the division of labor.

~~~
TeMPOraL
> _Because I 'm a stubborn ass who'd rather suffer a freeloader than hand in
> an incomplete assignment._

And sadly, off the backs of those like you MBAs flourish.

------
pbreit
I was expecting to see a "(1999)" in this headline.

------
brianchu
There's a glaring error, which makes me doubt the credibility of the rest of
the article. Mary Meeker joined KPCB as a partner, not an analyst ( _huge_
difference). And this was 5 years ago, so it's old news.

------
iamleppert
We don't need them. We have automated, or are in the process of automating
most of traditional finance anyway. They can come here, but they won't find
jobs unless they are willing to put in the time to learn and be competent
technically.

I'm not holding my breath.

~~~
bradleyjg
No one is automating M&A work. It'd probably take something close to strong AI
to do that.

------
beatpanda
"Talent"

------
ClayFerguson
California is completely out of water. I really doubt that many people are
foolish enough to mover there by choice.

~~~
jjoonathan
If it gets _really_ bad they might have to desalinate which will cost... $3
per thousand gallons. Oh, the horror.

~~~
meric
A single 1g almond takes 1.1 gallons of water to produce. That 1kg packet of
almonds is going to go up in price by $1.

------
hackaflocka
A dozen top financial people from Wall St. have taken up financial jobs in
Silicon Valley, and this is news?

~~~
busterarm
Agreed...

...and when I think about where the 'talent' is in the financial world, it's
on the technical side and all of those people are still there.

