
The best and brightest are turning away from Wall Street - mathattack
http://www.cnbc.com/id/101156782
======
sirkneeland
Good because fewer smart people will be going to Wall Street where they will
be tempted to think they can outsmart the market with elaborate financial
engineering that crashes the market.

Good because brilliant engineering types who would have been "Quants" on Wall
Street will go and be actual brilliant engineers.

Possibly bad because these Harvard MBAs (and their ilk) haven't magically
become passionate about technology. They are simply following the money. So,
we'll have more of "that kind" of people in tech.

Not to say there are no talented, technically savvy elite MBAs who do care
about tech. I know some of them. But plenty more may just be mercenary types,
going where the money goes.

~~~
gaius
If by "brilliant engineers" you mean, finding new ways to display ads and bill
people for displaying ads, which is what counts for "brilliant engineering" in
Silicon Valley these days.

~~~
dasil003
Putting aside the fact that Silicon Valley is doing a lot more than whatever
makes the front page of TechCrunch today, there's still the fact that in order
to get an ad impression you have to provide something that an actual person
somewhere ostensibly finds useful. At it's worst this is orders of magnitude
more useful than Wall Street's endless arbitrage seeking to benefit the
richest of the rich without actually providing anything that is useful to
someone with less than 10M dollars.

~~~
upquark
AdTech is a broken industry with most participants providing zero to negative
value to the world. They are basically just nodes in a messy, unregulated,
scam-ridden chain of players moving an ad from technically illiterate buy side
to an equally illiterate sell side, taking something like 70% of the money in
the process. Zero value for humanity, no comparison to Wall Street...

~~~
dasil003
But Silicon Valley !== AdTech.

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oscargrouch
The best and brightest = MBA people?

Im not saying that is not, or that it is.. But the "best and brightest" its
very subjective and cant be measured by objective means; and why by their
vision the "best and the brightest" are MBA's and not people from Physics,
Enginnering or Social Sciences?

Its ok to say that people with MBA do not like the financial sector anymore,
and are going to other hot sectors.. but that headline are pretty much
misleading;

I know bright, as i know stupid people with MBA , and the MBA itself doesnt
happen to change the stupidity case..

~~~
Thrymr
"The best and the brightest" has been a backhanded complement for quite some
time now:
[http://en.wikipedia.org/wiki/The_Best_and_the_Brightest](http://en.wikipedia.org/wiki/The_Best_and_the_Brightest)

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mattty
The analysis is a little flawed in that it assumes the composition of the
incoming class has remained consistent each year. In fact, Dean Nohria, who
took over in July 2010, shifted the composition of the incoming class (the
class of 2013) away from finance (finance as a pre-MBA industry showed a
decline of 7%pt vs 2012 class[1]).

This in part explains the shift in choice of career post-HBS.

[1] [http://poetsandquants.com/2011/06/06/harvard-down-on-
finance...](http://poetsandquants.com/2011/06/06/harvard-down-on-finance-
types/)

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JumpCrisscross
The Harvard MBA Indicator gives "long-term signals based on the relative
attractiveness of Wall Street jobs. The more grads that are enticed to go
there, the more bloated Wall Street becomes and the more likely the market is
nearing a top. When stock markets are doing poorly, fewer grads want to enter
the sector." The indicator "gave sell signals in 1987 and in 2000, which were
both terrible years for the stock market."

[http://www.investopedia.com/terms/h/harvardmba_indicator.asp](http://www.investopedia.com/terms/h/harvardmba_indicator.asp)

~~~
mathattack
I'd like to find out if this is a negative indicator for other fields too. Is
it a negative indicator for financial services because HBS produces general
managers? Or because they're chasing what's already hot?

~~~
jacques_chester
Bull markets precede bear markets, and bull markets attract more HBS graduates
into finance. That would be my guess for the mechanism.

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laughfactory
It's easy to see why this is the case: it's another, unexpected, result of
ever-increasing regulation in financial markets. The best and the brightest
are often driven to innovate, but if regulation becomes so stifling as to
reduce the opportunities (or perceive opportunities) to innovate then those
with the drive will go elsewhere. Having worked in banking, I can assure you
that the environment is often (though not always) very stifling. There is
often a constant pall over the entire organization...stemming from the
constant sense that you're owned (in every way that matters) by the regulator,
and that the "free market" as it pertains to the financial world is, in fact,
largely an illusion. In fact, in one position I worked in, most of our efforts
where directed at satisfying the regulators NOT producing any analytics of
value to the business.

Now I recognize this isn't true of all financial institutions, and I suspect
those that survive and thrive will be those who innovate effectively even
within the stifling constraints of recent regulation. That said, it's just
become a very difficult space to work in, especially in comparison to the
freedom offered by the tech space.

Please note too, that I'm not arguing whether or not the additional
regulations were necessary and effective; I'm simply stating that they are
having the effect of raising the cost of doing business for financial
institutions, and also tightening the constraints they operate under which has
the indirect result of making it difficult to innovate, reducing the desire
among the best and the brightest (i.e., those who I suppose might be the most
driven to innovate and harvest the appropriate rewards for their efforts) to
work in those institutions.

~~~
potatote
Can you explain a bit on what innovation means in financial industry? This is
not a sarcasm or a mockery, but a serious question. I have a friend in
financial industry who works for Barclays and she always complains that the
regulations are getting tougher, and it's hard to innovate. With you saying
that, it starts to make me wonder what kind of innovation one could possibly
create in banking other than loaning out money in various forms, and insuring
assets.

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nilkn
With people like Sheryl Sandberg getting paid hundreds of millions of dollars,
I'm not so sure I can blame them. This forum is heavily engineering focused,
but the technology industry is paying some of these MBAs extraordinary sums.

~~~
lmg643
it's for the good of the world that wall street is no longer the #1 desired
employer.

let's consider two types of innovation: (1) eliminate complexity, streamline
processes, lower expenses, and lower costs to consumers, and (2) increase
complexity, obscure details, and raise prices to consumers. Both are
considered optimizations; technology tends to affect #1 and MBAs like to
increase #2. (this also helps explain why my toilet paper now costs $15 for a
pack of 9, but you can get an old model iphone for free.)

Truth is - 27% is still too high - finance should be just another sector, of
say, 10 major categories. only 10% should be going into finance. and it really
doesn't matter a hoot if the smartest people go there. ultimately finance is a
relationship business - knowing the people who have the money and getting them
to trust you.

we should probably be more worried about the influx of MBAs into tech. there
are definitely a lot of rockstars who get MBAs, start great companies, etc -
and i don't want to take anything from that - but once the law of large
numbers start to apply, you inevitably get departments full of folks cranking
about powerpoints on strategic mumbo jumbo and that can be one of many
elements turning innovative companies into bureaucratic messes.

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bhewes
I think the "best and the brightest" turning away from Wall Street will leave
it open for new ideas to play out.

And Google's beloved margins are about to be destroyed with the big three all
developing hardware. All the cash GOOG, MSFT and APPL have been hording is
about to be returned to the market.

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ajiang
For the optimist undergrad...less competition for the next-best and next-
brightest to get jobs on Wall Street

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AznHisoka
Most MBA programs seem to teach you how to run an existing business, versus
how to create something people want. The first is much much easier than the
first. A cynical part of me wants to call it leeching off the hard work of
those who came before them. Somebody already did the hard part of starting the
business.

~~~
kasey_junk
There is no quantifiable way you can say that running an existing business is
easier than starting one.

They may require different skill sets or have different challenges but
claiming 1 is harder than the other is a particularly ignorant bias.

~~~
dllthomas
_" They may require different skill sets or have different challenges but
claiming 1 is harder than the other is a particularly ignorant bias."_

I don't know; it seems like a position someone could conceivably support with
evidence and analysis, but that certainly wasn't presented in the parent. In
principle it could have been done by the parent and not presented - I leave it
to others to make conclusions as to the likelihood of that.

~~~
kansface
Consider the failure rate of startups vs. those of established businesses.

~~~
dllthomas
There are many ways of defining success vs. failure, there are many ways of
defining difficulty, and there are very different barriers to entry.

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candybar
This is bad for both wall street and the technology sector.

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etrautmann
Since when have been been assuming that Harvard Business School students are
the best and brightest? That's never been my impression...

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PhasmaFelis
About damn time.

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carsongross
Mirabile dictu!

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michaelochurch
1\. Harvard MBAs aren't the "best and the brightest". Top-20 graduate programs
in CS, math, and physics, are far more selective. Possibly a quarter of the CS
students at Stanford are legitimately smarter than I am; in top MBA schools,
there _might_ be one or two per year who ties me.

2\. The good MBAs from Harvard still go to hedge funds and private equity
firms, because those pay $500k+ right out of school. (No startup comes close.)
The mid-grade MBAs go to venture capital and large banks and corporate senior
management. The ones who end up in venture-funded startups as VP/Finance are
the leftovers. Bossing nerds around is not what these people want to be doing.
They want to work on the billion-dollar deals and at the currency arbitrage
desks.

Trust me. While there are good MBAs out there, the ones who end up managing
startups are the ones who ended up falling to their third or fourth choice.
And to fall that far from a prestigious MBA (like Harvard or Columbia) means
the person really fucking failed.

3\. What this means is that, when MBAs invade VC-istan (as they do during
bubble times, like now) is that the best of the colonized tribe
(technologists) must answer to the _worst_ of the colonizing tribe (MBA-land
business types)-- the ones sent out into the hinterlands because they weren't
good enough to make it in the mother country. The dynamics that emerge from
this are, from a distance, hilarious.

~~~
michaelt

      Harvard MBAs aren't the "best and the brightest" [...] in 
      top MBA schools, there might be one or two per year who 
      ties me.
    

While I was in engineering graduate school sneering at people who entered the
finance industry and made triple what I did, I had a revelation: If people
dumber than you are getting paid more for less work, who's really the dumb
one?

~~~
dragonwriter
> If people dumber than you are getting paid more for less work, who's really
> the dumb one?

 _If_ your _only_ concern is making money, you are.

But then, that's a _big_ if.

EDIT: And, of course, the above also presumes that the making more money
doesn't have to do with family connections or other factors that have nothing
to do with intelligence.

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known
I'd blame it on HFT.

~~~
mathattack
There are lot of things to blame, but I don't think HFT is one of them.
Harvard MBAs rarely go into that field. They're much more likely to do M&A,
Research, Investment Management or Private Equity.

