Following the Money

Wall Street Brain Drain Reverses as Mathmatons Migrate to Tech

The End of Wall Street as They Knew It,” proclaims the headline on the cover story of New York magazine this week, an epic account of the woes of post-crash bankers. The masters of the universe have had their bonuses slashed, the story says, due to the suffering economy and the provisions of the Dodd-Frank financial reform legislation. The industry also cut 200,000 jobs. Where’s a young, mathematically inclined valedictorian to turn?

“If you’re a smart Ph.D from MIT, you’d never go to Wall Street now,” one hedge fund executive told the magazine. “You’d go to Silicon Valley. There’s at least a propsect for a huge gain. You’d have the potential to be the next Mark Zuckerberg. It looks like he has a lot more fun.”

By coincidence, Betabeat hopped on the phone yesterday with Lucas Nelson, associate at Draper Fisher Jurvetson Gotham Ventures, to get the Silicon Alley veteran’s take on The Startup World Today. Mr. Nelson, a Kauffman Fellow, worked at Adobe and US Venture Partners. (“Prior to that, business school,” he said. “Prior to that, I broke into computers for a living” for Symantec.)

A programmer and computer security expert, Mr. Nelson is on the nerdier side of VC, crunching numbers and sifting through DFJ Gotham’s already robust dealflow. And what he’s noticed is a stark contrast to the Silicon Alley of the early aughts.

The startup scene had no respect when he first started, he said, no respect. “Being an entrepreneur wasn’t the rock star job that it is today,” he said. “No one was on TV for starting their own company in ’99.”

In New York, being a programmer wasn’t respected the way it was in Silicon Valley, he said. And if you worked for a startp? Well, that was weird. “A lot of people worked for banks because they just paid better,” he said.

The Wall Street brain drain used to be something we wrung our hands over: the automated siphoning of the nation’s brightest students into the richly-carpeted halls of Morgan Stanley, J.P. Morgan and Goldman Sachs, the “Ivy-to-Wall Street pipeline,” as the Washington Post’s Ezra Klein put it.

But, my, how the balance is shifting. “I think that respect for geeks has gone way up and I think that respect for quant hedge traders has gone down some,” Mr. Nelson said. “And I don’t know that those are necessarily linked but it’s a good thing in my opinion.”

If entrepreneurs are rock stars, then we imagine Mr. Zuckerberg as the understated frontman, Andrew Mason as the floppy-haired drummer, and Jack Dorsey as the guitarist with mystique. That would mean the Wall Street bankers are like… we dunno… the greasy-haired guy from the record company who manages the band’s Pandora shares. No wonder more college grads say they’d rather work for tech companies than on Wall Street.

Runaway metaphors aside, there’s one other reason tech is giving finance a run for its money: windfalls.

“There’s no other industry where you could get paid so much for doing so little,” a former Lehman Brothers trader told New York. Considering Morgan Stanley’s bonuses were capped at a mere $125,000 this year, while a graffiti artist who got stock options for spray-painting phalluses on Facebook’s walls could be worth upward of $200 million, that may not be the case anymore.

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com

Comments

  1. Marianne says:

    I think I speak for everyone when I say if you’re “doing so little” you’re probably not working on a startup :)

    1. Anonymous says:

      Great article. And Marianne, the “doing so little” comment was from a Lehman trader talking about trading at a bulge bracket bank, not working at a startup.

  2. Stfu says:

    I know you are trying to crank up the page views, but come on…this article is just fucking pathetic.  Do our industry a good deed and get rid of the “its so cool to be a nerd at a startup” articles.