"Too many people go into finance and law" -Elon Musk

Intern in IB - Gen

Curious to hear everyone's thoughts on this. I don't know if I necessarily 100% agree with the statement-- I would argue that many software engineers, etc. are "creating" and innovating at tech companies (despite being under the company's umbrella). Personal anecdote, but when I told a friend's dad that I was working at a HF last summer, he said, "All of you kids, all you want to do is move money around and you don't want to create anything." Do you guys think that this is just a generational discrepancy (older generations grew up in a culture that valued manufacturing and production as opposed to our current services economy)?

(No, I'm not saying that a job in finance isn't valuable, just want to hear thoughts, hopefully from older members of the forum)

EDIT: The tweet was in reference to something he mentioned in the Joe Rogan podcast (summarized here: https://www.cnbc.com/2020/05/07/elon-musk-too-many...)

Comments (93)

Most Helpful
May 22, 2020

Ironically, I think tech is what finance used to be, and may be even better. Seems like everyone in tech is making six figures,work life balance, free lunches, WFH perks, company get togethers, free dinners, free drinks, nice holiday parties, etc. And creating what? Every start-up thinks they have some sort of solution figured out using buzzwords like machine learning, big data, algorithms, and then they get investors that for fear of missing out, throw hundreds of millions of dollars at these companies to never see any returns.

Yes, I'm a little jelly of tech people. But I'm sure many people in the finance field that broke into FO roles will say they are in their fields because they find it interesting. There are much easier and better careers for making money.

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  • Intern in IB - Gen
May 23, 2020

OP here. Maybe not "creating" in a traditional sense, but SWE friends of mine are able to see their work actually used on their company's platform (obviously one off cases so I don't know if that's true for all of tech). You definitely make a good point about the bullshit startups who are going to "change the world"... maybe even big tech is contributing to the complacency that Elon is kind've hinting at (I mean just look at the iPhone-- there has been very little innovation over the past 3-4 years). It's just interesting to think about the tangible effect of your work and how that might have changed over time. I'm not really claiming anything with this post, just curious about what people think (I'm just an intern and I know nothing).

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May 23, 2020

Sorry but.. when was finance ever like that? Lol I come from a family of bankers and, if anything, banking was 30x more intense in the 70s and 80s than now. I don't think finance has ever been a career that offered anything more than a lot of money.

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May 23, 2020
Goldmonkey Sachs:

Sorry but.. when was finance ever like that? Lol I come from a family of bankers and, if anything, banking was 30x more intense in the 70s and 80s than now. I don't think finance has ever been a career that offered anything more than a lot of money.

I'm going to call BS on this from a sheer time required and stress perspective. Note: this is not to say banking was not hardcore back in the day by any means. But everyone in the industry agrees that it was far less competitive, especially to get in.

I've had this same time and stress/hardcore debate with numerous people who are/were MDs, especially when I was in my 20s and early in my career (sitting in my seat gave me lots of exposure and often MDs would pitch to me).

The conversation would go something like this.

MD: all of you kids want to make MD so fast now. Pay your dues. I did. It took me 15-20 years of grinding and hard work blah blah blah.

Me: let me ask you a question. You worked hard. I respect that. You didn't have cell phones right?

MD: (nods)

Me: so when you left the office you couldn't be contacted right? You could go out on dates, see friends and even at home there would be plausible deniability right? Like if you didn't pick up the phone. You had time to meet your current partner/spouse if you were out of the office right?

MD: (nods)

Me: Well today things are different. You see this crap? (points at Blackberries on the lunch table). Yeah. We are on call. 24 hours a day. 365 days a year. Home or not. Date or not. Get an email or call before you board a flight? Well your vacation is gone. So let's see, I would calculate we work about 2x the hours you did (Blackberry time is work time).

MD: but...

Me: Let's make a trade. You take these sh***y things away which means that you can't reach us whenever/wherever you want. We'll work the hours you did and be just as committed. In exchange we won't demand to be MD in such a short period of time. I can think of tons of people of my age who would take that trade. Deal?

MD: uhm...

Me: yeah that's what I thought.

Note: yes I'm dating myself with regards to Blackberries.

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May 23, 2020

Is tech really that great? I know a number of programmers that all seem to make around $75k in NYC. One of my friends in NYC left Private equity after 2 years in Investment Banking and started learning to code. After he started talking to people, he found out he was looking at $70k starting out (almost 1/3 of his all-in comp).

  • Intern in CorpDev
May 23, 2020

Don't know any halfway decent company paying 75k for a software engineer. Entry level SWE at Microsoft for example makes 150k

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May 23, 2020

That sounds about right. The problem here is people are equating SWE/PM positions at FAANG/Big N to all of tech. These are the top 1% jobs in the entire industry.

It's like equating IB to all jobs in finance. For every front office analyst making six figures in NYC working on mega-mergers, there's dozens of financial analysts crunching the numbers for a MM paper-processing company's last quarter's revenue.

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May 24, 2020

Depends where you work....

There's working "in Tech" which is the whole Silicon Valley/Tech Hub eco-system of big tech companies and well-funded startups (and I definitely do not include startups that are on shoe-string budgets) and there are "other tech jobs"

The only spots that somewhat compete are internal "innovation" teams (think WalmartLabs) or literal embedded tech companies (think Marcus/Marquee at GS, Disney+, HBO Max) and financial services (especially quantitative groups/firms). It's only in these capacities will you ever find firms that compete with Tech for talent.

SWEs everywhere else get paid like any other middle class individual (think individual contributor/first-level manager corporate functions, engineering, academics, etc) would get paid. There's little to no premium in being a SWE at a non-tech corporate where the product is not technology (or at least truly technology-first/technology-enabled) because you just aren't a strategic asset to the company. You're looked at more as a necessary evil, a cost to be minimised and not a talented and important asset to be maximised.

That's where you'll see new grads/new entrants on like $60-80k rising up to a plateau of like $120-160k if they never move into management. In Tech (especially in the American tech hubs, other tech hubs have a different market rate) you can start at $120-200k as a new grad/new entrant with a plateau (i.e. terminal career level for most people) being more in the $250-400k range. Don't take my word for it, corroborate with a site that uses actual offer letter data: https://www.levels.fyi/

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May 23, 2020

At the macro level this makes sense for a lot of companies. But there's plenty of companies nobody has ever heard of that make really cool tools. It may sound simple and niche, but this abstract developer tool could save tons of money in both hours saved (SWEs cost a lot per hour) and company efficiency/ security. Prisma is a good example of this. This is why Stripe is so popular too.

Sometimes this amazing tech is created within a larger company, Facebook is very well known for this (React and GraphQL are great).

"The three most harmful addictions are heroin, carbohydrates, and a monthly salary." - Nassim Taleb

Previously Malta Monkey

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May 23, 2020

Although I think Elon is referring to too many MBAs as the Top 20 MBAs he encounters in his realm, his statement couldn't ring more true if all MBAs across the board are counted.

There are thousands and thousands of people graduating with fake MBAs. Sure, they have a diploma but once you hit the lower ranking schools, the job placement rate falls significantly and if they don't have a regional presence, you just wasted $100K or whatever their tuition was for 2 years.

But, in general business works in tandem with science. Science could not flourish without business. From small companies to countries to the world.

Each has its place. Lawyers have overrun America though - I think it hits Elon hard that some laws or regulation may limit the speed of growth. Also, he lives in California and no state has laws like they do. Its crazy.

He should delve to the 'why' of why 'too' many people go into finance and then he could find the drivers if he was really interested. But, it seems to be clear exit opportunities with high job placement rates. Throw some carrots to the engineers somehow (job incentives, scholarships) if that is what he wishes for the future of the country. If he thinks too many people go into finance and law, what has he done to change it?

I'm more for 'follow your passion' - but the incentives are real. Engineers cap out a lot lower than a lot of finance positions as well. There are lots of MBAs at the top of engineering firms at C levels, but many have received their engineering credential first. The business of the business needs to be learned and followed. There are best practices and if the business of the business is good - the engineering aspect then has the opportunity to flourish.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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  • Intern in IB - Gen
May 23, 2020

Really interesting comment-- regarding your 2nd to last paragraph, he talks about it a bit on the Rogan podcast (edited original post with link)

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May 23, 2020

Engineers' caps are definitely not lower than finance these days. The questions comes back to that one: how many people make the top in finance. Although I do think the tech industry has some hype, they are just more lucrative for employees right now.

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May 23, 2020

I believe I saw somehwere that Musk created a school for his children to attend and some others as well that focuses on sciences and does not have grades.

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May 24, 2020

Elon has kids?

Gun rights activist
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May 23, 2020
Intern in IB - Gen:

when I told a friend's dad that I was working at a HF last summer, he said, "All of you kids, all you want to do is move money around and you don't want to create anything." Do you guys think that this is just a generational discrepancy (older generations grew up in a culture that valued manufacturing and production as opposed to our current services economy)?

I think this mindset may be common, but often is the uneducated or those unfamiliar with the financial markets.

Those who create value - love to create value. They strive for accurate indicators of value and the proper growth of promising ventures and quick demise of those that should fall. The creation of value is an addiction for the best fund managers. To lead the markets - one has to think unlike the rest and not only anticipating what will happen, but when it will happen.

Regarding the quick demise of entities - consider the VCs on Shark Tank (namely Kevin) always saying to go around the back and kill this business because it sucks. What if that was the best solution to this person's financial gain? To start something completely different tomorrow and use their skills and expertise in a more productive manner. This financier just changed the path of someone who could be an engineer doing the wrong thing in their path. This is a rough example of what the markets do to companies and why proper value and shorting is essential. If the value isn't there - we should be able to see the lack of value. If there is no value - shoot it and do something else.

https://media1.tenor.com/images/f07ea0f2e206f0a59a9bd1938d35639a/tenor.gif?itemid=10240039

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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  • Intern in IB-M&A
May 23, 2020

Being creative or having the access to capital to create things as mentioned in the link is more about timing, capital allocation and luck rather than pure raw intellect. I get the overall premise but to me this is not applicable for anyone who isn't upper class or has well connected parents that can lend them a hand in the event of a failed business.

May 23, 2020

Too bad we can't have Elon 2024.

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  • Analyst 1 in HF - Other
May 23, 2020

I really don't want his fucking hippie retard wife and his bullied sons as my commander-in-chief.

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May 23, 2020
Analyst 1 in HF - Other:

I really don't want his fucking hippie retard wife and his bullied sons are my commander-in-chief.

Good point honestly. Though he seems to keep her in check.

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May 24, 2020

Wait trump or musk?

Gun rights activist
May 23, 2020

A lot of people who go into finance or law are choosing a much less risky path. The formula of going to IB > PE and whatever's beyond works for most people in terms of job security and setting up a good life for themselves. I think Elon wants more "brilliant" people to take riskier opportunities rather than "settle" for a known quantity. It's a fascinating debate for me but I think a good starting point

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May 23, 2020

I feel like it is the opposite of what you are saying.

In my mind engineering was always the safe route. The average gig is stable, high-enough-paying (relative to other careers), slower pay increases, lower hours, available outside of major cities etc. All feels safe and comfortable. That route felt boring and dull when compared to some of the uncertainty/risk/hustle on the finance side.

Often times we forget how difficult IB to PE is once we are in the door. Throwing all of your effort at FO finance jobs feels easy once you are in, but getting in (and sticking around) ain't easy. I lateraled, so have a little perspective on both sides of the table.

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May 23, 2020

I have tons of friends working as SDEs. The pay increases are definitely not slower, and entry-level SDE work is definitely much more interesting than entry-level ib.

I hope finance people open their eyes and admit that finance people are not the only masters of the universe anymore,

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May 23, 2020

I am doing financial due diligence on an energy company (a subsidiary of a F500). Every single C-suite executive / operations manager either majors in engineering and has a MBA later, or majors in BA in college. Even Elon himself attended Wharton, don't know why he has beef with MBAs.

May 23, 2020

the 'finance doesn't create anything' argument is such BS...
it can create capital, ensure smooth running of business, etc. etc.

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May 23, 2020

In general, I don't think elite finance and tech skills are that fungible. Maybe more in the hedge fund world- i.e. people who work at places like D.E. Shaw could do well in Silicon Valley.

I know a few people who've become very successful in finance, and a few who've been very successful in Silicon Valley. Their personalities and skills are quite different. The successful finance guys I know are smart, but not extreme geniuses. They're also very extroverted, confident, and polished. Often they're former college athletes or similar types.

The really good software engineers (i.e. the type who earn many 100s of thousands at FAANG companies, etc.) tend to be more like academics. They're smarter and more introverted. They often spend huge amounts of unpaid time on open source or personal projects simply because they find it intellectually satisfying. One guy I know well reads thick academic textbooks on algorithms and stuff like that for fun. I can't imagine anyone I know in PE doing that.

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May 24, 2020

I don't think that's wholly true. I would say there is a certain breed of finance professional that loves to learn things - sure they're not reading a textbook, but they probably, say, listen to various business podcasts, actually read a 200 page industry report, and that sort of thing. While maybe the top 10% of tech people beat the top 10% of finance people for intellectual brainpower, I wouldn't say they meaningful exceed them when it comes to intellectual curiosity.

May 23, 2020

In the grand scheme of things, you as an individual aren't making any meaningful contribution to the world. 99.9 percent of "financiers" can be replaced by somebody else.

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May 23, 2020

The irony of Elon Musk complaining about too many finance/law grads while underpaying his engineers at Tesla/SpaceX because he knows people are willing to work on cool projects for less is hilarious. Of course people will go into law/finance if they see higher paychecks. If companies want more smart people going into engineering, then raise the pay or do cool stuff like Tesla/SpaceX.

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May 23, 2020

From the numbers I've seen recently at Tesla for SWEs, he's definitely not "underpaying" anymore.

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May 23, 2020

Definitely paying well on the software side, was more focused on the other engineering aspects.

Array

May 23, 2020

Simply inaccurate. Has a friend working at Tesla and the pay is on the same level compared to FAANG.

May 23, 2020

I would think Elon's statement directly applies to supply/demand. He probably thinks there is a lot of work to do developing new technological advances, and perhaps assumes the capital formation process is overshot. This is something in which you can easily find the truth. Looking at the free flowing capital of the past decade and the monopolized FAANGs, there is something there in his statement. I don't know if I necessarily agree since the mechanism to change the supply/demand dynamic is to somehow make a career in developing tech more attractive, which isn't happening firmly enough to attract talent away from finance.

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May 23, 2020

Elon Musk is the non-athletic version of Dennis Rodman. He has that hyper insecurity complex that requires a lifetime of screaming "I am different" in everyones face. Major daddy issues sorta thing. Another comp would be all the hipster girls in Brooklyn who complain about how everyone else is "sooo mainstream and basic." What an exhausting life spent worrying about other people and shit you don't control.

Brilliant people spread across finance and law contributing (in varying degrees) to the world in a way that they chose with their own free will? "God dammit, so annoying! Should have been super different and thrown it in everyones face like me!"

end Elon Musk rant

On another note, very unsurprising and common first gen. wealth type of comment. Also a very common entrepreneur stance. Hit the success lotto ticket and make the $$ then ride around on your high horse poo poo'ing security and the establishment. Seen this one before...

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May 23, 2020
ChuckieSullivan:

Elon Musk is the non-athletic version of Dennis Rodman. He has that hyper insecurity complex that requires a lifetime of screaming "I am different" in everyones face. Major daddy issues sorta thing. Another comp would be all the hipster girls in Brooklyn who complain about how everyone else is "sooo mainstream and basic." What an exhausting life spent worrying about other people and shit you don't control.

Brilliant people spread across finance and law contributing (in varying degrees) to the world in a way that they chose with their own free will? "God dammit, so annoying! Should have been super different and thrown it in everyones face like me!"

end Elon Musk rant

On another note, very unsurprising and common first gen. wealth type of comment. Also a very common entrepreneur stance. Hit the success lotto ticket and make the $$ then ride around on your high horse poo poo'ing security and the establishment. Seen this one before...

Are you sure it's Musk the insecure here? Your post screeches envy.

May 23, 2020

Ha, sure... My arm-chair QB cheap shot at a celebrity bazillionaire who invites criticism is screeching jealousy? Hell, I am jealous of Derek Jeter too while we are at it.

Don't over think it. Just pointing out the very real and very tone deaf preaching that goes on at that level with a bit of sarcasm and hyperbole.

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  • Intern in IB-M&A
May 23, 2020

Why does this have any upvotes at all lol. You sound salty my friend

May 23, 2020

"lol" idk? Probably because someone else watched The Last Dance series, chuckled, and then moved on...

Upvotes? We talkin' bout upvotes? Grow up.

Come on brotha, taking a swipe at Elon Musk holds about as much weight in my soul as my disdain for Tom Brady. Love how a little sarcasm triggers you Musk fan boys.

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May 24, 2020

Probably because, unlike you, he's right?

May 23, 2020

I agree with your points about people contributing to the world in varying degrees in different ways. But disagree that Elon can be grouped into the more typical SV entrepreneur type who wins the tix, makes the $$ and rides around on a high horse. If Elon was one of those types, he would be mostly known as the guy that got rich off one good idea (e.g. Paypal) and got richer by investing in other startups in early 2000's (like certain other VC guys around that time). Instead, as soon as he became a multi-millionaire thru Paypal, he decided to start a rocket company (with 60% of his proceeds from Paypal), lost most of the money that he had previously made (to the point that at one point he didn't have a place to live in and had to bum at a friend's place), and in the midst of all this, decided to become a CEO of an electric car company and co-founded a solar energy company. If you consider his career more closely and his history of risk taking, you might be able to better understand where he is coming from.

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May 23, 2020

This is all very true. My post was mostly a cheap shot at some of the ridiculousness that comes with Musk's intelligence.

Deep down, respect Musk's sling from the hip style and never ending pursuit of the next big thing. Takes a hell of a lot of balls to constantly risk it all. The rational side of me fights with his ideas at times. How/Why should we drill high speed underground rail lines when NJT can't run on time? Then again, maybe that is exactly why we should drill high speed underground rail lines.

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May 23, 2020

The market is self correcting anyway. Finance no longer pays like it did, pre GFC, and the stories of hedge fund or PE guys making 8 figures are just that, stories. When you factor in the cost of having to live in a major city (NYC, London, Tokyo), the long hours, the lack of job security as fees fall and passive strategies dominate flows, and the reality that no one outside of finance really cares what you do for a living (there is no prestige) you can see why the industry is not as attractive to people as it was in the early 2000's. I suspect compensation will continue to fall and those people who were just in it for the money will depart for greener pastures leaving those who actually enjoy the work.

  • Analyst 1 in IB - Gen
May 23, 2020

Good take, but respectfully disagree on a few points. Fees are falling, yes, but that's in the post GFC era with free money abound everywhere, of course you're not going to generate a big fee on a deal where investors will throw money at you that they got w/ such a low cost of financing. However, once you get to more hairy deals, fees are solid and will stay that way as a GOOD banker will be able to tell the story of the company and why their 11% HY new issue is actually a solid buy. Of course fees are low on AA+ 5yr bonds, they're safe. It's going to be interesting to see, following covid and likely WAVES of defaults and downgrades, where fees move considering many more companies debt will become much more "hairy".

To the passive flows point, yes, in a grind-up, bull market w/ QE abound, of course passive will outperform. It will be interesting to see how flows look post-covid, where selling investors on "we will watch your money and hedge your tail risk from events like covid" will be more plausible than before, where any idiot with $100 could make money in stocks from 2008-2019.

Further, if anything, finance basically lets you get a "business" job anywhere after, because nobody outside finance understands how it works, and as such others assume you're smart since they don't know what you do. It's human psychology, but there's a reason that junior bankers are hired essentially anywhere even though they spent 2 years formatting logos and reading 10k's to find what to plug in for depreciation. Perception is reality I guess.

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May 23, 2020
Ovechkin08:

The market is self correcting anyway. Finance no longer pays like it did, pre GFC, and the stories of hedge fund or PE guys making 8 figures are just that, stories. When you factor in the cost of having to live in a major city (NYC, London, Tokyo), the long hours, the lack of job security as fees fall and passive strategies dominate flows, and the reality that no one outside of finance really cares what you do for a living (there is no prestige) you can see why the industry is not as attractive to people as it was in the early 2000's. I suspect compensation will continue to fall and those people who were just in it for the money will depart for greener pastures leaving those who actually enjoy the work.

At a high level, this. Though I'm not sure about people leaving. As income inequality continues to soar and the future seems (note: I didn't say is) less secure, I would surmise that finance/banking (Ie. A safe path to six figures early in one's life) will remain popular. Sure the upside is not anywhere near what it was and may never be again but the general level of compensation especially when compared to the average Joe, is pretty darned high.

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May 23, 2020

Elon Musk - the same guy who was pretty happy with the electric car subsidy that gave him a leg up but now anti government cause they won't let him open his plant

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May 23, 2020

nothing counters Elon's point better than Mark Andreessen publishing this monumental article called "It's Time to Build" and subsequently investing in a dumbass social app like Clubhouse.

this is a classic case of asking the barber if you need a haircut. everyone in tech thinks they are doing gods work

May 23, 2020

I actually happen to agree with him.

But we are seeing a big change in the graduate destination as the tech companies are competing with the traditional finance and law firms. I think this movement is much needed.

May 23, 2020

It's hard to disagree with him. At some point, society got lazy and became enamored with the idea that success isn't about what you personally accomplish, but more about what crowd you're in. So instead of focusing on how you can personally add the most value, focus instead on going to the right college, "breaking in" to the right industry, and having a job with status.

I think this happens when GDP growth slows in a country. When you're growing at the high rates we were in the 60s and 70s, every path looks good and people are more inclined to think about what's actually the right fit, what they're excited about etc. But as that growth levels off people get more concerned about locking down their status. Creates more people wanting to be bankers and lawyers, compresses relative pay for those fields, and also creates more parents willing to do crazy shit like bribe their kids into college.

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May 23, 2020

I could write signal processing codes for radars all day, but it will never be as profitable as working in finance. It is clear where the money is

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May 24, 2020

Basically what musk is talking about...

An incoming medical student interested in health tech, consulting, and entrepreneurship.

May 23, 2020

Ha fuck you whoever says finance pays just as much if not less than engineering.
All your software VC backed or MSFT engineer make a decent amount going in - but they DO cap out early. Some of them luck out and get some shares in some unicorn and end up rich - those are the guys you hear about.
Truth be told it's the same in PE - if you are lucky your carry did well and happy days, but a lot of the time you'll slave away, hit a crisis like '08 or '20 and that all goes to shit. Or you just get a small amount of carry for a long time.

The money is still in the banks, even if that has diminished. You'll likely make $300-600k consistently in your mid thirties, and for the next 10-15 years you'll have collected some nice pay checks. If in M&A start bringing deals and you'll make some serious dough - in markets just peacefully climb your ladder. In back office you will easily be on $400k as well if you've done 15 years of the same job and have become part of the structure.

My point is: finance, the base and the basic is still the best damn paid job out there in terms of safety. Not HF, not PE, but finance in BANKS.

So yea - too many people go into finance, and it makes sense. It pays well and affords you a good life Elon. I'd rather do that then be spiked up on red bull all night long looking at lines of codes

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May 23, 2020

By mid-thirties you're a VP at worst, likely a director, and if you're a stuf you're an MD. For FO roles, wouldn't 300-600k be a tad low? Or am I misguided in my view. From what I've heard VPs make 200k base and between 150-250k bonus (across IBD to S&T, obvi there are outliers), Directors make around the same base, maybe 225k but 200-400k bonus, and MDs pull 900k+ all in. Do those numbers sound correct?

May 24, 2020

You are pretty spot on. I would expect you to be a director in your mid-thirties. Out of my entire grad class (2008) I think only one is an MD - they are starting to be put up for MD promotion this year and next year. Although I was shocked to see how MD top heavy the bank I used to work at has become. A good old crisis is needed to clean that all up - coming soon in a bank near you!

For the base for a director you are pretty much spot on. They start them lower than 225k, but 225k is I'd say the average when you have been a director for a couple of years. So 200 to 400k bonus basically brings you to that top range of 600k - bare in mind that part of that comp starts getting deffered after $100k they start adjusting using a percentage rule how much they differ

MD your base goes up significantly - but to be honest I don't have many points of reference for salaries there - 1m all in sounds about right though

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May 23, 2020

Dear WSO ... If Tesla was a bank, which one would it be? If Elon Musk was a banker, which EB would he have founded?

May 23, 2020

I feel like everyone is missing the point he is trying to make and instead has turned this into a Finance vs Tech thing. I interpreted his statement as 'smart people should be doing other things outside of finance/law where they are actually being pushed closer to their intellectual limits'. I think hes got a great point here.

Plenty of super smart people will go into IB after college just because it's the thing to do, pays well and is highly respected. The work of a banker is not particularly intellectually challenging. Sure, modeling/valuation is tough for your average joe, but for people of above average/high intelligence, this really isn't that tough. The hours suck but the work itself could probably be done by someone of average intelligence (fully expecting tons of MS for that one, hah!). As far as what they should be doing instead? Who knows what he had in mind, he literally owns a rocket company so probably something within that field. That is probably something that would push very smart people closer to their limits compared to aligning logos in a pitch deck

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May 23, 2020

As a teen looking torn between a future in finance or economics and tech (I'm more interested in economics. but recognize the scope in tech), how viable is a finance/economics job in terms of career future with AI and machine learning becoming more popular in the field of finance.

  • Intern in IB-M&A
May 23, 2020

Double major in CS & Econ and profit. You can have the most sought after degrees and avoid worrying about if a robot will automate your job.

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May 23, 2020

That's what my guidance counselor was telling me.

So I guess that's what's right.

Thanks.

May 24, 2020
JeepTeeth:

As a teen looking torn between a future in finance or economics and tech (I'm more interested in economics. but recognize the scope in tech), how viable is a finance/economics job in terms of career future with AI and machine learning becoming more popular in the field of finance.

Finances aside (ignoring the potential need for you to pay bills and/support family), do what you find interesting and with people you like. The rest will fall into place. That includes money.

The industry is littered with smart people who should have done something else and openly admit it especially once they are in their 30s. Sometimes they are good at their job. Often they are not, but seem to get by, at least for the time being.

As a teen - go explore, dude. Develop interests, hang with friends etc. the world may be a very different place by the time you are 22.

Good Luck

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May 24, 2020

Thanks man. I think I might double major or major in Econ and minor in CompEngineering.

May 23, 2020

I think it's important to delineate the point that Musk is really making. He's saying there are too many smart people in finance/law. I tend to agree with that statement. He's not saying that smart people should only go into tech/engineering and not go into finance/law. Both fields are important. Technology cannot progress without efficient capital allocation and legal protection and I think Musk understands that. But when he applies his first principles mindset to the capital allocation mechanism it's clear many of the established norms in both finance and law are inefficient or superfluous. That's the case with every industry or even aspect of society. Musk is often compared to being a real-life Tony Stark but actually Musk takes a lot of his inspiration from Asimov's Foundation series and equates himself to Hari Seldon, who was a visionary trying to steer society away from a long dark ages by bumping technology onto a different course. From that perspective it's easy to see how our collective talent resources are being misplaced, where basically anyone that is not working towards solving our inevitable extinction from destroying the planet is a waste of resources. The real irony here is that finance is actually THE means to correct misallocation of resources. When you understand that money is a quantification of human time (eg SWEs make more due to the time it takes to learn that skill), capital is the accumulation of money / human time, and finance is really the decisioning of which problems capital is assigned to, then the logical extension is that finance plays a critical if not the most fundamental role in Musk's ultimate gameplan. I sense he is frustrated that the finance industry doesn't allocate as much capital to support his worldview as it should, but the actual issue is that society as a whole doesn't always align to his technocratic goals and there are other things people want (entertainment, gratification, etc) that have value which capital naturally gravitates towards. This obviously a purist's view of finance whereas there are plenty of roles which exist outside the efficient capital allocation function and/or receive a mispriced reward for the value-add and/or have an unfair advantage - which is basically why the SEC exists. Makes Musk seem like a bit of hypocrite when he makes a mockery of that system.
There's one more nuance I'd like to point out which is that there are cases where some people are simply too smart to waste on finance/law. I'm talking about the top 0.1% - those people should be solving problems that the rest of us can't even begin to fathom, not doing jobs that reasonably intelligent people can do. For that example I would argue it's not the problem of finance salaries being overinflated rather more that elite level research jobs are underpaid - which I guess goes back to IP protection and maybe a finance problem that the rewards for those discoveries are so long-dated, in PV terms the benefit is small, hence the need to keep costs in check. Again this is a very small subset of the broader allocation argument but one which Musk is maybe more aware of as a participant in that 0.1%.

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May 24, 2020

Totally; imagine if half the guys at DE Shaw, TwoSigma, RenTech, Citadel and Jane Street got to work in med-tech, AI or a bunch of other non-finance problems.

From a global perspective, it's a no-brainer. The markets would function just as well as they do today, but you'd also have a new NASA/Westinghouse/Fairchild of the 21st Century.

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May 24, 2020

Elon Musk doesn't always think things through, but in this case, he's pretty spot-on. The point here is simple--too many smart people go into professional services. That's what he meant to say. I'm sure Elon isn't considering the relatively high number of Oxbridge graduates in the UK who go into accountancy. After all, accounting isn't as prestigious in the US or South Africa, but it's generally true that too many kids want to go into consulting, banking or law globally.

The reason for this is simple--you make more money earlier in your career in professional services than in any other career path and you have higher long-term earning potential than you'd find in those other paths. Perhaps more importantly, most professional services careers don't require hard technical skills as prerequisites to entry. You can't become a software engineer tomorrow, but you can become a consultant or a banker tomorrow. Law, accounting and actuarial work are a bit different, but Elon's point still holds. He's just saying that too many smart people aren't challenging themselves and aren't adding materially to society.

This is actually my fundamental problem with investing. I don't actually value the opinions of most investors. I don't think that what financiers do is that valuable. I understand all of the arguments against this concept. I've made those arguments for years to people outside the business, but the truth is that investing in a business is fundamentally easier than creating a business.

I know almost all of the world's Midas List. I don't think I've ever met @APAE , but from his writing alone, I can tell you that they are not smarter than he is. They have no better crystal ball than a few thousand others than don't have their clout. APAE doesn't do VC. Venture is basically not investing. It's gambling. I wish more people would understand that.

I don't know Elon Musk, but I suspect he doesn't like 'investors' for the reasons I just explained. Starting a business is hard. Operations are hard. Fixing problems in a business are hard. Financial modeling for a math major like myself is mind-numbing. For those of your who can't keep it all straight in your heads and can't explain it to your bosses, it's because you're not that clever. For those of you at that level--Elon isn't talking about you. He's just upset that all the people who could have done more didn't do more. That's all.

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