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

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https://twitter.com/elonmusk/status/1258592155787…

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-man…)

Comments (166)

 
May 22, 2020 - 11:30pm

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.

Array
 
  • Intern in IB - Gen
May 23, 2020 - 12:00am

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).

 
Most Helpful
May 23, 2020 - 10:47pm

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.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
Controversial
May 24, 2020 - 9:52am

I’m not a SJW, but I have also never seen such a privileged post. 99% of people on this site (including myself) wouldn’t have stand a chance to get into finance 40 years ago.

Banking used to be an industry (even more than now) dominated by a few people who had very specific backgrounds and liked people from specific backgrounds around them. No chance you would find more than one person of color working as an analyst at a bank. Just no chance. So no. It wasn’t “less competitive.”

No idea why you’re talking about mobile accessibility as if it had anything to do with job opportunities. Two separate points.

 
May 24, 2020 - 9:59am

Do not get me wrong though. I do agree with your point about mobile accessibility. Just think you mixed up two things there. Less competitive? Nah. No chance. More mobile accessibility now, so more stress and work than back then? Maybe. But my point was, the OP response spoke about finance as if it used to be like tech is now today. Finance has never been, and will never be, a place you go to for work life balance. Sure, they could unplug when they were done with work, but my father also sat in a meeting room for 3 days straight when the LBO craze was going on in the late 70s...

 
May 29, 2020 - 3:35pm

I think the onset of mobile accessibility definitely leads to burnout faster nowadays via "always being on". But, hearing stories of my MD explain to me that associates used to redline turns of legal docs BY HAND sort of makes me appreciate technology in general. Also, apparently data rooms used to be actual rooms...full of actual paper documents. I'll take aligning logos in ppt over FILING FUCKING FILES BY HAND every. damn. time.

Array
 
May 23, 2020 - 7:45pm

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.

 
May 24, 2020 - 11:37am

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 - 5:28pm

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
 
May 23, 2020 - 12:05am

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

 
May 23, 2020 - 12:21am

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

 
  • Intern in IB-M&A
May 23, 2020 - 12:43am

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.

Array
 
  • Analyst 1 in HF - Other
May 23, 2020 - 1:20pm

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 - 6:15am

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

 
May 23, 2020 - 10:03am

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.

 
May 26, 2020 - 5:05pm

To be clear, I was referring more towards entrepreneurship when referring to "riskier" roles, not whatever average SWE role you and others are referring to.

And while I'm aware of the chops it takes to reel in and stay in a FO job (having been in it for four years now), I stand by the thinking that it is relatively risk averse for people who have drive and intellect given a well-paved and well-trodden path which people can follow.

 
May 23, 2020 - 9:12am

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.

 
May 24, 2020 - 12:31pm

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 - 10:00am

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.

Array
 
May 23, 2020 - 10:12am

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.

 
May 23, 2020 - 10:43am

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...

 
May 23, 2020 - 2:20pm

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 - 2:34pm

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.

 
May 23, 2020 - 8:18pm

“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.

 
May 23, 2020 - 8:05pm

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.

 
May 23, 2020 - 8:26pm

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.

 
May 23, 2020 - 11:40am

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 - 6:51pm

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.

 
May 23, 2020 - 10:54pm

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.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
May 23, 2020 - 12:39pm

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

Array
 
May 23, 2020 - 1:11pm

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 - 3:18pm

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.

 
May 26, 2020 - 12:58pm

Dr. Rahma Dikhinmahas:

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.

I think slowing GDP growth is behind a lot of the social phenomena that we’ve seen impact our generation - from low wages to weak interest rates on savings to increasing focus on protecting one’s status and the importance of hereditary wealth vs making your own way. Currently reading Piketty’s Capital in the Twenty-First Century where he discusses the same things.

 
May 23, 2020 - 5:25pm

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

 
May 23, 2020 - 6:54pm

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 - 4:24am

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

 
May 23, 2020 - 7:03pm

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

 
May 23, 2020 - 10:08pm

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 - 10:19pm

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.

Array
 
May 24, 2020 - 7:45am

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

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
May 26, 2020 - 7:31am
  • Paul Graham essay titled "What You'll Wish You'd Known"

"Suppose you're a college freshman deciding whether to major in math or economics. Well, math will give you more options: you can go into almost any field from math. If you major in math it will be easy to get into grad school in economics, but if you major in economics it will be hard to get into grad school in math."

"In short, he has not dedicated his life to reaching a pre-defined goal, but he has rather chosen a way of life he KNOWS he will enjoy. The goal is absolutely secondary: it is the functioning toward the goal which is important."

Two big influences in my life, you seem to be the type of person who would also enjoy.

 
May 23, 2020 - 10:19pm

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%.

 
May 24, 2020 - 5:02am

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.

Array
 
  • Associate 2 in Consulting
May 24, 2020 - 7:11am

I don't disagree with Musk, but I'll give you a personal example. My GF did both a Bachelors and Masters in Engineering with a true passion for the subject. Was really excited to go in the field until she saw UK salaries. To be clear, I am talking about London. Top firms like Arup, Mace and Atkins pay £25-30K per year in London. All of these are firms that generate over £1.5B annual revenue and yet decide to pay entry level students a disgustingly small amount. An amount that does not allow you to live in London. She found a consulting job that pays double that as an entry level profession. Same goes for people in research, biotechnology and other scientific disciplines. The only one that appears to have found a good balance is computer science.

 
May 24, 2020 - 7:32am

I mean, I think he has a point. it’s just the overallocation of resources to the finance industry in particular, as market forces result in high salaries for finance. so naturally more people will go into finance. it’s more of a market failure if anything, and the only solution, unfortunately, in my view, would be government intervention in the market- maybe artificially boosting salaries in science, engineering. if not, things will just remain the same.

having said that the truly brilliant people will still go into the academic fields like math, physics etc. you have people like Jim Simons, but you also have people who are equally brilliant in his field. I remember in an interview on YouTube he was asked about this problem, and he said that he doesn’t think it’s an issue, there isn’t a risk of the next Einstein joining a quant trading firm and making millions off algo trading instead of developing a new physics theory breakthrough, etc.

 
May 24, 2020 - 1:57pm

While Elon is a phenomenal entrepreneur, I think we should ignore his comments. He typically speaks out of turn and has plenty of hot takes. If he’s providing his view on raising capital, growing a company, electric cars, or space, it’s worth taking notes. That said, he’s out of his element.

Finance greases the cogs of capitalism to ensure that resources are being efficiently allocated while providing a service to investors. I don’t think I need to expand on the virtues of finance in this forum.

Additionally, there are a large amount of people who start their career in finance for the training. Plenty of people leave finance to start a company, work in industry, etc. If the world is really having a huge shortage of engineers, compensation will increase and more students will drift towards careers in engineering. That’s how the labor market works.

 
May 24, 2020 - 2:09pm

If anything too many ppl go into medical and law..

Never understood it. Obviously, people choose careers for different reasons and many are not simply in it for the money (* most fin people vs. medical), but I never understood going to school until your 30 to make less money than a 1st yr analyst... its insane. Sure you can make good money later on.. still years behind. Again, I fully get that many medical professional have some higher calling, but I never understood the comp benefit.

Same for law. Even after graduating from law school.. and getting into Big Law (if you even get there), the associates are making ~banking analyst pay. Never made sense to me... and they're just doing bitch grunt work (albeit so are finance analyst/associates). But on deal flow, counsel is just the deals teams bitch.. poor guys are cucked daily.

Beside the cost and years of further education, you come out behind most finance tracks... wild.

Going into finance is broad (IB, RE, CD, HF, etc.).. and keeps you open to many opportunities... rather than pre-med/bio/or liberal arts... which may pigeon hole you .... or leave you with worthless degree (if you don't pursue Grad school/ending up majoring in English to hit law school and fail, etc). Also likely why many undergrads just pick a finance major.

 
May 24, 2020 - 9:39pm

There is a more nuanced discussion re law vs. finance here (https://www.wallstreetoasis.com/forums/banking-vs-law) but just a few quick points:

  • some people choose law for reasons other than money (similar to your point about why some ppl go to medschool). also first year biglaw associates make $190K base plus a modest bonus and mid-level biglaw associates generally make around $300~400K (although for mid-levels it varies across firms). not sure this is comparable to banking analyst pay.
  • everyone who does work for a "client" is the client's "bitch" (as you call it). a lawyer working on a PE transaction does bitch work for their PE client, just as bankers on that same deal do bitch work for that PE client.
  • no one majors in English just to go to law school... law school students tend to come from various backgrounds (both liberal arts and also finance & engineering).
 
May 24, 2020 - 10:10pm

Cerainly there is an oversupply of lawyers. But medicine? No, that's empirically false. We have a physician shortage that is only getting worse as the baby boomers age. The US has been forced to import a huge percentage of doctors and nurses from overseas. Go to any ER and make note of the number of Filipino nurses for instance (Philippines specifically has a program with US to send nurses and get working visas). The problem is the AMA has blocked the launch of new medschools and the federal government has issued too few residency slots. So we have a shortfall of MDs, and lots of US students who want to be MDs who won't be able to win coveted medschool seats,so we are forced to import MDs and nurses. That's bonkers. Only 10% of pre-meds get into medschool. Less than 50% of medschool applicants get in to any medschool eventually, many having to re-apply 3 or 4 times. As a former pre-med this frustrates me to no end.

 
May 25, 2020 - 1:25pm

To be fair, the 10% number you're quoting is a product of high school grads not knowing what the hell they want to do with their lives and putting down pre-med. Then they hit intro chem or another weedout class and nope out. The 50% is probably more accurate.

We also have a shortage because med school is goddamn brutal, probably similar to Moelis except the analyst stint is basically unpaid and 2x the length. The opportunity cost is awful. IMO that's the primary reason keeping people away.

I'm unsure about the scarcity of slots of issue - yes, there is certainly a very high bar for med school. But on the other hand, I would prefer that since it means the folks we're trusting with our health have gone through the wringer and are educated and right as much as humanly possible. In IB, people freak out about a comma out of place or a misspelled word - but in the grand scheme of things, that rarely matters. Medicine on the other hand, it's literally life and death.

 
May 25, 2020 - 11:36pm

They actually opened up a new medical school roughly close to Los Angeles, recently. Family physicians are an increasing shortage and the system is doing its best to raise more Primary Care Physicians currently. They are currently trying to experiment with the 3-year med school program to pump out more doctors.

No pain no game.
 
May 24, 2020 - 9:55pm

Strawman here:
Elon makes some sense, but I'd go far further and spin it sideways a bit. Far too many people are going into inefficient and old-school industries, rather than those things that push society forward. We need more scientists, engineers, and a focus on those fields that will keep our species alive in the face of major global changes, serious and intractable problems, and existential ecological threats. We need more advancements in medicine, biotech, epidemiology, waste management tech, energy tech, food and ag tech, and AI. There is little value in the vast majority of our population working in inefficient industries - in which I will lump retail/consumer, much of manufacturing, and mind-numbing office drone work that is better done by an AI, etc.

So is finance among those industries that need to be taken behind the woodshed? Some of it, but certainly not all of it. I-bankers are necessary to facilitate deals. VCs are needed to allocate capital to the most promising teams and concepts, real estate financiers are needed to help make sure the right things get built, commercial bankers are needed so that loans to SMEs get made, and pension plan / insurance allocators to make sure we can afford to retire one day.

But do we need armies of sales people calling up the buy-side and pushing stock, often based on relationship? No, and the sales teams are being trimmed. Do we need armies of people jostling on a trading floor? No, machines can do that better. Do we need armies of office drones shuffling paper? No. Do we need armies of people evaluating loan applications when JP Morgan has already built an AI to do it? No.

Do you know what the #1 job is in nearly every state in America? Long-haul truck driving. It's a $70k/year skilled job. And an autonomous driving rig can already do a better job of that than a human. An AV can drive at night without getting tired, and has 360* visibility.

So now a more interesting question is how does the workforce transition? How do we deal with massive displacement at both the blue collar and white collar levels?

 
  • Intern in IB-M&A
May 25, 2020 - 4:10pm

The big worry is that tech in general is unregulated and has too much control of society to be regulated in the future without a long drawn out battle. Truth is that many people can't be educated to work as an engineer or support staff for AI so there will be no exit opps for these people which happen to make up the majority of America. I see a transition that is depressing and the unemployment levels going up and staying at that level for years as jobs are completely wiped out.

Array
 
May 29, 2020 - 3:40pm

I will throw a semi-political/societal/philosophical counter your way... All of your ideas are spot on and I agree 100%.

How do we go down that route with the current tone that is preached to "the next generation"?

All of your ideas are very technical, very defined, and very hands-on (STEM focused) pathways forward. Yet, our society preaches the "wishy washy do what you love" sort of thing. I believe that has established the baseline for "you don't have to do the challenging/difficult thing to be successful and/or contribute to society". When in reality, these problems require a lot of man/brain power and a bit of pain and exhaustion to get the finish line.

For instance, grade schools (7th to 12th grade) have largely stripped away and eliminated shop classes, mechanical design/engineering, personal finance etc. Instead of advancing or replacing them with more current applications designed to introduce generations to the future (i.e. computer coding).

I am a bit cynical and one who lacks "the arts" side of the human equation but I do understand/value what they provide to society. At the same time, I struggle to see how we can push out waves of individuals chomping at the bit to contribute to STEM initiatives when we don't introduce our youth early on and encourage (comprehensively) challenging/technical college degrees, certifications, or career paths.

 
May 25, 2020 - 6:54pm

Ok, I'm older, so I'll toss in my hat.

I think anything he says needs to be taken "with a grain of Elon" Not that I don't love what's great about him, but he's quite a character!

He's a very particular guy, with very strong views.

I do think our country could use more people in the sciences and engineering, anything that advances technology. And I can see why he's also probably in that mentality - because we need to encourage creativity. I'm not sure finance and law are creative in advancing the world. Necessary, sure. But Elon has such creative, innovative blood in his veins, and truth is much of what he learned about business he learned along the way, and with advisors...so is an MBA necessary when you start a business? Probably not. It's interesting that other countries/regions (e.g. the Middle East) really value sciences and engineering, it's looked at as a very impressive career option. I think a lot is what is encouraged at home and in schools, and hopefully there will be more of a push for sciences in the future.

And no, I actually don't want to go on a date with him, looks, money and all - I think I'd be rolling my eyes, which would be rude.

 
May 25, 2020 - 7:06pm

Exactly. I find him extremely amusing. "I will be on the line, but only arrest me." The CHUTZPAH!! It's hilarious. He's a mad genius. I read a book about him a few years ago, very interesting. Would be fun to meet him.
But it will be for a beer only. : )

 
May 25, 2020 - 7:38pm

It's a wider reflection of our culture. Consider the relative cultural prestige of being a rocket scientist and a banker in the 1950s versus today.

"Work ethic, work ethic" - Vince Vaughn

 
May 25, 2020 - 7:55pm

I'm an engineer working in REPE.

I think you need to compare these jobs on the basis of value creation if they are going to be measured on some similar axis. Now with that said, software engineering is creating new tech products whose value creation, if any, can be directly drawn from what the product is supposed to do. Finance is not about creating new products but creates value by the movement of capital, and new financial products (derivatives, etc) are created for that purpose. Law really has no value creation but is all about risk mitigation, which you can argue indirectly creates value by freeing up resources, but even if you set legal risk to 0, and you have 100% free resources, you're still not creating any value technically. I would thus argue that law has 0 value creation and is the least added value job function among the 3.

 
May 26, 2020 - 2:24am

A strong legal system with well-defined property rights, contractual certainty, and ability to seek recourse is pretty essential to a capitalist economy that creates value. If we want scaled systems, such as anonymous markets, and to expand the scope of property rights beyond those people you inherently trust because you know them well, we need to rely on the expectation that these claims can be enforced in a court of law.

One of the reasons the British and Dutch were so successful is because they were the first to create joint stock ventures, corporations, and stock exchanges - all legal structures. If you look at the world's biggest stock markets today, the vast majority inherited their legal institutions from Britain.

 
May 26, 2020 - 12:26pm

Agree with this - sure, lawyers and finance people are not creating new driving app every other month. But these people help establish the conditions through which "value creation" can be done in the first place, and also help execute a transaction in a way that it can be done more efficiently (e.g., the more efficient a transaction can be done, a greater incentive to do it in the first place with less "value" lost in the process).

 
May 27, 2020 - 1:55am

I respond to your reply with a simple question, have you ever seen a "well defined" contractual agreement between any party? In all my years negotiating legal agreements with big law firms, I have yet to see one. In fact, if such an agreement existed it would dismiss the need for arbitration/court system if a dispute were to arise, since presumably such a well defined document would outline all possible violations/damages during the life of the contract. Secondly, these basic constructs to enable commerce, which as you assert are an entity's right to property, enter into a contract with 3rd party, and seek recourse for damages are nothing new, and have as you say been around for centuries. Lawyers today debating the interpretation of single words/irrelevant terms of a contract I argue are not adding value in any way whatsoever, but simply deviating further away from this intangible concept of well-defined agreements for self-serving purposes/an economic conflict of interest.

 
  • Consultant in Consulting
May 25, 2020 - 11:49pm

Musk needs to lay off the drugs

Get busy living
 
May 25, 2020 - 11:53pm

I had a discussion with a friend of mine from high school who actually dropped out of college (local state computer science major) and started his own company. They are quite successful in the IoT area.

Part of the discussion we had was that we could use more engineers and scientists in society, there is no question about it. Think about this pandemic - the brightest minds in the world are trying to find a vaccine for this illness. We got a lot of problems to really solve. If people do not have a genuine interest, it is really difficult to succeed and thrive from a monetary perspective.

Plus, friends whom I known had worked for Elon in the past had quit and recc'd not to work there. Overworked/underpaid atmosphere.

No pain no game.
 
May 27, 2020 - 2:20am

As a cynical undergrad, I think us American monkeys should milk finance in law until the cow dies over here. Meanwhile, let the Chinese overtake us in R&D and tech, Which they would do anyway even if some of us w2ent into tech instead of finance.

"The beauty of me is that I'm very rich."
 
May 28, 2020 - 11:57am

Senior people have been speaking this way for decades.

This way means "the way things are done in my industry is the right way; the more young talent wants to do what I want them to do, the bette for me."

1980s/1990s Steve Jobs telling MIT MBAs they should go into manufacturing over consulting. Rahm Emmanuel in the 2000s saying young people lack attention to detail. Every single IB MD or MBB partner at OCR telling you to join their industry because of the skills, the opportunities, the total compensation etc. At a GS recruiting event I went to back in my day, they had someone senior tell a story how 30 years ago, he already had 8 IB offers, and got cocky when GS asked him "if we made you an offer, would you take it?" and how they immediately called his roommate next when he said he wasn't sure; his roommate said yes, and that was the last offer GS made on campus that year. Now it's Elon Musk. Latest in a long line.

TLDR: why would someone senior EVER go out and say "top talent: DON'T join my industry when you're young and affordable - go to the industry I compete with to hire you!"

The truth is you're the weak. And I'm the tyranny of evil men. But I'm tryin', Ringo. I'm tryin' real hard to be the shepherd.
 
May 28, 2020 - 2:40pm
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