Will the Tech industry take over?

Had a question for you guys.

The tech industry is the type of thing that seems too good to be true but actually turns out to be true. I have three main reasons to believe the most talented students will move in droves to the tech industry unless something changes.

1) Automation is set to get rid of a lot of jobs. Mostly things like cashiers, data entry and other simple blue collar functions. Though like it or not, finance is being affected by automation.

Some parts of finance have already been affected such as: AM, buy side/sell side research, S&T and bookkeeping/some parts of accounting (if you count these as part of finance). While these roles aren't the majority of roles in finance, this is still an alarming amount of jobs being cut back. Many people say that investment banking is a sales-oriented industry but that's only true for senior roles. A junior in investment banking could easily have their jobs automated.

Tech, on the other hand, is booming. Compensation is going up, jobs are plentiful, and the talk of the town right now is software and coding. And most of all, people in tech don't have to worry about automation because by the time tech is automated, everything will have been automated. This is a huge plus for tech because people don't want to worry about their job being phased out.

2) A degree in CS is far more versatile than any a degree in finance. A degree in CS can get you a job in quantitative finance, non-quantitative finance, and tech. A degree in finance could only get you a job in non-quantitative finance. For this reason, CS is becoming one of the most popular degree choices. While more of a minor pro for tech than my other two points, it still shows that the times have changed when financial institutions start taking non-finance related degrees.

3) Lastly, while getting into tech may be just as competitive as finance, staying with a job is definitely not.
In finance, you must always be close to the top-performer if you wish to move up or stay with a job. In software, there is no "up or out" set in place and so you may stay wherever you want as long as you're fulfilling your duties. Tech may slightly lose in the compensation department when compared to finance but tech offers work-life balance, job security, ability to advance, as well as most tech offices having a "fun" atmosphere where you have sleeping areas, free food, etc. Many young people see this and are turning their backs on the majority of career paths in favor of pursuing tech. I have no idea what banks, consulting/law/accounting firms are going to do when all the talent starts moving to tech because they actually get to go home at 5 rather than at midnight.

If you were to be looking at a job purely for its compensation and work-life balance but not taking interest into account, tech would be the way to go. Finance, law and consulting all have abysmal hours, medicine takes 8 years to be fully employed and engineering doesn't pay nearly as well as tech.

If you made a list of pros and cons comparing the business world to the tech world, it'd look like this:

Law, Finance, Consulting

Pros: Make excellent money
Cons: Long hours, non-existant work-life balance, no job security

Tech

Pros: Fun work atmosphere, job security, work-life balance, work 9-6, your office has a sleeping area, free food, free shuttle to and from work, massages at work, etc.
Cons: Make great money but not as much as law, finance and consulting.

So what do you guys think? Will finance firms ever start giving amenities to their staff or will tech start to decline? What changes do you foresee in the future?

Comments (41)

Oct 23, 2018

There are a few things you need to bear in mind with all this. I fear that your post has a bit of zeitgeist flavor to it.

  • Automation has always existed. What people are talking about now is the pace of automation. Technology is able to do more of our jobs due to its rapid development in recent years and a bit more due to us coming to an interesting phase of Moore's law: the slowing down of increases in hardware speed and the commoditization of really powerful computers. In large part, what we're seeing is a skills gap that has come about due to the speed at which people are now able to solve problems. A few years ago, a cloud solution for financial reporting was something you could charge companies millions for. In 2018, I have one of these for my personal budget hosted off a $200 Dell at my apartment. We don't know what the next phase of this flow will be, and shouldn't assume that any industry X or Y will be on the down forever.
  • Your point about the degree is true only from the perspective of a first job, and assuming you want to get a quant finance role. Your assumption that a CS degree trumps a Finance degree for say a BO role is flawed - you're forgetting that people want to hire people who A) will stay in a role for a while, and B) can be a team player. Some CS guy who talks about SQL queries and being able to learn VBA won't win the hearts and minds of any non-quant folks more than the finance major because the finance guy can learn those skills just as well, and nobody will treasure the CS kid's ability to write C++ because it's entirely useless outside of software engineering and other niche roles, AKA quant finance.
  • Staying in tech roles is ridiculously more difficult than staying in finance roles at lower levels, which is where your degree is relevant anyway. Past a certain level of seniority in FO, you're expected to generate money for the business, and that's very difficult. In tech, you get promoted to CTO, head of product, or some other role with similarly vague value-add. But as a newcomer in finance, all you need to know is how to not suck with Excel, and then you're expected to develop your domain knowledge throughout your career. Nice - you learn time series analysis and memorize a ton of shit about bonds and credit analysis. As a coder, you have to keep up with constant changes to your software pushed out by other people. Entire frameworks - skills you've spent maybe years developing - can become outmoded in a matter of months, and suddenly your worth becomes a bit questionable. Quant finance just marries all those problems together. Also worth mentioning is the paltry job security in tech; coders get fired all the time for very stupid reasons. A good friend of mine was fired for not attending an optional group lunch with his startup CEO. Not so optional compared with the "mandatory" CEO town halls I make sure to skip.

Re. your pros and cons: you're right. Those are they. But you're lacking the nuance, and that nuance is very important in this discussion. I think the decision of tech vs. finance comes down to what product you want to work with. If you're more cerebral and enjoy working with abstract concepts, come to finance. 99% of the world has no concept of even a bond. If you enjoy being "part of the conversation," have 9,000 friends, and like seeing concrete results, go to tech.

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Oct 23, 2018

If you're more cerebral and enjoy working with abstract concepts, come to finance. 99% of the world has no concept of even a bond. If you enjoy being "part of the conversation," have 9,000 friends, and like seeing concrete results, go to tech.

these should really be the other way round..

Oct 23, 2018

I think that could be your perception as a finance person speaking, assuming you aren't part of the tech world in any meaningful way. I've been part of both crowds since I went to college, being a former IT guy and going to school and focusing my career around finance, and now as a quant analyst/developer. Coding is a lot less "cerebral" and "abstract" than you think. Once you get over the mental hump of knowing what an "object" is (a data structure you specify), the rest of coding comes down to telling the computer what to do. I've yet to see any explanations of stochastic calculus, forecasting, time series analysis, or even intermediate statistics that don't involve a textbook.

And re. the concreteness - can you really argue that anything is concrete in finance? We don't make apps, websites, databases, phones, or really anything tangible. We're a bunch of people in suits talking about ideas; if you miss even a single conversation, you're out of the loop. We live off email and numerical representations of notional value. Ask anybody under 30 who isn't in finance about what we do and they'll jump to word bites from Bernie Sanders' campaign about whether we really add value.

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Oct 23, 2018

I'd love to really give this post justice but I'm hammering away at some work at the moment...

What I can say though is.. as a maths&cs major that's also been I guess "baptised" by the corporate world since before I care to admit - I have a bit of a unique insight into how the two worlds (tech, business) operate.

My observations of former/fellow classmates, software professionals and technical competitors from when I dipped my toe into a startup is that people in tech tend to be more "geeky". That is people are very niche in their interests and tend to be overly logical (to an almost scary point) about the way they think, oftentimes missing the nuances of different scenarios. It's entirely normal to have a discussion about the latest framework, or some oddly specific technical discovery as it is to talk about the latest magic the gathering evening.

Business people (largely talking finance/strategy here) on the other hand to be... more polished. They're more likely to be well informed generally, talk about ideas in the sense of how they connect together rather than just for the sake of the ideas themselves (as you'll find amongst tech people). With this polish also comes more social awareness, grace, and understanding nuance/reading in-between the lines - leading to them, on average, being more sociable and "part of the conversation".

Again, I'd really love to expand on this but time is limited.

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Oct 30, 2018

This is exactly right. No machine will ever be able to ape the value of someone with decades of relationships and experience who is "plugged in". That is what you're buying from a professional services company, not some excel spreadsheet.

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Oct 23, 2018

Tech is just like any other 'hot' industry, and industries that are 'hot' become crowded out as MBA students or college grads flock to wherever the best work/life balance and salary combination is. In this day and age, it is difficult to beat the job market, find alpha.

The hedge fund industry contained a considerable amount of alpha in the 90s, but that has weaned as analysts from investment banks pool into the industry. We are seeing a new quant wave, eg with Matt Ober being paid $2mil in comp at Third Point. However, these waves only last for so long before the job market becomes crowded out, for there is an excess of students willing to work in any industry, whether or not they have a genuine interest in it, in search of money and work/life balance.

And so, as talent continues to flood into Silicon Valley, angel investors have more and more options, the availability of capital diminishes and smart people in the tech industry will end up be no better off than their counterparts in law/finance/consulting etc.

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Oct 24, 2018

Yes, and over the long run, regardless of market cycle, people who are truly interested in tech, law, finance, consulting, accounting etc. will find sustainable success in their career.

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Oct 24, 2018

I hope every industry takes after how tech treats their employees. Having an office like Google's looks kick ass.

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Nov 3, 2018

I disagree. I think I'd be miserable in a place like google. Also I'd rather get paid more than have my comp turned into nice officers. A lot of google workers seem like people who like having the big company take care of them and they can just grind away. Sounds miserable to me.

Something feels very lemming to me with the big tech and lacks individuality. Not true at the higher levels with the founders but being stuck in the middle of those companies seems awful.

Array
Nov 3, 2018

I know a lot of ppl that work at Google. It's about as close to an ideal work place as I've seen:

  • Work is challenging and engaging (obviously depends on your group, i'm talking people on the product/ technical side)
  • You're in control of work/ life balance (mostly, also depends on team). You can work 24/7 if you want or make it a 9-6 (or more likely 10 - 7)
  • You're paid more than 99% of the population. No, that doesn't mean you have the same pay potential as PE/HF (no giant bonuses)
  • You have incredible job security AND a great brand if you decide to leave. This is 500x better than finance - I know people that leave TOP funds (think Tiger, Coatue, your standard Tiger Cub) and have serious trouble finding other spots. The tech labor market is just so liquid and so much less douchy

+Perks are great, but really just part of a culture of treating employees like they matter and they run the place. Can you imagine employees of a major Wall Street firm pulling this shit (https://www.engadget.com/2018/11/03/google-walkout...) and having the CEO come out in SUPPORT?

Oct 30, 2018

Tech/engineer (formerly) here. I worked at a large tech company involved in chip-making and development, and was part of the mass layoff that occurred a few years back. I ended up going to healthcare for a little while and now am interviewing again for (ironically) several chip makers.

The healthcare company will be fully automating their Customer Service department by the end of next year (timeline set), thus getting rid of their Call Center department altogether (to a limited extent they will keep a group on).

As @Kassad brilliantly pointed out, it depends on your objective and decision where you are headed to towards your career and interests. Having a CS degree does not translate into success in either field, but the determination (certs, detailed history, etc) will account for, along with what kind of "risk" the organization is willing to gamble in terms of the person staying.

Keep in mind, you have to be able to wake up everyday wanting to go to work to a job that is at least enjoyable and interesting, or else you'd be miserable.

No pain no game.

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Most Helpful
Oct 30, 2018

This is a pretty sophomoric post. Don't feel like writing an essay, so I'll try to be brief:

  1. Contrary to your assumptions, most tech jobs are more ripe for automation/outsourcing than banking jobs. In tech you make widgets or you manage relationships with the widget buyers. In banking/law, you provide "advice" which is simultaneously the source and the product of your pedigree.

No sane C-suite exec is going to entrust their highest-profile legal and financial matters to some young gun from silicon valley with a brave new-world -machine. You dont go to a bank to buy a model - you go to buy the people making it, and their connections.

  1. Juniors in finance etc. aren't replaceable with machines, because law/banking etc. are fundamentally apprenticeship professions. The MD/Partner doesn't want some machine that can spit out a boilerplate model - such a feat is neither difficult (even for a human) or what distinguishes your team in the marketplace. You need a human to do these things because you need the human junior to develop front-to-back understanding of "how the sausage is made" and develop working relationships and industry connects of their own that will benefit you when you promote them to associate and upwards and start having them run the execution aspects of your deals with counter parties.

Tech is demonstrably pretty outsourcable - doesn't matter whether your code is written by an American or a dude in Mumbai. Go ask IT workers from the past several decades how secure they feel from the robots, and go ask their banking counterparts the same. You have it all in reverse.

"Tech" (i.e. silicon valley and a few outposts elsewhere) looks nice now because it is experiencing a renaissance based on the combination of algorithmic techniques, enhanced computing power, and huge marketing spend from blue chips. Give it a few decades and people will look back on this time as the best it ever got. Sorry, but in a capitalist system long term you don't just have kids graduating from college with zero technical experience, joining google, making six figures working seven hours a day. That cushy life will either go away, or become justified by more brutal hours.

I dont' believe CS is a more flexible degree. More importantly, I dont think the options for someone coming out of google et al are more impressive than someone coming out of an IB program. Go look at the "experienced hires" section of big tech companies for non-coding roles - they are looking for people with IB/strat consulting experience, because at the end of the day, these industries are where you learn to think strategically about how to develop an organization and learn the execution skills to do it.

To be perfectly frank with you, I have a number of friends working in tech. None of them have impressive work ethics, and none of them are going to invent the next Facebook. They're all just reasonably competent people riding the gravy train of an industry that is having its day in the sun atop the back of a record bull market.

Go ask all the kids that were structuring mortgage-backed securities c. 2004 how things panned out.

Oct 30, 2018

Spot on

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Oct 31, 2018

@Fugue Haven't read the full article but would be interested to hear your thoughts on it

https://hackernoon.com/20-top-lawyers-were-beaten-...

Nov 1, 2018

As someone who has reviewed and negotiated probably hundreds of NDAs personally, these results are unsurprising and overstated.

NDAs are very, very easy to negotiate, and frequently are done by non-lawyer staff within an organization. The contracts are so boilerplate that when looking at two different form NDAs produced by two different law firms, you will often find 50% of each agreement match each other exactly, with the remaining 50% very similar. Negotiating an NDA is frequently a rote excercise in checking the box that certain must-have clauses are in the final agreement.

There is certainly room in the legal industry for tech solutions - particularly in the filling out of forms- and as natural language processing algorithms improve, the applications of tech to lawyering will expand dramatically, I think. That said, assertions that "the robots are coming" are as laughable now as they would've been when bankers transitioned from doing models on paper to doing them in excel. The ability to automate spreadsheets and write macros did not obviate the need for a competent professional to wield these tools.

The effects of automation will be to make the rote tasks of junior-level employees more efficient. I do not think we will ever reach a point where robots can exercise the sort of holistic professional judgment that top clients are paying top dollar for. There is simply far too much nuance and subtlety in the interactions between professionals on these deals for a robot to supplant the need for a competent human brain.

But yeah, the contracts manager in Witchita Kansas (sorry, "top lawyer") - that person's job may be at risk because within the legal world it's pretty low on the skill/difficulty scale. To say that the automation of that job bodes ill for the profession is like saying that the replacement of a records clerk at the capitol building with record management software bodes ill for the profession of being a politician.

Separately, I want to point out that this article is a promotional piece authored by an employee of the software company touted in the article. I would also only describe one of the people in the article as a former "top" lawyer , maybe two at a stretch - but the rest are thoroughly middling or lower in their pedigrees. The last person isn't even a lawyer at all. I think it says something about the software that it's designers would describe the robot/machine faceoff they engineered in these inaccurate terms.

Nov 3, 2018

Fucking solid. This hit it on the head. OP especially is overlooking the brutal hours in Silicon Valley and SF and the rampant meth addiction that is overtaking it because of said brutal hours. His post just falls under the grass is greener fallacy. If i could add to your point as well amazon coders are also worked like a sweat shop due to the firms constant code and software updates.

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Nov 3, 2018

Agree on some, disagree on some:
+ Kids with no technical skills aren't walking into the best jobs at Google. The best jobs (mostly technical) go to kids that could compete with any Goldman analyst
+ Who is going to be replaced? Honestly I think this is a silly argument, everyone is replaceable
+ Having done it I call bs on the "learning to think" aspect of IB/Consulting. These are 100% selection effect industries - ppl think they produce smart people but really they just hire smart people. This is the part I feel most strongly about: You will learn a lot more at Google than in most entry level finance jobs
+ CS is a more flexible degree (you can still work in finance if you want), but you're right that IB/consulting is more flexible junior employment (sets you up for anything except the technical roles)

Nov 3, 2018

Right now, there are tons of kids who know nothing about data or data-driven algorithms that are walking into sales/"account executive" jobs that start at 100+k with benefits and stock options that bring their all in comp close to that of top IB analysts. This simply will not last. It is merely a product of the fact that big data is such a new commodity, and so anybody whose job involves managing the flow of that commodity is reaping a windfall. This is how essentially all jobs that revolve around the exchange of commodities work. The plush lifestyles of Google's Account Strategists is going to go away with time, much like those of stockbrokers back when financial markets/products were multiplying exponentially decades ago.

Everyone is replaceable, but at the end of the day successful IBbankers derive their value from the breadth and depth of their professional network and their constant proximity to/holistic understanding of the deal landscape in which they operate. This is something that current machine learning could not hope to replace.

I don't need to prove whether IB/consulting make people smart or just hire people that were already smart. It's probably a bit of both, but that's all really besides the point. The point is that when blue chips go to hire people for strategic roles within their organization (the ones that have a path into senior management), they tend to be looking for people that come from IB/MBB because these people (1) have experience conceptualizing, socializing, and executing the sort of transactions that organizations are trying to pursue and (2) these people's work in IB/MBB connected them with the external stakeholders that you need in your rolodex in order to be effective in those strategic roles.

Sorry, but most of the people I know who work in non-engineering roles at FAANG firms don't really obtain well-rounded experience in doing business, at least not relative to analysts/consultants at top firms. They learn a lot about the big data products that their company sells, and they learn about metrics that are used to assess the effectiveness of the ad campaigns that purchase this data, and they may learn something about negotiating deals within this narrow context. But they aren't getting daily exposure to different types of business models, they aren't interacting with a wide-ranging variety of professionals in their every deal, and they aren't building a skillset that is obviously applicable outside their niche. Most importantly, outside the self-important clique of silicon valley, global institutions don't see Google as a poaching ground for their future junior executives. IB/MBB is seen this way, rightly or wrongly, and that matters.

Let's look at Google's careers page. Looking within the Business Strategy vertical, and excluding roles that are highly technical/niche in nature:

https://careers.google.com/jobs#!t=jo&jid=/google/... - "6 years of experience in a consulting, corporate strategy or similar role within the internet/media industry"

https://careers.google.com/jobs#!t=jo&jid=/google/... - "4 years of experience in management consulting, corporate strategy or project management experience in a technology/media company."

https://careers.google.com/jobs#!t=jo&jid=/google/... - "Experience working in a analytical, consulting, problem solving or strategic project management role, with the ability to analyze large and complex datasets and boil them down to a few actionable insights and compelling storylines"

https://careers.google.com/jobs#!t=jo&jid=/google/... - "5 years of experience in marketing analytics, return on investment/financial modeling and statistical analysis"

Jul 31, 2019

Great comment. Thanks

Oct 30, 2018

(I'm in tech - Machine Learning)

The main goal everywhere (with tech) is the least amount of human capital possible, while maximizing performance. In the world of finance, an ideal future would be software (robots) pretty much doing all the work, while the owners just feed them the inputs.

Of course, many tasks in finance are directly related to relationships and soft sills, and many investors will pay a premium for the human touch - however irrational it may be.

A big difference between tech and finance are the barriers of entry. In tech, the only things that matter are: How good and talented are you, how fast can you pick up new things? Dropped out of HS? Doesn't matter. Wen't to Stanford or MIT? Doesn't matter. As long as you have a kick-ass portfolio and something to show for, you have a realistic shot at even the best tech companies.

In Finance, that's very different. You could be the most talented financial analyst in the world, publishing reports (on your own) for years, but if you don't have the correct formal background, it's not gonna cut it. You have a better chance at finding a two-horned unicorn, than finding a Goldman Sachs analyst without a HS diploma.

Can you find talented people without a HS diploma at Google? Yes you can.

So I think that tech companies are better at spotting talent, than the archaic world of Finance.

Fintech is exciting, and I think that market is going to explode

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Oct 30, 2018

Dropped out of HS? Doesn't matter. Went to Stanford or MIT? Doesn't matter. As long as you have a kick-ass portfolio and something to show for, you have a realistic shot at even the best tech companies.

I disagree with this comparison.. Truth is, the median individual at a top tech company will have their own "technical pedigree".. It doesn't matter whether that's in the form of building something impressive at such an early age where 99% of people can't or going to a top technical program like CMU, Stanford, UCSD, UIUC, Waterloo etc the vast majority of engineers have to earn some kind of street cred.

Your average kid who does Minecraft mods or goofs around with a bit of code in high school is not getting into a top tech company at all. Just as your average finance major at a non-target who does 0 networking or research is not making it anywhere near high finance.

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Oct 30, 2018

+1 SB. I agree with your post.

No pain no game.

Oct 31, 2018
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