July 5, 2011 10:28 pm

Wall Street vs Silicon Valley

Wall Street is being dragged into the Silicon Valley talent war as the demand for data analysts increases on both coasts of the US.

Though maths and statistics experts are still offered handsome pay packages at New York banks, the thrill and cachet of life at an internet start-up is luring more of them to trade in their suits and financial models for jeans and website optimisation.

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“The trend is it’s much cooler to be an entrepreneur than to go work on Wall Street,” said Bill Aulet, a business professor at Massachusetts Institute of Technology. “They’re in it because they want to change the world, they want to feel like they’re adding value and not becoming an extra in Inside Job,” (the documentary film about corruption in the US financial system).

Comparing that with the box office success that was the The Social Network, last year’s film about the origins of Facebook, is a sign that Silicon Valley is winning the “cultural war” with Wall Street, said Peter Thiel, a prominent Valley investor.

Wall Street’s financial strength and reputation among elite universities still captures many top maths and engineering students upon graduation. But the daily work may not be enough to keep them from decamping to the Valley after a couple years, said Jeff Hammerbacher, chief data scientist at Cloudera. He was recruited out of Harvard by Bear Stearns, the collapsed investment bank, where he worked as a quantitative analyst for 10 months before taking a job at Facebook.

“I definitely think the pull has tilted toward Silicon Valley,” he said.

The financial regulations on Wall Street and the formal hierarchies in investment banks can make young data analysts feel stuck, whereas working on open source code or launching a start-up carries more freedom and more exposure, Mr Hammerbacher said. He remembers a panel at Bear Stearns where successful executives talked about their career paths.

“The critical jump where they made the transition from contributor to manager occurred because their boss was fired or left unexpectedly, so they stepped in and did well,” he said. “So instead of waiting for your boss to get fired or quit, you go where there is no boss and prove yourself under a trying circumstance.”

Engineers want to be surrounded by smart people and challenging problems, he noted. More than anything, they want to be appreciated. On Wall Street, traders and investment bankers rule, not quantitative analysts, or quants as they are called.

“They haven’t yet created a culture that places the quant at the top of the food chain,” he said. “Turning geeks into gods is what Silicon Valley is in the business of doing.”

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