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ManagedFuture


Total Posts: 4
Joined: Nov 2015
 
Posted: 2016-10-15 15:32
Hello Everyone,

Long time lurker, first time posting. As a reference this is the current compensation scale for recent Harvard Law (HL) grads in BigLaw:

Salary (Bonus)
1st year $180,000 ($15,000)
2nd year $190,000 ($15,000)
3rd year $210,000 ($25,000)
4th year $235,000 ($50,000)
5th year $260,000 ($65,000)
6th year $280,000 ($80,000)
7th year $300,000 ($100,000)
8th year $315,000 ($100,000)

Not comparing Sharpes since the variance of returns for BigLaw associates is very small.

My background: (4th or 5th year) PhD student in (math, computer science, statistics or physics) from a top 10 institution from the US. My thesis was/is complete garbage. I've interned at a large quant hedge fund (de shaw, two sigma or citadel).

Currently I have the following 3 options after graduation, would be open to considering something outside of this too:

- Full-time return offer from said quant hedge fund

- Full-time offer from small quant hedge fund with AUM/headcount = 200,000,000 and headcount > 20

- Full-time offer as a Data scientist at a top startup (Snapchat, AirBnB or Uber)

Again I want to maximize the probability of never crossing below the returns of an HL degree, happy to provide more info if necessary. Thoughts?

Thanks

EspressoLover


Total Posts: 221
Joined: Jan 2015
 
Posted: 2016-10-15 23:29
Eh, I feel like you're not comparing apples to apples here. First not all, HL graduates go to BigLaw, so already that's a self-selected group. Second the upward trajectory is biased, because there's pretty large attrition between year 1 and year 8. Only a small minority of hired associates make partner. They don't explicitly fire you, but you are "encouraged" to look for other employment starting around Year 5. So most of the people still in BigLaw by Year 8 are "partner material" from the top of their associate class.

That being said if shortfall is your biggest concern then I'd do a Big5 tech firm. That by far is your lowest variance option. Not that Uber or AirBnB's really that different, they're definitely much closer to Google than what any person who didn't live in the 21st century Bay Area would call "startup". Even a large established, hedge fund like Citadel is going to have much more variable compensation. You'll probably fall below your threshold at least one year (even if you double for some others).

a路径积分


Total Posts: 77
Joined: Dec 2014
 
Posted: 2016-10-16 05:16
We're probably 2 degrees of separation apart.

I happen to know the guys who run 2/3 of the firms you named, and probably the last guy who interviews you over the phone after the reference checks. If I had your objective function, I'd consider the 1st choice the strictly dominant choice over the 2nd choice. The remaining part of the pie tends to fall off like a geometric sequence past the 5th person. By the time you get to headcount 20 in a small hedge fund, I'd forget considering yourself an 'early employee', and the high variance-high reward argument becomes moot. This changes at some point if the said fund takes off and starts needing whole new superstar PMs, which I presume you're not from your background.

That leaves the 1st and 3rd choices. I also happen to know the guys who run and started the data science operations of 2/3 of the startups you're referring to. Depending on which firm exactly, you could be doing a lot of experiment design, scheduling jobs that glue different pieces of R/Python scripts, figuring out how moving X left by epsilon pixels is going to change h; 'data science' at these firms can have very macroscopic consequences, e.g. you're looking to present an argument to a higher-up to start business in a certain city. The feedback cycle is much slower and they're expecting much less of you - for some people that's actually the environment where they thrive in and become the most productive. In fact the data science operation at 1 of these firms was started by one who didn't really enjoy his/her time in trading, probably won't have made it very far on technical terms, but is very happy with the life at said firm now.

There's probably lower variance and voluntary turnover in the unicorn startups than a GOOG/AMZN/FB/AAPL actually - the average tenure at a top 5 tech firm is probably worse than in a top tier trading firm or hedge fund.

Between the 1st and and 3rd option, (big) if given that you're still with the said law or financial firm 4 years out, I think both provide a stable opportunity for you to do so up till the 4th year out. Beyond that, that's like asking us to predict if you can stay above the mean salary of a degree in medicine with a B.Sc in computer science. It is certainly possible, but most of the variance isn't explained by the name of firm or the type of the industry, so you've given us poor regressors for this problem.

Without knowing the exact names of the 1st and 3rd choices, the best I can tell you is that I'd pick whatever gives you most meaning in life, whether it be learning opportunity or exploitation of your existing skills, work-life balance, passion or the people that you're working. If you're like most people, then probably you don't know what gives you meaning in life, and that's OK - a greedy algorithm is to pick the place based on the people you're working with, because that's the biggest determinant of how long you stay with the firm as well as the other things abovementioned.

Unrelated to your question is a chunk of personal advice... I see a lot of people come out of a 'top 10 institution from the US' who binarize industry-vs-academia and when they decide they won't make it in academia, go all-in to optimize for cash and decide that they're willing to sell their soul completely to make up for lost time. It doesn't help that there's tremendous competitive pressure from your peers - they're working at Bain, Skadden, Google and you don't want to be outdone, and rightfully, you don't deserve to be outdone after all the hard work and sacrifice you've put in.

Advice 1: One of the happiest points in your life is when you can start sympathizing with your peers' success, not just their shortfalls. A corollary of this is that there's very little happiness to get out of a dogged pursuit of outdoing the showy guy whom you secretly disliked in high school or college and who has now earned a HL degree.

Advice 2: After you're past like $100k in income, the marginal value of the next dollar decays very quickly, not to mention the marginal tax rate grows quickly unless you're participating in the GP pool. I can also tell you that your happiness (stress) doesn't increase (decrease) past your first $10M.

Advice 3: Whichever you pick, do know that you're amazing for getting where you are. Very few people make it through their PhD and have a comfy job that puts them in the top 5% income bracket right out of it. And though this strictly reduces your probability of staying above the returns of a HL degree, don't forget to look back and give back to the people and places that have helped you get you where you are.

ManagedFuture


Total Posts: 4
Joined: Nov 2015
 
Posted: 2016-10-16 14:32
Thanks for your input Espresso.

You are right about the fact that not everyone at HLS goes to BigLaw but "Beating the expected returns of Harvard Law degree conditional on working at BigLaw NY/SF and being partner material" just doesn't have the same ring to it.

My issue with tech is that it seems compensation plateaus quickly so the later part of the curve would be harder to beat.

On a different note, do you have any suggestions on what to look for in a smaller fund in terms of career progression? I don't consider myself to be particularly talented so at a large quant fund my odds of becoming a portfolio manager would probably be slim to none. Getting into a position where I can manage money would be crucial, my true end game is to spin off my experience after ~10 years into a tech/hedge fund start up at a less competitive market.

ManagedFuture


Total Posts: 4
Joined: Nov 2015
 
Posted: 2016-10-16 15:18
You make a lot of good points a路径积分, let me try to address them.

The small quant fund I'm talking about is actually not a startup they have a track record of 10+ years. So I expected little variance in their AUM over the medium term. Is there anything redeemable about this option? What do you think is important to look for in smaller funds in terms of the following three dimensions: compensation, career progression and variance? As I mentioned before I think that at a large fund I would probably have a hard time getting into a senior position since I'm only a 3 sigma talent. My fear is getting stuck before even reaching middle management and get boxed into dead-end supporting responsibilities or getting fired. This leads me to (over?) value the 2nd and 3rd options.

The data science team I would be joining is definitely doing some interesting work but I find it hard to be truly passionate about improving models for ad click-through/host acceptance/user cancellation rates by 1-2 %. My advantage in the tech space is that I have no interest in being part of "team goofballs", use napping pods, bring my dog to work or ride scooters around the office during work hours. I would focus 100 % on working hard (65+ hours) on delivering tangible value and try to reach management that way.

In terms of giving you better description for a longer term forecast I can tell you that my true end goal is to use my experience to go and crush the less competitive emerging market where I'm from. I'm obviously willing to move there and aggressively navigate any regulatory obstacles that might keep more competent foreigners out of there.

Your advice has given me a lot to think about although the motivation for my post is not envy. I'm actually trying to anticipate how to keep stable some power dynamics / cultural expectations within my current romantic relationship.

Thanks for your kind words and advice!

a路径积分


Total Posts: 77
Joined: Dec 2014
 
Posted: 2016-10-17 01:38
I don't know what's a 3 sigma talent. With regards to talent, I would say that the best predictors of success in quantitative trading that I've seen has been a certain mix of calm temperament, thoroughly logical thinking and passionate diligence. This is just anecdotal, I could be wrong.

Talent usually matters much less, and in fact the majority of the most talented 10%tile people I know who have gone into this field have ended up in San Jose/MV/Cupertino/Palo Alto.

Temperament seems unimportant in a non-discretionary field, but in fact a lot is the work of art and it takes the right, non-confrontational kind of personality to collaborate well with a team.

"Passionate diligence" sounds a little awkward, but I mean a moderate form of passion (not some crazed fan of trading who has read every Michael Lewis or Taleb book and loves poker just because) that drives their hard work. On the other hand, the ambitious sort who has maintained a 4.0+ GPA without a motivating passion and churns out 80-100 hour weeks for their first 2 years tends to fizz out and join Google eventually.


> I'm actually trying to anticipate how to keep stable some power dynamics / cultural expectations within my current romantic relationship.

I'm not a relationship counselor, so you'd have to take my words with a pinch of salt:

1. I read somewhere that past the first 90k~ in income, income no longer explains the probability of a couple staying together. I don't know how well this assertion generalizes, but it makes sense to me. Shared experiences depend very little on income once you're past that stage. I mean, you're hopefully going to remember the time both of you spent time together in Venice, and not going to remember that you stayed at the Aman instead of the Gritti Palace.

2. If you're in a relationship where you feel a difference in income past 90k is going to make or break it, because of either partner's material expectations or insecurities, then there's something toxic in that relationship.

3. I'm a European girl married to an Asian guy, so I can empathize hopefully a little better. If you're going through a period of time where you're worried about how he/she is finding more career success, be happy for him/her. I don't know about men, but be aware a woman's default position is not to replace their SO because of an income gap.

4. All the more if you're worried about the future for your relationship, you may choose the city where you live based on your SO, but definitely don't pick your career based on your SO.

5. Do prioritize your work-life balance and the city that you're going to if relationship is especially a concern to you. A woman likes being a part of a man's life, she doesn't want the man to be a part of her life. Income lets you do something meaningful with your life, but it doesn't constitute your life. You need income to do something with your life, but past the numbers you're citing, you usually need time more than you need income. I mean, put yourself in her shoes, would you rather date the fat guy who stays in the suite at the Four Seasons NY watching Netflix all day in his foamy Bvlgari bath or the guy who's hanging out with his friends on a Friday night?

One of the problems with a research role in a small trading firm is that your work brings you very few social connections, so the current social circle you have is probably the one you'll have 1 year into your work. Good luck if your office is in Bala Cynwyd.

a路径积分


Total Posts: 77
Joined: Dec 2014
 
Posted: 2016-10-17 01:49
> The small quant fund I'm talking about is actually not a startup they have a track record of 10+ years. So I expected little variance in their AUM over the medium term. Is there anything redeemable about this option?

I don't know enough about this firm for me to judge. Just be aware that there's a certain class of quant funds that are lifestyle businesses. 10+ years track record and a small team may indicate that the firm falls into this category. As above, I think it's important to think about improvements to your lifestyle and social exposure as your tenure in the firm increases.

One great thing about a big firm like Citadel is that there's well-established procedures for everything, and there's clean data for everything under the sun, and the company has a certain operational resilience because of multiple business units. And your company parties are big. It's very hard to beat that sort of learning experience with 200M in AUM and 20 heads to feed, no matter how good your HR person and mentor.

If you pick a small firm as your first job, I'd be hesitant to join a lifestyle business because the growth opportunities ($, personal, social, technical) are artificially constrained. But I might consider joining a small firm if it was Misha branching out and growing a team.

NeroTulip


Total Posts: 995
Joined: May 2004
 
Posted: 2016-10-17 03:52
Hey ManagedFuture,

I just want to point out that "I want to maximize the probability of never crossing below the returns of an HL degree" is a pretty dangerous goal. Be careful what you wish for, you might actually get it. On top of the helpful advice you've received here, it may be useful to take a step back and think about what you really want from life, hopefully in a way that doesn't involve money (where you want to live, with whom, what you want to contribute to the spaceship).

That being said, go to the quant fund (if you liked your internship). As a路径积分 said, the small fund is likely a lifestyle business (which is awesome for the founder, maybe less awesome as an employee). And the unicorns are walking zombies. Here, have a laugh at silly con valley

"Earth: some bacteria and basic life forms, no sign of intelligent life" (Message from a type III civilization probe sent to the solar system circa 2016)

EspressoLover


Total Posts: 221
Joined: Jan 2015
 
Posted: 2016-10-17 04:53
> I'm actually trying to anticipate how to keep stable some power dynamics / cultural expectations within my current romantic relationship.

The findings that show a correlation between higher-female earnings and divorce are primarily driven by chronic unemployment or a college/non-college education gap. I really doubt that whether your combined household income is $600k or $700k is going to be the cause of a divorce.

Anecdotally, I can say a good number of my wife's close friends are single women in the latter part of NY Biglaw associates programs. First off, many don't really want to stay on that track. Most have expressed a desire to switch to a more family-friendly, low-impact job, if/when they get into a serious relationship. It might be worth it to communicate, because it's possible that you're reasoning from faulty assumptions. It's worth it to actually discuss what your joint expectations are, before making decisions that are going to affect the rest of your lives.

Second, I've never heard any say they refuse to date a man who makes less money than them. Yes they certainly want an educated partner, with a stable career and a modicum of ambition. But no, they're not going to refuse to date a guy because he's "only" a software engineer for Google instead of a PM at Two Sigma. Considering that in New York, college-educated 20-something women outnumber college-educated 20-something men 2:1, that'd be a pretty unrealistic standard.

Anyway, I'd stop thinking about your relationship in terms of "power dynamics". If you're in a mature, adult relationship, then you shouldn't have to think that way. It's self-destructive, and constantly framing things that way is a recipe for unhappiness. Your spouse should be a source of support, not a hurdle to overcome. If you think she's going to leave you because you end up making $300k instead of $350k, what do you think is going to happen if you end up developing ALS or Alzheimers?

chiral3
Founding Member

Total Posts: 4984
Joined: Mar 2004
 
Posted: 2016-10-17 05:05
"If you think she's going to leave you because you end up making $300k instead of $350k, what do you think is going to happen if you end up developing ALS or Alzheimers?"

That's some good fatherly advice. Besides, if you wind up near trading she better get used to YoY variations of at least that amount.

@a路径积分: What's wrong with Bala Cynwyd? Best thing I did for starting my family was move an Acela ride away from NY. :)

Nonius is Satoshi Nakamoto. 物の哀れ

rftx713


Total Posts: 73
Joined: May 2016
 
Posted: 2016-10-17 05:46
>Again I want to maximize the probability of never crossing below the returns of an HL degree, happy to provide more info if necessary. Thoughts?

>As I mentioned before I think that at a large fund I would probably have a hard time getting into a senior position since I'm only a 3 sigma talent.

>I'm actually trying to anticipate how to keep stable some power dynamics / cultural expectations within my current romantic relationship.

I think the way you're approaching the world is going to lead you to some very dark places as time goes on.

goldorak


Total Posts: 979
Joined: Nov 2004
 
Posted: 2016-10-17 06:56
> A woman likes being a part of a man's life, she doesn't want the man to be a part of her life.

Magazine psychology and "10 secrets of women men should know about"? Or it is peer reviewed? Evil Grin

ManagedFuture, you really picked your pseudo well. My piece of advice is the following, and I quote: "Life is what happens to you while you’re busy making other plans."

If you are not living on the edge you are taking up too much space.

ManagedFuture


Total Posts: 4
Joined: Nov 2015
 
Posted: 2016-10-19 06:02
Thanks to everyone for your replies, didn't mean to turn this into a Maury show episode.

@EspressoLover, @NeroTulip and @a路径积分 check your emails if you get a chance.

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