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Trading Bonuses for Bytes: The Wall Street Brain Drain

The young man sitting across from me at the desk opposite mine had what many of his classmates wanted. Twenty-two years old, a fresh graduate of Princeton University in economics, he had worked as an analyst for Goldman Sachs Group by day and was living its charmingly attendant party life by night. Midwestern-born and now a denizen of a Manhattan apartment, he happily thought himself a sort of pilgrim come to his modern Babylon, a glass island audibly humming with all the imagined sensual pleasures of drink and companionship that the glow over its stalagmite towers — still visible from his kitchen in the earliest hours of the morning — promised.

Why did he want to throw it all away and work at my Cambridge, Massachusetts–based start-up? The town has seen few succulent scandals since John F. Kennedy graduated Harvard College, and the only place a Gatsby might presently be found is in the local movie theater — were it not recently closed for lack of demand for contemporary cinema. (Another theater down the street, specializing in Casablanca and It’s a Wonderful Life reruns, is still open and thriving — you can’t make this stuff up.)

Wall Street is undergoing a brain drain to tech start-ups as it struggles to retain top talent. In the past the financial industry attracted the best and brightest from among the Ivy League and other top-tier institutions. According to a September Wall Street Journal op-ed by CME Group executive chairman and president Terry Duffy, in 2008 40 percent of Princeton’s, 28 percent of Harvard’s and 26 percent of Yale’s graduating classes headed to Wall Street. Since the financial crisis, however, those numbers have dropped considerably across each institution, with graduates often opting for the technology sector instead. Recent graduates are flocking to start-ups in particular. “Historically, Wall Street has been a haven for young people who are passionate about changing the world with a powerful idea,” writes Duffy. “Now it seems that those young people are much more likely to head for Silicon Valley.”

The trend has now spread to MBAs: In the past year — even as Wall Street saw one of its best bull runs in history — elite business schools have also seen their graduates migrating out of finance, trading bonuses for bytes. According to another Wall Street Journal article: “Just 27 percent of Harvard Business School graduates took jobs in finance this year [2013], down from 35 percent last year. That figure dropped to 16 percent from 27 percent at the MIT Sloan School of Management. And at Stanford Graduate School of Business, historically a haven for digitally minded graduates, tech companies overtook financial services for the first time this year, with 32 percent of the class accepting tech jobs and just 26 percent heading into finance. Two years ago, those figures were 13 percent and 36 percent, respectively.”

Leave a Comment    (1)

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Nothing new here; it's typical cyclicality. Happened in the late 90s tech boom. This phenomenon also coincides with tech IPO riches, which have seen a resurgence in recent years with FB, TWTR, FEYE, TRLA, etc. The moment the ability to get extremely wealthy "overnight" becomes a lot harder, Wall Street will once again regain hiring share.

Jan 17 2014 at 8:31 AM EST