Screw Wall Street: "Go West, Young Bank Bro"

From Modern Luxury:

Wall Street has ceased to be the career destination of choice for a certain kind of status seeker. Guess where that person wants to work now.

Antonio García-Martínez still remembers the feeling of drowning. It was the spring of 2008, and he was a 32-year-old programmer at Goldman Sachs. His job was writing and pricing investment-grade credit default swaps, the kind of exotic derivative that had just blown up Bear Stearns and would soon lay waste to another venerable investment bank, Lehman Brothers.

García-Martínez had been at Goldman for three years, and he was used to working hard. Fifteen-hour days were typical, and the resulting stress had plagued him with a litany of health problems, including hives and a short bout of irritable bowel syndrome. Then Bear Stearns collapsed, and the sensation that the levees were breaking became inescapable. "Everyone was scared for their lives," he says. "The credit spreads were blowing up, and it seemed pretty clear that something big was going on."

For months, García-Martínez had been angling to leave Goldman, which was shedding staff and seeing its profits vanish with the mortgage market. But the economic turmoil had left him with few options. Banks weren’t hiring, and his attempts to land a job at a rival firm had flopped.

Luckily for him, there was one area of the country where companies still wanted to hire talented programmers, and they didn’t much care if an applicant’s last job had involved creating sketchy investment vehicles. That spring, after seeing a New York Times article in which a Silicon Valley ad-tech startup boasted that it would triple its payroll over the next year, García-Martínez decided to apply for a job on the Peninsula. The startup, Adchemy, flew him across the country for an interview. A week later, he was negotiating his offer from the Goldman trading floor. “Everyone else was still paddling the oars, and I was inflating the life vest,” he says. “Tech in the Bay Area was my savior.”

In the six years since García-Martínez fled Wall Street for the greener pastures of the Valley, an unprecedented number of his peers have followed him. Bankers, traders, quants, and all manner of other Wall Street workers have been abandoning the finance industry in increasing waves ever since the crisis of 2008. They come to the Bay Area for many reasons. They’re convinced that the Street’s go-go days are behind it. They crave an easier lifestyle. They seek more excitement than can be found in the hum of an orange and black Bloomberg terminal. And, astoundingly, they’re betting that there’s an even bigger payday in store.

Roughly 31,000 people moved from New York to California in 2012, according to census statistics—the largest one-year migration since 2006. It’s impossible to know how many of those were Wall Street transplants, but a perusal of data provided by employees of tech firms suggests that it was a substantial chunk. More than 1,200 of Google’s 47,500 current employees formerly worked for one of the top 10 global investment banks, according to LinkedIn. The top banks also incubated at least 750 current Apple employees, 175 Facebook employees, and 260 Yahoo employees. Travis Kalanick, chief executive officer of the ferociously expanding Uber, has said that between 10 and 15 percent of his hires come from the financial services industry, with a full 5 percent coming from Goldman Sachs alone.

Peter Hébert, the cofounder of Palo Alto–based venture firm Lux Capital and a refugee from Lehman Brothers during the first dot-com boom, says that he’s bowled over by the increase in finance workers who are moving to the Bay Area in search of work. In the last two years alone, his firm has witnessed a marked increase in the number of résumés from bankers, he says. “When you get down to the college level, people who normally would have gone into the combine—you know, investment banking and consulting—are going into startups instead."

It’s easy to understand why a small migration, or even a medium-size one, would have happened after the financial Armageddon of 2008. Banks were laying off thousands of employees, and bonuses for many of those who remained were cut to nearly nothing. Workers on Wall Street were still expected to put in 80- to 100-hour weeks, but they were doing so at less lucrative firms, in an industry whose profits were threatened by a surge of demand for new regulations and a global market slowdown.

What’s more surprising, now that Wall Street has recovered much of its steam and the stock markets are near an all-time high, is that workers are still choosing tech over finance. Some of this is simply because that’s where the jobs are. In the next three years American tech firms are expected to hire 504,000 new workers. By comparison, finance and insurance companies will add only 370,000 new jobs.

But finance pros are also streaming to tech because of the very nature of the jobs that are on offer. At one time, the companies that defined Silicon Valley became famous by building fantastic new products, whether networks or hardware or awe-inspiring iThingies. Now, many of the hottest startups in the Bay Area bear the distinct mark of Wall Street’s profiteering impulse. Some are payments companies, like Square and Stripe, that make money by serving as financial middlemen and shaving cents from each transaction. Others, like Standard Treasury and LendUp, provide traditional banking and brokering services with a tech-age interface. Still others, like Uber, are starting to engage in loan practices. (Last year, Uber started a vehicle-financing program that secures car loans for UberX drivers at lower interest rates than they would be able to get on their own.) All of these companies have benefited from the salesmanship and confidence instilled in young Wall Street workers. “It’s no longer semiconductor companies being built,” Hébert says. “Where the money is abundant is in areas like consumer Internet, and the skill sets you need for that kind of company are being gregarious, extroverted, and hardworking.”....MORE

HT: The Big Picture's 10 Weekend Reads post