I am not endorsing these claims, but I do enjoy a good rant. It is an object lesson in showing how (some) people think about jobs, status, rivalry, and money.
First venture capital is generally consider where washed-out Wall Streeters go, when they can’t cut it in real finance. Very few b-school students start out trying to get into VC. And no, generally Silicon Valley people are not nearly as smart as HFT/algo quants. The type of kids who go to Google or Facebook are generally the Ivy CS students from the upper half of their class who are good at white-boarding problems (e.g. reverse a linked list). The truly brilliant kids, Putnam winners, math olympiads, core kernel contributors, etc. disproportionately go the quant route. (In which at least half will wind up in Chicago).
SV is generally a worse deal than HFT or quant trading. Starting comp is at least 50% higher than the big five tech firms, and goes up at a much faster rate. And definitely way higher than startups, which nearly always under-pay. It’s true in tech you can become a multibillionaire, but that’s extremely unlikely even for the most talented. In general SV is a bad deal for everyone except the small set of people lucky or connected enough to be at the top. Outside founder level, virtually no one gets rich from startups anymore. The equity and options comp is pathetic at best, if not outright fraudulent. (“You’ll be getting 1% of outstanding shares… from this round…”). Even founders have to live on 70k salaries in the Bay Area, then are frequently screwed over or cliff’d by their VCs. For every Google, heck for every Apigee, there’s a thousand no-name flame-outs, where no one but the VCs walk away with a dime.
Compare to quant trading. Compensation is cold hard cash, usually paid out annually, if not quarterly. Not lottery ticket equity with four year cliffs, unlimited dilution and byzantine share classes. Most comp is directly tied to individual trading performance, with clear results from trading everyday. No politics, extremely meritocratic, no being at the random whims of whether your app takes off fast enough to overcome your burn rate. Firms actually compete for talent and pay accordingly, instead of colluding to keep wages suppressed. Unless your ambition is to top the Forbes list, HFT’s a much better deal for someone extremely intelligent like a Math Olympiad. The probability of making “f-you money” before 40 is at least an order of magnitude higher as a prop quant than in the Valley.
That is from Doug.