When Google revealed this week it had poached Morgan Stanley chief financial officer Ruth Porat, the shift was the latest evidence of Silicon Valley’s allure to Wall Street bankers.
Silicon Valley is not only tapping into the finance and business skills of bankers, but the individuals themselves appear to be increasingly attracted to the cutting edge world of technology.
Twitter hired Goldman Sachs investment banker Anthony Noto as the social media firm’s chief financial officer last year, while Yahoo! picked up Goldman’s Jacqueline Reses as its chief development officer.
The $ US70 million Porat stands to earn at Google over the next four years was likely a persuasive incentive. Yet the trail of finance professionals heading west to Silicon Valley is not just occurring at the upper echelons.
Wall Street was once almost the universal top pick for young graduates boasting business degrees from Ivy League universities.
And while banks can still attract top talent, more graduates are increasingly opting to join the likes of Apple, Facebook and Google and startup firms, ahead of the bulge bracket investment banks.
“The ability for a millennial to have an impact on a business is becoming an increasingly important motivator for them choosing Silicon Valley,” says Samantha Wallace, who leads the technology practice at Futurestep, a subsidiary of headhunting firm Korn Ferry.
“When you look at the start up community, there is that potential in a much more immediate way than if you go into the big machine of Wall Street.”
“They could go in straight out of school and build the next big thing.”
Mark Zuckerberg’s success in building Facebook may have inspired graduates to test their luck in the valley, rather than in New York. The reputational hit Wall Street suffered after the financial crisis is also likely a consideration for budding professionals.
At Harvard Business School, 33 per cent of graduate entrants studied finance last year, compared to 42 per cent in 2006, the New York Times says.
Students taking up technology rose to 17 per cent, from 7 per cent.
Australian Anthony Goldbloom, the founder San Francisco-based data mining firm Kaggle, says Silicon Valley has become “trendy.”
“In finance you become a bit of a cog in the wheel and really grind it out,” the former economist says.
“In tech you’re creating something and it’s fun.”
“In Silicon Valley you’re introducing a new idea to the world and if you’re successful and the company is successful, everyone is incentivised by stock options and you do very well.”
When Twitter floated, it instantly created about 2000 new millionaires, many of them staff who held stock options.
The investment banking world can be notoriously brutal, with 90 hour work weeks not unusual.
While there are still long hours in the valley, it’s supplemented by other perks.
Mobile payments innovator, Square, provides staff three meals a day, as well as offering massages and acupuncture on site and coffee baristas.
Around the tech firms, ping pong tables are set up in break out rooms and casual dress standards give a more relaxed feel than the mandatory suit and tie on Wall Street.
Goldbloom says there is also strong comradery and collaboration in technology because the potential rewards equate to exponential growth.
“If the firm does well, we all do well, so we’re all pushing in the same direction,” Goldbloom says.
In banking the pie is more or less fixed and colleagues compete against each other for bonuses.
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