I often discuss Jane Street as a great model of employee branding. They do well placed adverts/sponsorships (e.g. Standup Maths[0]), they produce a quite decent quality podcast (Signals and Threads [1]), and they have consistent monthly puzzles [2]. That level of investment in branding only makes sense, I think, at a large size. I'm kind of surprised they only have ~2500 people.
Jane Street has been doing this since they were much smaller. I interned there when they had like 300 people, and they were actively cultivating a great brand as an employer back then too—and looks like they've really made it work over the last decade!
My impression with them in general was that they were willing to do lots of things that did not "conventionally" make sense at their size, and those things paid off. The internship program, for example, was relatively large in comparison to the size of the company at the time (≈50 interns?) and had lots of structure (events/talks/classes/group projects/etc) like you would expect from a big tech company, not from a 300-person firm.
They were also willing to build a lot of tools in-house like their own build system[1], their own code reviews system[2], etc. Most people would see this as wasteful NIH but I'm convinced it was a net benefit for them—they managed to be so productive in an absolute sense and especially on a per-engineer basis because they were willing to build so much themselves, not despite it. I'm sure the same thing applied to their recruiting efforts.
The biggest thing I took away from my internship was how much conventional wisdom in the software world was not necessary or true.
> Most people would see this as wasteful NIH but I'm convinced it was a net benefit for them—they managed to be so productive in an absolute sense and especially on a per-engineer basis because they were willing to build so much themselves, not despite it.
It paid off for them, but I would say it's a risky move in general - it is very easy to get sidetracked with failed projects that have nothing to do with the business. There are many examples - Uber's internal chat system, etc.
Others tools were more a necessity, eg the OCaml build story was not great back then. Investing in OCaml itself was a calculated risk.
Also I wonder how things would be different if they were starting today, where there are more mature tools in the space.
I often dread when I see an employer using in-house systems for common tasks like project tracking and code review. I'm curious how does JS's internal tools stack up against systems out there, like Github or Jira.
I prefer the JS thing to github, mostly because it makes it a lot easier to juggle lots of in-flight changes that depend on each other while simultaneously supporting code review.
> how much conventional wisdom in the software world was not necessary or true.
Do you remember any specifics?
I’m also curious how their tooling made them so much more productive. Were the tools just really well designed, or did they integrate perfectly with each other?
I used to work there - the jane street code review software is awesome, kind of like graphite but it works reliably. You can write a big tree of PRs. PRs get reviewed separately and you can merge them in any order at your leisure, without worrying too much about rebase issues or clobbering review or whatever. I would love to have some open source thing like that that actually works nearly as well. It may exist, but I haven't seen it yet.
And yeah, jane street is a pretty compelling demo that A) NIH syndrome is fine if you're good at writing software and B) it doesn't really matter that much if you use a mature language or some uncommon immature language
Revup does a good job of integrating tree-of-PRs workflows into GitHub, and is also designed so that one developer can use it in a way mostly transparent to reviewers or their colleagues. I _think_ that Revup + Reviewable.io would match much of the capabilities listed in the linked talk.
Because it is. What is the point of reinventing these wheels when gazillions of man hours have already been invested on open source tools that can do it better and cheaper?
1. You can do it better, with better taste. Existing tools are... not uniformly well-designed.
2. Building something for yourself is qualitatively different than building something for somebody else. (I've heard this described as "situated software"[1].) Both the results and the process are different.
3. Building something yourself lets you become an expert in the domain and the tool you're building, often faster and deeper than using somebody else's system. It's a way to build up tacit knowledge and institutional capital as much as (or even more than) software.
4. More often than people realize, building something yourself ends up simply faster than first learning and then wrestling an existing tool into the exact shape you need. I've seen a lot of teams waste way more time trying to get some existing thing working than they would have spent building their own thing.
Obviously it isn't always true that building your own version of something makes sense, and nobody is going to be building everything from scratch... but it makes sense far more often than conventional wisdom dictates.
Moreover, one thing NIH syndrome handwavers miss is that developing a custom situation-specific solution allows you to expand your knowledge in that discipline, create a more tailored solution, and avoid supply chain vulnerabilities that can come with using third-party packages. In my experience a handbuilt solution to a problem is going to be much more efficient in most cases than OSS out there, except in spot instances where the scale of the task is not able to be achieved in a small amount of code (e.g. a versatile graphing library), although these are /very/ few and far between.
You can, or you can just work around the existing tooling, which is quicker and assuming you choose wisely, has a wealth of googleable documentation. Its humbling, because you need to learn through _using_ rather than creating. It feels less productive, even though you're 90% of the way there with an existing tool
> 3. Building something yourself lets you become an expert in the domain and the tool you're building,
It might do, or it also might just drown you in complexities of the domain that you're building the tool for. Plus the assumptions you make when first designing the tool tend to be disproven as you learn more. Its good to question tools, but not blindly re-write them without studying _why_ they do that thing in that weird way.
> 4. More often than people realize, building something yourself ends up simply faster than first learning
Which means you are very likely make the same elementary mistakes as the previous generation tools. Plus its _always_ slower to start. mainly because naive re-writes have naive bugs. But you just don;t know it yet.
At the legions of VFX companies I've worked at, the number of people who look at the asset management system and go "Oh thats not hard, lets just re-write that to be x" is too damn high. 6 engineers and a year later, they still have a broken system, but in new and interesting ways.
Am I saying that you _shouldn't_ make tooling/software or custom things? no. I'm saying that you should really save yourself for something that critical to the company.
All projects have a limited number of innovation tokens. The more you use the slower your project will go. You should really only look to use 2 innovation tokens max.
I'd say the key insight that I see on #4 is that people do not consider libraries code. They consider it black box. It is the same urge that causes teams to label a code base they have taken over "legacy" and "in need of rewrite."
Sometimes, the answer is to dive in an seek to understand it. Now, that may end up meaning that you fork the tool or contribute back to it. It may mean that you choose to build anyway, and it may mean that you come back understanding it. However, if a library is not working for you, the slowest answer is often the one where you fiddle with it until it's working without taking the time to dive in.
By the numbers I think only the best programmers, which is a small minority, should consider NIH. Everyone else should use off the shelf as much as possible.
Since the best software is written by the best programmers, those of us interested in the best software, and have the capability to make such software, should be free to do NIH on an as needed basis.
I think it depends on if the targeted application is essential to your companies core buisness/product.
As an example, say if you're a small cloud vendor, you should probably write your own machine OS imaging automation, but probably not your own chat client.
I bring an inordinate amount of third part components inhouse for a solo dev company, so these tools/libraries only have one user. I do take return on investment into account and only bring things inhouse if I expect a positive net present value.
A few factors not normally taken into consideration;
- Tooling is a great place to practice transferable skills on a practical problem. This always annoyed me with the XKCD cartoon 1205 which didn’t take into account improvement in optimization ability from practice in optimization.
- I’ve had a few external library dependency rug pulls, open source and proprietary. It never happens at a convenient time and is a total pain in the ass. Contractual agreements won’t save you unless you’re ready to sue for breach of contract and even that is no real solution. Perhaps getting code in escrow could be an alternative but I’ve never seen that work out either.
- External quality is mixed and getting worse. I’m careful with my own code so most of the bugs I hit is in other people’s code. If it’s a small library it can easily be less work for me to bring stuff in-house than to debug someone else's crap.
Honestly I wish I didn’t have to bring so much in-house, it would have saved me a huge amount of work. But we don’t have an efficient market with clearly defined standard of goods where we could treat software as a commodity and I’m not sure if we’ll ever get that.
What do you mean, "reinventing these wheels"? Are you sure there are other tools that look and feel the same?
Letting your development team control and build their own tools is a good idea, if they are able to. You probably don't want to do it in Java or C#, it'll take too much time, too many people, and be too unreliable.
This implies that open source tools that do more (i.e. serve more use cases, work with larger amounts of software) work better for the narrowly defined use of a single company, even one as large as Jane Street.
They used to be very active in the NYC Meetup scene, too. ~~I think I visited at least two of their offices and the second was was stunning. It was far south enough and high enough that there was a nearly unobstructed 200° view of the southern end of Manhattan, both rivers, etc. It was also beautifully designed and had an obligatorily huge, open, stocked kitchen.~~ (This was actually Two Sigma.) They were also using exotic tech back then, too, like OCaml, which is itself a form of marketing and helps with recruitment.
Moral qualms aside, it must be a fascinating place to work.
> At the end of 2023. Jane Street employed 2,631 people, so that equates to almost $4mn of net revenue per head on average. In adjusted EBITDA, it comes to $2.83mn per employee (or nearly $22mn for each of the 482 traders actual traders at Jane Street.)
And regarding compensation:
> Given Jane Street’s disclosed compensation and benefits of $2.4bn last year, this works out to over $900k for each employee on average.
I highlighted Jane Street's recruiting outreaches specifically, when talking with an R&D unit at a big financial institution. (I also mentioned the tactic of fringe-tech-that-some-heavy-hitters-love. OCaml, Lisp, Rust, Erlang, etc.)
When I first heard of Jane Street, it sounded like Yaron Minsky was going around to MIT and such, high-touch, trying to hire just a few people. And later, things like this blog: https://blog.janestreet.com/author/yminsky/
The only negative thing I recall hearing is Jane Street alumni responsible for the infamous FTX and Alameda Research. I don't know whether the individuals were already fully into hopped-up sociopathic/narcissistic thinking in college, or whether their internship and employment experience contributed.
It seems their thinking is part of what led them to JS in the first place, which is a bit of negative and maybe they had some ideas reinforced there. But I also think they were some of the more extreme ones to begin with. They obviously didn't internalize JS's concerns about risk at all lol.
A Jane Street trader's risk tolerance does not equal Jane Street as a whole's risk tolerance. When you have 1,000 traders, each individual trader's risk profile can be much higher. There are also guardrails around compliance, risk management, etc. at the firm level that traders aren't necessarily involved in.
The things that made them great traders also made them much riskier choices to lead a larger company. To them, compliance is an obstacle in the way of profitable trades.
I work in quantitative finance and have wanted to to start using OCaml at work for years. I just find that unless you are at a shop like Jane Street with a well developed proprietary code base, internally developed tooling, etc, there just isn't the ecosystem available for me to be nearly as productive as I can be in other well accepted languages in the quant dev space...which is a bummer. It's been a little while since the last time I investigated this though.
It's brilliant if you think about it as an employer that wants to limit employee turnover. Great, you're an ace algo dev in OCaml, where you gonna jump ship to?
When we hire a junior person we are interested in math background, ability to communicate real world value of various models to our investment process and familiarity with computer science and software engineering concepts more than we care about experience with specific languages or technologies. That being said, C++ does still dominate this space so having exposure to it certainly would not hurt.
I am a strategist at a smallish boutique quant investment firm. This is how we think about hiring a junior person. It's not all that different for a more senior person, but actual development experience would likely be more important, we would expect more contribution sooner from a more experienced person. More senior jobs also might have more specific responsibilities and therefore require more specific knowledge of technologies, etc. Many junior analyst roles support the team as a whole and there is less concern around experience with specific technologies, typically.
Doesn't matter. It's same as any tech. Need to understand mathematics and algos and have great fluency in code. Can't speak for the other guy but I suspect he's same: no amount of skill "aligning stakeholders" and "managing cross-functional teams" is of much use in the business if you're at a prop shop. Have to be able to write code. No "blocked on other team", "Kernel Timestamping API is undocumented" etc.
My reply was somewhat facetious; though I have heard some pretty crazy personal anecdotes about what happens in the Bloomberg chat service.
But even taken at face-value, Bloomberg's annual fee is comparable to the yearly cost of an undergraduate degree - so it might very well be a fair deal.
I thought the Pareto distribution was most famously associated with 80-20? Of course you can change α to get whatever ratio you want but this is the first time I heard of the 50-1 ratio being used.
Seems like Pareto 80/20 law is not too dissimilar from powers of 2.
In binary, most significant(left most) bit is twice the magnitude of the previous bit. So that bit (or person) would contribute and get compensated accordingly.
Would also be similar to segment trees with each leaf node having a value of 1 with parents recursively summing the children?
"Jane Street has 40 “equity unit holders on a full-time basis and in good standing”, with an average tenure of 16 years" - I suspect a large portion of it would come from those 40 but that is purely a guess.
Hedge fund comp is extremely skewed. When I worked at one, in good years my boss made more than 10x what I made, and I made about 10x what my reports made.
Equity holders are probably forever, and the incentive problems are a hard thing to solve. But you won't be a founder or early joiner if you're not allowed to keep your equity anyway.
Fortunately it doesn't take that much to get top talent, because so many other companies underpay. Jane Street only has to pay out a small fraction of their PnL and doesn't even need to have a non-compete.
with a profit margin at 70%, they can afford very high pay.
And the equity holders would get diluted a bit when new employees are offered equity, but looking at the rate of profitability, each new employee more than earn their share in equity, even at the high end. Therefore, it is in fact, in the existing equity holder's interest to get diluted a bit to hire these employees, who would produce way more value (and thus increase the total value) compared to the loss in dilution!
> The real money is at the top. The bond prospectus reveals that Jane Street has 40 “equity unit holders on a full-time basis and in good standing”, with an average tenure of 16 years. Among those there will be at least a handful of billionaires, even if no Jane Streeter appears on any rich lists.
Sounds like any other partnership. A few people at the top are providing the equity and getting a profit share, and the thousands under them are getting salaries.
Typically at such companies you have to be at the very top of the hierarchy to be able to buy in and get a slice of the profits. It is very unlikely that rank and file employees are able to participate, at least at a scale larger than, say, a Google employee buying some extra shares.
> $100k buy in at the hedgefund I know. Its a big figure for most but starting salaries, friends & family, and personal loans will get you there.
Surely this is a HN culture bubble? Very few people can borrow tens of thousands of dollars from family and friends to lend to a hedge fund. Not only would I be refused, I'd damage friendships by exposing the moral vacuum at my core.
It has more to do with the nature of the industry and firm. If your TC yearly is all cash and exceeds 500k, asking 100k of that as buy in is not too different from being granted stock options as an outcome. They could just reduce your TC by 100k one year and replace it with equity in the pool.
Being able to borrow that amount might be a bubble, but depending on the fund I don't think it would damage friendships at all. If you had access to the internal Renaissance fund for example I think your friends would be happy to get in on that.
Big Canadian bank I know had something like a requirement to own $450k of shares to be a board member. But they sliding scale exempted you for your first 5 years and gave you $90k in shares each year, so as long as number go up, there was no actual outlay.
For what it's worth, a friend of mine is a lawyer in a well-known hedge fund and he gets access to their funds too (funds that would not otherwise be accessible without making a substantially larger investment I believe).
I've no idea if they feel they need this or not. But I do know that if you want to buy a significant chunk of JS (which is the context of this) then you'll need to have a lot of money to do so.
They typical reason hedge funds set minimums (aside from regulatory restrictions) is that they don't like dealing with a ton of small investors. It's easier to deal with fewer, larger ones.
In contrast, if you're a prop shop that only accepts employee money, you're already dealing with your employees.
So there's no real reason for JS et al. to set large minimums, in contrast to non-prop hedge funds.
Rentech uses this model too. The equity-to-salary ratio of an employee increases the longer they remain at the firm. It's for incentivizing employees to stick with the firm in the long run such that they don't work for any other firms and become a competitor (especially true in trading given the small population of talents).
How do you quantify, or even loosely, determine that?
What about ancillary workers who might not add any significant value to the (e.g. office janitor or HR) but supposing there’s a serious janitor or HR shortage then the org will still have to pay enough to attract someone, but what they pay is outside of their control and unrelated to the actual value to the company. And even in a worker-owned cooperative there’s still going to be in-groups and out-groups, and the in-group is incentivised to pay the out-group as little as possible as to maximise their own returns.
Plenty of companies are "employee owned" because the founders control the majority of shares. One person or a small group of people – whether they are employees or not – having total decision making power is the opposite of what worker collective means.
Like I said, please provide actual names or organizations with credible authority, such as the OED, and link the source.
EDIT: I'm not going to do this work for you and dig through all the places cited at the bottom to see if there's some source with that credible authority that proposes such a definition.
it's not a collective per se but employees are certainly well paid. because they are highly skilled, are not easily replaced, and could take secrets elsewhere.
commodities trading houses tend to follow this model too though that is changing a bit.
i remember having this discussion with a friend after he sent me a richard wolff video. nothing about our system stops coops from flourishing. one of my favorite retailers, REI, is a member-owned co-op. publix, the beloved florida grocer, is employee-owned.
I know you’re kinda joking but, The problem with socialism isn’t the voluntary organizations that people can join or leave at will, it’s the forced involuntary labor that is always brought about. Capitalism is about voluntary mutually beneficial partnerships which this is.
It also went wrong using only profitability as the only measure. Obviously an unprofitable company isn't long-term sustainable, but a maximally profitable company might not be either, as a company exists within a society and on a planet with limited resources.
Great comment from the FT's comments section on this piece.
> A good mate who runs and wrecks expensive cars for hobby once reminded me that course plotting (i.e. research) and braking (i.e. risk management) are the two sine qua non contributors to a successful race.
Along with a reminder that disasters happen when businesses forget this (Boeing!)
I love them because they keep the OCaml dream alive, but any company shouldn't have this kind of reach, especially in the realm of automation. This probably won't end well...
Meanwhile I'd love to know what their edge is... It's probably more than OCaml, although... ;)
What kind of reach? Just making a lot of money?From the article, it looks like they make a lot from market making in ETFs and similar. Thats an extremely competitive market that is necessarily a race to the bottom in terms of pricing
> From the article, it looks like they make a lot from market making in ETFs and similar. Thats an extremely competitive market that is necessarily a race to the bottom in terms of pricing
They are not making their money market making equity etfs afaik, mostly bonds. A slightly different game with a much higher barrier to entry etc
I think OCaml is more of symptom of the people who they hire. Most companies don't want to hire OCaml and Haskellers. They fear they would be too expensive, and requires clear thinking so you can't hire bottom of the bucket devs.
If you want to hire the best and willing to pay that is no longer a concern
I interviewed with them, a long long long time ago.
They use OCaml because it is explainable. Which it is. They use it like a non-lazy version of Haskell -- side effects are used rarely if ever. So there's no nonlocal behavior in the code, which makes it easy to reason about. And that kinda matters when a lot of money is at stake.
Incidentally, Standard Chartered has their own compiler for Haskell, without the laziness. The group is led by the guy famous for Cayenne (the first dependently typed Haskell dialect).
> Most companies don't want to hire OCaml and Haskellers
Most companies don't even know that these are programming languages. Also don't assume people interested in these languages are "the best". Regarding JS, this is all hearsay, but I think nowadays they hire good profiles (competitive programmers / olympiad winner / top graduates from prestigious schools), ask them hard leetcode questions, and teach them OCaml (which anybody can learn, not particularly hard. Their talent pool isn't restricted to the OCaml community, as it used to be when they were less famous, except for niche use case (compiler work and so on...)
I'm not saying people interested in OCaml are the best. I'm saying you don't have to worry about smart people being incapable of understanding OCaml.
You got the direction the wrong way around.
Ask to introduce OCaml at any company. The first thing is they're worried about is not being able to find people. To which the answer is to train them. But then they're worried some people just won't be able to learn ocaml quickly enough. To which my answer is hire people who are good enough to learn it quickly. But then they get worried those people are expensive. Ultimately it comes down to not being willing to pay.
Companies that want to maintain the ability to outsource or hire cheap developers if push comes to shove is actually pretty common. They want commodity labour.
To be fair, another reason for avoiding OCaml, or other kinds of almost-esoteric tooling is a business need for longevity of support and of the ecosystem: if you choose something like Java you have a reasonable belief that, at any point in the next 20 years, if something breaks then you’ll be able to call a phone-number and pay through the nose to get it working again. Companies don’t mind paying large amounts of money for an expert, provided those experts are available. But in 2024 try finding an expert for some dBase 4GL system from 1998 that only runs on AS400.
OCaml has been going since 1996 and is managed by an academic institution in France. It's also much more portable and malleable than dBase for DOS on old iron.
I interviewed there and can confirm they don't require you to know any OCaml (though I did have some Haskell on my CV - I don't know if that was a factor in hearing back or not). The questions are LC-adjacent but the interview is structured such that each question builds on the previous one.
Well 30-40 or more would be just needed to maintain OCaml codebase. Unless basic unit of bonus, salary, buying, selling, vendor payments, building maintenance and so on is OCaml lines of code, I would have guessed ~1000 people for sure.
Might also be that Jane Street is to OCaml what WhatsApp was to Erlang. Many ascribed the success of the small team at WhatsApp to their tech-stack, Erlang and FreeBSD. The reality probably was that they had hired really smart people, and those people choose to use Erlang (because eJabberd), but they could have been just as successful using another language.
Yes, Jane Street uses OCaml, they have no reason to stop using OCaml, but may very well have been just as successful using another language. It's hard to tell, when we don't know the full circumstances of why they went with OCaml initially.
> but they could have been just as successful using another language.
I remember reading about one founder that picked an obscure language because in doing so, it self-selected for more curious engineers who worked in the languages for fun rather than any other practical (re:job) reasons.
His thesis is that finding one really good engineer in said language was 1 in 10 (10 interviews to find 1 really good engineer) whereas in more commonly used languages like Java, JavaScript, etc., it might be 1 in 100
If we had picked Python, it’s very boring and reliable, and the same could be said of Java. But you’re picking the lowest common denominator. I would say high performers, and the best programmers are often people that will only work in niche languages.
The problem is, there are good Java programmers, but there are also thousands of terrible Java programmers. If you pick the right niche, it’s easier to find the high-end talent. I think Paul Graham also made a very strong case that in a startup, you should be using the most powerful language you can, and that is Clojure.
I interviewed with one YC startup that was using ReScript and ReasonML on the same principle (I asked the founder why he chose Reason).
Talented people are valuable in general which gives them bargaining power so they can demand to use their preferred tech regardless of whether that tech is niche or not.
I generally agree with the notion that talented folks are more likely to explore niche tech. Just be careful making the leap from "they prefer niche X" to "therefore they are talented".
Two anecdotes:
1. I'm an average programmer who likes niche tech.
2. My friend is 10x more talented than me, but he likes mainstream tech.
> Just be careful making the leap from "they prefer niche X" to "therefore they are talented".
Not my approach, to be sure :)
I think I have a pretty good heuristic for finding curious and inquisitive people that doesn't rely on esoteric tech stacks.
My sense is that a lot of engineering teams have lost their way so the only mechanism they can use now are convoluted leetcode style interviews instead to filter out Senior Java Dev Candidate 43 versus Senior Java Dev Candidate 96.
tons of successful companies (facebook) were founded on apps written in php (thought to be one of the lowest common denominator of the language world at one time).
Facebook, even early on, wasn't really what I would consider very technical in both engineering and domain complexity.
When FB started to grow, it needed the HipHop VM[0] to make it scalable beyond PHP. I'd agree that PHP is a lowest common denominator and FB eventually needed to move beyond it to get to the next level.
I dunno man, they managed to mostly stay up during times of extreme growth, and were able to scale their graph stuff (people you may know etc) in a way that competing companies (i.e. Friendster) couldn't.
The domain probably isn't that complicated, but the infrastructure certainly was (and this was all pre-cloud so they built it themselves).
But yeah, FB's success came from a base level of keeping the site up and incredibly good tactics to drive growth and distribution.
> but they could have been just as successful using another language.
I don't claim to be a rockstar developer or anything close. But my capabilities and efficiency as a developer are tightly coupled to the tech stack I use (not just language).
I moved from a job where I chose my own tech stack that I iterated over several years to one where I'm forced to use (IMHO) tools that are poorly suited to my work, and I'd say the quality and volume of my work has dropped by at least 10x.
So I think it's both. You need smart people, but they also need to be using the right tools for the job.
It's very hard to determine if they succeeded because of or despite of in any quantified way. WhatsApp, Viaweb, Jane Street, NoRedInk are examples of where they succeeded with a smaller language and none of them afaik blamed the language but praised it.
However, I think if you are a company doing something boring and that can only pay average, then having an interesting tech stack (including a nice language), hiring globally and having good benefits might give you a venue to compete for talent. You'll need some kind of strategy.
I'm very much not a serious OCaml:er but when I've dabbled some in it I got the impression that their "standard library" is kind of the de facto standard library.
They had Core. Base is their new attempt at sort of a "standard" lib. Not all OCaml-ers use JS libs though. There are some Batteries users out there. When I do Advent of Code, I almost always try to do it with OCaml's built in standard lib.
The paradox being: developer familiar with programming languages of level of power N doesn't recognize that languages of level N+ are better (more powerful expressively), only that N- are lesser.
Betas were certainly around 2002-03. Though thanks for the reminder that .NET was in a beta around 2000, so 90s is wrong (that's when I started work so my memory is sketchy that far back). CSFB was always a big MS shop and often trialled software before public release.
Hey, it's not massively relevant to your story, but this cracked a smile for me.
CSFB was a big Sun shop, up to and past the time they mounted a "SunSet" initiative around 1998. Scott McNealy came and gave talks to the engineers.
In CSFP, the derivatives arm, where the quants worked, there was more of a push to get onto Excel, build a relationship with Microsoft, which included getting onto the "Cool" program which turned into .NET.
Interesting, yesterday there was a thread on reddit in /r/ExperiencedDevs asking "What place is known as the ones with the best engineers now? One where if you saw that place on their resume you'd automatically assume they were good?"
And one of the answers was Jane St. Apparently they produce great engineers.
> Jane Street is stupidly profitable — net trading revenues of $4.4bn in the first quarter, after a $10.5bn haul in 2023, and a profit margin north of 70 per cent — but it bears repeating. That is the fourth straight year of net trading revenues exceeding $10bn. Gross revenues came at a record $21.9bn in 2023, up 34 per cent from 2022.
Yes, I suppose this is all something to get all starry-eyed over, Jane Street encroaching on Citadel Securities, the two of whom control 30% of the US equity market volume.
I see it another way. I see people's hard earned money being siphoned by enormous financially-engineered vacuums, never to be seen again. And not just in the US, globally. This won't stop at 30% of the US equity market. It won't stop until the music stops and the last chair breaks. Which may or may not be soon. It will certainly be coming at some point.
Five times the London Stock Exchange’s entire trading volumes in 2023 in just your ETF arm? Sure ... this sounds like reasonable growth ...
> This is why some people argue that APs like Jane Street have become systemically important.
Oh, you don't say!
> About 80 per cent of the company’s capital comes from employee equity
That's adorable. They're like a little mom-and-pop shop ... except not anything like that.
> I see people's hard earned money being siphoned by enormous financially-engineered vacuums, never to be seen again.
can you expand on this? I have zero idea of what Jane street actually does and how they actually make money. (someone wrote that they have ~450 traders. trading what? equity? stocks? dark pools? PE? are they market makers? are they offering services to institution types?)
also what does "people's hard earned money" mean? you mean that Jane Street takes away their 401k or ... ?
They provide market liquidity. The chances that a seller and buyer come together at the exact same time across the 7.5 hours of open market operations is fairly low, so they buy from sellers and sell to buyers and hold in between to keep the markets liquid. This liquidity costs(often advertised as the bid/ask spread).
We could essentially close them down if we moved all trading to say 1 hour a day.
speculators can then sell/buy to/from them and if they are doing it well, they make a profit. (and help narrow the spread.) sure, great, they even inject some liquidity. but why do we want a narrow spread? it only helps people who don't know which side of the trade they would rather be on, no?
The bid/ask spread is never good, as it is a fixed transaction cost no matter what side you play. In fact, the equity under consideration has to move greater than the spread to even realize a profit -- with the spread, you are always "buying high, selling low". With very narrow spreads, the spread is only a few cents at most and this consideration evaporates.
The spread also compounds quickly. A wide spread indicates low volume and a sparse order book. This means if you need to offload even say 100 shares, you can single-handedly as a retail investor, widen the spread yourself and take an even larger loss.
Liquidity injects supply/demand and its always a good thing for retail investors. It goes past the stock market as well, spreads are why pawn shops, thrift stores, and even eBay can be profitable in certain goods and with other goods, not so much.
You can absolutely set limit orders, but depending on the limit, other people may or may not be willing to trade with you. Your order can sit all day and never be accepted.
If I want to sell AAPL, and set the limit oder to $1/share, buyers would take that trade instantly. But if I set the limit order to $10k/share, nobody would buy from me.
The exact same thing happens with the buy side.
It's like haggling with the vendor on the street corner or negotiating with your car dealer.
Think of it like a liquidity tax. Jane Street and other market makers(Citadel, etc) compete over that liquidity tax. The more often a fund, ETF or stock is traded, the lower the liquidity tax.
If XYZ Corp is very illiquid and only trades a few shares a month, then Jane Street will charge you a lot of tax to allow you to trade it instantly, because they have a harder time knowing what they can get for it a month from now when someone actually wants the trade.
Notice something like SPY(S&P 500 fund) is basically free to trade, but something like EEH costs you a very pretty penny to instantly trade. For EEH, you might be better off re-issuing limit orders and just hoping someone comes along that wants that fund. If you let Jane Street or other market makers handle the trade, they will charge you more than it's worth to trade.
They provide market liquidity. The chances that a seller and buyer come together at the exact same time across the 7.5 hours of open market operations is fairly low, so they buy from sellers and sell to buyers and hold in between to keep the markets liquid. This liquidity costs(often advertised as the bid/ask spread).
We could essentially close them down if we moved all trading to say 1 hour a day.
Though most retail traders are upset they can only trade 7.5hrs a day, they want to trade 24/7 instead. They seem to WANT the liquidity and are apparently willing to pay for it.
Me, I'm fine with trading for only an hour a day, but I get not everyone is as lackadaisical as me.
Unless you have a better mouse trap to solve the liquidity problem, this is the best we have for now.
I actually know a little about this space. You know what the easiest response is that is always the answer?
"We provide liquidity".
Sounds important, most people don't get it, it works.
But it's not like the market is going to grind to a halt if Jane Street disappears overnight. Of course, people will say that. Not people telling you the truth.
I actually considered "but, but, THE LIQUIDITY!" in my answer but I felt there was sufficient snark.
Yes they would. It would be a significant and catastrophic mistake to restrict trading based on feelings of envy. It would be technically negative in every measurement possible.
So many poor policies originate from Envy and poor reasoning not grounded in logic and understanding of free markets and economics. This would be yet another classic example of that.
As we have talked about in the other part of this thread, envy has absolutely nothing to do with it. Stop thinking it does. You are starting to sound like a broken record.
> It would be technically negative in every measurement possible.
Since you believe this so strongly, can you provide academic sources for this perspective?
Please do tell me then, what exactly motivates all the proposals for restricting trading periods or changing to auctions? All I have seen is that Jane Street and other make “too much money”. The reality is actually different they provide a service in 20 countries across all asset classes and do it for only $12B/year, that’s actually very cheap once the scope of their reach and operations are understood.
Please explain what is the motivation other than envy behind the numerous comments proposing some restrictions or claiming they aren’t worse or even better.
There are definitely academic sources that will backup my assertions however the irony is that my position somehow needs to be defended when it’s actually obvious to anyone who has spent a lifetime on the inside of the very system we are discussing and that somehow absurdist proposals about restricting market hours are accepted on face value without any rational or academic evidence whatsoever.
First, I never said it was a great idea, or that we should. It's not about envy or not. Liquidity provides a great service, if we need long market hours. If we don't need long market hours, it arguably provides little to no value.
Yes it would massively reduce liquidity, that's the point :) Yes volatility would go up during that hour(especially at the beginning), because everyone would have to figure out the new pricing, but it would remove the need for liquidity as well. It would bring all the sellers and buyers together at the same time, eliminating the need for market makers to provide liquidity.
I'm not suggesting we actually do this, in fact, the markets are trending the other way to 24/7 market trading. I'm sure Jane Street and the other liquidity providers are 100% on board with this plan of 24/7 trading.
Personally, I'm very happy with the status quo, 7.5hr trading days M-F. Though personally I'd prefer they shift a little later so it's easier for west coasters to trade at market open. I.e. shift from EST to CST. I know that won't happen, but that would be my only real complaint.
> Jane Street’s 2613 employees are replacing at least 10x that many needed to perform the same critical and necessary service to the markets from 30+ years ago.
Agreed, they are doing a bang up job providing liquidity to the markets. I'm happy for them. I use their service, it's great.
If we as a society want long liquid trading markets, then we need people like Jane Street to provide that liquidity. If we don't want long liquid trading markets, we can eliminate them and force buyers and sellers to meet all at a given point in time. One is not necessarily better than the other, it's a trade-off.
> Liquidity provides a great service, if we need long market hours.
If Jane Street is so critical to the normal functioning of markets that their significance between "exists" and "don't exist" is a major change in liqudity, then they are a systemic risk.
They probably don't want to be viewed as a systemic risk to the financial system.
But when you are siphoning this much money out of the financial systems worldwide (to the point your employee equity looks to be going almost logarithmic), how much further can this go until "providing liquidity!" isn't good enough any more?
That's been the go-to answer since forever, anytime anyone questions what value is being added to the economy.
> If we as a society want long liquid trading markets, then we need people like Jane Street to provide that liquidity. If we don't want long liquid trading markets, we can eliminate them and force buyers and sellers to meet all at a given point in time. One is not necessarily better than the other, it's a trade-off.
This is categorically false. Long electronic trading hours are simply a better solution, a more fair solution, a more competitive solution, a more efficient solution, and what the market is demanding. There is no trade off, especially as most liquidity is supplied by automated systems that can operated 24/7/365 if needed.
When you compress transactions into specific time frames it isn't about forcing buyers and sellers to meet, you actually will reduce the numbers of buyers and sellers overall, you will lower the value of the asset, because assets are given liquidity premiums. The more you restrict transactions and reduce liquidity the less utility an asset has. This is one of the often overlooked reasons Bitcoin has more intrinsic value than is assumed at first by observers.
When a primary issuer creates new securities this is very different situation and why an auction is needed, for example for new treasury bonds or any other initial offering. In that situation there is only 1 seller, the issuer, and the question is what is the starting fair price at which buyers appear.
In a secondary market there are many current owners of the asset and many potential sellers. They don't decide to sell or buy independently and then meet. That is simply not what occurs. Instead think that every current owner is a potential seller and every participant who follows that market is a potential buyer. Sellers attract buyers, buyers attract sellers, both when they push the prices around via the market makers. By extending the time period for this dynamic to occur to continuous central limit order books (CLOBs) it make the most efficient process, periodic auctions have been proven to be very poor ideas and results in choice paralysis of participants, CLOBs incentivize higher rates of decision making and healthier dynamics. All properly operated CLOBs will also have a circuit breaker to auctions should time be need to digest rapidly changing information and the continuous book can't be created within some limits.
By having extended market hours you widen the pool of buyers and sellers who can participate. You also allow markets to instantly digest new information as quickly as possible, this is most fair to all participants equally.
Extended trading hours are strictly better than restricted trading hours.
You seem to imply I think it's better without them. I'm not saying that at all. I'm saying we could do it without them, if we, collectively, wanted to. Is there a cost to that? Of course there is, there is a cost for any big change like this.
Private Equity seems to do just fine without any of these liquidity problems.
Bond Markets are completely private still, sure some market makers are now playing in that space, but it's still completely private transactions and you are on your own to find buyers and sellers. Seems to work well enough.
Certainly public markets and stock exchanges are great inventions, but we didn't have market makers in the early stock markets for a very long time. Well one might argue JP Morgan(the man, not the bank) was THE market maker for all of the NYSE early history. He certainly bailed out the markets once or twice before the Fed existed and decided to do the job for him.
So we can absolutely do it without market makers. So I stand by it being a trade-off. If one really wants to kill off market makers, we can, that doesn't mean we should.
> The more you restrict transactions and reduce liquidity the less utility an asset has. This is one of the often overlooked reasons Bitcoin has more intrinsic value than is assumed at first by observers.
This would imply that Cash should be more valuable than it is? USD cash has near infinite liquidity, but at best it's worth around 0%/yr real return.
> You seem to imply I think it's better without them.
Yet these are also all you:
> We could essentially close them down if we moved all trading to say 1 hour a day.
> If we as a society want long liquid trading markets, then we need people like Jane Street to provide that liquidity. If we don't want long liquid trading markets, we can eliminate them and force buyers and sellers to meet all at a given point in time. One is not necessarily better than the other, it's a trade-off.
I responded that it is incorrect. You claimed that restricted hours and/or auctions are not necessarily worse, implied better for various envy based objectives that are commonly voiced in many of the comments under this article.
I am contenting that Continuous CLOBs with extending trading hours are technically better markets in every possible measurement. That is my position, it’s unambiguous and different than yours. I’d suggest you would prefer ambiguous positions that would elicit agreement and convey virtue than to take a hard stand for or against a topic.
> Private Equity seems to do just fine without any of these liquidity problems.
PE notoriously has liquidity issues. There are private platforms for qualified investors. PE also is focused on primary issued securities not secondary open free markets which we are discussing. So your observation is both irrelevant and incorrect.
> Bond Markets are completely private still, sure some market makers are now playing in that space, but it's still completely private transactions and you are on your own to find buyers and sellers. Seems to work well enough.
Bond markets are very very far from private. They are completely open but just not to small time investors other than indirectly via ETFs, which ironically the article explains is a massive source of income for Jane Street as they transfer institutional liquidity and prices into individual accessible ETFs. However the underlying cash and futures and options markets on both government, municipal, and corporate bonds are completely public and to any operator who can post the required collateral and meet the technical participation requirements. Trade sizes are often $1M notional minimal. In fact corporate and government bond markets are highly competitive and have extended trading sessions. So again you are technically incorrect.
> Certainly public markets and stock exchanges are great inventions, but we didn't have market makers in the early stock markets for a very long time.
Yes you did. Market making was a dedicated profession going back to the earliest exchanges and markets, including in Dutch empire, also in Roman empire times. Gold
market makers / dealing in bazars is 1000s of years old. I have no idea why you would believe such an incorrect opinion.
> Well one might argue JP Morgan(the man, not the bank) was THE market maker for all of the NYSE early history. He certainly bailed out the markets once or twice before the Fed existed and decided to do the job for him.
JP Morgan was a market manipulator and crony capitalist who using corruption bailed himself and his associates out of loses using the FED. Your example is extremely ironic if you actually understand what happened.
> So we can absolutely do it without market makers. So I stand by it being a trade-off. If one really wants to kill off market makers, we can, that doesn't mean we should.
> > The more you restrict transactions and reduce liquidity the less utility an asset has. This is one of the often overlooked reasons Bitcoin has more intrinsic value than is assumed at first by observers.
> This would imply that Cash should be more valuable than it is? USD cash has near infinite liquidity, but at best it's worth around 0%/yr real return.
This is a misunderstanding of the liquidity premium. Holding all other attributes constant of an asset, the intrinsic value, the income rate, all other relevant factors, then a more liquid asset vs less liquid asset with the same other attributes will have a higher market value. This is basic stuff.
You are missing the forest for the trees and misunderstanding what I'm trying to convey.
Even if we shifted to 1hr trading a day, we would still have market makers, but they would charge a lot more and a lot less people would use them. They would become more like pawnbrokers or middle-men, not be considered a must-have, like they are considered now. Much like your market makers of old.
For institutional investors, most all of their trading is already done either right at market open or right before market close, so it wouldn't be much of a shift for anyone except for retail investors.
I never said JP Morgan was a great guy. I basically agree with your characterization of JP Morgan. That said, he totally saved the NYSE and the larger American economy a few times anyway.
You are partially there in your understanding of the bond markets. There are public bond markets(NYSE, NASDAQ as examples) in the US, but they act very different from the stock markets, and they don't represent most of the actual bond market that is traded every day. The NYSE bond market still does public auctions of bonds for example.
There are MANY private bond markets. They don't regularly/always intersect. Bond markets as they exist today are still very new, and still not well understood. Pimco basically created the first ever regular bond market only a few decades ago. Before that pretty much all bonds just got stuck in some insurance companies filing cabinet never to see the light of day until it was time to collect a coupon. Even now a large portion of the bond market does effectively the same thing, except it's a digital file these days instead of a filing cabinet.
If I show up @ Brokerage A with 5M and want to trade bonds, they will for sure let me talk to their actual bond desk, but that doesn't mean they can facilitate my trade. I may have to shop around a few different bond desks to get my trade done. It obviously depends on how big that bond desk is and if they have any expertise in the particular bond I want to trade.
For stocks, if I show up with 5M and want to trade a stock, any brokerage anywhere well let me buy the stock.
TRACE, the system FINRA uses to monitor and manage the US OTC bond market doesn't even track all bond trades. Though they do track most of them now, however.
Certainly the bond markets are slowly becoming more public, but they are nowhere near public yet.
Corporate and government bonds have many venues and have for decades and in my opinion they are public in the sense that any qualifying participant can get access to them. Can an individual with a $10k in a 401k, no, but US treasury cash bonds have had published prints and quotes since 1970s. I personally remember corporates and converts prices and trades on my early Bloomberg terminal.
Now perhaps you call them private because they were and still mostly are for institutional traders however they are published prices and/or RFQ systems or there are continuously published two sided quotes. Yes big trades happened on phones and Jane Street is still involved in it.
When I think of a private market it means a market where prices and transactions are not published. So our terminology is different.
Fundamentally we disagree on the role of dealers and market makers. In my personal extensive market experience they are foundational and always have been. They carry inventory and manage risk. This has happened literally for 1000s of years and even in early NYSE and in the earlier stock markets in London and Amsterdam they were the key players in the price discovery process.
What you claim, that markets can even function with time restrictions and without two sided quoted dealers/makers in my world is absurd. I have nothing more to say. I don’t believe you have real world extensive market knowledge and if you do, you must he significantly younger than me. Goodnight.
I do agree with you. It's neither sustainable not really desirable, the amount of effort and resources and smart people dedicated to the financial sector.
Than in the past? That seems untrue at face, do you have a source? Firms like JS recruit a lot of people that wouldn't have ever considered a traditional finance institution in any event.
That sounds interesting. Are there easy sources for seeing what companies drive US equity market volume? My google-fu failed me but maybe I am missing something specific in the fintech industry that tracks that kind of thing . . .
> I see it another way. I see people's hard earned money being siphoned by enormous financially-engineered vacuums, never to be seen again. And not just in the US, globally. This won't stop at 30% of the US equity market. It won't stop until the music stops and the last chair breaks. Which may or may not be soon. It will certainly be coming at some point.
Envious bullshit! The reason they are so profitable is that believe it or not they are replacing earlier operators who were less efficient and taking more transactions costs out of the system before. To be anti-Jane Street is the same as being pro-Big Bank of the past, that was taking more money out of the economy doing a worse job!
Unless you know the history of global financial markets and lived it then you don’t understand. For example in the late 80s the CBOT treasury bond bit had over 1000 traders in that pit. They were all making money and quite a few a huge amount. And there was many more people supporting those traders of the floor. That was just a single futures bond contract! With Jane Street we have 2,631 employees doing the equivalent job globally and for less total cost of at least 80,000 employees in late 80s.
The profits per employee are higher obviously but that’s the effect of technology and productivity but the total price being charged to the economy as a whole is much lower. This trend will continue and I would not be surprised in 10 years that a company of 200 people will provide the entire function of those 2600 today, and probably the profits per employee will be $10M per person. But that’s what we want, is a good thing not bad, portraying otherwise is just Envy.
First of all I don't care one iota about Jane Street or how much money Jane Street employees make.
The problem is that this money has to come from somewhere. And while you say it's due to the entire system becoming more efficient, that's not the full story. That $1 billion Indian options play came at the expense of Indian retail investors.
So yes, there is a siphoning of money out of the hands of the retail investors and into the vast pool growing under Jane Street and its employees, much as it has done under others like Citadel.
Who is that good for, except Jane Street?
If you look the per capita income from where it's leaving to where it's going, that's where I see a growing problem.
There may be a sucker born every minute, but that doesn't mean that this is all just about making markets more efficient.
And, of course, none of this would have been possible without the additional "liquidity" provided ... the clearly essential contribution that makes it all justified. "We provide liquidity!". Ok ... ?
There's some efficiency improvements too, but ... eh.
> Which means they're rapidly coming to a position which will easily allow them to game the system (what used to be known as "cornering the market").
These are flows, not ownership.
Also, taking Citadel as an example, a vast portion of these flows are not their own, but rather thirs parties offloading their flows to them, so they have the underlying best execution guarantee to provide.
An other way to look at it is that investors are moving away from traditional brokers to execute their flows, because these HFT firms have become so good. So instead, investors offload their flows to HFTs acting as DMM instead.
Until a few decades ago, the term 'billion' actually meant one million million (1e12) in the UK, rather than the now commonly-accepted meaning of one thousand million (1e9). As a British paper, the FT may simply be trying to avoid the ambiguity.
Pretty common in finance across the board to use consistent units and to not use decimals. So in this case the following sentences mention $10 million, you would not want to say $0.10 billion. It depends on whats being presented of course but in large numbers like these, decimals make it harder to read.
Who knew? But that article indicates America has used the short scale (base ten) forever and the UK has used it since 1974, so let's just assume that FT (an English language paper) is not worried about confusion regarding the meaning of 'billion' and there's a different norm at work here.
> the UK has used it since 1974, so let's just assume that FT (an English language paper) is not worried about confusion
Anyone aged around 60 or older would have been learning these numbers before 1974, and that's a significant overlap with FT's audience. You are dismissing this as if it's Middle English. It's an entirely reasonable explanation, at least one that shouldn't be dismissed.
And there was a transition period where younger people need to know that the term could be ambiguous. It's not like they burned all the maths texts in 1974 and replaced them with newer literature. Older text books were probably in use into the 80s and perhaps the 90s.
From the writing of the era, it's clear this new definition for million was not popular, and many chose to continue using the "British meaning." So it was probably in colloquial use for quite a while, and the transitional term "1 thousand million" became the proper style.
>let's just assume that FT (an English language paper) is not worried about confusion
The FT has a big international audience. As a German reader where a "Billion" is still 10^12 it does sometimes trip me up a little. So I at least find it useful.
That's a decent point, but what I don't get is, when I do a Google Translate from English to German for "billion," I get "Milliarde." Is the concern that German readers, reading the article in translation to German, will be confused? It would seem like the German readers reading the English article would understand.
Not trying to argue any point (I mean honestly...), just trying to understand the German POV here, which is interesting.
You may not be aware that it's a false friend. The German word Billion exists, and it means trillion.
So the German reader will read the English article (in English, not auto-translated), see the word billion, think “oh that looks familiar” and might assume it means the same as the German word Billion.
Machine translation makes quite a few mistakes, so I think if you have some decent knowledge of a language, you might be better off reading the original rather than a machine translation. At least my point of view from a couple of years ago. But it's also possible that machine translation has gotten WAY better in the last couple of years, I'm not sure.
I disagree, as a native speaker of a language where "bilion" means 10^12, it's clear to me that "billion" means 10^9 when used in English text. So I disagree that is ambiguous. But maybe that's wiem that way to make sure foreigners with poor understanding of English don't read it incorrectly, because I guess it gets confusing (even journalists sometimes make a mistake of translating that wrong).
"Billion" meant 10^12 in England until... some time in the 1950s, I think? But 10^9 in the USA.
So there was confusion, even in the English-speaking world. Was. If I understand correctly, England has adopted 10^9, and so now there is no ambiguity.
I remember the first time I got those units out of gnu units on the command line scratching my head wondering why I'd never used them before and why it was using them at the same time.
I wonder why too. Same for weights: why have a ton (1000/kilo kilograms) if you can have a megagram (which is the weight of 1 cubic meter of water at the right conditions)
The only 'commonly' used unit of measure larger than a kilometer is a light year, at least that I can think of. Maybe a Astronomical Unit, but not 'common' I suppose.
I think in terms of things commonly measured on Earth we don't benefit much from the jump to megametres. The diameter of this planet is 12,742 km. Does it help much to say 12.7 megametres? Not really. Off planet the distances between objects are far beyond megametres. AU, parsec, and lightyears make much more sense.
In practice, people tend to use units that match the “natural scale” of the data.
If the data consists of electrical potentials between 0.0000001 and 0.0002 V, it’s way easier to think about it as microvolts, especially if any other is in a complementary scale.
I've had people get angry when I tried to use Mm (mega metre) or ask why using some currencies symbols before the number when all symbols for all other units are used after.
Yeah, quants firms are great at PR and marketing. They give out free merch, sponsor hackathons, and organize in-person events with all expenses paid. I study at Berkeley and so many students here rock their merch, which gave them even more exposure on campus.
Their effort definitely paid off though. Quants like JS, Citadel, or Jump hire some of the brightest students from Berkeley and other top CS schools.
A) usually if you're fresh out of school they filter on your school name because the average MIT cs grad is most likely better than the average cs grad from university of kentucky.
B) if you have work experience, they filter on where you worked because the average google engineer / HFT engineer is probably better than your average engineer who works at missouri national bank.
C) if you've done something great that everyone knows about (like being the author of popular libraries, inventing tools that people use), then you can most likely bypass filters A and B if you can get in touch with a human recruiter (shouldn't be too hard).
For prestigious smaller companies which gets a lot of applicants, there is no easy way to reduce the pool without doing A and B. It is unfair and what college you go to might depend on circumstances beyond your control but if you have high ability regardless of what school you went to, you would eventually do B or C and get into the prestigious company.
If you don't have high ability and will never do either B or C, then they did the right thing filtering out your resume.
In the real world, it doesn't make sense for a company to discriminate against a candidate with higher ability just because they went to the wrong school (unless the company makes money from appearances like law firms, consulting firms or is corrupt and entrenched).
Its mostly done as a way to filter job applications into a smaller set. When Google was the 'hottest' job prospect (many years ago) they needed a way to reduce the set of applicants down to a number where hiring managers could handle the load. Setting criteria such as having an Ivy League degree or a CS degrees with GPA over 3.8 was a logical way to achieve this goal.
That being said, if you went to a community college but also had 10+ years experience at one of their competitors (eg: DE Shaw, 2Sig, Citadel, etc), you'd almost be guaranteed an interview. But once again, thats another very small set of applicants.
To a certain extent, you are correct. However, companies like Jane Street need to filter and doing so based on colleges is the most efficient when other factors are all equal. Top tier colleges strive to base their admittance on performance and strive to be racially and culturally diverse. This gives Jane Street the ability to say they filter on the same criteria.
I'm all ears if you have a better system that is more efficient. I'd also add that I went to a State college and my resume would have been tossed if I applied as a starting engineer too.
I kind of agree, but I do wonder if that’s largely confirmation bias though; they hire the best engineers they can find from an Ivy League, don’t bother even looking at decent state school people, then the Ivy League engineers they hire do well and they assume it must because they went to an Ivy League school.
I know that fancy colleges like to say that they strive to base admittance on performance, and I believe that’s true to an extent, but it certainly seems like they make an exception for students who come from a lot of money. I’ve mentioned this before but think about any politician that you think is un utter moron, and there’s still a reasonably good chance that they went to an Ivy League because they come from a rich family.
And it annoys me that people act like Ivy League schools are the only ones that accept based on performance. I applied to a bunch of state schools as a teenager and I got declined by a bunch of them. We can wax philosophical about why I was declined but I doubt it was personal, just that they probably didn’t think I would perform well based on some metric.
It makes logical sense - if they look over their staff and search for commonalities amongst successful employees, and trends like school or CS degree and GPA stand out, then it's logical to assume that will predict further success and thin the pool. It's a jerk move, sure, but it can be both.
> they needed a way to reduce the set of applicants down to a number where hiring managers could handle the load
The question is what other attributes you "accidentally" filter by if you filter by school prestige. Even if you do bias your pool to individually better candidates on average, you may bias it in a lot of other ways.
If the purpose of the filtering is to reduce the pool to a size where humans with common sense can make sensible calls, then that CC graduate with 10+ years of competitor experience would likely be filtered out before common sense could suggest he might be good anyway.
They're smart enough to know how create filters that don't miss people with competitors experience on their CVs. In fact, they actively seek those people out on LinkedIn and anywhere else they can find them.
HFT jobs are high value / high comp jobs, so Jane Street and their cohorts put a lot of effort into recruiting. This includes their resume intake system, internships with desirable colleges and professional outreach.
they get many applicants for a job. So you have to filter those applications. One way is to recruit from known places where they have already got people from as they know it worked. Typically those universities also filtered on how good you were and so the average quality is higher from those.
Obviously there will be exceptions but not work spending time to find them. Recruitment costs a lot in time and money.
I come from a very small provincial university, but they still reached out to me 2018, so I don't think so. (I bombed their interview and didn't get an offer, though).
In 2016 I was still a dropout and they did an interview with me. I also bombed it.
I have applied about a dozen times since then after getting my degree from WGU and they haven’t gotten back to me; I almost wonder if not putting any college experience on the resume was a blind spot for their filter.
Maybe quite the opposite. Wall Street and Finance is can be very aggressive and learn it for yourself.
I learned math of finance from a professor I'm pretty sure was quanting on the Street at the time.
When I told him one of the constants in our little trading game was off by a factor of 10x, he said prove it. My final talk was: "How to make 2.3 million dollars in 30 days using options."
The real lesson wasn't about pricing options. It was about being ruthless when the time came.
Fair enough; I wasn't applying for a quant position, just a software job. Looking back, I suspect the real reason that they were even considering me was because I had professional Haskell and Scala experience on my resume, and so I looked appealing, particularly if a dropout was learning it for fun.
What I find amusing is that I'm categorically a much better functional programmer now than I was then, with professional F# experience with a lot of Clojure to boot, but they haven't responded back to any of my applications in the last three years.
They might want to shape developers on the job and bet that it's on average cheaper to do with functional-curious people rather than those that have professional experience in ML-languages.
Yeah fair, I definitely have developed pretty strong opinions on the "right" way to do things in functional languages, and those opinions likely do differ somewhat from theirs, at least in some cases.
I think if I want to work at Jane Street now, I either need to finish my PhD, or get a Masters degree from a sexy school to "cleanse" my WGU degree (despite the fact that I don't think I know much less than the average Ivy League graduate, though obviously I'm a biased audience).
One reason for recruiting from 'high end' unis is the kind of social networks those graduates are more likely to belong to. They are also more likely to have access to more candidates that you would like to evaluate and possibly give an offer, compared to 'lower end' unis.
I'm not saying that I think this order of things is jolly good, but from the perspective of this kind of business sector it makes sense. Personally I avoid finance related sectors, a stint at a casino operator to get some experience on the CV was enough for me.
Sort of a difficult question to answer if I'm being honest, because I'm kind of a strange outlier case.
I was a dropout for almost a decade, but managed to find work at big corporations somehow [1], and the entire time I was pretty obsessed with learning CS theory; partly because I liked it and partly because it made interviews easier. By the time I had decided to finish school and enroll in WGU, I already had roughly a bachelors' degree of education in CS anyway. And that's not just a pseudo-intellectual assertion on my end, I finished all my classes in a single term, most classes were completed in a week.
I don't think it's helped my job prospects much; I had already had senior level positions at Apple and Jet.com/Walmart Labs by the time I went back to school, and I suspect that they look better on my resume than a bachelors in CS from WGU.
(If you're curious, the reason I went back at all was so I would be qualified for a PhD program, which as far as I can tell universally requires at least a bachelors, and usually a masters, so I just wanted to check off a box. I'm not 100% sure why I wanted a PhD; I think my brain had fetishized professorships and CS research)
So it's tough to answer directly. I think for someone starting out today a degree from WGU is better than no degree, and I think the education they gave was "just fine". If you're ok with not working in Wall Street, it's enough to get you to the interview phase. If your goal is to work in Wall Street or to become a lawyer, it's probably better holding off until you can get into a "brand name" school.
I'm happy enough in my current position and they don't really care where I went to school, but I do believe that they had a firm requirement for a bachelors (I don't bother checking), and I like my current gig so it's probably worth it.
[1] I dropped out in 2012, which turned out to be just about the best time to drop out. It seems like everyone on earth suddenly had a smartphone and there was a shortage of engineers as a result.
> net trading revenues of $4.4bn in the first quarter
That's a lot of money for someone who is essentially a middle-man. What a grift, about 13 dollars for each average American lost out to them a quarter.
First, their trading's global, so "for each average American" isn't the right denominator, nor is it obvious to divide things on a per capita basis rather than a wealth-weighted one.
Second, it's not at all obvious that market-making is a zero-sum game, where profits to the market maker are "lost out" to someone else. Market-making profits from the bid/ask spread, but a new market maker tends to reduce that spread. Ordinary people tend to invest as price-takers, and thus they benefit from a reduced bid/ask spread.
> The only founder still at the firm is Rob Granieri, but insiders say it is functionally run by roughly 30-40 senior executives in what kinda resembles an incredibly profitable anarchist commune. Or as Jane Street itself puts it:
> We operate as a functionally-organized structure consisting of various management and risk committees. Each committee is responsible for directing the overall strategy of the firm and for emphasizing the importance of risk management to our operations. Each of our trading desks and business units is run by equity unit holders who take an active role in managing our day-to-day operations [...]. Our management structure allows for effective cross-departmental communication [...].
Yes, that org structure full of hierarchical business units with distinct responsibilities and committees and subcommittees and overseers and risk management totally screams "anarchy"...
There is a CEO on top who has the power to fire anyone. There are department heads and middle managers. There is an org hierarchy. There are performance targets and reviews. Nothing about it is "voluntary cooperation". This is how every large company runs.
Yes, jobs are voluntary. The vast majority of people could choose not to have a job and not to entertain certain luxuries in life like having a roof over one's head or food on the table. Some even (voluntarily!) choose not to have a roof over their head because they don't like the idea of having a job.
Food is not a luxury. Defining things necessary for continued existence as luxuries is ridiculously reductive and is why defining jobs as “voluntary” in a world where access to those things is gated by having a job for most people is disingenuous.
Taking job A over job B could be described as voluntary but saying that you could just be homeless and scrounge food, especially in locations where the local government makes this illegal, so working is voluntary is just wrong
You are of course right that food is not a luxury, that was supposed to be slightly tongue in cheek.
One can still choose to disobey the local government and be homeless. I'm not saying it's an easy choice, nor am I saying it's easy to be homeless. I'm just saying it's a choice.
You’re right, I don’t like your comment. It always amazes me how heartless you libertarian types can be.
Food and a roof are basics, not a luxury. The fact that a significant number of people in this world don’t have those things speaks more to our failure to provide.
I'm actually not a libertarian. I guess I'm your standard European socialist: I'm all good taxing (us) rich and providing for the poor.
It still is a choice whether one chooses to work, as evidenced by those who chose not to.
Edit: the "luxuries" was slightly tongue in cheek and perhaps didn't land well. Anyway, you're free to move to the wilderness, hunt/grow your own food, build your own shelter, and do without the socio-economic system altogether.
We aren't entitled to a roof over head and food etc, that's all I'm saying. We should be grateful when we happen to luck into circumstances (such as a job) that allow us to have roof/food. It's not something everyone has.
Saying we were involuntarily forced into having a job/roof/food feels very strange when compared with the people who weren't forced to have either of these three things.
We are entitled to a roof and food and it’s a tragedy that some people don’t have those things.
You’re not being empathetic by saying the opposite, you’re giving assholes with power an excuse to take those things away or make it harder to provide them to people.
I don’t understand why you’d say we’re being forced to have food and shelter, that makes no sense. We need food and shelter, which is why employment isn’t voluntary.
> it’s a tragedy that some people don’t have those things.
Agreed.
> I don’t understand why you’d say we’re being forced to have food and shelter, that makes no sense.
I was trying to take your position to the absurd extreme. You said employment was not voluntary, I took that to mean that you're forced to have food and shelter.
> We need food and shelter, which is why employment isn’t voluntary.
I don't know how else to explain this to you. As an objective fact, there are people who choose not to work. They do without. Some of them even manage to lead fulfilling lives. How can you pretend it's not a choice?
Seriously? You're really doubling down on this argument that technically there are people who choose not to work?
What a stupid, disingenuous fucking argument. You realize for the vast majority of people, food and shelter are top priority right? This is the foundation of Maslow's Hierarchy of Needs.
> What does that mean even?
Since I apparently need to explain the basics to you, entitled means "believing oneself to be inherently deserving". So yes, I think every human is entitled to food and shelter.
If socialism was a club, I'd take away your membership. Jesus christ.
no - fifty percent of managers control their employees through fear.. transparency and the magnitude of compensation and awards are different.. means of advancement are different.. overall "culture" is different..
but the other part of the definition is also important: "without political institutions or hierarchical government; anarchism". So the typical corporation is not exactly an anarchy according to the definition.
Yeah, that doesn't exist. Any gathering of people are going to have political institutions whether they are codified or not. Similarly, there's going to be someone or some group of people who the others look to for direction. And whether or not it is codified, those people will form a layer of hierarchy for your "non" government.
Because people seem to think it's "politics" and "government" that are the problem. It's not. It's people. It's always been people. It will always be people. People are the problem. Failure to acknowledge that people can and will be shitty is going to doom your system before it starts.
Was it an intentional rhetorical device to brush past the important distinction?
Yes, there will always be more powerful cliques. This is Jo Freeman's The Tyranny of Structurelessness. But the point is specifically whether those cliques and hierarchies are encoded into formal committees or whether they remain fluid based on the desires of the group at any given moment.
If we avoid codifying the hierarchies, we get better distribution of information and resources, people are held responsible to those who delegated tasks to them, and responsibility can be rotated more freely.
What really happens is that important information and resources get hoarded because that lets you control things. The only people "held responsible" are those you can convince others to punish arbitrarily. You'll create an entire shadow government the majority of the group has no knowledge of.
And showing how it worked within a group of 4 to 5 people is kind of useless. Lots of things work on small scales. The minute you scale to the point where you can't keep track of everyone, you're going to need an actual system in place to deal with everyone.
"without political institutions or hierarchical government;"
Think when trying to translate a society to a corporation, then each of the terms must also be translated.
For a 'society' there is a government. And politics is dealing with the government policies, how we come up with rules.
But, if you want to translate to a corporation, you can't just say it doesn't have 'government and politics' because the corporation isn't dealing with the larger society. You need to also scale down the terms,
The CEO and the Hierarchy of bosses, are the 'Government' and 'political institutions' are the departments like HR, Marketing, and between them there are 'politics'.
There is no real 'anarchy' like individuals having freedom to 'just work on what they feel like'.
Honestly 40-50 years ago all of the big investment banks were partnerships and operated in much the same way. Partners owned equity and by today's standards they were relatively risk averse because it was their money to lose, with no stock price to pump up.
SWE will probably make between 250-500k. Quants who can come up with profitable trading strategies can make a lot more. Managers of trading teams can make over 1MM and sometime a lot over 1MM depending on how profitable their teams perform.
SWE who have deep subject matter experience are super valuable to these firms. Folks who understand how to write low latency code, FPGA work and other stuff like that. But the real money is in figuring how "how and what" to trade. Once that's done, the SWEs can bang out the code.
I guess, I live in the wrong country and wrong profession if I want to make that much of money. This is an stupidly gigantic amount of money. I know that I will not make this much gross any year of my life, actually this is around 7-8 years of my gross annual salary.. I know US vs UE etc. Still this is crazy. Not sure how UE salary in the same field/category compares.
That is quite good and comparable to IB(investment banker) salaries. Meaning a few years ago $200k by 22, and incrementing $100k a year with $1M by age 30, and $10M by age 40 or so. The starting salaries out of college are now about $350k. My question is I wonder if the upward salary trajectory is similar to that IB track, this is assuming the employee has a somewhat upward career trajectory; does Jane street cap out folks at a certain level?
From my experience, the best way to get a pay increase is to code software for things closer to the trading system. Write code that makes a trading app faster and increases PnL, you'll make more money via bonuses. If you're writing back office code doing data loading, trade reconciliation or other "housekeeping" stuff, you'll not see the same comp.
Because of this, getting a SWE role that is assigned to a trading team is highly desired.
This is the average, it'd be interesting to know what's the median for a SWE is. Also, some high-level SWE do make 900K at Google and others. Maybe for a similar set of skills, JS doesn't pay (much) more than Meta or Google?
FWIW I'm getting contacted regularly by recruiters working with JS in London. When enquired about salary, from their experience, people with my experience can get about £350k+. It's higher than an L6 SWE at Google/Meta in London, but not outrageously so.
The tech billionaires are far richer than quant finance billionaires.
And I would bet that tech SWE has a far higher probability of launching you into $10M+ range than quant finance.
I don’t know that a few more single digit billionaires (if that is even true) puts quant finance ahead of tech SWE in terms of potential rewards for the “ambitious”.
Getting into quant finance is not very common. Getting into tech SWE - even FAANG - is much more common. There are way more people working as SWE in tech than as quants.
I've rarely met anyone who is a quant and doesn't have a PhD. That already narrows down the field quite a bit.
> And I would bet that tech SWE has a far higher probability of launching you into $10M+ range than quant finance
$1B net worth? Google has more SWEs than the entire quant finance industry globally. Yet Google could only produce what, 4 billionaires?
$10M TC at Google? That’s at most 500 VPs out of 150,000 employees. That’s 0.3%. Not good odds. More than 7 people (0.3% x 2500) at Jane Street are making $10M+…
Same logic applies to $1M TC. Tech has okay chances, but quant is simply multiples better. Only if you got lucky at Tesla or NVIDIA. Otherwise your L5-E5 comp maxes at 600-800k including RSU appreciation.
Then for junior/new grad, quant firms win again. 300-500k quant SWE offers vs 200-300k in tech.
Hell, even for summer internships, quant trading firms pay SWE interns $20-25k/month. Also on levels.fyi
"Average" is a meaningless number here considering the equity partners are getting ~100% of the profits. It is very different from the shareholder model of large tech companies, so a direct comparison is pointless.
Well, sometimes they only do stuff that should be illegal.
Superfast arbitrage, which is Jane Street's main thing as far as I understand, doesn't really produce anything of value to humanity. Yeah, I guess the contributions to OCaml are worth something, but maybe not 10 billion?
Jane Street is one of the slower market making firms and generates a significant share of revenue from being everywhere on everything (MUCH easier said than done). You want to trade some Canadian lumber ETF? Jane Street will be there. Some bond product with constituents that trade across 3 different trading sessions? Jane Street's active in that market. None of that is to say they don't have any presence in major products or don't have real short term alphas/edges of course.
They've never been at the forefront of latency games, like Jane Street isn't the firm sweeping equity markets since they have the fastest radio network out of CME (dubious value) or getting their quotes first-in-line every time.
They're not that good at arb. Real arb doesn't even really exist anymore. Even when it does, it's not JS that closes it. They market make, which is different.
well, running the financial system is overpaid work but it's the high-order bit in the current form of capitalism.
it's the operating system, some people might think it's a tax on everything, some people might think it provides the foundation to produce everything of value.
similarly, Google is the high-order-bit in the information or content economy, the creators get underpaid, the people who do ad optimization get overpaid.
no financial markets -> no IPOs -> no VC -> no Google and Silicon Valley as we know it.
the closer you are to the money and the transactions, and the high-order bit, the better the opportunities to redirect and organize to your advantage, and the more you get paid.
Well, Tether only needs to hold treasuries and collect quarterly interest payments. They don't need much staff, at least if they haven't looted the treasuries SBF style.
[0] https://www.youtube.com/user/standupmaths [1] https://signalsandthreads.com/ [2] https://www.janestreet.com/puzzles/current-puzzle/