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Comment by paxys | Hacker News Reader

They do pay extremely well, but are also very selective. The kind of talent they are looking for can earn similar salaries at large tech companies like Google ($400K-500K TC is pretty common at staff+ levels).

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They do a lot of hiring out of school though, so they are selective but if you make the cut you'd definitely be earning more at the start of your career. Plus if you perform well you can make well over 500K TC by the time you would have been promoted to staff at FAANG, because of bonuses.

a high performer at citadel or JS can make 1m in 5 years. i don't know many people at google make that much.

Citadel has 2600~ people, Jane street 2000~ while google has 150,000~.

Not many at Google receive that much in their offer letter, but with the stock appreciation over the last decade and stacked refresher grants, I'd be willing to wager there were thousands making >$1M as of Nov 2021 (many fewer since the stock has fallen though).

If Google is offering an initial total cash equivalents of $300k (say $140k salary, $480k/4 stock, 15% annual bonus on each), that's roughly the same deal as somebody else getting a base salary of $300k. The fact that a particular investment decision (GOOG) can accidentally push the individual's yearly increase in net worth past $1M isn't a good way to judge what Google is actually offering:

Anyone with a base salary of $300k can obtain a similar payoff structure by taking out a $550k loan to invest in GOOG, and taking out additional smaller loans at each stock refresh. The tax benefits from capital gains/losses and time-value-of-money benefits from getting your bonus sooner should handily outweigh the cost of servicing the loan, but even in a worst-case scenario where you pay interest for no benefit, that example Google offer would be a lot more comparable to a $315k-$330k salary, not a $1M+ salary.

Well first of all, my point was that over the last decade Google has likely paid more individuals 7 figures than JS or Citadel has. Obviously this is subject to the risk of stock performance, and if your point is that cash is better than stock, I agree with you 100% (especially today when tech stocks are still arguably over-valued).

On the other hand, this, my friend, is absolute nonsense:

> Anyone with a base salary of $300k can obtain a similar payoff structure by taking out a $550k loan to invest in GOOG, and taking out additional smaller loans at each stock refresh.

This is only equivalent if you ignore downside risk, which in the case of an average young professional with no significant assets could ruin you. The RSUs give you significant upside over 4 years with absolutely zero risk.

Also you said this:

> The fact that a particular investment decision (GOOG) can accidentally push the individual's yearly increase in net worth past $1M

This makes me think you might not understand how RSUs work. They are W-2 income at the valuation at the time of vest. What we're talking about is 7 figure annual income. Not investment gains over time.

> Well first of all, my point was that over the last decade Google has likely paid more individuals 7 figures than JS or Citadel has

No, they granted stock initially and set aside those shares for the employee. The market paid the employees the gain between the initial grant price and the sell.

> This is only equivalent if you ignore downside risk, which in the case of an average young professional with no significant assets could ruin you. The RSUs give you significant upside over 4 years with absolutely zero risk.

You didn’t understand the example. The person taking the loan gets $300k/year cash and the Googler gets $180k/year. Setting aside $120k/year for the loan makes the risk the same so you won’t be “ruined”. Google failing in either scenario means they each have $180k in annual cash leftover.

No, I understood the example perfectly, it's you who doesn't seem to understand the downside risk. You would need a $480k loan to buy the four years of stock because you are buying it before you've done the work to earn the $480k. A loan is something you have to pay back, so if the stock tanks you have to make up the difference. In order to be equivalent, the terms of the loan would have to be pegged to the stock price on the downside (so if stock price was cut in half you would only owe $240k), but not on the upside (so you get all the gains). No one in the world will give you a loan with these kinds of terms.

That's only relevant if you're leaving Google before the 4yr period is over and also if you don't know roughly what subset you'll stay for (where you'd just take a smaller loan to represent the first N years of vesting).

Also, the cost of options to completely mitigate the incremental risk beyond that of an ordinary Googler is small (cumulatively a little less than the cumulative cost of interest for the loan). It's a small point that matters if you go out to actually implement the idea, but in the context of comparing Google (X total cash equivalents in their normal structure) to some other company (X salary), the investment opportunities in GOOG are sufficiently comparable that it might be reasonable to upweight Google's TC to 1.1X or so (or downweight it because you're restricted to GOOG itself and don't have more options), but I still think it's unreasonable to call it anything like 3.5X. Those aren't million dollar contracts; they're $X contracts paired with a forced investment that anyone else could choose to make without a huge downside (ignoring the much rarer actual $X contracts).

   Anyone with a base salary of $300k can obtain a similar payoff structure by taking out a $550k loan to invest in GOOG

I'm curious how someone could obtain such a large, unsecured loan of $550k? Even secured against a home with a mortgage cash-out Refi, that's a large sum. You'd have to have built up a lot of equity in your home value.

GoKapital advertises up to $500k personal loans on an unsecured basis, with a higher chance of success if you're partially secured (admittedly, putting $50k down instead of investing it elsewhere is an additional cost to servicing the loan, but even 6-12 months into a tech career you should've had $50k saved up, so that shouldn't be a barrier to entry at least).

Also, ordinary banks might not advertise outrageous personal loans, but when your base salary starts at $300k and has a history of increasing (i.e., you don't _need_ the money and just want it to power a particular total comp over time profile, especially when you keep at least 50% of your total comp in cash rather than leveraged investments), most mainstream banks are more than happy to furnish somebody to personally service your account and make a loan like that happen.

Separately, if you live in parts of the country (US-specific) where salaries like that are common, you probably have a down payment of $200k+ if you have a mortgage and would have little problem grabbing a partially secured loan against your current equity.

Base salary can be re-invested (granted, their hands are somewhat tied when it comes to personal fund management due to the nature of their job)

Whatever point you're making flew over my head. Would you mind elaborating?

>but are also very selective

Yes, we've heard that yadda yadda, Caroline Ellison, SBF, etc...

One difference is Google, etc are all doing massive layoffs and i doubt JS, Citadel, etc will do this.

Where is Google doing layoffs? The latest news I have is that people are very worried about layoffs, but so far they've only started putting people on rebranded PIPs.

The other FAANGs are definitely laying people off, though. I personally think the recession is a self-fulfilling prophecy, but regardless of my take on the fundamentals, it is certainly fulfilling itself and everyone in tech should be pretty worried right now. This is not the year when you're going to increase your salary by jumping to a cool startup as employee #3.

> This is not the year when you're going to increase your salary by jumping to a cool startup as employee #3.

Agreed, you won't get a big salary out of the gate because unproven startups paying huge salaries are dropping like flies as the easy capital dries up. On the other hand, the likelihood of getting in on the ground floor of the next FAANG is increasing as staffing costs decrease and behavioral changes increase during a recession. EV obviously still higher at established top-of-market companies, but when has that ever not been the case?

you are correct, it has not happened yet, but you willing to bet it wont in the next 6 months?

https://www.seattletimes.com/business/google-employees-brace...

https://www.cnbc.com/2022/12/22/google-tells-employees-highe...

Note though that Citadel is reputed to have a turnover rate of 100% per year. Their layoffs take care of themselves.

I spent 9 years there, left a decade ago. Turnover is high, but this is a gross exaggeration. It is stressful, and not everyone can hack it. I was there during and after the '05 layoff when roughly 2/3s of IT was cut. That's still the worst I've heard of from what I hear from friends that are still there.

Ken G definitely does the "Good to Great" getting the right people on the bus thing, which typically means the bottom 5-10% are cut, but even that was slowing before I left.

Thanks for correcting me. Did you get a sense of whether engineers had a higher or lower turnover rate than traders?

The turnover for engineers tends to be lower than for traders at citadel and at a lot of quant firms.

Additionally, the turnover for citadel is not evenly distributed across teams. Certain teams and orgs have a lot more turnover than others. Some teams are made up of people with <=2 YOE at company while others are made up of people with >=15 YOE at company.

This!

My personal background is a "well known hedge fund" and the turnover there was rather high.

Many quit because it wasn't "a good fit".

Smaller companies do layoffs as well. They just aren't as highly publicized as those at tech giants. Severance packages are usually worse/nonexistent as well.

HFT companies also have much higher performance bars and rates of overwork/burnout. I'm willing to bet that people are leaving Jane Street, Citadel etc. (whether voluntarily or not) at much higher rates than large tech companies like Google.

Jane Street does much better at retention than Citadel and probably many other quant firms. The performance bar is definitely higher than the average at Google but it's not like there is no WLB either.

Because they are more selective about fit to begin with I wouldn't be surprised if JS has better yearly retention than most FAANGs. People seem to hop between different big tech cos quite a bit (pre hiring freezes anyway).

I do not see a way to compare big tech companies and Jane Street or Citadel, seeing as how the big tech companies employ many tens of thousands of very qualified people and Jane Street and Citadel are a couple thousand max.

Yeah there are a lot of differences, I wouldn't normally bring up the comparison. My point was just that the turnover is not as bad as the other commenter was implying.

True of Citadel, but Jane Street is supposed to have a solid wlb, and because of the high pay and the few companies willing to pay at that level, people generally stick around there. These kind of finance companies also do better in volatility so they're definitely not laying off right now.

I would assume JS has industry standard levels of notice, non-compete and deferred comp - which will sure help keep people around

Jane Street definitely does not have a non-compete. Citadel does though.

Deferred compensation is probably not relevant to any of the major quant firms, payment is almost entirely cash. If you're high enough up to start receiving stake in a prop firm directly as part of your bonus you are an order of magnitude above the TC cited by the original comment.

Of course, the amount of comp you can get is a big reason people stick around. For that level of earning potential JS is really good on the WLB front. But it's not going to be as good as big tech is (or at least has been), since QT/QR just has different requirements as a field.

When I worked at a small prop shop, the cutoff was $400k TC, after which 50% would go into the fund for N years.

Currently I work at a large bank. My comp is all cash, but many of my colleagues get deferred stock compensation. Not sure what exactly the limit is but it's definitely much less than, say, $1m.

I get the impression that in some jurisdictions, deferred equity compensation kicks in earlier than one would otherwise expect, in order to hit some employment law cut-outs for "highly compensated executives".

I worked over 10 years overseas at a Fortune 500 financial firm where my contract specified that my garden leave period jumped up if I ever accepted stock compensation. I got the feeling that was related to some legal requirements for shedding protections for "highly compensated executives". The garden leave worked out well, as I left right at the end of my paternity leave, so I effectively had almost half a year of paternity leave.

I didn't bother checking if I was getting the maximum legally allowed garden leave period in my jurisdiction, as the contract seemed fair. In any case, in some jurisdictions, I think some deferred equity compensation kicks in earlier than one might expect, in order to legally make more employees highly compensated executives.

I've always lived well within my means at my base salary, but even if I hadn't a good head hunter can often negotiate a signing bonus to partially backfill the lost expected TC , so you're effectively not really going down to your base salary during garden leave.

Might depend on the firm (or times) then, the starting trader TC is already pushing 600K at HRT, JS, etc. and many don't let you invest year 1 even if you wanted to. I'd be shocked if any of the major names made you take comp as a stake in the fund pre-1m today.

Large banks are for sure a different story, though I've heard of other large banks buying people out that they wanted to hire by offering the equivalent package in their stock of what the guy would've made in the other company's stock.

> Deferred compensation is probably not relevant to any of the major quant firms, payment is almost entirely cash.

Deferred != stock.

> If you're high enough up to start receiving stake in a prop firm directly as part of your bonus you are an order of magnitude above the TC cited by the original comment.

Fair

Yes you could theoretically delay cash comp over a period of 3+ years like tech companies do with stock, but I've never heard of that happening.

I suppose by the technical definition the year end bonus cash is deferred comp, but I don't think 1 year is especially hard to plan around. People might stick out an extra few months because of it but it's not locking anyone in for years at a time. Plus even if you subtracted an entire year from the JS retention rates they are still quite good.

Regardless, the amounts cited by the original comment are only the base which isn't deferred by more than 2 weeks at a time, whatever your bonus potential is.

> I've never heard of that happening.

I have heard of it enough that I assume it is industry standard (much like the non compete).

Admittedly I am more familiar with the quant side than pure dev

Interesting, I only have close friends at a handful of places so perhaps those are exceptions. Could be a dev vs trader thing too, I have heard the trader bonuses can get really nuts so maybe a deferred structure starts to make more sense at a point.

When they start letting you put your own cash in, you need cash to start with.

Really? Isn't FinTech getting hit harder than just about any other industry right now?

First, i dont consider Citadel, JS, etc "fintech" because they are not in the same line of work.

" Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. "

This is NOT what people like CIT, JS, etc. do.

So maybe FinTech is being hit very hard, but from what i hear Cit, JS are doing just fine (no real layoffs).

I agree that Two Sigma, Jane Street, Renaissance, etc. are NOT Fintech. Fintech is a really large umbrella which seems to includes people like Paypal or Bloomberg and things like robotraders or companies that deal with some financial product. Hedge Funds / HFT / Algo traders can be really sophisticated with their technology, but I wouldn't call them "Fintech".

Haha yea FinTech would be a pretty derogotory term to call a HFT firm

HFT makes money off of volatility. The more the world burns the more money they make by keeping markets liquid.

That’s true, in much the sense that doctors make money off people being sick. In times of high volatility, it’s HFTs that provide liquidity and keep spreads narrower than they’d otherwise be. It is extremely illegal to purposefully make markets more volatile; good trading firms are not going to do that.

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