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Why founding a three-person startup with zero revenue is better than working for Goldman Sachs.

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Why founding a three-person startup with zero revenue is beer than working for Goldman

The road to serfdom

I joined Goldman Sachs in 2005, after five flailing years in a physics Ph.D. program at Berkeley.

The average salary at Goldman Sachs in 2005 was $521,000, and that’s counting each and every trader,
salesperson, investment banker, secretary, mail boy, shoe shine, and window cleaner on the payroll. In 2006,
it was more like $633,000.

Donʹt read this book. It will ruin your life.

In the summer of 2005, I took one look at my offer and the Goldman
Sachs logo above it, another look at my sordid grad student pad, and I got
on a plane to New York within the week. I packed my copy of Liar’s Poker for

My job on arrival? I was a pricing quant on the Goldman Sachs corporate

credit trading desk. We traded credit-default swaps, both distressed and
investment-grade credit, and in the bizarre trading experiment assigned to
me, the equity part of the corporate capital structure as well.

There were other characters in this drama. The sales guys were complete
tools, with a total IQ, summing over all of them, still safely in the double
digits. The traders were crafty and quick-wi.ed, but technically
unsophisticated and with the a.ention span of an ADHD kid hopped up on
meth and Jolly Ranchers. And the quants (strategists in Goldman speak)?
Mostly failed scientists (like me) who had sold out to the man and suddenly found themselves, after making
it through two years of graduate quantum mechanics, with a bat-wielding gorilla peering over their shoulder
(that would be the trader) asking them where their risk report was.

Everything is quantifiable
Wall Street is inward-looking and all-consuming. There exists nothing beyond the money game, and nothing
that can’t be quantified into dollars and cents.

To cite a particularly grotesque example, once a year, one of

the partners would buy a pallet of White Castle burgers and
first-year analysts and associates would have a burger-
eating competition (with some nominal amount donated to
charity). All trading on the Goldman Sachs trading floor
would stop as every man on the floor would gather ’round
to watch the plebes stuff themselves.

Trading turned from interest-rate swaps (minimal notional

size: $50MM) to the over/under on the burger count for a
particular analyst. Occasionally, one poor schmuck would
puke, and the partner would rush to catch it with a plastic
trash bin.
Why founding a three-person startup with zero revenue is better than working for Goldman Sachs. | AdGrok

The odds-on favorite was a young analyst, who’d employ the Kobayashi[1] technique to get the tiny
greasepucks down. After sweeping the field with 26 burgers eaten, he’d leave the styrofoam cup containing a
congealed scum of burger grease and bun and pa.y bits floating on top, as mute testimony of his victory. The
trading floor smelled like the inside of a deep fryer for the whole day.

Death, Wall Street-style

Wall Street, like Scientology, has an all-inclusive and
claustrophobic value system all its own. Particularly at
Goldman Sachs, which prided itself as a breed apart from
other firms, this provincialism went even further. Former
employees who had left Goldman were rarely mentioned.
The unanimous phrase for it was ‘no longer with the firm,’
said in the same tone used to describe the passing of a
family member.

This tendency reached the height of comedy inside the

strategies division, where some of the quants published
academic papers on the more theoretical aspects of their
work. If an author quit Goldman though, his name would be removed from the official version of the
publication. It got to the point that some papers had no authors, and had apparently wri.en themselves. So it
goes. No longer with the firm.

Line up and take a number

I envy the religious. Their inner lives are so blessed. If you’re Christian, do
as the Gospel says, live a Christ-like life, and salvation is yours. If you’re
Orthodox, wear all black and a Borsalino, check off your share of the 613
mivot, and you can await the Messiah with an untroubled heart. No
gnawing sense of existential dread when staring at a Godless, star-filled
night sky.

Wall Street is even simpler than religion. Your entire worth as a human is
defined by one number: the compensation number your boss tells you at
the end of the year. See, pay on Wall Street works as follows: your base
salary is actually quite modest, but your ‘bonus’ is where the real money
is. That bonus is completely discretionary, and can vary anywhere from
zero to a manifold multiple of your base salary.

So, come mid-December, everyone on the desk lines up outside the

partner’s office, like the communion line at Christmas Mass, and awaits
their li.le crumb off the big Wall Street table. An entire year’s worth of blood, sweat, and tears comes down to
that one moment. And the entire New York economy marches to the beat of that bonus drum.

Without that number though, your privileged place in the New York hierarchy goes away. Gone is the house
in the East Hamptons. Gone is the $2mm duplex on the Upper West Side. Gone is your kid’s $25K/year

And that’s why Wall Street has that roach motel property: people check in, but rarely check out. By the time
you’ve been through a couple of bonus cycles and seen that wad of cash hit your bank account in
mid-January, you can’t imagine a life without it. And that’s exactly how the senior management at the Wall
Why founding a three-person startup with zero revenue is better than working for Goldman Sachs. | AdGrok

Street banks like it.

If Wall Street investment bankers were dogs, they would flaunt their expensive collars and leashes as marks
of status, not realizing their true purpose.

Jose Cuervo, meet Smith and Wesson

Giving sophisticated models and fast computers to traders is like giving handguns and tequila to teenage
boys. Only complete mayhem can result (and as we saw recently, complete mayhem did result) . The quants
were there to make sure the guns were loaded, but also to make sure the traders didn’t shoot themselves in
the foot.

Not that we were terribly appreciated. In fact, we were basically the trader’s li.le bitches, and any quant
who’s honest with himself realizes that. In time, we quants developed knee callouses from genuflecting to
service the traders, on whose profits our livelihoods depended.

The only time we shone as stars was when some particularly hairy deal came up, and a befuddled trader
came by, dropping off some thick bond indenture document, and asking for help.

Peering into these deals was kind of like the zoomed-in penetration shot in a cheesy porn video: you could
barely tell which end was up, which part was which, or, more importantly, who exactly was screwing whom.
The quant aspect didn’t really at the end, as one lacrosse-playing Penn graduate would agree on price
via phone with another lacrosse-playing Cornell grad, and life would resume its speedy course to another

The sad truth is: quants were the eunuchs at the orgy. We were the ever-present British guy in every
Hollywood WWII film: there to add a touch of class and exotic sophistication, but not really much to
the plot (and maybe even conveniently take some bad guy’s bullet).

Wall Street on a bad day.

But things weren’t all bad! At its best, when the markets
presented an apocalyptic Boschian landscape of damned
souls torn asunder by hellish tortures, every Goldman
grunt, sargeant, or general would close ranks and form a
Greek phalanx of greed. Unlike almost every other bank on
the street, Goldman could actually calculate its risk across
desks and asset classes, out to five decimals. The partners,
who had most of their net worth wrapped up in Goldman
stock, had tense meetings and came up with a plan to save
the foundering ship. Favors were called in. Clients
squeezed. Risks very quickly hedged and positions
unloaded. Despite the mayhem (and all the promises of
drama in Liar’s Poker) I rarely saw anyone lose their cool for longer than two seconds. We bled, but others
died, and you felt fortunate to have a front-row seat on the biggest financial show in a generation.

Beer to be first in a village than second in Rome.

Worldʹs largest bookie

Once upon a time, I picked up my early edition of the Wall Street

Journal from a liveried doorman and knew that whatever financial
Why founding a three-person startup with zero revenue is better than working for Goldman Sachs. | AdGrok

conflagration was on the front page would be the mess awaiting me at

work. I would ignore sub-million-dollar errors to our end-of-day profit-
and-loss reports as mere ‘noise,’ beneath my consideration. My
colleagues and I would grow hoarse to thundering toasts of ‘To
bankruptcy, gentlemen, to bankruptcy…” at our Friday post-work
happy hours, all on the corporate AMEX.

Now I log into our online bank account and nervously contemplate our
balance which, like the heart monitor on a terminally-ill cardiac patient,
just barely beeps above zero and is always decreasing. I sign up for
trials of online services and make lengthy mental tradeoffs between the
$30 and $50 per month plans. We work out of a cramped one-bedroom
apartment, and have to time bathroom visits not to coincide. Some days, it looks like we’re going bust within
the week. Some days, it looks we’re going to be the next Google.

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What’s work like now? Writing code. Worrying about

everything from our credit card billing to the pile of dirty
dishes in the sink that will give us all diptheria some day.
Writing linkbait blog posts to get us free PR (like the one
you’re reading now). Schmoozing with investors, and
playing the junior high school popularity contest that is
startup funding. Keeping jealous tabs on other startups to
see how they’re doing compared to us. Trying to put myself
in the mind of our users to make something they’d want.
Oh, and launching…finally, good God…launching[2].

You see, starting a product from an empty text buffer is very different from keeping a well-oiled money-
machine running. I’ve had apocalyptic fights with the other founders that almost ended in fisticuffs. I’m
watching my four-month-old daughter grow up via Skype. These jeans I’m wearing will likely fuse with my
skin at some point if I don’t take them off. I haven’t seen a paycheck or a loving woman in much too long.

You know what I regret most though, going from Goldman to this?

Not having made the switch earlier.

The Goldman meat grinder doesn’t really need me. It doesn’t really need you either, gentle reader. That
feel-good saying that made the rounds on a couple months ago is actually totally right: go out and write
your own story, or you’ll just be a character in someone else’s.


1. ^ Kobayashi (
2. ^ launching (

Excerpted from Why founding a three-person startup with zero revenue is be$er than working for Goldma n Sachs. | AdGrok


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