It's vastly easier to become a millionaire in finance than in tech. (2024)

I've worked in banking (algo pricing for an eFX trading desk), built a startup and worked for a VC.

From the financial perspective of a developer if you want to bank a couple of million dollars over 10-15 years then you should go work for a bank. If you want to bank ten million dollars you should start a startup, but it comes with a higher risk.

If you're a good developer, with reasonable people skills and a willingness to learn the business side, then becoming a millionaire in banking is pretty straightforward with a decent saving strategy. It's just a matter of time.

The risk level is pretty low, if you work for a hedge fund the risk is higher but you can earn more money faster and if the fund fails you can get a job at a bank pretty easily. The banking industry has a problem with hiring good devs just like everyone else does.

The financial reason for starting a startup is that you have the potential to make lots more money more quickly. But that also comes at a higher risk.

Finance is actually more meritocratic than software, these days. That may change. Right now, the douche factor is much higher in software startups that that clouds the game. Of course, many of those douches came from (cough failed out of) finance and management consulting.

Traders who top out at $500,000 per year are considered failures. Quants and programmers often get to (and, sometimes, past) that level, but more slowly (maybe 35-45 on average; obviously, there are outliers who get there faster).

For a contrast, the mediocre engineer gets such a small amount of equity that it's less than a finance bonus at liquidity. Then there's dilution and cliffing. Sometimes engineers (usually, ones who joined early and were later judged to have "too much" equity) are pressured into non-exercise of options on reputation threats (i.e. "you're fired, but if you don't exercise your options on that 2%, I won't have to give you a bad reference.")

Finance is harder to get into, but once you're in, you have a certain status that Silicon Valley just doesn't give to engineers except for a couple hundred with international reputations.

There's also much better career planning in finance. Don't make any obvious wrong moves and you will move forward. It might not happen as fast as you'd like, and you probably won't get to the $50M net worth level, but you can make a decent life for yourself and you won't be tossed out like yesterday's garbage at age 40.

Finance does have a lot of job volatility. The business is cyclical and layoffs happen. That said, so do startups. Finance compensates you for this risk by (a) compensating you well, and (b) being professional about it when layoffs happen, so your reputation is intact. The slimy tech companies, on the other hand, don't compensate your risk except with platitudes about "changing the world" and, when times are bad for them, hide layoffs with stack ranking and dishonest PIPs.

I will probably try to go back into finance in a year or so, honestly. (I'm already putting out feelers.) Tech is a nice idea, but the software industry, as it actually is with the "agile" micromanagement and the stupid startups and the general incompetence of its upper management (I won't call them "leadership" because they're not) is basically a waste of time for talent. At banks, I know that many of the MDs are at or above my talent level, and that almost all of them worked really hard to get there. Non-techs (including executives) in tech companies are basically 95% morons because the capable non-techs generally have better options in other industries.

It's hard to go back to finance, from startups, because the typical startup CV has a high jobs-to-years ratio and finance is still pretty bigoted about "job hoppers". (Finance is meritocratic once you're in, if you get a good job, but getting in can be a hassle.) In startups, one job per 2 years is normal; in finance, it f*cks you in the ass if you change jobs that often.

What did you do in finance? I'm guessing trading? It seems like it's a rather hard field to break into, as you've mentioned. I remember reading that even for people coming out of Harvard Business School only a few make it into trading.

Regardless, that's a small subset of finance jobs, no? What I've read about the investment banker side is that the job is absolutely dreadful; if you get into private equity, it gets better, but you're still working like a dog generally. Also, sans trading, the jobs tend to require a very different type of person than your typical software engineer. As you move up, your sales/pitch skills become more and more important, as your ability to win clients/deals for the firm is what brings in revenue, not your ability to use excel.

Quant trader. It was fun. That said, I'm more suited for programming and quant work than for "guts and glory" trading, especially now that I'm older. I don't think I could ever work a floor.

I remember reading that even for people coming out of Harvard Business School only a few make it into trading.

Business school is about connections, but you need smarts to be a quant or a trader, and I'm still smarter than 99% of the people at HBS. I don't have the connections to get a Partner job at Sequoia, but I have the raw ability that most of those people don't have.

What I've read about the investment banker side is that the job is absolutely dreadful

Entry-level (analyst) jobs are pretty awful, and the hours are inhuman. It gets better as you move up the ranks. MDs work 9-to-6. VPs and EDs work 8-to-7, and there's enough status to the job (and the work is usually interesting, at that level) that it isn't so bad.

As you move up, your sales/pitch skills become more and more important, as your ability to win clients/deals for the firm is what brings in revenue, not your ability to use excel.

There's some of that everywhere. We failed at keeping politics out, at high levels, in the Valley. It's just hard to make merit matter more than being well-liked no matter what industry you're in. I don't know of any industry that has figured that problem out.

You're vastly overestimating how easy it is to raise a series A - the majority of YC companies don't make it to series A. The chances of an inexperienced non-tech founder raising a series A are small; there are hundreds if not thousands of such founders who try and fail for everyone who succeeds.

Investment banking is also far from hom*ogenous, the requirements for being in sales at a mid-tier commodity fund in Chicago are vastly different from being in M&A at Goldman in New York. You can be pretty far down the pecking ladder in banking and still easily bank $1m+.

There is no need to reiterate how difficult it is to build a successful startup. My point was that even after controlling for this difficulty, for the average developer it's going to be "easier" to make $1mm by starting their own startup. The vast majority of finance professionals with target backgrounds won't break 200k in income per year. There are outliers in every profession and sure there are some hotshot salespeople and quants that make 1mm+/yr, but: when I look closely, and from talking with friends who work at namebrand banks and PE groups, it seems they're no more prevalent in finance than successful startup founders are in tech (i'd still like to see hard data on this because there are so many ways to compensate people and most have no incentive to report this, in both industries).

Now on to compensation: comparing apples to oranges, a Goldman Sachs VP's total compensation is about 240k, or roughly what a senior software engineer at Google makes. If I were a brilliant developer, I would rather work at Google and make the same amount than going through the meat grinder than is your IB to become a GS VP.

I really think it's a bad idea to go into finance for the salaries. You're going to be miserable, and no, you are not guaranteed a million dollars by 25. Obviously, there are many different career paths in finance, but all of the ones that involve making a lot of money include one or all of the following: stress, long hours (80-100/week), and risk (think how many financial crashes tend to happen. guess who loses their jobs?)

Of course, if you're willing to persevere through all that, and have very good people and/or sales skills, then sure, you might be able to join the ultra elite who own their private jets and have an island in Thailand. You'll need some luck for that too, though.

I think the only people that will 'make it' in finance are those that are genuinely passionate enough to endure the horrible work conditions and lifestyle while possessing the people/sales skills to be successful. Remember, to make it to the top in finance firms, you need to bring in revenue. With the exclusion of trading, this generally involves sales skills. Same goes for management consulting and probably law as well.

You want to start focusing on low-level programming: learn about C++ and assembly languages and cache behavior. Or possibly get into functional programming. I could see Haskell getting bigger in trading. Learning some statistics and math won't hurt.

I don't think there's a "too late", but there's a different skill set you need, especially to get a good job in finance.