Big pay rise at D.E. Shaw in London by Sarah Butcher 13 December 2019 "the first great quant hedge fund," D.E. Shaw launched in above a Marxist bookshop in New York City in the 1980s and came to the UK 13 years ago. D.E. Shaw & Co. (London) LLP just released its results for the year ending March 31st 2019. They suggest you'll be lucky to get a job at D.E. Shaw, but that you'll make good money if you do. There were only 21 slots for top quant portfolio managers at analysts at D.E. Shaw's London office in the year ending March. This was identical to the year before and reflects the fact that D.E. Shaw is far smaller than the biggest hedge funds like Millennium Management, which has 127 investment staff in London. D.E. Shaw's 21 traders are supported by 25 London administrators. The world's first quant fund is pretty generous when it comes to paying its people. The average UK employee (admin staff included) earned £614k ($822k) last year, up from £464k the year before. Bonuses at the fund are deferred over three years. The highest earning of the fund's three UK partners earned £4.5m, with a further £7.2m shared between the other two. To complicate matters, one of D.E. Shaw's London partners is D.E. Shaw & Co. UK, another listed entity. The other two are Neil Cosgrove, who's worked for the fund in the UK since 2005, and Julius Gaudio, a Harvard economist in his 40s who has his own philanthropic foundation. D.E. Shaw & Co (London) made profits of £11.7m on turnover of £65m last year. On its website, the fund says it is, "extensively searching the globe for talented individuals," and hires people who are, "able to think creatively, who are relentlessly rational, and who put ego aside in the interest of getting things right." The fund says it encourages employees to express the "eclectic parts of their personality." One quant analyst describes it as, "a mixture of grad school and a tech company with a flavor of finance in it."
The path is easier for some than others. If you go to the same schools and look like them, there is a higher chance. I briefly mentored a guy who had the lowest self esteem of anyone I had ever met but he was one of the most brilliant technologists I know to this day. He looked like them, went to the same schools, but had a super fucked up childhood which led to his self esteem issues. I encouraged him to get into finance and told him that everything I knew said he would fit in. He went from Germany -> London -> Buttfuck USA (apparently there is a successful HFT fund there) and now he is too cool for me. He was the right age, the right look, the right background (on paper.) Conversely, I know a guy who spent $100K trying to break in. MBA if memory serves. Didn't get in. The first guy stumbled into it just by virtue of me encouraging him. Had never considered it. The second guy had it as a goal for YEARS and got nowhere. You severely underestimate the role of luck in conventional measures of success. For example: my parents are not brilliant investors, but they think they are just by virtue of when they started investing.
Maybe they are not brilliant investors, but are smart enough to recognize the virtue of long term investing.
That's not even the point and you know it. If you buy by accident at the bottom of a V then are you a genius or lucky?
Or said another way: what is the difference between the two people I mentioned above? Main difference from my perspective was something that could not have been controlled for: age. The young guy (23 at the time) definitely had an advantage. The older guy (MBA, mid-30s) probably had something that betrayed his age, whether it was grey hair, wrinkles, etc. So is the 23 year old a genius? In some ways, of course. But in other ways, he had absolutely no influence in the hand he got dealt. He was the right age, met someone in an unrelated venue who encouraged him, and was successful. So is he a genius? He isn't. But he thinks he is! That's the role of luck. Successful people like to say "luck is opportunity meeting preparation" but that's not true. Luck is access to the opportunity in the first place!
All right, qualified work must be paid accordingly. All the more so because a team of talented employees is not only a profit for the company, but also a subject of competition. Of course, it is better to offer good salaries, bonuses, the main thing is that the employees stay in place and continue their analytical or any other activity in full. And it seems to me that many leading companies adhere to this policy. Let's take Google, with its New Year's bonuses and incredible offices, as an example, which are delightful around the world. It's not just for fun, it's for motivation. Oh, everybody would!