[msort]

Two major difference of a trading firm from a software firm: 1) Large amount of trading capital is needed to make a sizable profit. 2) Math, finance and trading skills.

A trading firm needs above 2 items in addition to technical skills to succeed. A team of good people with all 3 above items (capital, trading, tech) have a good chance to succeed.

In fact, Citadel (one of the largest quant hedge funds) was started by one person (Ken Griffin) when he was a undergraduate from a Harvard dormitory. It is pretty much a startup success story.

There is a major culture difference: trading is the key activity; coding is only secondary. This may explain why trading firms usually have a typical wall-street tough culture, and don't feel like a typical silicon-valley startup.

[gaius]

Not so different as you might think. After all, a large amount of capital is needed to build out a datacentre. Doesn't mean that Google is the only company that can make a profit on the Internet.

[hugh3]

Not really on the same scale. If you're a hedge fund, the most you can make in a year is some small percentage of your total assets under management, so you need to persuade people to give you billions (at least hundreds of millions) before you can start raking in the kind of dough that pays salaries.

[gaius]

That's what leverage is for (and if it goes wrong you end up like LTCM).