[tomkarlo]

I used to work for Lehman Brothers; since then I've worked for Amazon and Google in product capacities. (I was a PM before I went to MBA and then LB.)

The biggest problem was that there's little incentive in financial products to pursue true creativity or innovation that generates value for your clients. Both the market and the regulatory climate make it very hard, and very risky, to develop and market new products. It's a lot easier to just find innovative ways to strip value from your clients, or make new securities look a lot like old securities.

My role at Lehman involved helping issuers structure securities for various capital markets. I did not see us openly fleecing clients in the style of Enron or this Goldman article, but it was pretty clear that some kinds of deals were far more profitable for the firm than others, and it was going to be in your interest to promote those kinds of transaction. It's the people at the top who set the incentives and set the culture of a firm, and things will only generally get worse as they trickle down the structure to individual teams who are more interested in their personal comp than the overall corporate brand.

One of the main reasons I wanted to go back to tech from finance was that I felt like there's at least a lot of tech companies (Amazon and Google included) where delivering true value to the end user is the primary value, and how you get promoted and paid. I did not feel that was the case on Wall Street; it was more important how many fees your team brought in than whether the issuers (clients) were still in business a year later.

[rutipo]

I used to work for Lehamn too, M&A. Now working on my own startup. I also found that the focus was on our incentives, and this is where the tech industry is different in that it sets the incentives aligned with the users.

Wall Street could do the same by changing its incentives, and grow massively together with their clients. Once they understand that clients all the way to the end ("crowd") investor can also be happy users.

One thing that bothered me about this article though, is that it just seemed like he had a personal reason to make his superiors look bad. After all, he built his entire career in Goldman, so why burn your bridges? Unless they are already burned and you are leaving with a blast anyway, and maybe you are trying to get back at someone.

[tomkarlo]

I think he burned his bridges because he believes that GS is on a path that will lead to its collapse if it continues unchanged. I don't think he published the letter to be vindictive. It's supposed to be a wakeup call and it's not like they were going to distribute that company-wide internally for him.

Wall Street can't really grow that much more. It's already something like 11% of US GDP and that's way too much for an industry that really doesn't produce anything much. Fin services shouldn't be more than 3-4% of an economy, barring export of services to other countries.

I'd argue this is part of why it's starting to eat its own young; it's an industry full of extremely driven, competitive people but it has started to run into the natural limits of its potential size. If the industry starts to shrink a bit, things will get even uglier. It's not like there's a natural other industry for all these people to work in that's growing and will take the oversupply - if things get worse it will look like a piranha pool in the dry seasons where a million fish have been concentrated into one puddle.