With so much money on the line, hedge funds and other trading firms focus a lot of effort on marketing and building up a perception that they truly are something special (at least those that take outside client money). Internally, things could be rather mundane, and even downright awful (from a technology perspective). Not commenting on Jane Street in particular, just the industry in general.

Source: I've worked at a hedge fund and I've seen how the sausage is truly made. Many friends have told me similar stories about other firms.

Also having worked for a hedge fund, they're generally going to do their best to get you at the lowest salary possible. The overall benefits might be good, but they're going to do their best to low ball on the salary, "you'll make it up at bonus time!" Bullshit, You have to negotiate with hedge funds and be willing to walk away from a shit offer. I started at one a year out of college. Made 3x what I did as an intern. I was happy, at first. You can budget around a salary for rent, utilities, etc. You can't budget hoping for a bonus to make ends meet.

Took me about 3 years to realize I was being paid half of my coworkers doing the same to lesser jobs as mine. Took me resigning with an offer in hand for twice what I was making before they upped their offer. I stayed for another 3 years before I got so fed up with the bullshit I actually left for a lower paying job (also less stress).

There is another, more sinister reason for low base: typically if you have a non compete and are forced into a one year garden leave, they can get way with paying you just the low base.

FWIW, Jane Street is not a hedge fund nor take outside client money.

(Edit: I work at Jane Street.)

How would you best describe them

It's a prop trading firm. It's pretty important to distinguish between hedge funds that take public money (which are generally probably low quality, as the OP described) and prop trading firms that only or primarily trade their own money (Two Sigma, Renaissance, Jane Street, Jump trading, etc.). The latter deserve their mystique, because you only trade your own money if you are actually beating the market.

Two Sigma and Renaissance (albeit not Medallion) primarily invest outside capital.

Renaissance does take outside capital, but their primary business is Medallion. The outside capital is just a way to make a bit more by trading on their reputation.

Two Sigma does generate a bit more revenue from outside capital than Renaissance, but it is my understanding that the heart of their business is still prop trading. But I don't know that for certain.

Can you comment on relevance for society? Do these companies generate a net positive, or do they only extract value?

I.e. should I look for a job there only because of the money, or also because I can make a difference somehow in the bigger societal picture?

Difficult question, at least if you'd try to argue without politicizing too much. I'd say it's a false dichotomy to equate 'making money on the stock market on your own investments' with '(negatively) extracting value'. On the whole of it I'd argue that the existence of a stock market is a public good since it makes capital more liquid, more accessible and more transparent. Going from that to argue that firms that invest purely for themselves deliver a whole lot of positive externalities would be hard for me. I'd call it Lawful-Neutral. It's wholly within the rules of society, doesn't create very clear negatives and clearly delivers positives for those involved (employees, stockholders, etc.).

If you have a 'millenial mindset' and want to work where you directly and positively impact society, I'd choose elsewhere. From a Peter Singer-like perspective, if you'd earn top dollar there and spend at least a modest amount giving to the right charities, you might still be making the world a better place, even compared to the other place.

I'd maybe agree with your points, except the last point: if these traders keep all/most smart people from the job market, then even your dollars would not make a difference. Of course this is overblown but it is similar to the concern that "all of our smart people are trying to make people click ads".

I think the way to think about it is that this "make people click on ads" problem needs to be solved. Just like this "value assets efficiently" problem needs to be solved. And if you can contribute to solving either problem more efficiently, that frees up the next smartest person to do something more directly productive.

No, because how do you solve a problem better than with one smart person? The answer is with two smart people.

And from there you get an endless race using more smart people to solve pointless problems.

Sure, but you can only solve these problems so well. They are of finite complexity.

I would say yes, they do make a positive difference for society, but in a fairly abstract way.

Efficient capital markets are an extremely important part of a market economy. They allocate capital where it will do the most good. Firms like Renaissance make that process more efficient. That is, they take a process that used to require 1000 MBAs working full time, and they accomplish it with 4 physicists, and automate it. This frees up the 1000 MBAs to go do something more productive with their time.

I think it's easy to be dismissive of this sort of value creation because of how abstract it is, and how concentrated the wealth creation at a firm like Renaissance is. However, I think the value add to society is actually real.

There are legitimate questions about the value being added by ultra high frequency firms. The ones that engage in market making are definitely adding value, but the ones that are doing things more like front-running or statistical front-running are a lot more questionable.

I think this deserves a little bit more scrutiny in particular because the OP is asking about making a difference.

1. I would argue they're not a net positive. Making markets more efficient is fine but markets are already extremely efficient. The biggest social good can be achieved by working on issues that are classical market failures and full of externalities. Climate change, healthcare, basic science, education and so on. The man-hours invested in these prop trading platforms compared to the benefit to society is maybe positive under the microscope, but negative when one considers opportunity cost.

2. They're freakishly proprietary. They're corporate black boxes full of 200 IQ people who could be solving and distributing knowledge, but they're basically locking them in the basement to make money. Put any of those researchers into a public university and over the course of their career, they could educate thousands of fine researchers.

> Efficient capital markets are an extremely important part of a market economy.

i was under the understanding that the entire point of the medallion fund is that markets are not efficient and can be taken advantage of, which is exactly how medallion works.

That is exactly right, but as Medallion takes advantage of them, they become efficient with respect to Medallion's trading strategies.

You actually need to ask other people if you should care about more than money when looking at a job? Weird.

They trade their own money instead of OPM

>Internally, things could be rather mundane

Elite developers often make things mundane. No fires. No explosions. etc.

Is the sausage made in VBA?

In some shops, yes.

Yeah worked in the industry as well, there's a story an older buddy used to tell when he worked at PIMCO in the 90s. Bit different than a quant fund but still applies. They hired a few Harvard Economics PhDs, who when looking at their macro economics material for institutional investors, claimed it was all wrong/didn't make sense. Bill Gross, the fund manager, told them it was to "get the money in the door from the fucking clients, we make gut bets on the market". Then fired the guy

>Harvard Economics PhDs

tbf, academia is its own racket.

Yeah absolutely, the value of the Harvard PhD in this story is the name and nothing else.

The people who work at jane street are generally super talented, but they also mostly work on generic not-especially-interesting software problems.

Source: Former jane street employee, also worked at two FAANGs before that, so I think I have some basis for comparison

Not JS, but I've worked for a couple of competitors and can confirm. There were a few truly brilliant individuals, but most of the staff was unexceptional, and the general level of the tech varied between standard corporate and outright appalling. It turns out that if you have enough money, you can simply keep throwing programmers into the firefight until something sort of works. They're truly too rich to fail.

But, not an enjoyable ride if you actually love quality tech.

(But, money! So much money!!)

5 years ago, I had an interview with Jane Street. At that time I was interested in functional programming but not in OCaml. I think I had a fair chance but I bombed a technical interview. I do not have a "prestigious college" background and at that time I only had like a year of PHP experience. The interview format was also quite good.

I am not sure if the software they are writing is "elite" but OCaml is raising the bar a bit higher.

> "Google has the same tactic, even paying below market rates to people willing to work their for the brand."

I've never heard anyone say that google pays below market. Perhaps there are those who pay more, but it's definitely above "the market"

Below market rate compared to other Big Ns. But Google is willing to play ball if you can get other offers/get a good recruiter

This kind of elite mystique was also summoned in many posts in the "Who's hiring" thread a few days ago. It's important not to be too discouraged by all of this when looking for a job. Yes, there are really good programmers, but how many can there be, realistically?

I've worked for Google and been rejected by Jane St and come off with a much better impression of Jane St. Google has some bright stars, but Jane St has a higher portion of them.