The problem with the pointy part of spears, is that they are very small in relation to the whole. According to Google's 2011 10-K, 96% of their revenue is derived from Advertising income. So if you want to be in the pointy part of Google, you either have to work on the Adwords team, or be integrating Adwords profitably into some other product. I'd bet that's a small percentage of Googlers, overall.
You know what I find really interesting though, the overall similarity between the Goldman Sachs and Google numbers, except employee compensation. Google's Gross Profit (Total Revenue less Cost of Revenue) was $24.7B in 2011, and GS's was $24.5B. At the same time, Google had 32,467 employees to GS's 35,700. Yet, the Google net income was $9.7B compared to $4.4B on the GS side. The difference seems to be made up entirely by the difference in employee compensation.
I think that the real reason people on Wall St are substantially out-earning people in Silicon Valley, is that they are in it for the money. Working at Google is sexy. They'll give you a free lunch for $220,000 a year, and who doesn't want a free lunch. Plus there is a ball pit, and doors that don't function. And a mythos about changing the world through social networking. If one company on Wall St starts belt tightening, the top traders will jump ship in a heartbeat. It doesn't take too many big bonuses before you can trade profitably on your own, on your own time. Grab a few other traders with their own money, and pool the risk into your own fund. Hire a few front-office sales types, and bring in other peoples money. That's precisely why outsized bonuses exist in the first place. The best traders are going to make big gains no matter what, with your money, their money, or some other firms money. If they get big pay for big gains, then they'll stay. Better to get a slice of watermelon that a whole grape for the trader, and the firm picks up the bulk of the profit. If pay is even pretty close, how many people would realistically choose Wall St over Silicon Valley. The money is there, but it seems like Silicon Valley engineers are too sheepish to actually demand it, nobody wants to come off as being in it for the money. When people hear, "I really want this job because I'm passionate about changing the world with twitter posts, or Facebook timelines, or amazing time tracking software", they think, I don't have to pay this guy.
You know what I find really interesting though, the overall similarity between the Goldman Sachs and Google numbers, except employee compensation. Google's Gross Profit (Total Revenue less Cost of Revenue) was $24.7B in 2011, and GS's was $24.5B. At the same time, Google had 32,467 employees to GS's 35,700. Yet, the Google net income was $9.7B compared to $4.4B on the GS side. The difference seems to be made up entirely by the difference in employee compensation.
I think that the real reason people on Wall St are substantially out-earning people in Silicon Valley, is that they are in it for the money. Working at Google is sexy. They'll give you a free lunch for $220,000 a year, and who doesn't want a free lunch. Plus there is a ball pit, and doors that don't function. And a mythos about changing the world through social networking. If one company on Wall St starts belt tightening, the top traders will jump ship in a heartbeat. It doesn't take too many big bonuses before you can trade profitably on your own, on your own time. Grab a few other traders with their own money, and pool the risk into your own fund. Hire a few front-office sales types, and bring in other peoples money. That's precisely why outsized bonuses exist in the first place. The best traders are going to make big gains no matter what, with your money, their money, or some other firms money. If they get big pay for big gains, then they'll stay. Better to get a slice of watermelon that a whole grape for the trader, and the firm picks up the bulk of the profit. If pay is even pretty close, how many people would realistically choose Wall St over Silicon Valley. The money is there, but it seems like Silicon Valley engineers are too sheepish to actually demand it, nobody wants to come off as being in it for the money. When people hear, "I really want this job because I'm passionate about changing the world with twitter posts, or Facebook timelines, or amazing time tracking software", they think, I don't have to pay this guy.