Wait, let me see if I understand the logic here. Engineers are second-class citizens in finance, but third-class citizens in "the VC-funded world". Evidence: engineers get "0.01% equity slices of post-A startups".
What percentage of a hedge fund does a typical engineer get?
I get what you are trying to say, and don't agree with the either the second/third class citizen descriptions, but in hedge funds/prop trading shops compensation is typically not equity based, but is very typically profit sharing based, with the engineers getting a pretty hefty share of any trading profits.
In fact, when you hear about giant bonuses in finance what you are often really hearing about are groups that traded salary for profit sharing and it paid off. In the context of finance, this comes off as shady or outrageous but in the context of startup hits it doesn't.
Lets just say, having worked under option based equity arrangements and profit sharing arrangements, they both had their positives and negatives, but only ever felt like a system was stacked against me, as an employee, when equity/options were on the table.
Sure, but let me go a little further out on this limb and challenge you, too: in established trading firms --- DRW, Two Sigma, that sort of place --- what percentage of the returns do you think go to non-founding engineers?
I obviously have no way of knowing, but I suspect the compensation package at those places is much more dependent on the amount of impact you have to those returns than to when you joined the firm (for better or worse) and that people that impact those returns in dramatic ways will get compensated in a similar manner to early stage employees at startups.
The big issue I think with the equity based model, is the golden handcuffs it applies to early employees. Not only do they frequently forego market based compensation for long periods of time, when they make the decision to stop doing that, they are asked to take on more downside in order to keep any part of their deferred compensation. For all it's downsides, the trading environment would never ask someone to do that.
You'd know better than I would, and if I have a dog in this fight, it's fighting on your side: the more prized engineers are in trading firms, the better off I am. :)
My immediate reaction to this point, though, is:
* The downsides of equity comp are shared by all roles in a tech company, not just engineers; the exceptions are the very most senior management, and the tiny cohort of founders. Both of which are exceptional at all firms.
* Dev jobs in finance are, I am pretty sure, a better deal than those in tech startups.
* But let's not move the goalposts: the argument is that engineers are second-class in tech startups in a way that isn't true in finance companies. Most engineering jobs at finance companies are cost-center roles.
"But let's not move the goalposts: the argument is that engineers are second-class in tech startups in a way that isn't true in finance companies. Most engineering jobs at finance companies are cost-center roles."
As I mentioned, I do not think it is a fair characterization to say that engineers are more/less valued in either situation. I just think that using equity distribution percentage to argue one way or the other is problematic in that compensation is determined in 2 dramatically different ways.
That said, if I were going to argue anything, it would be that the equity options based compensation packages in tech startups seem to have more opportunity for abuse. So characterizing engineers as 3rd vs 2nd class isn't interesting, but characterizing one compensation structure as more exploitative than the other may be, and I think that is at the heart of what the original post was about.
[edit] I'd also add that any characterizations about the methodologies used in finance/trading vs tech startups is completely inaccurate. I've seen great development process in both places and the converse as well.
Most engineering jobs at finance companies are cost-center roles.
I think this will vary based on the size of the firm. Larger firms that trade in multiple markets and in different asset classes or firms that become registered broker dealers will tend to have larger back office operations. Smaller firms will outsource as much as they can so that the engineers are primarily focused on supporting whatever strategy the firm wants to trade.
Way, way, way out on a limb, but here goes: a higher percentage of the total return that goes to engineers at DE Shaw (a firm I did not select at random.)
What percentage of a hedge fund does a typical engineer get?