CelestialEmpire
True Anglo-SSaxon⚡️⚡️
- Joined
- Jan 20, 2025
- Posts
- 5,267
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1. Look for industries that haven't matured yet, so software / FAANG 15 years ago, AI now, finance in the 80s/90s.
Reasons:
- Labour pool is relatively static for at least a decade (takes time to diffuse knowledge to universities / colleges and for growth companies to IPO and become famous / well known), avoiding wage compression
- Lack of regulatory oversight in the early years makes activities much more profitable (i.e., Dodd-Frank, Basel I-III), creates competitive edge in industry compensation / revenue relative to matured industries
2. Only look for roles where you are revenue-generating or highly product technical within a firm. Never be a cost center.
Reasons:
- Ceiling is super low for cost centers within a firm (i.e., accounting, HR, IT, admin), firms always looking to offshore, outsource, etc to cut down on SG&A, also massive layoff risks during M&As (realizing cost synergies), also very fungible with ample replacements
- Revenue generating (Ex: Hedge fund trader outperforming on his $750mm sleeve, M&A banker pulling in $80mm in fees this year, BigLaw associate billing 3000 hours at $400/hour this year, surgeon operating 200 heart surgeries in a year, etc), comp ceiling is very high, meritocratic, visibility from management, etc
- Key technical / product person (Ex: Top AI researcher at a frontier lab, top PM at a quant trading shop, top coverage RM to megacaps at a BB, top GPU designer at a fabless chip designer, etc) - very entrenched, not commoditized, could be poached by competitors for a massive payout, ceiling relatively high at technical firms.
3. Scaleable Revenue Generation (or beyond a certain scale)
Reasons:
- So you're insanely good at selling kitchen knives door to door and make $300k a year, there is nowhere else to go. You can't go door to door faster nor can you sell to more people at once. Stupid
- If you're a technical person on a SaaS product or a frontier LLM model, your "revenue" can scale infinitely (albiet cost of compute / tokens / cloud hosting)
- If your revenue is already pretty scaled (Ex: bringing in ~$15mm in advisory fees per $2bn M&A mandate you win means your revenue is enough to give you high comp even though this can't scale). Ex: as a MD - 5 mandates/year*$15mm fee per mandate*15% fee credited to bonus (BB range 15-20%, EBs 20-30%, MMs/independents 30%+) = ~11mm in comp/year
Reasons:
- Labour pool is relatively static for at least a decade (takes time to diffuse knowledge to universities / colleges and for growth companies to IPO and become famous / well known), avoiding wage compression
- Lack of regulatory oversight in the early years makes activities much more profitable (i.e., Dodd-Frank, Basel I-III), creates competitive edge in industry compensation / revenue relative to matured industries
2. Only look for roles where you are revenue-generating or highly product technical within a firm. Never be a cost center.
Reasons:
- Ceiling is super low for cost centers within a firm (i.e., accounting, HR, IT, admin), firms always looking to offshore, outsource, etc to cut down on SG&A, also massive layoff risks during M&As (realizing cost synergies), also very fungible with ample replacements
- Revenue generating (Ex: Hedge fund trader outperforming on his $750mm sleeve, M&A banker pulling in $80mm in fees this year, BigLaw associate billing 3000 hours at $400/hour this year, surgeon operating 200 heart surgeries in a year, etc), comp ceiling is very high, meritocratic, visibility from management, etc
- Key technical / product person (Ex: Top AI researcher at a frontier lab, top PM at a quant trading shop, top coverage RM to megacaps at a BB, top GPU designer at a fabless chip designer, etc) - very entrenched, not commoditized, could be poached by competitors for a massive payout, ceiling relatively high at technical firms.
3. Scaleable Revenue Generation (or beyond a certain scale)
Reasons:
- So you're insanely good at selling kitchen knives door to door and make $300k a year, there is nowhere else to go. You can't go door to door faster nor can you sell to more people at once. Stupid
- If you're a technical person on a SaaS product or a frontier LLM model, your "revenue" can scale infinitely (albiet cost of compute / tokens / cloud hosting)
- If your revenue is already pretty scaled (Ex: bringing in ~$15mm in advisory fees per $2bn M&A mandate you win means your revenue is enough to give you high comp even though this can't scale). Ex: as a MD - 5 mandates/year*$15mm fee per mandate*15% fee credited to bonus (BB range 15-20%, EBs 20-30%, MMs/independents 30%+) = ~11mm in comp/year
