Do I need to take the new job?

[mylife]

I just gradate with a CS PhD degree. Currently I have worked in a startup firm for 1 year, and actually my phd advisor is the CTO of this startup firm. I am designing some equity trading model and the backtesting result looks good. I am the only person to do designing/implementing/testing of models. The firm's CEO and other investors are very interested in putting some money on it and eventually to build a small hedge fund. Their plan is to invest multiple million dollars on this model in the next few months, and may grow it to a billion fund after they have enough track record. This job is interesting, but the downside is pretty clear, this firm has no fame at all, and my salary is much lower than most fresh CS PhDs (if they go to industry).

I tried to find other better quant-type jobs, but failed. The only offer I have now is a data analyst position from a hedge fund (this firm has some fame, but not the top ones). As far as I can see, the job is pretty boring, just prepare data for traders and quant researchers, and the job is stressing. The good thing is that it makes my base salary doubled, and I have some real industry experiences. The bad thing is that the job is nothing related to models, and I feel it is hard to switch to quant jobs later on.

Both the two jobs have pretty clear upsides and downsides. My current job is interesting but I have to sustain a low pay, and it is hard to say whether they will success in the future. The new job is not interesting at all, but the pay is good. I am also wondering how likely small firms like my current one will become a decent hedge fund in the future? After all, the team has no much financial industry experiences. My career goal is to become a quant trader or portfolio manager eventually, and I am taking the partime MFE program in NYC. I don't know which job will be better off for me to choose? Anybody can share your thoughts? Thanks?

 

[Yike Lu]

Salary is not why people become traders/PMs and/or join hedge funds.

If you are getting a good cut of the PnL and some management fee from the model, then the choice is primarily to do with your risk preference when it comes to the $$$.

As for your future career goals, your current job is far better than being somebody's data guy, even if the fund is less well known.

 

[mylife]

yes you are right. The job here is more interesting than the new position.

However, I feel I am much underpaid, and hard to negotiate with my boss with a better offer. And feel pressure for MFE tuition. I am wondering, if I go to the more famous hedge fund, can I learn something even as a data guy?

 

[alain]

yes you are right. The job here is more interesting than the new position.

However, I feel I am much underpaid, and hard to negotiate with my boss with a better offer. And feel pressure for MFE tuition. I am wondering, if I go to the more famous hedge fund, can I learn something even as a data guy?

You will definitely learn more from were you are. Could you get a piece of the P&L?

 

[mylife]

it is pretty good so far, in terms of sharp ratio, win rate, and it is market neutral. but the problem is backtesting period is relative short (3 years), and we dont have enough track record.

 

[IlyaKEightSix]

Then do more backtesting. If you're having trouble making ends meet, tell your superiors this. Money's just stuff you trade for other stuff. If you have enough stuff in your life, do you need more money currently? Also, look on the upside: if this fund becomes successful and you were one of the first employees, you'll be far better off than being employee #24601 at a more established institution like Goldman Sachs or so.

 

[myampol]

yes you are right. The job here is more interesting than the new position.
However, I feel I am much underpaid, and hard to negotiate with my boss with a better offer. And feel pressure for MFE tuition. I am wondering, if I go to the more famous hedge fund, can I learn something even as a data guy?

Have you considered asking your current boss whether, instead of increasing your salary, would they cover the MFE tuition for you? You could offer to structure an agreement which says that if you were to quit, you would agree to repay them a specified amount of the tuition. This way they could "lock you in" to continue working for them, and you wouldn't have to feel stressed over covering your MFE tuition and living expenses on your current salary.

And, if in the future some other firm wanted to hire you away with an offer of a good position, you would be able to insist upon a "signing bonus" which would at least cover the amount of tuition money that you would have agreed to repay to your present firm (as well as the taxes that you would have to pay on top of such money.)

Just be very careful if your current firm tries to make you sign some non-compete agreement (assuming that they haven't done so already.) Doing so could truly make you into an indentured servant.

 

[rajanS]

I just gradate with a CS PhD degree. Currently I have worked in a startup firm for 1 year, and actually my phd advisor is the CTO of this startup firm. I am designing some equity trading model and the backtesting result looks good. I am the only person to do designing/implementing/testing of models. The firm's CEO and other investors are very interested in putting some money on it and eventually to build a small hedge fund. Their plan is to invest multiple million dollars on this model in the next few months, and may grow it to a billion fund after they have enough track record. This job is interesting, but the downside is pretty clear, this firm has no fame at all, and my salary is much lower than most fresh CS PhDs (if they go to industry).

I tried to find other better quant-type jobs, but failed. The only offer I have now is a data analyst position from a hedge fund (this firm has some fame, but not the top ones). As far as I can see, the job is pretty boring, just prepare data for traders and quant researchers, and the job is stressing. The good thing is that it makes my base salary doubled, and I have some real industry experiences. The bad thing is that the job is nothing related to models, and I feel it is hard to switch to quant jobs later on.

Both the two jobs have pretty clear upsides and downsides. My current job is interesting but I have to sustain a low pay, and it is hard to say whether they will success in the future. The new job is not interesting at all, but the pay is good. I am also wondering how likely small firms like my current one will become a decent hedge fund in the future? After all, the team has no much financial industry experiences. My career goal is to become a quant trader or portfolio manager eventually, and I am taking the partime MFE program in NYC. I don't know which job will be better off for me to choose? Anybody can share your thoughts? Thanks?

first of all, what school did you graduate from? how old are you? where are you pursuing your mfe? if you are pursuing your mfe at a top school where placement is very good...then stay at your current job. otherwise i would leave. Usually, a good company can boost your marketability especially if you are pursuing your mfe. many start up companies have a high failure rate. After getting a year or two experience, you can leave or search for better jobs while working with a higher pay. Also, maybe you can move within the departments of the new company. I fail to see why you would stay with a company that doesn't make ends meet and is not that reputable to begin with. Also, getting a percentage of profit and loss is nice and all. But what if the firm doesn't make profits? What are you going to do?

 

[Ohad]

Just be very careful if your current firm tries to make you sign some non-compete agreement (assuming that they haven't done so already.) Doing so could truly make you into an indentured servant.

I don't know how it works in the US but here most of these contracts don't apply.
Due to the law of freedom of choice , each person can work wherever he likes hence unless you are moving to another company and specifically use patents of the previous one , then this part of the contract doesn't apply.

 

[Ohad]

first of all, what school did you graduate from? how old are you? where are you pursuing your mfe? if you are pursuing your mfe at a top school where placement is very good...then stay at your current job. otherwise i would leave. Usually, a good company can boost your marketability especially if you are pursuing your mfe. many start up companies have a high failure rate. After getting a year or two experience, you can leave or search for better jobs while working with a higher pay. Also, maybe you can move within the departments of the new company. I fail to see why you would stay with a company that doesn't make ends meet and is not that reputable to begin with. Also, getting a percentage of profit and loss is nice and all. But what if the firm doesn't make profits? What are you going to do?

Almost no company starts its first day making billions dollars of profit. Being the core root of a start-up can give you a better return of investment than working 9-5 (if the start-up succeed obviously). Not to mention that he have a good position there.

I would have to say that unless he is really stretched for money, he should remain there until he finishes his MFE.
By then he will have both a PhD and MFE, good experience and a good idea if this company is going down or not.

 

[rajanS]

Almost no company starts its first day making billions dollars of profit. Being the core root of a start-up can give you a better return of investment than working 9-5 (if the start-up succeed obviously). Not to mention that he have a good position there.

I would have to say that unless he is really stretched for money, he should remain there until he finishes his MFE.
By then he will have both a PhD and MFE, good experience and a good idea if this company is going down or not.

sounds good. but the question is, how much is he making at his current job? I am assuming around 50k because if he was earning atleast 100k then that would be a different story

 

[myampol]

I don't know how it works in the US but here most of these contracts don't apply.
Due to the law of freedom of choice , each person can work wherever he likes hence unless you are moving to another company and specifically use patents of the previous one , then this part of the contract doesn't apply.

If a company requires you to agree to a non-compete agreement at the time that you are hired, that is one thing. On the other hand, if you are already working for a company and they subsequently realize that you are very important to them and so they ask you to sign a non-compete agreement, they have to give you something of substantial value in exchange for your agreeing that you will not quit and work for a competitor. If they demand that you sign a non-compete agreement and you refuse, so they then fire you for refusing to sign, then it should be no surprise to them if you turn up working at a competitor.

There was a noteworthy case a number of years ago where a couple of quants working for Jim Simon's Renaissance Technologies were confronted with just this situation. They had already been working there for a couple of years, and they had never been asked to sign non-compete agreements, but then they were suddenly requested to do so. They refused, and were fired because they refused to sign.

They immediately turned up at Izzy Englander's Millennium Partners, where they re-implemented their strategies, perhaps using some of the knowledge they had gained while working at Renaissance, but asserting that they were not using any of the code.

Renaissance sued them, and Millennium, and requested an injunction preventing them from working at Millennium -- despite the fact that the pair had NOT signed any non-compete agreement with Renaissance.

Here is the judge's response to Renaissance's request for such injunction:

http://www.briefworks.com/RenaissanceDecision.pdf

In short, the judge agreed to issue an injunction banning their use of Renaissance's confidential materials at Millennium, but refused to grant an injunction barring the defendents' employment at Millennium, precisely because they had NOT signed the agreement not to compete. (If they had signed, then it would have been much less likely that Millennium would have hired them in the first place.)

However, several years later, Millennium caved:

http://www.marketwatch.com/story/renaissance-millennium-settle-trade-secrets-dispute

But, the ex-employees did not:

http://www.briefworks.com/PressRelease.pdf

The ex-employees then claimed that Renaissance had asked them to implement algorithms which would violate securities laws, which in legal terms is a defense that alleges that Renaissance had "unclean hands" by engaging in illegal activity, and demanding that they participate:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agxVXC.r9Edw

Renaissance asked the court to throw out the defendants' use of this "unclean hands" defense, but the judge did not buy it:

http://www.zerohedge.com/sites/default/files/Quant Case.pdf

The issue, as described by an economist who has some expertise in such matters, is that employers such as hedge funds are using the confidentiality agreements, which are supposed to protect intellectual property, to "back-door" their way into asserting non-compete agreements where none actually exist:

http://www.efalken.com/papers/IPclaims.html

The upshot is that if the small firm at which "mylife" is now working becomes successful, it would be (in part) because of the quality of the trading strategies which "mylife" has discovered. As it seems that presently the firm is not generating revenue because they are not actually trading these strategies yet (but, rather, are simply back-testing them), the company may not yet have funds with which to pay "mylife". But if the firm does start trading, and does become successful, then the firm ought to reward mylife for contributing to its success.

If "mylife" hasn't signed any non-compete agreement, then the firm should eventally realize that it must offer a fair reward -- otherwise "mylife" could join some other firm which does agree to pay fairly.

But if "mylife" does sign a non-compete agreement, that will drastically reduce the monetary value that could be demanded. The current firm could choose to give "mylife" meager rewards, knowing that a competing firm would be reluctant to hire mylife upon learning that there does exist a non-compete agreement with the present employer. Firms (like those involved in the above action) often do make incoming employees sign very specific non-compete agreements, which diminishes employees' future marketability and accordingly reduces thefuture compensation that the firm needs to pay them.

Just be sure that you know what you are getting -- and, what you are giving up.

 

[mylife]

first of all, what school did you graduate from? how old are you? where are you pursuing your mfe? if you are pursuing your mfe at a top school where placement is very good...then stay at your current job. otherwise i would leave. Usually, a good company can boost your marketability especially if you are pursuing your mfe. many start up companies have a high failure rate. After getting a year or two experience, you can leave or search for better jobs while working with a higher pay. Also, maybe you can move within the departments of the new company. I fail to see why you would stay with a company that doesn't make ends meet and is not that reputable to begin with. Also, getting a percentage of profit and loss is nice and all. But what if the firm doesn't make profits? What are you going to do?

I got PhD from a medium-ranked CS program (20-40), and pursuing a part-time mfe which is usually regarded as one of the top 3 mfe programs. I guess I can find a good job with the mfe degree, also the brand of the new firm will be useful. But it is hard to get both (the new job will make me less concentrated on the mfe study), that is a trade-off. If I can only pick one, I guess the mfe will have more value. Thinking about that, as a data guy of a known hedge fund, I'm still a IT-like person, hard to make career transition...

 

[IlyaKEightSix]

Snip

A bit offtopic on this, but given the Rentec fanboy I am, I tried reading some of that legalese.

Big mistake. It made my head hurt.

I swear...legalese is probably more foreign to me than Japanese. Despite being written with English characters.

 

[Ohad]

I got PhD from a medium-ranked CS program (20-40), and pursuing a part-time mfe which is usually regarded as one of the top 3 mfe programs. I guess I can find a good job with the mfe degree, also the brand of the new firm will be useful. But it is hard to get both (the new job will make me less concentrated on the mfe study), that is a trade-off. If I can only pick one, I guess the mfe will have more value. Thinking about that, as a data guy of a known hedge fund, I'm still a IT-like person, hard to make career transition...

I have to say that unless your current job pays so little that you can't support yourself, your current job seems to be better.
If you can maintain yourself until you finish the MFE which shouldn't be far since these are short programs, you will have a pretty impressive track record.

PhD , MFE and developer experience , also by that time you should know where is that start-up going, under or to the top.