Goldman versus Google: A career on Wall Street or in Silicon Valley?

[Music] if you were advising a young student entering the workforce now whether what their career direction should be and they were they were thinking maybe I'll go to work for Google or or should I go and work for Goldman Sachs what would we advise them where's that where's the best where's the best industry to go in the future and we both picked our favorite debater to come on and and take one side or the other of that debate and so to debate Google versus Goulburn the the company that can do no evil against the giant vampire squid we have the Nobel Prize winner Bob Shiller who is going to argue I think for Goldman and on the other side Vivek Wadhwa who is a great academic at the carrot top of academics in fact according to the CEO of Twitter who is singularity University as a adviser government and all sorts of innovation sides of things and so I invite them both up on on the stage to to join us correct maybe you want to talk briefly about how this is gonna work first of all it's great to be here you can tell I'm representing the technology industry because I think I'm the only person in the room without a tie so this is this is just a fun debate about whether graduates should go into technology or finance and I'll let the debaters speak for themselves but I will say that Professor Shiller sent his first tweet today backstage you can find him on Twitter now at Robert J Schiller fantastic very exciting news so the way this is going to work is each of our speakers is going to speak for five minutes then Gregg and I are going to ask each of them one question each they're going to reply briefly in about a minute then we're going to throw it open to you for a few minutes and then they're going to have a two or three minutes to wrap up each at the end we're going to take a vote now and we're going to take a vote at the end to see which which one has managed to sway you so all those who think that you would advise archetypal I guess we'll call them a Harvard or Stanford student who thinking about what they're going to do next who would advise go and work for Google Wow and who would advise Goldman Sachs so I think the googles are probably two-to-one ahead is that you can agree with that yeah I'd say about two to one okay The Economist conference right so with no further ado then Bob I'm going to hand you the poison chalice to you and you have five minutes starting from now have an economist I have to say we don't all do the same thing and everyone is different so I'm not going to really answer that course the question is is it a good idea for people who find it interesting to go into Goldman Sachs and I would say yes I've written a book with associated with my undergraduate finance course called finance and the good Society okay I guess it's maybe why you picked me I wrote this book right now the finance is excessively maligned you know when prejudice is developed as you know they're prejudiced against all sorts of people right now its finance I want to reflect at what it does for our society now my assumption is I'm not talking to students who want to make a lot of money okay coincidentally they'll probably make more money at Goldman Sachs right then at Google but I'm putting that aside I'm assuming that my students are idealistic and see the importance of they want to make their mark on the world in a good way so I'm I'm thinking that actually I'm distinguishing that from wanting to win accolades or the admiration of their friend we we have some very genuine idealistic students and that they right now feel that they couldn't possibly go into finance that's wrong finance is the place where you can make your mark on the world and it has to be a personal I maybe I'm overdoing this personal commitment because you won't get credit for it now they've made a Hollywood movie about the founder of Facebook okay they're crazy I know if he's happy with that movie at least they made a movie they do not make Hollywood movies about famous well but when they make them they're Devils they're evil so the public kind of hates you and I it's a burden that you must carry with you all your life if you go into the finance but you will know in the end inside you that you've made things happen on a bigger scale than you ever would have at Google okay what it is is every human activity that matters has to be financed you cannot do good things for the world all by yourself any important human activity involves groups of people groups of people who have access to resources to actually do things and this is just a fact of the world we live in everything that is good that's done is financed most good and important activities have a financial basis and they they need a financial basis so that they can last over the centuries I'll give the example of our not school under the the Economist magazine tell me if I'm wrong was founded in the mid nineteenth century and it had a peculiar financing through these four women who were [Music] personally behind the Economist magazine fat was a family business in a sense number of finances yeah but but these were these were my students okay this kind of you are a finance financier with principles and purpose it's not about making money so the people who kept the economists going were people who believed in the Economist magazine and they were from in encouraging they were providing the resources for it to develop into what it has this is what I want my students to do so I tell my students that your personal identity shouldn't be as someone who's making a lot of money in finance your personal identity builds around particular interests that you have that you want to I'm saying intellectual interest moral interest that you have that you want to promote so I'm actually thinking of bringing in to my students this next semester someone who runs a venture capital firm that specializes in health care now I met this person and I thought I'm thinking of bringing in I think he's as good as anyone in this world for what he does now I don't think that he has the followers who appreciate so so I have 27 seconds so the point is not that everyone should go into finance it's that people with a moral purpose will discover that there is power in the technology you when you study finance you are studying how to make things happen on a big scale on a lasting scale that has to matter more than getting into Google and programming some little gimmick can I go now you know I made a quick list of what Finance gave us collateralized debt obligations credit default swaps structured investment vehicles subprime loans the housing bubble credit default swaps I made it just such a long list goes on and on and on the economic meltdown and then look at what Google has given us over the last 10-15 years search now you can find anything anywhere YouTube you can have you can watch videos of this online and you can experience what the world is doing Maps whenever you travel anyway you are now Google mapping it and getting where you want to do and then what's facilitating mobile Android UI in droid operating system and then you have the web browsers and then if you look forward a little bit Google is developing for example the Google car if you read about the Google car that could revolutionize transportation worldwide imagine not having accidents imagine being productive when you drive when you have self-driving cars imagine not hitting bumpers because cars don't crash into each other not reading traffic not needing traffic not having to own cars Google cars Google loon which is now an Internet facility delivered by Wi-Fi or Google Fiber which is going to automate cities if you start going through the things which Google is doing you'll be blown away that we're talking about changing the dynamics of cities change the dynamics of life look at how our lives have changed over the last 10 to 15 years with the internet and all the good things that brought but more important that we use Google generically I'm not just going to talk about Google there's a lot of pessimism about about industry about society about the world about shortages about the fact we can run out of food energy water they're going to be hunger everywhere my view after being the technology world is that the exact opposite is happening that the United States is reinventing itself justice happens every 30 or 40 years the u.s. is in the middle of a major rebound it's being driven by tech ecology it's being driven by innovators you know we all know about how computing has advanced the iPhones the smartphone's you carry in your pockets have more computing power than existed on the entire planet the day I was born some of you are younger than I am but these are supercomputers we have in our pocket that's how computing is advanced exponentially the same advances are happening in medicine in robotics in AI in nanotechnology I can go on our own field after field after field and what that means is that we're now going to be able to solve Grand Challenges of humanity I'll give you an example start with the humanity itself start with us the human genome was first sequenced about 12 years ago it costs billions of dollars to get there today you can do full human genome sequencing for about three thousand dollars soon it'll cost zero to do complete human genome sequence why is this important it's important because it means that we become software just like you do searches on Google you'll be able to searches on the diseases we have you will be able to correlate them with with genes you'll be able to correlate them with lifestyles with habits so that same tools that have brought you Google search imagine that bringing you search for for cures for health at the same time we have advances happening in robotics to the point that as if this year it's cheaper to manufacture in the United States than it is in China the value chains have been caught up there's the massive investments involved but move forward five or ten years despite how much Steven Roach hypes China China is doomed manufacturing is not only coming back in United States is going to become a local industry everywhere soon after you have robotics you'll have 3d printing 3d printing is going to put the robots out of business at the same time you have advances happening in nanomaterials we're talking about nano bytes nano molecules that go inside your body and now do what you saw in Fantastic Voyage we're headed into an era in which we are talking about unlimited food unlimited energy unlimited water being able to 3d printer houses a much better society I'm not talking about science fiction I'm not talking about decades from now or what your children will experience I'm talking about things that'll happen in your lifetime the Google car you can see driving around in California today it's women half a million miles without a single accident give it five or ten maximum worst-case-scenario 15 years and we'll all be going on Google cars and the traffic mess you see outside in New York City won't exist anymore we spent 40 percent of our land space on parking we won't need it anymore because cars will drop us we want to do thanks to the web Google is coming into this so the would you rather have your children going and cooking up the financial system engineering the financial system and creating more problems for us more meltdowns more bubbles like what my esteemed friend is famous for I would rather have ashamed of saving the world it's a binary thing you know I can't even believe I'm having this debate let alone with a Nobel Prize winner okay Greg have you got a question for Bob I have a lot of questions one question for Bob and then one for attack okay so I guess my one question is its we know that Finance helps financially support a lot of these tech companies that a lot of the wonderful things that V Beck talks about but we talk about brilliant engineers concocting all these wonderful mathematical algorithms and engineering a lot of that seems to me to go into high-frequency trading a lot of things that kind of hurt the financial industry so when you're thinking about an engineer how can an engineer use his mental horsepower to help people through the finance industry more than going into Google well I thought it was interesting that vivec in his description of Google was constant focusing on their investment banking division in effect because all those things that you for example draw itself driven cars that's not Google technology or maybe it involves it they bring in they must have brought in other people they're acting like a venture capitalist when they do that they're bringing yeah you have engineers doing all these amazing things I think we need more engineers than we need finance people but we need a lot of finance people to help provide the resources for them to do these things but I tell my students that I wish there were more engineers who would take my class to me it's not it is not a choice between Google and gold of course you have to pick one or the other and when you graduate but your life career in involves both I like in fact in my latest project syndicate column I propose the Nobel Foundation should add a nobel prize for engineering completely agree and so that's that up there I admire and my father was an engineer but we need finance too in fact engineers are increasingly studying finance it's an important part of an engineering education ok so I'm gonna jump in on my question to you Bob because one of the things that struck me most soon after the financial crisis in 2008 was hearing Paul Volcker talk about how the lowest point in his life was when his grandson said grandpa when I grow up I want to be a financial engineer basically after the financial crash happened he called up his grandson and said you know it's all your fault and his grandson said no and I was just doing what I was told to do and and Volcker actually said no you can't use the Nuremberg defense for financial engineering I mean its financial engineering just is there anything at can solve I was actually the graduation speaker for one class of the University of California at Berkeley financial engineering program and so they brought me and I believe in financially but what is financial engineering it's the application of mathematics basically to understanding risk management and these things that you describe is so evil are not evil they're there so welcome financial engineering soul the other engineering count it's of what does financial engineering is not new it goes back so for example one example I like to give is comparing the effect of earthquakes in Haiti with the earthquakes in the United States Haiti had this horrible earthquake how many people died fifty thousand people died people were homeless because their homes were collapsed when we have an earthquake in the United States you know 20 people died and there's nobody homeless why is the difference it's because we have insurance and there is this thing now there's a Caribbean of it finance insurance initiative trying to bring it to these people but they don't have it you would have you easily naively imagined that there will be some charity that will come through whether if some of it did but it wasn't adequate I do I want equal time over here we're gonna push you on and go X now a question for you as well my question for you is you criticized the the chairman of Twitter and he called you this the carrot top of academic sources which I gather was a reference to a comedian and he basically you accused Twitter of being a classic example of the Silicon Valley boys club because it basically had no people of certain ethnic minorities on the board or white men and so if you were Wall Street is not I think as sexist I'm not sure but that worked on Wall Street I know how we treat women on on Wall Street so let's not go there the but the fact is that would you go to Google or the Goldman plenty Google because Google is more sensitive than Wall Street is you have to work in the I tell you I worked at First Boston for many years the way women are treated there is disgusting so both are evil and it's wrong in in both cases to mistreat women or to mistreat minorities in that way but getting back to what think we can produce the innovation is actually an outcome in finance the real innovation for the blue is coming of Silicon Valley look at now PayPal look at digital currencies look at crowdfunding my question Greg you worked in banking and technology do you need advanced mathematics and cutting-edge financial engineering to finance the googles and the Facebook's or can it be done by just a with a venture capitalist with some intuition well the cost of developing the technologies I talked about is drop exponentially you can have two kids in a garage right now building worlds you any technologies the type of sensors that can detect our health cost practically nothing you deal with DNA cause dropping you can have a fourteen-year-old writing search algorithms to come up with things so the cost it used to be five or ten years ago you needed millions of dollars you needed venture capital system you did an IPO system to innovate you no longer need that the cost of technology weapons drop to the point that innovators can do it on their own they can borrow money from mom and dad they can work just out of their garages as long as they have enough money to eat they can now do world-changing technologies that's how much things have changed I want my kids to go there I want them to be saving the world and not be cooking up new financial instruments we've got enough of that we even if but to play devil's advocate I mean when Facebook IPO Twitterers gonna IPO they still need bankers to find out if even if we cut off the supply of talent to the financial services industry for the next thirty years that we would do just fine thank you and as Walker said the last great innovation was the ATM we don't need any more innovations Silicon Valley will take it for take care of it for us a lot more innovations we we benefited enormous ly from those in the past this is a whole string of great financial innovation I just mentioned the mortgage the home mortgage when you are young you want to buy a house with for your children they want a yard and all that but you don't have money when you're young so you get a mortgage that's very simple but you know a lots of countries don't have a developed mortgage instant institution so people end up unhappy because in that way credit default swaps came from Italy I think that's probably Moby this game innovation was in cooking the system we already have these estimates already I mess up the funding we don't want to be more creative in how you skip money off the top to give that's good doing Robert just to explain that are there any recent innovations in the last five years with mathematics or algorithms in financial that makes transformative that make this mortgage finance five years can you name anything that really advance people's ability to buy I'll give you one that's very relevant to because you're involved it's the benefit corporation and you you're singularity University so many people it's so new it's three years Oh many people don't know what it is but traditional finance has two main sectors for profit and nonprofit and let's not forget that there's nonprofit finance it's very important but now what they're the new thing is to put something halfway between it's for-profit and nonprofit this sounds strange it's an experiment it tells the board that you can do good you don't have to just focus on the investors you can also focus on social causes this is why we're both agreeing so I think we agree on everything else also just very quickly if you just say questions Thank You Jesse Sandra from Stanford so talking about you touched on innovation at the end so in financial products actually I think you have the greatest amount of of innovation in the sense that you can get a product to market more rapidly than you could in even technology if you come up with an algorithm you can deploy it the next day having said that when you yes so the question is where do you think the the core of innovation lies in in finance versus technology is it and the ability to deploy more quickly or the ability to generate a greater diversity of talking about Goldman versus Google and you spoke a lot but the actual macro level impact of those industries but for me as an upcoming graduate and economic reddit I for me it's much more interesting looking into for example the company culture of those two companies and how would you for example defend the Goldman Sachs company culture compared to the Google company culture thank you quick question micro funding crowdfunding as it relates to a potential example where finance and innovation come together for good your thoughts on that would be interesting my question would be as we've seen innovation progress there seems to be a tendency for less competition actually where these large firms like Facebook and Google kind of snap up these upcoming companies as they rise and I was wondering if you could speak to whether that's a function of furthering technology of furthering finance or if I'm wrong and really competition is increasing as far as acquiring small startups goes it good it's good because it reaches the ecosystem it gives small startups a way of becoming part of a bigger entity and getting the technology spread quite fast crowdfunding and and all of these associated micro fund microfiber so they're great the innovations coming from Silicon Valley that's the type of finance innovation I'd like to see versus the brain dead skin money off the top innovation sorry she won't respond to any of those questions yeah about Goldman company culture John Whitehead was the head of Goldman for many years he's in his 90s now I guess and he he actually listed a state list of principles for Goldman people and there was an eye certain amount of idealism but not one thing they were really after making money okay yeah there wasn't but there was also a philanthropic sorry Goldman has been good on relatively good on philanthropy but the company culture is really important and not all financial companies yeah some of them are they should go to jail so we have to have regulation and we have to have young people who make discrimination when they take a job and they must have a sense that they want to improve the culture of the company but but they look they will tend to look greedy to some anyone who lends money and asked for it back is going to look greedy and you'll never be you'll never be loved that the way mother Teresa was it just never will happen but you have no inside that you are a person of principle and Google does no evil of course actually Google is exemplary in Silicon Valley in terms of reaching out to the community doing things if you look at Google for entrepreneurs google.org if you look at a lot of the things that they're doing for the community the reason why Google can get away with so much evil in hacking our data and and and knowing everything about us is because it does so much good its employees really have a really great culture it's a company that have been very critical of but which blows me away with the culture that is people have you don't see the same culture in goldman sachs you don't see that anywhere I mean I understand that Goldman is a has philanthropy I understand there's impact investing is there any good in like the majority of Finance yeah it's a it's a technical system that you have prices that get out of line and some people merely trade restoring and they don't look good at all but it's part of a system whose overall function brings us modern civilization there is no country living like this country does that doesn't have these financial institutions look let's put our energy saving the world we want our kids to be building world-changing innovations versus world-changing Financial skimming I think you've basically covered the waterfront so let's go for a lower wins gets a Nobel Prize so all those who would advise Google still after having heard that passionate defense of Goldman from Bob Shiller all those in favor of Google and now all those in favor of Goldman Sachs I think you've won you keep your Nobel Prize it's about 50/50 from from two to one in favor I think I think I think I think Robert convinced me I don't know who know there we go we need to we need to count dimpled Chad's now right well I mean what a spirited debate thank you very much for the two of you together right thank you very much thank you

Channel: WithTheEconomist

Views: 121,551

Rating: 4.8677917 out of 5

Keywords: Robert J. Shiller, Vivek Wadhwa, Yale University, Singularity University, Google x Goldman, The Economist, Economist, Economist magazine, Economist Group, Economist Events, Wall street, Buttonwood Gathering

Id: O6ecPxD_tV0

Length: 28min 33sec (1713 seconds)

Published: Thu Dec 05 2013