Why the best finance software engineering jobs aren't at trading firms

October 18, 2022
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One of the challenges we've seen in hiring for a fintech startup is that top candidates are biased towards trading firms; fintech startups don't have the same cache that a top-tier trading firm has. This reputation didn't happen by accident. Trading firms work hard to drive appeal through the promise of high-paying salaries or top-paying internships. While this may have been true in the past, we're seeing a massive shift and the tides are turning.

Let's take a look at why candidates are—or should be—shifting their focus away from trading firms and exploring opportunities at fintech startups instead.

Trading firms can make upwards of $1B in a good year. However, top data firms can make multiples of that. The potential upside for a great financial data firm easily eclipses that of a trading firm in any given year.

You also have to account for the winner-takes-all mentality in trading, where the top two to three firms take home the lion's share of the revenue, leaving the other firms to fall by the wayside.

Trading firms tend to have imbalanced incentives that favor the founder and/or early partners. These individuals capture more of the upside than you'd see in other industries. So much so, that it's rare to see a firm leave a legacy beyond its founder. When you hear about firm spin-offs, it's often because that's the only way a trader can get further career upside.

It's also difficult to put a valuation on company IP and unpredictable revenues, as evident in the low-revenue multiples that stocks like VIRT trade at. The relatively low M&A or private funding activity for trading firms is also an indication of imbalanced incentives and potential upside for non-founders.

Just like a broker collecting trading commissions or any other trade facilitator, trading firms are directly tied to the volatility and uncertainty of the markets. Data firms, however, are far more defensible from market downturns, changes in volatility, or sudden catastrophic events wherein an entire firm is taken out.

A trading firm will have a specific tech stack and process, significantly limiting an engineer’s potential to learn and grow—not to mention help build something new. Data firms have a measurable impact on an engineer’s transferable skills, especially when it comes to web stacks.

Web apps have been the centerpiece of the greatest economic successes of the decade. Engineers are more likely to have successful outcomes working at a web-based company than in any other line of work. Yet at a trading firm, even the top firms only have a few web developers (if any) regularly maintaining their public sites.

This discrepancy in emphasis on web development means that engineers at trading firms might miss out on opportunities to enhance their skills in areas like:

  • Web API design
  • Docker
  • Continuous deployment
  • Zero downtime deployment

In contrast, data firms tend to focus more on these aspects, providing engineers with greater career mobility. Additionally, data firms tackle unique challenges like:

  • Optimizing for low latency
  • Managing single-threaded versus multiple instances
  • Implementing distributed architectures

Concepts like clustering are frequently encountered in these dynamic environments. At Databento, for instance, we prioritize maintaining high availability due to the continuous influx of customer traffic.

Data firms, particularly those focused on web stacks, provide engineers with a broader range of skills and offer more opportunities for career growth compared to trading firms.

Databento engineers gain experience in product development, conduct rigorous A/B testing, perform canary testing, and develop a sense of user experience (UX) design.

In most trading firms, traders and portfolio managers (PMs) are typically seen as the primary revenue generators, commanding higher salaries and bonuses. Software engineers often find themselves undervalued and under-compensated, despite playing a crucial role in building and maintaining the complex technological infrastructure that powers trading operations.

One incident that garnered significant attention involved a mutiny at a prominent options market-making (OMM) firm. Compensation information was inadvertently leaked, and engineers were shocked to discover that their earnings were substantially lower than those of their trading counterparts. This revelation highlighted a fundamental issue within the firm's culture and exposed the notion that engineers weren't considered first-class citizens.

Trading firms are notorious for a lack of work-life balance. For some, that may seem like a badge of honor, but in recent years, many people have realized that a healthy balance between work and personal life is better for everyone.

At product-led data firms like Databento, teams can focus on building something they’re proud of, not clocking hours of face time.

Being part of creating something innovative and useful is a critical requirement for software engineers. Databento senior frontend engineer, Naomi Danielle recently noted how the team’s collective commitment to creating something great drives the entire organization to succeed:

“Everyone here cares, both about the product and the journey building it.”

‍Building something great is a huge motivator, but creating a product for customers that need and use it is an intangible benefit that can’t be achieved at a trading firm. At a data firm, engineers often have direct interaction with customers on a daily basis. Whether it’s troubleshooting bugs, explaining features, or gathering feedback on future enhancements, engineers have a direct line to the people that use the product they helped create.

‍Trading firms like to keep their teams under lock and key, and many require employees to sign non-competes when they join effectively limiting their future prospects. Data firms most likely won’t require you to sign a non-compete, so your expertise and exposure is yours to use as you wish if you decide to move on.

When people talk about trading firms, culture likely isn’t one of the selling points. Competitiveness and self-preservation often overpower collaboration and don’t foster a collegial, welcoming working environment.

Data firms are collaborative by nature and require the unique skillsets and backgrounds of a diverse group of individuals. Engineers have regular interactions with everyone from sales and marketing to product. Everyone on the team has the potential to make a material impact and is encouraged to have a voice and contribute.

Data firms are also much more likely to look at non-traditional backgrounds and experiences when hiring, resulting in a wider diversity of thought that drives a more inclusive and accessible product.

At Databento, we value our software engineers and offer all the perks of trading firms—without the drawbacks. Our cutting-edge low-latency and performance engineering technology is on par with that of the largest firms, and through our partnerships with top-tier infrastructure providers, we leverage the same resources trusted by global market leaders.

Our codebase is written in C, C++, and Rust, and we avoid garbage-collected languages like Go or Java that are designed for web developers. We also possess a high ratio of servers, cores, memory, and storage per employee, ensuring that engineers have access to robust and scalable infrastructure. Databento is primarily self-hosted, but we host a lot of our tech stack in the cloud as well.

Our employees include professionals from renowned organizations like Jump, Tower, Citadel, IMC, Two Sigma, and Flow Traders, as well as tech giants like Facebook, Google, Bloomberg, Pinterest, Instacart, and Microsoft. Our team comes from a wide range of educational backgrounds, representing institutions like MIT, Harvard, Stanford, Berkeley, CMU, Princeton, Duke, Northwestern, and more. With diverse expertise, we approach problem-solving from multiple angles, celebrate innovation, and value niche skills.

We’re always seeking new talent. If Databento sounds like a fit for you, check out our careers page.