Automation at Goldman, The Computer takes out four people

Today, nearly 45 percent of trading is done electronically, according to Coalition, a U.K. firm that tracks the industry.

Pay:

Average compensation for staff in sales, trading, and research at the 12 largest global investment banks, of which Goldman is one, is $500,000 in salary and bonus, according to Coalition. Seventy-five percent of Wall Street compensation goes to these highly paid “front end” employees, says Amrit Shahani, head of research at Coalition… Investment bankers working on corporate mergers and acquisitions at large banks like Goldman make on average $700,000 a year, according to Coalition, and in a good year they can earn far more.

Automating those $700,000+ meat-sacks:

Goldman Sachs has already begun to automate currency trading, and has found consistently that four traders can be replaced by one computer engineer, Chavez said at the Harvard conference. Some 9,000 people, about one-third of Goldman’s staff, are computer engineers.

Finding the things to automate:

Though those “rainmakers” won’t be replaced entirely, Goldman has already mapped 146 distinct steps taken in any initial public offering of stock, and many are “begging to be automated,” he said.

To be all double-turns-out about the grim automation stuff, in theory, this could mean hiring more programmers and people who support those robots, bringing down those big chunks of cash from “rainmakers” and spreading it down to “lower” grade staff. Of, you know, the bank can just keep that money and trickle it up to execs and share-holders.

Source: As Goldman Embraces Automation, Even the Masters of the Universe Are Threatened

Global IT spend at $2.4 trillion in 2017, 3.5% growth, IDC

Worldwide revenues for information technology (IT) products and services are forecast to reach nearly $2.4 trillion in 2017, an increase of 3.5% over 2016. In a newly published update to the Worldwide Semiannual IT Spending Guide: Industry and Company Size , International Data Corporation (IDC) estimates that global IT spending will grow to nearly $2.65 trillion in 2020. This represents a compound annual growth rate (CAGR) of 3.3% for the 2015-2020 forecast period.

Link

Growing eyeballs at Facebook, some product management tips

Some intersting history of how Facebook grew users. Of course, this the case study is for a free service, that focuses on a high volume of users. I.e.: not an enterprise sales business that charges $3m+ per user-cum-customers.

Contextualizing aside, there’s some good product thinking:

Better know what your product is good for:

Knowing true core product value allows you to design the experiments necessary so that you can really isolate cause and effect.

Getting people to realize your product is useful, understanding and the wanting the value-prop:

Once you understand core product value you can create loops that expose that over and over again. You have to work backwards from ‘what is the thing that people are here to do?’ ‘What is the A-ha moment that they want?’ and giving that to them as fast as possible.”

The clock is ticking, the cash is burning:

“Startups only have so many opportunities to run an experiment in the product, and they’re also time bound by the cash they have in the bank. With that said you need to run experiments that matter.” “Experiments that count when you are using smaller samples have to be incredibly thoughtful.”

You’d think that would favor large organizations who have the scale of people, time, and money…if only they can switch over to this way of thinking.

Your best customer is one you already have:

Retention is the single most important thing for growth.” “Retention is the number one thing we focus on at Facebook. You can’t trick users into doing that.”

Link

Coté Show: Biz Dev, Defining an application, the atheist eagle scout, with JJ Asghar

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Another interview, mostly on cloud and other dorky topics:

Having worked in cloud since before cloud, JJ and I talk about what companies are using various cloud things for. We also discuss the conceptual history of cloud, and what exactly he does as a “business development” person at Chef.

Subscribe, tell your friends, or just download the episode directly.

Software Defined Talk: Snap’s cloud billions, Google’s social, Monitoring Startups considered hard, DHS wants your passwords

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This week’s episode is out:

Snap is looking to spend billions on AWS and Google Cloud over the next five years. We talk about what exactly that could be for, then check in with Google’s social strategy and thermostat strategies; meanwhile, the America Fuck Yeah crew wants to start gathering passwords at the boarder. Also, Brandon lays out the case that an open-core monitoring startup is a hard row to hoe.Also, Baltimore is not in Maine. (But Coté is pretty sure it actually is.)

Subscribe, tell your friends, or just download directly. Don’t miss the extensive show notes with plenty of bonus links.

“Give us your passwords, foreigner” – DHS mulls password collection at borders

Kelly noted that while this was “still a work in progress” and not necessarily “what we’re going to do right now,” he added that President Donald Trump’s freeze on entry to the U.S. by citizens of seven countries, “is giving us an opportunity… to get more serious than we have been about how we look at people coming into the United States.”

“These are the things we’re thinking about,” he said. “We can ask them for this kind of information, and if they truly want to come into America, then they’ll cooperate. If not, you know, next in line.”

It’s be nice to find the exact back and forth, somewhere in this five and half hour Home Security Committee video.

Also, it’s further in the “life becoming more like Black Mirror” vein. Recall that episode where people are required to review all their memories when they cross borders and enter airports.

Source: “DHS mulls password collection at borders.”

Onshoring manufacturing, shoes edition

A nice scenario’ing of brining manufacturing back to the US, told through Under Armour. For example, with factory-automation and higher labor prices, you don’t end up hiring 1,000’s of people:

Plank has lamented that we’ve been making clothes the same way for 100 years, and he hopes to change that with the innovation happening at UA Lighthouse. But a huge innovation in the footwear industry, as in other industries, is automation. Adidas now has two Speedfactories, its automated robot-helmed sites. According to Fortune, these only require 160 employees, cutting out many of the humans formerly needed for this kind of factory work.

Plank is fully aware of this tradeoff. When asked about creating jobs in the US, Plank told Footwear News, “It’s not pegged to have 175,000 of those jobs come back to America. I just wonder if there is a way that we can be more thoughtful, creative, and innovative. What if we could bring 100 of those jobs or 500 or 1,000 or 10,000 here?”

Productivity!

There’s also a nice discussion about a border tax’s effect on retail.

The summary is: on shoring manufacturing will create jobs, but probably much less than “like back in the good old days” notions. Further, in the overall retail system, it’ll require much investment and change.

As ever, for an administration that wants to “shock the system,” it fits what’s on the tin. Get some rubber shoes.

Link

“[E]verybody likes growth in someone else’s backyard”

So, long run growth comes from one thing, and one thing only: Productivity. New and better ways of doing things. New and better products, new and better companies. It doesn’t come from 90% of the things that we talk about. So, the Federal Reserve, stimulus programs, even anti-inequality programs–over 10-20 years, it’s about productivity. Our ancestors may have, you know, you might have had a grandparent who dug coal with a pickaxe; and how did you get so much richer? Not by your union getting him higher wages and he still digs coal with a pickaxe at 20 cents an hour, not 10 cents. It’s because one guy left and he uses a bulldozer. Right? Growth comes from productivity. And productivity–everybody likes growth in someone else’s backyard. Productivity comes from new companies, doing things new ways, and making life very uncomfortable for everybody else. Uber is the great example. Uber is–that’s a great productivity enhancement. It’s putting a lot of people to work who otherwise couldn’t go to work. And the taxi companies hate it. And most of economic regulation is designed to stop growth. It’s designed to protect the old ways of doing things. So, what we need for growth-oriented policies is exactly that kind of innovation, that kind of new companies coming in an upending the status quo, that make everybody uncomfortable and run to their politician to say, ‘You’ve got to stop this.’

I don’t know the politics of economics enough to figure out if that’s a dick thing to say or not, but it sure makes grim-sense. The rest of the interview has some fun mental gymnastics and suave “turns out”’ing.

(And check out the show notes! That’s some intimidating work.)

Source: “EconTalk: John Cochrane on Economic Growth and Changing the Policy Debate”

6 page memos for meetings? Hold my beer. How ’bout 9 bullet points?

The commander in chief doesn’t like to read long memos, a White House aide who asked to remain unnamed told The Huffington Post. So preferably they must be no more than a single page. They must have bullet points but not more than nine per page.

Source: “Leaks Suggest Trump’s Own Team Is Alarmed By His Conduct”