[0] https://www.youtube.com/user/standupmaths [1] https://signalsandthreads.com/ [2] https://www.janestreet.com/puzzles/current-puzzle/
My impression with them in general was that they were willing to do lots of things that did not "conventionally" make sense at their size, and those things paid off. The internship program, for example, was relatively large in comparison to the size of the company at the time (≈50 interns?) and had lots of structure (events/talks/classes/group projects/etc) like you would expect from a big tech company, not from a 300-person firm.
They were also willing to build a lot of tools in-house like their own build system[1], their own code reviews system[2], etc. Most people would see this as wasteful NIH but I'm convinced it was a net benefit for them—they managed to be so productive in an absolute sense and especially on a per-engineer basis because they were willing to build so much themselves, not despite it. I'm sure the same thing applied to their recruiting efforts.
The biggest thing I took away from my internship was how much conventional wisdom in the software world was not necessary or true.
[1]: First Jenga, now Dune
[2]: Here's a neat talk on how they do code review at Jane Street: https://www.janestreet.com/tech-talks/janestreet-code-review...
It paid off for them, but I would say it's a risky move in general - it is very easy to get sidetracked with failed projects that have nothing to do with the business. There are many examples - Uber's internal chat system, etc.
Others tools were more a necessity, eg the OCaml build story was not great back then. Investing in OCaml itself was a calculated risk.
Also I wonder how things would be different if they were starting today, where there are more mature tools in the space.
Do you remember any specifics?
I’m also curious how their tooling made them so much more productive. Were the tools just really well designed, or did they integrate perfectly with each other?
And yeah, jane street is a pretty compelling demo that A) NIH syndrome is fine if you're good at writing software and B) it doesn't really matter that much if you use a mature language or some uncommon immature language
Because it is. What is the point of reinventing these wheels when gazillions of man hours have already been invested on open source tools that can do it better and cheaper?
Moral qualms aside, it must be a fascinating place to work.
> At the end of 2023. Jane Street employed 2,631 people, so that equates to almost $4mn of net revenue per head on average. In adjusted EBITDA, it comes to $2.83mn per employee (or nearly $22mn for each of the 482 traders actual traders at Jane Street.)
And regarding compensation:
> Given Jane Street’s disclosed compensation and benefits of $2.4bn last year, this works out to over $900k for each employee on average.
When I first heard of Jane Street, it sounded like Yaron Minsky was going around to MIT and such, high-touch, trying to hire just a few people. And later, things like this blog: https://blog.janestreet.com/author/yminsky/
The only negative thing I recall hearing is Jane Street alumni responsible for the infamous FTX and Alameda Research. I don't know whether the individuals were already fully into hopped-up sociopathic/narcissistic thinking in college, or whether their internship and employment experience contributed.
the bigger the vol, the more imma do
Is learning C++ a must?
For quants (progression towards a trader / portfolio manager), Python / Matlab / R is enough.
> About 80 per cent of the company's capital comes from employee equity, which has swelled to $21.3bn at the end of 2023
o.O
I'd be interested to see if the Pareto distribution holds here as well, namely that 1% of employees (26) hold half the wealth ($10b).
> The real money is at the top. The bond prospectus reveals that Jane Street has 40 “equity unit holders on a full-time basis and in good standing”, with an average tenure of 16 years. Among those there will be at least a handful of billionaires, even if no Jane Streeter appears on any rich lists.
Sounds like any other partnership. A few people at the top are providing the equity and getting a profit share, and the thousands under them are getting salaries.
The difference is that these thousands also get to invest in Jane Street, which seems a pretty profitable investment (70% margins, etc).
Jane Street shares and profits are proportional to the capital you invest/accumulate.
commodities trading houses tend to follow this model too though that is changing a bit.
i remember having this discussion with a friend after he sent me a richard wolff video. nothing about our system stops coops from flourishing. one of my favorite retailers, REI, is a member-owned co-op. publix, the beloved florida grocer, is employee-owned.
Finance tends to pay its workers better than shareholders—most banks’ trading and IB groups pay out more than 50% of profits to workers.
Where it goes wrong is when the regulator fails to stop foul play…
> A good mate who runs and wrecks expensive cars for hobby once reminded me that course plotting (i.e. research) and braking (i.e. risk management) are the two sine qua non contributors to a successful race.
Along with a reminder that disasters happen when businesses forget this (Boeing!)
Meanwhile I'd love to know what their edge is... It's probably more than OCaml, although... ;)
They are not making their money market making equity etfs afaik, mostly bonds. A slightly different game with a much higher barrier to entry etc
If you want to hire the best and willing to pay that is no longer a concern
They use OCaml because it is explainable. Which it is. They use it like a non-lazy version of Haskell -- side effects are used rarely if ever. So there's no nonlocal behavior in the code, which makes it easy to reason about. And that kinda matters when a lot of money is at stake.
Incidentally, Standard Chartered has their own compiler for Haskell, without the laziness. The group is led by the guy famous for Cayenne (the first dependently typed Haskell dialect).
Most companies don't even know that these are programming languages. Also don't assume people interested in these languages are "the best". Regarding JS, this is all hearsay, but I think nowadays they hire good profiles (competitive programmers / olympiad winner / top graduates from prestigious schools), ask them hard leetcode questions, and teach them OCaml (which anybody can learn, not particularly hard. Their talent pool isn't restricted to the OCaml community, as it used to be when they were less famous, except for niche use case (compiler work and so on...)
Yes, Jane Street uses OCaml, they have no reason to stop using OCaml, but may very well have been just as successful using another language. It's hard to tell, when we don't know the full circumstances of why they went with OCaml initially.
> but they could have been just as successful using another language.
His thesis is that finding one really good engineer in said language was 1 in 10 (10 interviews to find 1 really good engineer) whereas in more commonly used languages like Java, JavaScript, etc., it might be 1 in 100
[Edit] https://www.juxt.pro/blog/clojure-in-griffin/
If we had picked Python, it’s very boring and reliable, and the same could be said of Java. But you’re picking the lowest common denominator. I would say high performers, and the best programmers are often people that will only work in niche languages.
The problem is, there are good Java programmers, but there are also thousands of terrible Java programmers. If you pick the right niche, it’s easier to find the high-end talent. I think Paul Graham also made a very strong case that in a startup, you should be using the most powerful language you can, and that is Clojure.
I don't claim to be a rockstar developer or anything close. But my capabilities and efficiency as a developer are tightly coupled to the tech stack I use (not just language).
I moved from a job where I chose my own tech stack that I iterated over several years to one where I'm forced to use (IMHO) tools that are poorly suited to my work, and I'd say the quality and volume of my work has dropped by at least 10x.
So I think it's both. You need smart people, but they also need to be using the right tools for the job.
However, I think if you are a company doing something boring and that can only pay average, then having an interesting tech stack (including a nice language), hiring globally and having good benefits might give you a venue to compete for talent. You'll need some kind of strategy.
The paradox being: developer familiar with programming languages of level of power N doesn't recognize that languages of level N+ are better (more powerful expressively), only that N- are lesser.
These days, starting or running a financial business with less popular languages is, well, less popular.
And one of the answers was Jane St. Apparently they produce great engineers.
Yes, I suppose this is all something to get all starry-eyed over, Jane Street encroaching on Citadel Securities, the two of whom control 30% of the US equity market volume.
I see it another way. I see people's hard earned money being siphoned by enormous financially-engineered vacuums, never to be seen again. And not just in the US, globally. This won't stop at 30% of the US equity market. It won't stop until the music stops and the last chair breaks. Which may or may not be soon. It will certainly be coming at some point.
Five times the London Stock Exchange’s entire trading volumes in 2023 in just your ETF arm? Sure ... this sounds like reasonable growth ...
> This is why some people argue that APs like Jane Street have become systemically important.
Oh, you don't say!
> About 80 per cent of the company’s capital comes from employee equity
That's adorable. They're like a little mom-and-pop shop ... except not anything like that.
can you expand on this? I have zero idea of what Jane street actually does and how they actually make money. (someone wrote that they have ~450 traders. trading what? equity? stocks? dark pools? PE? are they market makers? are they offering services to institution types?)
also what does "people's hard earned money" mean? you mean that Jane Street takes away their 401k or ... ?
We could essentially close them down if we moved all trading to say 1 hour a day.
We could essentially close them down if we moved all trading to say 1 hour a day.
Though most retail traders are upset they can only trade 7.5hrs a day, they want to trade 24/7 instead. They seem to WANT the liquidity and are apparently willing to pay for it.
Me, I'm fine with trading for only an hour a day, but I get not everyone is as lackadaisical as me.
Unless you have a better mouse trap to solve the liquidity problem, this is the best we have for now.
I actually know a little about this space. You know what the easiest response is that is always the answer?
"We provide liquidity".
Sounds important, most people don't get it, it works.
But it's not like the market is going to grind to a halt if Jane Street disappears overnight. Of course, people will say that. Not people telling you the truth.
I actually considered "but, but, THE LIQUIDITY!" in my answer but I felt there was sufficient snark.
That's funny, people say the same thing about ticket scalpers.
No. Flow data is quite expensive, and most providers will only provide bucketed data unless you contribute with your own flows.
OP obviously has no idea what he's talking about but hey, what wouldnt you do for some internet points.
Envious bullshit! The reason they are so profitable is that believe it or not they are replacing earlier operators who were less efficient and taking more transactions costs out of the system before. To be anti-Jane Street is the same as being pro-Big Bank of the past, that was taking more money out of the economy doing a worse job!
Unless you know the history of global financial markets and lived it then you don’t understand. For example in the late 80s the CBOT treasury bond bit had over 1000 traders in that pit. They were all making money and quite a few a huge amount. And there was many more people supporting those traders of the floor. That was just a single futures bond contract! With Jane Street we have 2,631 employees doing the equivalent job globally and for less total cost of at least 80,000 employees in late 80s.
The profits per employee are higher obviously but that’s the effect of technology and productivity but the total price being charged to the economy as a whole is much lower. This trend will continue and I would not be surprised in 10 years that a company of 200 people will provide the entire function of those 2600 today, and probably the profits per employee will be $10M per person. But that’s what we want, is a good thing not bad, portraying otherwise is just Envy.
No, no ... it's not.
First of all I don't care one iota about Jane Street or how much money Jane Street employees make.
The problem is that this money has to come from somewhere. And while you say it's due to the entire system becoming more efficient, that's not the full story. That $1 billion Indian options play came at the expense of Indian retail investors.
So yes, there is a siphoning of money out of the hands of the retail investors and into the vast pool growing under Jane Street and its employees, much as it has done under others like Citadel.
Who is that good for, except Jane Street?
If you look the per capita income from where it's leaving to where it's going, that's where I see a growing problem.
There may be a sucker born every minute, but that doesn't mean that this is all just about making markets more efficient.
And, of course, none of this would have been possible without the additional "liquidity" provided ... the clearly essential contribution that makes it all justified. "We provide liquidity!". Ok ... ?
There's some efficiency improvements too, but ... eh.
Which means they're rapidly coming to a position which will easily allow them to game the system (what used to be known as "cornering the market").
I even wonder if their system has already learned cornering by itself via stochastic gradient descent.
These are flows, not ownership.
Also, taking Citadel as an example, a vast portion of these flows are not their own, but rather thirs parties offloading their flows to them, so they have the underlying best execution guarantee to provide.
An other way to look at it is that investors are moving away from traditional brokers to execute their flows, because these HFT firms have become so good. So instead, investors offload their flows to HFTs acting as DMM instead.
And instead of (metric) tons, I want megagrams. No kilotons; gigagrams.
I've had people get angry when I tried to use Mm (mega metre) or ask why using some currencies symbols before the number when all symbols for all other units are used after.
Their effort definitely paid off though. Quants like JS, Citadel, or Jump hire some of the brightest students from Berkeley and other top CS schools.
B) if you have work experience, they filter on where you worked because the average google engineer / HFT engineer is probably better than your average engineer who works at missouri national bank.
C) if you've done something great that everyone knows about (like being the author of popular libraries, inventing tools that people use), then you can most likely bypass filters A and B if you can get in touch with a human recruiter (shouldn't be too hard).
For prestigious smaller companies which gets a lot of applicants, there is no easy way to reduce the pool without doing A and B. It is unfair and what college you go to might depend on circumstances beyond your control but if you have high ability regardless of what school you went to, you would eventually do B or C and get into the prestigious company.
If you don't have high ability and will never do either B or C, then they did the right thing filtering out your resume.
In the real world, it doesn't make sense for a company to discriminate against a candidate with higher ability just because they went to the wrong school (unless the company makes money from appearances like law firms, consulting firms or is corrupt and entrenched).
That being said, if you went to a community college but also had 10+ years experience at one of their competitors (eg: DE Shaw, 2Sig, Citadel, etc), you'd almost be guaranteed an interview. But once again, thats another very small set of applicants.
It wasn't a "logical way", it was an "easy way". That's classist at the very least.
The question is what other attributes you "accidentally" filter by if you filter by school prestige. Even if you do bias your pool to individually better candidates on average, you may bias it in a lot of other ways.
If the purpose of the filtering is to reduce the pool to a size where humans with common sense can make sensible calls, then that CC graduate with 10+ years of competitor experience would likely be filtered out before common sense could suggest he might be good anyway.
they get many applicants for a job. So you have to filter those applications. One way is to recruit from known places where they have already got people from as they know it worked. Typically those universities also filtered on how good you were and so the average quality is higher from those.
Obviously there will be exceptions but not work spending time to find them. Recruitment costs a lot in time and money.
I have applied about a dozen times since then after getting my degree from WGU and they haven’t gotten back to me; I almost wonder if not putting any college experience on the resume was a blind spot for their filter.
You can't claim to have diversity if everyone did the same courses in the same schools.
That's a lot of money for someone who is essentially a middle-man. What a grift, about 13 dollars for each average American lost out to them a quarter.
Second, it's not at all obvious that market-making is a zero-sum game, where profits to the market maker are "lost out" to someone else. Market-making profits from the bid/ask spread, but a new market maker tends to reduce that spread. Ordinary people tend to invest as price-takers, and thus they benefit from a reduced bid/ask spread.
> We operate as a functionally-organized structure consisting of various management and risk committees. Each committee is responsible for directing the overall strategy of the firm and for emphasizing the importance of risk management to our operations. Each of our trading desks and business units is run by equity unit holders who take an active role in managing our day-to-day operations [...]. Our management structure allows for effective cross-departmental communication [...].
Yes, that org structure full of hierarchical business units with distinct responsibilities and committees and subcommittees and overseers and risk management totally screams "anarchy"...
> the organization of society on the basis of voluntary cooperation, without political institutions or hierarchical government; anarchism.
Because people seem to think it's "politics" and "government" that are the problem. It's not. It's people. It's always been people. It will always be people. People are the problem. Failure to acknowledge that people can and will be shitty is going to doom your system before it starts.
Sounds like a company.
Think when trying to translate a society to a corporation, then each of the terms must also be translated.
For a 'society' there is a government. And politics is dealing with the government policies, how we come up with rules.
But, if you want to translate to a corporation, you can't just say it doesn't have 'government and politics' because the corporation isn't dealing with the larger society. You need to also scale down the terms,
The CEO and the Hierarchy of bosses, are the 'Government' and 'political institutions' are the departments like HR, Marketing, and between them there are 'politics'.
There is no real 'anarchy' like individuals having freedom to 'just work on what they feel like'.
> Average TC of 900K
> Several unranked billionaires
it makes even OpenAI / Meta ML SWEs look underpaid
SWE who have deep subject matter experience are super valuable to these firms. Folks who understand how to write low latency code, FPGA work and other stuff like that. But the real money is in figuring how "how and what" to trade. Once that's done, the SWEs can bang out the code.
JS pays their new grads similarly, just a tiny bit lower.
New grad SWE is 400K
https://www.levels.fyi/companies/jane-street/salaries/softwa...
And levels.fyi not very accurate because 2nd year bonus is much larger than 1st year bonus in offer letter.
Quants/traders can hit $1M with 5 YOE not too difficult. Portfolio managers (similar to EM in tech) definitely $1M, sometimes $10M.
900k is average including janitors and HR.
Median for SWE most definitely over $1 million. Turnover of 6%? No way people stick around “only” making 500-600k new grad comp. Check levels.fyi
> Also, some high-level SWE do make 900K at Google and others
And some high-level SWEs at JS make 9 figures, not 900k.
Tether made 4.5bn net income in Q1 2024 w/ probably <50 employees.