Early in his college career, Tyler Bosmeny assumed that after graduating, he would do what hundreds of other self-respecting Harvard University engineering, math, and science students do: take a job on Wall Street. "I had done a summer internship in investment banking, and part of me always figured that I'd be working in finance after Harvard," says Bosmeny, an applied mathematics major. But on graduation in June 2009, Bosmeny will work instead for an Internet startup he founded with five undergraduates from top schools who, like him, were on student newspapers. Called PaperG, the startup sells online advertising to local businesses.
Only three years ago Bosmeny could have written his ticket for an entry-level job in the financial sector with a starting salary north of six figures. Those days are over, at least for now. The global market crash and the contraction of the financial sector has dramatically changed the decision matrix for tens of thousands of promising math, science, and engineering graduates such as Tyler. Students who in years past would have flocked to Wall Street are considering careers in engineering and technology. Suddenly, science is sexy.
Ranjitha Kurra, a student at the Masters of Engineering Management program at Duke University, says she interned as a business analyst at Barclays Capital (BARC) this summer and had an offer for a full-time job. But following Barclays' recent acquisition of Lehman Brothers, Kurra was told she may not have a job when she graduates in December. She worries that even if Barclays were to meet its commitment, she might be laid off within months. She doesn't want to return to her home in India yet, so she is looking for a job in engineering, an area she thinks will be safer than anything in financial services.
Safety is Relative
Sure, the tech sector is shaky, too. Witness Intel's (INTC) Nov. 12 announcement that fourth-quarter sales will fall short of previous forecasts (BusinessWeek.com, 11/13/08) and Cisco's recent disclosure that sales in the period that ends in January will decline. But few expect Silicon Valley to undergo the carnage suffered by Wall Street.
Another Duke student, Vinay Lekharaju, says his dream since childhood has been to become an investment banker. He believed that a solid education in engineering and mathematics, combined with courses in financial management, would position him well for this career. He says he has been applying to every financial service company he can, but unlike previous semesters, when peers would get multiple job offers, he hasn't even been called for an interview. So Lekharaju is looking for a job in information technology.
It stands to reason that when even the best Wall Street firms, such as Goldman Sachs (GS), are laying off staff, students aren't getting job offers and are having to rethink their options. Indeed, even sectors once considered fallbacks, such as regional banks, boutique investment banking, or insurance, are busily handing out pink slips. Investment banking isn't the holy grail of professions anymore. Duke's engineers are increasingly looking at such companies as IBM (IBM), Microsoft (MSFT), Medtronic (MDT), and The Parsons Corp.
When I joined the Pratt School of Engineering at Duke University in August 2005, more than one-third of the masters of engineering management students from the outgoing class told me they were taking jobs in financial services. From the class of 2007, 22% went into finance. In 2008, the percentage slid to 17%. I sent an e-mail last week asking the 112-strong class of 2009 how many were interested in financial service jobs. Only three, including Kurra and Lekharaju, responded in the affirmative. Nearly all of the others said they wanted to become engineers.
Shijie Deng, director of quantitative and computational finance masters at Georgia Tech, says some of his students are getting job offers outside the U.S., from such operations as the Hong Kong outpost of Merrill Lynch, which was recently acquired by Bank of America (BAC). Still, the job market is tough, and demand for his program is down. Its graduates increasingly are looking for jobs in consulting, energy, and traditional engineering that have an interface with finance but aren't in the thick of the industry. Others are applying for PhDs.
There also may be many others like Tyler. "Over the last few years, many students who have had innovative ideas ultimately chose to take a more risk-averse career in investment banking or consulting," says Travis May, another Harvard undergrad who put off finishing school to relaunch StudentBusinesses.com, an online service designed to match student-founded companies with angel funding. "Now, there is less of a pull to go in a traditional route, and the upside of that is it makes startups more compelling as a career path," May says.
The venture capital community appears to have taken note of the newfound disillusionment with finance. First Round Capital, an early-stage VC firm based in New York City, launched "Leave Wall Street, Join a Startup," a Web site that lists job openings at its portfolio companies and encourages financiers to jump to tech startups. The campaign got heavy play—and approving mentions—in the blogosphere.
The societal benefit of developing a new type of credit default swap has always been dubious. In an era when thousands of amateur stock analysts post their thoughts online, expert opinions from Wall Street analysts may also provide less value. On the other hand, we need our best and brightest engineers developing new types of medical devices, renewable energy sources, solutions for global warming, and ways for sustaining the environment and purifying water. And we need them to start companies that help America keep its innovative edge. So maybe the dark cloud over finance has a silver lining, and investment banking's loss will be engineering's gain.
Wadhwa is Wertheim Fellow at the Harvard Law School and executive in residence at Duke University. He is a tech entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com. .