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| Friends Don't Let Friends Get Into Finance | Top |
| After having been a tech executive for many years, I needed to take a break, and I wanted to give back to society. Duke University engineering dean Kristina Johnson gave me a great spiel about how the school's Masters of Engineering Management program churns out great engineers, and how engineers solve the world's problems. She said that I could make a big impact by teaching engineering students about the real world and encouraging them to become entrepreneurs. I felt so excited that I joined the university without even asking for a proper salary. That was in 2005. I was shocked—and upset—when the majority of my students became investment bankers or management consultants after they graduated. Hardly any became engineers. Why would they, when they had huge student loans, and Goldman Sachs was offering them twice as much as engineering companies did? So when the investment banks tanked in 2008, I cheered because engineering had become sexy again for engineering grads (read my BusinessWeek column ). But thanks to the hundred-billion-dollar taxpayer bailouts, investment banks recovered and went back to their old, greedy ways. And they began offering even more money to engineering grads (and themselves). Kauffman Foundation’s Paul Kedrosky and Dane Stangler have just published a report that analyses the damage this has done to our economy. They note that the finance sector today produces a greater percentage of GDP than at any time in history. In the mid-nineteenth century, its contribution was between 1 percent and 2.5 percent of GDP. It peaked at around six percent of GDP at the beginning of the Great Depression, and then fell sharply. Since 1945 it has been steadily increasing, to 8.4 percent over the last two years. Historians will tell you that empires collapse when they become too dependent on finance, but I'm not so pessimistic. I do, though, share the concern that Kedrosky and Stangler expressed in their paper: Fewer people are being added to industry employment, but they are coming from new and narrower places. The financial services industry used to consider it a point of pride to hire hungry and eager young high school and college graduates, planning to train them on the job in sales, trading, research, and investment banking. While that practice continues, even if in smaller numbers, the difference now is that most of the industry's profits come from the creation, sales, and trading of complex products, like the collateralized debt obligations (CDOs) that played a central role in the recent financial crisis. These new products require significant financial engineering, often entailing the recruitment of master's- and doctoral-level new graduates of science, engineering, math, and physics programs. Their talents have made them well-suited to the design of these complex instruments, in return for which they often make starting salaries five times or more what their salaries would have been had they stayed in their own fields and pursued employment with more tangible societal benefits. An analysis of MIT’s graduate-employment data shows that the financial sector increased its hiring from 18 percent of its graduates in 2003 to 25 percent in 2006. So not only are the investment banks siphoning off hundreds of billions of dollars from our economy with financial gimmicks like CDOs; they are using our best engineering graduates to help them do this. This is the talent that our country has invested so much resource in producing. When most sectors of the economy grow, new companies are created. The authors found, however, that the finance sector is not driving firm formation; it is cannibalizing entrepreneurship in the U.S. economy by offering wage and skill premiums to individuals who might otherwise have started companies. It is also causing far greater volatility among publicly traded firms and a reduction in the quality of businesses started. The report concludes that a shrinking finance sector will likely lead to a higher entrepreneurship rate and the creation of companies with greater social value, and still provide the financial intermediation services that are most important to young companies. So that's what we need in order to save this empire: to tame this beast. Paul Kedrosky says that the virus that infects scientists and engineers and causes them to go to Wall Street rather than create something of societal value is "economic Ebola". He wants to be an "economic virus hunter". Let's all help him. Let's save the world by keeping our engineers out of finance. We need them to, instead, develop new types of medical devices, renewable energy sources, ways for sustaining the environment and purifying water, and to start companies that help America keep its innovative edge. Editor's note: Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School, Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University, and Distinguished Visiting Scholar at The Halle Institute for Global Learning at Emory University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com . | |
| Five Things Facebook Should Fix Immediately | Top |
| Let me start with two questions. Why is it that such a successful company as Facebook feels like it needs to change and reinvent its interface constantly? And why are we so complacent with these changes that, quite literally, disrupt our online social lives? We have seen how social media is changing the world around us, yet we don’t have a say in its progress. Undeniably, Facebook is already part of all of our lives, even for non-users. We shouldn’t take the site for granted. After all, it has over half a billion users. Alternatively, we should not allow it to take us—their users—for granted either. I remember back when I was heavily using Digg, they made so many changes, that it was all too hard to follow. At around version 4, I couldn’t use it anymore and therefore left the site. Now don’t get me wrong, I’m in favor of new design and up-to-date features. But when one has such a large community of users, you need to make changes carefully and not force your members to suffer through your own growing pains. It’s true, we can all leave the site if we are upset with the changes. No one is forcing us to be members. But most of us don’t want to leave. We want to be part of this community. Facebook should acknowledge some of the problems that need to be resolved and show appreciation for the mass following they have built before it slips away. I’d like to highlight 5 critical problems that Facebook needs to fix immediately: Groups One day I saw this update on my Facebook feed: “If one more person adds me to a group, I’m sending you to the unfriended land.” I easily related to this, can’t you? I don’t know what Facebook was thinking by letting anyone add you to a group, and start sending messages as a default setting. That’s like saying: Hello spam, come visit me more often. And yes, your Facebook friends are the biggest spammers in the world, they just might not know it. By the time I wake up in the morning, my mailbox has at least two new group invites (I’m not sure we can even call them invites), and email discussions around this group, mostly from people that have no clue why this group owner added them. Couldn’t you handle this one better Facebook? Shouldn’t I get an email suggesting that I join this group in the first place? And thank god, my chatbox is closed most of the time because if I had to get all of those Group discussions inside chat, I’d go nuts. I’m a member of my high school’s group (something that is always nice to remember) but I know some people that left the group since the chat was too annoying for them and they didn’t want to deal with (nor understand) the odd settings. So rant number one: Make groups less spammy. Photo Viewer I wanted to leave this section open and let you all say whatever that comes to your mind.. but I feel like I must say it out loud: What the hell?! How did this design replace the previous one? The user experience is so completely wrong here. The light box annoys the eye and basically it is just a bad visual that doesn’t fit the overall design of the site. A photo viewer is for viewing pictures, but the pictures are now displayed in a smaller format so you get a poorer experience than before. Why did you fix something that wasn’t broken, Facebook? And before you tell me to click F5 and forget about it, I don’t want to and I shouldn’t have to either. I think it looks bad, and I’m sure I’m not the only one, and since photos are a huge part of the site, I also don’t think it’s a good idea to change it from good to worse. Usually, it goes the other way around. Places To have a world of possibilities is sometimes great and sometimes confusing. I love both Foursquare and Gowalla, and only lately have I started to use Facebook Places . But when it comes to choosing one service, Facebook is my last choice. Why? You can’t connect it to Twitter. Perhaps Facebook thinks all my friends are on Facebook, but even so, if I want them to know where I am, I’d like to extend this ability to make sure they’ll be able to see my statuses from other platforms as well. I still don’t get why Facebook is so closed. If people want privacy they can set their own personal choices. What if other people want to share more? I think Facebook should allow it. After all, it’s a “social” network, right? Messaging I can honestly say that I haven’t switched from the old messaging platform to the new one . But I’ve noticed people sending me up to 10 emails when they meant to send only one. Most people don’t know how to fix this so they always just apologize for sending too many messages, which results in even more messages. Overall, it looks like Facebook is trying to make everything behave like chat (i.e., new commenting system) when chat is not something everyone feels comfortable using all the time. Tabs Now, I don’t want to say Facebook is evil, but I don’t really understand how they could dismiss the customized tabs so easily after people worked so hard on them, and many companies were built specifically around this creation space. Yes, I know you can still see tabs, but not as prominently as before. Again, this was to me at least the part of Facebook that was fun and now has been marginalized. With the latest changes from FBML to Iframe, many users who could create customized tabs on their own have been left with obsolete skills. Seriously, if a company asked me if it’s worth it to create something from the Facebook API, I’d say it’s a risky situation since Facebook so easily changes things solely for their own benefit. Tabs are one great example of that. I would never expect them to change such a great feature. One that really gave users and brands the feeling of ownership but, alas they did… Remember when it used to be so much fun to use Facebook? When you had games right in your face (not just news), when you could see your connections from Flickr, Youtube, and other sites, when it was just a more friendly place? I miss that. Does Facebook not care anymore? Or does it just demonstrate our own apathy and powerlessness as users? Social media is a wonderful, wonderful thing. Don’t forget you have a voice. Use it. You can start in comments below. CrunchBase Information Facebook Orli Yakuel Information provided by CrunchBase | |
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