Why is Finance Full of Jocks? (Plus: Useful Advice for People Who Think This is Stupid and Unfair)

When I was younger, I was outraged by how popular athletes are. It made perfect sense to me that the world valued stuff I’m good at, like banging out five double-spaced pages on why literally any literary character is a Christlike figure, or getting a grade-inflation-adjusted Gentleman’s C

When I was younger, I was outraged by how popular athletes are. It made perfect sense to me that the world valued stuff I’m good at, like banging out five double-spaced pages on why literally any literary character is a Christlike figure, or getting a grade-inflation-adjusted Gentleman’s C on a math test. But it seemed completely inappropriate that people also thought highly of skills like running fast, kicking a ball, or working together as a team in order to overcome rivals.

What I always assumed was, sure, in high school and college, people care about athletic ability, but out there in the real world, the nerds will rule. I was sort of right, but I got lucky: nerds have had a good run in the last couple decades, but a lot of the successful people I meet, especially in finance, are jocks. What gives?

The financial services industry has a few peculiar traits that happen to make it a great place for athletes.[1] While I still personally find sports pretty boring, I’m now convinced that athletes are overrepresented in the industry for good reason, and that savvy employers should deliberately evaluate entry-level employees by their batting average and free throw percentage, not just their intellectual talents.

Here’s why:

Sports and Finance Both Compress Lots of Practice, Effort, and Luck Into One Number

Our brains like compression. We enjoy the lightbulb moment, the punchline, the hack that lets us shrink a program from 50 lines to 5, the poem that squishes a lifetime of experience into a couple dozen syllables. Every game in every competitive sport does this routinely: both teams practice hard, they hone their talents, they strategize. They spend years and years getting to peak condition. And then, over the course of a couple hours, they find out if it paid off or not.

The transition to investment banking is natural: your team spends years building up a reputation in the industry, cultivating contacts, cranking out pitchbooks. And then, you get the mandate! (Or you don’t.) 90% of the work was wasted, but you don’t know which 90%. And still, luck matters. If you’ve developed a mindset where you have to work insanely hard, but your success or failure comes down to a tiny number of somewhat random datapoints, you’re ready to work in finance.

Even the compensation structure is designed for people who think this way. Every year, your accomplishments get summed up. They get quantified. And then on January 1 you’re back to zero. GOOOOOOOAL.

Trust and Teamwork

Teams win; it’s a cliche for a reason. It’s the nature of financial services that companies are theoretically overstaffed most of the time, and painfully understaffed when it counts. In a stylized model, you might say that the industry has about forty hours a week of work in the average week, but that it’s mostly concentrated in just a few weeks of the year. This means the rewards to effective coordination are enormous: if someone slacks off, or works on the wrong priority, for just half a day on the wrong day, that can be the difference between success and failure.

Team sports train people to think about success in terms of an entire team. A group of high performers working together will tend to beat a group of better athletes who don’t trust each other.

Companies try to build team loyalty, and they often do a pretty good job of it, but if you’ve got the teamwork rut already worn into your brain, it’ll take faster. And, statistically, nothing builds teamwork like a shared stressful experience. If your first shared experience with someone is the big IPO deal, that’s a risk; if your shared experience was a big lacrosse game back in undergrad, you’re already on a team, just playing a different sport.

Sports Select for Raw Endurance

One of the things you learn when you turn thirty is that you’re not in your twenties any more. It’s simply astounding what kind of terrible sleep, diet, and work habits I could throw at myself a decade ago. At least, it’s astounding now; at the time, it just seemed like the natural order of things that subsisting on junk food and substituting coffee for sleep was feasible.

Athletes end up hitting these limits earlier, so they’re more realistic about them: if you’ve been getting up for practice at 5am, and taking a full courseload, and having a typical college social life, you’re probably subjecting your body to about as much stress as a demanding job will subject it to when you’re a decade or two older. So athletes tend to develop a keener sense of what their limits are, which makes them less prone to burnout.

And in a more direct sense, sports and workouts build some slack into your total daily effort. I try to hit the gym a little more than every other day, and that usually adds about half an hour to my daily sleep needs. So when I need it, I can get back another 10–15 hours per week of work time just by deferring workouts. If I didn’t make a habit of going to the gym, I’d have less room for error.

Network Effects and Weak Ties

The most common explanations for why athletes are overrepresented in finance are 1) that athletes are biased towards hiring other athletes, and 2) that athletes were already overrepresented.

That begs the question, just a little bit.

But it’s also a real effect. There are teams at big banks that are mostly staffed by teams at certain schools — it happens, and people like to hire the people they know. Sociologists have found that weak ties are powerful; you benefit a lot from your friends-of-friends, not just your friends. And sports are well-designed to produce close friendships. You can’t win together and lose together without building some kind of togetherness.

That’s at an individual level, but what about a group level? What about people who share the same general experience, but didn’t share the same exact experience?

There’s another way to frame this: it’s easier to work with people who think like you and work like you; if you socialize in the same way and share some of the same hobbies, you’re likely to bond faster and thus work better together. This network effect is part of why athletes continue to do well in finance, even as the industry has transformed into more of a technology business and less of a risk-taking one.

You can call this unfair. At some level, it is. But there are good reasons these social networks exist, and they’ll persist for a while. Importantly for people like me, this is a hackable phenomenon. A friend of mine effectively worked the system by identifying an obscure sport he could excel in (rowing), and using that to get into a great school. You can also get these benefits a la carte by doing intellectual team sports (like working on a software project or startup in school) and also developing a gym habit. Poker, while not a team sport, is certainly a game that requires endurance, subjects you to risk, and helps you get to know people. Once you’ve reverse-engineered the metagame of successful college athletes, there’s no reason you have to play by exactly the same rules as everybody else.

The rise of more rigorous and quantitative approaches to finance doesn’t change the value of grit in the face of randomness, or of teamwork, or of raw endurance — in thirty years, savvy finance companies will still be hiring people who played lots of sports in college. Just more parkour, ultimate frisbee, and poker, and a little less lacrosse.