In startup hubs like New York, where large numbers of new tech companies have popped up in recent years, the trend is even more pronounced.
The number of investment bank and brokerage firm employees in New York dropped by 17 percent from 2008 to 2011, according to analysis of government data by The New York Times. The number of bankers aged 20 to 34 fell by 25 percent in the same period. Meanwhile, in New York's high-tech sector, employment shot up by 30 percent from 2005 to 2010, city officials report.
While layoffs at large Wall Street banks continue to winnow the number of employees in New York's financial services sector, the allure of starting or joining technology firms in a city where Internet startup investments are soaring has pushed some bankers to the exits.
Glamorized media accounts of financiers turned successful startup CEOs provide added encouragement to professionally frustrated Wall Streeters.
There's the poster-boy in Silicon Valley, Mark Pincus, who began his career as a lowly stock analyst, graduated into private equity, but ultimately dumped finance to launch Zynga, the social-gaming startup that recently sold shares to the public at a $7 billion valuation.
Then there are the homegrown New York stories of Wall Street number-crunchers who started some of the city's hottest startups, including Vinicius Vacanti, the founder of Yipit, Andy Dunn of Bonobos, Alexa Von Tobel of Learnvest and Barry Silbertof SecondMarket.
Silbert, for his part, spent the early part of his career as an investment banker selling off pieces of bankrupt Enron. He soon discovered that the way people buy and sell illiquid assets was ripe for disruption, and went on to build an online marketplace that facilitated such transactions. That marketplace, now known as SecondMarket, currently employs more than 200 people in New York, is worth an estimated $200 million and has changed the way private-company shareholders trade their stock ahead of an initial public offering.
But for each successful startup that has grown out of a Wall Street hangover, or received a boost from ex-Wall Street talent, there are at least 100 new businesses that flop, creating and then ultimately destroying jobs. Some fear those numbers will grow as the threat of a startup credit crunch becomes more real.
As such, some experts believe established tech giants like Google and Facebook — rather than the droves of young New York-based startups — are the drivers of the city's rising high-tech employment numbers. Facebook, for its part, is opening a large office in New York, the social network recently announced, and Google already employs about 1,200 engineers in the city.
It's at these large technology companies, not at Goldman Sachs, where the new "status jobs" are, a former Goldman analyst recently told The New York Times.
Regardless of which group draws more people away from Wall Street — the tech giants or the tech startups — Google and Facebook building engineering talent in New York is a net positive for the city's startup community, according to John Frankel, a partner at ff Venture Capital, who spent 21 years at Goldman Sachs before he became a full-time venture investor in 2008.
"Google and Facebook, much like Goldman, attract a lot of very smart people to New York," Frankel says. "And many ex-Googlers end up starting their own businesses here. Much like people in finance move from big Wall Street banks to hedge funds after a few years, folks often spend two to three years at Google, get fed up with whatever aspect there, and then go off and do their own thing."
In the past week alone, Frankel says several people currently employed on Wall Street have sought him for advice on transitioning into the tech sector. One, a 55-year-old banker, told Frankel that he's thinking about creating a group that helps funnel Wall Street refugees into positions at high-growth startups. (Arguably, those mechanisms already exist in the form of New York's growing network of incubators and accelerators, many of which have seen an increase in the number of applicants with finance backgrounds.)
But perhaps the flow of talent from Wall Street to Silicon Alley, and more broadly, from financial services firms to entrepreneurial technology firms nationwide, is just a fad. After all, previous economic downturns have caused the financial services industry to shrink in the short-term. And perhaps this time around, it's just that the contraction is coinciding with a '90s-style tech startup bubble that will soon pop and send all the Zuckerberg-wannabes back to their trading desks.
Harris, of Village Ventures, who was investing in startups in the immediate aftermath of the late-'90s bubble popping, is concerned about what exactly draws the best and brightest to startups in the age of Facebook.
"I think venture capitalists have been guilty of creating a monolithic and, on average, incorrect view of what entrepreneurship means," Harris says. "If entrepreneurship means building the next Facebook, then 99.9 percent of people involved are going to be really disappointed with the outcomes.
"But I don't think this is just a phase," he adds. "Entrepreneurship is about building a career for yourself that doesn't rely on a large corporation and a boss to give you direction and give you security and give you a paycheck. Whether you should raise venture capital is an open question. Whether the outcome is an acquisition or a merger or just a lifetime job in a company that you own part of or all of is another open question. In most cases, the answer is you should not raise venture capital and you should never sell the business -- this is just how you live."
"As for going to back to a world in which people just check their own initiative at the door of a large company when they take the job there and don't reemerge until they're laid off," Harris says, "people's thinking on that has changed."