> But yeah, how they missed that is hard to comprehend.
Look at the German DAX and what is in there. That is explanation enough. Heavy industry, consumer goods, banks, insurances. The only IT company other than Wirecard is SAP and it is not exactly known for innovation.
Everyone, especially politics, wanted Wirecard to succeed: the only actually somewhat innovative IT company in the DAX. It's the same pattern with the car industry scandals (not just Dieselgate but also the Porsche attempted takeover) or with Bayer/Monsanto.
Germany doesn't have many "unicorns" so politics will protect them until way too late, for the companies, for the share/stakeholders and the planet.
> Germany doesn't have many "unicorns" so politics will protect them until way too late, for the companies, for the share/stakeholders and the planet.
Interesting. Is there a strong feeling of innovation/unicorn envy among the wider business culture in Germany? Is it a fear of being stale, comparisons to Silicon Valley & Asian tech scene, or something else? I'm curious if you have more insight on this?
> Is there a strong feeling of innovation/unicorn envy among the wider business culture in Germany?
Everyone wants to be like the SV hipsters, no one can because the higher-ups are still mentally and literally stuck in fax times, there is almost no venture capital (and the venture capital that is here gets invested into stuff like Rocket Internet whose "business model" is to copycat US ideas), banks (across the EU) won't dish out dumb money because unlike the US we have public funded pension systems and not capital-based ones and we have strict loan regulations (Basel framework).
> Is it a fear of being stale
Culturally, us Germans are known for being extremely risk-averse, bankruptcies are socially shamed. This of course clashes with the US way of life that from the bottom to the top embodies "fail fast", and the youth yearns for change but as explained above that's hard to do.
May I also additionally ask how on Earth a 50k salary for a software engineer is at all justified? After paying taxes and rent, it seems to me there is not much money left over for saving or lifestyle spending?
Define plenty? It seems to me the other commenters have offered counter points to you.
In the US, before taxes, an income of $130,000 to $170,000 is the norm in bigger cities. I imagine based on my calculations that the difference between Berlin's discretionary income for SWE and NY/SF/SEA/BOS is probably an extra $50,000 post tax.
And what do you think do houses cost in Germany, compared to "bigger cities" in America?
I know plenty of people in that income range myself who do own houses (or apartments in some cases) and wouldn't think of forgoing their summer vacation in Menorca or Ibiza.
"The other commenters" is just one, and he's factually wrong. No matter how much HNers love to pile on, 50k Euros is a respectable income in most parts of Germany.
The idea that all software engineering is in Stuttgart, Munich or Berlin is laughable. We have lots and lots of family companies of the so-called "Mittelstand" strewn across the province (but West Germany primarily). Some of those are hidden champions. In towns and regions few Americans will ever have heard of.
I've heard of plenty of American and also German towns and cities and even if I was living for free in a caravan (which I've done for many months in my life, much like Germans who go to music festivals will do in the summer), I don't see how it is possible to make a substantial savings in life on a yearly post tax income of $25,000.
After an entire decade of working, this will only result in a best case scenario of $250,000 in savings, which, for my personal lifestyle is not going to work. I think collective action for higher wages is proper here.
Trust me, in Germany with that income you can either buy an apartment (not a house, at least not in a place where you will find a software developer job nearby) or fly on vacations, but not both...
My parents earn together ~90k, just bought a house and travel about 4 weeks a year through all of europe and still support us three kids. So thats not true, at least not if you are living in a smaller city. And for places like Berlin or Munich, 50k a year would be ridicoulously low. CEO in a start-up in Berlin told me a few month ago that they are hiring poeple with literally 2 to 3 coursera courses in machine learning for around 60k, more experienced people rather in the range of 90k. Big corp like Bayer will hire you with a PhD starting around 120k (as analyst without further responsebilites, team managers obviously get more). Given the Copay on Retirement and Health Insurance, that equates to an US salary of around 150k USD. Quite a bit lower than SV, but not as bad as some people want to make it.
You get 401k match and health insurance at any good employer in the US too. As well as much lower taxes. German taxes are just batshit crazy, second only to Belgium. How people can afford to FI/RE with these taxes and pay is beyond me. Oh wait they don't! One of the lowest median wealth per adult in western Europe!
> 1. our retirement systems is based on a generational
contract, not capital
You mean that people pop kids so that those kids would feel obliged to take care of them when they're old? Yeah, that's one legitimate retirement strategy. It's very popular in poor countries e.g. ex-USSR where I'm from.
Personally I'm more of a fan of US-style self-made retirement. It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce). But not so in Germany and much of Europe.
> 2. home ownership is very low
Isn't that roughly same as saying people aren't wealthy enough to afford one? So if you "control" for this factor, you're just selecting the richer subset of people.
> You mean that people pop kids so that those kids would feel obliged to take care of them when they're old?
It's not based on a generational contract within the same family (i.e. my kids pay my retirement) but society wide. Instead of saving up capital I pay the retirement benefits of the current generation and when I retire the then current workforce will pay mine. For the calculation of median wealth this shows up as a big fat 0 (no capital) but it gives me significant financial safety of having a set income from the age of 67 to the end of my life, no matter how old I get. Shit system if you die at 68 (or even earlier), amazing system if you live to be 95.
The existence of this system is largely based on WW2. There was no capital to pay for people at retirement age in the 50s so the current system was developed.
> It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce).
The US has always been a very individualistic society and it' s probably the best country in the world to be rich in. For tech workers in FAANG it's a great place to be. If I look at the long tail of workers I shudder. The living condition of the working class is far, far worse than what I see in north/west Europe. Of course there's poverty here too but at a very different level. Personally, I'm happy to pay my taxes and social insurance obligations so I don't have drive past tent cities on my way to work.
> Isn't that roughly same as saying people aren't wealthy enough to afford one?
Well I'd control for it by excluding the value of your residency from the household wealth. Your original post was commenting on median wealth compared to other Western European countries. I'm merely pointing out that this is too simplistic a number to compare without context.
I ran the numbers and I don't think it's as amazing as you describe:
From what I could quickly find online (correct me if I'm wrong), the theoretical maximum pension you can get today is 3034 EUR/month, starting from the age of 67. With current life expectancy you're going to enjoy it for only about 15 years on average. To get it, you need to work for 45 years straight earning at least 82800 EUR each year and paying whopping 18.6% of that (incl. employer part) for the privilege to be part of this amazing system.
Let's look at net present value as of retirement age of both sides of the equation:
for r in [1.07, 1.05, 1.012]: # discount factor
for y in [15, 30]: # years to live
print('%.3f %d %.0f %.0f' % (r, y,
sum(82800*0.186*r**i for i in range(45)),
sum(3034*12/r**i for i in range(y))))
#discount factor, years to live, NPV contributions, NPV payout
1.070 15 4400768 354813
1.070 30 4400768 483414
1.050 15 2459510 396798
1.050 30 2459510 587664
1.012 15 911856 503038
1.012 30 911856 923662
No matter how you slice it, the answer seems to be the same: you pay way more into the system than you get out of it. Only under rather unrealistic assumptions that you can't get more than ca. 1% investment return for 45 years(!) and you're going to live till almost your 100th birthday(!) do you approach a break-even point
I respect the effort you put in to really understand this system, most folks wouldn‘t do this based on our short conversation.
Unfortunately the system is rather convoluted and the math has more unknowns to it.
- the maximum salary on which you pay the retirement insistence is dynamic and rises every year
- every year you earn “points” based on the relationship between the current average salary and your own salary. (The average is 1 point)
Now these two above can be ignored to get an estimate how the return compares to a capital based system. The following three can’t:
- the worth of a point changes, both while you’re working but also during your retirement. You’ll receive more money in year 14 of your retirement than in year 1. Today one point is worth 33,23€. 2010 it was just 24,13€. The value changes based on the average net salary of those who pay I to the system.
- the insurance will pay out early if you become disabled and unable to work. I just looked up my numbers from last year and while I only earned retirement benefits of less than 300€ so far (based on the current point value) my disability benefits would be over 900€
- if I die my widow and/or unsafe children can get some money for a certain amount of time. E.g. children under 18 or under 25 while in college
I want to stress again that this system is far from perfect and smart folks will save up in a capital based system as well (and there are tax incentives for this, especially for low earners) but it does guarantee a good baseline retirement for folks who worked all their lives that can’t be lost. No divorce, personal bankruptcy or anything else will be able to touch this money.
I don't think it's true, a lot of my German friends have been traveling for 3 years in south East Asia without having any real job while I hear from German old men that new generation is not as passionate about working as they were at their time. So what gives? How do Germans maintain such high quality life without working, it's mystery to me.
Easy, inherited wealth. Germany has one of the most unequal wealth distributions in Europe.
Their boomer parents worked hard and saved a lot and managed to buy lots of assets, especially real estate, back in the 60's - 80's when salaries were high and properties were cheap. Now they can just kick back and relax while all that sweet rent money, that skyrocketed in the last two decades, comes in.
If you move to Germany now you definitely won't enjoy this kind of standard of living as your rent costs will be financing their mortgages while you won't manage to save enough to buy one of your own since property prices now are way higher, wages are low and taxes are high.
> how on Earth a 50k salary for a software engineer is at all justified?
Too many mediocre developers available (local & EE), too few good ones (they're in the US, UK, Switzerland). Also, if you can't find software engineers at that price, you just close the office and move it to Poland or so. Hence fewer employers remain.
That's simply not true. There is a lot of VC but there aren't many good startups - because the best people are heading straight for SV instead of dealing with a second-rate environment and a second-rate (in IT) labor force.
The German venture market (USD 6B) is about the size of a second tier market like Los Angeles. MoneyTree says that SV investment In Q1 of 2020 was about 2X Germany’s total for last year.
Not to mention that what gets invested in is mostly food delivery, shops and not particularly technical businesses (which are a very large investment sector in the US but aren’t considered “startups”. What gets written up in, say, Gründerszene are companies like the one that would tell you where to get your car repaired.
> The German venture market (USD 6B) is about the size of a second tier market like Los Angeles.
I don't know where that number comes from, but I'll assume it's the sum of investments and not the sum of capital available for investment since the latter is a bit hard to determine.
Deals done into {Germany,LA,SV,SF} from funds anywhere in world. That’s what I think is meant when someone says there is “almost venture capital” — is money available to invest there? These data are available from the usual sources online (Moneytree report, E&Y etc etc etc in English and German sources).
I don’t know of any German funds that make venture investments outside Europe though doubtless some exist. Still, if you want to back into the size of the domestic venture funds, pick a percentage (70%?) of the investments made as having come from domestic sources and figure that a fund wants to put all its committed capital to work within the first couple of years, and figure that the total venture pool is perhaps $7B. There are bigger single venture firms a few blocks from my house in Palo Alto. For example I walk past Accel every day to get a coffee.
As you say there just aren’t many companies there being funded, and when I read the local blogs and such people seem to want “the lifestyle” (or hate it) more than talking about building major businesses. To me it’s indistinguishable from people starting a sandwich shop.
> Deals done into {Germany,LA,SV,SF} from funds anywhere in world.
That's not the same as the available venture capital. If there are no good investments to be made, the potential venture capital simply isn't (all) invested. So the point that lack of VC is a problem is wrong, it's the attractive startups that are missing. It's the same in Austria - I invested in 2 startups, got a little burned and have since not invested for lack of good opportunities. I've also been asked a few times by a larger German company for my opinion on potential investments, so I know they're looking and can't find anything worthwhile. Funding is not the problem! And the "market size" is only indicative of the (too few) good startups, not of the potentially available capital.
I am investing in the USA, just not in the VC market. The legislation is a barrier, the physical distance too. So it's just the stock/options market for me now.
I'm German and I honestly have the opposite feeling. I participated in "startup culture" for a few years and I want to never touch it again.
I think in the German industry itself there is no real fear of staleness because our systems of innovation generally work differently, on occassion there is a media hype cycle about "rising economy X" displacing everyone, but that has been going on since the 80s when the UK's financialisation was everyone's favourite model. I'm glad we didn't follow on that front... well I guess except for Wirecard that is.
German here with startup experience abroad. No there isn't - and it baffles and worries me to the same extent. (Many) Germans think of innovation as incremental, and don't realise how much Germany is missing out in terms of disruptive innovation.
There is a profound lack of developers to start. I was in a German startup and it was awesome. Product didn't pan out for the mass market (medical devices) but the few devices we build by hand are now used for studies in clinics. So it wasn't at all wasted. Software sucks though because I wrote it shortly after finishing my studies with negligible experience. But it works at least. I got support from another developer at some point into the project, but finding qualified people was basically impossible.
Still, developers are probably mostly active in traditional industries. Manufacturing needs software experts for example, the product isn't necessarily software itself. There are advantages and disadvantages to that. Overall I don't think Germany/EU is friendly for startups. There are grants for some business ideas, but it is mostly older established folk that know the details of successfully getting capital.
In general, I think there is a huge fear of being "left behind digitally". Not so much in the industry itself than in politics or on a personal social level. The demographics responsible for implementing digital innovations often speak english and just use international solutions. There is little "local patriotism" in software. Perhaps there is also a strong idealism which lets people get involved in open source instead of creating business models and market digital services. Again, advantages and disadvantages.
edit: To the question about the kind of medical devices perhaps in reaction to the "shitty" software I mentioned: medical devices that cannot kill you and were mostly for diagnostic support. It was safe, the software "architecture" was all over the place though.
Sorry, I am not available for hire right now. I have some experience with regulated software for medical devices, but any generic developer could learn the regulatory requirements with a little effort. Mostly related to ISO 62304 and in general ISO 13485. The tools to meet regulatory compliance are general tools developers employ in most projects already. The important part is that the development process is formally defined.
The device I worked on was classified as IIa. There was a focus on a thorough risk analysis and we ensured mechanism were in place to shut down the device in any case of emergency.
I don't want to say what kind of device it was, it had to do with higher frequency ultrasonic sensory.
I don't think so. Judging by the low salaries most companies are offering in parallel with the huge number of devs on reddit from outside of the EU wanting to move to Germany it doesn't look like there's a shortage of developers, quite the contrary.
If there was a shortage, pretty shore we'd see higher salaries being offered.
Or they don't want to pay more than that so they don't find developers. I saw friends moving from Italy to the UK, Germany and the USA because of that. Maybe developers from Germany move to other countries as well.
I think there's a cultural difference. Developers don't seem to be trusted as much here, which means software development isn't that much of a difficult job which would merit higher pay. The "meat" of the work - architecture, design etc. doesn't seem to be done by software developers so much as by specialized roles, often people who don't or almost don't code. These roles are paid comparably better, but if you lump all the web devs and people implementing business logic into the same category you'll get lower wages on average.
That might indeed be true, but it can probably be detrimental to the software industry as a whole. I think at least basic coding experience is needed to plan architecture and design maintainable software to start with. Especially for getting experience for the viability of available solutions.
I have seen more software projects fail because of over-engineering for alleged maintainability, extensibility and a too generic design. Some would say that violates KISS. Many have shifted to more iterative development, which doesn't exclude the need for a solid architecture and extendable software, but it can improve time to an MVP. Quality can suffer, but you also gain experience.
Business logic can be as complex as you want. In fact one of the highest paid field resolves around optimizations in this particular field. SAP is an example here but there are others. "Cubing" data on your normal business data server isn't trivial, but allows to answer questions about trends management is very interested in and they have all the money bags.
Still, developers aren't payed that badly to be honest and you have options to reduce your workload, so that you don't end up with 60h work weeks or regular crunch. Projects might take as long as some unrelated airports in some setups I guess. If you code in a quiet smaller city, you can kiss 6 figures goodbye of course, but in many cases you are the best paid person in the room.
I mean SAP has roughly 30 BN € in revenue and according to their marketing more than 70 % of all transactions worldwide run through an SAP system. If that's not a "unicorn" company I really don't know what qualifies. You could of course argue that SAP is quite old already (founded in 1972, soon to be 50 years old), but so is e.g. Intel (founded in 1968).
It's true we missed the boat on the second and third waves of IT companies, but there are many unicorns in the manufacturing sector that most people in IT have just never heard of because it's outside of their bubble, these companies often dominate the world market in their respective segments though. For example, do you associate Germany with 3D printing? Probably not. Well, turns out some of the leading companies in industrial 3D printing technology were created here, in 2016 GE for example tried to acquire Germany-based SLM Solutions for 1.4 BN €.
As I said I think the problem is more that most people from IT just tend to ignore companies that don’t fit into their worldview. There are plenty of highly successful technology companies in Germany, just not so many in software.
>the problem is more that most people from IT just tend to ignore companies that don’t fit into their worldview
Why is this a problem? If I studied IT and want a good job in IT then that will interest me the most. Sure, it's good for the overall economy, but what good is it to me that I'm surrounded by pharma or mechanical engineering companies if IT is my bread winner?
Sure, but there is a huge difference in pay, career prospects and respect between being the IT guy at a non tech company and being the IT guy at a company who's main focus is tech.
That's the problem Germany has, it's full of successful companies that aren't IT related so people who want good jobs in IT are forced to either leave to SV/CH/London or stay and be "the IT guy" at a non tech company where you get treated as a cost center.
Funny, I know a lot of people that work in software development in Germany, and most of them seem to be quite happy. They don't make SV style salaries of course but are well paid. And let's not forget about the difference in cost of living and work-life balance in Germany as compared to the US (or London), especially for people that have a family.
Of course if you think that only SV-style software companies are worth working for then Germany isn't the place to be.
SAP is a solid business, but have you used their software? Once? It's atrocious and the developer experience is even worse, ABAP gives me shudders to this day. Not to mention that somehow, whenever a big IT project in government or private industry crashes, SAP seems always to be lurking.
SAP is not "modern" in any sense and certainly not "innovative". Unicorn companies generally are both.
It’s enterprise software, so by definition it “sucks” to the average developer due to its complexity and accumulated tech debt. Show me one software tool that has as much functionality as SAP and does not suck by your standards. Unicorns like Slack have better UI/UX because they solve a conceptually much simpler problem. Maybe you could say it’s better to find a large market that can be addressed with a simple tool, but being in a large market with an incredibly complex product also has its benefits. I doubt for example that SAP will be disrupted by a unicorn with better UI because the upfront cost of building the same functionality that SAP offers (and which is not superfluous) is horrendously high. Regarding Slack I can absolutely imagine that it will be disrupted in the near future, because it’s conceptually a much simpler product.
SAP is a behemoth and a success story, but you are missing the point. by the same logic you could even put Oracle in the category. but they are hardly described as a unicorn, or a startup by most people.
> Is there a strong feeling of innovation/unicorn envy among the wider business culture in Germany?
It's not the business culture that's driving this, it's politics. Germany simply isn't a competitive environment for entrepreneurship anymore with problems in many areas: schools, taxation, immigration (too easy for unqualified workers), legislation. Politics is in denial and desperate for success stories that would prove things aren't so bad.
Can you please elaborate how/why immigration is easy for unqualified workers in Germany? I thought the point of immigration is to bring in qualified workers to boost the economy.
Or most of the major fraud happened outside of Germany [1] and like most ponzis/frauds they can seem entirely legitimate on the surface until all the tail ends start becoming shorter and there's no Peters left to pay Paul.
Plus they seemed to have had a legitimate primary business, more than enough to cover their pump & dumping in foreign countries without strong rule of law.
There are always limitations on how much regulators and law enforcement can do and it always seems obvious in retrospect. There's always more that could have been done.
[1] the prior accusations by FT in 2019 mentioned it was their foreign subsidiaries inflating sales figures and recently the money got 'lost' hit a dead end in Asia. Companies often get plenty of time to pay back debts and billion dollar companies are given the benefit of the doubt they can pay it back...
Bafin went further than "not paying attention/not having access" though. When Financial Times published articles last year questioning Wirecards accounts, Bafin banned shorts on Wirecard temporarily and asked prosecutors to investigate the journalists for market manipulation, in parallel to looking into Wirecard. That's a bad look when it seems they were right.
FT have been on WC's case from 2015, looking at various associated accounts dated as far back as 2011.
The 2019 article was the killer, with one of Wirecard's financial partners traced to the home of a baffled fisherman in the Philippines.
IMO it's hard not to wonder if there's a story behind the story. "Oh dear we at BaFin really didn't notice" just doesn't seem at credible, even if you include some toxic politics.
As one person in Germany explained to me - there is no corruption at the low level - it is not worth it for the policeman to lose a nice salary and a pension for a few hundred euros bribe. So you will get a speeding ticket everytime and Germany is known for that sort of 'solidity'.
On the higher end, however, the stakes and balances are different - high pay is frowned upon and owners of Aldi supermarkets etc are known for their frugality and driving second hand cars.
So if one wants to make big money - it needs to be under the radar, possibly illegal and bribes for big infra projects are common.
I'd would rather say: a) Incompetence instead of curruption. Plus b) trust culture as entry-vector.
a) It has been bemoaned on many instances regarding Germans and finance: We're just inapt when it comes to knowledge about finance. Teachers unions fight tooth and nail to keep finance and business acumen out of the curriculum. This (itself being rooted in culture) will have to bear fruit in some way or another. Eg. Germany has the lowest share of people invested in equities of all industrialized nations. Even with negative interest rates, people rather use savings accounts than "risky" products with yields above 2%. And then there is real estate…
So it is no wonder to me that a state-agency is even easier fooled than E&Y was. Afterall (regarding leaked chats of Eno Kurniawan), they internally boasted about "brainwashing" the E&Y guys.
b) after all, what short-cuts our lack of understanding most of the time, is that we assume there is no wrong doing in the first place. So Markus Braun, claiming everything is fine until the very last minute seemed plausible. Even after the news broke on Thursday it seemed plausible for many, that the wrong doing was on the side of some Philippinian actors only.
> Eg. Germany has the lowest share of people invested in equities of all industrialized nations. Even with negative interest rates, people rather use savings accounts than "risky" products with yields above 2%
That is mostly to be blamed on savings accounts being decent in interest until the 2008 financial crisis while at the same time, especially in the dotcom boom, a lot of money was destroyed in the stock markets. The "Volksaktie", today known as Telekom (yes, this Telekom, for the US folks), wiped out a lot of people's savings and they remembered this.
- Returns of Savings accounts were better accross the industrialized world back then.
- The amount of people investing in equities was low before the "Volksaktie". It only declined thereafter even throughout the latest, longest bull-run in history.
But yes, events like the dot-com bubble or now Wirecard just strenghten the prejudice Germans have toward the whole topic.
Germany's economic model in the late 19th century, one copied by East Asia, was to force savings into banks, and then give out loans at heavily subsidised rates to well-connected industrialists.
This model has never stopped. Equity markets have never really existed because they are competition with the banking system. And the banks are heavily supported by (or owned) government. They have always paid a rate significantly under market. Always.
Germans have the same median net wealth as Greeks and the highest level of wealth inequality in the world (bar China). This is part of the system. If savers take their money out of banks, it is over (and btw, most German banks are functionally insolvent...they were the biggest buyers in pretty much every meltdown in the past fifteen years).
Germany is a developed economy but it's financial markets/banking system is Chinese (unsurprising because China copied Japan and Japan copied Germany). Savers get utterly screwed, the wealthy are eating their lunch.
It is also relevant that a good chunk of the ultra-rich in Germany came to prominence with govt assistance (that varies from slave labour to heavily subsidised loans).
Aldi is a pretty poor example because they are an example of a company that actively disrupted German corporate life.
So being understated is a north European characteristic but that isn't why German billionaires behave that way (they are often extremely overstated in private). They have no public profile because the way they made their money is usually horrific (Oetker family, Quandts, etc.), there are always vague suggestions of corruption, and they are very rich but aren't capitalists...it is crazy.
Also, the amount of corruption in Germany is huge. The most similar country is probably China. The state is run by and for billionaires. There is almost no oversight of this. The purpose of the German economy is to steal from consumers: low wages, forced savings, essentially free loans from state-owned banks to well connected companies, very weak unions. Not as bad as China, stuff like hukou is...fedualistic, but unlike almost any other developed economy.
Germany and weak unions? Lol, I get they're not as solid as French unions where bossnappings and violent riots are the norm not the exception, but still. We have legally protected unions and employee councils ("Betriebsrat"), the US and many other countries in the world do not have these at all.
How would you find it respectable that the BaFin leader basically describes it as if he's a spectator, even after?
The arrest is one thing, it would be interesting to see if there's jail time. The other executives responsible haven't even been fired and just shuffled around Wirecard.
The most terrible thing is that Bafin or their successor organisation will contain nearly all the current managerial cadre, but will have grown by 5 times in the coming 4 years. Nothing will change except for more chauffeur-driven BMWs. Never waste a good crisis.
I think you are over-estimating what an auditor is expected to do. Auditor's, to me, seem to be there to make sure you're compliant with the law or regulation that they are auditing for. In these audits, the company gathers and presents all of the data that the auditors will see.
The auditors will do interviews with people, but the company also (somewhat) picks who will get interviewed.
Remember that auditors are paid for by the company they are auditing. They are motivated to do the minimum required to pass the given regulation. They aren't there for true oversight, they are there to make sure all the checkboxes are checked.
Yes, but the understanding is that the auditor gives approval of your "books" and companies should not be able to function for years while doing fraudulent things. This is why there is audit in the first place. It is mandatory and they should be held accountable for it.
EY did catch them eventually. I'm guessing the courts will be doing a review of the audits that EY did over the years. It's likely a matter of how deceptive Wirecard was to their auditors.
In theory they could provide a qualified opinion (which basically says: this company is screwed) or withdraw from the audit (which will signal the same thing).
The problem with shorting a company that you believe is committing fraud is that you cannot do it alone.
You need to convince the rest of the market that the company is fraudulent - and that is a very expensive and complex process.
...but it does illustrate the value of short contracts in finance. They incentivize investors investigating and raising the alarms for the rest of the market. This company was particularly aggressive in defending themselves publicly, so it didn't happen until their market valuation was high enough to make it worthwhile for the big shorts to come in and crush it.
unfortunately it is common in the country as big companies or party donor often get "protection" from the govt despite their failings. Deutsch Bank and Volkswagen for example. Big scandal (globally) but at home they merely got a slap on the wrist.
Matt Levine, who writes the “Money Stuff" column for Bloomberg News, described it like this:
> When a company is going around accusing reporters of conspiring with short sellers to bring it down, that is an almost infallible sign that it is going down. Companies that are not doing fraud, when reporters ask if they have faked their revenue, respond by explaining where their revenue comes from. Companies that are doing fraud, when reporters ask if they have faked their revenue, call the police to try to get reporters arrested.
> The news about Wirecard, now, is sort of trivial; anyone who read McCrum’s reporting and knew the almost-infallible rules of short-selling conspiracy theories already knew that Wirecard was faking its revenue. The bigger implications of the news are for BaFin, which focused on protecting Wirecard from speculators when in fact the speculators needed protection from Wirecard.
I guess we all have our limits? Just wish the newsletter was more concise with the opp to dig deeper...found that just reading a segment at times drags on and gets interrupted/ incomplete.
A better approach would be to either pull a single paragraph from the full length piece, a TLDR type summary conclusion of the broader thought and hyperlink that clip to the expanded/full content on Bloomberg's site. This would result in my stayed subscription to the (truncated) newsletter, a higher open rate, and actual visits to their website (which the newsletter does not drive IMO). Cheers!
I love long-form newsletters and prefer them to reading content on the web (no ads, instant load times, the personal touch of having it delivered in my mailbox, breaking out of the "one more click" dynamic when browsing the web, etc.) . I guess it's why people like Ben Thomson or Matt Levine write and distribute them - ultimately, because there's an audience for it. The former even makes a pretty penny with it, and I'm sure there are others.
Your claim about open rates is unsubstantiated because I wouldn't have ever subscribed if it was just a summary and a link to Bloomberg (which has a free article limit to boot, if I remember correctly). So between the two of us that's only n = 2 and I think neither of us has any clue what metrics for that newsletter might look like.
As a consumer, I am completely in agreement insofar as the benefits or receiving content via email medium vs. going on the web, esp. considering bloomberg does have a paywall at some point, autoplay ads, noise, etc. Comparatively, the user experience w/ email is unanimously better via email!
And of course, in this hypothetical, that same content would need be equally accessible/free on the site as in the email otherwise moot point to begin with.
But the publishers POV, this author in question creates really compelling content, so much so that as a consumer of it, I actually would sacrifice hopping to/reading on bloomberg.com if it meant a more palatable intro/summary initially via email. (And again assuming it's just as free).
Indeed the open rate claim is unsubstantiated, and we do not know what the metrics look like in any dimension. And maybe they even tested this out early on / upfront and evolved into what it is now? There has to be some data/science to it, because right now, the email appears to be hardly commercialized, so Bloomberg is not only missing out on the site traffic benefits, but also not optimizing email monetization? (A quick glance with adblock off shows now ads?)
Anecdotally (and maybe I am completely alone here) I am more inclined to click on a content link or open an email if I believe that there is a high probably of thoroughly reading what's inside. Take for FWIW, my own process of unsubscribing: I went from opening all/90%+ to opening less and less over the coming weeks because I knew I couldn't consume/get through enough/all and that felt defeating, futile, and proving impossible. So eventually, I stopped opening all together, stayed subbed for a few more weeks, but eventually unsubbed altogether when it came time for a monthly inbox pruning. No we both lost in this scenario, I can admit.
I am biased too, because in a previous life I built an email list with ~50% open rate and ~25% CTR (high for my field/industry) built upon this outbound link strategy, as I know others have to. Apparently there are multiple ways to go about it :)
(All that said I am surprised at all the downvoting...either Levine has a mob on here intolerant of any harmless critique or generally my parent comment wasn't relevant enough to the broader topic at hand? It would be helpful to hear feedback on why)
I 'snooze' them for later in the day/evening when I have more time to read them.
The other things I realized is that I should treat it like a magazine rather than a newsletter and read only the 'articles' that I'm interested in. I don't have to read the entire thing.
It's interesting to think of this from the tesla standpoint. There was a kind of reverse situation where the shorters and idealogically opposed to evs or pro gas people had conspiracy theories going the other way. They were doing secret investigations and harassing some reporters who thought telsa was some big financial fake-out.
There were claims that tesla wasn't really selling cars (cause who would want one?), or they were all parked in some giant hidden parking lot, rusting away or something. They hired airplanes to take pictures of the factory. This somehow got some famous investors into it who were sure tesla was doomed. There was a whole belief system, weird twitter handles. There seemed to be coordinated publishing of information to try to sink the stock. I've never been close enough to a stock to see it happen before this.
And now it has turned around again - instead of too many shorters, their value is too high. Tesla's market value feels vastly too high, like 10x or more too much. The company should do pretty well but they won't be approaching half the world car market imho.
> it baffles me that it had to come this far. There were warning signs all over it.
It's not a Germany specific problem. Warning signs all over tons of companies.
Most of silicon valley darlings are plastered with red flags all over. But financial regulators like SEC are unable/not willing to take an action against darlings of wall street.
I was just listening to a podcast last night, in which a financial analyst who identified problems with Wirecard was harrassed for years, both online and IRL. Interesting story: https://www.npr.org/transcripts/868001948
What's really interesting is seeing the same people sound the same alarms about extremely popular companies that continue to trade today, and yet our regulators, auditors, and journalists all ignore them.
We really never learn. If I were a regulator I would be taking short seller statements extremely seriously when it comes from one of the proven reliable ones.
Though I can't speak for regulators and auditors, you have to keep in mind that 99% of journalists are just hired guns who's sights are specified ahead of time.
Since no one with power had their sights on Wirecard, nothing happened - it's not unexpected.
I'd recommend this HN post [0] which links to a good background story [1]. It literally starts with "For those who just came back from a 15 year space mission: Wirecard is a German company that..." haha.
Tesla is probably over-valued, but not every over-valued company fails. Some (amazon, tesla, google) eventually back-fill value into their bubbles.
IMHO it really comes down to how solid the business and its' operations are as a whole. As long as they aren't mis-spending any excess capital in horrible ways, they can definitely do well. Of course, I prefer to see more conservative approaches to growth and expenditures but that's nearly impossible with a car company.
If those companies eventually backfilled value, then they weren't overvalued. Investors just, and correctly so, valued growth over immediate revenue.
Of course, growth oriented companies fall flat on their face plenty of times, but for your Amazon's and Google's, with hindsight I don't think you can call them overvalued with the information we have now.
Chanos, the guy sitting on a bearish call against Tesla in November. The stock is up 200% since then. If Chanos were really betting to match his propaganda, he'd never work again after being destroyed like that.
So did the steal the money like Nissan's ex-CEO or just spent over a decade lying about the company's financials? The latter seems incredibly retarded; To what end? It's a job.
The latter. Basically the missing $2b of cash equals the sum total of all the net income the company claimed to have earned over its entire history (which was the basis for its $27b market cap at its peak). As for why, who knows, they probably would have gone under during the financial crisis in 2008 and lost their jobs if they hadn’t cooked the books. Then once you start doing that you’re on a treadmill to keep it going, similar to the Madoff fraud. And in the meantime, the CEO gets to be the big man of the German tech scene and enjoy the perks of being a billionaire on paper. It must have been pretty stressful though, that’s for sure! These kind of people have some way of compartmentalizing things so they can function on a day to day basis.
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[ 3.5 ms ] story [ 191 ms ] threadThe German BaFin messed up so badly that one must either fundamentally doubt theircompetence or question their integrity.
This is rare, and I find it respectable. But yeah, how they missed that is hard to comprehend.
Look at the German DAX and what is in there. That is explanation enough. Heavy industry, consumer goods, banks, insurances. The only IT company other than Wirecard is SAP and it is not exactly known for innovation.
Everyone, especially politics, wanted Wirecard to succeed: the only actually somewhat innovative IT company in the DAX. It's the same pattern with the car industry scandals (not just Dieselgate but also the Porsche attempted takeover) or with Bayer/Monsanto.
Germany doesn't have many "unicorns" so politics will protect them until way too late, for the companies, for the share/stakeholders and the planet.
Interesting. Is there a strong feeling of innovation/unicorn envy among the wider business culture in Germany? Is it a fear of being stale, comparisons to Silicon Valley & Asian tech scene, or something else? I'm curious if you have more insight on this?
Everyone wants to be like the SV hipsters, no one can because the higher-ups are still mentally and literally stuck in fax times, there is almost no venture capital (and the venture capital that is here gets invested into stuff like Rocket Internet whose "business model" is to copycat US ideas), banks (across the EU) won't dish out dumb money because unlike the US we have public funded pension systems and not capital-based ones and we have strict loan regulations (Basel framework).
> Is it a fear of being stale
Culturally, us Germans are known for being extremely risk-averse, bankruptcies are socially shamed. This of course clashes with the US way of life that from the bottom to the top embodies "fail fast", and the youth yearns for change but as explained above that's hard to do.
It seems like an unfair situation
In the US, before taxes, an income of $130,000 to $170,000 is the norm in bigger cities. I imagine based on my calculations that the difference between Berlin's discretionary income for SWE and NY/SF/SEA/BOS is probably an extra $50,000 post tax.
I know plenty of people in that income range myself who do own houses (or apartments in some cases) and wouldn't think of forgoing their summer vacation in Menorca or Ibiza.
"The other commenters" is just one, and he's factually wrong. No matter how much HNers love to pile on, 50k Euros is a respectable income in most parts of Germany.
The idea that all software engineering is in Stuttgart, Munich or Berlin is laughable. We have lots and lots of family companies of the so-called "Mittelstand" strewn across the province (but West Germany primarily). Some of those are hidden champions. In towns and regions few Americans will ever have heard of.
After an entire decade of working, this will only result in a best case scenario of $250,000 in savings, which, for my personal lifestyle is not going to work. I think collective action for higher wages is proper here.
1. our retirement systems is based on a generational contract, not capital 2. home ownership is very low
If you control for both the results would look very different. Now #2 obviously causes a huge issue in terms of generational wealth.
You mean that people pop kids so that those kids would feel obliged to take care of them when they're old? Yeah, that's one legitimate retirement strategy. It's very popular in poor countries e.g. ex-USSR where I'm from.
Personally I'm more of a fan of US-style self-made retirement. It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce). But not so in Germany and much of Europe.
> 2. home ownership is very low
Isn't that roughly same as saying people aren't wealthy enough to afford one? So if you "control" for this factor, you're just selecting the richer subset of people.
It's not based on a generational contract within the same family (i.e. my kids pay my retirement) but society wide. Instead of saving up capital I pay the retirement benefits of the current generation and when I retire the then current workforce will pay mine. For the calculation of median wealth this shows up as a big fat 0 (no capital) but it gives me significant financial safety of having a set income from the age of 67 to the end of my life, no matter how old I get. Shit system if you die at 68 (or even earlier), amazing system if you live to be 95.
The existence of this system is largely based on WW2. There was no capital to pay for people at retirement age in the 50s so the current system was developed.
> It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce).
The US has always been a very individualistic society and it' s probably the best country in the world to be rich in. For tech workers in FAANG it's a great place to be. If I look at the long tail of workers I shudder. The living condition of the working class is far, far worse than what I see in north/west Europe. Of course there's poverty here too but at a very different level. Personally, I'm happy to pay my taxes and social insurance obligations so I don't have drive past tent cities on my way to work.
> Isn't that roughly same as saying people aren't wealthy enough to afford one?
Well I'd control for it by excluding the value of your residency from the household wealth. Your original post was commenting on median wealth compared to other Western European countries. I'm merely pointing out that this is too simplistic a number to compare without context.
From what I could quickly find online (correct me if I'm wrong), the theoretical maximum pension you can get today is 3034 EUR/month, starting from the age of 67. With current life expectancy you're going to enjoy it for only about 15 years on average. To get it, you need to work for 45 years straight earning at least 82800 EUR each year and paying whopping 18.6% of that (incl. employer part) for the privilege to be part of this amazing system.
Let's look at net present value as of retirement age of both sides of the equation:
No matter how you slice it, the answer seems to be the same: you pay way more into the system than you get out of it. Only under rather unrealistic assumptions that you can't get more than ca. 1% investment return for 45 years(!) and you're going to live till almost your 100th birthday(!) do you approach a break-even pointUnfortunately the system is rather convoluted and the math has more unknowns to it.
- the maximum salary on which you pay the retirement insistence is dynamic and rises every year - every year you earn “points” based on the relationship between the current average salary and your own salary. (The average is 1 point)
Now these two above can be ignored to get an estimate how the return compares to a capital based system. The following three can’t:
- the worth of a point changes, both while you’re working but also during your retirement. You’ll receive more money in year 14 of your retirement than in year 1. Today one point is worth 33,23€. 2010 it was just 24,13€. The value changes based on the average net salary of those who pay I to the system. - the insurance will pay out early if you become disabled and unable to work. I just looked up my numbers from last year and while I only earned retirement benefits of less than 300€ so far (based on the current point value) my disability benefits would be over 900€ - if I die my widow and/or unsafe children can get some money for a certain amount of time. E.g. children under 18 or under 25 while in college
I want to stress again that this system is far from perfect and smart folks will save up in a capital based system as well (and there are tax incentives for this, especially for low earners) but it does guarantee a good baseline retirement for folks who worked all their lives that can’t be lost. No divorce, personal bankruptcy or anything else will be able to touch this money.
Their boomer parents worked hard and saved a lot and managed to buy lots of assets, especially real estate, back in the 60's - 80's when salaries were high and properties were cheap. Now they can just kick back and relax while all that sweet rent money, that skyrocketed in the last two decades, comes in.
If you move to Germany now you definitely won't enjoy this kind of standard of living as your rent costs will be financing their mortgages while you won't manage to save enough to buy one of your own since property prices now are way higher, wages are low and taxes are high.
Too many mediocre developers available (local & EE), too few good ones (they're in the US, UK, Switzerland). Also, if you can't find software engineers at that price, you just close the office and move it to Poland or so. Hence fewer employers remain.
That's simply not true. There is a lot of VC but there aren't many good startups - because the best people are heading straight for SV instead of dealing with a second-rate environment and a second-rate (in IT) labor force.
Not to mention that what gets invested in is mostly food delivery, shops and not particularly technical businesses (which are a very large investment sector in the US but aren’t considered “startups”. What gets written up in, say, Gründerszene are companies like the one that would tell you where to get your car repaired.
I don't know where that number comes from, but I'll assume it's the sum of investments and not the sum of capital available for investment since the latter is a bit hard to determine.
I don’t know of any German funds that make venture investments outside Europe though doubtless some exist. Still, if you want to back into the size of the domestic venture funds, pick a percentage (70%?) of the investments made as having come from domestic sources and figure that a fund wants to put all its committed capital to work within the first couple of years, and figure that the total venture pool is perhaps $7B. There are bigger single venture firms a few blocks from my house in Palo Alto. For example I walk past Accel every day to get a coffee.
As you say there just aren’t many companies there being funded, and when I read the local blogs and such people seem to want “the lifestyle” (or hate it) more than talking about building major businesses. To me it’s indistinguishable from people starting a sandwich shop.
That's not the same as the available venture capital. If there are no good investments to be made, the potential venture capital simply isn't (all) invested. So the point that lack of VC is a problem is wrong, it's the attractive startups that are missing. It's the same in Austria - I invested in 2 startups, got a little burned and have since not invested for lack of good opportunities. I've also been asked a few times by a larger German company for my opinion on potential investments, so I know they're looking and can't find anything worthwhile. Funding is not the problem! And the "market size" is only indicative of the (too few) good startups, not of the potentially available capital.
I think in the German industry itself there is no real fear of staleness because our systems of innovation generally work differently, on occassion there is a media hype cycle about "rising economy X" displacing everyone, but that has been going on since the 80s when the UK's financialisation was everyone's favourite model. I'm glad we didn't follow on that front... well I guess except for Wirecard that is.
Still, developers are probably mostly active in traditional industries. Manufacturing needs software experts for example, the product isn't necessarily software itself. There are advantages and disadvantages to that. Overall I don't think Germany/EU is friendly for startups. There are grants for some business ideas, but it is mostly older established folk that know the details of successfully getting capital.
In general, I think there is a huge fear of being "left behind digitally". Not so much in the industry itself than in politics or on a personal social level. The demographics responsible for implementing digital innovations often speak english and just use international solutions. There is little "local patriotism" in software. Perhaps there is also a strong idealism which lets people get involved in open source instead of creating business models and market digital services. Again, advantages and disadvantages.
edit: To the question about the kind of medical devices perhaps in reaction to the "shitty" software I mentioned: medical devices that cannot kill you and were mostly for diagnostic support. It was safe, the software "architecture" was all over the place though.
The device I worked on was classified as IIa. There was a focus on a thorough risk analysis and we ensured mechanism were in place to shut down the device in any case of emergency.
I don't want to say what kind of device it was, it had to do with higher frequency ultrasonic sensory.
I don't think so. Judging by the low salaries most companies are offering in parallel with the huge number of devs on reddit from outside of the EU wanting to move to Germany it doesn't look like there's a shortage of developers, quite the contrary.
If there was a shortage, pretty shore we'd see higher salaries being offered.
Basically, I was quite impressed with their brilliance and almost insane work ethic.
The ones I worked with were kind of unorganized, but that was a small sample.
I have seen more software projects fail because of over-engineering for alleged maintainability, extensibility and a too generic design. Some would say that violates KISS. Many have shifted to more iterative development, which doesn't exclude the need for a solid architecture and extendable software, but it can improve time to an MVP. Quality can suffer, but you also gain experience.
Business logic can be as complex as you want. In fact one of the highest paid field resolves around optimizations in this particular field. SAP is an example here but there are others. "Cubing" data on your normal business data server isn't trivial, but allows to answer questions about trends management is very interested in and they have all the money bags.
Still, developers aren't payed that badly to be honest and you have options to reduce your workload, so that you don't end up with 60h work weeks or regular crunch. Projects might take as long as some unrelated airports in some setups I guess. If you code in a quiet smaller city, you can kiss 6 figures goodbye of course, but in many cases you are the best paid person in the room.
It's true we missed the boat on the second and third waves of IT companies, but there are many unicorns in the manufacturing sector that most people in IT have just never heard of because it's outside of their bubble, these companies often dominate the world market in their respective segments though. For example, do you associate Germany with 3D printing? Probably not. Well, turns out some of the leading companies in industrial 3D printing technology were created here, in 2016 GE for example tried to acquire Germany-based SLM Solutions for 1.4 BN €.
Smaller countries like Sweden or The Netherlands host more successful unicorns than Germany.
Why is this a problem? If I studied IT and want a good job in IT then that will interest me the most. Sure, it's good for the overall economy, but what good is it to me that I'm surrounded by pharma or mechanical engineering companies if IT is my bread winner?
That's the problem Germany has, it's full of successful companies that aren't IT related so people who want good jobs in IT are forced to either leave to SV/CH/London or stay and be "the IT guy" at a non tech company where you get treated as a cost center.
Of course if you think that only SV-style software companies are worth working for then Germany isn't the place to be.
SAP is not "modern" in any sense and certainly not "innovative". Unicorn companies generally are both.
It's not the business culture that's driving this, it's politics. Germany simply isn't a competitive environment for entrepreneurship anymore with problems in many areas: schools, taxation, immigration (too easy for unqualified workers), legislation. Politics is in denial and desperate for success stories that would prove things aren't so bad.
Plus they seemed to have had a legitimate primary business, more than enough to cover their pump & dumping in foreign countries without strong rule of law.
There are always limitations on how much regulators and law enforcement can do and it always seems obvious in retrospect. There's always more that could have been done.
[1] the prior accusations by FT in 2019 mentioned it was their foreign subsidiaries inflating sales figures and recently the money got 'lost' hit a dead end in Asia. Companies often get plenty of time to pay back debts and billion dollar companies are given the benefit of the doubt they can pay it back...
The 2019 article was the killer, with one of Wirecard's financial partners traced to the home of a baffled fisherman in the Philippines.
IMO it's hard not to wonder if there's a story behind the story. "Oh dear we at BaFin really didn't notice" just doesn't seem at credible, even if you include some toxic politics.
But if you owe the bank 100 million dollars... then it's their problem.
This, by definition, cannot be an explanation, because what's in the DAX and what's not is based solely on the numbers of the listed companies. See https://de.wikipedia.org/wiki/DAX#Auswahlkriterien
a) It has been bemoaned on many instances regarding Germans and finance: We're just inapt when it comes to knowledge about finance. Teachers unions fight tooth and nail to keep finance and business acumen out of the curriculum. This (itself being rooted in culture) will have to bear fruit in some way or another. Eg. Germany has the lowest share of people invested in equities of all industrialized nations. Even with negative interest rates, people rather use savings accounts than "risky" products with yields above 2%. And then there is real estate…
So it is no wonder to me that a state-agency is even easier fooled than E&Y was. Afterall (regarding leaked chats of Eno Kurniawan), they internally boasted about "brainwashing" the E&Y guys.
b) after all, what short-cuts our lack of understanding most of the time, is that we assume there is no wrong doing in the first place. So Markus Braun, claiming everything is fine until the very last minute seemed plausible. Even after the news broke on Thursday it seemed plausible for many, that the wrong doing was on the side of some Philippinian actors only.
That is mostly to be blamed on savings accounts being decent in interest until the 2008 financial crisis while at the same time, especially in the dotcom boom, a lot of money was destroyed in the stock markets. The "Volksaktie", today known as Telekom (yes, this Telekom, for the US folks), wiped out a lot of people's savings and they remembered this.
- Returns of Savings accounts were better accross the industrialized world back then.
- The amount of people investing in equities was low before the "Volksaktie". It only declined thereafter even throughout the latest, longest bull-run in history.
But yes, events like the dot-com bubble or now Wirecard just strenghten the prejudice Germans have toward the whole topic.
This model has never stopped. Equity markets have never really existed because they are competition with the banking system. And the banks are heavily supported by (or owned) government. They have always paid a rate significantly under market. Always.
Germans have the same median net wealth as Greeks and the highest level of wealth inequality in the world (bar China). This is part of the system. If savers take their money out of banks, it is over (and btw, most German banks are functionally insolvent...they were the biggest buyers in pretty much every meltdown in the past fifteen years).
Germany is a developed economy but it's financial markets/banking system is Chinese (unsurprising because China copied Japan and Japan copied Germany). Savers get utterly screwed, the wealthy are eating their lunch.
Aldi is a pretty poor example because they are an example of a company that actively disrupted German corporate life.
So being understated is a north European characteristic but that isn't why German billionaires behave that way (they are often extremely overstated in private). They have no public profile because the way they made their money is usually horrific (Oetker family, Quandts, etc.), there are always vague suggestions of corruption, and they are very rich but aren't capitalists...it is crazy.
Also, the amount of corruption in Germany is huge. The most similar country is probably China. The state is run by and for billionaires. There is almost no oversight of this. The purpose of the German economy is to steal from consumers: low wages, forced savings, essentially free loans from state-owned banks to well connected companies, very weak unions. Not as bad as China, stuff like hukou is...fedualistic, but unlike almost any other developed economy.
The arrest is one thing, it would be interesting to see if there's jail time. The other executives responsible haven't even been fired and just shuffled around Wirecard.
Bafin would look a lot better, IMHO, if in addition to investigate the FT and British short sellers, they also had a closer look at WC. They didn't.
The fact that something this obviously fraudulent dragged on for over a decade is nuts.
The auditors will do interviews with people, but the company also (somewhat) picks who will get interviewed.
Remember that auditors are paid for by the company they are auditing. They are motivated to do the minimum required to pass the given regulation. They aren't there for true oversight, they are there to make sure all the checkboxes are checked.
You need to convince the rest of the market that the company is fraudulent - and that is a very expensive and complex process.
...but it does illustrate the value of short contracts in finance. They incentivize investors investigating and raising the alarms for the rest of the market. This company was particularly aggressive in defending themselves publicly, so it didn't happen until their market valuation was high enough to make it worthwhile for the big shorts to come in and crush it.
> When a company is going around accusing reporters of conspiring with short sellers to bring it down, that is an almost infallible sign that it is going down. Companies that are not doing fraud, when reporters ask if they have faked their revenue, respond by explaining where their revenue comes from. Companies that are doing fraud, when reporters ask if they have faked their revenue, call the police to try to get reporters arrested.
> The news about Wirecard, now, is sort of trivial; anyone who read McCrum’s reporting and knew the almost-infallible rules of short-selling conspiracy theories already knew that Wirecard was faking its revenue. The bigger implications of the news are for BaFin, which focused on protecting Wirecard from speculators when in fact the speculators needed protection from Wirecard.
https://www.bloomberg.com/opinion/articles/2020-06-22/the-be...
A better approach would be to either pull a single paragraph from the full length piece, a TLDR type summary conclusion of the broader thought and hyperlink that clip to the expanded/full content on Bloomberg's site. This would result in my stayed subscription to the (truncated) newsletter, a higher open rate, and actual visits to their website (which the newsletter does not drive IMO). Cheers!
Your claim about open rates is unsubstantiated because I wouldn't have ever subscribed if it was just a summary and a link to Bloomberg (which has a free article limit to boot, if I remember correctly). So between the two of us that's only n = 2 and I think neither of us has any clue what metrics for that newsletter might look like.
And of course, in this hypothetical, that same content would need be equally accessible/free on the site as in the email otherwise moot point to begin with.
But the publishers POV, this author in question creates really compelling content, so much so that as a consumer of it, I actually would sacrifice hopping to/reading on bloomberg.com if it meant a more palatable intro/summary initially via email. (And again assuming it's just as free).
Indeed the open rate claim is unsubstantiated, and we do not know what the metrics look like in any dimension. And maybe they even tested this out early on / upfront and evolved into what it is now? There has to be some data/science to it, because right now, the email appears to be hardly commercialized, so Bloomberg is not only missing out on the site traffic benefits, but also not optimizing email monetization? (A quick glance with adblock off shows now ads?)
Anecdotally (and maybe I am completely alone here) I am more inclined to click on a content link or open an email if I believe that there is a high probably of thoroughly reading what's inside. Take for FWIW, my own process of unsubscribing: I went from opening all/90%+ to opening less and less over the coming weeks because I knew I couldn't consume/get through enough/all and that felt defeating, futile, and proving impossible. So eventually, I stopped opening all together, stayed subbed for a few more weeks, but eventually unsubbed altogether when it came time for a monthly inbox pruning. No we both lost in this scenario, I can admit.
I am biased too, because in a previous life I built an email list with ~50% open rate and ~25% CTR (high for my field/industry) built upon this outbound link strategy, as I know others have to. Apparently there are multiple ways to go about it :)
(All that said I am surprised at all the downvoting...either Levine has a mob on here intolerant of any harmless critique or generally my parent comment wasn't relevant enough to the broader topic at hand? It would be helpful to hear feedback on why)
The other things I realized is that I should treat it like a magazine rather than a newsletter and read only the 'articles' that I'm interested in. I don't have to read the entire thing.
There were claims that tesla wasn't really selling cars (cause who would want one?), or they were all parked in some giant hidden parking lot, rusting away or something. They hired airplanes to take pictures of the factory. This somehow got some famous investors into it who were sure tesla was doomed. There was a whole belief system, weird twitter handles. There seemed to be coordinated publishing of information to try to sink the stock. I've never been close enough to a stock to see it happen before this.
And now it has turned around again - instead of too many shorters, their value is too high. Tesla's market value feels vastly too high, like 10x or more too much. The company should do pretty well but they won't be approaching half the world car market imho.
It's not a Germany specific problem. Warning signs all over tons of companies.
Most of silicon valley darlings are plastered with red flags all over. But financial regulators like SEC are unable/not willing to take an action against darlings of wall street.
We really never learn. If I were a regulator I would be taking short seller statements extremely seriously when it comes from one of the proven reliable ones.
Since no one with power had their sights on Wirecard, nothing happened - it's not unexpected.
That's a pretty specific claim you're making. Got a source?
Is there a good backgrounder on this whole thing?
[0] https://news.ycombinator.com/item?id=23598824
[1] https://valueandopportunity.com/2020/06/19/wirecard-the-germ...
IMHO it really comes down to how solid the business and its' operations are as a whole. As long as they aren't mis-spending any excess capital in horrible ways, they can definitely do well. Of course, I prefer to see more conservative approaches to growth and expenditures but that's nearly impossible with a car company.
Of course, growth oriented companies fall flat on their face plenty of times, but for your Amazon's and Google's, with hindsight I don't think you can call them overvalued with the information we have now.
If you have high conviction something is wrong then it doesn’t matter that it works the wrong way in the meantime.
https://news.ycombinator.com/item?id=23573386
https://news.ycombinator.com/item?id=23598824
https://news.ycombinator.com/item?id=23438323
This, from a year ago, reads interestingly now: https://news.ycombinator.com/item?id=19737344