Read: We were spending money on new hires like a drunken socialist sailor to show "growth" to keep the bubble going and sucking in even more VC money. My bad.
ZAPP: Men, you're lucky men. Soon you'll all be fighting for your planet. Many of you will be dying for your planet. A few of you will be forced through a fine mesh screen for your planet. They will be the luckiest of all.
Eh, does he deserve $55M for founding a f(l)ailing company? If he wasn't a founder, would you say "No, never mind the $55M he pulled out of the company last year, last year everything was fine. The massive cash shortfall the company is experiencing today has nothing to do with those $55M that are no longer in the company's coffers."?
Mate, ultimately the point is that if you sell $55 m of your stock in a company you're not taking money out of the company. That stuff ceased to be owned by the company when those shares (or derivatives that control them) were granted (way before this point).
I think ultimately the point is that this guy who fucking sucks at running a company made $55mm, and several hundred people just lost their jobs due to his ineptitude. Seems pretty cut and dried to me that he's a pile of shit; if he really cared about his employees he would truly take responsibility and reinvest some of his money in the company.
Page 68 and on of the Schedule 14A filed with the SEC, published this May. The $300 I was referencing was the top price target of the PSUs that make up his comp.
Are you complaining that when they cut their pay from 400k to 32k that wasn’t enough? Or are you complaining that they didn’t cut their 32k salaries down further?
I mean, if you think "salaries" doesn't include 800MM in bonuses (the number that's been thrown around), then you're speaking differently than others in the thread.
“While employees from all functions will be impacted, the changes are particularly concentrated in our operations, marketing, and program management functions.”
"Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022..."
We are now at the point when we will find out which of the changes to behavior (financial and otherwise) that came about with the onset of the covid-19 pandemic are going to be lasting, and which are not. I do not claim to be able to predict which ones (if any) will last, but I can confidently say that Robinhood is not the only one to have been surprised by changes which they thought would "stick", going back to pre-covid norms.
Amazing the number of people I personally know who took 1 year of day trading to be the “norm” and made big life decisions based on their results. From quitting good jobs to buying houses they can’t afford, all because they made big money in 2021 and thought they could keep repeating it every year.
Unless you're going to do it for living and really invest hard into educating yourself, I don't think you should also take the investment advice from people who have been doing it for more than a decade, unless the advice is "buy index funds and HODL" (I maybe exaggerate a bit, but boiled down to the essence that'd be it). For a common person that doesn't plan to make a career out of it and spend a lot of time honing one's skills, daytrading is rarely going to pay off, IMHO. You can do it for fun, there are more expensive hobbies probably, but as a means to support yourself in the old age... well, you might get lucky. Or not.
Nah a lot of the tech and meme plays were up hundreds to thousands percent returns. Of course they were hit the hardest in the down turn, but the money making potential was pretty insane.
Options trading in particular is really addicting, like gambling. I’ve had periods where I was completely sucked in, looking at charts and news all day.
I will admit I’ve had thoughts in the past of “I should just quit my job and do this” without any practical consideration as to how sustainable it would be. Not because I thought I would be rich, just because I wanted to trade all day! It’s kind of like being addicted to an MMO lol
I did that too and you’re spot on about how addictive it can be. But I looked at my wins and realized that I had no real thesis and was essentially gambling. Had to quit at that point.
I talked with a “professional” day trader who basically said “write down your strategy on a piece of paper pre-market and the. Paper trade that strategy. If it doesn’t match what you were doing then you weren’t acting like a professional, you were a gambler”.
To any one person, sure. But, as the saying goes, "None of us is as dumb as all of us."
Once you start move into the realm of group decisionmaking based on hypothetical future demand for $OUR_WORLD_CHANGING_PRODUCT, positivity culture starts to take over. Plenty of people in the room where the decision is made may be thinking, "But what if this is a passing fad and people don't really love our product in any sort of durable way," but nobody wants to be the one to actually say it.
I would even go so far as to say that those whose temperament would allow them to say something like that out loud in the boardroom generally don't get promoted into the kinds of positions that get you invited to boardroom meetings.
Positivity culture exists because there’s no real downside for the people exuding it. You swing for the fences and the losses and layoffs are someone else’s problem. Most decent people might find such decision making distasteful and that excludes them from leadership.
It's sort of like optimistic concurrency. Sure, transactions straight-up get killed on a regular basis. But if you make transactions cheap things that are easily replaceable, then the overall system might still benefit.
I think that all you really need to do to translate the principle to business culture is replace the word "transaction" with "someone's career".
It is also because executives operate on the long tail of a pareto distribution. You get there by capitalizing on a large number of successful gambles. With few exceptions, you don't get their without beating the odds several times in a row.
Hindsight's 20/20? Why would we feel sure that people wouldn't keep up with habits they picked up during COVID? That seems like it could have been similarly likely to me -- someone picks up day trading, gets hooked, and now it's a regular habit.
Well, you'd ask the question "why weren't they doing it before?". If the answer is "they didn't know about it", you might expect them to keep doing it. But not otherwise.
Day trading has had a lot of popular awareness for a long time.
Day trading has all the meaning and fulfillment of cigarette smoking and slot machines, but with none of the addictive chemicals or flashing lights. So it's not surprising that people didn't hold onto the habit once there were better alternatives.
Even if you know something exists, you might just have never tried it for some reason until something causes you to, at which point you might realize you enjoy it.
E.g., I got a bike over COVID, found I liked biking a lot, and have been doing it a lot more now.
From a user perspective, day trading is very similar to online poker or other gambling activities. The exception being that everyone wins sometimes, and everyone loses other times.
Anecdotally various betting games had a similar growth curve. People rush in when it’s easy, and then rush out once it’s hard.
Just saying, the ones who might end up being surprised are those who think that the crazy days of 20/21 are definitely over. For all we know, it's just summer now. Not that I don't dread further lockdowns or even necessarily expect them, but I have them on my list of possible scenarios.
Oh we will be getting locked down again in the fall I am sure of that. Canada didn’t upgrade it’s definition of fully vaccinated for no reason. Come fall those “fully vaccinated” will be allowed to enter restaurants and work while those who oppose further shots will be told stay home
I am willing to bet $100, through any escrow mechanism of your choosing, that we are not getting locked down again. There’s no appetite for it, and no reason to do so.
Vaccine requirements are not a “lockdown” though by any common understanding of the term.
All of this has already happened. Just look at the stocks of all the pandemic companies. Peleton, Teledoc, Zoom, Docusign and on and on. Pretty much all down 80%+ from their highs.
If anyone had any notion that the markets were efficient or rational in any way regarding the actual underlying value of the companies they purport to represent, I certainly hope that notion didn’t survive the pandemic - I’m not sure what world stocks were pricing in over the last two years, but it didn’t pass even a cursory smell test.
Nikola, a vaporware company with absolutely 0 revenues burning $600m / year, is still "worth" $3b.
HKD, a vaporware company, is being pump and dumped and is now "worth" $150b+, the size of Bank of America, despite being 50 employees with nothing of value.
The only way I can understand the Efficient Markets Hypothesis is as a way for academic economists to explain why they personally have not gotten rich trading stocks.
I assume you mean they don’t put much stock in the strong EMH - Which is true, but the concept is the underpinning of most risk-weighted investing and some form of it (eg weak or semi-strong EMH) lines up nicely with why index funds outperform on a very broad basis.
I’m trying to think of a good analogy to CS.. maybe “Good engineers don’t put much stock in artificial intelligence”
It's a really approachable theory and contrary to what you'll read in tech message boards - doesn't remotely boil down to "the market can't be wrong". Burton Malkiel (economist most famous for writing "A Random Walk Down Wall St" and being a longtime advisor of Vanguard) has a paper talking about the early 2000's pushback.
It gives a good summation / spells out some critiques / offers his reasons for disagreeing:
the market is the most efficient place you can put your money, and the companies that underlie the market are the greatest stores of value with the best growth opportunities we know of, and the pandemic didn't change that.
Dying to hear where else you suggest putting investments...?
If one believes the current market is bogus, then it is quite possible to move money into hard/sticky assets. Real estate is the prime example of this, as it’s in everyone’s interest that real estate not crash too hard. Similarly bonds
Big question to ask if you are betting the market is bogus is whether the market will stay bogus while your “safe” asset stays flat.
Yes, the market is very efficient at losing money as well by punishing foolish people that believe the market is only efficient at making money. Buy, buy, buy!
If anything, the current situation is a demonstration of the opposite. The claim that markets are efficient and rational is based on long term price finding. This includes a lot of noise. If Peleton never makes a profit, the market will eventually find the correct price.
Would you say the same about working from home generally, which seems to have more staying power (even if we are seeing some return to office)?
It seems not-crazy to me that someone would have thought that WFH was going to stick around post-COVID and thus also make people want to keep being able to work out from home.
first and foremost, working out at home has always been available. If you prefer working out at home you were probably already doing it.
Second, a lot of people enjoy a social aspect of gyms, or even just find it motivating to be around other people working out even if you don’t talk to them.
You only have to spend a little time around fitness oriented folks to know workout at home was never going to stick
I worked in a consumer goods VC during this time and we couldn’t believe anyone was touching these companies, most were just instagram-aesthetic branding on cheap machines
as a bodybuilder for 20 years, i completely agree with you. working out at home has never had the same appeal to me or anyone else i knew who worked out as going to a gym. i got a peloton during covid isolation and it simply wasn't the same. i went to the gym the first day it opened and so did every other regular. i knew peloton wasn't going to continue thriving, however i do have to say they have very quality equipment so they'll probably continue to do okay.
you can’t really short private companies as a normal person and even if you could you would never outlast the money VCs are willing to pump in to prop it up until they find the greater fool buyers
Your best bet is just to stay away when something smells
I think people are going to be more tech focused as a result of the pandemic. I notice that the majority of my meetings, even mundane meetings, are virtual rather than face-to-face for example.
The big difference that is happening currently is inflation, recession fears, and fear among the general public about financial turmoil. The entire situation has been very poorly handled by governments and institutions around the world who seem to have collectively pretended that nothing was wrong. In particular inflation has been poorly fought because a huge percentage of the left wing were insistent that public spending would not cause inflation, but did not have a chance to implement that public spending in the 2010s due to the rise of the far-right so have absolutely nothing to show for it except inflation. Now the US is trying to cause a recession so that inflation and economy instability can be brought back under some resemblance of control, but the US is still acting as if it's the only major economic power in the world - Asia for example has been far less hit by inflation and many countries (including India) are not predicting a recession.
Next up, the remote work craze. Everybody thinks they are super productive working from home but on a larger scale I imagine it took a huge hit.
Plus it is dystopian as fuck. People need to be around people outside of their immediate family to stay sane and I promise you most of these new remote workers are basically never interacting with people outside their small bubbles.
It’s gonna swing back. Calling it now. A ton of people I’m know made some seriously impulsive moves into houses way out in the middle of nowhere thinking this will last. It will be interesting to see how well their bet paid off in a year.
> A ton of people I’m know made some seriously impulsive moves into houses way out in the middle of nowhere thinking this will last
I've seen it too, and I was really surprised because a house is a 5+ year commitment, and it wasn't (and still isn't) clear WFH will be commonplace that far out.
A lot of the numbers I’ve seen are basically a reversal to an existing trend line projected into 2022. Maybe a bit of “rebound” behavior for things that were possible (eg travel).
I suspect we’re going to see a regression of most new trends. Especially anything that felt too related to lockdowns.
It's just a turn of phrase... usually "it's on me" just means I've acknowledged what you might be thinking and I'm going to continue doing whatever I want.
That's a lot of staff - it means 1/5th of your coworkers got laid off...
I'm very bearish on Robinhood - I don't know if they have enough of a moat to defend themselves from other free stock trading apps. People have forgiven so many outages. The Gamestop saga was the straw that broke the camel's back for many.
The Gamestop fiasco rightfully killed their reputation among their absolute core fanbase who gave Robinhood the word of mouth that got them off the ground
Those people are never coming back and they're never going to have anything good to say about Robinhood
I know I’m a mere small drop in a large bucket, but I take solace in knowing there were plenty of other drops like me that eventually wrecked that bucket.
I like Robinhood and I have no problem with them having technical issues when users a flash mobbed a meme stock. In the end they learned what to do next time.
They weren’t technical issues; they were financial, business, and policy issues. And many people people either lost or think they lost a lot of money because of it.
Robinhood branded themselves as bringing power to the people but as soon as the people got the upper hand in a market, Robinhood turned around and screwed them. It’s a lot worse than a young startup struggling to keep up with explosive demand.
I guess when you give power to the people that means flash mobbing meme stocks. Not something traditional institutions have had to deal with before. Traditional users as well who don’t see what happened as good behavior. Robinhood handled it as well as could be expected.
> As CEO, I approved and took responsibility for our ambitious staffing trajectory—this is on me
Reminder that Vlad Tenev received $800M in compensation in 2021. In the same year the company made terrible bets on crypto and banking, took an irreversible reputation hit among its core user base because of the GME fiasco, had multiple user data breaches, was subject to several investigations and was fined hundreds of millions by the SEC and other regulatory bodies, and saw its share price drop by 90%.
At this point "taking responsibility" would mean resigning and letting someone more competent fix his messes.
“crypto up plz” being the calculated, good faith, board approved risk?
I’m not saying it was illegal. All I’m saying is the people who paid for the bad bets (with their livelihoods) were not the same ones who made the bets in the first place.
Not my company not my bets. I’m paid to staff a post at a company, the CEO laying people off has no more impact on or responsibility to my livelihood than I do to the workers of food truck I frequent. As a worker I take literally no risk except “one day they might stop paying me.” I am not impacted at all by how the company is doing.
And if you’re a stock holder then you should love this move since it’s in your best interest.
This was the whole point of the analogy. Taking risky bets has cost the employees nothing. The only thing that the employees have lost is imaginary future pay and benefits that could have been taken from them at any point for near any reason. It's hurting the employees that were laid off as much as me choosing not to eat at my local burger stand hurts its owner. Dgmr, it sucks to get laid off, it's a huge PITA and a good number of them were probably depending on that income but they haven't lost anything.
Those cost of those massive risks are actually literally at the expense of the shareholders. Ironically the employees who have some of their compensation in stocks will actually be helped by this move.
If you crash a company against the wall resulting in such a disaster and having to cut so much staff, resigning isn't enough. CEO's should have to pay back big parts of their compensation.
executives should be compensated for the performance of the company in the future, not the current quarter or year. this is the board's fault for failing to set effective incentives.
people talk about ESG... imagine what the world would look like if energy company executives were compensated based on the health of the company (and by proxy the health of the economy) ten years in the future...
also maybe more tax rules along the lines of long/short cap gains that reduce the short term time value of money.
Exactly, there should be a multi-year lockout period where the CEOs cannot sell their stock. If the potential hires don't like it, well, cry me a river. Plenty of people would still take the job, especially if they are interested in building a long-term company.
If the CEO picks the board, and packs it full of his other CEO friends, who all have him sit on their boards too, and everyone rubber stamps each others compensation packages; isn't this circular blame game awfully beneficial to all of the CEOs at the expense of all the non-CEOs?
Do you want it to be very hard to fire people? If you make it that way, then companies become much more reluctant to hire people, and tend to start hiring on contracts instead of full time. My understanding is that that's been the effect in France, at least. And if you think about it, it's a completely rational response to essentially making it riskier to hire.
Investment comes with risk - that's why you can make money at it. I think it's fair to say if this business is struggling it'd be more equitable to share the excess compensation with rank and file employees that are being deprived of their livelihood but unfortunately they likely have no "right" to that compensation with how various employee contracts are structured. It's usually the case in situations like this that the CEO getting a golden parachute is less expensive to the company than trying to get out of paying them. Companies, of course, would prefer a world in which no one had to be paid so all this thread is sort of a socialist pipedream where the havenots might actually get treated fairly since if the money wasn't going to the CEO it'd likely end up straight back in the pockets of investors.
All these people had salaries in excess of $180k I presume + stock compensation. Sorry, but they do not fall in the category of people that were exploited.
I firmly believe in at will employment.
In this case, the CEO exploited the investors, whether it is VC firms, institutional or private investors by making an error in the judgement of hiring needs. Of course there is a risk in investment, but when CEO's make major mistakes while paying themselves $800M in compensation; investors should seek relief.
> All these people had salaries in excess of $180k I presume + stock compensation. Sorry, but they do not fall in the category of people that were exploited.
I am making the argument that they were not in a cage at all and that they were justly compensated for the risk of joining a rapidly expanding startup.
There are talks of "late stage capitalism" all over the place - I think CEO compensation is one of the biggest hallmarks of it. Capitalism is supposed to naturally reward value creation to incentivize further value creation - somehow we've found ourselves in a situation where folks on the bottom of the pyramid aren't going to get incentivized for efficient labour no matter how much value they create - while folks at the top will be gloriously celebrated for even the most abject failures.
Most people are doing their best to be productive and most of their managers are trying to reward these efforts with recognition beyond a "thanks" but it becomes more difficult to do when we have an insane wealth sink at the top of our economy.
Ehhhh.. Economic rents and scarcity of talent with solid networks still apply to execs as much as pro sports.
You don't buy an exec because they are brilliant or hard working, you buy them for their network and how much they can grow the the business relative to compensation. At least in theory.
My own theory is that executive compensation serves a purpose that generally isn't said out loud. Usually compensation comes mostly in the form of stock, and the real reason for the large amounts is to reassure investors that if the executive finds him or herself in a situation where they have to make a choice between what's good for employees or what's good for shareholders, they'll be strongly incentivized to choose the latter.
It follows that if a CEO were to refuse stock compensation they'd be at risk of being fired by the board of directors, because owning stock is an unspoken qualification for the job.
Vlad created an app and created value for lots of people. People chose to give him money in the form of investment for his company. I’d say plenty of people are motivated to become founders and create value. Most people just aren’t good at it or prefer a comfy and safe life. Nothing wrong with that either but don’t expect the same payout as someone who worked harder than you.
This really just seems like more a comment on how you relatively value networking compared to skills acquisition. Being a technical worker instead of a manager isn't a flaw - I am happy to continue delivering technical product to my company and I definitely deliver significant value.
I don't disagree that starting a company comes with risks and a personal investment that warrants increased compensation - but right now CEOs in the US make an average of 670x their employees... that is extreme.
I think the modern world has come to view low level employees as replaceable and thus the compensation is more focused on market pricing instead of individual value creation - but with CEOs that 670x is usually justified with how important the decisions they are making are but founders and CEOs are just as replaceable as anyone else.
There are different types of CEO’s: founders and non-founders. Founders make their money when their product gets used by millions of people. Is that worth 670x? Ultimately it’s worth whatever people will pay for it, so when you judge a founder you’re really judging the millions of people who parted with their money. I’d argue those millions of people are more “correct” than deciding an arbitrary number like 670x is too high.
The other type of CEO is one who joins after founding. Their compensation depends on providing tangible measurable growth for the company. Driving 5% additional revenue for a company like google is worth billions, so their pay is considerate with the value they provide. It’s been shown in research that a good CEO can make or break a company.
You say you deliver tons of value but you don’t explain why your pay is high as a technical worker. It’s high because the market is tight and there aren’t enough skilled technical workers. There’s plenty of other industries like biotech where they deliver significant value but don’t get paid as much as software. Same goes for CEO’s it’s an important position and there aren’t that many people that can do the job.
I realize it's not something that happens, but I would say "taking responsibility" would mean taking, oh, I dunno, $50M of that $800M in compensation in 2021, and distributing it to those laid off?
(How the hell is your life different with $750M instead of $800M anyway?)
It's simple to say we'd be more charitable if we had incomes 1,000x or more our current annual compensation, but I do genuinely wonder if I'd be different. Would I be greedy, would I care about doing right to the laid off employees-- it's hard to imagine how crossing that bridge might change people.
I'm not going to try to justify how I would act, or how anyone else should act, were I to have a compensation package putting me easily in the top 0.1% of society, but we can collectively dispense with the notion that certain types of compensation (i.e. stocks) must necessarily be prohibitively harder for a CEO to give up than just money.
The CEO of Robinhood would need to file a public form with the SEC if he wanted to sell any of his shares. People watch that and say "hmmm, why is the CEO of Robinhood wanting to sell shares? I wonder what he knows that we don't" and the stock goes down on that information.
Stock is absolutely more difficult to liquidate for a CEO.
It's probably not that simple. Most chief executives delegate the responsibility of hiring staff to others. Sure, the buck stops with the executive, but ultimately nobody can review every single operational decision at scale. Maybe they hired for a world where the pandemic didn't happen and the monetary supply didn't tighten, then the world changed.
The entire purpose of the C-suite is to stay on top of macro level stuff, and its the boards purpose to make sure the C-suite is doing it. They didn't do their job. And they got rich not doing it.
What CEO doesn't approve overall hiring numbers? If you're worth paying millions upon millions of dollars a year, shouldn't you have capital-F Foresight?
Or is it more that most public-company CEOs are probably not playing above replacement level?
I think by example we can guess that you might act exactly that way (since so many other people do) but IMO the important thing is how do we as a society want people to act (ITT it would not be how this person is acting).
IMO we as a society should pass rules and laws to prevent people from acting this way ie limits on compensation.
That's insider trading, and a whole different accusation than the one levied above, which is implying some sort of wealth inequality issue that executives are compensated in stocks and non-executives are compensated in cash.
Frustrating to see the incredibly common conflation of equity and salary. Even though it’s always correctly suffixed with “compensation”, people assume that means “a bank account with 8 zeros”.
That's because it effectively is. I suggest you look into pledged asset lines (and more broadly 'buy, borrow, die'), which are even more tax advantaged than just getting paid directly. Sure, there is some marginal cost associated with borrowing against granted equity, but it's almost certainly less than 10%. So yes, it is accurate to assume that if an exec vets $x00 million dollars of equity a year, they have a high percentage of that available to spend on whatever consumption or investment they desire.
Quite possibly the best comment in this thread. Some people are quick to say that the high on-paper number doesn't mean anything, but remain (in most cases wilfully) blind to the fact that the low on-paper number doesn't mean anything either. As you point out, the real number is unknown and often not fixed but for all practical purposes probably still way higher than most of us will ever experience.
It's even more bizarre/frustrating for someone, especially in tech where many of our TC is largely RSUs, not understand that wealth is almost never held in cash.
When I was young (and poor) I also believed that being rich meant having Scrooge McDuck piles of cash to swim in.
After my first big RSU payout I quickly realized that nobody with more than a few 100k in assets keeps anything close to the majority of them in cash. Savings accounts are for the poor. Anyone, even in the every day millionaire level, keeps most of their wealth in non-cash investments, leaving only enough cash to cover crisis situations. Especially with inflation this high, holding cash is literally throwing money away.
Nobody has a bank account with 8 zeros, except maybe lottery winners that never learned the basics of asset management.
Canonically according to Rosa the money bin is just his “personal memento” cash - the money he earned by hand and remembers every bit of. It’s only a portion of his fortune.
That's not really true, at least not in the same way being discussed above. Jobs already owned millions of shares in Apple stock, so yes, he profited from the stock but AFAIK that was only from the appreciation of existing stock, not from new grants.
Sure, go ahead and ask those laid off if they'd feel better if they were given a nice grant of $HOOD, which was worth about 500% more in 2021.
The post-IPO 2021 price stabilized for a while around $50, so $50M is about 1M shares. The article says about 1,000 people were laid off, so if split equally that's 1,000 shares per employee. Since then, the price has come down to about $9, so it's a severance of $9,000 today.
I would hope everyone getting laid off receives at least that much.
The rich don’t see it that way. At its core wealth accumulation is a scoring contest so every penny counts for those care.
Also if you have all the material needs that is satisfied, then you go after the rare hard to get high value exclusive money drain this is human nature.
For your specific example what that 50m might make difference it maybe a bigger jet that flies further or a second jet for the family or a yatch or a castle in Italy or penthouse in New York.
For you and me that may seem ridiculous and unnecessary, yet we do the same thing too.
There are many many parts of the world owning a car (or even riding in one) eating three meals a day or eating out are luxuries many don’t see in their lifetimes. Yet we use do all those things without second thought to people leaving on $1 a day or less .
I agree with you but there is also the dynamic that there is always other richer people than you with richer lifestyles. So while you might think that one jet is enough for you if you had friends who didn't own a jet. When all your friends own 3 jets it makes you feel like you should also own 3 or whatever random expense you can imagine.
And while you say "human nature" I'd rather say it's "human illness." They someone are within a strata of society where there is no limit, a 20 minute private jet flight or a $20,000 meal is not out of the question and is in fact the norm.
They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.
this is entertaining but, I think the relative-riches-rat-race theory here is missing the harsh "stick" part of carrot and stick. Money systems have both. Many wealthy people have debt and cash flow pressures, sometimes badly. The casinos and rehab clinics are full of those who lost touch with emotional stability during the race.
The sort of stable accumulation described is typical for a very small number of people overall, from low income to higher incomes, in my experience. Life is complicated.
>They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.
I know of a billionaire (one of the ones most HNers consider evil) that had a lot of the local millionaires sneering at him when he didn't renovate the vacation house that he bought in the kind of place where those kinds of people buy vacation houses. According to the help at the yacht club his rational was that it wasn't worth his time to think about and there was no sense in paying someone to manage the process because from his POV there's no difference between vacationing in a house his contractor optioned out vs vacationing in one the last owner optioned out. That said, I think it may have been a "guest house" because upon Googling he has a much more extensive mansion in the area.
Imagine if I was visiting Laos and told someone I met in the countryside that I spent, say $2,000 on a racing bicycle -- which would be considered "normal" in bike racing culture in many parts of the US.
Imagine what that person would think!
My central point is this: People are quick to "normalize" their behavior relative to their perceived peer group.
So, yes, multinational CEO compensation is hard to comprehend. (It is arguably to the point where it does not serve those very corporations well. But that isn't my point...)
Just remember, the income and spending habits of a "typical" mid-range software developer in a major U.S. city are similarly incomprehensible for a wide range of people.
In some sense, it is turtles all the way down.
P.S. I'm not defending CEO pay. First, I haven't really studied it up close. I'd like to see more, erm, experimentation in it. Lowering it, sure. But also I'd like to see it deferred, for example, so a CEO's compensation is also tied to what happens after they leave. That would increase the incentive to not plunder the place or take shortcuts. Yes, I recognize this proposal seems to mix incentives between past and current CEOs. But that reflects reality. You can't just "wash off" a terrible previous CEO. And the "glean" from a wonderful predecessor will pay dividends for a long time.
P.P.S. Shameless plug: if you are a well-funded not-for-profit with a generous comp and benefits package, you could do worse than hire me. I'm an expert at studying CEO pay and pay inequity at organizations, both using intra- and inter- methodologies. I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.
> I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.
Not a job offer and no offense intended, but you sound like an excellent crypto startup founder there. Oh wait, they wouldn’t have used the term self and instead used a much more grandiose term. :P
At my company (non-tech), all leadership compensation is paid based on percentages hit over the next five years.
Your first year, you’re only getting 20% off the position’s salary, and 80% goes to your predecessors. When you retire, 20% of your salary got the previous four years is based on how well the company does the year after you leave.
It strongly incentivizes healthy transitions and long-term plans.
The study of reinforcement learning, I've found, is incredibly insightful as a way to really force us to operationalize reward functions. I've benefitted from the process of reasoning and exploring RL reward functions.
Sure, I also value game theory, sociology, and psychology as well. People are complex, with culture, identities, imperfect reasoning, and biochemical influences.
That said, one key benefit of RL is the hands-on experimental aspect. You get to play God and see what happens. Surprise triggers cognitive dissonance and drives further questions. In contrast, some academic disciplines become rather enamored with their own theories, to the detriment of operationalizing them.
Imagine everyone is on a ladder. In order to ascend they have to step on the faces of the people below them while simultaneously getting their face stepped on by the people above them. Which one do they care more about?
Another way to think about it: Who has various kinds of power? To set pay? To help get one promoted? To help the company succeed?
Treating people well tends to have good long-term results. There are exceptions, situations, and cases where you have to be more cautious. To put it nicely, there are some people who favor shorter-term strategies. We all should recognize there is a fraction of people lacking in awareness or empathy or ethics. Some of the folks, wittingly or unwittingly, will bring down the entire ship if you let them. Still, IMO, a wise, ethical person gives the benefit of the doubt and helps others to the extent possible, without overextending themselves. As time passes, a good strategy is to help relatively more people who (a) need the help; (b) reciprocate, to the degree they are able; (c) and let's face it, those who can help you get a foothold. The third point is based on this logic: if you are a conscientious person, it is your ethical responsibility to not be naive. You should carefully strive to use your power to help. Sometimes this means playing the game.
What I've said above leaves open all sorts of paradoxes, value judgments, and dilemmas. Such is life. I think it is useful to frame ethics as striving towards an ideal (not just a goal) despite all the complexities. I could use all the feedback you all have to offer... I have a long way to go.
I don't entirely disagree with your point. However you and that person in Laos both have to work to put a roof over your head and food in your plate.
There's an absolute threshold at a few million dollars that guarantees financial independence wherever you are in the world. These rich people are well above that threshold. That's why it is more ridiculous to chase ever more money at their level than it is for you to purchase an expensive bike.
I see plenty of people on HN complain that no, they are not middle class while making $400,000/yr because they can't afford a 2,000 sq ft house in the most expensive area of the US.
Like the old saying "An alcoholic is someone who has one more drink than me."
Thing is, though, you really do need that second helicopter pad. That way, when yours is parked up there, you can still receive visitors. It’s not easy being rich.
It definitely happens in some cultures. I remember reading about the CEO of Nintendo taking a temporary pay cut after the botched launch of the Wii U. At the time, people were talking about other Japanese CEOs that had done this too.
For one thing, as another comment mentioned, he didn’t actually get $800M because that was contingent on hitting various price targets that didn’t happen.
For another, it’s not like it’s just cash sitting in a checking account. It would be stock in the company. Since he’s a CEO, he can’t just sell it whenever he wants, insider trader rules mean there’s only certain windows when he could buy or sell, and the CEO selling off that much of his holding would raise all sorts of questions among investors.
If he did it as a personal gift to each employee, there’d be enormous gift taxes that would eat most of it.
If he did it as part of their compensation, it would be coming from the company, not him, and he would have to justify to the board of directors and shareholders why he’s spending so much on a lavish severance package that is far beyond the industry norm (assuming they aren’t already getting generous severance packages)
It’s not as simple as “Oh rich people could just fix every problem by giving away all their money, but they’re just greedy jerks”
To counter that a bit, rich people with these kinds of assets can take out loans or cash with their assets as collateral. And of course these loans have way better rates than whatever kinds of loans you and me could get. Even better - This way, they don't even have to pay capital gains tax.
What I'm saying is, Vlad could most likely buy an expensive yacht without ever having to actually sell stock, so the argument that "it’s not like it’s just cash sitting in a checking account" is not that fair as well. Makes it seem like the uber-rich are actually quite restricted and that all of their money is locked up in investments and other things. Which is simply not true, they can use these locked-up assets in very attractive ways.
Loans still have to be paid back at some point. It’s true that sometimes banks are happy to let the billionaires have the loans for their whole lives and get paid back out of their estate when they die. But, when you borrow against a security (like a stock) and the value of that security plummets (like pretty much every tech stock did recently) the terms of your loan can force you to sell the stock and pay it off right away. (and sell it at the worst possible time since it just crashed and now you’re locking in that loss) So it’s not really a good idea to over leverage yourself in that way.
Sure, he can borrow a bunch of money against his stock and buy a giant a yacht or give it away to people who got laid off, just like a normal person can borrow a year’s worth of salary from credit cards or take out a high interest loan to buy an expensive car, but that doesn’t mean it’s a good idea.
"With big money comes big responsibility, so I took that responsibility and I'm going to take more of it next year. As a result of my increased responsibility, 25% of our staff will be given new opportunities this year and 25% more will see even more opportunities next year. Stay tuned."
The Shopify layoff also contained this phrasing. Shows how tone-deaf these CEOs are.
Shopify's version:
> Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today.
This is basically the Lord Farquaad line: "some of you may die, but it is a price I am willing to pay"
I don't think they're tone-deaf as much as they don't care.
Which reminds me of another line, this time from Kids in the Hall (from the Girl Drink Drunk sketch): (from memory, so may not be exact) "I can't help to feel responsible for this, but then again, I can't help not to care: that's just who I am")
Note that the complete, non-truncated quote [1] says:
"Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that."
Emphasis added, but perhaps some part of this apparent tone-deafness might be attributed to the omission?
I worked for a small business. The CEO and other executives were generally ethical people. When revenue went down, the C-level executives took a pay cut to ensure others could stay. They knew they could weather it better than their employees. Their salaries were always some of the lowest even before that, because they had a stake in the business that the employees did not have.
Given how much money this person makes, how much of a safety net they likely have compared to their employees, it doesn't make much sense that they do not redistribute their personal wealth to help the people they are "deeply sorry" to "say goodbye to"
Reminder that Vlad Tenev founded Robinhood, an incredibly successful app that disrupted an industry and is still best in class. There really is no replacement for a founder CEO.
Not true that there's no replacement for a founder CEO. Creating a company and growing it to viability is a much different skillset than running a company of a given size. Many startups have actually eventually suffered because they didn't transition.
>Why would a typical retail investor prefer commissions to PFOF?
It's about incentives. I am more than happy to pay $0.65 to Fidelity for my options trades, because I know that Fidelity's incentive is to get me the best possible price. Commission fees are absolutely negligible compared to price improvement with a real broker.
I don't remember exactly but i thought Robinhood was first about how it had "free" trades and then they basically forced all their competitors to race to the bottom and lower fees in response. For some retail traders it was like pay $10 to get a few shares of some stock you want to buy. Pretty terrible deal in comparison to PFOF.
You don't sound like a typical investor so I get why you might care deeply about pennies at price execution. But I think most retail investors really don't care about PFOF and prefer it to commissions. And some of these retail firms are basically about just getting your stock trading business so they can funnel you towards professional portfolio managers who will just take a cut of your savings for no real value...that is probably even worse than the PFOF business model imo.
> ... took an irreversible reputation hit among its core user base because of the GME fiasco
God I'm so sick of hearing this. It comes from people who seriously don't know what happened.
let me explain: RH had (and still has) a service that you can trade immediately on signing up and sending funds rather than waiting for them to clear. This mostly works out fine because people buy different things and you have the underlying assets as security so it tends to work out, meaning it's not a risk of a huge loss. Put another way: the convenience of RH lending you money (because that's actually what's happening) is counterbalanced by the additional business they get.
When GME popped off, they got a ton of sign ups to buy GME. This wasn't people using their own money to buy GME. This was RH lending you money to buy GME. And suddenly it didn't balance out. RH actually had a huge long GME position effectively. They actually borrowed a billion dollars to cover that and that was insufficient. So they stopped lending money to buy GME to avoid insolvency.
Remember too that they are lending you money on the promise you would fund the account. If people bought GME at $100 and it dropped to $30, RH would be left holding the bag as a significant percentage of people would simply avoid the loss by not funding their accounts. RH may have recourse to pursue that in court but that's going to get expensive and is a losing option all around.
That's literally all it was.
Some people were so delusional about what was going to happen with GME. They thought that since the open short interest exceeded the stock actively traded, the shares were going to go to infinity or something like that. That was never going to happen.
The fact that other brokerages could handle the counterparty risk with stronger financials than Robinhood (eg: by continuing to permit securities purchases) does highlight reputational risk in that you're clearly running an inferior brokerage compared to the competition. Ordinary market conditions wouldn't add visibility to this fact, but unfortunately there was always the risk and the situation had occurred.
Well sure, a new upstart brokerage doesn't have the spare capital when new collateral requirements are imposed with little warning. Otoh, they were able to get access to more capital in a couple days, so from a business continuity perspective it was fine. They still missed out on a couple days of trading though.
I've never done business with Robinhood, but they never seemed to be a quality brokerage. I seem to recall they didn't support limit orders for some time (but I could be misremembering). I do thank them for their work in reducing retail comissions to zero though.
This was not about margin lending to Robinhood customers. It was about a multi-billion dollar increase in collateral required by the NSCC due to a large volume of unsettled trades in highly volatile stocks.
This is blatantly wrong. The entire problem was the standard settlement delay, which requires sufficient collateral to derisk the settlement period -- regardless if they are from instant deposits or made from cash accounts. Robinhood could not have kept operating even if instant deposits were disabled and every account had margin disabled.
The NSCC has a rule-driven model that tries to make sure that it holds an appropriate amount of collateral for each participant based on risk of default between trade and settlement.
That includes a core capital model that’s derived primarily from value-at-risk based on portfolio size, volatility and the usual things.
It also has an excess capital premium charge which varies according to the extent to which the core requirement is large vis-a-vis a participant’s excess net capital (excess over the minimum regulatory capital required by the SEC); because those are precisely the cases where default is more likely.
In the case of Robinhood, it seems like their internal risk management team had failed to take into account the excess capital premium (which is a large problem on its own), and that premium was particularly large based on how poorly capitalized Robinhood was.
You can go look up details on the NSCC model; it doesn’t care whether your clients are trading on margin.
You really are quite on the wrong side of this discussion: where are you getting your information?
Pretty much everything you wrote is incorrect. You are describing margin lending, which had nothing to do with the issue. Robinhood instead blocked trading even for fully funded accounts. The problem wasn't the money that Robinhood lent you, but rather the fact that they themselves didn't have enough collateral to get cleared for the increased risk posed by these stocks. They were posing as a first-class brokerage without having the financial backing for it.
Moreover, the issue brought their business model into public spotlight, and people realized the problems with making money by selling order flows and the conflicts of interest that came with it.
My understanding is most people aren't commenting on this coherently†. The problem that halted Robinhood's GME trades, as I understand it, was that they had insufficient collateral to cover their clearing requirements. Clearing collateral isn't customer money; it's funds that clearinghouses require brokerages to post to protect them from each other. This, as I understand it, is money Robinhood was required to have on hand regardless of whether they had the money from customers to back trades. The amount is based in large part on the volatility of the stocks they're trading, and papers the illusion that stocks trade instantly when in fact the actual trade takes days to settle, during which the price of a volatile stock can swing wildly.
My understanding is that nothing you can do with customer trading funds will mitigate or offset your clearing collateral requirements. Brokerages that want to clear trades just have to have a big chunk of segregated money set aside to keep participating in the market. Robinhood ran out.
† because it's complicated, and there are lots of simple explanations you can come up with that are wrong, and we all have an Internet nerd tendency to fixate on a couple of axioms and derive the rest of the world from them, rather than reading the huge legal documents that set these things out
This may be true. But it's also true that Robinhood's business model took a massive reputation hit amongst its core user base as a result of this.
Some people were utterly delusional about what was going to happen with GME, but Robinhood's business model was based around providing low friction trades to the sort of consumer who makes casual trades based on what they hear on the internet: i.e. exactly the person most likely to be delusional about GME and likely to subscribe to someone else's theory it was all their broker's fault really. Even the name is a nod to the delusion trading stocks is a place for poor amateurs to fleece deep-pocketed professionals and not the other way round!
Robinhood's executive compensation clawback policy just FYI:
In March 2021, our board of directors adopted a clawback policy effective upon the closing of this offering. Under our clawback policy, our board of directors may recover incentive compensation from an executive officer in the event of (i) a restatement of our financial statements or a material error in the calculation of one or more performance-based measures used to determine the amount of such compensation or (ii) the executive officer’s “detrimental conduct” (as defined in our clawback policy) that results in an excess performance payout, results in legal proceedings or causes us material financial or reputational harm
I'm wondering how much of that language is common to all publicly traded companies and how often the clawback policy is actually activated. Maybe the board sees enforcing the clause to be detrimental because it would impair their ability to hire another CEO, or it would have a chilling effect on the performance of CEOs in general. The board members are all wealthy themselves so this isn't a decision that affects their lives in any material way, except for their likelihood of being appointed to other company boards in the future. They basically meet in a fancy conference room once every six weeks to eat an expensive lunch and play-act at running a company.
I said the same thing. Taking responsibility doesn’t mean “I acknowledge that this is on me.” Of course it is. How about some accountability? How about getting your pay clawed back etc? Just “taking responsibility” is lip service.
Are you talking about the ~$800M in stock-based compensation described here [1]?
Nearly all of that only vests if Robinhood stock hits price targets between $120 and $300 per share. The remainder requires a price of $50.75 to be sustained for 60 days. Since none of these goals have been met, Vlad has not received any of it. And unless the company turns around dramatically - it's currently around $9/share - it's likely he never will.
Exactly - all these articles about CEO compensation are misleading.
Case in point: Intel's CEO's 2021 salary was reported as almost $180M. In reality, he got only about $10M. He hit literally none of the targets that would allow him to get the rest of the compensation (although in theory he has a few years to hit those targets).
Not scientific and maybe inaccurate, but a quick Google search showed the average Intel employee makes $100k. The shift in social norms where 100x the average employee (of a tech firm, which skews towards high salaries) is considered “basically nothing” is something worth talking about.
If you're in charge of managing 121k people - 10x the average salary seems like a minimum. 100x seems in the realm of reasonable.
If the CEO's salary is distributed to all employees, they would get a ~0.05% raise. If distributed to the shareholders, it would increase profits by ~0.01%.
Yet this person's decisions can have much bigger consequences to both employees and shareholders.
> If you're in charge of managing 121k people - 10x the average salary seems like a minimum. 100x seems in the realm of reasonable.
Except, that’s not a CEO’s job. Even remotely. At best they “manage” a few department heads who each manage a few middle managers who each manage a few direct managers who then manage the workforce.
Even then, that’s a misrepresentation however. They are in charge of managing and directing overall company strategy in the interests of the board. The COO (and, sometimes, the CTO; in tech firms) is usually (indirectly) in charge of managing people.
I think it’s a valid point that they bring large value to a corporation, but it would be very difficult to quantify that value to be anywhere near 100x any other non-Csuite employee.
And yet, CEOs for decades (the 50s-80s) did just fine at a fraction of wealth disparity compared to today [1]. In fact, in just the last three years; the overall disparity has increased 31% despite corporations failing to properly manage the pandemic or their workforces.
It’s a reasonable point. But I think the distinction is SW wasn’t creating the economic value it does now. Similar to why firmware jobs don’t pay FAANG type salaries, the scale of economic impact isn’t there. (Not to be confused with societal impact).
So the question becomes, are CEOs pay commensurate with their added value? Put differently, is the rise in production mainly attributable to the CEO (as wages were largely stagnant prior to 2020, yet CEO wages increased rather dramatically.) Are they adding more value now than they did before and, if so, can we actually measure it?
Considering I’m the only one that has sourced anything in this thread and that the response I was responding to made an easily disproven claim in such a snide/sarcastic manner, it’s hard not to respond in kind.
But sure, from a super simple query on any search engine:
Feel free to gate your query to anytime between 2003ish to now, the results are all the same with a few exceptions (MLE and DeFi jobs, for instance): stagnant or decreasing.
According to BLS data [1], the median computer scientist salary in 1997 was $82k, adjusted for inflation [2]. The same data has software developers median salary today at $121k. It seems SWE are getting paid much, much better today.
Granted, the occupation titles don't align perfectly. There was no "software developer" role in the 1997 dataset, but most of the computer science positions have a median salary in the low $80k-range in todays dollars. Also note that the timeframe you chose was at the peak of a tech bubble. Probably not the best for comparison, just like you wouldn't want to use 2006 or 2021 for a gauge on housing costs.
> SWE’s straight out of school made 90-100k in the late 90’s.
They absolutely did not with just a BS. Perhaps a few companies paid that high, but 100K would be an easy outlier.
To give you an idea, even in 2010 most non-big names outside of SV and Seattle paid under $100K right out of school. Many companies in my city were offering $70-80K. Even my big name company paid under $100K in those days.
Relevant to this thread, Robinhood numbers are way down yet the CEO still made significant salary by historical comparison. To me, that points more to a change in social norms than in productivity.
But you bring up an interesting point. The CEO may be incentivized to promote wealth disparity. If they are measured by profitability only, without regard to the larger systemic effects, it incentivizes them to take a myopic view. This could mean implementing policies that help hit short term targets without regard to long term health, suppressing wages, etc.
To a certain extent, whichever side we’re on is really just a narrative we tell ourselves since there doesn’t seem to be conclusive data about CEO impact.
The research is a bit mixed on whether a CEO of a large corporation (S&P 500 size) really matters so I’m not sure the risk statement can be said with conviction.
The thing is, they aren’t actively managing 121k people anymore than the President is commanding 1MM+ troops. Nobody is capable of actually managing that scope. In reality, they are managing a handful who are also managing a handful who are also managing a handful etc. If you disagree, ask yourself if they could intelligently describe a randomly selected employees day-to-day duties. If they can’t, they aren’t really managing them in a meaningful way.
I agree they manage the strategic vision of the company. The research on whether they make a real difference in the long term trajectory seems mixed.
Meh … just like the President … a CEO’s performance is highly correlated to business cycles and stages of a company’s growth. Most of the decisions made are not earth-shattering; they go through the motions and hire the same contractors and make the same decisions that most of their competitor company CEO’s make … after all most of them went to the same business schools and learned the same “cutting edge” business tactics from the same professors.
Nokia and RIM got clocked by the iPhone. I don’t care who their CEO could have been, these companies were on the downward trend and headed for tough times.
What about CEOs like Jack Welch, who everyone lauded as a paragon of management? He was handsomely paid but his decisions crippled the company years later because of bad foresight? I think the main issue ITT is that it’s very hard to measure and distinguish a good CEO from a bad one, yet they are almost all paid as if they are great leaders.
> yet they are almost all paid as if they are great leaders.
The board of directors are the ones who measure CEO performance and set compensation but most of the times they just rubber stamp whatever the CEO does.
One of the criticisms is that the boards are incestuous. Another issue may be that stock options are much more common now. I know the argument is this should align the CEOs interest with the shareholders but the counterpoint is it incentivizes a short term outlook.
Certainly a point worth making, and I might even be inclined to agree, but I think my point stands. Comparing against similarly noteworthy companies, Intel's CEO doesn't make all that much.
That speaks to another point though -- the incentive to return shareholder value, often times to the detriment to the company, the employees, the customers, and sometimes to public safety.
Well, the shareholders provided the money that allows any of it to exist at all. If there's was nothing flowing back, there'd be nothing for institutional investors. IPOs would be worthless which means there'd be no exit for VCs. Everyone would love to just get money with no obligation to give anything back, but that's not the way the world works.
The same document points out that the CEO and CCO (both co-founders) each realized more than $168M in compensation in 2021. That's the number to talk about I think.
Your math makes no sense. The fewer the employees laid off, the more the dollar per employee will be. What does that mean? If a company lays off only one employee, then all of the CEO's salary could have gone to one person?
I think it just shows that the CEO earned enough to give every laid off employee a whole annual salary, so you could argue that the layoff could have been prevented for at least a year.
> Hate to go there on HN but there _is_ a moral side to this.
No there isn’t. Wasting money to keep employing people isn’t good for anyone. The labor market is still tight right now so the employees are better off going to a company that actually wants them.
And if they'd over hired, their business could still be in the same place (or worse) next year. People should just say they don't think executives should earn that much money (in good times or bad) rather than making moral justifications like this.
Sure, but no doubt a Silicon Valley programmer could take a 50% pay cut, still have plenty to live on, and double the salary of 3 cleaning staff that work at their company.
Their compensation being high is not really relevant imho. It's the hidden assumption that if only the CxO compensation was lower, those workers could've been saved (aka, instead of redundancy, the CxO takes a pay cut to pay for the wages of those workers).
Is this a valid argument? I dont know, but i feel that it isn't.
Are you saying executive compensation should be orthogonal to company performance?
Overpaid executives failed, so workers lost their jobs, but the executives get to keep theirs all the while saying things like "I take responsibility for this" when it is objectively false that they are taking responsibility.
Does that seem right to you? Is that a good way to run a business, to keep failed leadership?
Their failure has already dropped a huge amount of their stock-based compensation. Their base salary shouldn't be determined by the company's failure (only their _future_ salary).
What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform?
> Yes. Yes I would take the CEO's total compensation package.
As in you would accept, without knowing ahead of time, a cut to your salary when the company's performance drops?
I'm not talking about performance based bonuses or commission based pay. I'm talking about a salary that was pre-negotiated at the time of your employment, but upon the company performing badly, your salary is dropped.
This is what the OP is saying - that high CxO pay is the problem, and that they should have been paid less (after the company's performance dropped).
Plenty of ordinary sales people are 100% commission based.
Plenty of CEOs already do (or did during their tenure) take no material base salary and their compensation is tied entirely to the performance of the company.
Is that not reasonable for large, profitable businesses. It has its own issues, but what compensation plan doesn’t?
> Plenty of ordinary sales people are 100% commission based.
that's not what i meant.
The question is whether you would take a pay cut _after_ the company performed poorly, but you didn't know ahead of time that it would cut your pay. Performance based bonuses or commission is obviously pre-negotiated and thus, not subject to post-fact alteration.
Executives also have to hold lots of stock that tanks when the company does poorly. Should workers also be forced to hold 100% of their RSUs as long as they work there and be paid 80% in RSUs? Even senior SWEs make 50% tops in RSUs and can sell their stock as soon as it vests with no restrictions. They get top ups to make up for poor stock performance. Their personal exposure to the company (risk!) is way lower than any executive. The CEO has effectively made negative salary due to their stock tanking.
Should companies be forced to keep unproductive or no longer useful workers? Clearly there is not enough customer demand for Robinhood to continue employing their ops/content/etc. workers. What are those workers going to do then, if they keep working?
If it’s so risky, why do CEO’s end up making 350x the typical employee? Those poor CEO’s taking all that risk to be compensated at a rate equivalent to 351 employees.
> taking all that risk to be compensated at a rate equivalent to 351 employees
Do you understand how risk works? If you take on more risk, you should be compensated for that risk, else it doesn't make sense for you to take so much risk if you can get the same reward by taking less risk.
Executives as a whole (CEOs, VPs, even directors!) take a lot more risk - career and financial risk - than your typical line engineers. Their success depends on the success of the initiatives they lead, which can be subject to macro or competitive factors entirely outside their control. Those initiatives are generally longer timeline, meaning they have less chances at bat (and thus higher variance in outcome) than an IC. And a shitty IC can always be rehired pretty much trivially. If your company fails with you at the helm, you're not getting another CEO job. For example, Carly Fiorina has never held another management role in a large multinational corporation after her failure at HP.
On top of that, executives have to hold a large portion of their compensation as stock which they are barred from selling as long as they work at the company. If the company tanks, they take a retroactive paycut, often times upwards of 50%. They don't get refreshers to boost their comp back to original levels like ICs either.
Yeah CEOs nowadays have quite excessive compensation. But they will never have compensation at a single digit multiple of the average employee. The risk they take is too big for that to sufficiently compensate them.
Journalists have no idea how corporate compensation works. At one point in Yahoo's history they reported Terry Semel's compensation as $300m. In actuality he got just his base salary that year as the options were all underwater. And they vest over 4 years. Further, they thought you multiply the stock price by the number of options to figure out how much they are worth. He would have never made that much under any circumstances.
An article I read on HN talked about the difference between being nice (saying something to appease someone) vs. kind (doing something that benefits another person).
It mentioned on the NYC Subway you will see a guy help with a mother's pram but not say a word. No small talk. No smile. They are kind but not nice.
Assuming the above definition, I would say this CEO is "nice" but not "kind".
Since when did giving millions to some bankers being laid off become the signal of being kind?
They are getting severance packages with two months of further employment, and while that is not ideal for them at the individual level, I don't see why they need charity any more than anyone else.
Being kind would actually be donating the money for truly charitable purposes to help the poorest.
I agree. Being kind is not keeping it for yourself.
Also the "some bankers" classification. I remember in the 2008 crash people getting angry at their tellers because they are "bankers". Yes they are, but they probably don't earn that much, dude.
His job is to make big ambitious bets. These didn't pay off. CEOs are not hired (or retained) for the benefit of employees or customers, they are hired by boards for the benefit of shareholders, and shareholders in Robinhood were not buying for stable reliable dividends.
At this point, unfortunately, "take responsibility" it just a PR phrase. It doesn't come with any consequences, responsibility, or costs to the individual in the corporate class.
> Reminder that Vlad Tenev received $800M in compensation in 2021
No he did not in fact receive $800m. You seem to know a lot about the performance of RH stock, but you’ve completely missed the fact that the poor performance means he won’t be seeing that $800m worth of stock - almost none in fact.
He got a comp plan that could get him up to that much in stock if certain goals were met, but none of those have been met so he hasn’t gotten any of that $$.
Suffice it to say, if he had met those goals, they wouldn’t be laying off anyone, as their stock price would be sky high.
>For Tenev to actually receive the full compensation, Robinhood stock would need to trade up to $300 per share over the next seven years, the company said in the filing.
It closed today at $9.23, so it's a fair guess that he's not getting anywhere near 800M value.
i’m positive vlad feels like he did something hard by “taking responsibility.” but he loses nothing and some former employees are now in a precarious financial situation. his skin in the game is nothing compared to theirs.
Vlad Tenev received $800m for taking the company public per an RSU agreement the board gave him in 2019 and $800m was when the stock price was $50+. Nows its only worth $130m. Banking is standard with discount brokers, you have a sweep account that is probably on an FDIC insured bank. GME issue was a lack of capital to settle GME trades. They owed $3 billion to NSCC. Robinhood was insolvent but people always flock to conspiracy theories on why Robinhood pulled GME trades. I am curious what would be the better decision for robinhood with the GME issue?
I don't use Robinhood but do benefit that my trades at other discount brokers are now free.
Didn't etrade and/or other frims do the same halting of GME because they couldn't cover the overnight options capital requirements?
Ultimately RH and others didn't have the ability to raise the crazy amount of capital they needed to cover trades over a very short time and instead of breaking these requirements and receiving the consequences (getting taken over by SIPC? or whatever, I don't actually know) they halted trading.
Failure to predict an unprecedented future, I suppose.
> At this point "taking responsibility" would mean resigning and letting someone more competent fix his messes.
Your derision is probably blinding you from the solution that's most likely to produce the best outcome -- him learning from his mistakes & cleaning up his own mess. Resigning won't be a magical fix-all.
It's actually ironic that your definition of "taking responsibility" is him quitting and having someone else clean up his mess. Paying back a portion of his stock based compensation from 2021 or forfeiting his comp going forward would make sense though.
At first I was like "jesus christ this is going to be a bloodbath" and then I read your post and thought "huh yeah i guess it makes sense they are firing people."
I hate this BS lately with CEOs claiming it's "on them" and "their bad decisions" as if that somehow makes it all okay. There is NEVER any repercussions for CEOs when they fire/lay off no matter how many people.
I know this is not the cultural norm, but I am curious how long this norm can persist.
Without the ability to cut pay, layoffs are the only option for companies burning cash and losing altitude. That locks pay increases at the same inflated point that the bubble supported but which reality does not.
To go one step further, is there a single advanced economy in which pay cuts, rather than layoffs, are the norm?
Because then you'd still have more people than you need, except now everyone is poorly motivated, and your best people will just leave.
Germany does actually have a model called "Kurzarbeit" (literally "short work") to reduce hours across the board while some of the wage losses are being offset by payment from the unemployment insurance system. The idea is to avoid layoffs during times of recession etc. which would allow the companies to bounce back more quickly once the situation has picked up again.
I get that it seems like what would happen, but where are the cases proving that's what happened? Especially in an economy shedding jobs, there may not be many other places to go.
Also, studies seem to find that money doesn't motivate people to perform at a higher level.
How do you think of "best"? There are many senses:
(a) People that do well in a particular organizational context?
(b) People with a certain set of skills?
In the software industry, these do change pretty dramatically from time to time. For example, the FAANG style of interviews disrupted what came before. And of course, there is considerable variation between FAANG style hiring and others.
I bring all this up not just to be pedantic... (Is there anything wrong with being pedantic? We should do a proper study to find out, but I digress...) ... because I'm curious if and how the industry is changing.
Many software developers got comfortable with being in the driver's seat and being fawned over. This has changed a lot, it seems to me, in the last 3 to 6 months. Where does this leave us?
>Also, studies seem to find that money doesn't motivate people to perform at a higher level.
What that really means is that if you're paying $200k now, bumping to $250k isn't going to make your workers more productive. However, if you're paying $200k now and you cut the pay to $180k, and your competitors are offering $230k, your best performers are still going to jump ship.
The top talent can jump jobs on a whim in major tech hubs. The only senior programmers I know in Chicago that have been unemployed or underemployed for longer than a few weeks in the past decade were of their own volition. Maybe this is just my bubble and maybe it's just Chicago, but I doubt both of those.
I really wish that the US's Paycheck Protection Program had been modeled on Kurzarbeit - the money is distributed to workers via their employers, saving a lot of bureaucracy, but because it's directly tied to previous wages, would have prevented a lot of the shenanigans we saw with PPP in the US.
Exactly, why would a high performer want to subsidize the lower performers with their own salary? Just go somewhere that will continue to pay top market rate.
It can work to some degree especially at smaller companies where cash flow matters a lot.
I experienced this in the dot-com collapse but probably ripping off the bandaid is a better approach in many circumstances especially when cash flow isn't the driver.
With the job market still being as strong as it is, cutting pay like that would be a disaster.
If my employer told me they were cutting my pay by 20% one morning I would already be out doing interviews by the afternoon.
With layoffs you at least control what talent you are giving up in exchange for a smaller payroll. With across the board salary reduction, your most talented employees will get up and leave and the people who remain will be demoralized and poorly motivated.
I worked at a startup that tried that. Within 4 months, a good chunk of the best tech people were gone. Within 12 months they had gone under.
Maybe for an economy-wide recession where your workers have no other options. But if it's just startup risk that are making you founder, you're basically guaranteeing a death spiral. There is some chance if you make it a fixed-term paycut with a payback with interest, but you better have a real cult leader as CEO to get people onboard with something complicated instead of just getting a job at Google.
It was the beginning of covid and we were in the travel industry. It was messaged well and the executives took a bigger % paycut than everyone else, so no one was angry about it.
The best people went to FAANG (immediate comp) or one particular fintech startup (good shot at an exit).
You get very little from your employees in the meantime, the ones you are still paying, as they have a much harder time concentrating, and also don't know that they have any reason to care about the company's future. The first week or two after a layoff is very glum and unproductive.
However, proper reasoning while taking into account uncertainty is not so simple.
Let's do a thought experiment. Let's say you are the CEO and your estimate for the necessary layoff ranges between 2% and 11%. What to do? One and only one round of X% layoffs? What should X be? Or perhaps start with a round of 5% layoffs. The hope would be that the uncertainty decreases. Time passes. You might not need an additional round. Or if you do, it can be done more accurately.
If you combine layoffs the reduction in burn can be pretty significant. The exact numbers vary per company but for a startup delaying layoffs by one month can be the difference between having one year of runway remaining or one month once all is said and done.
Somehow I feel that all these VC backed firms just add employees for the sake of adding employees.
I use Tastyworks - another free online brokerage that it almost at feature parity with Robinhood. They have stocks, options, futures and even some selective crypto. They also make money using PFOF just like Robinhood.
However on Linkedin, their employee count is less than 100 (99 to be precise) On the other hand, Robinhood was at almost 4000 employees at the start of the year. I think they still have about 80% more employees than where they need to be.
Very few people use RH as 'investing'. Those will be on boring brokers like Vanguard.
I have a Tastyworks account too - the fills are way better than Robinhood's. As expected, since they charge some amount per trade. But that means that the "free" platform will definitely have more users, just because it's supposedly free (even though you pay for it in the fills, and get frontrunning trades)
If you are seeing a venue not meeting nbbo you have a whistleblower suit to make which have been quite lucrative.
When I was doing this for work the issues we ran into came down to a) making the orders hit the tape close enough to ensure similar priority b) the size of the orders changing execution depending on venue c) differences in performance per symbol.
This was in a place that was sending a fair amount of orders in. Even then given the above finding statistical relevance was hard.
I don't know the situation now, but both used to sell their order flow to the same place. I used both and fills for pretty much the same. However, I used tasty platform to set up options and then execute them on RH most of the time.
>just because it's supposedly free (even though you pay for it in the fills, and get frontrunning trades)
Can you provide a source for this? Citadel (one of the companies robinhood sells order flow to) claims in regulatory filings[1] that the overwhelming majority of orders are executed at market price or better, and that they on average save traders money.
tl;dr: adverse selection. retail traders are less risky to deal with, so market makers can offer better prices to them.
>If the retail trades are random. If retail traders usually buy before the stock goes up, and sell before the stock goes down, the wholesaler would consistently lose money on price risk. (This is called “adverse selection.”) But they don’t. Even now, retail traders tend to be small, dispersed and uninformed. If you sell stock to a retail trader for $58.15, you have no particular reason to think it will go up (or down). The retail traders are trading randomly, which is what allows you to treat this problem as though you were matching them up with each other at a fixed price and collecting a spread. In reality you are matching them up with each other over time, not simultaneously, and the price moves while you are doing it, but the randomness of their trading means that this difference doesn’t matter too much.
>Meanwhile market makers on the public exchange are doing something similar, but with institutional traders who tend to be informed and trade large lots of stock, so their trading does carry a lot more risk of adverse selection. If a big institution buys some stock, that does mean the stock is somewhat more likely to go up, so if you sell them the stock you are somewhat more likely to lose money. This is why the spread on the public exchange—the difference between the $58 best bid to buy the stock and the $58.25 best offer to sell the stock—is so much wider than the 5 cents that the wholesaler charges. The wholesaler is just matching up small pleasant random orders and clipping a spread; the stock-exchange market maker is facing a real risk of being run over by an informed trader.
The numbers are given as examples, not as real figures. If you look at the document from my prior comment the price improvement (and therefore spreads that citadel makes) is on the order of pennies or less.
Because they are paying for a supply of (on average) uneducated morons with no edge. Can you imagine how much a professional poker player would pay to be in a tournament with amateurs?
Tastyworks was founded by the founders, CTO, and CFO of Thinkorswim. I worked on thinkorswim institutional desk for several years back in the mid-2000s. Not great brand recognition but a company built for traders by traders.
… and competition comes screaming into their short-lived dominance and leaves them reeling with a mountain of debt and no profits. Barriers to entry are quite small for tech companies, so it always amazes me when analysts and dreamy investors rave about how their favorite “unicorn” tech company will dominate or is “disruptive”. Their disruption and dominance is likely to be short.
I used to work at a real time brokerage + national bank based out of the Midwest. The entire engineering+ operations team was 128 people, exactly. Including the CIO and his assistant who ruled the 39th floor with an iron fist, a hold over from the dot com era. They're publicly traded. I think they're down to 90 people but still running a functional company with tens of thousands of broker dealers. I have no idea how you need more than 500 tech people to run an online trading platform.
AFAIK, it's just representative of status/power, but I don't know its origins.
A listing in The Urban Dictionary defines/describes it as: When an idea, movement or act has become very successful. To be propelled to great heights. [1]
FWIW, there's a band called The 39th Floor [2] that I like for its grungy/retro-ish rock. The band's name evokes, for me, the image of "high-powered execs", but I'm not sure how that association got into my head. (Possibly the track Koka Kola on The Clash's album London Calling [3], but that refers to a "51st floor", rather than 39th, to symbolise corporate success/power [4].)
No that's just the particular floor we happened to be on. I think the bank was on 38 and the trading floor was... 32?, executive suite was 41 or something. We had like five or six floors in the upper third of the 42 story building and a bank branch down in the lobby. They probably would have liked to have contiguous floors but it would have been a lot of work to move the data center and trading floor just to say you had X floors in a row.
You are actually a bit closer to the truth than most. The goal of a CEO is to generate as much hype early on as possible in order to spur growth. They spend early capital on growing employee count to generate even more hype. This raises their own net worth significantly. When the company goes public, they will dump what they are allowed to, navigate the much more "public" waters for a bit, then walk away with a small fortune. It becomes a game of investor bag holding at some point. The C-Suite is almost never left holding the bags. It is always the investor. I'm not sympathizing with investors, mind you.
> ”In his message Tuesday, Mr. Tenev said the new round of changes at the company are particularly concentrated in its operations, marketing and program management departments.”
People here on HN often say how bad is to be an engineer in a non-tech company. It seems that it’s much worse to be a non-engineer in a tech company.
As a nontechnical person, I can say I don't blame co's for cutting these roles first. Marketing, HR, program management, etc. are great at creating additional layers and busywork that makes it seem like they're absolutely critical to a company functioning. I was mostly in sales/bd and what I did love about the job was that there were pretty objective criteria to look at to see performance- how many partnerships or deals were in the pipeline, how many did you close, what dollar value, what was the csat on closed deals, etc.
I don't disagree on cutting these roles first, but I don't think it's a function of these roles being non-important; rather when a company stops growing these roles have less utility. Less about the role and more about the company priorities which shift when growth stalls. No one is sales is going to advocate for less marketing spend.
Program managers have very little utility. Ops should really be automated (i.e. it should be half run by SWEs that automate everything they can), so real ops headcount should stay constant as the company grows as automation is increased. I would hope marketing is data driven on things like CAC, but who knows at a lot of companies. Lots of marketing people are not quantitatively fluent.
In general the non-engineers at tech companies get treated pretty well and I don't think they are more likely to get laid off than they are at other companies. They also generally get the same kind of RSUs/options/stock comp as anyone else at the company: those are not normally restricted to engineers, although engineers often get more compensation than others.
Marketing, advertising and sales people are especially vulnerable at any company: if the company expects consumer confidence and purchases to decline, those are some of the first roles that get cut anywhere.
We honestly aren't treated better, and as you point out, are usually the first out the door. This has been my experience as a marketer over the last 16+ years. So, so many of my compatriots let go in these lean times (and often not backfilled), leaving those left behind to do 2-3X more work and get the ol "you're lucky to have a job!" speech. I've been laid off twice in my career, despite being considered a high-performer, once mid-way through Covid, and am staring down the barrel of another looming layoff. Honestly, being a marketer sucks but I don't know what else to do at this point.
This is a weird thing to say. Not only is it functionally false, we have plenty of cases where companies made layoffs due to personal reasons and also where companies are making a profit, but also comes across as condescending.
If you figure it out, let me know. I'm a content marketer recently laid off, and I've been dabbling in learning Python in my downtime as a general interest but also as a horizontal skill that... may prove helpful?
In the meantime, kicking down every door I can to find a great company looking for great content.
Hey.. check out Superpath and Content & Pros Slack communities. They post tons of jobs and you can usually direct message the hiring managers - sure beats the endless blind application game. I can send you some other resources - DM me.
In my view the difference between a tech company and a non-tech company is what percentage of the company's value is stored in the intellectual property rights of their software. The higher that number the more of a 'tech' company you are.
In non-tech companies software engineering is a cost center and at tech companies things like operations are cost centers. In both cases you need them for the business to function but they don't deliver lasting business value on their own so you look to minimize costs.
Many non-tech roles have the problem of being easily replaceable while many tech role have the problem of being expensive.
Yes. Try to be a cold-blooded professional. Do your job without attachment. Your company is not your family. It will end one day, but you will still be going. What you take away is experience, learning from success and mistakes, connections, and most importantly - friendships. The rest is insignificant.
We live in such morally bankrupt times. You can just say "you take responsibility" without actually taking responsibility at all. Our expectations have become so low and we've become so complacent that just the statement is enough.
In similar vain, "we care about your mental health" as is the common internal email from HR. No actual care is offered though. Giving staff a day off is a tangible example of doing at least something, but obviously no such thing happens. Once again the difference between caring and not caring is zero.
"We care about your privacy" except for the 20 years of prior tracking where we didn't. And actually still don't as we annoy and mislead you to keep doing it.
Maybe it’s worth reiterating that the unions and legal frameworks didn’t just happen “because unions.” And unions weren’t always (never were) guiltless entities. It was always a fight. The past is full of incidents to be horrified and emboldened by learning.
Edit-there have been long periods where seemingly nothing can possibly change. Then enough backlash is raised against another side (even the status quo) and things change.
There's different types of unions, those in Europe tend to be different from the unions the US used to have (and perhaps still have).
Unions in my country (Netherlands) do not protect the individual. You do not get hired via a union (free job from a "friend") nor does the union protect you from getting fired. The union is only there to protect collective interests. For example, a massive degradation in contract terms for all workers.
In the Netherlands, strikes are extremely rare because of a unique system called the "Polder Model", it's a triangle of government, employers and unions coming to yearly wide sweeping agreements on things like taxes, pensions, employment and termination terms, the like.
It has provided an extreme degree of stability for decades in a row. Simply put, it's a system that suppresses extremes. Nobody really wins or loses.
I have to admit though that this once well working system is largely hollowed out by now. Under the pressures of globalization, power has shifted slowly but surely towards the government-employers pair.
It seems worldwide the working class (and to a large degree the middle class) has been abandoned by both politics and employers.
I actually respect he French attitude and willingness to stand up for their rights and way of life. We can endlessly debate whether they take it too far but in the backdrop of the rest of the world doing fuck all, I see it as a positive.
Sure, I didn’t actually expect an off-hand remark like that to be taken as a serious comment on the French labour situation. (It’s... complicated, seems to have no good solutions, and I have mixed feelings about it given that France is one of the few places in Western Europe that has actual, genuine socialists rather than social democrats, but yes, the fact that there does seem to be a serious discussion going on, with a decent range of options and real power to enact them, makes up for a lot of my gripes about the quality of the arguments used.)
The point was that while Europe, as a rule, does lean towards more labour regulation than the US, the specifics vary so much that this is about the only useful generalization you make about it. The rest heavily depends on the country, and even geographical proximity doesn’t really play into it. (But you would know all about that, I expect.)
True, it's complicated, but I can offer the counter generalization that the US view on European worker protection is dramatically overstated.
Case in point, Germany did not have a minimum wage...AT ALL...until 2015. In the Netherlands, there's an entire class of workers on "zero hours" contracts, which give said workers none of the traditional protections.
Protections that even in the best of cases, an indefinite work contract situation, are strongly hollowed out by now.
“In the case of less well-intentioned towns, matters get only worse. In some locations, companies would compensate workers with a scrip—a monetary substitute that was valid only at stores owned by that same company”
Source: https://explorethearchive.com/company-towns?amp=1
Totally agree. I once helped start a worker-owned cooperative dev agency, and discovered (naively) that getting investment was basically impossible because investors and lenders aren't interested in creative legal solutions that don't fit their mold in which they would have funded a normal company doing the exact same work. That and extensive direct democracy can lead to design by committee and factionalism, which distract from the mission or violate the bylaws and require more overt conflict (compared to the back room stuff of hierarchical companies). I also recently took a university course on corporate law and co-ops were not mentioned even once (in Canada where there is a federal Cooperatives Act that permits their creation no less), so it is very niche. See Mondragon for an example of successful worker co-op businesses.
At least unions can still exist inside the standard model of employment which everything else is built around. In a "benevolent" tech company that actually treats its people well, I have trouble seeing unions as the ideal vehicle for balancing fairness with innovation. Of course there is inherent exploitation in any employment relationship within the standard model. I would love to see an example of it working in tech though, because I can imagine a union that is equally as interested in the success of the business and prioritizes sustainable growth on top of enforcing equitable treatment as a backstop.
There has to be some combination of legal structures that can somehow represent all interests fairly without adding friction. That is unions, or unions plus other things.
For example, employee ownership trusts could in theory be very aggressive and help smooth out the continuum between periodic bargaining and striking as the main/only leverage. Similar to a share purchase plan or RSU with a pool that has a majority of voting power, or at least equal to founders and investors with all the usual tie-breakers and dilution protections.
If I remember correctly some countries (Germany?) also have legislation requiring a certain amount of employee representation on corporate boards, but I don't know if that actually makes a big difference.
How would a union make Robinhood a more successful company that can afford to pay all of those employees? For that matter, how would it make a government organization better?
This is where you need to see the glass half full.
Obviously, serious mental health issues are not restricted to a fixed day per year. Yet the company did give some relief, which they also could not have done at all. There's a real world cost to giving you that day, and in my view, money talks.
More importantly, I find consistency between messaging and actions important.
I don’t think humanity has ever not been morally bankrupt. Politics has always been immoral. Industrialism has always been immoral. Slavery was commonplace. We used to have feudalism and nobility.
Morals are only applicable to those who have no choice and power to choose otherwise.
Each of those statements are rather simplistic, but for the sake of argument true-ish enough. I'm not at all surprised that there are sociopaths willing to leverage the twisted incentives in our system.
The sociopath comes natural, the system does not. It's malleable.
In a more balanced world, this behavior is corrected. That CEO should be chased down the streets or do prison time. Their assets seized and given back. Even more ideal would be for legislation to fix the twisted incentive.
The above stuff matters. Instead we focus on canceling somebody over an offensive tweet containing a word not at all offensive 3 days ago.
Many people use "politics" as a dirty word. That's understandable.
However, I try to remember that politics is the process of getting and using power without violence. In this way, politics is both a practice and a tool. Let this soak in.
Once you realize that politics is about dealing with conflict in some context without violence, you can at least grant that it is better than punching someone in the face.
To generalize, you might say that politics is a game you have to play. Perhaps call it a necessary evil. But the framing is somewhat arbitrary. I'd rather say that using power wisely and justly is a moral and ethical requirement. To do otherwise would be to abdicate responsibility and squander your power.
It is curious that the so-called sausage-making of politics is considered to be unsavory. It is certainly a mix of sometimes inconsistent ideas.
But it seems likely that uneasy compromise tends to be better than an imposed set of consistent doctrines. Or not... stay tuned.
The power of the elite is an illusion as is well documented. It is based on mass and flawless compliance.
The current state of the world demonstrates how even relatively small disruptions create a tidal wave and break down systems. The point being that even a limited act of non-compliance brings things to their knees.
Which if of course a tool to not use lightly, I'm just saying it doesn't take that much if people would organize.
Watch money. Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed.
I get it -- I often say "we're doomed" -- but very few of us get into the details of what that means. Maybe you have? What does the descent into doom look like? Any predictions?
That’s actually a quote from Atlas Shrugged one of the monologues called the money speech. I should have attributed it sorry. I would say we are heading for further authoritarianism and state capitalism. Things have stagnated.
Dear recreational club swinger and small dimpled ball whacker who tempts the gods: Conversations wander and this is a good thing. It is ok that a thread several levels down does not share the precise topic with its ancestor, no?
A useful insight I’ve internalised is to ignore what people say and look at their actions in terms of money.
As in: “Ours is the most reliable product!” Is just empty puffery, but cash-money-back warranty terms exceeding all other products in the market is a statement with real meaning.
“We care about our employees” is free to state and worthless. Golden parachutes are expensive and valuable.
Etc…
A similar statement is: “Don’t tell me your priorities, show me your budget and I’ll tell you what your priorities really are.”
"By and large, language is a tool for concealing the truth."
— George Carlin
One of the most salient features of our culture is that there is so much bullshit. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted. Most people are rather confident of their ability to recognize bullshit and to avoid being taken in by it. So the phenomenon has not aroused much deliberate concern, or attracted much sustained inquiry. In consequence, we have no clear understanding of what bullshit is, why there is so much of it, or what functions it serves.
On Bullshit, Harry Frankfurt, Princeton University
> "we care about your mental health" as is the common internal email from HR
I told my last boss I needed to take 3 months off because I was severely burnt out, without pay or benefits of course, and I am sure the team could handle it because there were 10 other devs including me and we didn't have that much work to do, and guess what happened? That's right, got fired a week later. I literally built the team, including hiring the team manager (I'm not interested in management), and built the first version of the product my team was developing and they didn't care; they wanted to eliminate my weakness. Their stock is worth 1/4th of what it was when I was "let go", so I feel pretty happy about that (because I'm a prick).
The whole market downturn begun months ago, since November as predicted. [0] That was the exact time to run away.
Many other small companies like Robinhood were one of the first to start downsizing quicker, which really doesn't surprise me since all the cheap money is now gone.
But the actual winners are the C-level executives, the VCs and any of the long term employees who cashed out.
A lot of Robin Hood's growth in particular was driven by people gambling their stimulus money because they didn't need it to make ends meet, and by the Fed juicing the markets with low rates for far too long, and by the ridiculous meme stock phenomenon. It was a perfect storm of stupidity.
Personally I'm glad that some sanity is returning to investing, and we are still a long way from getting back to normal.
They didn't, but I think most people would guess that is accurate. I know I do. I supported one of their open source infrastructure solutions(that they weren't paying for mind you) when SHTF.
If all we are doing is guessing, I would also guess that people being stuck at home with nothing to do but mess around with Robinhood played a big factor
In my industry the wave of stimulus definitely caused behavior changes, it was pretty distinct.
Obviously, a lot of people did need that money to make ends meet. But it's also obvious that some % of the population was able to treat it as money they were able to play around and have some fun with.
Something tells me infosec's not going to give me the okay on that one.
In lieu of that, I think "sending a wave of money through the system by handing a check to every taxpayer will not temporarily change some peoples' behavior" is the hypothesis that would need some data to back it up, in my view.
If infosec won't give you the +1 on sharing, it's best you and they find some shared ground. I suspect app/othersec would actually agree here.
Sending a wave of money into a group of historically underemployed seems like it'd result in normal expenditures, modulo some slush.
Maybe it's the contemporaneous injection of many, many trabillions into 501c3s, individual funds, small businesses, and other groups who could show they had done a small amount of due diligence to get a gazillion bazillion dollars for no reason that might draw your interest here?
Edit: alternatively, feel free to abstain from conversations where your allegiances lie contrary to complete honesty. I suspect many HNers do this regularly, and you can, too.
Your misconceptions about what I said somehow outnumber the things I actually said.
Sending a wave of money into a group of
historically underemployed seems like
it'd result in normal expenditures, modulo
some slush.
Do you have hard data for that? (j/k)
Far more importantly, "sending a wave of money into a group of historically underemployed" is not what happened. Pretty much every taxpayer got a series of stimulus checks. It wasn't based on need; it was based on your claimed income for the previous year. Historically underemployed groups got checks, rich boys with time and money on their hands got checks. Everybody. (edit: not everybody, more like ~80%) Maybe this is the root of your misconceptions?
Maybe it's the contemporaneous injection [...]
What? That wasn't even remotely part of this discussion. At least not anything I've written. If it helps, I agree with you: a lot of the payments to businesses amounted to lining the pockets of the already-rich.
Edit: alternatively, feel free to abstain
from conversations where your allegiances
lie contrary to complete honesty
What? Literally the only thought I've expressed this entire time is yup, that wave of money given to consumers seems like it had an effect on consumer spending habits, and now that stimulus has worked its way through the system some of those habits will revert to their former states. Not the most controversial of opinions.
What is this missing honesty you're referring to? This is one of the weirder interactions I've ever had on HN. And that's really saying something.
>Your misconceptions about what I said somehow outnumber the things I actually said.
oops! let me rectify that!
> Do you have hard data for that? (j/k)
ach, i'd answer but you're just kidding. still, it might be worth looking into?
> is not what happened? Pretty much every taxpayer got a series of stimulus checks. It wasn't based on need
I didn't get one. I didn't get a second. In fact, nobody I know except for business owners and one person whose income was skewed for very VERY specific reasons got one. Maybe this is the source of our fundamental disconnect? Only my business owning friends got money, none of my non-business-owning friends got money. The money mostly went, in my experience, to those who were already well set up. Or to business owners, who largely got loans forgiven.
> Literally the only thought I've expressed this entire time is yup, that wave of money given to consumers seems like it had an effect on consumer spending habits
I mean, that's the thing I mostly disagree about, so sure- it can be small but it's all I'm keen on talking about?
People should be able to do that. Is it just the rich who are allowed to make profit that way. Nobody is judging rich here what they do with their money. May be because people in hn are privileged.
I hope it didn't appear that I was saying otherwise - I was purely stating an observation.
I would feel that way about any kind of government payments, "aid" or otherwise. However, I think it's especially true for money marked as economic stimulus payments. That money is specifically meant to... stimulate the economy. It's meant to be spent.
Even rich people "playing" with money stimulates the economy, because they are spending the money.
One estimate puts it at $170 billion extra flowing into retail investing.[1]
Also, it may be reasonable to use the savings rate as a rough proxy. That rate was higher than it has been for decades when the stimulus was active and has since dropped. [2]
I am willing to bet they didn't factor in the whole meme stock craze.
Zero of our stimulus went into buying said stocks, however I did make a bucket load from GME and AMC prior. Our stimulus went into further "stimulating" our savings account. The money I spent with Robinhood was entertainment money. It just happened to pay off big.
A more conservative estimate places stimulus "meme stock" trading at less than 0.1% of the stimulus.
How much of that was due to inflation?
People could just be trying to get rid of cash.
I had a bunch of excess cash due to falling behind on D.C.A.-ing, and I accelerated that (which was not a good idea in the short term, but that's what D.C.A.-ing is all about - wish I hadn't fallen behind on it over the years!) and bought a bunch of under-par bonds and utilities for the yield, sold a lot of now-expired SPY puts and stock calls too ;) More trading than I've done in my life, mostly because of inflation, not stimulus.
It’s possible, but I don’t think that was a major factor. It wasn’t in the linked article and inflation was much lower during the stimulus. When it was creeping up, initially people thought it was transient. I don’t think most people know what the inflation rate actually is; I asked someone yesterday and they said “close to 50%”.
I think the fact that people just discovered that government deciding to put the country under house arrest is the thing now and they can be out of the job and not allowed to leave home at any time now - and started to save more is kinda natural behavior in these circumstances.
The hardest part of this to me to deal with is that it’s the truth. For decades, the conservative line was if you give people money they’ll just blow it on gambling and booze. Turns out it’s true.
It's absurd Americans judging at normal people spending money, but same people ok with companies making record profit during pandemic, the minimum wage limit etc. It's pathetic.
No kidding, a few well off tech bros use the stimulus to gamble and suddenly every family who actually needed that money was a waste? Was the government just supposed to lower taxes for corporations and the rich yet again?!
It's the usual way people react to their favorite partition talking points. There's a good amount of research that suggests that people saved their stimulus money. Not everyone spent and not everyone gambled it.
It would have been even better had the Paycheck Protection Program worked more like Kurzarbeit does in Germany - instead of just giving money to employers on the promise that they'd use it to protect jobs, insist that the employers use it to pay the wages that employees were going to be missing due to reduced hours, and have to prove that that's where the money went.
Kurzarbeit was one of the main reasons my employer survived the ill-timed purchase of another German industrial giant (deal done right before the 2008-9 financial crisis kicked off, payment due during said financial crisis) without having to lay people off, and left it in the position to get right back into the game once the world economy started improving. And, of course, spared thousands of working people a lot of misery.
Remember what the administration was that put it into place. It was never meant to help people and systems for tracking down where the money went and how it was used were struck from the bills by certain groups of people who usually spend their time saying that you have to add anti-drug rules to government handouts or else the welfare queens will just bleed your country dry.
Housing market appreciation happens because homeowners vote to restrict housing supply. Turns out it’s hard to convince people to vote for lowering the price of something when most of their net worth is tied up in it.
Ridiculous housing appreciation is practically a global phenomena that is due to artificially low interest rates and easy credit driven by many of the central banks around the world. What you describe (housing supply restrictions) is a local phenomena in a few markets like San Francisco and not the primary reason behind the incredible speculative nature of the recent housing market. China has been building in hyper-sonic mode for decades and look at the bubble happening there, for example.
Japan has the lowest rates in the developed world and a very generous central bank but no housing appreciation.
No one expects housing to appreciate (except in limited, specific situations) and then no one votes or sets policy specifically to prop up prices. There’s a dynamic market with plenty of development and supply in the right types of housing and price points and everyone’s happy pretty much.
Japanese homes are mainly prefabricated and are nothing like the type of construction you see in most other places. So of course a home doesn't appreciate because they are the same as a trailer. They only last 20-30 years.
The land does appreciate in Japan though. And if they built good homes, they would too. But they choose not to.
Is this also true of better constructed housing say in high rises which would likely be built to last longer due to the heights of the building requiring concrete and steel?
It's hardly surprising that given breathing room, people who live in miserable poverty will spend on things they couldn't previously afford. "Man cannot live on bread alone" is a pretty old concept. As for the people who already could afford the necessities of life, why not have a bit more fun than normal?
Ah yes, it’s completely fair that the only people who should be morally allowed to participate in the financial apparatus that sometimes leads to getting rich, are the people who are already rich. I see no incongruities whatsoever with this logic. rapid eye blinking
Bunch of people lost money. Some of them got rich. Booze is good and gambling is fun and it’s ok to blow their own money on exactly the things that everyone else blows their money on.
(This hits on the idea of “accredited investor,” and I have such a hard time not calling out that it’s a mechanism for already-rich people to participate in every deal that could make not-rich people rich. And that there are very few other ways to earn a fortune when you only have $10k in the bank. I lost my dad’s $11k when mt Gox exploded, which is objectively stupid. Meanwhile my friend is now a multi millionaire simply because he didn’t lose his coins and didn’t sell them. Was he stupid? Did I blow my money on gambling, but he was just lucky?)
Didn’t mean to rant, but it is what it is. You’re not wrong though.
The accredited investor rules aren't what's locking out individuals from getting the deals that are actually worth something. Those deals are already buttoned up by the connected VC folks. Look at the endless string of ponzis that get advertised to a typical doctor or dentist, that's all you're missing out on.
I agree that the rules are overly crude and that in principle there should be some more equitable way to achieve the same way. But I'm also very confident that those rules have stopped a lot of people losing all their money and killing themselves.
> Meanwhile my friend is now a multi millionaire simply because he didn’t lose his coins and didn’t sell them. Was he stupid? Did I blow my money on gambling, but he was just lucky?
Yes. You both did a stupid gamble and one of you got lucky for now. There's no broader lesson to take from that.
> Ah yes, it’s completely fair that the only people who should be morally allowed to participate in the financial apparatus that sometimes leads to getting rich, are the people who are already rich.
I agree with your overall point, but to be clear, we're talking about day trading. There's a lot of arguments you could have about banning casinos, pro and con, but "hey, some poor person might win big on the quarter slot machines" isn't a good argument.
Also, the median "accredited investor" is a dentist from Topeka who's about to get suckered by an advance fee fraud. Being an accredited investor doesn't automatically give you access to good deals. There just isn't a pool of amazing investments out there hungry for capital but being stopped by investor protection laws. (But there is a pool of scams...)
(Note that I'm not saying that the system is good or fair or just; I'm just saying mechanically, accredited investor laws aren't the part of the system stopping you from getting rich.)
Accredited investor rules exist so that your average person isn’t scammed into penury from a fraudulent investment.
Accredited investors suck at due diligence as is, and Joe Everyman can barely understand their own bank statement, so those rules exist to prevent them from getting raked by extremely questionable investment offers.
And a massive increase in crypto scams. And a massive increase in collectibles prices like trading cards and old video games. So much cash sloshing around. Everything inflated except the consumer price index (especially if you adjust the automotive, fuel, and electronics sectors of CPI because those price increases reflect supply issues rather than stimulus demand). Where did all that money go?
The untargeted stimulus just enabled mob madness and scams paid for by tax dollars. Wealth redistribution from the tax payer to the dishonest and lucky.
What we had, in effect, was the closest thing we will ever get to a nationwide short-term UBI experiment and it was a complete disaster.
The worst fears about UBI were realized with just a few payments: people gambling with the money, creating stock bubbles with meme stocks, and contributing to a rapid rise in inflation.
People will say that wasn't really UBI -- but it's the closest we have ever been to it and probably the closest practical implementation we could ever expect from our government, and with "real" UBI people would have been given even more free money.
The problem is being smart lands you in positions of power today but being wise has no value towards that.
Everyone knows UBI can’t possibly work but enough people who are or think they are smart will find every way possible to convince themselves and others it not only can work but it’s obvious why it will. Ignoring thousands of years of humans that said “no”.
We have a paleo-phobia problem today where for whatever reason there are a lot of people that are pretty sure the entire history of humanity has been wrong about most things and we are the fortunate ones to know better, today. Without ever considering that we are possibly just cascading our problems due to our unwise choices.
Regardless, history has shown that decadence is the end of a culture.
Which makes sense, because it wasn't. A key point of UBI is its consistency: you know you are getting that money every month, indefinitely, and therefore can plan/budget accordingly.
A one-time payment? Okay, sure, I can use that to cover my rent this month, but then it's not doing me any good. So why pay my rent with it when I can go gamble with it and maybe luck out?
> and with "real" UBI people would have been given even more free money.
tldr: the point isn't the amount of money, it's the consistency.
This reads like a boring classist commentor. Reddit is always joking/lying about what they are really doing. So no, stimulus checks didn't cause retail investors to become less sane.
People stuck at home, with extra spending money, and a desire for internet points, caused your deviation from normality in investing.
SIPC pays out eventually. If you routinely withdraw money from your brokerage account to pay for expenses or are doing anything fancy with options, you may not want to twiddle your thumbs for months while the bankruptcy court chews things over.
>Once a customer claim is filed, the trustee will research and analyze the claim and then mail to the claimant a written determination either allowing or disallowing the claim. If the claim is allowed, the trustee will satisfy the claim through the distribution to the claimant of “customer property” or advances from SIPC, or some combination of the two.
>How quickly claims are satisfied depends on the complexity of the liquidation and the condition of the failed brokerage firm’s records. Delays of several months can arise when the firms’ records are not accurate or incomplete. It also is not uncommon for delays to take place when the brokerage firm or its principals were involved in misconduct. When the records of the brokerage firm are accurate, and no misconduct occurred, deliveries of some securities and cash to customers may begin shortly after the Trustee receives completed claim forms from customers. Generally, in these cases, customers may receive at least some of their property one to three months after filing a completed claim form.
Not sure about SIPC but the FDIC usually gets involved before the bank actually goes insolvent and helps find a plan to keep the accounts active the whole time (eg sell to bigger bank without insolvency issues). Very rare to reach the point of people needing to file a claim.
Anyways i don’t know how SIPC works but I bet it’s similar. Also if Robinhood can go under then so can lots of other neobanks so I’d be worried about money in all those accounts.
agreed - had $50K in investments (I admit, it’s small fish). Transferred that to another brokerage following the GME sell button fiasco. Although in retrospect, I probably should have switched sooner than that
That's brutal. We just laid off a couple hundred people last week, only five from our department (which is 190 people) but two of them were from one of my teams. Demoralizing, and in the case of that team, absolutely devastating to productivity in the short term.
Cutting almost 1 in 4 employees is beyond anything I can imagine. I think I'd feel like I was rearranging deck chairs if I survived the cut and stuck around. I'd be putting out my resume right now.
I’ve gone thru those it a few times - while most all other companies were doing hiring freezes or layoffs as well. It’s times like that that employers really squeeze every last bit out of those “lucky enough” to stay around.
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[ 38.8 ms ] story [ 1231 ms ] threadRead: We were spending money on new hires like a drunken socialist sailor to show "growth" to keep the bubble going and sucking in even more VC money. My bad.
Tired - burn rate, wired - hiring rate.
"As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me. "
What he totally forgot to mention:
"I also take a pay cut to reduce the opex burden on the company and to retain as many FTE as possible"
If it's good enough for a lord, must be good for the CEO.
Lord Farquad and Zapp B would make great CEOs.
https://youtu.be/u48vYSLvKNQ?t=17
Do you not understand how stock sales work?
The $55M didn't come from company coffers. It came from pension funds, hedge funds, and retail investors on the other side of the sale.
The 800 million number seems to be better supported via a quick search - https://www.execpay.org/executive/vladimir-tenev-42307/r-186...
We are now at the point when we will find out which of the changes to behavior (financial and otherwise) that came about with the onset of the covid-19 pandemic are going to be lasting, and which are not. I do not claim to be able to predict which ones (if any) will last, but I can confidently say that Robinhood is not the only one to have been surprised by changes which they thought would "stick", going back to pre-covid norms.
The same thing basically happened in the run-up to dot-bomb. It was really easy to make book with day-trading in 1999 or so. See also crypto.
Amazing the number of people I personally know who took 1 year of day trading to be the “norm” and made big life decisions based on their results. From quitting good jobs to buying houses they can’t afford, all because they made big money in 2021 and thought they could keep repeating it every year.
You should not take investment advice from people who have been doing it less than a decade. It takes time to sort out the lucky from the smart.
I will admit I’ve had thoughts in the past of “I should just quit my job and do this” without any practical consideration as to how sustainable it would be. Not because I thought I would be rich, just because I wanted to trade all day! It’s kind of like being addicted to an MMO lol
I talked with a “professional” day trader who basically said “write down your strategy on a piece of paper pre-market and the. Paper trade that strategy. If it doesn’t match what you were doing then you weren’t acting like a professional, you were a gambler”.
Once you start move into the realm of group decisionmaking based on hypothetical future demand for $OUR_WORLD_CHANGING_PRODUCT, positivity culture starts to take over. Plenty of people in the room where the decision is made may be thinking, "But what if this is a passing fad and people don't really love our product in any sort of durable way," but nobody wants to be the one to actually say it.
I would even go so far as to say that those whose temperament would allow them to say something like that out loud in the boardroom generally don't get promoted into the kinds of positions that get you invited to boardroom meetings.
I think that all you really need to do to translate the principle to business culture is replace the word "transaction" with "someone's career".
Day trading has had a lot of popular awareness for a long time.
E.g., I got a bike over COVID, found I liked biking a lot, and have been doing it a lot more now.
In a related sense, Peleton did really well during the pandemic and now they're doing really poorly.
Anecdotally various betting games had a similar growth curve. People rush in when it’s easy, and then rush out once it’s hard.
Meanwhile fidelity who avoided crypto and has a great reputation saw & continues to see growth
There was legit fear of the disease in 2020-21. It has now morphed into a strong flu - and the data shows it.
It's what happens when a bunch of dumb money comes into the market
Nikola, a vaporware company with absolutely 0 revenues burning $600m / year, is still "worth" $3b.
HKD, a vaporware company, is being pump and dumped and is now "worth" $150b+, the size of Bank of America, despite being 50 employees with nothing of value.
https://www.reddit.com/r/wallstreetbets/comments/wegalp/hkd_...
I’m trying to think of a good analogy to CS.. maybe “Good engineers don’t put much stock in artificial intelligence”
It gives a good summation / spells out some critiques / offers his reasons for disagreeing:
https://www.princeton.edu/~ceps/workingpapers/91malkiel.pdf
Dying to hear where else you suggest putting investments...?
Big question to ask if you are betting the market is bogus is whether the market will stay bogus while your “safe” asset stays flat.
It seems not-crazy to me that someone would have thought that WFH was going to stick around post-COVID and thus also make people want to keep being able to work out from home.
first and foremost, working out at home has always been available. If you prefer working out at home you were probably already doing it.
Second, a lot of people enjoy a social aspect of gyms, or even just find it motivating to be around other people working out even if you don’t talk to them.
You only have to spend a little time around fitness oriented folks to know workout at home was never going to stick
I worked in a consumer goods VC during this time and we couldn’t believe anyone was touching these companies, most were just instagram-aesthetic branding on cheap machines
Your best bet is just to stay away when something smells
The big difference that is happening currently is inflation, recession fears, and fear among the general public about financial turmoil. The entire situation has been very poorly handled by governments and institutions around the world who seem to have collectively pretended that nothing was wrong. In particular inflation has been poorly fought because a huge percentage of the left wing were insistent that public spending would not cause inflation, but did not have a chance to implement that public spending in the 2010s due to the rise of the far-right so have absolutely nothing to show for it except inflation. Now the US is trying to cause a recession so that inflation and economy instability can be brought back under some resemblance of control, but the US is still acting as if it's the only major economic power in the world - Asia for example has been far less hit by inflation and many countries (including India) are not predicting a recession.
Plus it is dystopian as fuck. People need to be around people outside of their immediate family to stay sane and I promise you most of these new remote workers are basically never interacting with people outside their small bubbles.
It’s gonna swing back. Calling it now. A ton of people I’m know made some seriously impulsive moves into houses way out in the middle of nowhere thinking this will last. It will be interesting to see how well their bet paid off in a year.
I've seen it too, and I was really surprised because a house is a 5+ year commitment, and it wasn't (and still isn't) clear WFH will be commonplace that far out.
Not sure why it’s so hard for people to understand that there’s a solid chunk of the population that gained nothing from it.
I suspect we’re going to see a regression of most new trends. Especially anything that felt too related to lockdowns.
So, find a decent replacement for CEO.
With that view, a competent CEO wouldn't have hired those people to begin with.
If you use that self-admission as a reason to fire him, the excess labor still loses its job.
I'm very bearish on Robinhood - I don't know if they have enough of a moat to defend themselves from other free stock trading apps. People have forgiven so many outages. The Gamestop saga was the straw that broke the camel's back for many.
You mean it will be a big loss for retail traders
https://www.tradersmagazine.com/departments/brokerage/fideli...
Those people are never coming back and they're never going to have anything good to say about Robinhood
Robinhood branded themselves as bringing power to the people but as soon as the people got the upper hand in a market, Robinhood turned around and screwed them. It’s a lot worse than a young startup struggling to keep up with explosive demand.
Reminder that Vlad Tenev received $800M in compensation in 2021. In the same year the company made terrible bets on crypto and banking, took an irreversible reputation hit among its core user base because of the GME fiasco, had multiple user data breaches, was subject to several investigations and was fined hundreds of millions by the SEC and other regulatory bodies, and saw its share price drop by 90%.
At this point "taking responsibility" would mean resigning and letting someone more competent fix his messes.
If not willing to step down, then give up pay.
You are allowed to admit you made a mistake without publicly self flagellating. This is some straight puritanical shit.
* If I take all reasonable precautions and bad thing still happens — not a fuckup.
* If try my best but make an honest mistake like being forgetful — minor fuckup.
* If I try my best but don’t know something crucial — minor fuckup. If I am paid to be an expert on that thing — major fuckup.
* If I deliberately choose to forego necessary precautions because that’s effort it’ll be fine — major fuckup or legal trouble depending on the field.
* If I purposely cause bad thing to happen — legal trouble.
* If I choose to take a calculated risk in good faith after getting the advice of my board and my advisors and bad thing happens — not even a fuckup.
How bad the bad thing is doesn’t matter except at the margins “no harm done” or actual injury. Downsizing a company does not meet that bar.
Being in a leadership position shouldn’t be a job of calling coins in the air and betting your job you get it right.
I’m not saying it was illegal. All I’m saying is the people who paid for the bad bets (with their livelihoods) were not the same ones who made the bets in the first place.
And if you’re a stock holder then you should love this move since it’s in your best interest.
This was the whole point of the analogy. Taking risky bets has cost the employees nothing. The only thing that the employees have lost is imaginary future pay and benefits that could have been taken from them at any point for near any reason. It's hurting the employees that were laid off as much as me choosing not to eat at my local burger stand hurts its owner. Dgmr, it sucks to get laid off, it's a huge PITA and a good number of them were probably depending on that income but they haven't lost anything.
Those cost of those massive risks are actually literally at the expense of the shareholders. Ironically the employees who have some of their compensation in stocks will actually be helped by this move.
Will the board return their board fees?
people talk about ESG... imagine what the world would look like if energy company executives were compensated based on the health of the company (and by proxy the health of the economy) ten years in the future...
also maybe more tax rules along the lines of long/short cap gains that reduce the short term time value of money.
What you described is supposed to be part of the "G" in "ESG".
I'm serious. If there were any risk at all that he might lose a cent, he would never admit anything in a way that could be referenced by a lawyer.
I firmly believe in at will employment.
In this case, the CEO exploited the investors, whether it is VC firms, institutional or private investors by making an error in the judgement of hiring needs. Of course there is a risk in investment, but when CEO's make major mistakes while paying themselves $800M in compensation; investors should seek relief.
The gilded cage is freedom argument?
Most people are doing their best to be productive and most of their managers are trying to reward these efforts with recognition beyond a "thanks" but it becomes more difficult to do when we have an insane wealth sink at the top of our economy.
You don't buy an exec because they are brilliant or hard working, you buy them for their network and how much they can grow the the business relative to compensation. At least in theory.
It follows that if a CEO were to refuse stock compensation they'd be at risk of being fired by the board of directors, because owning stock is an unspoken qualification for the job.
And not cashing it out.
I don't disagree that starting a company comes with risks and a personal investment that warrants increased compensation - but right now CEOs in the US make an average of 670x their employees... that is extreme.
I think the modern world has come to view low level employees as replaceable and thus the compensation is more focused on market pricing instead of individual value creation - but with CEOs that 670x is usually justified with how important the decisions they are making are but founders and CEOs are just as replaceable as anyone else.
The other type of CEO is one who joins after founding. Their compensation depends on providing tangible measurable growth for the company. Driving 5% additional revenue for a company like google is worth billions, so their pay is considerate with the value they provide. It’s been shown in research that a good CEO can make or break a company.
You say you deliver tons of value but you don’t explain why your pay is high as a technical worker. It’s high because the market is tight and there aren’t enough skilled technical workers. There’s plenty of other industries like biotech where they deliver significant value but don’t get paid as much as software. Same goes for CEO’s it’s an important position and there aren’t that many people that can do the job.
(How the hell is your life different with $750M instead of $800M anyway?)
Stock is absolutely more difficult to liquidate for a CEO.
Or is it more that most public-company CEOs are probably not playing above replacement level?
IMO we as a society should pass rules and laws to prevent people from acting this way ie limits on compensation.
I guess it's true that you can't sell "whenever you wish", but if you set up a rule 10b5-1 plan your shares are effectively as good as cash.
Probably still getting much more than they need to live off of, so some of that should go to the people getting let go.
When I was young (and poor) I also believed that being rich meant having Scrooge McDuck piles of cash to swim in.
After my first big RSU payout I quickly realized that nobody with more than a few 100k in assets keeps anything close to the majority of them in cash. Savings accounts are for the poor. Anyone, even in the every day millionaire level, keeps most of their wealth in non-cash investments, leaving only enough cash to cover crisis situations. Especially with inflation this high, holding cash is literally throwing money away.
Nobody has a bank account with 8 zeros, except maybe lottery winners that never learned the basics of asset management.
Haha, I have an idea. P.S. Dealbreaker.com is great in general for tabloidy high finance news
The post-IPO 2021 price stabilized for a while around $50, so $50M is about 1M shares. The article says about 1,000 people were laid off, so if split equally that's 1,000 shares per employee. Since then, the price has come down to about $9, so it's a severance of $9,000 today.
I would hope everyone getting laid off receives at least that much.
Also if you have all the material needs that is satisfied, then you go after the rare hard to get high value exclusive money drain this is human nature.
For your specific example what that 50m might make difference it maybe a bigger jet that flies further or a second jet for the family or a yatch or a castle in Italy or penthouse in New York.
For you and me that may seem ridiculous and unnecessary, yet we do the same thing too.
There are many many parts of the world owning a car (or even riding in one) eating three meals a day or eating out are luxuries many don’t see in their lifetimes. Yet we use do all those things without second thought to people leaving on $1 a day or less .
And while you say "human nature" I'd rather say it's "human illness." They someone are within a strata of society where there is no limit, a 20 minute private jet flight or a $20,000 meal is not out of the question and is in fact the norm.
They buy a fully renovated house for $10 million but then gut it to renovate it to "their tastes" and then live in it for two weeks of the year. There's just not culture to tell them it's excessive.
The sort of stable accumulation described is typical for a very small number of people overall, from low income to higher incomes, in my experience. Life is complicated.
I know of a billionaire (one of the ones most HNers consider evil) that had a lot of the local millionaires sneering at him when he didn't renovate the vacation house that he bought in the kind of place where those kinds of people buy vacation houses. According to the help at the yacht club his rational was that it wasn't worth his time to think about and there was no sense in paying someone to manage the process because from his POV there's no difference between vacationing in a house his contractor optioned out vs vacationing in one the last owner optioned out. That said, I think it may have been a "guest house" because upon Googling he has a much more extensive mansion in the area.
Imagine what that person would think!
My central point is this: People are quick to "normalize" their behavior relative to their perceived peer group.
So, yes, multinational CEO compensation is hard to comprehend. (It is arguably to the point where it does not serve those very corporations well. But that isn't my point...)
Just remember, the income and spending habits of a "typical" mid-range software developer in a major U.S. city are similarly incomprehensible for a wide range of people.
In some sense, it is turtles all the way down.
P.S. I'm not defending CEO pay. First, I haven't really studied it up close. I'd like to see more, erm, experimentation in it. Lowering it, sure. But also I'd like to see it deferred, for example, so a CEO's compensation is also tied to what happens after they leave. That would increase the incentive to not plunder the place or take shortcuts. Yes, I recognize this proposal seems to mix incentives between past and current CEOs. But that reflects reality. You can't just "wash off" a terrible previous CEO. And the "glean" from a wonderful predecessor will pay dividends for a long time.
P.P.S. Shameless plug: if you are a well-funded not-for-profit with a generous comp and benefits package, you could do worse than hire me. I'm an expert at studying CEO pay and pay inequity at organizations, both using intra- and inter- methodologies. I'm part of an exclusive self-selected, self-reinforcing group of self-proclaimed experts, so be sure to send your best offer.
Ask someone who makes $100, and they'll explain they don't have a lot because someone makes $500.
Ask someone who makes $100,000, and they'll explain they don't have a lot because someone makes $500,000.
Ask someone who makes $100,000,000, and they'll explain they don't have a lot because someone makes $500,000,000.
Not a job offer and no offense intended, but you sound like an excellent crypto startup founder there. Oh wait, they wouldn’t have used the term self and instead used a much more grandiose term. :P
Your first year, you’re only getting 20% off the position’s salary, and 80% goes to your predecessors. When you retire, 20% of your salary got the previous four years is based on how well the company does the year after you leave.
It strongly incentivizes healthy transitions and long-term plans.
Sure, I also value game theory, sociology, and psychology as well. People are complex, with culture, identities, imperfect reasoning, and biochemical influences.
That said, one key benefit of RL is the hands-on experimental aspect. You get to play God and see what happens. Surprise triggers cognitive dissonance and drives further questions. In contrast, some academic disciplines become rather enamored with their own theories, to the detriment of operationalizing them.
Treating people well tends to have good long-term results. There are exceptions, situations, and cases where you have to be more cautious. To put it nicely, there are some people who favor shorter-term strategies. We all should recognize there is a fraction of people lacking in awareness or empathy or ethics. Some of the folks, wittingly or unwittingly, will bring down the entire ship if you let them. Still, IMO, a wise, ethical person gives the benefit of the doubt and helps others to the extent possible, without overextending themselves. As time passes, a good strategy is to help relatively more people who (a) need the help; (b) reciprocate, to the degree they are able; (c) and let's face it, those who can help you get a foothold. The third point is based on this logic: if you are a conscientious person, it is your ethical responsibility to not be naive. You should carefully strive to use your power to help. Sometimes this means playing the game.
What I've said above leaves open all sorts of paradoxes, value judgments, and dilemmas. Such is life. I think it is useful to frame ethics as striving towards an ideal (not just a goal) despite all the complexities. I could use all the feedback you all have to offer... I have a long way to go.
There's an absolute threshold at a few million dollars that guarantees financial independence wherever you are in the world. These rich people are well above that threshold. That's why it is more ridiculous to chase ever more money at their level than it is for you to purchase an expensive bike.
I see plenty of people on HN complain that no, they are not middle class while making $400,000/yr because they can't afford a 2,000 sq ft house in the most expensive area of the US.
Like the old saying "An alcoholic is someone who has one more drink than me."
How as an investor or shareholder can you not look at this as downright robbery?
https://www.youtube.com/watch?v=frh5lA5uGRU
It definitely happens in some cultures. I remember reading about the CEO of Nintendo taking a temporary pay cut after the botched launch of the Wii U. At the time, people were talking about other Japanese CEOs that had done this too.
For another, it’s not like it’s just cash sitting in a checking account. It would be stock in the company. Since he’s a CEO, he can’t just sell it whenever he wants, insider trader rules mean there’s only certain windows when he could buy or sell, and the CEO selling off that much of his holding would raise all sorts of questions among investors.
If he did it as a personal gift to each employee, there’d be enormous gift taxes that would eat most of it.
If he did it as part of their compensation, it would be coming from the company, not him, and he would have to justify to the board of directors and shareholders why he’s spending so much on a lavish severance package that is far beyond the industry norm (assuming they aren’t already getting generous severance packages)
It’s not as simple as “Oh rich people could just fix every problem by giving away all their money, but they’re just greedy jerks”
What I'm saying is, Vlad could most likely buy an expensive yacht without ever having to actually sell stock, so the argument that "it’s not like it’s just cash sitting in a checking account" is not that fair as well. Makes it seem like the uber-rich are actually quite restricted and that all of their money is locked up in investments and other things. Which is simply not true, they can use these locked-up assets in very attractive ways.
See this article for a better write-up: https://www.businessinsider.com/securities-asset-backed-loan...
Sure, he can borrow a bunch of money against his stock and buy a giant a yacht or give it away to people who got laid off, just like a normal person can borrow a year’s worth of salary from credit cards or take out a high interest loan to buy an expensive car, but that doesn’t mean it’s a good idea.
An important thing to mention at a layoff.
Shopify's version:
> Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today.
I don't think they're tone-deaf as much as they don't care. Which reminds me of another line, this time from Kids in the Hall (from the Girl Drink Drunk sketch): (from memory, so may not be exact) "I can't help to feel responsible for this, but then again, I can't help not to care: that's just who I am")
"Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that."
Emphasis added, but perhaps some part of this apparent tone-deafness might be attributed to the omission?
[1] https://news.shopify.com/changes-to-shopifys-team
I worked for a small business. The CEO and other executives were generally ethical people. When revenue went down, the C-level executives took a pay cut to ensure others could stay. They knew they could weather it better than their employees. Their salaries were always some of the lowest even before that, because they had a stake in the business that the employees did not have.
Given how much money this person makes, how much of a safety net they likely have compared to their employees, it doesn't make much sense that they do not redistribute their personal wealth to help the people they are "deeply sorry" to "say goodbye to"
Their entire business model is PFOF [0]. That is, a huge fucking scam against retail.
[0] https://www.investopedia.com/terms/p/paymentoforderflow.asp
It's about incentives. I am more than happy to pay $0.65 to Fidelity for my options trades, because I know that Fidelity's incentive is to get me the best possible price. Commission fees are absolutely negligible compared to price improvement with a real broker.
You don't sound like a typical investor so I get why you might care deeply about pennies at price execution. But I think most retail investors really don't care about PFOF and prefer it to commissions. And some of these retail firms are basically about just getting your stock trading business so they can funnel you towards professional portfolio managers who will just take a cut of your savings for no real value...that is probably even worse than the PFOF business model imo.
“We will be like [established legacy business] but our app will be better” is not a long term business model.
God I'm so sick of hearing this. It comes from people who seriously don't know what happened.
let me explain: RH had (and still has) a service that you can trade immediately on signing up and sending funds rather than waiting for them to clear. This mostly works out fine because people buy different things and you have the underlying assets as security so it tends to work out, meaning it's not a risk of a huge loss. Put another way: the convenience of RH lending you money (because that's actually what's happening) is counterbalanced by the additional business they get.
When GME popped off, they got a ton of sign ups to buy GME. This wasn't people using their own money to buy GME. This was RH lending you money to buy GME. And suddenly it didn't balance out. RH actually had a huge long GME position effectively. They actually borrowed a billion dollars to cover that and that was insufficient. So they stopped lending money to buy GME to avoid insolvency.
Remember too that they are lending you money on the promise you would fund the account. If people bought GME at $100 and it dropped to $30, RH would be left holding the bag as a significant percentage of people would simply avoid the loss by not funding their accounts. RH may have recourse to pursue that in court but that's going to get expensive and is a losing option all around.
That's literally all it was.
Some people were so delusional about what was going to happen with GME. They thought that since the open short interest exceeded the stock actively traded, the shares were going to go to infinity or something like that. That was never going to happen.
I've never done business with Robinhood, but they never seemed to be a quality brokerage. I seem to recall they didn't support limit orders for some time (but I could be misremembering). I do thank them for their work in reducing retail comissions to zero though.
No; that's really not what it was.
This was not about margin lending to Robinhood customers. It was about a multi-billion dollar increase in collateral required by the NSCC due to a large volume of unsettled trades in highly volatile stocks.
ref. https://fortune.com/2021/02/02/robinhood-gamestop-restricted...
The NSCC has a rule-driven model that tries to make sure that it holds an appropriate amount of collateral for each participant based on risk of default between trade and settlement.
That includes a core capital model that’s derived primarily from value-at-risk based on portfolio size, volatility and the usual things.
It also has an excess capital premium charge which varies according to the extent to which the core requirement is large vis-a-vis a participant’s excess net capital (excess over the minimum regulatory capital required by the SEC); because those are precisely the cases where default is more likely.
In the case of Robinhood, it seems like their internal risk management team had failed to take into account the excess capital premium (which is a large problem on its own), and that premium was particularly large based on how poorly capitalized Robinhood was.
You can go look up details on the NSCC model; it doesn’t care whether your clients are trading on margin.
You really are quite on the wrong side of this discussion: where are you getting your information?
Moreover, the issue brought their business model into public spotlight, and people realized the problems with making money by selling order flows and the conflicts of interest that came with it.
My understanding is that nothing you can do with customer trading funds will mitigate or offset your clearing collateral requirements. Brokerages that want to clear trades just have to have a big chunk of segregated money set aside to keep participating in the market. Robinhood ran out.
† because it's complicated, and there are lots of simple explanations you can come up with that are wrong, and we all have an Internet nerd tendency to fixate on a couple of axioms and derive the rest of the world from them, rather than reading the huge legal documents that set these things out
Some people were utterly delusional about what was going to happen with GME, but Robinhood's business model was based around providing low friction trades to the sort of consumer who makes casual trades based on what they hear on the internet: i.e. exactly the person most likely to be delusional about GME and likely to subscribe to someone else's theory it was all their broker's fault really. Even the name is a nod to the delusion trading stocks is a place for poor amateurs to fleece deep-pocketed professionals and not the other way round!
In March 2021, our board of directors adopted a clawback policy effective upon the closing of this offering. Under our clawback policy, our board of directors may recover incentive compensation from an executive officer in the event of (i) a restatement of our financial statements or a material error in the calculation of one or more performance-based measures used to determine the amount of such compensation or (ii) the executive officer’s “detrimental conduct” (as defined in our clawback policy) that results in an excess performance payout, results in legal proceedings or causes us material financial or reputational harm
ref. https://www.sec.gov/Archives/edgar/data/1783879/000162828021...
Nearly all of that only vests if Robinhood stock hits price targets between $120 and $300 per share. The remainder requires a price of $50.75 to be sustained for 60 days. Since none of these goals have been met, Vlad has not received any of it. And unless the company turns around dramatically - it's currently around $9/share - it's likely he never will.
[1] https://www.sec.gov/Archives/edgar/data/1783879/000178387922...
Case in point: Intel's CEO's 2021 salary was reported as almost $180M. In reality, he got only about $10M. He hit literally none of the targets that would allow him to get the rest of the compensation (although in theory he has a few years to hit those targets).
As for Intel: $10m a year is still a lot of money.
I have also heard that targets are occasionally hit. ;-D
In absolute terms, 100% yes it is.
In "CEO of a major corporation most people in the world have heard about," it's basically nothing.
If you're in charge of managing 121k people - 10x the average salary seems like a minimum. 100x seems in the realm of reasonable.
If the CEO's salary is distributed to all employees, they would get a ~0.05% raise. If distributed to the shareholders, it would increase profits by ~0.01%.
Yet this person's decisions can have much bigger consequences to both employees and shareholders.
Except, that’s not a CEO’s job. Even remotely. At best they “manage” a few department heads who each manage a few middle managers who each manage a few direct managers who then manage the workforce.
Even then, that’s a misrepresentation however. They are in charge of managing and directing overall company strategy in the interests of the board. The COO (and, sometimes, the CTO; in tech firms) is usually (indirectly) in charge of managing people.
I think it’s a valid point that they bring large value to a corporation, but it would be very difficult to quantify that value to be anywhere near 100x any other non-Csuite employee.
The risks of a bad CEO are enormous.
1 - https://www.forbes.com/sites/annefield/2022/05/23/ceo-worker...
And yet, SW professionals did just fine for decades when making anywhere from a quarter to a third of today's FAANG salaries (inflation adjusted).
So the question becomes, are CEOs pay commensurate with their added value? Put differently, is the rise in production mainly attributable to the CEO (as wages were largely stagnant prior to 2020, yet CEO wages increased rather dramatically.) Are they adding more value now than they did before and, if so, can we actually measure it?
Try again.
Do you have a source supporting your comment that SWE comp in 2005 was the same as it is today?
But sure, from a super simple query on any search engine:
https://insights.dice.com/2018/02/09/tech-pro-jobs-pay-2018/
Feel free to gate your query to anytime between 2003ish to now, the results are all the same with a few exceptions (MLE and DeFi jobs, for instance): stagnant or decreasing.
According to BLS data [1], the median computer scientist salary in 1997 was $82k, adjusted for inflation [2]. The same data has software developers median salary today at $121k. It seems SWE are getting paid much, much better today.
Granted, the occupation titles don't align perfectly. There was no "software developer" role in the 1997 dataset, but most of the computer science positions have a median salary in the low $80k-range in todays dollars. Also note that the timeframe you chose was at the peak of a tech bubble. Probably not the best for comparison, just like you wouldn't want to use 2006 or 2021 for a gauge on housing costs.
[1] https://www.bls.gov/oes/tables.htm
[2] https://www.usinflationcalculator.com/
They absolutely did not with just a BS. Perhaps a few companies paid that high, but 100K would be an easy outlier.
To give you an idea, even in 2010 most non-big names outside of SV and Seattle paid under $100K right out of school. Many companies in my city were offering $70-80K. Even my big name company paid under $100K in those days.
But you bring up an interesting point. The CEO may be incentivized to promote wealth disparity. If they are measured by profitability only, without regard to the larger systemic effects, it incentivizes them to take a myopic view. This could mean implementing policies that help hit short term targets without regard to long term health, suppressing wages, etc.
To a certain extent, whichever side we’re on is really just a narrative we tell ourselves since there doesn’t seem to be conclusive data about CEO impact.
I agree they manage the strategic vision of the company. The research on whether they make a real difference in the long term trajectory seems mixed.
Except if the CEO screws up the company goes bankrupt and people lose their jobs. Look at Nokia and RIM.
Exactly why you need a good CEO at the top to understand that the landscape has changed with a new competitor but Nokia and RIM failed to adapt.
The board of directors are the ones who measure CEO performance and set compensation but most of the times they just rubber stamp whatever the CEO does.
Perhaps CEO pay is beyond the pale generally, and these are obscene expectations.
https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
Their salary has a higher salary than you.
I’m stealing this line
The same document points out that the CEO and CCO (both co-founders) each realized more than $168M in compensation in 2021. That's the number to talk about I think.
$168M/(3800 employee / 100*23 layoff) = $192,219 per layed off employee
Not that I am suggesting he should pay the layed off employees from his personal kitty. Just trying to understand the numbers.
Edit: OP said CEO and COO each. So $192K x 2 ~= $384,000.
Hate to go there on HN but there _is_ a moral side to this.
What is the cost of making the kind of mistakes this guy did? And who should pay for them?
No there isn’t. Wasting money to keep employing people isn’t good for anyone. The labor market is still tight right now so the employees are better off going to a company that actually wants them.
Should we talk about that too?
Is this a valid argument? I dont know, but i feel that it isn't.
Are you saying executive compensation should be orthogonal to company performance?
Overpaid executives failed, so workers lost their jobs, but the executives get to keep theirs all the while saying things like "I take responsibility for this" when it is objectively false that they are taking responsibility.
Does that seem right to you? Is that a good way to run a business, to keep failed leadership?
Their failure has already dropped a huge amount of their stock-based compensation. Their base salary shouldn't be determined by the company's failure (only their _future_ salary).
What if you applied this to a worker instead of a CxO? Would you yourself take a pay-cut, after the fact, if the company fails to perform?
Yes. Yes I would take the CEO's total compensation package.
I am skeptical that the CEO is worse off than any employee.
As in you would accept, without knowing ahead of time, a cut to your salary when the company's performance drops?
I'm not talking about performance based bonuses or commission based pay. I'm talking about a salary that was pre-negotiated at the time of your employment, but upon the company performing badly, your salary is dropped.
This is what the OP is saying - that high CxO pay is the problem, and that they should have been paid less (after the company's performance dropped).
Plenty of CEOs already do (or did during their tenure) take no material base salary and their compensation is tied entirely to the performance of the company.
Is that not reasonable for large, profitable businesses. It has its own issues, but what compensation plan doesn’t?
that's not what i meant.
The question is whether you would take a pay cut _after_ the company performed poorly, but you didn't know ahead of time that it would cut your pay. Performance based bonuses or commission is obviously pre-negotiated and thus, not subject to post-fact alteration.
Should companies be forced to keep unproductive or no longer useful workers? Clearly there is not enough customer demand for Robinhood to continue employing their ops/content/etc. workers. What are those workers going to do then, if they keep working?
https://www.epi.org/publication/ceo-pay-in-2020/
Do you understand how risk works? If you take on more risk, you should be compensated for that risk, else it doesn't make sense for you to take so much risk if you can get the same reward by taking less risk.
Executives as a whole (CEOs, VPs, even directors!) take a lot more risk - career and financial risk - than your typical line engineers. Their success depends on the success of the initiatives they lead, which can be subject to macro or competitive factors entirely outside their control. Those initiatives are generally longer timeline, meaning they have less chances at bat (and thus higher variance in outcome) than an IC. And a shitty IC can always be rehired pretty much trivially. If your company fails with you at the helm, you're not getting another CEO job. For example, Carly Fiorina has never held another management role in a large multinational corporation after her failure at HP.
On top of that, executives have to hold a large portion of their compensation as stock which they are barred from selling as long as they work at the company. If the company tanks, they take a retroactive paycut, often times upwards of 50%. They don't get refreshers to boost their comp back to original levels like ICs either.
Yeah CEOs nowadays have quite excessive compensation. But they will never have compensation at a single digit multiple of the average employee. The risk they take is too big for that to sufficiently compensate them.
It mentioned on the NYC Subway you will see a guy help with a mother's pram but not say a word. No small talk. No smile. They are kind but not nice.
Assuming the above definition, I would say this CEO is "nice" but not "kind".
They are getting severance packages with two months of further employment, and while that is not ideal for them at the individual level, I don't see why they need charity any more than anyone else.
Being kind would actually be donating the money for truly charitable purposes to help the poorest.
Also the "some bankers" classification. I remember in the 2008 crash people getting angry at their tellers because they are "bankers". Yes they are, but they probably don't earn that much, dude.
Debts, taxes, regulations, suppliers, and other liabilities and requirements come first.
The CEOs making ambitious bets should take those into account.
No he did not in fact receive $800m. You seem to know a lot about the performance of RH stock, but you’ve completely missed the fact that the poor performance means he won’t be seeing that $800m worth of stock - almost none in fact.
He got a comp plan that could get him up to that much in stock if certain goals were met, but none of those have been met so he hasn’t gotten any of that $$.
Suffice it to say, if he had met those goals, they wouldn’t be laying off anyone, as their stock price would be sky high.
Laying off 23% of staff is _literally_ how he will make the stock go up enough to get a good % of his compensation, if not 100%.
It closed today at $9.23, so it's a fair guess that he's not getting anywhere near 800M value.
800M is more money in a single day than a very large number of people make in an entire lifetime.
What does the timescale of a single day have to do with anything?
I don't use Robinhood but do benefit that my trades at other discount brokers are now free.
Ultimately RH and others didn't have the ability to raise the crazy amount of capital they needed to cover trades over a very short time and instead of breaking these requirements and receiving the consequences (getting taken over by SIPC? or whatever, I don't actually know) they halted trading.
Failure to predict an unprecedented future, I suppose.
These aren't rhetorical questions, I'd like to actually know these details.
Your derision is probably blinding you from the solution that's most likely to produce the best outcome -- him learning from his mistakes & cleaning up his own mess. Resigning won't be a magical fix-all.
It's actually ironic that your definition of "taking responsibility" is him quitting and having someone else clean up his mess. Paying back a portion of his stock based compensation from 2021 or forfeiting his comp going forward would make sense though.
So if it's on you, how about YOU lose your job?
No?
Oh well then.
I know this is not the cultural norm, but I am curious how long this norm can persist.
Without the ability to cut pay, layoffs are the only option for companies burning cash and losing altitude. That locks pay increases at the same inflated point that the bubble supported but which reality does not.
To go one step further, is there a single advanced economy in which pay cuts, rather than layoffs, are the norm?
Germany does actually have a model called "Kurzarbeit" (literally "short work") to reduce hours across the board while some of the wage losses are being offset by payment from the unemployment insurance system. The idea is to avoid layoffs during times of recession etc. which would allow the companies to bounce back more quickly once the situation has picked up again.
Where is the evidence for this?
I get that it seems like what would happen, but where are the cases proving that's what happened? Especially in an economy shedding jobs, there may not be many other places to go.
Also, studies seem to find that money doesn't motivate people to perform at a higher level.
https://hbr.org/2013/04/does-money-really-affect-motiv
How do you think of "best"? There are many senses:
(a) People that do well in a particular organizational context?
(b) People with a certain set of skills?
In the software industry, these do change pretty dramatically from time to time. For example, the FAANG style of interviews disrupted what came before. And of course, there is considerable variation between FAANG style hiring and others.
I bring all this up not just to be pedantic... (Is there anything wrong with being pedantic? We should do a proper study to find out, but I digress...) ... because I'm curious if and how the industry is changing.
Many software developers got comfortable with being in the driver's seat and being fawned over. This has changed a lot, it seems to me, in the last 3 to 6 months. Where does this leave us?
What that really means is that if you're paying $200k now, bumping to $250k isn't going to make your workers more productive. However, if you're paying $200k now and you cut the pay to $180k, and your competitors are offering $230k, your best performers are still going to jump ship.
I experienced this in the dot-com collapse but probably ripping off the bandaid is a better approach in many circumstances especially when cash flow isn't the driver.
If my employer told me they were cutting my pay by 20% one morning I would already be out doing interviews by the afternoon.
With layoffs you at least control what talent you are giving up in exchange for a smaller payroll. With across the board salary reduction, your most talented employees will get up and leave and the people who remain will be demoralized and poorly motivated.
Maybe for an economy-wide recession where your workers have no other options. But if it's just startup risk that are making you founder, you're basically guaranteeing a death spiral. There is some chance if you make it a fixed-term paycut with a payback with interest, but you better have a real cult leader as CEO to get people onboard with something complicated instead of just getting a job at Google.
The best people went to FAANG (immediate comp) or one particular fintech startup (good shot at an exit).
Combined that’s a 30% headcount reduction since Q1-2022
However, proper reasoning while taking into account uncertainty is not so simple.
Let's do a thought experiment. Let's say you are the CEO and your estimate for the necessary layoff ranges between 2% and 11%. What to do? One and only one round of X% layoffs? What should X be? Or perhaps start with a round of 5% layoffs. The hope would be that the uncertainty decreases. Time passes. You might not need an additional round. Or if you do, it can be done more accurately.
This is not the exact link I was looking for but goes into it somewhat https://www.ycombinator.com/library/3Z-advice-for-companies-...
I use Tastyworks - another free online brokerage that it almost at feature parity with Robinhood. They have stocks, options, futures and even some selective crypto. They also make money using PFOF just like Robinhood.
However on Linkedin, their employee count is less than 100 (99 to be precise) On the other hand, Robinhood was at almost 4000 employees at the start of the year. I think they still have about 80% more employees than where they need to be.
Companies in hyper-growth stages may hire/fire differently than others.
:%s/investing/speculation/g
Very few people use RH as 'investing'. Those will be on boring brokers like Vanguard.
I have a Tastyworks account too - the fills are way better than Robinhood's. As expected, since they charge some amount per trade. But that means that the "free" platform will definitely have more users, just because it's supposedly free (even though you pay for it in the fills, and get frontrunning trades)
I worked professionally on this problem a while ago and it was very hard to do even with full depth feeds direct from the exchanges.
When I was doing this for work the issues we ran into came down to a) making the orders hit the tape close enough to ensure similar priority b) the size of the orders changing execution depending on venue c) differences in performance per symbol.
This was in a place that was sending a fair amount of orders in. Even then given the above finding statistical relevance was hard.
Can you provide a source for this? Citadel (one of the companies robinhood sells order flow to) claims in regulatory filings[1] that the overwhelming majority of orders are executed at market price or better, and that they on average save traders money.
[1] https://s3.amazonaws.com/citadel-wordpress-prd101/wp-content...
https://www.bloomberg.com/opinion/articles/2021-02-05/robinh...
tl;dr: adverse selection. retail traders are less risky to deal with, so market makers can offer better prices to them.
>If the retail trades are random. If retail traders usually buy before the stock goes up, and sell before the stock goes down, the wholesaler would consistently lose money on price risk. (This is called “adverse selection.”) But they don’t. Even now, retail traders tend to be small, dispersed and uninformed. If you sell stock to a retail trader for $58.15, you have no particular reason to think it will go up (or down). The retail traders are trading randomly, which is what allows you to treat this problem as though you were matching them up with each other at a fixed price and collecting a spread. In reality you are matching them up with each other over time, not simultaneously, and the price moves while you are doing it, but the randomness of their trading means that this difference doesn’t matter too much.
>Meanwhile market makers on the public exchange are doing something similar, but with institutional traders who tend to be informed and trade large lots of stock, so their trading does carry a lot more risk of adverse selection. If a big institution buys some stock, that does mean the stock is somewhat more likely to go up, so if you sell them the stock you are somewhat more likely to lose money. This is why the spread on the public exchange—the difference between the $58 best bid to buy the stock and the $58.25 best offer to sell the stock—is so much wider than the 5 cents that the wholesaler charges. The wholesaler is just matching up small pleasant random orders and clipping a spread; the stock-exchange market maker is facing a real risk of being run over by an informed trader.
Gobble-gobble, the sound of consolidation.
Please explain? Is ruling the 39th floor a particularly [financial] in-joke?
A listing in The Urban Dictionary defines/describes it as: When an idea, movement or act has become very successful. To be propelled to great heights. [1]
FWIW, there's a band called The 39th Floor [2] that I like for its grungy/retro-ish rock. The band's name evokes, for me, the image of "high-powered execs", but I'm not sure how that association got into my head. (Possibly the track Koka Kola on The Clash's album London Calling [3], but that refers to a "51st floor", rather than 39th, to symbolise corporate success/power [4].)
[1] https://www.urbandictionary.com/define.php?term=39th%20floor
[2] https://the39thfloor.bandcamp.com/
[3] https://en.wikipedia.org/wiki/London_Calling
[4] https://genius.com/The-clash-koka-kola-lyrics
What is "PFOF" here?
People here on HN often say how bad is to be an engineer in a non-tech company. It seems that it’s much worse to be a non-engineer in a tech company.
Marketing, advertising and sales people are especially vulnerable at any company: if the company expects consumer confidence and purchases to decline, those are some of the first roles that get cut anywhere.
In the meantime, kicking down every door I can to find a great company looking for great content.
In my view the difference between a tech company and a non-tech company is what percentage of the company's value is stored in the intellectual property rights of their software. The higher that number the more of a 'tech' company you are.
In non-tech companies software engineering is a cost center and at tech companies things like operations are cost centers. In both cases you need them for the business to function but they don't deliver lasting business value on their own so you look to minimize costs.
Many non-tech roles have the problem of being easily replaceable while many tech role have the problem of being expensive.
In similar vain, "we care about your mental health" as is the common internal email from HR. No actual care is offered though. Giving staff a day off is a tangible example of doing at least something, but obviously no such thing happens. Once again the difference between caring and not caring is zero.
"We care about your privacy" except for the 20 years of prior tracking where we didn't. And actually still don't as we annoy and mislead you to keep doing it.
A web of lies. Optics, zero substance.
Limited work weeks (40 hrs). Monday thru Friday as business days. Paid vacations. Family and medical leave. Breaks. Paid holidays. Sick leave.
It’s a shame there’s been a massive push from corporations pushing anti-union propaganda. We have been complacent.
We need unions to make our voice heard. Both in the mega corps and local/state/federal governments.
Edit-there have been long periods where seemingly nothing can possibly change. Then enough backlash is raised against another side (even the status quo) and things change.
Unions in my country (Netherlands) do not protect the individual. You do not get hired via a union (free job from a "friend") nor does the union protect you from getting fired. The union is only there to protect collective interests. For example, a massive degradation in contract terms for all workers.
In the Netherlands, strikes are extremely rare because of a unique system called the "Polder Model", it's a triangle of government, employers and unions coming to yearly wide sweeping agreements on things like taxes, pensions, employment and termination terms, the like.
It has provided an extreme degree of stability for decades in a row. Simply put, it's a system that suppresses extremes. Nobody really wins or loses.
I have to admit though that this once well working system is largely hollowed out by now. Under the pressures of globalization, power has shifted slowly but surely towards the government-employers pair.
It seems worldwide the working class (and to a large degree the middle class) has been abandoned by both politics and employers.
The point was that while Europe, as a rule, does lean towards more labour regulation than the US, the specifics vary so much that this is about the only useful generalization you make about it. The rest heavily depends on the country, and even geographical proximity doesn’t really play into it. (But you would know all about that, I expect.)
Case in point, Germany did not have a minimum wage...AT ALL...until 2015. In the Netherlands, there's an entire class of workers on "zero hours" contracts, which give said workers none of the traditional protections.
Protections that even in the best of cases, an indefinite work contract situation, are strongly hollowed out by now.
https://www.history.com/news/5-famous-company-towns
“In the case of less well-intentioned towns, matters get only worse. In some locations, companies would compensate workers with a scrip—a monetary substitute that was valid only at stores owned by that same company” Source: https://explorethearchive.com/company-towns?amp=1
At least unions can still exist inside the standard model of employment which everything else is built around. In a "benevolent" tech company that actually treats its people well, I have trouble seeing unions as the ideal vehicle for balancing fairness with innovation. Of course there is inherent exploitation in any employment relationship within the standard model. I would love to see an example of it working in tech though, because I can imagine a union that is equally as interested in the success of the business and prioritizes sustainable growth on top of enforcing equitable treatment as a backstop.
There has to be some combination of legal structures that can somehow represent all interests fairly without adding friction. That is unions, or unions plus other things.
For example, employee ownership trusts could in theory be very aggressive and help smooth out the continuum between periodic bargaining and striking as the main/only leverage. Similar to a share purchase plan or RSU with a pool that has a majority of voting power, or at least equal to founders and investors with all the usual tie-breakers and dilution protections.
If I remember correctly some countries (Germany?) also have legislation requiring a certain amount of employee representation on corporate boards, but I don't know if that actually makes a big difference.
We have them; it's why education and policing is so fucked.
Obviously, serious mental health issues are not restricted to a fixed day per year. Yet the company did give some relief, which they also could not have done at all. There's a real world cost to giving you that day, and in my view, money talks.
More importantly, I find consistency between messaging and actions important.
Morals are only applicable to those who have no choice and power to choose otherwise.
The sociopath comes natural, the system does not. It's malleable.
In a more balanced world, this behavior is corrected. That CEO should be chased down the streets or do prison time. Their assets seized and given back. Even more ideal would be for legislation to fix the twisted incentive.
The above stuff matters. Instead we focus on canceling somebody over an offensive tweet containing a word not at all offensive 3 days ago.
However, I try to remember that politics is the process of getting and using power without violence. In this way, politics is both a practice and a tool. Let this soak in.
Once you realize that politics is about dealing with conflict in some context without violence, you can at least grant that it is better than punching someone in the face.
To generalize, you might say that politics is a game you have to play. Perhaps call it a necessary evil. But the framing is somewhat arbitrary. I'd rather say that using power wisely and justly is a moral and ethical requirement. To do otherwise would be to abdicate responsibility and squander your power.
It is curious that the so-called sausage-making of politics is considered to be unsavory. It is certainly a mix of sometimes inconsistent ideas.
But it seems likely that uneasy compromise tends to be better than an imposed set of consistent doctrines. Or not... stay tuned.
The current state of the world demonstrates how even relatively small disruptions create a tidal wave and break down systems. The point being that even a limited act of non-compliance brings things to their knees.
Which if of course a tool to not use lightly, I'm just saying it doesn't take that much if people would organize.
I get it -- I often say "we're doomed" -- but very few of us get into the details of what that means. Maybe you have? What does the descent into doom look like? Any predictions?
http://faculty.citadel.edu/sobel/Entrepreneurship%20Class%20...
As in: “Ours is the most reliable product!” Is just empty puffery, but cash-money-back warranty terms exceeding all other products in the market is a statement with real meaning.
“We care about our employees” is free to state and worthless. Golden parachutes are expensive and valuable.
Etc…
A similar statement is: “Don’t tell me your priorities, show me your budget and I’ll tell you what your priorities really are.”
— George Carlin
One of the most salient features of our culture is that there is so much bullshit. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted. Most people are rather confident of their ability to recognize bullshit and to avoid being taken in by it. So the phenomenon has not aroused much deliberate concern, or attracted much sustained inquiry. In consequence, we have no clear understanding of what bullshit is, why there is so much of it, or what functions it serves.
On Bullshit, Harry Frankfurt, Princeton University
http://www2.csudh.edu/ccauthen/576f12/frankfurt__harry_-_on_...
If a normal employee missed their goals by this much, they'd be on a PIP and out the door in less than three months.
Rules for me, and rules for thee.
I told my last boss I needed to take 3 months off because I was severely burnt out, without pay or benefits of course, and I am sure the team could handle it because there were 10 other devs including me and we didn't have that much work to do, and guess what happened? That's right, got fired a week later. I literally built the team, including hiring the team manager (I'm not interested in management), and built the first version of the product my team was developing and they didn't care; they wanted to eliminate my weakness. Their stock is worth 1/4th of what it was when I was "let go", so I feel pretty happy about that (because I'm a prick).
Many other small companies like Robinhood were one of the first to start downsizing quicker, which really doesn't surprise me since all the cheap money is now gone.
But the actual winners are the C-level executives, the VCs and any of the long term employees who cashed out.
[0] https://news.ycombinator.com/item?id=29508238
Personally I'm glad that some sanity is returning to investing, and we are still a long way from getting back to normal.
Obviously, a lot of people did need that money to make ends meet. But it's also obvious that some % of the population was able to treat it as money they were able to play around and have some fun with.
In lieu of that, I think "sending a wave of money through the system by handing a check to every taxpayer will not temporarily change some peoples' behavior" is the hypothesis that would need some data to back it up, in my view.
Sending a wave of money into a group of historically underemployed seems like it'd result in normal expenditures, modulo some slush.
Maybe it's the contemporaneous injection of many, many trabillions into 501c3s, individual funds, small businesses, and other groups who could show they had done a small amount of due diligence to get a gazillion bazillion dollars for no reason that might draw your interest here?
Edit: alternatively, feel free to abstain from conversations where your allegiances lie contrary to complete honesty. I suspect many HNers do this regularly, and you can, too.
Far more importantly, "sending a wave of money into a group of historically underemployed" is not what happened. Pretty much every taxpayer got a series of stimulus checks. It wasn't based on need; it was based on your claimed income for the previous year. Historically underemployed groups got checks, rich boys with time and money on their hands got checks. Everybody. (edit: not everybody, more like ~80%) Maybe this is the root of your misconceptions?
What? That wasn't even remotely part of this discussion. At least not anything I've written. If it helps, I agree with you: a lot of the payments to businesses amounted to lining the pockets of the already-rich. What? Literally the only thought I've expressed this entire time is yup, that wave of money given to consumers seems like it had an effect on consumer spending habits, and now that stimulus has worked its way through the system some of those habits will revert to their former states. Not the most controversial of opinions.What is this missing honesty you're referring to? This is one of the weirder interactions I've ever had on HN. And that's really saying something.
oops! let me rectify that!
> Do you have hard data for that? (j/k)
ach, i'd answer but you're just kidding. still, it might be worth looking into?
> is not what happened? Pretty much every taxpayer got a series of stimulus checks. It wasn't based on need
I didn't get one. I didn't get a second. In fact, nobody I know except for business owners and one person whose income was skewed for very VERY specific reasons got one. Maybe this is the source of our fundamental disconnect? Only my business owning friends got money, none of my non-business-owning friends got money. The money mostly went, in my experience, to those who were already well set up. Or to business owners, who largely got loans forgiven.
> Literally the only thought I've expressed this entire time is yup, that wave of money given to consumers seems like it had an effect on consumer spending habits
I mean, that's the thing I mostly disagree about, so sure- it can be small but it's all I'm keen on talking about?
I hope it didn't appear that I was saying otherwise - I was purely stating an observation.
I would feel that way about any kind of government payments, "aid" or otherwise. However, I think it's especially true for money marked as economic stimulus payments. That money is specifically meant to... stimulate the economy. It's meant to be spent.
Even rich people "playing" with money stimulates the economy, because they are spending the money.
Also, it may be reasonable to use the savings rate as a rough proxy. That rate was higher than it has been for decades when the stimulus was active and has since dropped. [2]
[1] https://www.nytimes.com/2021/03/21/business/stimulus-check-s...
[2] https://fred.stlouisfed.org/series/PSAVERT
Zero of our stimulus went into buying said stocks, however I did make a bucket load from GME and AMC prior. Our stimulus went into further "stimulating" our savings account. The money I spent with Robinhood was entertainment money. It just happened to pay off big.
A more conservative estimate places stimulus "meme stock" trading at less than 0.1% of the stimulus.
I had a bunch of excess cash due to falling behind on D.C.A.-ing, and I accelerated that (which was not a good idea in the short term, but that's what D.C.A.-ing is all about - wish I hadn't fallen behind on it over the years!) and bought a bunch of under-par bonds and utilities for the yield, sold a lot of now-expired SPY puts and stock calls too ;) More trading than I've done in my life, mostly because of inflation, not stimulus.
It's absurd Americans judging at normal people spending money, but same people ok with companies making record profit during pandemic, the minimum wage limit etc. It's pathetic.
https://jsri.msu.edu/publications/nexo/vol-xxv/no-1-fall-202...
Kurzarbeit was one of the main reasons my employer survived the ill-timed purchase of another German industrial giant (deal done right before the 2008-9 financial crisis kicked off, payment due during said financial crisis) without having to lay people off, and left it in the position to get right back into the game once the world economy started improving. And, of course, spared thousands of working people a lot of misery.
Worked as designed for the benefit of the minor nobility... er, "job creators".
Let the privileged folks have their fun, so the unprivileged can eat and not worry so much.
Causes asset inflation making them out of reach for the 'unprivileged'. See housing market.
No one expects housing to appreciate (except in limited, specific situations) and then no one votes or sets policy specifically to prop up prices. There’s a dynamic market with plenty of development and supply in the right types of housing and price points and everyone’s happy pretty much.
The land does appreciate in Japan though. And if they built good homes, they would too. But they choose not to.
Bunch of people lost money. Some of them got rich. Booze is good and gambling is fun and it’s ok to blow their own money on exactly the things that everyone else blows their money on.
(This hits on the idea of “accredited investor,” and I have such a hard time not calling out that it’s a mechanism for already-rich people to participate in every deal that could make not-rich people rich. And that there are very few other ways to earn a fortune when you only have $10k in the bank. I lost my dad’s $11k when mt Gox exploded, which is objectively stupid. Meanwhile my friend is now a multi millionaire simply because he didn’t lose his coins and didn’t sell them. Was he stupid? Did I blow my money on gambling, but he was just lucky?)
Didn’t mean to rant, but it is what it is. You’re not wrong though.
I agree that the rules are overly crude and that in principle there should be some more equitable way to achieve the same way. But I'm also very confident that those rules have stopped a lot of people losing all their money and killing themselves.
> Meanwhile my friend is now a multi millionaire simply because he didn’t lose his coins and didn’t sell them. Was he stupid? Did I blow my money on gambling, but he was just lucky?
Yes. You both did a stupid gamble and one of you got lucky for now. There's no broader lesson to take from that.
I agree with your overall point, but to be clear, we're talking about day trading. There's a lot of arguments you could have about banning casinos, pro and con, but "hey, some poor person might win big on the quarter slot machines" isn't a good argument.
Also, the median "accredited investor" is a dentist from Topeka who's about to get suckered by an advance fee fraud. Being an accredited investor doesn't automatically give you access to good deals. There just isn't a pool of amazing investments out there hungry for capital but being stopped by investor protection laws. (But there is a pool of scams...)
(Note that I'm not saying that the system is good or fair or just; I'm just saying mechanically, accredited investor laws aren't the part of the system stopping you from getting rich.)
Accredited investors suck at due diligence as is, and Joe Everyman can barely understand their own bank statement, so those rules exist to prevent them from getting raked by extremely questionable investment offers.
The untargeted stimulus just enabled mob madness and scams paid for by tax dollars. Wealth redistribution from the tax payer to the dishonest and lucky.
Most people just have no financial skills and will just get slaughtered on the stock markets. Others refuse to save money for their retirement at all.
What we had, in effect, was the closest thing we will ever get to a nationwide short-term UBI experiment and it was a complete disaster.
The worst fears about UBI were realized with just a few payments: people gambling with the money, creating stock bubbles with meme stocks, and contributing to a rapid rise in inflation.
People will say that wasn't really UBI -- but it's the closest we have ever been to it and probably the closest practical implementation we could ever expect from our government, and with "real" UBI people would have been given even more free money.
Everyone knows UBI can’t possibly work but enough people who are or think they are smart will find every way possible to convince themselves and others it not only can work but it’s obvious why it will. Ignoring thousands of years of humans that said “no”.
We have a paleo-phobia problem today where for whatever reason there are a lot of people that are pretty sure the entire history of humanity has been wrong about most things and we are the fortunate ones to know better, today. Without ever considering that we are possibly just cascading our problems due to our unwise choices.
Regardless, history has shown that decadence is the end of a culture.
Which makes sense, because it wasn't. A key point of UBI is its consistency: you know you are getting that money every month, indefinitely, and therefore can plan/budget accordingly.
A one-time payment? Okay, sure, I can use that to cover my rent this month, but then it's not doing me any good. So why pay my rent with it when I can go gamble with it and maybe luck out?
> and with "real" UBI people would have been given even more free money.
tldr: the point isn't the amount of money, it's the consistency.
sheesh...
People stuck at home, with extra spending money, and a desire for internet points, caused your deviation from normality in investing.
Robinhood is struggling for capital, so I wouldn't trust them with my cash investments whatsoever.
Not that anyone has trusted them for a while, but yeah.
Why not? You're protected by SIPC for up to $500k (for securities) and $250k (for cash).
“Robinhood” my ass
...and getting price improvements. See: https://news.ycombinator.com/item?id=32325223. I don't see the issue here.
Presumably there's some delay in the recovery process during which you cannot access or trade your assets. Crypto is also explicitly not covered.
https://www.sipc.org/for-investors/investor-faqs
>Once a customer claim is filed, the trustee will research and analyze the claim and then mail to the claimant a written determination either allowing or disallowing the claim. If the claim is allowed, the trustee will satisfy the claim through the distribution to the claimant of “customer property” or advances from SIPC, or some combination of the two.
>How quickly claims are satisfied depends on the complexity of the liquidation and the condition of the failed brokerage firm’s records. Delays of several months can arise when the firms’ records are not accurate or incomplete. It also is not uncommon for delays to take place when the brokerage firm or its principals were involved in misconduct. When the records of the brokerage firm are accurate, and no misconduct occurred, deliveries of some securities and cash to customers may begin shortly after the Trustee receives completed claim forms from customers. Generally, in these cases, customers may receive at least some of their property one to three months after filing a completed claim form.
Anyways i don’t know how SIPC works but I bet it’s similar. Also if Robinhood can go under then so can lots of other neobanks so I’d be worried about money in all those accounts.
* "thats bull shit you took 800m in compensation last year"
* get fired without severance
* feel really good
Cutting almost 1 in 4 employees is beyond anything I can imagine. I think I'd feel like I was rearranging deck chairs if I survived the cut and stuck around. I'd be putting out my resume right now.