Let’s just say most technology folks in Arizona had little belief in this company after their tech lead gave a talk/presentation at a meet up where their programming paradigms & setup just didn’t make any sense.
Not like didn’t make any sense because folks didn’t like the programming stack choices or anything it just literally didn’t make sense what they were trying to do.
I'm curious what he said. Any links or recollection? How could GE not have done this simple due diligence? Even seeing the HTML5 quote at the top comment here is startling.
Anyways, I'll preface this by saying: while a member of my former team handled acquisitions and divestitures, I've never participated in one.
Most due diligence processes I've heard or discussed never remotely focus on the functionality of the technology. Even the guy on our team doing the auditing couldn't tell us what the company/product did until it was publicly announced. The process focused on data and compliance like verifying revenue, profits, patents assigned, tax records, SOX audits, data access logs, are these transactions valid, are there weird or flagged wire transfers, do all engineers involved have a wavier signed writing over all IP, does everyone have a non-disclosure signed, etc.
I could see how "does this product actually work" getting overlooked in the process, because their supporting and underlying data is probably valid.
However, I'll again mention that I have never actually done an acquisition audit (just worked close to someone who did), so maybe someone else can chime in and tell me about some process I just don't know about.
It’s been a hot minute but basically the talk was about the programming language that they’re using which the lead was one of the main writers/collaborators for and how it was a secure language among other things that just weren’t really making sense.
Overall, I got the sense this was a person who aligned with their founder in selling themselves as badasses.
To address some of the "how will GM react" question:
- GM has conspired with Nikola management to, for the lack of a better term, rob Nikola investors. The chances are great that GM knew exactly what Trevor Milton and Nikola really are, and price they extracted for playing along reflects that.
Nikola's supposed USP was this "amazing, decades-ahead" technology that somehow made hydrogen-based propulsion not just competitive, but a non-brainier. They were going to drive everyone out of the market! But don't take my word for it:
“Our technology is 10-15years ahead of any other OEM in fuel efficiencies, MPGand emissions. We are the only OEM to have a near zero emission truck and still outperform diesel trucks running at80,000 pounds. To haveover7,000reservationstotaling more than 2.3 billion dollars, withfive months remaininguntil our unveiling ceremony, is unprecedented,”said Milton.TheNikola One truck leasing program costs $4000 to $5000 per month,depending on which truck configuration and options the customer chooses. The first million miles offuel is included with every truck sale, offsetting 100% of the monthly lease for every owner. An average diesel burns over $400,000 in fuel and racks up over $100,000 in maintenancecostsover 1,000,000 miles. These costs are eliminated with the Nikola One lease.“We believe we will pass the current market leaders likeDaimler, PACCAR, Volvo and Navistar in sales orders within the next 12-24 months.Just imagine the orders that will come in once we begin taking dealer applications. We have shown other OEMs and their shareholders why they should be nervous about NikolaMotor Company. Some of the top class 8 dealerships in America have reached out and are willing to either add our brand or move away from their existing brands,” he added.
So, with this amazing tech at hand, let's look at the terms GM was able to secure from Nikola:
- $700M in cash to build a production line that GM retains full ownership of.
- $2B to design a vehicle platform that GM retains full ownership of.
- Profit on the front end, as an exclusive major drivetrain component supplier
- Profit on the back end, thanks to a cost-plus nature of the contract
- Profit off all of Nikola's alleged other products (Class 7/8) trucks, as exclusive drive train supplier
- Most of Nikola's ZEV credits
That's quite a haul from the company that claimed to have breakthrough technology, which, funny story, they appear to have discarded as part of this deal. The cost-plus contract on top of being an exclusive supplier is also a head-turner: GM would be ordering parts from.. GM to build a truck for Nikola and then charging cost+margin back to them. Nice arrangement if you can get it!
Equally interesting is what GM is not getting involved in:
- Distribution and sales
- Support, Service and Warranty
You are free to draw your own conclusions, but if Nikola was actually a legitimate company, this would have been one of the most fundamentally terrible deals in the history of North American capitalism.
What it instead appears to be GM's deal with the devil: They managed to extract such inordinate toll from Nikola (precisely because, I would argue, Nikola is build on fraud and was willing to do anything to gain some legitimacy), as to feel comfortable to ignore the ethical end of it.
GoDaddy rejected me a year after I applied and only realized it when a recruiter was trying to input me into their system. I took great pride in informing her that a) I made more than their proposed offer and b) I’d never work for a company who couldn’t operate with basic human decency in their recruiting process.
Because of that experience, I make it a point that every single candidate deserves a yes or no response and the company I work for has kept that up.
> I took great pride in informing her that a) I made more than their proposed offer and b) I’d never work for a company who couldn’t operate with basic human decency in their recruiting process.
I used to work in tech recruiting. I guarantee you 100%, no one cares.
As a candidate your only option is to move on or write a bad glassdoor if you are so inclined and move on.
Well, it tells a lot about how much you(and probably your management) care about your job.
My org was once hiring for a tech position, it was a new role, we weren't exactly sure if the process was right and one candidate sent us an email criticising the process and interviewers. We have apologised and thanked for the feedback, which was brought onboard and used to calibrate and improve the process further. Not every company is the same.
Besides, when we have received that kind of message it immediately raised some red flags. What if the candidate complains on glassdoor or other social media? It would damage our reputation. And frankly speaking, GoDaddy doesn't exactly have a good reputation.
About 15 years ago I managed a software team and decided I wanted to consider new opportunities. I wasn't sure I was leaving, but I wanted to see what was out there. A recruiter saw my resume, called my workplace to speak to the hiring manager, and offered his services to help the company fill their soon-to-be-vacant development manager position.
The recruiter was happy to reveal that I was considering leaving until he realized I was the hiring manager he was talking to. He quickly hung up.
I was a hiring manager in tech for many years and my impression was that talented people care, as do managers. Seems like everyone involved except the recruiter wants an optimal outcome ....
Maybe i misinterpreted what GP said. curious if you have an example where you took a candidates feedback and improved your process.
If you company does leetcode puzzles ( I worked at such a company) for hiring and a candidate tells you that they felt like that processes lacked basic human decency. What would you do?
Evaluate the areas of human interaction or places where some could be and try to make those better. Instead of just thinking that a technical challenge is there be all end all of recruiting.
“ I used to work in tech recruiting. I guarantee you 100%, no one cares.”
This does not reflect tech recruiting. People do care and while there are many hurdles to changing a process, we shouldn’t give up because its hard.
As a candidate? Tell them you don't do puzzles before talking to humans and to advance you to the next screen? It's not like those rules can't be broken or changed, they aren't laws of physics.
> I used to work in tech recruiting. I guarantee you 100%, no one cares.
Sounds correct. That's why professional tech recruiters are best avoided. Have never seen anything but empty talk and bad matches from them. On either side, recruiting or being recruited. Unfortunately the bigger the HR of a company, the more similarities to outside recruiters.
> That's why professional tech recruiters are best avoided.
I worked as a recruiter at a big tech company not a tech recruiting firm.
Recruiting is just a big numbers game, it is nothing personal.
Its just the way it is.
Most people here hate white board, leetcode puzzles with passion but you cannot simply "best avoid" it if you want to get into a big tech company.
Do you really think making engineers with 2 decades of experience solve 'trapping rain water' in 30 mins is "basic human decency" ? Do you think they care if you write to them about that?
Attitudes like yours are why tech recruiters are notoriously inconsiderate and difficult to work with. It’s not a good look and not something to be proud of.
There’s like 2 very discrete camps in recruiting in my experience, people who optimize for short vs long game basically. I’ve maintained a fantastic relationship with the best recruiter I met, and it’s definitely not like this, there’s some great people in the long game camp.
Candidates talk. If we hear that a company has a terrible recruiting process, we'll generally avoid it. This is especially true of qualified candidates who are heavily recruited. You'll send an email or a LinkedIn message to a candidate and get one of the suggested "No, thanks" replies or outright silence.
While I agree with you in the sentiment that they are venting to space... metaphorically speaking. A recruiter either works for themselves, as an agency, or for a company. In all three scenarios your business is only as good as your reputation since “service” is your business. I’d highly suggest taking a second look at your stance. While it takes years to build reputation, it takes minutes to destroy it.
I'm hiring now. I don't think no one cares. Our recruiter is processing 400 candidates at once and relying on a lot of new hiring managers to follow a process. It's a lot of work to keep up and stuff does fall through the cracks. And we're a tiny startup.
Agreed, "no one cares" was probably not the right way to put it. I should've said that its highly unlikely that someone will actually look at the feedback and take it seriously.
You shouldn't make such sweeping statements. I can assure you that candidates do care. Feedback should be mandatory for the time invested by candidates.
As a hiring manager, I care quite a bit about how candidates think of our process BUT I also know that most folks who bother to write something like 'basic human decency' to a recruiter, who usually has little power or status in a company, are probably not the people I want to hire.
Nothing wrong with complaining but people often hurl needless insults when they've had a less than optimal time.
Why couldn't the feedback bubble up to someone who has enough authority to improve the process? No one expects recruiters to fix the company by themselves.
Yep lol. They added me as a “prospect” as they were trying to poach me and then I got the email. My best guess is that some sort of automated process picked up a rejection email or an email was queued in the system so when the new recruiter tried to send me an email with info via whatever tool they use it triggered it to send as well
I’ve worked for 5 startups now and my equity payout has been 0, 0, 0, 0, and now I stand I make low 7 figures from the equity on this last company (publicly traded now).
During those startups the following happened:
- I saw my nieces and nephews so little they forgot my name. They were young, sure, but it still stung when they look at you like a stranger
- Messed up a 8+ year relationship with my significant other and we haven’t talked in years
- Let my student debt pile up to take on more equity than salary (dumbass idea for the record)
- Lost friends along the way because I could never do anything
- Missed many family/friends birthdays as I was working
- Worked 80 hour weeks for a long time
What did I feel after I saw my equity/stock rise to above 7 figures?
Stupidity. I gave up a lot on my journey and money can’t get it back, in fact, the money I stand to earn doesn’t enable me to do much more than what my salary already does. I can travel, eat well, have luxury goods if I want (I’m not that type of person but anyways), and so forth.
My point being that this was a.) self-inflicted and b.) not worth the combined opportunity cost of all of those years.
So for every “friend” who made lots of money at Uber or other places, there’s a story like me or a story where someone’s never made anything from equity because profitable exits are fucking hard
Well we also don't open up about mistakes as often as successes. I'll share mine which is a mixture of both.
The article is basically a rehash of my experience in a start up as the first engineer for a technical founder. I spent the next 6 years growing the company, my skills, and my experiences. I was constantly provided more salary and stock options until I had so many options I could not reasonably exercise them without taking on massive risk. I had to consistently request the status of the option pool to even know what percentage I was granted. When I left the company I effectively had 3 months (Nov 2019 - Feb 2020) to make a decision. I'm personally glad I was conservative and did not exercise them given the outcome of COVID in the US.
I don't regret taking that job at all as it helped me become a very skilled technology professional despite not having a prestigious educational background. It opened new doors which would have otherwise been closed until I had an equal opportunity to prove myself at scale. I do regret the extra hours worked which led to burn out and health issues as well as not being more bullish on salary until later in my career.
Working ridiculous hours at a startup (I can barely remember anything from 2016) really drove home to me that time is way way way way way more valuable than money. Use it wisely (unfortunately wisdom is hard to get before the time has been wasted). Took a few years to get out of startups but I'm out (ish) now and I'm way more picky about how much time I'll work on something these days.
It depends on your lifestyle. If you ask the early retirement / FIRE forums, they'll tell you you're good to go.
If you have 2 million, you can conservatively (meaning a low 3% - 4% withdrawal rate) take out 60k to 80k a year in perpetuity. Can you live on 60k - 80k a year? Consider you'll be paying a lot less in taxes since it's all capital gains. If your normal salary was 100k ish, you probably can.
It's entirely possible to relocate to a different country with a cheaper cost of living, universal health care, etc too. So, the limits of the US system should be taken as a given.
3% is a pretty good rule of thumb for perpetual withdrawal rate. If it's say $1M after taxes, that means $30k/yr. This is enough to retire on but only if you're willing to make lifestyle changes. Probably not that hard to do if you're 30 and single and renting, but married with kids and a mortgage it's a tough sell.
(Obviously as your raise the definition of "low 7 figures" this can change dramatically)
If you're married and retired then your partner can work and you can be primary homemaker. $60K is just enough to pay for a modest house if you're friends with HN types, though.
Other folks already chimed in, but yeah $1-3M depending on how everything ends up.
After taxes and everything, it’s not “enough” to never need to work again but yes, I would say I’m very fortunate to not have money as the concern as long as I’m not irresponsible with it.
The point was more that it easily could’ve been another $0 and in theory, the company could fail taking that $1-3M down considerably.
The salary most HNers make is way above the median and is enough to live a very comfortable life. I honestly can’t tell you if the money was worth the personal pain of the last 10 or so years, truly I don’t think it is.
I’ve always found it shocking (well not that shocking honestly after years at 10 person startups to 5,000+ people companies) that you get these folks who read “measure what matters” or some cherry picked Andy Grove stuff & decide “this will fix our velocity and other problems”.
Like no, hard no. OKRs are great, I personally love them but if your company has deeper issues a set of OKRs won’t help and likely hurt as it obfuscates the underlying issues that exist.
Most times they don't even read the books. They just stop at "what doesn't get measured doesn't happen." Great, that leads people to measure all sorts of stupid stuff like lines of code to production. Who cares if it isn't something that contributes to a thing that someone's going to use.
The last company I worked for had a problem with the service, it lost their clients money. Their solution was to make everyone in the management team read a 'business book' per week, and discuss it in weekly meetings.
Which we have started to see within the Bay Area and other higher rent areas.
The really interesting thing to watch will be commercial real estate, but those leases are longer & either impossible or expensive to break. We’ll see how the remote culture change impacts commercial real restate and if companies stop signing new leases & don’t renew them either once they run their course.
My prediction is that commercial real estate is in for a bad time. The shift to remote work appears to be sticking enough that plenty of businesses are going to be really questioning thier facilities budget, and I doubt food or personal services are going to fully recover quickly. I have no idea what retail will do, but it had issues before the crisis.
One word why I think this will work out well: money.
I can see FB/MS tapping into deep pockets to offer some top streamers a great deal to move platforms. If they get enough of them to move and the service is stable, intuitive and fun to be on then I can see FB doing well.
FB knows how to build communities, they know how to build engaging content and how to run that type of business. I would bet on them figuring out how to leverage their subject matter expertise on that side house to bring a very good product offering in this new vertical.
There’s an ecosystem there that they can tap into as well, marketplace, pages, etc that if they can pull it off, could make it a very lucrative all-in-one solution for the streamers.
No way. This is literally exactly what Microsoft just did, and here we have the results. Facebook can try it, and they'll fail too.
There is absolutely _zero_ chance of younger demographics moving to facebook. I'm in my 20s and know many gamers in their 20s/teens and we all avoid facebook like the plague. There's no chance.
We've seen it again and again and again-- you can't just steal away a successful business by throwing money at the problem and copying it. Look at zune, look at tidal, look at google+, look at bing, look at mixer. All either outright failed or stole at best a tiny fraction of market share.
There's so many examples of corporations trying and failing at this strategy that it's just a comic act by now.
Sure. Look at Google (Yahoo, Altavista, Lycos), look at Messenger (AIM, ICQ), look at GMail (Hotmail, Yahoo Mail), look at Facebook (Myspace), etc...
You absolutely CAN steal a userbase if the quality of your product is sufficiently better than the existing alternative. The problem with Mixer is that the only real advantage they had was latency, and that's not a big enough reason to draw people to the platform.
Facebook's current problem is that they want to use their existing network and one of the primary features of a gaming platform is anonymity. 99% of the streamers on twitch can't be identified by anything but their usernames, and that's the way they like it. Facebook is antithetical to that experience.
The examples you give are simply not comparable. In all three cases, this was not someone throwing a ton of money at something and copying it to try to steal it.
Google was made by two grad students who came up with a better way of searching. They invented a superior product and it took off on its own merits.
Gmail was largely created by one person helming the project on his own, and again it took off because it was VASTLY better than existing options. I was a Gmail beta user-- I remember! It wasn't even close.
Facebook, again-- not a corporation throwing a ton of money at something. It took off on its own, exactly as depicted in The Social Network. It was made by a handful of college students and people simply loved using it in the beginning.
Given your examples, you see to have misunderstood me as arguing that a successful product can never be replaced or lose its dominance. Of course I am not saying that, that would be crazy. I am saying a corporation or any other entity with a lot of money cannot replace a successful product using that money. They can only do it by actually coming up with a better solution to the problem, and that almost never happens-- they simply aren't able to do such a thing in most cases.
Instead they deliver hollow, branded imitations like the many examples I named, and they fail.
I agree. For me, the core problem with facebook gaming is that I'm not going to interact with a gaming stream while I'm logged into my facebook account. I use my FB account to connect with family, and it works great for that, and that's it. Using it for anything else just inevitably leads to messy information leakage.
A decentralized streaming network is technically infeasible with the current Internet. Keep in mind that every watcher adds upload bandwidth requirements to a node somewhere else in the network. Consumer network connections are too asymmetric for that.
Nope, I have nothing. The most popular thing out there is Acestream, which is a weird Russian fork of VLC that is probably spyware but it "just works". It's closed source and I have never seen anything written as to how it works, sadly.
My point was along the lines of, p2p streaming is feasible with current infrastructure because it already works under those less than ideal conditions
> you can't just steal away a successful business by throwing money at the problem and copying it. Look at zune, look at tidal, look at google+, look at bing, look at mixer.
For serious scientific studies, anecdotal data is not useful.
For product fit, the experiences and feedback from your target audience are _extremely_ "relevant in the grand scheme of things." If your target audience is saying "I literally don't know anyone who would want to use this," yeah, that's relevant.
Unless you're aiming to imply that me and my friend group and greater gaming community are the exception and in fact the majority of young people use facebook, in which case....lol.
My "anecdotal experience" is interacting with dozens of gaming communities which mysteriously all link to subreddits and discords and twitches and never, ever a facebook group. That's not very anecdotal when these are communities of tens and hundreds of thousands of people.
Unless you're aiming to imply that me and my friend group and greater gaming community are the exception and in fact the majority of young people use facebook, in which case....lol.
Have you done a statistically relevant survey of what the “majority of young people do”?
As a reference, if you go to r/cscareerquestions you would swear that no other company exists for graduating software engineers but the big 5 tech companies and if you don’t spend every minute “learning LeetCode to work for a FAANG” your life is over and you might as well kill yourself.
But it's what it is. Most people active on Facebook 10 to 5 years are not active anymore, and young people avoid it. If Facebook wants to attract young gamers, they will need a new brand for their gaming platform.
"Around eight-in-ten (79%) of those ages 18 to 29 use Facebook". Anecdotally, I know a number of people who 1) say they hate Facebook 2) say they never use it 3) show up in my feed at least once a week for the last month.
I think there's an under-reporting problem here, where there's a stigma associated with using Facebook (it's for old people!) yet younger people still use it a lot. Note that this doesn't bode well for launching a service aimed at people in their 20s. Even though they're the most common demographic, they might not want their peer group to know they're using it.
I would have expected a big rise around 18-22 because a lot of college / University and other interest group activity is there, and there are more varied friend groups and family to keep up with.
The 4th survey for 13-17 year olds with 50% is somewhat surprising for me though.
The average gamer is 34 years old
70% of gamers are age 18 or older
Considering FB has between 2.5 and 3 billion users. FB has much more chances of success considering its size, its user base, its built in advertising platform, its global reach, etc. Streaming and gaming isn't just about 12-18 year old gamers. If you're thinking monetization, there's not a whole lot to gain there for the majority of steamers. Not a whole lot of 12 year olds can support streamers financially. So sure, maybe it won't be the platform of choice for the 16 year olds, but doesn't mean it can't be dwarfed in size by the rest of the demographics who are also into gaming.
Don't forget, gamers of yesterday who started with the earliest consoles or who got on board anywhere between atari, NES, SNES, Sega, PS1, PS2, or PC gamers, are still gamers today.
MS already did that by paying Ninja ~30M to stream on mixer originally. He averaged like 2K viewers. They did the same with shroud with the same result. Now Ninja and shroud are supposedly being paid out in full for their contracts and are free to sign with any platform.
Why offer them a second massive truckload of money when the first truckload fundamentally did not work.
> Why offer them a second massive truckload of money when the first truckload fundamentally did not work.
Except Facebook did that. Rumors go Facebook offered them double their Deal from Mixer, but they declined. Though, others did take it. Facebook is bar far not as worse as Mixer for a streamer. If you have the matching games, you can be happy there.
I really don't understand this confusion about the ridiculous amount of money in gaming. Sony is projecting $20 Billion in revenue this FY. Nintendo is projecting 10, with no new console launch. There are multiple game developers who make billions of dollars every year.
Gaming is the most profitable and highest revenue part of the entertainment industry, and it's not even especially close.
The current rumor is that FB offered to double the Mixer contracts for Shroud and Ninja as well, and that both turned them down. Not sure how accurate said rumors are.
I guess I don't understand as it has been already proven in the marketplace that Shroud and Ninja can't attract new viewers so why would anyone overpay for their services? The only streamer that I could imagine that could drag viewers away from Twitch would be DrDisrespect but he recently signed a multi-year deal with Twitch.
The free prime sub is a huge deal not a lot of people are talking about. Also a huge portion of twitch subs comes from whales dropping blocks of gifted subscriptions.. especially the bigger streamers. They've gamified ePanhandling and they're falling for it
> One word why I think this will work out well: money.
This is indeed usually the strategy.
What people seem to forget though, is that Mixer is not the first streaming competitor that thought of the idea of "just pay streamers a bunch of money, and hope the viewers follow".
Although, in some sense, this does work, there is a long graveyard of failed attempts.
It is a bit of a winners curse. A platform can always just pay people a bunch of money to join their platform. That is the easy part. The hard part is actually making back the money that you spent on those creators.
And the reality is that none of the attempts to just buy out streamers, by vast over paying for them, has ever worked, for the long term.
Eventually the money spigots dry up, and the people spending the money start to wonder when they are actually going to make back on their investment (hint: the answer is never).
There's probably a place for streaming sites that cater to very very specific content. NSFW is the obvious one, but I imagine you could try to serve one narrow nice extremely well, like auto racing, speed runners, live coders, baking, whatever. Become known to that community and offer features that mainstream streaming sites don't want to provide because it doesn't make sense for everybody.
Although I agree with you that this strategy might work in a duopoly type situation, where there are two platforms competing against each other, in a borderline zero sum game.
The problem, though, is in markets where there are more than two participants.
What happens when Mixer does this strategy, as well as Facebook gaming, as well as youtube gaming? Answer: the costs shoot up into the stratephere, and all of them go bankrupt.
It is kind of like a game of chicken. Massively overbidding to buy out the entire market only works if there aren't other people out there who are willing to meet you at the same level of irrationality, and burn the whole thing to the ground, along with you.
IMO, the only real workable strategy, similar to this, would be if those are smaller platforms, agree to do some sort of team up (which is sorta what is happening with FB gaming and mixer), so that the irrational actors don't all lose the game of chicken.
However, as long as someone isn’t betting their life savings on this I don’t see or take any issue with it.
...
Thai Gaon, a 23-year-old salesman in San Francisco, bought 35,000 Hertz shares on June 4 at $1.43, spending a little over $50,000, according to documents viewed by The Wall Street Journal.
“It was my entire life savings,” he said. “I decided, you know, if I’m gonna do it, I should do it big, and I’ll make a play and see what comes out of it.”
I don’t know why so many commenters here seem to want to prevent people like this from speculating/investing how they want. His risk tolerance is larger than yours and he’s arguably making a very stupid investment, so what?
It's like having to wear a helmet when you ride a bike, you might say why does the government cares, it's my life after all.
But the problem with this logic is that if you fuck up hard enough you effectively become a liability for society. You'll hit the safety net and tax dollar will be spent helping you recover. And that's a good thing in my opinion, but because of this we can't just watch people going "YOLO" and putting themselves in extremely precarious situations and say nothing.
If the guy ends up on food stamps, society will pay for those. It's therefore in society's best interest to prevent this insane risk taking.
Who decides what is risky enough to warrant that? Your example with bicycle helmets is a perfect example, helmet usage is not correlated with less bicycle accidents/injuries. The greater risk is that people choose a car just because they do not have a bicycle helmet, considering long term health should be a part of it.
That’s an impressive savings for a 23yo. Imagine all the work and discipline going into it. I wonder how much work and discipline he put into betting on Hertz.
And Hertz of all companies. My experiences with them have been uniformly awful; they always try to charge me for insurance or services which I explicitly decline, and their customer support is openly hostile. I'm sure they were a competent company at one point in time, but betting your life savings on a company that is apparently surviving on fraud is bold.
But all of that shitty behavior is actually good for the shareholders (in the short term) they were essentially seeing how much you could abuse captive and or ignorant customers.
> shrug And people jump off bridges. Doesn't mean we stop building bridges. The market is rough, them's the rules, sorry not sorry.
But it also doesn't mean we can't put barriers on those bridges that prevent people from jumping off. A rule preventing a company from selling stock when it's pursuing a bankruptcy would be just such a barrier.
Risk is an integral part of the market. Why should people be prohibited from taking risks? I could probably get behind preventing people from taking extreme risks--those that would likely make them dependent on our social safety nets--but why prohibit people from putting a few bucks into a high risk investment (which is what you're doing if you prohibit the sale of stock in companies pursuing bankruptcy)? Even if you're 23 and betting your life savings, you still have an income and retirement account and a lot of working years left before retirement.
Because then we are implicitly responsible through social services for the idiots who gamble away their life savings with margin trading as an advanced form of gambling addiction. It's not just 24 yo doing it, it's also 55yo doing it with their life savings. I remember my previous landlord complaining about her ex-husband doing it decades after the fact and it's the reason why they split.
Requiring a pilot license level of education for margin trading & gambling past a certain point (like $1k) is making more and more sense as time goes on.
A local businessman in our area began day trading and options trading. Soon was fudging the books and lying to corporate about inventory. They soon came and locked up the joint, hauled him to jail and his family had to sell out to make up the losses. They'd owned a huge mansion and estate outside town - now its a development.
He was in his 60's, been a rock in the community and nth generation in the family business.
I'm not in favor of loosening the rules on who can trade risky investment.
I addressed all of this in my post already. This doesn't support the idea that we should prevent companies from selling stock when they're pursuing bankruptcy. It does support the idea that we should prevent people from taking risks that will likely land them on social support (which does not apply to the 23-year-old scenario above or even the 55-year-old scenario provided the couple had enough in retirement to keep them off of social services). Note also that none of this is incompatible with a licensure program.
You're just rephrasing the original argument, not rebutting my proposal. So I ask again: why prohibit everyone from taking reasonable risks when it's perfectly feasible to prohibit only high risk investments (i.e., those risks that would be financially ruinous i.e. put the investor on social support)?
> So I ask again: why prohibit everyone from taking reasonable risks when it's perfectly feasible to prohibit only high risk investments (i.e., those risks that would be financially ruinous i.e. put the investor on social support)?
1. These risks aren't reasonable.
2. It's practically simpler to ban this kind of weird and sketchy offering entirely than to implement some kind of control to limit the impact of what people can lose on a particular investment.
1. There's nothing unreasonable about someone investing their own money on whatever odds they want, provided the upside is proportional to the risk and if the investment goes badly it's not financially ruinous (where "financially ruinous" means "the person becomes a burden on welfare system" or similar).
2. It's marginally simpler but enormously restrictive. If I want to invest $100 for a potential thousand-fold payout, why can't I? I can legally spend more for worse odds (and a worse payout) on any number of institutions (casinos, lottery, etc). When you say "sketchy and weird" you just mean "a different risk profile".
> There's nothing unreasonable about someone investing their own money on whatever odds they want, provided the upside is proportional to the risk and if the investment goes badly it's not financially ruinous
Why stop there? Why not let Ponzi schemes operate unimpeded? After all, if you pull your money out of the scheme early enough, you could profit handsomely. Why not let people take that risk?
>> when it's perfectly feasible to prohibit only high risk investments (i.e., those risks that would be financially ruinous i.e. put the investor on social support)?
> It's marginally simpler but enormously restrictive.
All right: please submit a notarized accounting of your income and assets, so that the bureaucracy can evaluate it and decide if it's acceptable for you make this investment. We'll get back to you in 6-8 weeks with the decision.
> Why stop there? Why not let Ponzi schemes operate unimpeded? After all, if you pull your money out of the scheme early enough, you could profit handsomely. Why not let people take that risk?
To be clear, you think Ponzi schemes are illegal because they are too risky?
> All right: please submit a notarized accounting of your income and assets, so that the bureaucracy can evaluate it and decide if it's acceptable for you make this investment. We'll get back to you in 6-8 weeks with the decision.
I don’t understand the snark. That’s less involved than getting a permit to remodel your kitchen and the government already has information about your wealth anyway.
Anyway, I don’t understand your argument: “it’s too easy to make risky investments and if you make it harder it would be too hard so we should prohibit it altogether”
Yeah, I tend to agree. This kind of deal with extreme and ridiculous risk is exactly what accredited investor rules are supposed to mitigate - but because Hertz is a public company they don't apply.
Pull what off? The company is bankrupt, the equity will be wiped out, they literally say that in the filing:
"Although we cannot predict how our common stock will be treated under a plan, we expect that common stock holders would not receive a recovery through any plan unless the holders of more senior claims and interests, such as secured and unsecured indebtedness (which is currently trading at a significant discount), are paid in full, which would require a significant and rapid and currently unanticipated improvement in business conditions"
No one is "putting their nose to the grindstone" to save the company. The money is going to the creditors.
Equity "going to 0" is a consequence of a court proceeding called "bankruptcy". It is the courts of law that approve the deletion of equity. So not sure whom are you going to sue.
It will not go to $0. It will simply stop existing. You are free to trade it until then.
Lots of companies enter bankruptcy, are restructured, and emerge from the process without equity being destroyed. There is certainly some chance that happens here.
There's no hate on the offering itself. Hertz would be negligent if they didn't tap a source of interest free funding at the lowest position in the bankruptcy repayment. They saw the demand for their stock and took advantage.
The hate is on the "investors" yes but I don't hate them. It is just that if they really thought auto rentals were going to rebound there are plenty of other opportunities out there that are currently not bankrupt. But hey, they aren't "99% off" like Hertz is.
I don't hate it. The Hertz proposition is quirky and strange, but it's fully out there as well. These risk paragraphs are fun to read because they're ment to be a clear warning of what could go wrong. Not too much CEO-speak allowed, because if you cover up and mess up, you'll get sued. This filing, or say the WeWork IPO are in my book good examples of a part of financial regulation just working.
IANAL, but when you sue the bankrupt company for going bankrupt, the same judge that allowed the IPO will be the one to look at your lawsuit accusing fraud. Seems to me like he’d toss the claim and it would be discharged through bankruptcy.
It's a nearly guaranteed loss, and and pretty much the only people who will invest in it are those that are too incompetent to realize that. It smells like a legal con to separate those people from their money.
If you watch CNBC, the common theme is that "Robinhood traders" are buying/selling hertz (despite its near $0 actual worth) in a gamble for short term profits.
Much like people buy/sell crypto with zero analysis of fundamentals.
I don't think it's a bad decision for Hertz to offer up shares if it allows them to repay a greater percentage of their debt.
I think the real problem is that there are a lot of people who are speculating (gambling) in stocks like Hertz. This has been the case since online brokers came in to existence, and has only been magnified by the recent trends toward $0 fee commission trades pushed by Robinhood and the like.
If there is anything that I'd say needs to change, it would be apps like Robinhood should make detailed company information more easily accessible so people realize Hertz is going to $0 before gambling on a short term swing (which would mean making the UI/UX a bit more clunky + dense, so it probably won't happen)
I get your point, but you chose a really bad example. A properly underwritten insurance policy never has any theoretical upside to anyone except the insurer. Premiums should also theoretically be close to proportional to the actual risk. Your grandma's premiums would be very low, but, unless a tiger escapes somewhere near her, she'd never be able to collect. And, any reasonable policy would have specific exclusions for willingly and knowingly going somewhere that tigers are native. :P
> I don’t get the hate on this offering. It’s a huge gamble for sure, but the upside is there if they pull it off.
Disclaimer: I'm basing this comment on rough memories of undetailed news coverage.
That said, the impression I got was that Hertz asked the bankruptcy court for permission to issue $1 billion of stock while needing ~$3 billion to pay off its creditors. This makes no sense to me. The right thing to do would be to try to sell $3 billion of stock. In that case, the path to non-failure is obvious. Here, failure isn't just the most likely option; it's also the plan.
(Would issuing so much new stock wipe out pre-bankruptcy stockholders? It might, but so does the bankruptcy.)
The hate is that it’s a hugely risky investment that Hertz is knowingly marketing to unsophisticated investors who don’t understand the offering enough to fully appreciate the risk and who aren’t in a financial position to absorb this kind of risk even if they do appreciate it.
It’s a money grab. The second the stock is issued it’s basically worthless and Hertz knows it. But when these investors are inevitably screwed over they’ll basically have no recourse against Hertz so why not?
The only reason it's happening is that the regulators have been gelded and there is no reason not to. Adam Smith's invisible hand has been replaced by a dirty glove giving the public the finger.
Makes a ton of sense. I’ve experienced and dealt with a lot of customer confusion with Facebook, Google etc sign in where they lose access to that account & then it’s just a cascading failure of whack a mole trying to have them get their account setup etc.
I can imagine how awful it feels to be at the stadium gates (I’ve ran into this on TicketMaster’s lovely app where it can’t pull up the ticket) and you can’t figure out the login while you/your kid/friends wait on you awkwardly. Customer support has to love this decision.
Reducing friction in a signup flow is key and that’s what FB login did. It made signing up easy as people already had an account. You could pull some data attributes depending on what you were looking for but overall, it made signup flows significantly easier.
Now FB doesn’t carry the same brand trust it used to and folks prefer their own signup flow.
Not like didn’t make any sense because folks didn’t like the programming stack choices or anything it just literally didn’t make sense what they were trying to do.