[HN Gopher] Robinhood lays off 23% of staff
___________________________________________________________________
Robinhood lays off 23% of staff
Author : tempsy
Score : 225 points
Date : 2022-08-02 20:11 UTC (2 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| metadat wrote:
| Un-paywalled: https://archive.ph/wsimy
| xyst wrote:
| That's a significant RIF
| yuan43 wrote:
| Why not cut pay across the board?
|
| 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?
| this_user wrote:
| 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.
| yuan43 wrote:
| > ... your best people will just leave.
|
| 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
| nrmitchi wrote:
| The best people (the ones you really don't want to lose)
| will always find a place to go.
| gruez wrote:
| >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.
| emidln wrote:
| 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.
| enticingturtle wrote:
| Short answer: your best employees will leave
| daenz wrote:
| 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.
| [deleted]
| ghaff wrote:
| 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.
| babypuncher wrote:
| 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.
| drc500free wrote:
| 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.
| smm11 wrote:
| Good. Problem is, fewer of those vultures means even bigger one
| survive. Just can't win.
| datalopers wrote:
| Biggest mark of utter management failure is making too small a
| layoff in April (9%) and needing to do another round today.
|
| Combined that's a 30% headcount reduction since Q1-2022
| ab_testing wrote:
| 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.
| [deleted]
| dan-robertson wrote:
| Isn't Robinhood public rather than VC-backed?
| niyazpk wrote:
| Sure, but also, none of my (investing) friends use Tastyworks,
| and almost all of them are using RH as their primary investing
| platform!
|
| Companies in hyper-growth stages may hire/fire differently than
| others.
| xoxodave wrote:
| 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.
| outworlder wrote:
| > as their primary investing platform
|
| :%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)
| kasey_junk wrote:
| How are you quantifying that the fills are better?
|
| 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.
| sitzkrieg wrote:
| price and execution time? how much slip or price
| improvement on limits? or god forbid the casual retail
| market orders fill vs nbbo and pools at exec
| kasey_junk wrote:
| 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.
| 0x457 wrote:
| 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.
| bostonpete wrote:
| Wow, TIL you can use sed syntax in vi. I'm not a heavy vi
| user but that's still a handy trick. :-)
| gruez wrote:
| >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.
|
| [1] https://s3.amazonaws.com/citadel-wordpress-prd101/wp-
| content...
| [deleted]
| daoist_shaman wrote:
| This is a red flag.
|
| Robinhood is struggling for capital, so I wouldn't trust them
| with my cash whatsoever.
|
| Not that anyone has trusted them for a while, but yeah.
| gruez wrote:
| >Robinhood is struggling for capital, so I wouldn't trust them
| with my cash whatsoever.
|
| Why not? You're protected by SIPC for up to $500k (for
| securities) and $250k (for cash).
| xyst wrote:
| Aren't they selling the order flow of retail traders?
| Protected or not. I'm not trusting them.
|
| "Robinhood" my ass
| gruez wrote:
| >Aren't they selling the order flow of retail traders?
|
| ...and getting price improvements. See:
| https://news.ycombinator.com/item?id=32325223. I don't see
| the issue here.
| sitzkrieg wrote:
| other brokers do too..
| CameronNemo wrote:
| You actually want to have to rely on insurance? I would hope
| that my brokerage can at least stay solvent ffs.
| xyst wrote:
| 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
| soneca wrote:
| > _"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.
| atlasunshrugged wrote:
| 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.
| Dma54rhs wrote:
| Of course it is. People, especially during this golden bull run
| of decade in tech, are one of the most privileged people out
| there.
| twblalock wrote:
| 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.
| nativespecies wrote:
| 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.
| CSMastermind wrote:
| Same thing I would say.
|
| 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.
| papandada wrote:
| Some company will always need a person who can actually make
| things work, definitely.
| tmpz22 wrote:
| * unmute microphone
|
| * "thats bull shit you took 800m in compensation last year"
|
| * get fired without severance
|
| * feel really good
| rootusrootus wrote:
| 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.
| papito wrote:
| ".. ambitious staffing trajectory".
|
| 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.
|
| Tired - burn rate, wired - hiring rate.
| hmryehbut wrote:
| danwee wrote:
| > As CEO, I approved and took responsibility for our ambitious
| staffing trajectory--this is on me
|
| So, find a decent replacement for CEO.
| radicaldreamer wrote:
| 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.
| yodsanklai wrote:
| ... and at the same time trying to show they're a great
| because capable of acknowledging errors.
| throwawaysleep wrote:
| Employment is a transitory thing. Remember this the next time you
| spend your life energy fixing something you could get away with
| letting fail.
| chadlavi wrote:
| They were still in business?
| MrMan wrote:
| its worse than any other broker, so there is no reason for it to
| survive
| 88840-8855 wrote:
| What they write:
|
| "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"
| civilized wrote:
| _swinging the ax_ I take full responsibility for this
| function_seven wrote:
| This axe is heavy, and the destruction wrought by it saddens
| me. I need to be compensated for this.
| analyst74 wrote:
| "One who passes the sentence should swing the sword"
|
| If it's good enough for a lord, must be good for the CEO.
| newfonewhodis wrote:
| "Some of you may die, but it's a sacrifice I am willing to
| make"
| timack wrote:
| "Some of you may die, but it's a sacrifice I am willing to
| make," - Lord Farquaad
| ChuckNorris89 wrote:
| Silicon Valley (the satire TV show) already covered this exact
| scenario. Mike Judge is a brilliant writer.
|
| https://youtu.be/u48vYSLvKNQ?t=17
| renewiltord wrote:
| His salary is like $300k and the stock options he was granted
| as the pandemic growth hit break even at some $300/share (it's
| $9/share right now).
| jeffbee wrote:
| In the past year he sold $55 million of shares. Let's don't
| be too credulous about cries of poverty.
| renewiltord wrote:
| Sure but that's not opex (the context of this thread).
| That's stuff he has by virtue of founding the company.
| saalweachter wrote:
| 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."?
| renewiltord wrote:
| 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).
| idontpost wrote:
| > 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.
|
| 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.
| Arcuru wrote:
| Elsewhere in the thread, others mention he was paid 800
| million in stock awards in 2021. Do you have some other
| supporting info?
|
| The 800 million number seems to be better supported via a
| quick search - https://www.execpay.org/executive/vladimir-
| tenev-42307/r-186...
| renewiltord wrote:
| 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.
| redredrobot wrote:
| 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?
| robertlagrant wrote:
| Which people did that?
| tclancy wrote:
| Reddit will be telling me this split is just like a dividend too.
| CodeSgt wrote:
| "While employees from all functions will be impacted, the changes
| are particularly concentrated in our operations, marketing, and
| program management functions."
| rossdavidh wrote:
| "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.
| t_mann wrote:
| 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.
| 14 wrote:
| 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
| twblalock wrote:
| 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. 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.
| civilized wrote:
| It should have been obvious to anyone that people would do less
| day trading once they had _anything_ better to do.
| alecbz wrote:
| 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.
| thaumasiotes wrote:
| 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.
| civilized wrote:
| 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.
| alecbz wrote:
| 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.
| ghaff wrote:
| And once even throwing darts to pick stocks stopped producing
| big gains.
|
| 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.
| spaceman_2020 wrote:
| Or when making money became harder.
|
| 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.
| georgeecollins wrote:
| This happened in 1998-1999 too. People got online trading
| accounts, did great and then decided to try to invest for a
| living.
|
| 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.
| smsm42 wrote:
| 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.
| mumblemumble wrote:
| I would even argue that a decade isn't necessarily enough
| time. The decade in question might have been the 1990s.
| t_mann wrote:
| Or the 2010's.
| mumblemumble wrote:
| 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.
| mgfist wrote:
| 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.
| roughly wrote:
| 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.
| adam_arthur wrote:
| It's rational on the predication of completely absurd
| stories about growth trajectories.
|
| It's what happens when a bunch of dumb money comes into the
| market
| throwaway_4ever wrote:
| It's still going on.
|
| 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
| _...
| skrtskrt wrote:
| Any institution that invested in "home workout" stuff
| deserves to lose every dollar they put in, how could you not
| see that coming.
| alecbz wrote:
| 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.
| bushbaba wrote:
| There prior earnings had substantial revenue from crypto.
| That's mostly dried up. Then you've got the GME reputation hit.
|
| Meanwhile fidelity who avoided crypto and has a great
| reputation saw & continues to see growth
| [deleted]
| aaaaaaaaata wrote:
| They didn't avoid cryptocurrency..they've been mining. BTC
| offerings in friendly nations (Canada).
| dcolkitt wrote:
| What? Fidelity has a huge digital assets division and
| literally added Bitcoin as a 401(k) option
| onlyfortoday2 wrote:
| llaolleh wrote:
| 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.
| Bluecobra wrote:
| Not to mention they are screwed if congress passes legislation
| to ban selling order flow to firms like Citidel.
| tempsy wrote:
| stjohnswarts wrote:
| Right sizing not layoffs
| paxys wrote:
| > 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.
| [deleted]
| kaczordon wrote:
| No one's forcing those employees to stay working there. If he's
| that bad people can just leave and work for a company that they
| like.
| pcurve wrote:
| Yep, talk is cheap. Of course he's responsible, whether he
| admits it or not.
|
| If not willing to step down, then give up pay.
| Spivak wrote:
| Good lord, if I resigned every time I caused a production
| issue my resume length would triple.
|
| You are allowed to admit you made a mistake without publicly
| self flagellating. This is some straight puritanical shit.
| paxys wrote:
| Does your company also do mass layoffs whenever you cause a
| production issue?
| Spivak wrote:
| The impact doesn't matter, the magnitude of the mistake
| does.
|
| * 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.
| abirch wrote:
| How many lives were impacted significantly by your
| production error?
| VoodooJuJu wrote:
| The beauty of corporatism - unlimited upside and no downside.
| V__ wrote:
| 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.
| _jal wrote:
| The way you know that would never happen is that he said he
| "takes responsibility".
|
| 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.
| a-dub wrote:
| 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.
| lupire wrote:
| gruez wrote:
| Isn't that what a vesting period is supposed to enforce?
| guntars wrote:
| 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.
| Phlarp wrote:
| 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?
| somehnacct3757 wrote:
| 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.
| prh8 wrote:
| I commented about this when it happened and was met with
| vitriol. Nice to see people here have some sense.
| cjrp wrote:
| Taking responsibility would mean returning a significant
| portion of that compensation.
| systemvoltage wrote:
| Wait, shouldn't this be returned back to whom the money
| belonged (investors)?
| munk-a wrote:
| 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.
| systemvoltage wrote:
| 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.
| paxys wrote:
| Investment is always a gamble. Employment shouldn't be.
| munk-a wrote:
| 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.
| elihu wrote:
| 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.
| Spivak wrote:
| > owning stock
|
| And not cashing it out.
| kaczordon wrote:
| 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.
| munk-a wrote:
| 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.
| tomrod wrote:
| 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.
| jrochkind1 wrote:
| 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?)
| gerdesj wrote:
| It's the difference between having only one or even no
| helipad on your floating gin palace or two.
| nerdponx wrote:
| The article said it was around 1000 employees. So cutting his
| pay by $50m would mean $50k _per laid-off employee_.
|
| How as an investor or shareholder can you not look at this as
| downright robbery?
| eatonphil wrote:
| Lots of execs take "only" $100ks of compensation in salary
| and the rest in stock.
| radicaldreamer wrote:
| Steve Jobs famously took a $1 salary and everything else
| was in stock.
| bostonpete wrote:
| 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.
| Phlarp wrote:
| If nothing else, he also got unlimited personal use of
| the company jet.
| sianemo wrote:
| He's perfectly capable of giving stock to these employees
| as well.
| wombat-man wrote:
| Looking at Robinhood stock, it might be way less than
| that now. But I get your point
| gruez wrote:
| Robinhood is a public company. There's no difference
| between getting stock/RSU compared to getting paid in
| cash and then using it to buy stocks.
| 88913527 wrote:
| 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.
| sianemo wrote:
| 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.
| leereeves wrote:
| Is it charitable to accept responsibility for the
| consequences of your mistakes, and compensate those
| you've harmed? Or is it just common decency?
| 88913527 wrote:
| 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.
| tmpz22 wrote:
| 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.
| NegativeLatency wrote:
| "With great power comes great responsibility"
| NegativeLatency wrote:
| 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.
| KMnO4 wrote:
| 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".
| tschwimmer wrote:
| 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.
| NegativeLatency wrote:
| Feels like you're arguing semantics, either way the CEO
| is being made wealthy right?
|
| Probably still getting much more than they need to live
| off of, so some of that should go to the people getting
| let go.
| PheonixPharts wrote:
| 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.
| paisawalla wrote:
| 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.
| decebalus1 wrote:
| But how would that motivate the other CEOs or aspiring CEOs
| to be better CEOs? /s
| remflight wrote:
| With $800M you can't keep up with the really successful
| billionaires. You know, things like sports teams, bezos's
| yacht etc.
| manquer wrote:
| 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 .
| memish wrote:
| 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.
| adambyrtek wrote:
| Would you say the same about Travis Kalanick and Adam
| Neumann?
| Phlarp wrote:
| And Elizabeth Holmes
| adam_arthur wrote:
| Brokerage is such a competitive space, their valuation never
| made any sense. And big money players would never use Robinhood
| over schwab et all
| ramesh31 wrote:
| > And big money players would never use Robinhood over schwab
| et all
|
| Their entire business model is PFOF [0]. That is, it's a huge
| fucking scam against retail.
|
| [0]
| https://www.investopedia.com/terms/p/paymentoforderflow.asp
| jmyeet wrote:
| > ... 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.
| prh8 wrote:
| They also prevented trading by people who had long running,
| funded accounts. It was a mess and it wasn't only GME.
| 88913527 wrote:
| 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.
| NovemberWhiskey wrote:
| 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_
|
| ref.
| https://www.sec.gov/Archives/edgar/data/1783879/000162828021...
| sn_master wrote:
| how much of that $800M was in stock vs cash?
| arcticbull wrote:
| The only thing that matters is how much he sold vs held. Cash
| is cash no matter how derived.
| remflight wrote:
| 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.
| jonas21 wrote:
| Are you talking about the ~$800M in stock-based compensation
| described here [1]?
|
| That only vests if Robinhood stock hits price targets between
| $120 and $300 per share, so I'd imagine Vlad has not received
| it.
|
| [1]
| https://www.sec.gov/Archives/edgar/data/1783879/000178387922...
| akomtu wrote:
| "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."
| BurningFrog wrote:
| I read this as saying "This is not happening because _you_ did
| a bad job, it 's because _I_ did a bad job ".
|
| An important thing to mention at a layoff.
| lupire wrote:
| rubyist5eva wrote:
| If Vlad Tenev is accepting responsibility he should resign. What
| a dumpster fire company.
| fleddr wrote:
| 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.
|
| A web of lies. Optics, zero substance.
| yomkippur wrote:
| Coinbase for instance...
| xyst wrote:
| This is where we balance it out with unions. Unions have
| historically gotten us everything today that most people think
| is just SOP.
|
| 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.
| tootie wrote:
| I only object to the notion that this is a problem of these
| times. It's human nature and always has been.
| RSHEPP wrote:
| Company I work for gives international Mental Health Day off,
| October 10th.
| elcomet wrote:
| This is strange, people might need a day off for dealing with
| their mental health on another day of the year
| emanresu3 wrote:
| The downturn has begun.
| rvz wrote:
| 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.
|
| [0] https://news.ycombinator.com/item?id=29508238
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