Good to see that they at least gave some instructions on moving the money (it was the absolute minimum, to be fair). No hate to them - some business don't work out.
That said, I personally don't understand keeping my assets that I hope to retire off of someday at a startup style company. Everyone's gotta start somewhere, but financial services like this are probably a hard sell for a lot of people.
On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.
I think the biggest problem with this startup was that the product they offered was so marginally different from Vanguard ETFs unless you have a super specific and unique investment thesis.
> On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.
Oh for sure - I'm sure they did. I just still wouldn't want to bother with a turbulent company and having to migrate assets from working with a company that has less of a reputation.
I worked for a wealth management company. The money was held at the financial institution's accounts. We just calculated when to re-balance the portfolios and executed the trades on the customer's behalf. Not sure if that's how this works.
Yeah that's what I was thinking. There is 0 benefit to such a product unless the company can guarantee they will be in business for 10-20 years. Otherwise moving my money us just a big time wasting headache if the company shuts down before any benefit is realized. (<1 year... ouch to the users).
It seems like a good idea. It is a margin profits play though. I know that in dealing with big money there is a lot of foot guns as far as costs. If you mess up even one thing it can cost you tens or hundreds of thousands in unexpected expenses. No offense to the founders but I'm guessing that they didn't have someone with 20+ years finance experience to make absolutely sure they never stepped on those mistakes. You'd have to operate flawlessly with only margin profits.
Hopefully the founders will give us some more context on what happened.
The attraction is easy. Internet company means lower overhead. I'm not paying to go into a lavish office with people in it like with Fidelity, and the money just needs to sit there generating modest returns. It's all numbers on a screen anyway.
Internet company means a VC is setting a bunch of money on fire and providing you the product at a loss to them - which is your gain. They hope they can buy enough eyeballs to get their exit and the users can move on to the next revolutionary idea to giveaway a bunch of cash.
I'm curious what led to the lack of demand for this—was it the friction involved in moving brokerage accounts, or do ETFs already meet the needs of most retail investors? A post-mortem on the limited traction would be quite insightful.
As I understand it, this product involved using fractional shares to try to adhere to an index, while using tax loss harvesting to optimize for tax.
Fractional shares cannot be transferred between brokerages and are generally sold when transferring brokerages. If you owned on average, half a share of the largest 250 US companies, you'd may need to sell about $30,000 in shares, which could result in an unexpected tax bill.
There are large brokerages and companies offering similar direct indexing products, generally at a higher cost. However, I expect those products are less likely to be shut down.
The problem was easy/trivial competition from larger brokerage firms. The core IP was all about tax optimization. The same customers who would employee direct indexing already have dedicated accounting services for exactly that purpose and the additional brokerage fees are either sunk costs or de minimis.
To use an analogy, the folks who are hedge fund customers don't care about the lack of liquidity or higher management fees. You can't capture that market on margin, volume, or any kind of flow ancillaries.
it wasn't obvious to me how Double is significantly better than an ETF. It'd have to be MUCH better (e.g. at least 50bps to 100bps) to warrant taking a bet on an unproven company.
They had cute names for the indexes ("Founder Mode")... but do those actually make me better returns than an ETF? Probably not.
Yeah this would be interesting. Also the founders should consider open sourcing some/all of the code. It could be an awesome platform for the open finance community.
> If you are technical, we are open sourcing our optimization engine, Oracle, which does our daily Tax Loss Harvesting and rebalancing. You may be able to use this to set up your own trading bot on Alpaca. You will need to contact Alpaca support to request an ACATS of your current assets held at Double.
> Note that ETF Holding data, corporate action data, and possibly factor model data would be required to reproduce Double’s Direct Index strategies. Unfortunately this data is not generally free and would require a fair bit of work to get Oracle working.
It would be interesting to have an open source direct indexing system with plugins for different brokerages. A CLI tool that provides recommended trades and an option to accept or cancel would be perfect.
But then this analogy doesn’t hold… Has there ever been a startup in history where it’s break even everywhere? Investors don’t get their money back, customers (hopefully!) are made whole, and the founders and employees are now out of a job and _perhaps_ didn’t get their final pay check depending on how bad it is.
Yeah, you're missing my point. Given most startups fail, the question isn't "at the end of the day do you still get a paycheck for your failed startup", it's "how much of your life did you burn on that failed startup".
Since we're talking about a specific startup whose founders are participants here, I think we can do without the ghoulish stuff about them not making payroll or whatever; "winding down" implies they're failing in an orderly way.
I got your point (after the Free Parking clarification).
(To be clear, my comment wasn’t on Double specifically. No clue how strapped for cash they are while winding down. They seem to be doing right be people (paying fees and such), and that’s great.)
Finally, maybe it’s unintentional, but you seem to be implying that “it’s not worth burning your life on a failed startup,” which seems like a bad take.
If you spend 5 years on a startup that shows promise but ultimately doesn’t pan out, is that always worse than spending 6 months on a startup that fails fast? First, this would be wildly hard to prove, and second, there are obviously counter examples.
In that 5 years, I’ve identified a shit ton of stuff that works, doesn’t work, and made relationships along the way. I’d bet money on the founder of the 5 yr startup being successful over the 6 months founder.
You do that stuff in every job. Meanwhile, people with careers in startups do multiple startups. You get a finite number of them. You are literally better off working at somebody else's successful startup than you are spending 5 years on a doomed startup. The most valuable asset you have is time.
I really don't think I need to cite a study that 5 years of time is a lot to give up on a company that goes nowhere. It happens! It's normal! And very painful. Which is why getting to a decisive resolution in 6 months is often a gift.
You will make more money, and probably work on equivalently interesting problems, working any other job than at a startup you cofounded that limps for years before winding down. It's really hard to see what upside you're finding here. I don't say this often, but this isn't a place I see leaving at "reasonable disagreement".
> I really don't think I need to cite a study that 5 years of time is a lot to give up on a company that goes nowhere.
I think your problem is that you have one definition of success for a startup and that’s to become a unicorn.
> working any other job than at a startup you cofounded that limps for years before winding down.
Not everyone starts a startup to become a billionaire, and not everyone seeks to _make more money_.
But aside from that, the way you’re going to _make more money_ in another job is by working at a large company that can pay you more money. That large company has lots of people and lots of jobs that are specialized… because? Lots of people are there to do them. If I work on a team in a large company, I very likely have a narrow focus and I am not “solving interesting problems” on average.
You keep saying stuff like this, but I'm asking a simple question. How have you personally benefited from spending years at a startup that failed, so much so that you were better off at the doomed startup than in any other place in the industry? I'm looking for some kind of relatable experience.
I’ve worked at a few “unsuccessful,” but long term startups. Bought, but kind of for parts. The 2 yo startup I closed down was the most enjoyable and most rewarding from a learning perspective. The longer term, but unsuccessful, ones were also enjoyable and great learning experiences.
The two larger company experiences had me much more pigeonholed, even as a principal engineer / architect, and exposed me to far less of the important aspects of running a company or product, generally, but I made money. Often it was not enjoyable, and certainly leadership did not always enjoy my questioning of their actions and decisions.
During what "era" did these startups wind down? Pre- or post- first Internet bubble? How old were you at the time? Maybe a failed startup is a great experience when you're 23, and not so much when you're 38?
(I've worked in startups my entire career, and been a founder of five, one serious acquisition, two going concerns, and two failures, one fast one slow; the long failure, circa 2001, was not a valuable experience in any way.)
I started working at startups in 2009… in my late 20s.
If you’re not already financially stable at 60 and hoping to win the startup lottery to retire… well…
So yeah, obviously age plays some role here.
I didn’t go work at startups because I thought I was gonna get rich. I worked at startups because I expected to learn waaaaay more than at Big Co, and have wayyyy more fun while doing it. This panned out.
Money has never been my motivation in computing—interesting problems are.
It wasn’t until I turned 42 that I realized I did it all backwards, though. I should have started by working at Big Co and saved/invested every penny to seek early retirement, and then do whatever I wanted with no financial pressure, later.
I could have stayed at a Big Co for 4+ more years and racked up more RSUs, and bonuses, but my job became boring, and I started to resent it. What can I say?
Curious about the 2001 failure… but am guessing the amount of free money in the dotcom boom led to you trying to build something not well thought out or with ang real hope for viability. (not throwing shade, but lots of mud was thrown and very little stuck)
I don't understand this "startup lottery" stuff. I've been on HN since roughly 2007 and for most of those 18 years I've been a bootstrapping evangelist. My most successful exit to date was a bootstrapped company. I'm just saying: there's no romance or great reward to working in a failing startup. If you have a clear signal that your startup is failing, you've been given a gift from the heavens: the ability to see into the future, see yourself wasting years, and then navigate around those years.
2001 was the beginning of the "nuclear winter" for startups. I think part of this is that I'm just older than you? (I have no idea how old you are, but "how did your startup fail in 2001" is an odd question).
Were you a founder at any of these startups you're talking about? If you're just talking about being an employee, that's totally different. It's often (maybe even usually) reasonable for employees to value their equity at ε. That being the case: you can absolutely choose roles based solely on base comp, how interesting the work is, and how it looks on your resume.
Finally: if you try to factor money out of entrepreneurship discussions, you get to very funny places. We're in one of them now! It is strictly better for a startup to fail at 6 months in than it is for it to fail at 5 years in.
> I don't understand this "startup lottery" stuff.
What’s not to understand? There’s a whole class of people that start a startup hoping for it to be the next big thing and they get their golden ticket to billionairedom. There’s also a whole class of non-founders that will join early stage companies at their riskiest stage hoping for the lottery payout. I’m not sure what there is to misunderstand about this?
> I'm just saying: there's no romance or great reward to working in a failing startup. If you have a clear signal that your startup is failing, you've been given a gift from the heavens: the ability to see into the future, see yourself wasting years, and then navigate around those years.
I don’t think I’ve said anything that negates this statement? If after 6 months you have absolutely no customers and you’ve tried everything, then clearly you don’t stick around for 5 years trying. I’ve never said that. This is way different than “we’ve found some success and after 5 years, hired people, just never figured out how to take it to the next level and so we’re shutting down.”
But you can’t make a general statement that there’s no “romance or reward” because people have a whole lot of reasons for doing what they’re doing. That’s been my big disagreement here. As always the answer is “it depends.” You’ve not cited some study that says differently… so… shrug.
> (I have no idea how old you are, but "how did your startup fail in 2001" is an odd question).
I _guess_ I asked that question, but not really. I asked what your startup was, and made an assumption that the amount of “free money” available may have doomed it from the start. Maybe VCs bet on something that obviously (in retrospect) couldn’t succeed … like Pets.com, or the wide variety of “we’ll just burn all this cash paying people to drive a pack of gum from the upper east side to wall st… in the middle of rush hour… and hope we figure out a way to scale it later!!!!!” startups that existed.
> Were you a founder …
I’m not sure why this actually matters? There are plenty of founders who start a company… almost accidentally… because a project they built became bigger than side-project, who aren’t necessarily motivated by a potential unicorn status. The people who benefit most from “try something for 3mo and hope it fails fast!!!” are (I’m going to make a guess because I doubt there’s a citable study out there!) the people most likely looking to win the startup lottery. In that case, the more chances to “scratch off the ticket” the better.
But, I still maintain that it’d be better for those people to have the experience of being a longer term founder for 5 years to gain more experience, see and adapt to more problems… etc, than to start and kill, start and kill, over and over again. In a fast cycles, you can test one or two hypotheses against a very targetted customer base. But you could totally be looking for a great white shark in a lake, which makes absolutely no sense.
> Finally: if you try to factor money out of entrepreneurship discussions, you get to very funny places.
Funny, when I brought money into it before:
> Yeah, you're missing my point. Given most startups fail, the question isn't "at the end of the day do you still get a paycheck for your failed startup", it's "how much of your life did you burn on that failed startup".
This will be my last reply. We don’t agree, and that’s fine. :)
When you work with Apex (or really any other technology bridge to the traditional financial world, Q2's Helix is common for traditional banking, Apex Clearing is common for stock trading, etc) they require you think about things like this during your implementation. Its not quite as turnkey as something like opening a Stripe account; your implementation will need to demonstrably pass a playbook of tests before your partner will allow you to play in real financial transactions - and those tests typically include things like account closure or program shutdown.
Basically, the traditional financial services partners who give startups access to these legacy networks know their clients are startups who might not fully understand the space or might want to cut corners. They're good at making sure they're protected against their clients' behavior, and in most cases legally the end users are actually the customer of the financial services company, the startup will be considered a "deposit broker" instead of a "bank" etc. Its been longer since I've touched the stock broker side so I'm fuzzy on the specific terminology but its similar there.
A few questions that you might be able to help with (also happy to jump on a call to discuss, you can find my details in my profile):
- Transferring - will partial shares be liquidated (since both are part of Apex)?
- Can I see my portfolio through Apex Clearing independently (something that Double provided)?
- If I want to transfer my assets in in kind, and invest them in the Total US index, how do I ensure that nothing is sold as part of the rebalance during that transfer?
Can someone double-check my understanding of this?
Double is a portfolio management service that purchases shares that match the blend of a specific index for its customers. So instead of owning an index, you own the shares.
Double is winding down because they are not profitable. They are instructing their customers to either fully liquidate their holdings, or perform an ACATS transfer, which generally requires that any fractional holdings be liquidated first. However, the business model will necessarily require holding fractional shares because of the way indexes work.
So my question is, this is going to cause many of their customers to get dinged by short-term capital gains tax, right? That stinks.
Sorry to hear. I know you are probably down right now but is there any chance you would be willing to share some details on why things didn't work out? I'd like to learn and I'm sure lots of others on HN would benifit from your experience.
That also tracks why the README would be pointing to a 404 file, since the other commit that touched that file was to change its name, and also not update the README
Frec is an option for customers looking for a new low cost direct indexing provider! All assets remain securely held with Apex + Frec has grown to over $300m in assets with continued rapid growth.
Saw some posts asking why and for postmortems. I am not the founder, not in the retail industry but adjacent space to understand enough of why.
1) there are already competitors in this space that have been there for a decade or longer. Higher fees but not significantly so to counter the risk of doing business with a startup.
2) If you use their calculator is a bit disingenuous, starting balance of $1mm. Those clients exist but that’s the minority. If you bring that number down to a more typical average or median for someone with a 30 year horizon you see that the difference is not material compared to their default assumptions.
3) if you are a high net worth individual where tax low harvesting matters, the product does not feel that compelling.
Indeed, this is ideally suited as a small team in a brokerage or other asset management firm, marketed to existing high net worth customer relationships either as part of the asset under management fee or some cut of tax savings realized. It is not a sustainable standalone business.
This is the first I'd heard of something like this.
What other services are in the area of "Cheap automated portfolio management" that HN might recommend?
If you're investing in a taxable account, Target Date funds might be less preferable than holding the underlying funds (or similar funds if the underlying funds aren't available). Vanguard recently made changes to their target date funds that resulted in a lot of redemptions and extra costs to those holding these funds in taxable accounts.
Every-time I look at those they seem extremely risk adverse for such a long term investment. Sometimes with 50%+ bonds/notes. If you are looking to retire in 5 years sure but I'm guessing most HN are hoping for more than 4% returns on their retirement account 25+ years from now.
Vanguard Target Date 2045 (suitable for someone born in 1980, looking to retire in about 20 years) is, as of September 2024, at 50.3% Total US Market Institutional Shares, 33.2% Total International Investor Shares, 10.9% Total US Bond Investor, and 4.8% Total International Bond Institutional.
Fidelity's 2045 fund is even higher in the market, they are 10% bonds and 95% equity (they appear to be levered by 5%).
ITs been a while. I'm referring to the ones that have been presented for choices in various 401k's over the years. Those ones always seem quite terrible. I basically just ignore them now. There may be others that I've not seen outside the the restrictions of 401k's. Maybe I should take a another look and update my knowledge on them.
401(k)'s almost always have terrible choices for funds, because of the principal-agent problem. The agent of the company makes the choices on what funds are available but it is the principals as employees who pay the fees. In half-a-dozen career stops over 20 years, I've seen good fund choices in the 401(k) maybe twice? Which is why whenever I leave a job I always roll it over into my trusty Vanguard IRA as quickly as I can, and get to have my choices for funds.
(401(k)'s and IRA's are treated differently in a divorce, which fortunately has not been a problem for me, otherwise having a IRA is so much better than a 401(k). If it wasn't for the employer matching funds I would never do a 401(k) and just do a IRA.)
It seems I only looked at 401k options for target-date type which are apparently universally terrible. I never looked at private ones because of this bias.
It seems I only looked at 401k options for target-date type which are apparently universally terrible. I never looked at private ones because of this bias.
I use Wealthfront and highly recommend it. In addition to a normal managed portfolio they've also recently offered a direct investment option tracking SPY with a management fee equivalent to the ETF's express ratio. Great for scraping a couple dollars off your tax liabilities with loss harvesting. Can share a referral that (iirc) reduces management fees for a couple months if you're interested.
I have money in a Fidelity retirement fund and have invested additional money into Vanguard funds. Additionally, Schwab Intelligent Portfolios have treated me well. That portfolio has total unrealized gains of +37.27%. I have read lots of anecdotal stories of people taking losses using it, though, so YMMV.
Frec team here. We're in a very different position and confident we're here for the long haul. We manage over $300 million in assets, have grown 5x year-over-year, and are on a clear path to profitability without needing additional capital. The business is built on sustainable AUM-based fees with strong unit economics.
Good to see that they at least gave some instructions on moving the money (it was the absolute minimum, to be fair). No hate to them - some business don't work out.
That said, I personally don't understand keeping my assets that I hope to retire off of someday at a startup style company. Everyone's gotta start somewhere, but financial services like this are probably a hard sell for a lot of people.
On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.
I think the biggest problem with this startup was that the product they offered was so marginally different from Vanguard ETFs unless you have a super specific and unique investment thesis.
> On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.
Oh for sure - I'm sure they did. I just still wouldn't want to bother with a turbulent company and having to migrate assets from working with a company that has less of a reputation.
I worked for a wealth management company. The money was held at the financial institution's accounts. We just calculated when to re-balance the portfolios and executed the trades on the customer's behalf. Not sure if that's how this works.
Yeah that's what I was thinking. There is 0 benefit to such a product unless the company can guarantee they will be in business for 10-20 years. Otherwise moving my money us just a big time wasting headache if the company shuts down before any benefit is realized. (<1 year... ouch to the users).
It seems like a good idea. It is a margin profits play though. I know that in dealing with big money there is a lot of foot guns as far as costs. If you mess up even one thing it can cost you tens or hundreds of thousands in unexpected expenses. No offense to the founders but I'm guessing that they didn't have someone with 20+ years finance experience to make absolutely sure they never stepped on those mistakes. You'd have to operate flawlessly with only margin profits.
Hopefully the founders will give us some more context on what happened.
The attraction is easy. Internet company means lower overhead. I'm not paying to go into a lavish office with people in it like with Fidelity, and the money just needs to sit there generating modest returns. It's all numbers on a screen anyway.
Internet company means a VC is setting a bunch of money on fire and providing you the product at a loss to them - which is your gain. They hope they can buy enough eyeballs to get their exit and the users can move on to the next revolutionary idea to giveaway a bunch of cash.
I'm curious what led to the lack of demand for this—was it the friction involved in moving brokerage accounts, or do ETFs already meet the needs of most retail investors? A post-mortem on the limited traction would be quite insightful.
There is financial friction involved.
As I understand it, this product involved using fractional shares to try to adhere to an index, while using tax loss harvesting to optimize for tax.
Fractional shares cannot be transferred between brokerages and are generally sold when transferring brokerages. If you owned on average, half a share of the largest 250 US companies, you'd may need to sell about $30,000 in shares, which could result in an unexpected tax bill.
There are large brokerages and companies offering similar direct indexing products, generally at a higher cost. However, I expect those products are less likely to be shut down.
This was precisely their business model.
The problem was easy/trivial competition from larger brokerage firms. The core IP was all about tax optimization. The same customers who would employee direct indexing already have dedicated accounting services for exactly that purpose and the additional brokerage fees are either sunk costs or de minimis.
To use an analogy, the folks who are hedge fund customers don't care about the lack of liquidity or higher management fees. You can't capture that market on margin, volume, or any kind of flow ancillaries.
it wasn't obvious to me how Double is significantly better than an ETF. It'd have to be MUCH better (e.g. at least 50bps to 100bps) to warrant taking a bet on an unproven company.
They had cute names for the indexes ("Founder Mode")... but do those actually make me better returns than an ETF? Probably not.
this[0] also scared me away
0 - https://news.ycombinator.com/item?id=42377934
Damn, not even a year?!
Why on earth would you trust your money to a start up like this?
Nobody with any real money and smarts is going to do that.
Now if this was somehow a crypto play, I’m sure they’d be rolling in it.
Yeah this would be interesting. Also the founders should consider open sourcing some/all of the code. It could be an awesome platform for the open finance community.
Reading the post, it sounds like they are
> If you are technical, we are open sourcing our optimization engine, Oracle, which does our daily Tax Loss Harvesting and rebalancing. You may be able to use this to set up your own trading bot on Alpaca. You will need to contact Alpaca support to request an ACATS of your current assets held at Double.
Also note:
> Note that ETF Holding data, corporate action data, and possibly factor model data would be required to reproduce Double’s Direct Index strategies. Unfortunately this data is not generally free and would require a fair bit of work to get Oracle working.
It would be interesting to have an open source direct indexing system with plugins for different brokerages. A CLI tool that provides recommended trades and an option to accept or cancel would be perfect.
Previously (launch): https://news.ycombinator.com/item?id=42377018
Only 6 months ago? Oof.
Most startups fail, and you should be so lucky as to have one fail quickly and decisively. It's like landing on Free Parking in Monopoly.
> It's like landing on Free Parking in Monopoly.
I have no clue what you’re trying to convey with this analogy? “Free Parking” is different in virtually every household.
I was not thinking about random house rules in the analogy.
Standard rules free parking is a no-op; you get nothing and pay nothing. It just prolongs the inevitable.
Yes, that's what I was referring to.
But then this analogy doesn’t hold… Has there ever been a startup in history where it’s break even everywhere? Investors don’t get their money back, customers (hopefully!) are made whole, and the founders and employees are now out of a job and _perhaps_ didn’t get their final pay check depending on how bad it is.
Yeah, you're missing my point. Given most startups fail, the question isn't "at the end of the day do you still get a paycheck for your failed startup", it's "how much of your life did you burn on that failed startup".
Since we're talking about a specific startup whose founders are participants here, I think we can do without the ghoulish stuff about them not making payroll or whatever; "winding down" implies they're failing in an orderly way.
I got your point (after the Free Parking clarification).
(To be clear, my comment wasn’t on Double specifically. No clue how strapped for cash they are while winding down. They seem to be doing right be people (paying fees and such), and that’s great.)
Finally, maybe it’s unintentional, but you seem to be implying that “it’s not worth burning your life on a failed startup,” which seems like a bad take.
If you spend 5 years on a startup that shows promise but ultimately doesn’t pan out, is that always worse than spending 6 months on a startup that fails fast? First, this would be wildly hard to prove, and second, there are obviously counter examples.
Yes. If you spend 5 years on a promising startup that fails, that is strictly worse than spending 6 months on a promising startup that fails.
LOL. Completely disagree.
In that 5 years, I’ve identified a shit ton of stuff that works, doesn’t work, and made relationships along the way. I’d bet money on the founder of the 5 yr startup being successful over the 6 months founder.
You do that stuff in every job. Meanwhile, people with careers in startups do multiple startups. You get a finite number of them. You are literally better off working at somebody else's successful startup than you are spending 5 years on a doomed startup. The most valuable asset you have is time.
Both of us are arguing based on feelings and intuition, so this is going no where. If you can cite a study then so be it.
I think what we can both agree on is that it is pretty obvious that prior startup experience is key to the next startup being successful.
I really don't think I need to cite a study that 5 years of time is a lot to give up on a company that goes nowhere. It happens! It's normal! And very painful. Which is why getting to a decisive resolution in 6 months is often a gift.
You will make more money, and probably work on equivalently interesting problems, working any other job than at a startup you cofounded that limps for years before winding down. It's really hard to see what upside you're finding here. I don't say this often, but this isn't a place I see leaving at "reasonable disagreement".
> I really don't think I need to cite a study that 5 years of time is a lot to give up on a company that goes nowhere.
I think your problem is that you have one definition of success for a startup and that’s to become a unicorn.
> working any other job than at a startup you cofounded that limps for years before winding down.
Not everyone starts a startup to become a billionaire, and not everyone seeks to _make more money_.
But aside from that, the way you’re going to _make more money_ in another job is by working at a large company that can pay you more money. That large company has lots of people and lots of jobs that are specialized… because? Lots of people are there to do them. If I work on a team in a large company, I very likely have a narrow focus and I am not “solving interesting problems” on average.
You keep saying stuff like this, but I'm asking a simple question. How have you personally benefited from spending years at a startup that failed, so much so that you were better off at the doomed startup than in any other place in the industry? I'm looking for some kind of relatable experience.
You haven’t asked a question before now…
I’ve worked at a few “unsuccessful,” but long term startups. Bought, but kind of for parts. The 2 yo startup I closed down was the most enjoyable and most rewarding from a learning perspective. The longer term, but unsuccessful, ones were also enjoyable and great learning experiences.
The two larger company experiences had me much more pigeonholed, even as a principal engineer / architect, and exposed me to far less of the important aspects of running a company or product, generally, but I made money. Often it was not enjoyable, and certainly leadership did not always enjoy my questioning of their actions and decisions.
During what "era" did these startups wind down? Pre- or post- first Internet bubble? How old were you at the time? Maybe a failed startup is a great experience when you're 23, and not so much when you're 38?
(I've worked in startups my entire career, and been a founder of five, one serious acquisition, two going concerns, and two failures, one fast one slow; the long failure, circa 2001, was not a valuable experience in any way.)
I started working at startups in 2009… in my late 20s.
If you’re not already financially stable at 60 and hoping to win the startup lottery to retire… well…
So yeah, obviously age plays some role here.
I didn’t go work at startups because I thought I was gonna get rich. I worked at startups because I expected to learn waaaaay more than at Big Co, and have wayyyy more fun while doing it. This panned out.
Money has never been my motivation in computing—interesting problems are.
It wasn’t until I turned 42 that I realized I did it all backwards, though. I should have started by working at Big Co and saved/invested every penny to seek early retirement, and then do whatever I wanted with no financial pressure, later.
I could have stayed at a Big Co for 4+ more years and racked up more RSUs, and bonuses, but my job became boring, and I started to resent it. What can I say?
Curious about the 2001 failure… but am guessing the amount of free money in the dotcom boom led to you trying to build something not well thought out or with ang real hope for viability. (not throwing shade, but lots of mud was thrown and very little stuck)
It happens! It’s OK!
I don't understand this "startup lottery" stuff. I've been on HN since roughly 2007 and for most of those 18 years I've been a bootstrapping evangelist. My most successful exit to date was a bootstrapped company. I'm just saying: there's no romance or great reward to working in a failing startup. If you have a clear signal that your startup is failing, you've been given a gift from the heavens: the ability to see into the future, see yourself wasting years, and then navigate around those years.
2001 was the beginning of the "nuclear winter" for startups. I think part of this is that I'm just older than you? (I have no idea how old you are, but "how did your startup fail in 2001" is an odd question).
Were you a founder at any of these startups you're talking about? If you're just talking about being an employee, that's totally different. It's often (maybe even usually) reasonable for employees to value their equity at ε. That being the case: you can absolutely choose roles based solely on base comp, how interesting the work is, and how it looks on your resume.
Finally: if you try to factor money out of entrepreneurship discussions, you get to very funny places. We're in one of them now! It is strictly better for a startup to fail at 6 months in than it is for it to fail at 5 years in.
> I don't understand this "startup lottery" stuff.
What’s not to understand? There’s a whole class of people that start a startup hoping for it to be the next big thing and they get their golden ticket to billionairedom. There’s also a whole class of non-founders that will join early stage companies at their riskiest stage hoping for the lottery payout. I’m not sure what there is to misunderstand about this?
> I'm just saying: there's no romance or great reward to working in a failing startup. If you have a clear signal that your startup is failing, you've been given a gift from the heavens: the ability to see into the future, see yourself wasting years, and then navigate around those years.
I don’t think I’ve said anything that negates this statement? If after 6 months you have absolutely no customers and you’ve tried everything, then clearly you don’t stick around for 5 years trying. I’ve never said that. This is way different than “we’ve found some success and after 5 years, hired people, just never figured out how to take it to the next level and so we’re shutting down.”
But you can’t make a general statement that there’s no “romance or reward” because people have a whole lot of reasons for doing what they’re doing. That’s been my big disagreement here. As always the answer is “it depends.” You’ve not cited some study that says differently… so… shrug.
> (I have no idea how old you are, but "how did your startup fail in 2001" is an odd question).
I _guess_ I asked that question, but not really. I asked what your startup was, and made an assumption that the amount of “free money” available may have doomed it from the start. Maybe VCs bet on something that obviously (in retrospect) couldn’t succeed … like Pets.com, or the wide variety of “we’ll just burn all this cash paying people to drive a pack of gum from the upper east side to wall st… in the middle of rush hour… and hope we figure out a way to scale it later!!!!!” startups that existed.
> Were you a founder …
I’m not sure why this actually matters? There are plenty of founders who start a company… almost accidentally… because a project they built became bigger than side-project, who aren’t necessarily motivated by a potential unicorn status. The people who benefit most from “try something for 3mo and hope it fails fast!!!” are (I’m going to make a guess because I doubt there’s a citable study out there!) the people most likely looking to win the startup lottery. In that case, the more chances to “scratch off the ticket” the better.
But, I still maintain that it’d be better for those people to have the experience of being a longer term founder for 5 years to gain more experience, see and adapt to more problems… etc, than to start and kill, start and kill, over and over again. In a fast cycles, you can test one or two hypotheses against a very targetted customer base. But you could totally be looking for a great white shark in a lake, which makes absolutely no sense.
> Finally: if you try to factor money out of entrepreneurship discussions, you get to very funny places.
Funny, when I brought money into it before:
> Yeah, you're missing my point. Given most startups fail, the question isn't "at the end of the day do you still get a paycheck for your failed startup", it's "how much of your life did you burn on that failed startup".
This will be my last reply. We don’t agree, and that’s fine. :)
Yeah, I think I understand the perspective mismatch now. Thanks!
I like that they had already written their "destructor function": https://news.ycombinator.com/item?id=42379135
When you work with Apex (or really any other technology bridge to the traditional financial world, Q2's Helix is common for traditional banking, Apex Clearing is common for stock trading, etc) they require you think about things like this during your implementation. Its not quite as turnkey as something like opening a Stripe account; your implementation will need to demonstrably pass a playbook of tests before your partner will allow you to play in real financial transactions - and those tests typically include things like account closure or program shutdown.
Basically, the traditional financial services partners who give startups access to these legacy networks know their clients are startups who might not fully understand the space or might want to cut corners. They're good at making sure they're protected against their clients' behavior, and in most cases legally the end users are actually the customer of the financial services company, the startup will be considered a "deposit broker" instead of a "bank" etc. Its been longer since I've touched the stock broker side so I'm fuzzy on the specific terminology but its similar there.
You've told me enough to let me know I don't wanna do this.
Traditional finance is secure for a reason! Good they have strong requirements.
> You can initiate a cash withdrawal or transfer your assets to another brokerage. We ask that you do this by July 31, 2025.
Seems to still require manual work, though? With less than 30 days to do so...
Welp, looks like I am moving to Frec. Hoping the Apex -> Apex transfer means I can transfer partial shares.
Note for other folks in this situation: you should be able to find a referral link and get a $250 bonus for transferring over.
Frec is here to help! And going to offer a $250 bonus to clients moving over. Double will be sharing the link soon.
A few questions that you might be able to help with (also happy to jump on a call to discuss, you can find my details in my profile):
- Transferring - will partial shares be liquidated (since both are part of Apex)?
- Can I see my portfolio through Apex Clearing independently (something that Double provided)?
- If I want to transfer my assets in in kind, and invest them in the Total US index, how do I ensure that nothing is sold as part of the rebalance during that transfer?
Absolutely.
1. We also custody with Apex so you'll be able to transfer easily between Frec <> Double and continue to see your assets held independently.
2. We can definitely setup a call to review the individual positions and the evaluate risk of positions being sold to rebalance.
You can book a demo here: https://calendly.com/frecdemo/frec-demo or feel free to email me amberly@frec.com
Thank you. Do you know the answer to the partial shares question?
We are running a test to know for sure but don't think it will be an issue since we both use Apex. I will circle back here upon confirmation.
Thank you!
Circling back - Apex confirmed fractional shares will transfer over, not be sold off.
Can someone double-check my understanding of this?
Double is a portfolio management service that purchases shares that match the blend of a specific index for its customers. So instead of owning an index, you own the shares.
Double is winding down because they are not profitable. They are instructing their customers to either fully liquidate their holdings, or perform an ACATS transfer, which generally requires that any fractional holdings be liquidated first. However, the business model will necessarily require holding fractional shares because of the way indexes work.
So my question is, this is going to cause many of their customers to get dinged by short-term capital gains tax, right? That stinks.
Sorry to hear. I know you are probably down right now but is there any chance you would be willing to share some details on why things didn't work out? I'd like to learn and I'm sure lots of others on HN would benifit from your experience.
Re: License for https://github.com/doublehq/oracle
The README.md says it's MIT licensed on the very last line (https://github.com/doublehq/oracle/blob/b69ef4c940217a2fbf52...).
However, LICENCE file (not LICENSE.md file, which doesn't exist, https://github.com/doublehq/oracle/blob/b69ef4c940217a2fbf52...) says it's GPL 3.0 license.
Which one is it?
Seems to be a failure to update the README, since https://github.com/doublehq/oracle/commit/7923eee62bccb565c8... was an explicit change away from MIT to GPLv3
That also tracks why the README would be pointing to a 404 file, since the other commit that touched that file was to change its name, and also not update the README
Frec is an option for customers looking for a new low cost direct indexing provider! All assets remain securely held with Apex + Frec has grown to over $300m in assets with continued rapid growth.
Would you be so kind to elaborate?
Absolutely - what details are you curious about? I am on the Frec team and happy to provide a demo.
Saw some posts asking why and for postmortems. I am not the founder, not in the retail industry but adjacent space to understand enough of why.
1) there are already competitors in this space that have been there for a decade or longer. Higher fees but not significantly so to counter the risk of doing business with a startup.
2) If you use their calculator is a bit disingenuous, starting balance of $1mm. Those clients exist but that’s the minority. If you bring that number down to a more typical average or median for someone with a 30 year horizon you see that the difference is not material compared to their default assumptions.
3) if you are a high net worth individual where tax low harvesting matters, the product does not feel that compelling.
Indeed, this is ideally suited as a small team in a brokerage or other asset management firm, marketed to existing high net worth customer relationships either as part of the asset under management fee or some cut of tax savings realized. It is not a sustainable standalone business.
This is the first I'd heard of something like this. What other services are in the area of "Cheap automated portfolio management" that HN might recommend?
The Target Date Retirement fund from your preferred low cost fund provider (i.e. Vanguard, Fidelity, Schwab, iShares, etc) is an excellent choice.
If you're investing in a taxable account, Target Date funds might be less preferable than holding the underlying funds (or similar funds if the underlying funds aren't available). Vanguard recently made changes to their target date funds that resulted in a lot of redemptions and extra costs to those holding these funds in taxable accounts.
>Target Date Retirement fund
Every-time I look at those they seem extremely risk adverse for such a long term investment. Sometimes with 50%+ bonds/notes. If you are looking to retire in 5 years sure but I'm guessing most HN are hoping for more than 4% returns on their retirement account 25+ years from now.
Vanguard Target Date 2045 (suitable for someone born in 1980, looking to retire in about 20 years) is, as of September 2024, at 50.3% Total US Market Institutional Shares, 33.2% Total International Investor Shares, 10.9% Total US Bond Investor, and 4.8% Total International Bond Institutional.
Fidelity's 2045 fund is even higher in the market, they are 10% bonds and 95% equity (they appear to be levered by 5%).
ITs been a while. I'm referring to the ones that have been presented for choices in various 401k's over the years. Those ones always seem quite terrible. I basically just ignore them now. There may be others that I've not seen outside the the restrictions of 401k's. Maybe I should take a another look and update my knowledge on them.
401(k)'s almost always have terrible choices for funds, because of the principal-agent problem. The agent of the company makes the choices on what funds are available but it is the principals as employees who pay the fees. In half-a-dozen career stops over 20 years, I've seen good fund choices in the 401(k) maybe twice? Which is why whenever I leave a job I always roll it over into my trusty Vanguard IRA as quickly as I can, and get to have my choices for funds.
(401(k)'s and IRA's are treated differently in a divorce, which fortunately has not been a problem for me, otherwise having a IRA is so much better than a 401(k). If it wasn't for the employer matching funds I would never do a 401(k) and just do a IRA.)
Cool so I'm not mistaken but I overgeneralized my thoughts that there are no good target date funds. Just the 401k ones suck, so I learned something.
>I always roll it over into my trusty Vanguard IRA
Same.
Are you looking at ones with retirement dates well into the future? The one Vanguard suggests for people born in 1990 (VFFVX) is 90% equities.
It seems I only looked at 401k options for target-date type which are apparently universally terrible. I never looked at private ones because of this bias.
The target date fund glide path: https://institutional.vanguard.com/investment/strategies/tdf...
tl;dr at age 40 (90/10) it starts increasing bonds until age 60 (60/40); age 65 (50/50), and then 72 (30/70)
It seems I only looked at 401k options for target-date type which are apparently universally terrible. I never looked at private ones because of this bias.
I use Wealthfront and highly recommend it. In addition to a normal managed portfolio they've also recently offered a direct investment option tracking SPY with a management fee equivalent to the ETF's express ratio. Great for scraping a couple dollars off your tax liabilities with loss harvesting. Can share a referral that (iirc) reduces management fees for a couple months if you're interested.
I have money in a Fidelity retirement fund and have invested additional money into Vanguard funds. Additionally, Schwab Intelligent Portfolios have treated me well. That portfolio has total unrealized gains of +37.27%. I have read lots of anecdotal stories of people taking losses using it, though, so YMMV.
I've been pretty happy with Betterment.
generally ETFs as a whole and if you want direct indexing like they offered, fidelity has something similar: https://www.fidelity.com/direct-investing/overview
M1 Finance is quite like this.
vanguard life strategy funds
I'm a Frec user and have never heard of Double before. Is this likely to happen to them as well?
Frec team here. We're in a very different position and confident we're here for the long haul. We manage over $300 million in assets, have grown 5x year-over-year, and are on a clear path to profitability without needing additional capital. The business is built on sustainable AUM-based fees with strong unit economics.
Why gave up so soon? I remembered reading this on HN not too long ago.
SEC is a complete joke at this point. Zero due diligence being done on companies like this, and as always, the consumer is left footing the bill.