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.
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.
If you want to take on risk there are much better risk return ratios for your retirement money.
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.
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.
> 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.
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.
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.
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
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.
Fidelity's 2045 fund is even higher in the market, they are 10% bonds and 95% equity (they appear to be levered by 5%).
(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.)
>I always roll it over into my trusty Vanguard IRA
Same.
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)
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?
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
Note for other folks in this situation: you should be able to find a referral link and get a $250 bonus for transferring over.
- 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?
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
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.
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.
bckmn•7mo ago
3D30497420•7mo ago
tptacek•7mo ago
apgwoz•7mo ago
I have no clue what you’re trying to convey with this analogy? “Free Parking” is different in virtually every household.
tptacek•7mo ago
toast0•7mo ago
tptacek•7mo ago
apgwoz•7mo ago
tptacek•7mo ago
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.
apgwoz•7mo ago
(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.
tptacek•7mo ago
apgwoz•7mo ago
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.
tptacek•7mo ago
apgwoz•7mo ago
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.
tptacek•7mo ago
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".
apgwoz•7mo ago
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.
tptacek•7mo ago
apgwoz•7mo ago
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.
tptacek•7mo ago
(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.)
apgwoz•7mo ago
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!
tptacek•7mo ago
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.
apgwoz•7mo ago
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. :)
tptacek•7mo ago
axus•7mo ago
ezekg•7mo ago
Seems to still require manual work, though? With less than 30 days to do so...
sethhochberg•7mo ago
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.
NetOpWibby•7mo ago
Traditional finance is secure for a reason! Good they have strong requirements.