tfehring

Looks like it was removed on July 29 when rolling forward from Q2 to Q3.

Live site: https://www.atlantafed.org/cqer/research/gdpnow

Latest archived version at the time of this writing: https://web.archive.org/web/20220801040302/https://www.atlan...

Latest archived version with the data in question: https://web.archive.org/web/20220729004224/https://www.atlan...

Founders generally do give themselves options instead of shares for tax purposes. The reason investors get shares directly is that they’re buying them, not earning them as income. There are plenty of ways to screw over unsophisticated minority shareholders in a funding round or acquisition even if they have the same class of ownership as the founders. The main disadvantage of options for employees is that they have to pay to exercise them, but the company can trivially make this a non-issue by setting the exercise period to 10 years.

For private unicorns I think the answer is no, I've seen plenty of good people join companies that are perceived to be likely to IPO soon. There's plenty of shady stuff that can still happen in late-stage startups, but I think the perception (which is probably somewhat but not completely accurate) is that at that point the equity is enough of a known quantity to be somewhat de-risked.

For earlier stage startups...yeah, I dunno. To be clear, I think the illiquidity and vesting period and all of that are basically fine, well-understood risks, and in principle startups can offer enough equity to compensate "true believers" for those risks. What gets me is the really shady unforeseeable stuff, like converting part of the acquisition price to retention bonuses avoid paying out ex-employees for their vested equity. Between that unquantifiable risk and the inherent risk and illiquidity of early startup equity, I'd personally discount the 409a valuation by something like a factor of 5 when evaluating a job offer from an early-stage startup.

I don't see a ton of people leaving FAANG or similar companies for early-stage startups, but obviously there are lots of engineers outside of FAANG companies, and I'm sure it helps that valuations are rich enough (or were until recently) to compete with non-tech companies on cash comp.

The issue is the principal-agent conflict that cash-out opportunities create. The executives have a fiduciary duty to shareholders, including their employees. Cashing out not only reduces the alignment of incentives between executives and shareholders, it also frequently causes executives to accept funding deals that are suboptimal for other shareholders. E.g., they may accept funding at a lower valuation or with otherwise less favorable terms in exchange for a partial cash out.

Of course, you're correct in saying that everything is a negotiation. Rank-and-file employees should have accounted for the risk that they'd get screwed over by the founders and required more cash or equity to compensate for that risk. But I worry about a future in which the best talent refuses to work at private startups because the risk of getting screwed renders employee equity next-to-worthless. Arguably we're already there.

The fastest-growing (and largest) category of that debt was mortgage debt, which is probably a positive economic indicator if anything, though note that that's based on Q1 data. Household debt servicing costs as a percent of disposable income are still lower than at any point between 1980 (the earliest data available) and the start of the pandemic. https://fred.stlouisfed.org/series/TDSP

Also keep in mind that those debt figures are in nominal USD. One positive effect of inflation is that it reduces the real cost of paying off debt.

Because for better or worse, while some other countries have purely formulaic recession criteria, the US doesn't. This can swing either way - the US never experienced two consecutive quarters of negative real GDP growth during the 2001 recession, for example. No one is denying that real GDP has shrunk for two consecutive quarters, they're just correctly pointing out that that's not how the US government defines a recession.

My impression is that layoffs have been mostly isolated to tech at this point. I do know a couple of recruiters (outside of tech) who've been laid off lately, so that could be the canary. But my impression is that all of the quantitative labor market indicators we have are still strong - likely stronger than we've ever seen in a recession.

I think it's useful to distinguish the behavior of FAANG [0] as a collective vs. any individual FAANG company. FAANG as a collective almost exclusively hires recent college grads, who work there until retirement [1]. Any individual FAANG company is constantly hiring senior devs, who work there for ~2 years before going to a different individual FAANG company for a pay raise (or for various other reasons). Some FAANGs (or at least some teams) are meat grinders, but my impression is that that's pretty far from the norm.

[0] Meaning those 5 specific companies + other large tech companies that compete with them for talent + startups comprised of people from those companies.

[1] Leaving in your thirties to become a carpenter or open a restaurant or whatever still counts as retirement if you have enough in the bank to never have to work again.

Lots of insurtechs - including Root, Lemonade, Policygenius, Next, and Vouch, just off the top of my head - have had layoffs this year. Insurtech is a really broad field, and the unit economics vary wildly depending on where in the value chain a particular company is operating, so it's hard to generalize.

I went from a life insurance company in the Midwest to a pretty desirable tech company in the last few years. This tweet [0] from patio11 (linked from the posted tweet) basically sums up my path:

> If you’re early career, try to get into a high-status engineering employer or consider a status arbitrage like e.g. a stint at one of the many startups which are known to recruiters but can’t match Google offers and so feel perpetually understaffed.

I went to a YC-funded startup. It wasn't a well-known startup by any means, and there were fewer than 30 employees when I left. I don't think anyone there was ex-FAANG, and they didn't pay at anywhere near FAANG levels. But startup employees are in the talent pool for big tech companies in a way that insurance company employees generally are not.

Anyway, when I had been at the startup for a year, I cold applied for my current position on my current employer's website, and here I am. Zero chance I would have gotten a callback if I'd applied directly from the insurance company, even though I would still have been able to do my current job effectively if I'd never gone to the startup.

[0] https://twitter.com/patio11/status/1379852979868631041

> a general description of any bonuses, commissions, or other compensation

By my reading, that just means that they have to disclose that equity compensation is available, not the amount of that equity compensation. Contrast that with "the rate of compensation (or a range thereof), including salary and hourly, piece, or day rate compensation," which actually requires a number.

It functions like a tax in that it decreases the net amount that you receive for working (more). If you lose 40 cents' worth of benefits for every additional dollar that you earn, it doesn't matter that your "real" marginal tax rate is only 25% - earning an additional pre-tax dollar only makes you 35 cents richer, just as it would if your marginal tax rate were 65%.

Also, while some of those benefits are less fungible, others have phase-outs that are functionally identical to taxes at the margin. For example, if you get subsidized health insurance through healthcare.gov, every additional dollar that you earn directly reduces your tax refund by up to ten cents, on top of your marginal tax rate.

In the US, low- and lower-middle-class income households often do face very high effective marginal tax rates - sometimes north of 60% - due to the combination of direct taxes and benefit cliffs and phase-outs. State income taxes and benefit programs can exacerbate this. Slightly dated reference (2012) but [0] is still pretty representative.

[0] https://www.cbo.gov/sites/default/files/cbofiles/attachments...

For reference, the slower speed seems to be around 1500 MB/s read and write, compared to 3000 MB/s read speeds for the M1 MBP [0]. While there are definitely applications that would benefit from the extra speed, I wouldn't call 1500 MB/s - ~2.5x the speed of the fastest SATA SSDs - a "performance issue."

[0] https://www.macrumors.com/2022/06/26/base-m2-13-inch-macbook...

The opportunity cost of 2% credit card rewards isn't a rate, but you can convert it to a rate by dividing by the time period. If you forego $200 in rewards to keep $10k for an extra 3 months, you're paying $67 or 0.67% per month for that money. If you instead forego that same $200 in rewards but get to keep your money for 6 months, you're only paying $33 or 0.33% per month. Converting those monthly rates to annualized rates of ~8% and ~4% respectively is just a matter of convenience, the math still works out the same if you keep everything on a monthly basis instead.

It’s still useful to convert to an annualized interest rate even if your “investment” period is less than a year, because annualized returns are the standard unit of measurement for investment returns.

For example, if you’re debating whether to use a 2% rewards credit card or to use BNPL and keep the difference in a savings or money market account for 90 days, the latter strategy only wins if that account is yielding more than ~8%. Or if you’re deciding whether to use BNPL to let you pay down other debt a little faster, it’s only worth it if the interest rate on that debt is above ~8%.

They’re free but there’s an opportunity cost - by using BNPL you forego 2% or whatever in credit card rewards, so you’re effectively paying ~8% annualized for a 3-month term. My understanding is that the BNPL providers are effectively paying interest out of their merchant fees (in that they securitize and sell the debt for less than face value and rely on fees to make up the difference), so as interest rates go up I’d expect the terms to become less consumer-friendly.

It’s a 30% to 40% decrease in the growth though, not the level. Meta’s headcount will be growing from ~75k to ~81k this year, instead of growing to ~85k. The scenario you’re describing would be more like if Meta’s headcount were dropping from ~75k to ~50k. That would definitely be a stark drop, but that’s not what’s happening.

> The liabilities of the insurer are typically fixed amounts regardless of investment performance or changes in mortality. If and when the insurer miscalculates they will be wiped out if their assets don't match their liabilities.

Again, for deferred annuities (and immediate-election GLWB annuities), which make up the vast majority of annuities that are sold and in force today, that's generally not true. The guaranteed credited rates on fixed and indexed annuities sold today are typically very close to zero (often 0.1% to 0.25%), and the guaranteed option budgets on modern variable annuities are often negative, which gives insurers a ton of leeway to reprice inforce policies as needed.

> Modern tontines are structured more like the Dutch/Swedish/Danish state pensions (the safest in the world) which have the ability to adjust the ongoing payments to members based upon the investment returns and mortality experience.

So pay-as-you-go? Does volume risk get passed along to the members, i.e., your payment in a given period is proportional to the amount of new money that gets put in during that period?

I'm with you on the asset issue, it would be great to have a less capital-heavy way to hedge longevity risk so that people aren't stuck funding their retirements with low-yield interest-bearing assets. But I don't think pay-as-you-go is a great workaround. Volume risk is significant even if you're a state-level actor and can make participation compulsory; I imagine it would be much worse as an individual player in the private sector.

Yes, they generally get wiped out by inflation. You can get annuities whose payments increase by a fixed amount every year, or that increase based on the performance of the S&P 500 or whatever, but AFAIK you can't get an annuity with inflation-indexed payments today. I agree that that limitation makes them pretty crappy. Inflation-indexed annuities used to be available (I think until 2010 or so), but companies broadly stopped selling them because hedging long-term inflation is expensive.

I guess I don't understand what you mean when you say "tontines have no liabilities." Mechanically, the way that a tontine works (or at least the way that they worked historically) is that I give you a fixed amount of money today, and in exchange you promise me a series of payments that are contingent on my life and the lives of the others in the risk pool. That promised series of payments is a liability, as a matter of accounting but also for all other practical purposes. Maybe you have a different structure in mind, but I don't see a way to operate a tontine-like product without a balance sheet.

Yes, there’s no reason for the expected total value of your payments to inherently be higher or lower for a tontine vs an annuity, after adjusting for time value of money.

Typically a tontine would have lower payments in early years with much faster acceleration later on compared to an annuity. That means that healthier people would generally do better with a tontine than an annuity, and less healthy people would do better with an annuity. It also means that the nominal amount of payments from a tontine is higher than those from an equivalently priced annuity, but that difference is entirely due to the tontine having more time to earn interest on your money before it pays out.

I used to price annuities (but no longer have any affiliation or financial interest in the industry) and this isn’t true IME - annuities are typically priced using best-estimate mortality rates. Outside of immediate annuities, which are a pretty small chunk of the business, mortality rates just wouldn’t be a useful lever to increase profits, since the predominant decrement is generally lapse/surrender, not death. Annuities are profitable because insurers price to high target IRRs or equivalent metrics, build in enough fees or spread to achieve that IRR, and build in enough management levers (e.g. the ability to increase those fees/spread) that they can compensate for any mispricing after the fact.

Related article and HN discussion from last year: https://news.ycombinator.com/item?id=28855330

> Honestly, I think most startups are betting that employees don’t know any better.

Yeah, that's probably accurate. For whatever reason, many seem to view equity as a "check the box" formality rather than a material part of your compensation. I mostly avoided non-unicorn startups during my last job hunt for that reason, but the few that I got around to talking numbers with offered <$50k in equity over 4 years (and in the form of options to boot); the equity comp for the role I ended up taking is around an order of magnitude higher.

Even without getting into the magnitude of the difference, and just talking about the direction, I think a lot of folks at private startups expect external candidates to value $1 of their stock (based on their last 409a) more than $1 of stock in a public company. I don't have a strong opinion on how big the liquidity premium for equity in a private tech startup should be, but I feel pretty strongly that it shouldn't be negative.

I like this syntax better than the new lambda syntax, but I think it's good that a proper lambda syntax exists now. Not all higher-order functions accept formulas (they have to wrap their function arguments with rlang::as_function or equivalent), and there are probably some obscure cases where the distinction between a formula and a function matters.

I think it's pretty unlikely that Google is getting a bad deal on its group life insurance relative to the expected value of benefits. Yeah, younger people are cross-subsidizing premiums for older coworkers - it's arguably a dumb standard, but it is a standard, and ultimately the impact isn't that significant.

The bigger issue with employer-sponsored life insurance is that it leaves you vulnerable to losing your coverage right when you actually need it. Lots of fatal medical conditions make it impossible to work in your last months or years of life. And that's if you want to spend your last months or years of life at work, which many people understandably don't.

In the best case, you can take your insurance with you when you lose or quit your job. You just have to remember to fill out the forms to port your policy out and pay the premiums within ~30 days, which sounds trivial but probably isn't exactly top-of-mind if you're dying. The insurer will be unsympathetic if it takes you 31 days instead of 30, of course. In worse cases, you might not be able to port out your policy at all if you have an immediately-life-threatening medical condition, or your premiums may be unaffordable, or there may be limits on how much you can convert.

So yeah, I generally recommend that people ignore their employer-sponsored life insurance and buy their own if they need it. All of this also goes for long-term disability insurance.

Yep, until a couple years ago you had to say “Hey Siri, play Tom Waits on Spotify,” otherwise it would always try Apple Music even if you didn’t have a subscription or the app wasn’t installed. But they changed it - probably for antitrust reasons, like you said - and now it’s pretty seamless.

Building your own housing usually means living either in the middle of nowhere or at the sprawling edge of suburbia. None of the places I would want to live have much, if any, empty developable land. So that would mean a tear down and rebuild of an existing house, which is a lot more expensive than just buying an existing house. Also, relatively modern building codes and zoning rules like setback requirements put new construction at a disadvantage compared to existing housing.

Because it’s easy to credibly promise someone their claim is worth X dollars when you (and you alone) control the creation of dollars.