Hacker News Reader

Comment by ddgddg | Hacker News Reader

much hate here; but mostly it is transparent jealousy arising from frustration about the great global money game being unfair and many educated and deserving ppl having no hope of ever making it off the bottom rung.

But jjmaxwell4 don't let any of that distract you

1. This problem (solid, simple, inexpensive) direct indexing is totally real 2. Congrats on identifying this and getting going on it 3. All your best customers are almost certainly not posting on reddit. Again don't let it distract you. This is a great idea 4. Pricing

While you don't want to price on AUM, 1$ is going nowhere fast, and as someone who is jazzed to be an early customer, I would really appreciate it if I could pay more than 1$ (along with everyone else out there) to ensure that the lights stay on and you don't feel pressure to sell to a trash retail bank who will just pepper me with lame cross-sells

View on HN

Some might say this already exists with stuff like VOO. When you're averaging 10-15bp, that should be a good deal. Concerns like you raise about keeping the lights on, change of ownership, or other's concerns about sub optimal execution are real. I'd pay $1K on $1M for the piece of mind.

same here, $1 makes me wonder how you'll stay alive.

I don't want to wonder.

Makes me wonder how me as a customer will get fucked when things change in the future. Because you know the institutions they do business with won't accept getting fucked. It usually ends up on the customer. There is no end of financial providers with examples - start ups and established. The only real difference is the big guys get bailed out.

growth at a loss and ever increasing vc funding....

think it'll be difficult for them to be around 3 years from now (in their current form)

Appreciate the kind words and feedback.

What's the value of the borrow fees they can take?

I mean, $12/yr is not a lot, but if the platform is geared for long term investing and not trading, I'd imagine that in any given month 95%+ of accounts are doing nothing but sitting static and handing over $1.

Even if there are no trading costs, 12/y gets you one modest developer salary for every 10,000 customers.

How big is the addressable market here?

Wealthfront has struggled to grow with a 0.25% fee - so $25 annually for every $10,000 deposited.

Marketing and operations account for a lot!

$1/mo x 12 months x 10,000 customers = $120,000

But that will not pay a modest developer salary. The corporate side of FICA is 7.62%. Also add in health insurance, a retirement plan, office space, a computer for the developer ... and that's just the human side. There's all the corporate costs (e.g., servers) and regulatory filings.

The only play I can see with something like this is to ride it out and hope some established player buys you out for the tech.

Sure, we can quibble. If they are intending on paying competitive bay area salaries they'll be paying much more. Or maybe they can build the bulk of their engineering team in Warsaw or whatever and pay less.

I picked a number on the lower side to be generous. Whether this pays for one developer, half a developer, or a quarter of a developer doesn't fundamentally change the big problem: you need a lot of users to cover even a small team and the total addressable market here is small.

They still have to rebalance all the time.

Most indexes are capitalization weighted, so they don't ever need to be rebalanced.

Reply on news.ycombinator.com