Hacker News Reader

bsimson HN Office Hours with Jared Friedman and Trevor Blackwell

Hi Trevor and Jared, we have been building financial predictions on data from marketplace lending platforms. Curious to talk to you about where you see the business models of prediction going, examples other YC companies who are selling prediction and ML as a service, pricing strategies etc.

bsimson How to Survive in SF as a Broke Startup

Any other Sunset start-ups out there?

bsimson LendingClub Files for $500M IPO

Agreed on the institutional side. However LC also invests in their own loans from time to time, both directly or through LC Advisers.

In the early days LC invested their own capital more heavily to make sure loans were fully funded, and to ensure the community was active enough.

This is why they have "funded_amnt" and "funded_amnt_inv" to denote how much of the loan was funded by investors vs. internally.

bsimson LendingClub Files for $500M IPO

A part of this article is false.

"LendingClub doesn't loan out its own capital and collects fees of loans that are originated on its platform from both individuals and more sophisticated investors alike."

Lending Club owns a subsidiary fund that invests in the platform as well.

Investors should be aware that LC is both a platform, and an investor in it's own platform which, if not monitored closely, can be potentially dangerous.

[Source] http://www.prnewswire.com/news-releases/lending-club-announc...

bsimson So You Think You Want to Open a Brewery

My friend has been working on a TV series for years which finally was picked up last season by Esquire Network featuring craft breweries across the country. Awesome to watch it go from custom videos for the Craft Brewer's Association, to pilot, to first and second seasons. Super proud of them.

Brew Dogs. http://tv.esquire.com/shows/brew-dogs

bsimson Jury says Cuban did not commit insider trading

In 2007 I was in the midst of uncovering a pump and dump scheme while communicating with the SEC (who were incredibly non-responsive and incompetent).

While trying to learn more about white collar crime, I uncovered a website, sharesleuth.com. The owner was writing stories on stock fraud/white collar crime, and we exchanged a few emails.

A few weeks later I found out Mark Cuban was backing him, and short selling the companies he found to be fraudulent. Cuban was doing this for two reasons: #1 To bring attention to white collar crime and #2 If the SEC wasn't going to shut down the companies, he might as well make money while doing it...inevitably bringing it back to #1. It looks like he was successful in drawing their attention.

A previous Wired article on Sharesleuth: http://www.wired.com/techbiz/people/magazine/15-10/mf_shares...

X-post from HN thread on the pump and dump I uncovered: https://news.ycombinator.com/item?id=5236372

bsimson Ultimately, Banks are ‘Big Data’ and Technology Companies

I've worked with several hundred regional banks and credit unions.

One thing people forget is that there are over 14,000 banks and credit unions across the country, not including the top 10. The challenges of regional FIs is dramatically different than that of large organizations. (Note, most comments on HN are from large banking backgrounds, very few from the other 14,000).

FWIW, the two themes I have seen emerge are:

1) Regional banks outsource a lot of their technology, often times leaving them with the inability to quickly adapt.

2) The regulatory environment drives technology and has created a gun shy approach to tech.

3) Most CEOs of banks and credit unions tend to have some type of finance background as opposed to technology.

bsimson [dead]

Meanwhile student loan rates double tomorrow...

http://www.nydailynews.com/news/national/education-debt-mini...

...and the US Government is making more on student loan interest than Exxon profits.

http://www.huffingtonpost.com/2013/05/14/obama-student-loans...

bsimson Economists: Home ownership leads to unemployment

I spend quite a bit of time analyzing lending data and personal finances.

I've also observed that when comparing a group of loans, those with homes were almost as likely to default on a loan as those without homes and it had minimal impact despite most people assuming that having a home makes a person "more stable." I have definitely seen many situations where a home becomes the priority over life, family and personal finances as well.

On the flip side, this argument also assumes that if consumers get better jobs, make more money, etc. that they'll actually save and/or invest more and the unfortunate reality is that most people just tend to increase their rate of consumption proportionately to their income/bonus increase.

So the nature of having a forced savings plan through a mortgage payment requires them to put money away yet still limiting their ability to move or take better positions.

bsimson U.S. Alleges $6 Billion Money-Laundering Operation Using Virtual Currency

Here is an interesting article talking about the $2 Trillion underground economy of people using cash to avoid paying taxes as part of the economic recovery.

http://www.usatoday.com/story/money/business/2013/05/12/2-tr...

bsimson Indiegogo fund raises enough money to buy video of Mayor Rob Ford smoking crack

Is anyone else bothered by the fact that if the [Insert Kickstarter project here] doesn't materialize there are few things holding the founder/creator accountable?

In this case, if they don't obtain the video they are simply going to donate $200k to a charity that they will "figure out what that is later if it comes to it."

bsimson Hand-to-mouth living from a credit card company perspective

This is a fair point, but more often than not people living paycheck to paycheck aren't as familiar with dollar cost averaging and are probably just buying in $20 amounts because that's how much cash they have at that time.

The OP also said it was based on 5+ years worth of data which probably means it is less about gas price fluctuations and more about buying habits.

bsimson How to Be Startup CEO

One of the things I appreciate about Ryan and the information he shares is that he provides very detailed information and a lot of it. He leaves it to the reader to determine what parts are helpful, which varies by what stage each company is at to your point.

However, I'd rather have too much information and be able to determine what is helpful myself at that point in time than to have someone choose to provide less information.

bsimson Poll: How much money have stock options brought you?

I don't think it necessarily has to be evenly distributed. If you think about options people probably either A) Made a good amount of money or B) Made none at all. Most companies issuing options are likely venture backed and not going to settle for a marginal gain. Thoughts?

bsimson My former employer Opera Software has filed a lawsuit against me

It is fairly common for non-profits to own for profit subsidiaries which often become the main sources of revenue and sustainability for the non-profit.

bsimson Spark Capital will now pay their own legal bills

Heard at an event last night that for one company, the legal cost to include UPS as a strategic investor actually exceeded the amount they invested but the company chose to do so in order to access UPS data.

bsimson Is it a phone, is it a bank?

There are also a lot fewer banking regulations which allow other companies to try new models with less risk of intervention. (e.g recent crowd funding/SEC issues)

bsimson An Open Letter to Google: Google Alerts Now Useless

I know the author of this post and notified him it had made the front page of Hacker News.

Thought it was ironic to find out from a person vs. Google Alerts.

bsimson 'Too Big to Jail' Admission Changes Debate

You're correct about the book value and asset quality being an issue. I don't think a run on banks would be an issue if government orchestrated (especially if not during a crisis). More than likely it would be similar to how AT&T was done previously.

http://en.wikipedia.org/wiki/Breakup_of_AT%26T

You Canadians have it figured out, your banking system seems far more efficient with larger regional institutions.

bsimson 'Too Big to Jail' Admission Changes Debate

I have worked with a number of banks and credit unions. One of the biggest challenges on the regulatory side is that of unintended consequences. Lawmakers create a policy meaning to spare regional banks/credit unions, but ultimately they get carried along because their 3rd party providers have to comply (core processors, Visa, etc.), which pass along those costs/rules inevitably to the smaller organization.

Pros: Capital would be lent more efficiently as region's know their markets/customers better. Generally better service. Possibly fewer loan losses due to knowing the local market better.

Cons: The largest drawback is that of security, as many regional banks/credit unions are amazingly insecure. Cost to the consumer would probably go up slightly in the form of higher loan rates and lower savings rates, but it could easily be argued large banks aren't distributing these savings anyway.

The most amazing piece I've seen was when TARP money was given to the banking industry with the goal of it being lent to consumers and businesses. Instead the capital was used to fuel M&A within the banking industry which ultimately lead to fewer jobs.

bsimson Aaron Swartz's FBI File Released

How much do you want to bet that someone manually goes through to scrub the personal information on every page...any other reasons the white out boxes would be so inconsistent?

bsimson Aaron Swartz's FBI File Released

Anyone else find it weird they included his social security number (page 5)? With the amount of detail they included it seems as though it would be fairly easy for someone to use any FBI file on a deceased person for fraudulent purposes, ID theft, or accessing accounts at companies who may not realize he is deceased yet.

bsimson What it's like to uncover a $1 billion fraud

>The classic pump and dump involves acquiring a position in an illiquid stock, spreading false information to get investors to bid up its price…

This happened. The company paid exorbitant fees for PR and news services to hype the stock with announcements that were't real in the build up period.

>This line set off alarms because I've experienced, first hand, how difficult it is to get information about a Cayman holding company or trust in person, let alone remotely, let alone before 2008.

I didn't interface with any of the Cayman organizations directly. What made it difficult? Just paper trails, continual mailed notices etc?

>If this is true, the class action settlement is illegal - you are not allowed to take payouts from a fraudulent scheme.

Not a lawyer, however the company shut down just before the SEC investigation was complete, investors settled the lawsuit before fraud was proven, and evidence dismissed before it could show up in public records…it is very possible.

As a high frequency trader I’m sure you’re very familiar and aware of how plausible and possible these things are.

bsimson What it's like to uncover a $1 billion fraud

Appreciate the comments, particularly those that provided specific organizations and links related to investigative journalism, white collar crime etc. I also hope the information was helpful to those who are involved in forming their own organizations, dealing with investors, etc.

Some additional points addressing various comments and themes:

>I’m glad there is additional dialogue about investor due diligence. Others are absolutely right that if you’re going to invest in a company it is up to you to do your own due diligence. Go visit the company, speak with customers, get references.

>I lost no money in this process and was simply looking out for the interests of a friend and investor.

>The original individual referenced counter sued the State of Idaho for defamation, after the State originally filed suit against him years ago. Obviously the State has far greater resources than I do. As much as I’d like to throw up names, links etc. there is a very real downside and unfortunately is not something I’m willing to do at this time publicly. If some enterprising investigative journalist wanted to take the reins I’d be open to helping them find out information on their own.

>This was posted on Blogger because I didn't want it distracting from other things I’m working on. I also don’t think my personal site would have been able to handle the traffic.

>There are legitimate examples of reverse mergers and stocks that aren't traded on major exchanges. However, the smaller the stock the more chance for fraud, fewer checks etc.

>International incorporation is a regular practice and employed by companies such as Apple and Facebook. However the Cayman Islands are simultaneously a hot bed for fraudulent activity (interestingly as are Vancouver, B.C. and Boca Raton, Florida).

http://www.businessinsider.com/facebook-funneled-nearly-half...

As for Unicorns and sniff tests, if you don’t believe it, that's ok. I wouldn't have believed it either. It's good you're exercising your right to question things which was the basis of the post.

bsimson What it's like to uncover a $1 billion fraud

The point was not to establish whether "white collar crime" existed already but rather to emphasize how little attention was being paid to it at that point in time.

For example, since then inter-agency task forces have been established, media has begun covering the topics, books have been written and movies produced. http://en.wikipedia.org/wiki/Inside_Job_(film)

The general awareness is much higher (despite little action taken).

bsimson What it's like to uncover a $1 billion fraud

Can't speak to Washington, but he had a pretty extensive military/government background.

bsimson Bankers now Too Big to Jail

Apologies for linking outside this thread, but some of the audience asked me to write this. Hope it is helpful.

http://news.ycombinator.com/item?id=5236372

bsimson Bankers now Too Big to Jail

Here is a link to the post you guys were asking for. Hope it is helpful.

http://news.ycombinator.com/item?id=5236372

bsimson Bankers now Too Big to Jail

Thanks for sharing and good example of knowing the source of funds.

To clarify, Yuri Milner was not an investor in the company referenced.

bsimson Bankers now Too Big to Jail

DB, can you send me your email?