804 karma · joined September 30, 2009
Mostly financing $2M+ B2B SaaS companies these days.
Once upon a time wrote code and started companies.
In normal times with well-functioning markets and non-distressed players, that's so.
But with distressed (or small or less creditworthy) players or at distressed times, it's extremely common for lenders to demand equity as a concession for making a loan. See PIKs, warrant coverage, convertible notes, etc.
But the point of this subthread remains; corporate loans are expected to be paid back (less some loss reserve, but plus some credit spread), whilst direct payments to individuals are not.
[Edit: should speak of corporate bonds, not loans, for precision. There is a big difference though for this thread it's minor.]
If you write a firmly worded letter to your Senator, you are protesting and it would take the most abusive stretch of discretion to consider it criminal in any way.
If you drive with your buddies in dark of night to a store and do a smash-and-grab, it would take an absurd ideological contortion to consider it protesting in any genuine way.
In real life, there's a spectrum moving from letter-writing and sign-holding into civil disobedience and then into forms of disorder.
If you start with the observation, as you have, that "people are taking this opportunity to steal and ... burn[] down shops," I would submit that you shouldn't then apply the term "protester" to what you are defining as an opportunistic criminal.
You know what has worked really well for Niketown in Seattle the last few days? They just have a bunch of beefy dudes in athletic wear (some Polynesian fella cheered them as being Samoans, I dunno, but it's relevant mainly in that they look not like a bussed-in white-only goon squad, and optics are gonna matter in this crisis) standing around it. Nobody's messing with those guys.
If your cops aren't up-armored and manning a barricade of people doing free speech stuff, they can, you know, take 911 calls and go respond to actual calls.
I would challenge your insinuation that theft and arson are "in places where the police [are] weak" and the implicit corollary that you should then make those police more "strong." I would grant you that (perhaps tautologically) those crimes happened in places where keeping the peace has been done poorly, and it should be done better.
Do you live in a metropolitan city in the US? Seattle, USA is my point of reference. I have lived for 15 years here, mostly living in the most dense neighborhood and mostly working in the downtown core.
Seattle is a low-violence, high-civic-engagement, high-trust, relatively wealthy city. There is typically a small 10-50 person protest weekly in front of the Federal Building. There will be additional larger protests several times annually, with a 200-500+ person gathering probably about every two months in favor of pot, anti-war, or whatever. Then 2-3 times a year there will be a large gathering, often around May Day, MLK Day, Hempfest, etc., where thousands will gather for (generally permitted and pre-planned) marching and demonstration. This is all the baseline activity level regardless of things like COVID, Trumpism, or BLM.
It's very usual to see strollers and children on shoulders at these events. The strong presumption is that civic engagement in Seattle is safe and normal.
If you come from a place where political parties have proxy street-fights with backed youth gangs, or where ethnic mobs are torching trains full of apostates, I understand (and I'm very sorry and hope it gets better). I know the world is a scary place and that there are such things as violent mobs.
But despite how inconvenient it might be to have one's commute path blocked, or how scary it might initially be to have an Other-looking youth shouting hyperbolic slogans, protests here (and elsewhere) generally don't start, and don't inevitably turn, violent.
That particular reaction requires another reagent altogether, and usually quite a bit of activation energy.
In none of the instant cases (the last four days of nationwide protests focused on or around BLM-esque causes) has it been correct for "both sides [to] presume violence with guns." Only the state agents could reasonably be presumed to have and use firearms. These protesters are not shooting at cops. There is no valid presumption there.
(Assuming there's some good faith there.)
Governments ought not to "control" protest crowds in a democracy. This is literally written down in the foundational-myth-papyrus of America.
By and large none of these crowds start as "violent" crowds. These are drivers, bartenders, moms, students, butterfly-collectors, tinkerers, teachers, short-order cooks -- they are citizens, calling for a redress of grievances.
The instinct and assumption that you ought "correctly to control" such people is what leads to increased tension and ultimately violence.
Source: I live in Seattle, and for nearly 10 years lived a block off of Pine St. (almost all of the pictures or videos you have seen of Seattle recently would be on the Pike/Pine corridor). I would see protest marches off my porch and on my walk to work, as well as black bloc types. I've walked home on May Day through protests a few times. The participants all start very clearly as protesters or vandals. Protesters have signs and wear their union jackets or their scrubs or their tennis shoes and khakis, or their superhero outfits, or whatever; they are there to protest. There are very, very few proper vandals to start off these things.
But you know what vandals and looters love? The chaos that ensues when forces with an instinct to "control" unleash munitions and other uses of force on the protesters. Do some protesters boil over and turn into vandals when the temperature and pressure turn up? Yes.
By the time you have a "violent crowd", you've fucked up and arguably lost the mandate of heaven.
Casinos make money from "whales," who may or may not end up ruined to a man, but who are certainly losing enough money to ruin an average bettor.
The guy losing $500 at BJ once in a while (and once in a blue moon winning some back) is the "economy coach class super saver" flyer. Yes, enough of those small fry help defray the fixed costs of the flight. But it's the last minute business class flyer that brings the margin.
Similarly, the real money for the casino is in some mix of 1. problem gamblers, almost by definition, and 2. money laundering.
(All of the below assumes the bonds actually pay as agreed. Actual default risk is something totally different, and still present here.)
When you buy a bond and hold it to maturity, you're sort of right. If you put in $10,000 into buying a coupon bond, you will get the coupons plus the $10,000 back at the end. And if you buy a zero-coupon bond for whatever amount, which will be worth $10,000 at maturity, you'll get the $10,000 back at the end.
In fact, you don't even need to "assum[e] yields stay positive." When you buy individual issues and hold to maturity, you don't really care what everyone else's yields do; you get what you contracted for.
The problem comes if you want to actually sell out of your position, OR to know the true value of your position (essentially equivalent operations) along the way.
If you put in $10,000 into a bond yielding 5% coupon, and the next day yields spike to 10%, nobody will want to buy your bond for $10,000 any more. You most certainly have lost value. "Aha," the naif says, "but I could always hold to maturity and get my principal back!" Sorry. Do the thought experiment where instead of buying the 5% issue on day 1, you instead buy the 10% issue on day 2. Compare the cumulative sum you receive under each scenario. Investing on day 1 (at 5%) is strictly worse than investing on day 2 (at 10%).
Likewise, if yields instead crash from 5% to 1% on day 2, your position will be worth much more. Your $10,000 notional bond yielding 5% will net a buyer so much more than $10,000 spent on a 1% yielding issue that she will pay more than $10,000 for it. You have had a real gain, even if not realized.
The same thing applies to bond funds or indices but with much more smoothing across a portfolio. With bond funds, however, there is not even the illusory "X dollars out" guarantee; since they are marked to market every day you might well never enjoy a breakeven price.
Bond yields are at an all time low. That means prices are at an all time high.
This is not the time to massively rotate into an asset class at an all-time high price due to fear/risk aversion.
I would say "driving rents to zero." There's a well understood notion of earning an accounting profit, and an economic profit, even under perfect competition.
It's "rents" that perfect competition and market "efficiency" can arb away.
Combine with cardboard and paper tape and you’ve got a pretty well compostable shipping container. Landfill neutral.
Recently in Washington State, a small research group at WSU lost a couple of hard drives that had PII data on them on order of 1 M people. They even had them in a safe; the safe was stolen and no real evidence of the data being the target of the theft was found.
Nonetheless, being good civil servants they scrupulously reported what happened and carried out required notification procedures to the million folks.
Their reward was to be sued for basically the maximum that their insurance would pay out.
How many thousands of times per year do similar things happen in private industry? Nobody knows. You don't even have to posit malice or a coverup; just think about how many times a year a hard drive backup of a database with a mere million records gets accidentally thrown away or sold off with surplus.
It's overly reductionist to attribute Trump and Brexit just to online trolls, but it's folly to ignore their effect at the margins (because both Trump and Brexit were relatively close calls, influencing a 5% middle ground definitely mattered).
My most recent investment was on this thesis: http://blog.rlucas.net/vc/exchanging-thoughts-on-a-thoughtex...
Modern encryption is, eventually, either effectively unbreakable, or effectively worthless.
Or is there widespread knowledge of exploits that can recover, say, 25% of a plaintext reliably, but no more?
These compensation deals are very often based on earnings per share or value per share. And you can increase it.
The link below is from the Conference Board, which is about as rock-ribbed big business friendly capital establishment types as they come. Even they caution about executive trickery here.
https://www.conference-board.org/blog/postdetail.cfm?post=68...
Fact 3 is also a fairly fanciful interpretation. Large public corporate board membership can be lucrative, but is in practice not competed for by a talent pool the way that say, a CTO or VP of Sales or CFO role would be. New board members are almost always vetted and nominated by the existing board. Hence new board members are nearly always either 1. in-group members (a cynic would say "cronies") with satisficing business acumen from the same social/business milieu as the incumbents, or in the exceptional case, 2. high visibility outsiders (a cynic would say "window-dressing") from other endeavors, such as former politicians, admirals and generals, etc. A new movement adds a third possible vector in, namely being a highly qualified business person with a politically / optically desirable diversity characteristic. But once that candidate comes in, they quickly will learn that the means to stay in the Inner Ring and gain lucrative additional such opportunities is to toe the line...
I'm sympathetic to your idea of emergent behaviors of the group arising from knowable axioms about the individuals and their motivation but I think you've got some incorrect axioms about the selection and incentives of those individuals.
There's no way the incentives from something like this SEC program could outweigh the economics of being high up within Rentec. [No dog in this fight about theorizing fraud vs. legit, just saying the SEC gap is multiple orders of magnitude in incentives here.]
For example, you might make a (successful) bet that works only in a low-volatility environment; if it works, your ex post Sharpe ratio will look ingenious.
I suppose you could create a reserve against projected liabilities such as warranty returns (which is commonly done in for-profit companies). But that is pretty well explicitly not for a rainy day or the unexpected; it’s for the rather firmly expected.
HIPAA is a fig leaf. Cardboard covers on clipboards to inconvenience the nurses and receptionists, but a unencumbered infobahn for anyone who touches the money to drive straight through.
For decades, every visit, test, procedure, and medication you've ever had paid for by a health insurer in the US got dumped straight into MIB, where any insurer could look at it. HIPAA functionally changed this not a whit.
Specifically, consider Snapnames -- a company born out of the notion that snapping up a domain name coming up for renewal was something that was legitimately fairly awarded to the automated process that was fastest.
Stipulated, it definitely depends on personal preferences and workflows as to what you personally prefer.
But it is pretty incontrovertible that Blackberry was a finely-honed email tool with departures from that core use case being pretty tightly defined around the things you do ancillary to email (setting appointments, reading attachments, etc.).
iPhone is worse at that particular thing -- but vastly more capable broadly speaking for a universe of other things.
As it was originally proliferated in reference to tech ventures, it referred to a very specific pattern highlighted by Clay Christensen's writings out of HBS.
In classical "disruption," a product or technology that is notionally "worse," but as a result greatly cheaper or more easily distributed, takes over a market from notionally "better" but more expensive legacy approach. Often includes de-skilling of the use case too.
It's sort of like guerilla warfare in that way.
The successful recent IPOs people are pointing to in this comment section -- like Zoom, Datadog, and Cloudflare -- all tend to have a version of this classical disruption if you try and see it.
I say this not for mere pedantry but because taking "disruptive" to mean "F---ing things up (rules, laws, etc.)" dilutes a useful concept in thinking about technology adoption approaches.
Agreed, if you knew there was 0% hope (say, of flying anyone back a week hence) it would be unethical to keep it going. But if you were trying to keep things afloat and thought you could do, it would be unethical to do otherwise, since stopping new outbounds would 100% doom the firm and strand the overseas travelers.
Two problems tend to arise from it:
1. Ex ante, people who don't understand it think that just by being weird, they will have exceptional (weirdly good) results. So they are libertine or uncivil and that alone doesn't drive anything useful.
2. Ex post, people who achieved highly attribute the success to the weirdness, and take it as extra license to let the id flow free.
In fact, my belief is that a good bit of weirdness both causes and is the effect of some other qualities that in turn correlate with success: obsessive knowledge of a domain, obsessive levels of effort, single-mindedness, manic level charisma, inordinate confidence (itself charismatic), and willingness to be contrarian / unorthodox.
But man is it annoying when people are just assholes and wave it off blithely as coming with the territory.
For example, it was never possible to read, secretly and automatically, in bulk, everyone's correspondence in the 20th century. With email, it's a commonplace that governments do it routinely. Encryption doesn't make it impossible to figure out what someone's corresponding about, it just makes it more expensive (as the investigator may need to devote resources to shoulder-surfing or other means instead of auto-collection). It used to be fairly expensive to have to go to the post office and steam open an envelope, copy it, and seal it back up without detection.
Likewise for various other surveillance technologies, such as the ALPR/ANPRs. The people who (still) write our laws were raised watching TV cops listen for a radio APB on a license plate. For their intuitions about this matter to be valid, it should be roughly as costly in manpower, time, and attention to do a "live alert" on a license plate today as it was for those TV cops.
A pen register used to be an actual box you put at the central office on a specific bad guy of interest, not an excuse to sweep up and cross-correlate every dialed number ever. Again, several orders of magnitude cost difference here, in a way where the difference of degree (cost) becomes a difference of kind.
The big danger IMO is when you have well-meaning legislators and jurists opining about network-enabled privacy intrusions using intuitions and examples formed with 20th century cost expectations.
Eventually those expectations will need to reflect current technology, but in the meantime, anything that can be done to raise the cost of pervasive surveillance is IMO a good thing as it buys time for legal and moral intuitions (much slower rate of change) to adapt.
That means for consumer accounts there's a ton more risk of things going sideways well after the money has moved on.
(Source: possibly outdated circa 2011 NACHA rules and transaction types)