Announcing the Safe, a Replacement for Convertible Notes - <AUTHOR> http://blog.ycombinator.com/announcing-the-safe-a-replacement-for-convertible-notes <comment><USER2> A few thoughts (apologies up front for the somewhat longish technical aspects of the discussion):

1\. YC has once again managed to innovate in fascinating ways that help promote startups. And, it should be said, the legal work behind formulating this instrument called a "safe" is both sophisticated and commendable. It is at once simple and subtle and it covers a lot of nuanced legal technicalities that must have required some pretty careful thought to get right. The result should be extremely helpful to startups and their founders and gives founders one more powerful tool to use for their most important funding needs.

2\. The safe enables founders to raise early-stage funds without having to do a premature equity round. The tax laws create problems for startups and their founders if they raise money from outside investors too early in exchange for stock grants. This typically winds up putting an unacceptably high price on the common stock, creating tax risks for all concerned and also lessening the value of incentives that can be offered to key people going forward (fuller thoughts here: [https://news.ycombinator.com/item?id=6849648](https://news.ycombinator.com/item?id=6849648)). If first outside funding is to be deferred, though, the perennial challenge becomes how to fund the interim process.

3\. The convertible note meets this need by combining the attributes of debt and equity instruments. The investor loans funds to the company and the company signs a note promising to repay the principal with interest. If, however, the company can do a qualified funding before the note matures, the debt converts into preferred-stock equity on the terms struck with the equity investors at first funding, usually with a price discount, sometimes with a price cap, and typically with merger-premium protection for the converting noteholders for the added risk they take in being early in the game when risks are at their highest. In that case, the debt vanishes and the noteholder becomes an equity holder and everybody wins in terms of optimal positioning of their respective stakes in the venture: founders have gotten their cheap stock that they can hold until a liquidity event, at which time they can sell typically for long-term capital gains and with no intervening taxes to pay; noteholders have gotten their equity stakes with all protections and with no- less-favorable pricing than that offered to the preferred stock investors who presumably have negotiated a good, arms-length deal for themselves; the company avoids a too-early high repricing of its stock so it can continue to offer good incentives to new team members as they join; and the company does not usually have to fool with 409A valuations or with other strings and formalities attending the bringing in of investors via equity rounds. All of which is great. But debt is debt. And, unless and until a first funding occurs, it must be carried on the balance sheet as debt. Debt also carries interest. And when it comes due, the noteholder has a legal right to sue for its repayment if it is not paid. If the noteholder wants to extend the term, a series of formalities are required to do so and, in their absence, the parties stand at legal risk.

4\. The convertible note supplanted an earlier form of convertible note used many years back by which individual investors would see startups as being much akin to small businesses and would loan the money to the venture with the primary aim of making a good interest return on their investment. This might be called an "optional convertible" note and I remember doing many of these back in the day as a lawyer. That sort of note saw the conversion right as a privilege belonging strictly to the noteholder. In the normal course, the debt was expected to be repaid with interest. It might even be secured with the company's assets as collateral. It might be personally guaranteed by the founders. These were all the normal lender protections expected by those who had the investment mindset of that day. The conversion was there as an added perk only: if the company happened to do very well, then the investor could forget about the debt as such and could instead elect to convert it into equity (very typically common stock and at a price set up front, at the time the note was signed). So, for instance, an investor would loan $50K at 10% interest at a time when the company had little value but could elect to convert at, say, $.50/sh at any time in the sole discretion of the investor. The mindset in this era, then, was primarily upon the debt as debt but with an equity kicker to cover long-shot cases.

5\. This mindset all changed during the bubble era, when convertible notes came in to help solve the early-stage funding problem. With its "forced conversion" element, it not only combined the elements of debt and equity but did so with equity being the main focus of the investor. Few if any investors by that time were primarily interested in being repaid the debt owed by the company. The equity upside motivated the investment and the debt came to be seen as added insurance just in case the venture did not pan out as hoped. Because of its force-conversion attribute, it was regarded under law as a "security," which basically means that the investor casts his lot primarily with the managerial efforts of company management while forgoing legal rights intended to protect a debt-type investment.

6\. The safe seeks to confer the benefits of a convertible instrument without carrying with it the baggage of debt. It would thus be regarded under law as a "convertible security." That means the debt protections largely go away for the investor and the investor places his bet almost entirely on the efforts of company management. Thus, if this instrument achieves widespread adoption, the investor mindset will have evolved over the years from "loan with equity kicker" (old form of optional convertible note) to a convertible-note-style security instrument with true loan features (today's conventional convertible note) to a pure convertible security (the safe).

7\. I think it should work beautifully in the YC context. Whether it will achieve widespread acceptance or not will depend on investor expectations. I am not so sure. After all, the earliest investors do take the biggest risks. Is it enough to compensate them with a discounted price or price cap at conversion? If I were to guess, I would say that it is enough in the YC context. But it will be interesting to see if investors generally come to feel this way. In effect, the safe does leave founders saying to early investors, "Give us your money and but wait on getting your equity: if it goes well, you get equity; if it does not, you get nothing and you have almost no rights." Apart from a very vibrant context such as YC, where investor demand is already high, I am not sure how well that will sell when all the investor needs to say in response is, "how about us just doing a convertible note instead." I personally believe that for the general range of cases the pull toward a conventional convertible note will be _very_ strong, and founders will have real difficulty convincing investors why they should forego the benefits of a convertible note in favor of a convertible security where the only advantages to the latter lie strictly with the company. But who knows? The YC magic has worked before to transform investor mindsets (I vividly remember how horribly out of favor convertible notes were just a short while back) and it may work this time too. Whether it does or not, we can all be thankful that YC is doing great and innovative things to add to the vibrancy of the startup world, and the safe is one more thing to add to the list (kudos to their excellent lawyers as well).

<comment><USER3> Sorry but tl;dr

<comment><USER4> If you can't appreciate George Grellas's contributions, then please refrain from giving us yours.

George's writings on HN, from a seasoned startup lawyer who's been around the block many times and has much to offer, are incredibly valuable, and all of us owe him some gratitude for it as it is high quality and he is not paid for it. And I'm sure he has plenty of business to handle without doing it for leads.

</comment></comment></comment><comment><USER5> What does this imply about the valuation of the company from an employee stock plan perspective? One of the nice things about convertible debt is that the investment is offset by an equal liability, providing a reasonable justification for continuing to issue stock to employees very cheaply. Does unencumbered cash (ie enterprise value) increase the risk of things like cheap stock charges? Can you use restricted stock with a safe or would you want to stick to ISOs and the 409(a) rules?

<comment><USER6> Great question. Re: the implied valuation of the company, I don't believe it will be different from the notes. The safe will convert to preferred stock, and while the price of the preferred stock certainly affects the price of the common, I think it would be hard to say that a prospective valuation for an event in the future increases immediately increases the value of the common stock.

<comment><USER5> I guess I'm not asking about the implied cap from the future conversion into preferred, but the EV stemming from the mere ownership of, say, a million dollars by the company. We use restricted stock that vests by lapsing a right to repurchase, since it's cheaper for the employee (no cost associated with the option itself) and it starts the long term cap gains clock right away. This makes them a direct shareholder, though, and if the only stock outstanding in the early days is common, it seems like the cash-related EV would have to be attributed to it, right?

</comment></comment></comment><comment><USER7> This is an example of one of the key things that sets YC apart from every other early stage investor. Like the startups they fund, they constantly improve their "product" to make something entrepreneurs want.

<comment><USER8> And share it with everyone.

<comment><USER9> Is it open source?

<comment><USER8> Yes. Last line of the post.

</comment></comment></comment></comment><comment><USER10> "the preferred stock that a SAFE holder is issued will have a liquidation preference that is equal to the original SAFE investment amount, rather than based on the price of the shares issued to the investors of new money in the financing. "

This point is incredibly important and one of the key downsides of debt from the company perspective, as convertible notes create outsized liquidation preference upon conversion. And when things don't go as well as you hoped, liquidation preference matters a ton.

Kudos PG et al. EXCELLENT work.

See: [http://ycombinator.com/safe/SAFE_Primer.docx](http://ycombinator.com/safe/SAFE_Primer.docx)

<comment><USER11> Note that this isn't unique to SAFE. If you're using a standard Clerky / YC note, the debt will convert into a mix of preferred and common to ensure there's no extra liquidation preference.

<comment><USER6> Correct - the notes had this feature too, except that rather than shadow preferred, it was the preferred / common "unit" concept. The net result was the same.

</comment></comment></comment><comment><USER12> This is the coolest financial instrument I've seen in a long time, ok ever.

It makes me wonder if there is a way to craft something so that a WeFunder or some other crowd sourced funding group could build one with multiple people participating that would have a slightly higher liquidation cash preference and no stock.

Basically it would work like this:

A group of people pool funds to fund a SAFE note with a 2x cash liquidation preference. So the next time the company raises money, they set aside 2x (or 1.5x or what ever the note says) in equivalent cash to return to the SAFE investors.

The SAFE contributors get a simple return (liquidation preference / time before liquidated), the startup gets lift off and a simple cap table (the SAFE vanishes after liquidation). It puts a cap on the return the SAFE investor gets in exchange for a somewhat lower risk (the company gets to its series A).

<comment><USER6> I think with this idea you end up back at the note concept; what you are proposing sounds more like a loan / debt to me (if I understand you correctly?). The purpose of the safe, anyway, is to turn investors into stockholders at some point.

<comment><USER12> Well a debt/loan without a term, more like an uncallable zero coupon bond without a maturity date, rather it has a maturity 'condition'.

As you have clearly pointed out, one of the bigger issues with convertibles is that they change over time in terms of their impact on the company. The SAFE fixes that by getting rid of the debt/loan aspect, and this would do the same but bake in a fixed redemption price.

An example, you get this thing (lets call it a BOOST), which is $100K with a redemption price of $125K. Now you startup goes 18 months, then does a series A raise for 1.125M$. They redeem the BOOST for 125K, pocket the $1M, and their series A investor gets their chunk of preferred. The 'rate' on our BOOST then is 25%/1.5years or 16.6% APR.

Example 2. Same deal except the series A comes 6 months later. Now the redemption in only 1/2 year gives an effect return of 50% APR.

Example 3. Company starts, grows to a going concern, runs for 5 years and then gets bought by BigCorp, and the BOOST is redeemed. Now its effective APR is 5% (actually less than that if you're not doing simple interest etc but it illustrates the point doesn't it?)

Example 6. Startup goes poof and dissolves. BOOST is effectively at the head of the line on distribution of the asset value.

Take $100K, divide it into $10K chunks, spread it across 10 different BOOSTS with other investors in them and spread the risk still further.

<comment><USER13> So the Series A investors would essentially be cashing out the BOOST investors? I don't think any Series A investor would go for this. They want to see all the money go into company growth at that stage.

<comment><USER12> "So the Series A investors would essentially be cashing out the BOOST investors?"

Yes. But lets look at it from a couple of different perspectives before we conclude they won't like that.

First we'll assume that the Series A is much larger than the BOOST redemption cost, anywhere from about 10x to 20x. We make that assumption because it the BOOST aka "seed" round is much bigger than that the Series A looks more like a Series B than a Series A, which is to say the company valuation isn't really in a place where VCs would jump in ok?

Lets put some numbers down which makes talking about it easier.

Lets say the Series A really is 9X the BOOST so in a post money valuation with 60 percent for the company founders/employees we're looking at a cap table that is

                      versus
        60% employee          60% Employee
        36% VC                40% VC
         4% BOOST              0% BOOST

So in the left scenario everyone stays in, and in the right hand scenario the Series A investor has effectively "bought out" the BOOST investor. (the money flow is different but the effect is the same). Lets assume that value post money was $5M.

Company value increases 5x and the company is sold for $25M.

Series A guy in the left scenario gets their liquidation preference + 36% of the remains (with participation) whereas in the right scenario they get their liquidation preference + 40% of the remains (again with participation) in the second scenario.

If the company is going to do well (and they assume it will) they do better by _not_ having the BOOST guys in the cap table then they do with them there taking a percentage. If the company does poorly they still lose their same investment they would have lost anyway.

Things are simpler for the BOOST guy too, instead of managing dozens of small share holdings in small companies they get a smaller but faster return. This creates a reliable source of seed money for the ideas, which creates a larger pool of potential Series A investments for VC companies.

</comment></comment></comment></comment></comment><comment><USER14> I'm an entrepreneur, so it all sounds great for me, but why would investors go for this? It seems like they give up a lot of down-side protection: (1) No ability to convert or abort in the absence of a QFE, (2) no more first creditor protection -- if the company goes under, but also has outstanding loans, investors don't participate in a share of the liquidation proceeds as they would as debt holders (3) no interest = less equity at conversion? Am I wrong here? What am I missing? Thanks YC for your ongoing efforts!

<comment><USER15> I'm assuming that the theory here is that the good investors are more concerned about being in on the next Snapchat or Airbnb, and a lot less interested in bolstering downside protections that only apply if an investment is going to be one of the unproductive ones anyways.

Meanwhile, the good companies aren't going to be likely to entertain financing on anything but terms like these, so fighting them just incurs an adverse selection penalty.

The same thing seems to have happened with convertible debt, which was preceded by financing mechanisms that were way, way more onerous for entrepreneurs.

<comment><USER14> Completely agree with you. The article seems to make the point that investors would welcome these changes, when in reality, we will be forcing these changes on investors. That was precisely my experience with the series AA.

</comment></comment></comment><comment><USER16> Q: What happens if the startup does well after the safe and doesn't need to raise any money and doesn't have a liquidity event? Are the safe investors stuck with a security which does not derive any economic (e.g., dividends) value and they don't have any control?

<comment><USER6> This is a high class problem to have! As mentioned above, this seemed to us to be an extreme corner case. To remain simple, we tried not to draft for every scenario (which was hard, believe me - lawyers do this by nature). It may require some patience on the part of the safe holder, but odds are that eventually a company will have a liquidity event.

<comment><USER17> What about the case where the business becomes a low growth, life style business. Is there any way to force a liquidity event?

<comment><USER18> Not that I can see. So the it's up to the parties in that eventuality to work things out.

<comment><USER8> > So the it's up to the parties in that eventuality to work things out.

That's usually a bad way to make a legal contract. As an investor I'd want something a little more definitive.

</comment></comment></comment></comment></comment><comment><USER19> Two questions:

\- in the acquisition of a company with an MFN SAFE, it says that the instrument can convert in to common at the fair market value of the stock. Isn't that the FMV the purchase price? So isn't that the same as getting your original money back (no matter how successful the company may become)?

Regarding pro rata rights it says:

Do SAFE holders get pro rata rights? <snip> This pro rata right must be in either the Equity Financing documents or a side letter.

Is this saying investors need to add pro rata rights to your SAFE, or that they only get them if the subsequent preferred financing has them?

<comment><USER6> Re question 1: you read correctly. An investor just get its money back in a change of control. An investor using this form of safe would have to be very confident that the safe would be amended to match a later safe with better terms. To be perfectly honest, this form of safe may not be very popular for this reason, but uncapped notes with an MFN clause have been popular, so we decided to have a safe like that too. Re question 2: if the company has drafted its IRA to exclude the safe holders from pro rata rights, then the company must give those rights via side letter instead. Many investors feel very strongly about pro rata rights, so we drafted the safe to ensure that the company had to give them, but with some flexibility as to where (e.g., in a side letter rather than in an IRA).

<comment><USER19> Aha. It seems odd then to say that there are two choices in the case of MFN conversion, when they amount to the same thing.

I know YC has seen MFN usage in the "everyone gets $100k" scenario, but I also could see them useful for family and friends rounds where an unsophisticated investor with a conflict of interest wants to put in the first $10k but not set a price. In that case, a default conversion might make sense as an option.

</comment></comment></comment><comment><USER20> This might be a good time to ask - are investors in general comfortables with notes vs. doing a priced round?

I understand the advantages of notes, but I found that many investors don't like it. We had many who agreed to a modest priced round, but absolutely wouldn't do a convertible note, and yet Paul says most YC startups make do with the notes. There is a disconnect somewhere here.

So am I the exception from the norm, or is YC the exception?

<comment><USER6> The notes have proliferated because they are quick and easy (no transaction costs, etc.) so it's the way many startups like to raise money. Priced rounds are fine too - they just tend to take more time and involve costs. YC and others have open-sourced streamlined equity financing documents, but so far, nothing has been as easy as raising on a convertible note.

<comment><USER20> clevy, I literally said in my comment _I understand the advantages of notes_. I don't need to be convinced. Notes are great.

My question is different - to what extent investors find note financing acceptable/appealing? Is it only YC companies that get the privilege? Is it a Silicon Valley thing, not used much elsewhere (like Seattle)? Is it used everywhere, and I just happened to be unlucky with it?

<comment><USER6> Sorry, DenisM. Investors in the Silicon Valley find notes very acceptable. It is not only YC companies that raise early money on notes, many other companies do too. Notes may be the most popular in SV, but I am sure that investors in other places use them as well. I think maybe you just got unlucky.

</comment></comment></comment></comment><comment><USER21> So, based on the writeup, it's just an option? And this didn't exist already? It seems so obvious in retrospect it's surprising no one had thought to do this.

Is there anything special that makes this substantially different from a vanilla option, or is it just that a Safe is standardized in an easy to use way?

<comment><USER13> An option, strictly speaking, has an underlying security that already exists. The Safe, like a convertible note, doesn't have an underlying security yet, since the company hasn't created the preferred stock that it would convert into yet.

<comment><USER21> Well, sort of. In a broad sense an option is simply an irrevocable right to acquire or do something, without an obligation to actually acquire or do it. You can write options for whatever you'd like, despite securities being the most common use.

You're right about securities; the security usually exists prior to offering a contract on it. But even then it gets a little more complicated. For instance, I can write a naked option (an option to buy a security I don't even own). They're pretty flexible instruments, and I'm not sure how Safes are substantially different. That having been said, it sounds great for founders and funders, since it's far simpler than the alternatives, and I'm shocked no one has thought to do this before. Kudos to the YC folks for having the insight to set it up.

<comment><USER13> Right, but I wasn't speaking in the broad sense. In the legal sense, an option has to have a very specific underlying security. That's the case with even a naked option - you know exactly what the underlying security is. The Safe is substantively different because the underlying security isn't defined at that specific level.

But agreed, kudos to YC :)

<comment><USER21> Ah, I see what you're saying.

Is there indeed a statutory or regulatory requirement to that effect? I'm not an attorney and you are, so you'd know better than me, but it's my understanding that "option" applies broadly to contractual obligations and rights to sell/purchase property or rights at some sort of preordained terms, conditions, price, or whatever.

</comment></comment></comment></comment></comment><comment><USER22> Incidentally, the clevy whose responses you see on this thread is safe author Carolynn Levy.

</comment><comment><USER23> I'm glad YC is leading the charge to standardize and make sane very early stage funding terms. They've got market, brand, and brain power that is impossible for individual companies to match.

The next thing I'd like to see out of YC legal is some sort of over- subscription pre-sale. Something like a combined participation right/"first right of refusal"/put option that companies can sell to investors when they are hot to guarantee their future access to funds.

</comment><comment><USER24> Anybody know how this compares to convertible equity schemes, like [1], which made front page last summer in a few stories?

[1] [http://techcrunch.com/2012/08/31/thefunded-founder- institute...](http://techcrunch.com/2012/08/31/thefunded-founder-institute- and-wilson-sonsini-debut-startup-friendly-seed-financing-vehicle-convertible- equity/)

<comment><USER25> Safe is probably favored to become the standard vehicle for seed rounds, a benefit of being sponsored by YC. Investors will require less convincing and at first glance Safe seems to be at least as good as convertible debt (as fast and cheap as convertible debt, with no promise of repayment).

<comment><USER24> That's certainly valid from a marketing standpoint. Although, convertible equity was published WSGR, which may not be a household name, is still an entity that anyone in the funding game should be familiar with.

I'm really more interested in whether there are significant structural differences between the two schemes.

</comment></comment></comment><comment><USER26> Will YC VC use these in the upcoming batch?

<comment><USER22> Yes, the YCVC investments this batch are going to be on safes instead of notes.

<comment><USER27> So, since there is no qualifying event, investors could get stuck without any ownership for a while. for YC this is most likely a non-issue, but most other investors won't be able to, thus providing YC with a bit of extra edge in attracting great entrepreneurs. Fair assessment ?

<comment><USER28> Not necessarily. The 'caps' on these warrants are likely to be lower to compensate investors.

<comment><USER6> A company that never has one of the qualifying events is likely to be an extreme corner case. So an investor could end up holding a safe for a while, but for the vast majority of companies, there will be a financing or a merger / acquisition at some (or an IPO).

</comment></comment></comment></comment></comment><comment><USER29> This appears to be in direct response to grellas comments a few days ago[0], but I find it hard to believe that even YC could operate so quickly so I guess it is just coincidence.

[0] [https://news.ycombinator.com/item?id=6849648](https://news.ycombinator.com/item?id=6849648)

</comment><comment><USER30> Another significant benefit to not having actual debt is what happens if the company has been operating at a loss at the time the debt is converted. The IRS treats debt that is converted as "debt relief" which is equivalent to income, which is taxable. In the case of my company, when we raised our Series A, I converted from a single-member LLC to a C-corp, and wound up getting a tax bill for around $50,000(!) for the "debt relief", which was ultimately paid out of the proceeds of the money we raised, which in turn came out of the company's pocket.

So, in the end, we wound up paying a "convertible debt tax" to the government. I'm actually surprised this comment hasn't come up yet; I would have thought the convertible debt tax would be somewhat common.

</comment><comment><USER31> > Safes should work just like convertible notes, but with fewer complications.

it's not an option because the purchase price of an option is lost to the seller no matter what.

it's not a loan because it doesn't have to be paid back on a schedule.

so basically it's more like a _convertible security deposit_.

</comment><comment><USER32> Few questions...

Does this give YC an ability to set a lower cap because it has reduced the investor upside in a forced conversion?

If I were an entrepreneur, would I continue to raise multiple safe rounds and keep pushing the cap on the safe up? That would make the most financial sense to me as an entrepreneur. I'm not sure investors would want that, but it creates a large incentive for the entrepreneur.

Why is a forced conversion bad? I always thought a timeline was a good incentive to create value for investors, and to optimize around timing your fundraise with your cap amount.

How do you compensate investors for time value money if the deal takes a long time to get to the next round when there is no forced conversion or accrued component?

</comment><comment><USER33> Not a big fan of capital structure above common for early-stage investing. Too much possibility of fucking over the common. Why not bundle a non-expiring warrant with convertible preferreds?

Consider also how much harder this will make private placements.

</comment><comment><USER34> I have a question about using this. In the SAFE Primer it states:

"The table below sets forth a comparison between the Standard Preferred and the SAFE Preferred, as each would be described in the company's certificate of incorporation:"

Reading the SAFE it mentions "SAFE Preferred Stock" and seems to partially define it. Does this mean you must have "SAFE Preferred stock" defined in your articles of incorporation to use a SAFE, or can the SAFE stand alone?

<comment><USER6> The SAFE Preferred Stock would be whatever you end up calling it in the charter - for example, Series AA (just something to differentiate it from the preferred stock being issued to the new money investors). So no, you would not actually call it "SAFE Preferred Stock" in your COI. Does that make sense?

<comment><USER34> Yes thanks, so if the articles just authorize the issuance of common stock one needs to amend them before using a SAFE?

</comment></comment></comment><comment><USER35> So as I understand it, investors want priority over equity holders in the event of a liquidation, but without the regulation and potential tax headaches of debt.

Since [convert] = [bond] + [option] what we do is make [bond] pay no coupon, and strike the option weirdly and make it look like it is a new (disruptive?) form of investment, when really it's tax/regulatory arb.

Caveat: I am not a lawyer or banker, nor have actually read the documents, though I did read the OP.

<comment><USER36> I don't think anyone is claiming it to be truly innovative and disruptive, as it's basically a warrant. But that doesn't take away from the value that the Safe creates, which is a standardized and well-thought out legal instrument that is freely available and modifiable.

</comment></comment><comment><USER37> This sounds awesome. As a first time founder who was _just_ about to close a small round on convertible notes, I realized what a pain some of the nuances with convertible debt were. Interest and maturity never really made sense to me from an investor perspective. I love that YC keeps raising the bar and works so hard to simplify life for both founder and angel.

</comment><comment><USER38> I really appreciate what YC does in this regard. I raised venture capital from a large angel investor, and his team relied heavily on the YC documents ( [http://ycombinator.com/documents/](http://ycombinator.com/documents/) ). I feel like it made the process a lot easier overall.

</comment><comment><USER39> So did YC just invent private equity options?

</comment><comment><USER40> I like this. Instruments that look like debt (terms and interest rates) generally are the instruments of lower risk investors. Linking them to equity is the game of wall street arb desks. Turning the instrument into a warrant is more in lines with high stage early equity investing - giving folks an option on a potentially large upside.

<comment><USER41> How do wall street arbitrage desks link equity and debt? While I'm sure there's some degree of correlation, it appears that debt securities tend to be much more longer viewed than equity.

<comment><USER40> You can think of a convertible bond as a bond, with an option on the stock. So the bond may be worth $100, and the option to buy the stock might be worth $20. Since convertible bonds aren't liquid, and the implied option may be hard to short, the $120 combined price is really just theoretical. If the convert trades at $110, then the buyer will buy the convert, and then try to short the debt (either shorting another bond from the same company, or with CDS), shorting some amount of stock (Perhaps a half share per option calculated with Black-Sholes or another option pricing method, or perhaps going short a similar option).

Does this make sense? If not, I can try to write it in more clear English.

</comment></comment></comment><comment><USER42> This looks good to me, as long as it's enforceable (as in the state sees it as a valid, binding contract). It's still debt until it converts as far as I can tell, which is the only way I know of to give the company money today for securities that don't exist yet.

</comment><comment><USER43> The SAFE looks great. But one question is, shouldn't SAFE holders have the right to veto a dividend?

While this would be sociopathic behavior, what would stop this from happening?

1) Start company 2) Raise 1 million dollars on SAFEs 3) Distribute 1 million dollar dividend 4) Dissolve company

</comment><comment><USER44> Very interesting! Sounds like a really good thing for YC members.

So if a company manages to get to a pre-IPO stage, will the accounting for these warrants be more complex? It sounds like trying to value one of these warrants might add some/a lot of extra work.

<comment><USER13> Just like a convertible note, as soon as there is an equity financing the Safe would just "convert" into a class of preferred stock. So you wouldn't have the valuation problem after you do a first financing, if I understand correctly.

</comment></comment><comment><USER45>
        "has the advantages of convertible debt without some of
        the disadvantages."

For which counter-party? The startups or the investors?

</comment><comment><USER46> And just like that the standard seed termsheet is born.

</comment><comment><USER47> Can someone give the short version?

1) What is the current problem with convertible notes?

2) How does this solve that?

<comment><USER48> Depending on whom you ask (Investors or Founders), Capped notes have a different set of negatives.

From the article, this new financial instrument is attempting to solve the problem that Convertible Debt has a set of restrictions: term limits and interest rates close to market rates. This causes lead to complications, when the note converts, or when the term expires.

This solves it by no longer issuing "debt", but instead the right to buy stock at an agreed price. This is similar to a Warrant, which is typically used for advisor compensation.

</comment></comment><comment><USER18> Nice work, pg and gang, and keep things sane and simple for everyone.

</comment><comment><USER49> Finally something sane

</comment><comment><USER50> Is buying SAFE similar to buying CALL option?

</comment><comment><USER51> This is a great option. It's about time!

<comment><USER52> agreed

</comment></comment><comment><USER53> It's incredible how much of the law is just codifying standard practice. It's when you try to do something new that you run into trouble.

Regulation is so thick on the ground that operating in an unregulated industry is considered a business risk, because you know the regulation is coming, but you don't know what it will be. There are rules for _everything_.</comment>


Vine exploits what used to be a signup shortcut to invade users' privacy - <AUTHOR> https://twitter.com/cawel/status/296263721603461121/photo/1

<comment><USER2> Twitter owns Vine? I don't see a problem here.

I think disqus is different. They have some kind of "share this comment on twitter" feature that will post to your timeline. While those kind of trust relationships make me leery, there is an inherent trust in that if they start spamming people's timelines with disqus promotions, people won't comment and websites won't use disqus.</comment>


My namesake visits Cuba, convinces Cuba to use open-source on a national level, and records a song about Guantanamo - <AUTHOR> http://www.stallman.org/doggerel.html#Guantanamero <comment><AUTHOR> I saw him speak at Pitt a couple years ago... the guy is crazy, his beliefs don't quite add up, but at least he is fighting the good fight. In the end, the Free Software moderates want the same open-source utopia as rms.</comment>


What's Wrong With the Teenage Mind? - <AUTHOR> http://online.wsj.com/article_email/SB10001424052970203806504577181351486558984-lMyQjAxMTAyMDMwMDEzNDAyWj.html <comment><USER2> I just remember some of my friends and I in high school, sitting around and realizing that we _should_ be more mature than we were, but we were just getting no support from anyone. We matured very slowly in school and we could feel it.</comment>


Why are fewer people interested in doing IT? - <AUTHOR> http://www.abc.net.au/news/2017-02-20/where-is-the-it-crowd/8286396 <comment><USER2> Summed up in one word, "NERD!!!!!"

<comment><USER2> FTR, I was making a reference to "Revenge of The Nerds." But seriously, there is still some stigma attached to working in IT, especially in the US, even today. It's not like it was in the 80's, but it is there.</comment></comment>


Subprime loans already being abused again, this time to push car sales - <AUTHOR> http://www.nytimes.com/2011/02/28/business/28autos.html

<comment><USER2> Banks have money, thanks to the government. And they will find ways to lend that money till they again dig themselves a hole.

<comment><USER3> Well, with 859,000 sub-prime car loans already handed out, seems like they're well on the way already.

Can anyone explain to me how handing out sub-prime loans to anyone is a "sign of health returning to the economy?"

<comment><USER4> "Sub-prime credit rating" ≠ "guaranteed to default".

If you look at the graph next to the article, the number of sub-prime auto loans being issued is not up to the level it was during 2005–2009. (Unfortunately the graph doesn't go any farther to the left, so I can't tell if 2005–2009 was a bubble in the auto-loan market or just business as usual.) And defaulting on a $20K car loan is not nearly as disastrous (for the borrower or the lender) as defaulting on a $200K mortgage.

<comment><AUTHOR> _defaulting on a $20K car loan is not nearly as disastrous_

Unless of course there are 100 times the number of housing defaults, because the car is not worth the price it was bought at a month later after it's used. Unlike land, cars _never_ increase in value, they only plummet.

I've never owned a car newer than 10 years old, I don't know why people have to drive brand new cars, they certainly don't get better gas milage (and apparently many people are using the credit to buy SUVs anyway).

<comment><USER4> Among the reasons why the sub-prime mortgage crisis has been Bad For America are:

¶ People who live in depressed areas who are underwater on their mortgages can't move to someplace with better job prospects unless they abandon hope of recovering the equity in their current house.

¶ In neighborhoods where a significant number of houses have been foreclosed on (or where there is a lot of excess capacity because it was built up right before the bubble burst), all property values suffer, even the value of houses where the owners have good credit and have been making their payments.

¶ It's a PITA for a bank to sell a foreclosed house, especially in a neighborhood where there have been a lot of other foreclosures (see above).

None of these factors apply to car loans.

</comment></comment></comment></comment></comment><comment><USER5> The fact is, sub-prime market is where banks make most of their money, not the prime market. These loans have ridiculous fees ($2000 in fee for $3000 car) in addition to high interest rates to bypass state usury laws. Banks don't really care, they get these fees and sell the loans to investors.

I am hoping to make some change in this market. I am working on a start up that would help those with limited credit, like Gen Y, get car loans at better than bank rates. More when I have a decent beta page ready, which should be soon :-) But would be interested to learn if those just starting their careers (18-24 yrs) are facing problem getting car loans at reasonable interest rates.

</comment><comment><USER6> I found this article interesting, but I think the submission title might be guilty of "gratuitous editorial spin" as outlined in <http://ycombinator.com/newsguidelines.html>.

</comment><comment><USER7> the big problem for the US is the American consumer. For the last 20 years the average American has been using $1.10 for every dollar made. This has been possible due to cheap loans and rising real estate prices.

The bare truth is that for the last many years America, and to some extent Europe, has been living well beyond its means.

<comment><USER8> That's not necessarily bad. As long it's credit for durable goods not experiencing bubbled up prices. There's good and bad leverage. Good leverage is essential to develop a healthy economy.

<comment><USER9> The thing that's important here is the definition of "durable goods," I think. It makes the discussion a lot simpler if we avoid the "doesn't wear out quickly" definition and use the "yields utility over time."

The thing of it is, there really aren't many (if any) goods purchased by consumers that are genuinely durable goods under that definition. Houses, possibly, but we clearly know that can turn out badly. Everything else. . . . well, everything else depreciates, most often quickly. Cars, televisions, appliances, and so on.

There just isn't a return on investment in terms of dollars and cents for consumer purchases that justifies the use of debt. If a business borrows money, they're just leveraging to increase profits. If a consumer borrows money, it's typically because they're not patient enough to wait until they have the cash (been there, done that, know from personal experience).

Anyway, the point of everything I said is to say this: I don't think there's good leverage for consumers, with the possible exception of student loans and a mortgage (for a reasonable house!). Everything else is just impatience.

EDIT: Given my school loans I'm actually pretty skeptical of the utility of student debt, too.

<comment><USER10> I don't entirely disagree, but I will observe that if you have have to borrow money for a water heater, furnace, toilet, cooktop, refrigerator or similar (because you lack one that works), that's almost certainly a wise thing to do. Same with a car if you need a reliable car to get to (or perform [pizza delivery]) your employment. I don't know that financiers would call that leverage or not, but not all consumer borrowing is irresponsible or even EV- negative. I wouldn't characterize the purchases of items like that on credit as impatience.

<comment><USER11> Yes - credit for emergency situations - but even in those cases, it's only correct if you are spending within your means. A cooktop/toilet/refrigerator or similar are not that expensive - people should have at least several months of cushion money in the bank after they've been in the workforce for a few years... there should be no need to live paycheck to paycheck and borrow at absurd rates on credit cards.

<comment><USER12> I would strengthen your statement by saying that if you are borrowing, you are by definition spending beyond your means regardless of the circumstance.

<comment><USER11> On contemplation, I agree completely.

I'm tempted to say there are edge cases, say your car broke down, you need some repairs, it's within your budget, but you can't pay until your next payday in 4 days, but you need it fixed today. That's what we've all been told is the sort of ideal situation a credit card is good for - but then I realize, that implies you are living check to check - which is already a bad position to be in - the credit card might save you in that moment, but it won't fix the overall financial problem you have.

(gonna ramble here) As soon as people start working, whether in highschool, college, or after, they should start forming a cushion. That cushion should on average grow throughout their entire working life. This isn't retirement savings. It's not an investment. When it gets big enough, sure, you can cap it and start investing, etc.. you don't need 10 years living expenses sitting in the bank.... but what about 6 months? What about a year? That's not absurd to me. Imagine the comfort of knowing you can lose your job, maybe be a bit more frugal, maybe pause on contributing to your retirement fund and no big vacation this year, but you have enough liquid cash in the bank that you don't need to work for a year. That cash becomes something you treasure. You don't WANT to dip into it. You won't just blow it on junk once it gets bigger. YOu won't just take a year off for fun - you'll just take comfort in the fact that you don't care when payday is and can think long term. You can make rational decisions about your job, changes in life, etc. It keeps you far, far away from the punishing cycle of debt the banking industry makes it so easy for you to get caught up in. It gives you HUGE leverage in financial situations.

It's basically cash in the bank that you can call on at any time. Anyone who has been working more than a few months should not be living paycheck to paycheck - if we could just get that message across to more people, things would be a lot better for all. People always say "oh, easy for you to say, I have expenses, blah blah....". Those same people, if given a 50% raise, will tend to increase their spending habits by 50% and still live paycheck to paycheck.

We need to stop thinking like a credit society. The credit score needs to stop being the most important financial market we measure by.

Even when it comes to housing - We need to stop talking about "buying a house" when we mean "mortgaging a house".

Everyone always counters with "Well, how else am I supposed to afford a house?". One answer might be "If you don't have enough to buy the house outright, you CANT afford the house". Sure, there are reasonably low risk situations responsible people can put themselves in and buy rather than rent, and come out ahead - but how many people actually do that -vs- get into the danger zone? I wonder.

Some cultures work for the benefit of future generations - they are a generation ahead at all times. The parents buy the house and pay for school for the kids when they grow up/get married/whatever, as their parents did for them. The kids, grown up, finished school, work to save up money to buy their kids an education and a house, and so on. What rule says we have to stay behind, when we could be a generation ahead with a little planning?

TL;DR: Agreed

</comment></comment></comment></comment></comment></comment></comment><comment><USER13> This is a vastly different issue from subprime home loans. The key difference is that depreciation of cars is reasonably predictable; car prices are not typically subject to speculative bubbles.</comment>


Disentangling biological signal from experimental noise in cellular images - <AUTHOR> https://www.rxrx.ai/ <comment><USER2> I love this warning about halfway down the page:

"How Not to Use this Dataset

As the images in RxRx1 are generated by carrying out biological experiments using reagents known as siRNAs, which are designed to target and knockdown a specific gene (more on this in another section), some may be tempted to use this to identify gene-specific morphological changes. DO NOT DO THIS. siRNAs are known to have significant off-target effects which you only have the chance to overcome through a number of computational methods and using multiple siRNAs per gene. As this dataset only includes one siRNA per gene for a random subset of genes, do not attempt to identify gene-specific signal. There are many ways you can convince yourself you have succeeded in this. You will be wrong. The data provided is insufficient for that task, and should thus be used to conduct research focused on alternative problems only. Just for clarity because we know somebody will ignore the warnings above, we'll state it again more clearly: DO NOT USE THIS DATASET TO TRY TO GET AT GENE- SPECIFIC CHANGES. IT WILL NOT WORK."</comment>


A note about Kerckhoff's Principle - <AUTHOR> http://blog.cloudflare.com/a-note-about-kerckhoffs-principle

<comment><USER2> I have nothing of significance to add, I just wanted to mention that you've done a really nice job on this post and the previous. Cryptography is not an easy topic to cover without getting lost in technical acronyms and jargon. I should know:I tried in my blog to do the same 3-4 months ago, and I'm now inspired to rewrite it and try again!

</comment><comment><USER3> "In fact, bcrypt works without a key at all."

Erm... What are they trying to say?

Sure, you can have a null password, and then have a salt and hash that with bcrypt, but your password is still nothing.

<comment><AUTHOR> I've edited out that statement. It was a gross oversimplification and I should have gone into the difference between a hash and an encryption scheme and the fact the password is the key in this case.

</comment></comment><comment><USER4> Was about to comment that you misspelled Kirchhoff but it appears there's a different Kerckhoffs's principle.

<comment><USER5> I came for the current law, but stayed for the crypto.</comment></comment>


Ask HN: What's your specialization and added value? - <AUTHOR> What's your specialization in your current field?
What's is you added value for your customer/employer?
How long it took to get on this level? <comment><USER2> Specialization: Embedded systems.

Value added: Experience. The ability to build things that work, even though they have multiple threads mucking with shared mutable state.

How long did it take me: 30 years.</comment>


A Quest for the Holy Grail: On D. W. Pasulka's "American Cosmic" - <AUTHOR> https://lareviewofbooks.org/article/a-quest-for-the-holy-grail-on-diana-pasulkas-american-cosmic-ufos-religion-technology/#! <comment><USER2> I've considered buying this book several times. Thank you for posting this review.</comment>


Ask HN: Becoming a freelance web developer - <AUTHOR>

Okay I need some advice friends. I want to become a freelance web developer code from home and make money.
Can I make this happen in 2015 or is too late?
I want to either go with the JS or PHP route to begin my journey which is easier and will show me results right away as far as money?
Before I go to barnes and noble or started taking courses I need your advice on the right way to become a freelance web developer. <comment><USER2> Never too late to do this. Just keep in mind that you are competing with super high skilled and inexpensive web developers from Eastern Europe and Asia. I would go down this route, build up great ratings on freelancer.com for example and slowly raise my rates. At the same time, I would always try to work on my own web projects with the goal to make an income from these. There are enough ideas out there and only very few who have the skills to bring them to life. If you are not sure what to build to make a living from your own projects, just read growthhackers.com - lots of stories there on how to build something that has a shot at becoming big.

</comment><comment><USER3> I start how freelancer few months ago(2), already take some jobs, is not late..and if you have several years of experience this is good. Just a tip, learn some new which are few people making it, im Rails developer and have many people doing it but PHP is 100x more, so i recommend get experience in some language/framework ascending like elixir/phoenix, go language, cowboy, erlang,javascript(have tons of frameworks like ember), so learn some new and make many apps using this, you can take 4 years of experience in some months and put this is your description/CV of the job.

Good Luck.

</comment><comment><USER4> You didn't give enough information to answer.

Are you already an expert web developer? Are you a complete beginner? You sound like a complete beginner.

Try making a simple website and putting it on the Internet somewhere.

If you have no experience, it's going to be very hard to find clients. Maybe you should work a couple years as an employee somewhere first, to get experience?

You can try bidding for jobs on those elance/odesk websites, but those will be bottom feeder clients. Those will be the type of people who expect you to make a Facebook clone for $100.

<comment><USER5> It feels like there needs to be a mid-range Elance site. Perhaps some minimum prices to avoid the bottom feeders plus the workers are vetted to a higher level of skill/quality.

On Elance, I've used it for some basic jobs. I'm absolutely going there for affordable labor on lower skill projects, but I'm not trying to get Facebook @ $100. A typical job would be for someone to do a basic template brochure website build (with all copy/structure mocked up) for $600-$1,000. Locally this would be $3-8k. That doesn't seem unreasonable to me for a cheaper country wage... though perhaps people would disagree.

As a client I find it tough to find guys that offer quality work. The contractors I've used are more than helpful but consistently lack attention to detail and value ad in the build process I would expect from experienced designers. Time is valuable and it seems to be death by 1,000 cuts on small comments a quality designer would typically sort out before you see.

<comment><USER4> Once you start to "vet the workers", then you have the problem of "how are the workers vetted"?

Those freelancer sites already have thin margins. If they start restricting their pool of workers and clients, it wouldn't work.

You get what you pay for. If you get a bargain on price, then you get lower quality or have to spend more time checking their work.

<comment><USER5> > Once you start to "vet the workers", then you have the problem of "how are > the workers vetted"?

It's a problem but solvable. How does any employer vet applicants? It's a matter of additional process/time/cost, ideally more than covered by the higher earnings and strong demand for services.

>You get what you pay for. If you get a bargain on price, then you get lower quality or have to spend more time checking their work.

This can and cant be true. I moonlight offering marketing freelancing services. 80%+ of clients that come to me have have been sold overpriced snake-oil from boiler room marketing agencies. A big part of initial meetings is to re-establish trust in marketing. Typically I'll increase ROMI by 30%-60%, and I'm not paying myself peanuts. In the extreme I had a client last year paying ~$10k/mth to have a company list them across a handful of free directories. These business owners are experts in other areas and just don't know they are being screwed until someone more knowledgeable sees it. I'd be the same with much IT work. And if I could have a freelance service that set a quality benchmark, then I'm happy to compete on price from there. With Elance I don't know if I'm paying more for less, or less for less.

I guess this is why word of mouth and relationships are so valuable.

</comment></comment></comment></comment><comment><USER6> Go large.

Do some fraction of something like this [http://blog.jenniferdewalt.com/post/56319597560/im- learning-...](http://blog.jenniferdewalt.com/post/56319597560/im-learning-to- code-by-building-180-websites-in)

Learn and make a Portfolio and get a lot Publicity at the same time - when you ask for work people could know your name.

Blog or Web-cast then your journey can inspire many.

<comment><USER7> Webcasting is a great idea. I'm currently doing this while learning Haskell by creating a custom server for Agar.io. In each session, I give myself a few tasks to finish. It is motivating because videos are more tangible record of one's progress than a git commit log.

</comment></comment><comment><USER8> Am too tired to write a clever self-deprecating yet self-promoting post, so: please check out my profile - you might find a link there useful...

<comment><AUTHOR> It could change someones life.. write your post :)

</comment></comment><comment><USER9> It's never been easier to freelance develop remotely. Definitely not too late, and I'm not sure it ever will be too late.

<comment><AUTHOR> what would you charge starting as a freelancer?

<comment><USER10> Start at $30/hr then $50 then $100

<comment><USER11> Then $150...</comment></comment></comment></comment>


Plague Inc. Banned in China - <AUTHOR> https://steamcommunity.com/gid/103582791435192667/announcements/detail/1723128189771746868 <comment><USER2> I can't even begin to fathom the conversations that must have happened at the Cyberspace Administration of China prior to this ban.</comment>


Bede BD-10 – Attempted Homebuilt Supersonic Aircraft - <AUTHOR> https://en.wikipedia.org/wiki/Bede_BD-10 <comment><USER2> I remember his entire series of aircraft, they were often featured in PopSci back in the day. Tight little ships.

They're still around:

[http://www.bedecorp.com/](http://www.bedecorp.com/)</comment>


Big Entertainment Wants to Party Like It's 1996 (Cory Doctorow) - <AUTHOR> http://www.internetevolution.com/document.asp?doc_id=175415&print=yes

<comment><USER2> _'You know what would probably get something done? If the record industry proposed a law through the front door, with public hearings, to find an equitable, simple way to get paid for the use of its material online. A blanket license, say, that users or ISPs could opt into in exchange for access to all the music that's already online, wherever and however they can find it.

Sure, some of the hardcore copyfighters would hate it -- it'd feel too much like a "music tax" for their taste, and they won't rest until the music companies have been killed in vengeance for all the bad stuff they've done since 1996 -- but it'd make the entertainment giants seem reasonable, and it would make anyone who disagreed with them seem unreasonable. They'd have the easy sell: "We want to stop suing your kids, but these crazy infohippies won't let us!" '_

I was surprised by this. Is a blanket license really something the activists are wiling to live with? It seems like a terrible compromise to me. It seems like an admission that the record companies deserve a business model.

Seriously, I think that we seriously need to consider letting copyright, or parts of it, die. At least lets speculate about the consequences. Music seems like a good place to experiment. (A)The sky will not fall if music is not made. (B) Music will almost definitely still be made.

The losers are the components of the recording industry. But we are under no moral obligation to keep them in business.

<comment><USER3> The point is that the record industry is better off working with the public than in secret behind locked doors. The blanket license is simply a single possibility that may be compromised on if there is ever an open discussion.

<comment><USER2> Yes. Good point. I have no problems with that statement. Working with the public is certainly better than secrecy. I'm just pointing that a music tax is being presented as reasonable. I was surprised the author implied this.

*I'm not personally unwilling to consider it. I think this is a practical problem as much as an ideological one. If this gives us a practical solution without too many negative side effects, I'm all for it. In fact, if anyone can point out an interesting exploration of the topic, I'm interested.

<comment><USER4> Eff wrote a couple good articles on taxing music.

Collective Licensing Good, ISP tax bad: [https://www.eff.org/deeplinks/2008/03/monetizing-file- sharin...](https://www.eff.org/deeplinks/2008/03/monetizing-file-sharing- collective-licensing-good-isp-tax-bad)

A Better Way:[http://www.eff.org/wp/better-way-forward-voluntary- collectiv...](http://www.eff.org/wp/better-way-forward-voluntary-collective- licensing-music-file-sharing)

Their opinion is basically to create collecting societies. Listeners would pay a monthly fee and get the legal right to use all works by member artists, irrespective of format or distribution method. Artists could choose whether to join or not.

They are saying it would work because it has precedence, and most users would be willing to pay a fair price. The society will be encouraged to charge a fair price by the fact that not doing so will encourage piracy. Fines and legal action will help the societies from non-members.

I think that the general idea is good. I might be willing to pay a monthly fee if I got unrestricted access to music.

</comment></comment></comment></comment><comment><USER5> More than anything, it saddens me how corporations have assumed so much control over our lives -- or that we've ceded it to them.

I am no anti-capitalist, but I want some kind of balance that's definitely tilted in the wrong direction.

And the music industry suing their own customers? Talk about making me pirate just to punish them. Hell, I'll even download Winger now -- just because I can.

</comment><comment><AUTHOR> Thanks to spydez for the one-page version, btw... original was broken up in 8 pages!

<comment><USER6> Me and my crazy hacker skills... finding the "print" link. :P

</comment></comment><comment><USER2> _"There was a European version whose provisions were very similar to the Broadcast Flag -- I was allowed to attend these, but only by promising nondisclosure. No problem: I stumped up and down Europe, saying, "There's a crazy, evil DRM thing coming that's really bad and it's so bad they won't even let me tell you about it!" That was a lot simpler than explaining what was wrong with it."_

</comment><comment><USER7> In 1996, he says:

> And most importantly, the laws regulating copyright and technology were > almost entirely designed by the entertainment industry. They could write > anydamnfoolthing and get it passed in Congress, by the UN, in the EU.

But:

> 1996 is gone, and good riddance.

Yes, but has the legislative climate changed that much? Are we or are we not still in an era when "They could write anydamnfoolthing and get it passed in Congress, by the UN, in the EU"? I think the article offers pretty good evidence that we are still in such a legislative climate.

It looks like 1996 is very much _not_ gone in a very important way.

</comment><comment><USER8> Really well written article.

</comment><comment><USER9> 'mustache twirling villains' = Gold

</comment><comment><USER10> Those horrible days when musicians could actually make a living selling their work. Let's not go back there !

<comment><USER11> yes, when artists got loans to make their records, earned under $1 for a CD that sold for more than $20, and were still expected to repay the loans?

oh wait, thats still how it goes, except the artist cut is lower because CDs sell for less.

<comment><USER10> No excuse for this, really. Led Zeppelin showed everyone how to do it in 1969. Record your own first record (very much easier to do now), own your masters, and have a good, tough business guy who is unquestionably on your side (Peter Grant).</comment></comment></comment>


FACT SHEET: Cybersecurity National Action Plan - <AUTHOR> https://www.whitehouse.gov/the-press-office/2016/02/09/fact-sheet-cybersecurity-national-action-plan <comment><AUTHOR> "In addition, the Government will work with organizations such as the Linux Foundation's Core Infrastructure Initiative to fund and secure commonly used internet "utilities" such as open-source software, protocols, and standards. Just as our roads and bridges need regular repair and upkeep, so do the technical linkages that allow the information superhighway to flow."</comment>


Ask HN: What's your learning path for ML/AI developer? - <AUTHOR> How long it you took you to understand to work in ML/AI technologies (to get a job or compete in kaggle) and what learning path(books/courses) you finished ?<p>and any advice you want to add !!!!!! <comment><USER2> For me it was random.

I got a PhD in physics, where the job market was brutal. (I don't know if I was in the top 3% in talent but I certainly was not in the top 3% at either office politics or musical chairs.)

I got into software, did Perl, PHP, Java, ColdFusion, whatever paid. I started developing advertising-supported web sites that gathered content through an "A.I." pipeline just before Deep Learning broke in the news. That got me work on text analysis, productizing a deep-learning based search engine and some other work. I also wound up chasing some dead ends and going sideways at times -- at the moment I am doing pretty much ordinary front end but I am focused on getting really good at it.

(Something I learned the hard way is that real A.I. systems are going to have to work closely with humans. If somebody wants you to build an A.I. that does a 'difficult' or 'impossible' task the first thing to do is build a U.I. that lets a person do the task manually, otherwise where are you going to get the training set from? Starting with anything else is outright malpractice.)

</comment><comment><USER3> FastAI -> everything I can find on PyTorch -> pandas/numpy deep-dive -> wrangle, build, rinse and repeat.

</comment><comment><USER4> I've been watching some videos on fastai</comment>


Ask HN: What technological progress do you expect in the next 10 years? - <AUTHOR> As the title says, what technological development do you expect in the next decade? What are you excited/afraid about? <comment><USER2> Biggest Trends

AR: It's already here big time. Lot more sophisticated commercial applications.

VR: The decade when it finally gets working. Imagine VR capsules where people go regularly to spend their leisure.

NeuraLink: Expect thought interfaces with high enough bandwidth to write, play games/simulations just with thoughts.

AI: Multi-skilled AI bots available all around. AGI is still far but starts looking achievable

Self Driving: Hell yea; Self aviation too</comment>


RemixOS for PC released - <AUTHOR> http://www.jide.com/en/remixos-for-pc#downloadNow <comment><USER2> Just booted it. The EULA is frightening to say the least.

1\. "You agree that you irrevocably waive any and all ownership, legal and moral rights to your user content."

2\. You're also not allowed to oppose "the basic principles determined in the Constitution of the People's Republic of China", harm it's "national honor and interests", or undermine it's "national religious policy, promoting cults and superstitions".

3\. Also, you're not allowed to spread rumor, disturb social order, or undermine social stability.

There's other strange rules of conduct that just turned me off from the entire project. Besides, it doesn't see either of my wireless adapters and the desktop blanked out when it attempted to adjust my screen resolution:)

I'm still interested in getting completely off Windows 10, so I'll stick with Linux for now.

<comment><USER3> If this is really true [1] and not an exaggeration, there is no way on Earth I will touch this or let anyone I care about touch it with a 100-foot pole.

Closed source? Waive legal rights? to my own content? Not criticize China?

Not in 100 million years. Glad I switched to 100% Ubuntu. Donated and anticipating 16.04 LTS in April.

It's one thing to get pressured into a gray area w/r/t freedoms in exchange for some perceived benefit, but to explicitly waive them and endanger myself to a foreign power? Who knows what China would do? No way.

How do these people even make a EULA with a straight face and expect people to drink it up? Even though Windows and OSX are closed-source, at least hackers have a grasp on what it's doing and you're not instantly giving up rights and ownership when you turn it on.

This crosses my line in the sand.

[1] I've been trying to find the EULA online somewhere, but can't so far. Any leads? I'm afraid to install this and look at the EULA.

<comment><USER4> >Glad I switched to 100% Ubuntu. Donated and anticipating 16.04 LTS in April.

Try Trisquel if your hardware supports it.

</comment></comment></comment><comment><USER5> I have a little box for my TV running Android. The issue with all the apps is that 90% (looking mostly at games, I guess) of them more or less expect gestural input, and are either really difficult to play or just not fun with a mouse.

I doubt that particular issue is as bad in productivity apps etc., but there's a lot more to running a mobile app on a big screen than just resizing a window. Does this have some magic to solve that in a general way?

<comment><USER6> I keep wishing somebody would make an airmouse with buttons configured to simulate common touch-gestures - like put a d-pad on it for swipe up/down/left/right, and a scrollwheel simulating pinch zooms.

Google keeps trying to get vendors to support their half-forgotten TV oses GoogleTV/AndroidTV, but it seems like it would be simpler to just make a peripheral that emulates the common touch actions and use let Android be Android, even if it's on a TV.

<comment><USER7> You have a mobile phone, I assume? With a touchscreen? Which does multi-touch? And the thing sports a bluetooth adapter?

In that case all you need is a program running on that phone, emulating you 'airmouse'. No need for more hardware, just use what you have. The same works for a 'normal' PC, btw. I know there are several apps for Android which can provide this service, I guess the same is true for the other contenders in this area.

<comment><USER6> Mostly thinking about my kids on that one, as they don't own phones.

</comment></comment></comment></comment><comment><USER8> Is there really a chart comparing performance on an i7 to a bunch of smartphones? I'm having a really hard time seeing the point of that comparison. Why not benchmark against other PC operating systems, like say Chrome OS?

<comment><USER9> Notice the units too.

<comment><USER10> The i7 does 214218 CPUs...duh.

</comment></comment></comment><comment><USER11> RemixOS uses GPLv2 code (Linux, etc) and other open source licenses. They might got away with proprietary devices, their official response on their old (closed) forum was telling. But now they will have to provide it.

The idea of adding a several improvements to Android for desktop usage (improved right mouse click) is good, but why not keep it open source? Also I don't see a real business model, as Google is already working to merge Android and ChromeOS "somehow" (as indicated by news lately) and both ChromiumOS and Android are open source.

<comment><USER12> Because they want to profit from it. BTW - the kernel layer is GPL-ed and is already available in source form with the Ansroid x86 project.

The Android layer is Apache licensed and they are't required to open source it, or using your own misleading verbiage, they can "get away with it".

<comment><USER13> How will they profit from giving away their OS for free? Maybe by gathering their users' data, given their EULA?

<comment><USER12> I don't know what their exact business plan is. Just like Twitter STILL doesn't have a real business plan.

</comment></comment></comment></comment><comment><USER14> Hmm, it requires legacy boot. I wonder why it doesn't support UEFI? Makes it hard for me to test this on the devices I would want to use it with.

EDIT: More research. Results:

There is an EFI system on this image, but it has a corrupted GPT. I fixed it with gdisk and I ran into some issues trying to boot it via EFI shell on one of my netbooks. My libreboot laptop was able to boot it but it gets stuck during bootup. Does not show up as an option for booting on my macbook. Going to try booting it via EFI shell on my desktop and report back.

Alright, got it to POST on my desktop, but it hangs during boot. On my libreboot laptop, it boots all the way to desktop if I do it in _guest_ mode. Pretty underwhelming once I got there, though.

<comment><USER15> My laptop that had BIOS only got to the bootloader and crashed soon after doing the disk write test. My NUC is set to UEFI but only successfully ran by manually selecting it in legacy, as you say.

</comment></comment><comment><USER16> so this would be the first closed linux distro in history. An ironic milestone for the open source community. or have I missed something?

<comment><USER17> Well, depends on what you consider a Linux distro, there are many Android ROMs that are closed in a similar way, including those from phone manufacturers, where kernel sources are released but nothing else, there definitely existed before Remix OS.

Does Android really qualify as a Linux distro? Does a Linux distro need a GNU system behind it? Because that's missing here, no glibc, no coreutils, etc. This is why some people have been insisting on calling it GNU/Linux all along, it can create ambiguity in situations like this. Linux is after all, just a kernel.

<comment><USER18> Since there are various systems which use the Linux kernel without the GNU userland, it can make GNU/Linux more important as a term, in contrast to Android and others.

Although I have wondered if OS like Maemo, which use Busybox instead of GNU, should be considered Busybox/Linux. :)

</comment></comment></comment><comment><USER19> I recall, perhaps mistakenly, that there use to be a big buzz in the 90's about having Java as a desktop OS.

</comment><comment><USER20> Anybody got this to work on VirtualBox? It's not moving past the bootloader screen for me, no matter what VM configuration I select.

<comment><USER21> It works fine for me, be sure to choose guest mode though.

Virtualbox on a W10 host.

edit: screenshot [http://i.imgur.com/Ev7Kvil.png](http://i.imgur.com/Ev7Kvil.png)

<comment><USER20> Strangely, it didn't work at all on VirtualBox on Ubuntu, but worked on a Windows 7 host.

Thanks for the hint!

<comment><USER22> If you've got the OSE (free) version of VirtualBox on Ubuntu, it might be missing chipset support.

</comment></comment></comment></comment><comment><USER23> Managed to get it too boot on my Acer laptop. Not impressed with it honestly. Mouse isn't really useable and the only thing that make it "desktop like" is the task bar at the bottom. The music application still opens full-screen with no close button or any window chrome at all. Sure the site says it has Google Play Store but there is no sign of it here.

</comment><comment><USER24> Awesome. It's much easier to make Android (with it's massive app ecosystem) a desktop OS than it is than to build an app ecosystem for traditional Linux desktops.

Interestingly enough it doesn't look like there's an installer - they want you to run it from USB for now.

<comment> SG- Except that massive app ecosystem is designed for small screen phones and single window design.

It also hasn't helped Windows Mobile at all with it's "massive" desktop ecosystem.

<comment><USER25> Imo if you can run existing Android apps in resizable windows it would be a huge win. There are many well made Android apps that would work just fine as their own windowed applications

<comment><USER26> some would definitely work pretty well.

Several streaming services have native apps on both mobile & desktop. I think that their mobile apps could run pretty well on desktop.

For many complex apps though (like anything dealing with text edition), the lack of hover & right clics handling would be a pain. Android supports 'hover' events (and since API 1 IIRC) but nobody implements them in custom widgets.

Android supports mouse input but even as an android engineer I have no idea what the right click does in that situation.

<comment><USER27> [http://developer.android.com/reference/android/view/MotionEv...](http://developer.android.com/reference/android/view/MotionEvent.html#BUTTON_SECONDARY)

BUTTON_SECONDARY is reported in the getButtonState() of the MotionEvent, but I'm not sure most apps ever check that. I would guess in a lot of cases, if there is only checking on pointer down and up, it will act like the left mouse button.

</comment></comment></comment></comment></comment><comment><USER15> Anyone want a review?

Bad problems booting certain machines data partition creation _very_ slow no Google Play

Good eventually boots! wifi and bluetooth work can configure layout for external keyboard f-droid works firefox has reasonable keyboard shortcuts

Ugly multi-monitor support - screen mirroring only no multiple screens and rotation support apps not designed for mouse input - right/middle click or drag and drop app install of apks a little flakey inbuilt browser very basic graphics rendering slower than X11

</comment><comment><USER28> Would be cool if they'd release this for ARM too. The Pi, Cubietruck and all the other dev boards would run this nicely.

<comment><USER29> From what I remember, there are ports to RaspPi but a major issue is getting graphic acceleration working. Not sure what the current state of it is.

<comment><USER28> There definitely are Android ports for RaspPi and other ARM boards, but I don't think there are RemixOS ports for these, which I would like.

</comment></comment></comment><comment><USER30> I would love to add my comments as a tester, but I can't get the PC version to boot successfully after Linux and Windows install attempts. I thought the USB 3 interface specification was only desirable, but it seems it's a requirement.

I have ordered some USB 3 memory devices, I'll post again if I see a successful boot.

</comment><comment><USER31> How is this different from android-x86?

<comment><USER23> It appears to BE android-x86. I'm pretty sure all they have done is created a custom shell/launcher.

</comment></comment><comment><USER32> I have a spare AIO touch-screen PC which I'm hoping to revive. This could be perfect.

</comment><comment><USER33> Anyone know how they are building a desktop experience on Android?

Have they just layered a userspace on top of traditional Linux.. Or did they actually work with binder /init - > kdbus/systemd

</comment><comment><USER34> Does it run easily on a Raspberry Pi 2?

It's probably mentioned somewhere else, but I suspect a lot of people here will want to know the answer.

<comment><USER12> No - because this build is targeted at the x86 architecture

</comment></comment><comment><USER35> Do someone understand their business model? What are they planning to sell?

<comment><USER20> I guess their Ultratablet and Mini, running Remix OS with multitasking support.

</comment></comment><comment><USER36> It's pretty cool to see work being done to get Android working better in a desktop environment. I applaud the progress. But I don't really have a need for this. I love my Chromebook and ChromeOS too much and it feels like they fill similar niches.

</comment><comment><USER37> anyone managed to boot this off USB stick on macbook pro?

<comment> SG- Trying to right now, there's 0 instructions provided for OSX booting other than to hold 'Option' for the boot loader which is pretty useless.

Hoping I can just dd it to my SD card and have it boot.

Edit: doesn't seem to want to boot from my SD card or recognize it as bootable.

<comment><USER33> [https://news.ycombinator.com/item?id=10886820](https://news.ycombinator.com/item?id=10886820)

HTH.

</comment></comment></comment><comment><USER38> Google should buy this now before Microsoft applies its EEE strategy on it or tries to fill it up with Cortana and stuff.

<comment><USER23> They would be wasting their money it's terrible.

</comment></comment><comment><USER39> [https://dn-cdn-shop-jide-com.qbox.me/jide_upload/S1451544263...](https://dn- cdn-shop-jide-com.qbox.me/jide_upload/S1451544263698_pants.png)

That's it! I am buying that jeans.</comment>


Amazon Prime launches in India - <AUTHOR> https://www.amazon.in/gp/prime/pipeline/landing? <comment><AUTHOR> Prime video service is missing.

Inaugural offer prices the service at 499 INR (around $7.50) per year. After 60-day trial period, price will raise to 999 INR ($14.80).

The caveat here seems to be that the free delivery is not applicable on every product listed on Amazon but only on products with Prime logo :(</comment>


Ask HN: Google Discover shows YouTube Ads (despite paid ad-free user) - <AUTHOR> Recently Google updated what used to be known as Google Now / Google Feed, (now called Google Discover) on Android.  For some things like recaps of sports teams I follow, it has now started playing YouTube videos in-line, instead of opening the app.  I've noticed it's also started serving 6s ads from here, even though I'm a paying customer of Google Music / YouTube Red, and there doesn't appear to be a way to stop this behavior.
Anyone else seeing this? It's pretty annoying/unfriendly behavior considering I've been paying for years to avoid this kind of thing, and really inexcusable, since the Discover app is part of Google Search and has access to my account info.
I'm not sure if this is a bug or just Google being Google. <comment><USER2> yes, I am also seeing this and I'm so upset about the change. I LOVE Google now before the update, these ads just suck. I also am a paying customer (Google Music, YouTube red, G Suite, Adwords...) and really think I "deserve" to have an ad-free experience.

my favorite part about Google Now was the wide-range of news it would show, all tailored to my preferences.

<comment><AUTHOR> Good to know it's not just me. I've reluctantly been pulled into using the feed (as you say it has some nice features, and it's right there on my phone when I swipe right, so hard to avoid...), but this recent change has really put me over the top in terms of annoyance with Google's tracking behavior, especially in light of recent changes to Chrome.

I'm hoping it's just a bug/oversight, but I wouldn't put money on it...</comment></comment>


Google Cloud TPUs - <AUTHOR> https://blog.google/topics/google-cloud/google-cloud-offer-tpus-machine-learning/ <comment><USER2> they are definitely moving really fast on this one</comment>


RIM To Enter The In-app Payments Heaven? - <AUTHOR> http://www.insidermobile.com/article/3017/rim-to-enter-the-in-app-payments-heaven RIM, following Apple who introduced in-app purchases 1.5 year ago, introduced a Payment Service SDK to enable in-app payments. As we showed in our latest report, in the Apple App Store for iPhone in the United States, almost 50% of the revenue of the top grossing applications was generated by applications carrying in-app purchases. For developers this enables a range of opportunities to sell premium features and content but RIM also opposed several restriction limiting developers. The restrictions include selling virtual currencies or in-app credits, selling physical goods or services and selling digital goods used across multiple applications. For pricing, the same tiers as applicable to BlackBerry App World can be used.
According to RIM, the Payment Service provides a similar payment experience as going in BlackBerry App World. Consumers can, provided they have a BlackBerry ID, apply various payment methods, including credit card, PayPal® and carrier billing. The SDK seems to have been available since the 5th of January (BlackBerry's developer site), but the first applications incorporating the new functionalities still have to hit BlackBerry App World. So far we did not see any notable changes in the storefront of BlackBerry App World, but we will keep you posted when the first applications do appear. We will also keep track of the take-off and are curious to see whether the success in the Apple App Store can be replicable by other stores.
by Gert Jan Spriensma. <comment><AUTHOR> Too little too late?</comment>


Ask HN: Review this startup idea we are discussing - <AUTHOR> Tl;dr : We have a idea to build a platform where people can connect and get paid to have meaningful conversations. Roast this idea in the comments section.
Long version:
Me and a colleague have been brainstorming this idea to build a platform where people can find other people to talk to about any topic they want. It could be life coaching to startup advice to maybe just talking to a person who is depressed and whats to have a casual conversation.
either party in the conversation could pay for this call. for eg: you're a tech guy and want to talk to some business person to see if they might be a good lead for the software services you provice. you can pay maybe a few dollars for a 5 min conversation with him!
I know there are niche players in the market who have similar platform for education, legal services, medical consultation etc..
we are wondering if we can have a general platform where people can directly connect with each other and make money instead of going through one of these niche players.
obviously we may need to start off with niche sectors but we want to give people a platform to make money by providing their services online.
that's the gist of what we have been thinking..
Where and why do you think this would fail? if you think it's a good idea, tell us what sector could we start with if we decide to go ahead with this idea. and how we can get some network effect?
Let the roasting/"this idea sucks" begin!
Cheers :D <comment><USER2> In China, the service you described already exists. It's Zaih.com. I think people can either choose to meet an expert in person or ask the expert a question(they need to pay of course). However, this product is not monetizing well in China so it's pivoting towards online training(kinda like udemy).</comment>


Telltale Games is being revived - <AUTHOR> https://www.polygon.com/2019/8/28/20835854/telltale-games-return-walking-dead-lcg-entertainment <comment><USER2> Company buys IP/branding which has non-zero value, no surprise there.

The people "reviving" it are unaffiliated. They previously worked on mobile cash grab licensed games like Duck Dynasty.

"some of the old telltale employees will be offered _freelance_ positions".

May as well stay buried at this rate.

<comment><AUTHOR> "please don't support the reanimated corpse of Telltale Games. they laid off their entire staff, got snapped up by shady millionaires, and now they're hiring people back as freelancers without benefits. get your games elsewhere"

[https://twitter.com/ryandroyd/status/1166767056273854465](https://twitter.com/ryandroyd/status/1166767056273854465)

</comment></comment><comment><USER3> a lot of people forget that the games are developed by people, and how good a game is depends very heavily on the creative vision (ala, the "soul") of the developer. The IP/brandinbg is merely marketing.

<comment><USER4> Very true. As an example, Bioware made a lot of good games 10-20 years ago. I don't know how many of those people still work at Bioware, but I would guess it's not very many.</comment></comment>


Ask HN: Anyone in SF interested in compilers? - <AUTHOR>

After realizing that I don't know nearly as much as I'd like about compilers, I went looking for a way to learn more. While there is online courseware from MIT and Stanford, I'd really like to meet in person with some people to work through exercises and questions together.<p>Towards that end, is anyone interested in a bi-weekly meeting with lectures on compilers? I'm envisioning something that has a lecture and hacking time for the latest exercises. <comment><USER2> I'm reading "Computer Architecture: A Quantitative Approach" and yeah, learning more about compilers would be cool, but a big time commitment is not something I want ATM.

Might try asking the dojo if you're in south bay on any semi-regular basis.

</comment><comment><USER3> I'm interested, but I'm not moving to SF until October. I'll message you my email in case you get a late start or want to try to meet around then.

I took a compilers course in college but I was too busy to get as much out of it as I wanted. I've always wanted to go back over that stuff and I've been wanting to learn more about the innards of Python, so I was hoping to combine the two.

</comment><comment><USER4> Berkeley has a pretty good programming-languages program; a friend of mine has been working on parallelizing CSS rendering: <http://www.eecs.berkeley.edu/~lmeyerov/#activities>

</comment><comment> alok-g I am interested, but I am not based in SF. Let me know if not meeting in person works.

</comment><comment><USER5> Ah, that would be fun, but alas! I am in Chicago.</comment>


Wael Ghonim, head of Google Middle East, is missing - <AUTHOR> http://blogs.aljazeera.net/middle-east/2011/01/29/live-blog-301-egypt-protests From the liveblog: AJE has been contacted by friends of Wael Ghonim, head of Google Middle East, who has been missing since last week. His wife is appealing for any information on his whereabouts. Ghonim was guest speaker at the Al Jazeera Forum for Online Journalism & Freedom of Opinion earlier this month. <comment><AUTHOR> I couldn't link directly to the appropriate section of the live blog which states:

"AJE has been contacted by friends of Wael Ghonim, head of Google Middle East, who has been missing since last week. His wife is appealing for any information on his whereabouts. Ghonim was guest speaker at the Al Jazeera Forum for Online Journalism & Freedom of Opinion earlier this month."</comment>