LivingSocial: Employees' and Founders' Common Stock Now Worthless - <AUTHOR> http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy <comment><USER3> As an independent restaurant owner, I can't say I didn't expect to see this one day. The model simply doesn't work, at least in our industry. The restaurant loses money on every single "daily deal" that is redeemed. With LivingSocial or (insert any other daily deal site here) taking half of the deal, the restaurant is simply left with 25% of the revenue generated. This does not even cover our food costs, let alone labor.

The rise of daily deal businesses have brought up a couple of fundamental issues for us: 1)Customers are often daily deal hunters - We would be willing to take the one-time loss on a daily deal, if we had a chance of converting the customers into regular diners. However, we have found that most people who purchase these deals, simply move on to the next deal after they are done.

2) Cheapens the product - Once you have lowered the price for a product, in this case food, the guest automatically ties the value of that product back to the price they paid. This is a huge problem for restaurants in particular because the guest is not willing to pay full price for the product even if they liked it. Now your product is valued at half of your current price, and to get that customer back in the door, you have to offer a significant discount again (most likely another daily deal).

3) Cannibalizes our existing customer base - One of the worst unintended consequences of using daily deals is that some of your regular guests start waiting for these deals, and only come in when they are available. This hurts in two ways: 1) regular guests are now spending less than they were the last time they came in, 2) regular guests are now waiting for a LivingSocial/Groupon deal to become available before returning to the restaurant causing them to wait longer before returning to the restaurant.

I believe that a company that provides customer acquisition via deals could be extremely valuable, but they must do it properly, and most importantly it must benefit their customer (in this case the restaurant). Until a company learns how to ensure that a business is obtaining a profit from providing this massive discount, without cheapening the product, and cannibalizing existing sales, the daily deals industry will continue to fall by the wayside.

<comment><USER4> I really hate using LivingSocial/Groupon because it seems like the business owners always HATED taking these deals. I always feel like I'm being treated differently because I'm not paying the actual price. One time when I used one of these deals, I even heard the employee say to another employee "... another #$#@$#@ groupon deal....". If they didn't like people using the deals, why bother signing up for it?

I can't wait for these daily deal business to go away because I don't think it benefits anyone.

<comment><USER5> _"I can't wait for these daily deal business to go away because I don't think it benefits anyone."_

If you don't like these deals, then don't use them but don't say that they don't benefit anyone. Customers benefit from these deals all the time. 50% off a meal is a great offer!

I think the biggest problem with these deals (for the wait staff at a restaurant) is that people think they should tip based off the discounted meal, instead of the full price.

It's a deal on the meal, not a deal on the tip.

<comment><USER6> >If you don't like these deals, then don't use

When all your competitors are? Go make a business and try that strategy.

>50% off a meal is a great offer!

So great the company who set it up went right out of business despite an insane amount of funding.

>I think the biggest problem with these deals (for the wait staff at a restaurant) is that people think they should tip based off the discounted meal, instead of the full price.

I don't think people should tip at all. Tipping is just a sneaky way of having the customers pay the labor costs directly. It's ridiculous to say a steak costs $7 when I'm paying the the server as well.

<comment><USER5> My points about not using the deals and them being great offers was from the point of view of a customer.

 _"I don't think people should tip at all. Tipping is just a sneaky way of having the customers pay the labor costs directly. It's ridiculous to say a steak costs $7 when I'm paying the the server as well."_

Not wanting to tip and actually not tipping are two different things.

I agree with you that the whole tipping concept can get ridiculous but like it or not, that's the system we have.

To not tip in all cases, in a system that has tipping as a critical part of the labor costs, is flat out wrong. You _know_ the system is based on tipping and you're punishing the wrong person for your distaste for it.

If you don't want to tip, don't participate in the entire system. Don't go to any restaurants or other place of business that advocates tipping and makes it a critical part of the staffs salary.

Again, it's absolutely wrong to not participate in only one aspect of the system you dislike when the people who get hurt are the ones with little power to change things.

</comment></comment></comment></comment></comment><comment><USER7> I know some of Living Social's original investors, and I approached them for an investment in my startup about 8 months ago. Part of our pitch was that daily deals solve and amazingly valuable problem in an inherently not-valuable way, and although our system would take less of a straight line, it would and already WAS solving the problem for a small subset of businesses in a more valuable and vastly more sustainable way.

They ultimately passed on the investment, our last gasp to survive, because "Living Social was obviously their flagship, and they didn't want something who's core value proposition was that Living Social was doomed, which is obviously isn't." That's very close to a direct quote.

This doesn't make me happy. I hope Living Social figures it out. They realized Daily Deals were doomed even before Groupon did and tried to work out other revenue streams. I hope this report isn't even true. But God damned if I didn't tell'm so.

<comment><USER8> Do you think Daily Deals are a fundamentally flawed concept?

I tend to think there's nothing wrong with them other than an over-saturation of the market and a prevailing attitude that says all you need is a sufficiently large mailing list to win. But that's just my outsider's view.

<comment><USER9> They are flawed unless you can do something about retention.

Has anyone tried the concept where the "deal" is that you go, name the site, and get a coupon giving you a deep discount the SECOND time you go back to that store? That would seem to make more sense. Because everyone that the store gives the deal to, has actually paid full price once. And wanted to go back. And if you've been twice, you're more likely to go 3x. And furthermore most of the failed leads were a sale, so nothing was lost.

<comment><USER10> CVS, El Pollo Loco to name 2 that I've interacted with lately. When you buy something there, they give you coupons at the register for next time that are pretty deep. I'm guessing this is a proven effective marketing technique judging by the big companies using it.

<comment><USER9> The coupons that you're talking about are for specific products. The idea being that you come in to get that price on one thing, and wind up picking up others at full price.

<comment><USER11> Some stores offer coupons for your next purchase. For example, Gap gave me coupon for 20% off any one item if I complete their online survey. That's a pretty big discount, so that survey information must be pretty valuable.

<comment><USER12> I think that they don't expect you to come back for just 1 item. So I would guess that they value the engagement and increased chance of a trip to a store.

I don't know their margins, but I doubt a 20% discount has them losing much on that item.

</comment></comment></comment></comment></comment></comment></comment><comment><USER13> Over 5 years ago I turned down an offer to work at LivingSocial. Last year, I would've been worth $10 million on paper. All of that fake wealth evaporated today. What a mess.

<comment><USER14> Wow, LivingSocial has now been funded to the tune of $918 million, and really, what is there to show for it?

<http://www.crunchbase.com/company/livingsocial>

<comment><USER15> I guess they bought a lot of ads.

<comment><USER16> and not very well apparently, I managed to get a 70% discount on their listed price for something by using their referral system (refer 3 people and get yours free) plus targeted advertising

</comment></comment></comment></comment><comment><USER17> I've always felt that companies like Groupon, LivingSocial, and Zynga do way more harm than good.

Early on I was impressed by how well these startups were able to capture mainstream attention and change the way so many people live and behave.

But at the end of the day, what value does Groupon and Zynga actually add to society? I'm of the opinion that most daily deals and social gaming companies bring out our most primitive and animalistic tendencies (addiction and impulsiveness), and are antithetical to human progress.

If this is the beginning of the end of LivingSocial and daily deals then good riddance I say.

<comment><USER18> Please define "good" and "human progress." In my experience these terms are often so nebulous as to be meaningless when applied to companies.

EDIT: How can you conclude that I'm wrong if even you haven't defined "good" and "human progress" in your argument?

<comment><USER17> Point taken, and I'd rather not even attempt to define the two because I think that is outside the scope of HN altogether.

I'm pretty new around here and the last thing I want to do is be starting political/moral/religious flame wars in a post about LivingSocial.

<comment><USER19> I disagree, it is will within the scope of HN especially if we're to prevent this sort of thing happening again from a founder/person on the ground level.

The other guy is wrong, good and human progress can be paired well with technology and business solutions. It's called social venture, and it's possible. It's just not what the valley focuses on.

<comment><USER20> you can take the view that Good means profitable. thus if your business generate a profit you have done good.

of course this is only true if the market is free.

<comment><USER21> Drug dealers? Pirates? Hell, the somali pirates even have an investment system now.

<comment><USER20> lets talk about drug dealers. The drug market isn't really a free market. THere isn't really easy competition, the means of production is difficult for people to get into. The participants don't really want to do it sometimes, but is forced to.

In fact, if the gov't legalized drugs, and let big pharmaceuticals produce these drugs, i reckon it'd drive the scarcity of the drugs down, leading to their devaluation, and the market would correspondingly collapse (as its no longer seen as the forbidden fruit).

<comment><USER21> On driving prices down, yes, on the market collapsing, you have clearly never interacted with an addict.

Selling drugs to an addict is in no way creating value for society. None. You're taking money that was hustled/stolen in order to leave someone worse off than if they got clean. It might be that legalization is better than the black market but what I'm contending here is that "just because you made money, does not mean you were serving society".

<comment><USER18> Did you read my comment? Please define what you mean by "value, "worse off," and "serving society." Don't just throw those terms around expecting everyone else to share the _exact same_ values as you.

Some examples: life, truth, and/or pleasure. If it's a combination, how do you prioritize?

Discussing "X has no value" is absolute garbage if you don't discuss "value."

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER22> I am honestly surprised they've lasted this long. The whole current premise of daily deals does not work whatsoever. Every business owner I've ever known that has done one of these daily deals has never done them twice, why? Because every deal offerer (restaurant, beauty spa, dentist, tooth whitening formula company, discounted holiday) loses out and it has been proven a daily deal coupon doesn't mean you'll get a return customer because lets face it, most of the people buying these daily deal vouchers like bargains and your standard price offering is probably way out of their affordability league.

I once considered a daily deals type site where the premise was there is a strictly limited number of deals driving up the demand and at the same time, not bankrupting the family owned hardware store because 800 people bought their $500 worth of tools for $120 voucher because they thought more vouchers would mean more return business. Sucks about the stock though, I'm sure every single employee of LivingSocial deserves that money, they had a good thing going. I feel sorry for the families of the employees who are about to lose their jobs. They say the economy is on the mend, the increasing number of failing business stories I read every week says otherwise...

<comment><USER23> If you're going to use a daily deals site, come into it not expecting a profit and look at it for what it is ... a form of cheap marketing. I know a couple of businesses that have used them and found it generated a decent amount of additional sales. Mind you that was about 2 years ago.

<comment><USER20> it's not cheap if youre making a loss on every deal and the number isn't capped. its a good channel if you manage it properly tho.

</comment></comment></comment><comment><USER24> Here are a few tips for others startup employees:

1\. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock.

2\. Unless it's liquid - it's worthless.

3\. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share of 1 billion in common stock for $1 right now. See the implicit valuation leverage. I took a dollar, then invented the billion.

4\. If you work for a "nasty" startup - one which people can consider to be negative long term to one or more parties - expect eventual collapse or flat line growth (Zynga/Groupon).

5\. Companies exist to make management, investors and founders rich - <USER2> hold the vast majority of the stock - and benefit greatly from path dependence and network effects. You on the other hand don't. Expect to be screwed at any time.

Think of it like this. Managers/founders of most companies are pretty dipshit - how is it that they can own so much more stock? Simple. Be there earlier! Akin to how old money works. Imagine if you were the first person to squat land near what has now become Manhattan. You'd easily be worth hundreds of millions. There is obviously some skill in researching, predicting, working and acquiring land that will soon appreciate in value. But it's not worth nearly that much. Path dependence, luck and network effects do that. See GFC boom and that dumbass cousin who made and almost certainly lost millions in housing to understand how this works out.

Startups really aren't that different to a speculative investment in a house during boom times. Once you understand this - a lot of things start to make a hell of a lot more sense.

6\. PG says be relentlessly resourceful. That's useful. But even better is to be relentlessly cynical.

Free t-shirts? Just an easy way to drop your salary and indoctrinate you - scratch that - it's a god damn uniform - freedom be damned! Free food? You took a $30-$40K pay cut to take the damn job - the food isn't worth a tenth of that + you're now working during lunch hours! Free hardware? That's only $2-$4K.

Hackathons? That's just work during your free time - or if it's during work time, it's a startup product you should own, but don't. More days off? Aren't you already working 60+ hours a week today! Culture shit after work? That's just more indoctrination. Gym membership? Only $200-500 - peanuts! Flexible work hours? That just means work more, but do it at times that aren't 9-5. Parental leave? Big companies and Europe have had that for ages.

Oh, and that culture fit crap? That's just discrimination - rebranded! What? You don't like what other late 20s upper-class educated males like? Be gone heathen!

End advice.

Not saying big companies or government jobs are any better. But at the very least you're already cynical about those things and demand to get paid well enough in risk-adjusted terms.

<comment><USER25> You sound like the worst employee ever.

<comment><USER24> Yes - realistic employees are the worst - they are so unexploitable!

What companies really need are wide-eyed, earnest, new college grads who have no idea what goes on in the real world, and how much they are truly being screwed by their current startup.

Those guys rock! They work 100+ hour weeks, they don't have families, or commitments and are willing to do it all for mere peanuts and empty promises of golden rainbows!

Sadly - a few years of this turns them into realistic employees - and you need a whole new batch to replace them.

<comment><USER26> Honest question: do you believe there any job where you are not being screwed? And do you believe you are an above average employee, or that you could be a founder yourself (as it's just like getting in on Manhattan early)?

If so, why not work in that job (rather than at a startup)? Or why not found a startup (rather than be an employee)?

<comment><USER24> Any job with monopoly pricing protections - a doctor or engineer at large established firms fit the bill. Once you have monopoly pricing - you are no longer the one being screwed, but rather the one doing the screwing.

Do I think I'm above average? Depends on what you mean by average.

There are zero barriers to entry in becoming a founder - so yes I'm founder material. As is everyone else. The question that actually needs to be asked is: How lucky can one get?

<comment><USER27> I know several doctors and they all complain about how they are getting screwed--by the trial lawyers, the insurance companies, the hospital, the government, etc.

This may just be a situation where the grass looks greener.

</comment></comment></comment></comment></comment></comment><comment><USER28> I can't see Living Social surviving if it really is short that much money owed to merchants. Why on earth would any new merchants join at this point knowing that Living Social is reasonably unlikely to be able to pay them?

I'm a bit surprised the company is so nonchalant about running that far behind on merchant payables. An easy argument could be made that it should not have dipped in to merchant funds at all and all that cash should have been "restricted".

Also, the cheap shot on Groupon is pretty lame considering that Groupon has something like 2x the cash on had as it owes merchants (if I'm reading Sep '12 Balance Sheet correctly).

</comment><comment><USER29> > _But despite our Current Liabilities being high, they at least are not as > frightening as Groupon's Merchant Payables gap, as Groupon pays out usually > in 1/3rds (30 days, 60 days, then 90 days), while at LivingSocial, we > usually pay 80% of the total daily deal's sales to a merchant within 10 days > of the offer ending, and then we owe them the other 20% months later. So yes > we owe local merchants a lot of money, more than our Cash, and these > Merchant Payables are most of our Current Liabilities as PrivCo surmised, > but I will point out thta at least it's not as as great a portion of our > Current Liabilities as Groupon's._

What's with the Groupon deflection spin? LS clearly screwed up here. Pointing fingers at Groupon as an even-worse-offender achieves literally nothing.

<comment><USER30> I agree. You could even argue from a business perspective that Groupon's making a wiser business decision by using the time value of money more in its favor.

</comment></comment><comment><USER31> You never would have thought by their office space that anything was wrong... [http://www.businessinsider.com/living-social-office- tour-201...](http://www.businessinsider.com/living-social-office- tour-2012-8?op=1)

<comment><USER32> So true, also surprised they didn't have a super bowl commercial.

It's like the dot com hype all over again but with crazy short term revenue that's unsustainable

<comment><USER33> But they did have a Super Bowl commercial: <http://www.youtube.com/watch?v=33jb2Ns7yaQ>

</comment></comment></comment><comment><USER34> What a weird, weird company. There was a time when fully half of the talented rubyists I knew were joining LivingSocial all at once. And none of them could tell me why the company needed such incredible firepower. I guess they never figured it out.

</comment><comment><USER35> This is absolutely terrible news. I don't care if you "like the daily deals business model" or "hate the daily deals business model" - this is very very bad news for a lot of people. It will have impact on the rest of the industry and perhaps already has. We should be very disappointed that things have gone south in this way. We should work harder to build profit into our businesses and we should hope still that LivingSocial can pull itself above water... Best wishes go out to everyone there...

<comment><USER36> Maybe I am being too insensitive, but ...

I think that if the valuation for companies, which have been overvalued corrects itself, that is ultimately a good thing for the industry and society at large. It means that resources are being freed up to work on more valuable things. It is also another case study from which this young industry can learn.

As for the employee and investors, they have taken a deliberate bet on the company and lost their stakes. This is what you sign up for when you decide to work for / invest in a start up.

<comment><USER37> I like your perspective on this. It is impossible to see the 'damage' done by capital applied (or over applied) to the wrong thing. So people don't really think about it. What great things were NOT created by the great people LivingSocial hired.

</comment></comment></comment><comment><USER38> Can someone speak to the reliability of this site? Or provide a corroborating source?

<comment><USER39> The Washington Post & Reuters corroborate the statement that Living Social received $110 million in funding, though neither says anything about stock options.

[http://www.washingtonpost.com/business/economy/livingsocial-...](http://www.washingtonpost.com/business/economy/livingsocial- receives-110-million-cash- infusion/2013/02/20/618163ea-7b79-11e2-9a75-dab0201670da_story.html)

[http://www.reuters.com/article/2013/02/20/us-livingsocial- id...](http://www.reuters.com/article/2013/02/20/us-livingsocial- idUSBRE91J0UK20130220)

</comment></comment><comment><USER40> Only tangentially related maybe, but I've noticed an increase in the 'scamminess' of a lot of daily deals lately. Stuff like a cottage for £70/weekend but if you read the small print there's a 'cleaning charge' of £250 - to give one recent example.

I don't know if that perhaps hints at the desperateness of daily deal companies to get new business in running such promotions, but it certainly dampens any enthusiasm I have for checking these sites again in the future.

</comment><comment><USER38> Perhaps I'm missing something here -- people criticize group deal sites for taking too much of the money in a deal (50% of the revenue). The marginal cost for LivingSocial on this is 0... why aren't they making tons of money? Where has the near $1 billion dollars gone?

<comment><USER41> You're assuming it costs LivingSocial nothing to enlist a new business willing to offer a deal. I'm sure this is a huge cost for them, especially considering this is a "land grab" phase where there is fierce competition from other deal sites.

</comment></comment><comment><USER42> This isn't terribly surprising, they've been losing engineering talent left and right. It was pretty easy to infer that they were in trouble.

<comment><USER43> To be fair though, I know that you (and I!) follow more Rubyists than the average HN reader or analyst ;-)

</comment></comment><comment><USER44> This is an example of a flawed business model, copied (from Groupon, et al), then over-funded so that the economic viability of the Model does not surface as soon as it should. In the finance world these often called Ponzi schemes, just saying...

</comment><comment><USER45> This headline is misleading, because it implies the common stock was worth something at one point. :)

</comment><comment><USER46> I was in their Seattle office and they seemed to be spending money on things needlessly. They had events where they spend hundreds yet only brought in 20 people at maybe $10 a piece. Can't say I am surprised.

</comment><comment><USER47> Here is the indirect response of LivingSocial's CEO via a leaked memo reported by CNN: [http://finance.fortune.cnn.com/2013/02/21/what-really- happen...](http://finance.fortune.cnn.com/2013/02/21/what-really-happened-at- livingsocial/)

It doesn't mean that most of the advices here aren't just that PrivCo might be making up stuff stories.

</comment><comment><USER48> Not enough cash to pay local merchants? If I were a merchant on LivingSocial I would be cancelling any further deals and notifying my customers that they should be filing chargebacks. I doubt the credit card companies would let LivingSocial off as easily as their employees had to.

</comment><comment><USER49> Google must be relieved that they didn't end up 6 billion dollars out of pocket and holding the sinking ship that is Groupon.

The marker is saturated, businesses have had enough of getting little in return and consumers are getting annoyed with their inboxes full of annoying offers.

</comment><comment><USER50> The investors must have had one of those 75% off coupons.

I honestly don't understand how these sites manage to raise any money at all, regardless of valuation.

<comment><USER51> In the early years of Groupon it was seen as coupons moving online to create a new business model that was going to drive retail.

The sites had off the charts growth, huge revenue dollars that were growing just as fast and the land was up for grabs.

Even Google got suckered into this when it tried to buy Groupon for billions in cash, I can see where the investors were coming from, well at least before 2011.

</comment></comment><comment><USER52> The fact that investors are putting up the money means there is some hope to the business. Not every startup gets that ...

People seem to really focus on the negative. Startups are known to be bimodal outcomes. Either you retire from them or your income is down a few years. If you don't believe in a specific startup, don't work for them. If you don't believe in any startup, go work somewhere else.

</comment><comment><USER53> * This Has To Be The Worst Written Article I've Seen In A While

* Who Designed This Piece Of Art?

</comment><comment><USER54> If only they had beat Groupon to an IPO and been the ones to raise a warchest before the market realized these businesses were a terrible idea.

Once this funding runs out they will probably be a great bargain basement acquisition for a handful of companies.

I feel really bad for the hard working employees who were counting on the stock options =(

<comment><USER55> You should _never_ count on stock options being anything other than a nice bonus that likely won't materialize. If you're taking a significant haircut on salary or benefits in order to have a shot at a big payday, you're doing it wrong.

Join a startup because you think it'll be a fun ride, not to make a million dollars.

</comment></comment><comment><USER56> I think one thing to remember when joining a company, particularly one of the higher profile startups that raise huge sums of money is that values really matter.

Not mission statement values, but the actions that are consistently taken on a daily basis.

Is your startup or employer profitable? No? Then why are they spending money on nice offices and expensive dinners and so on? I can almost guarantee that LivingSocial could have done with less than the 800 million it raised had they valued frugality and breaking even more than being some giant media darling worth-a-billion company. Deficit spending can work longterm for governments, but not for companies or individuals.

It's a real shame everyone got cleaned out, but they had to know this was going to happen at some point.

</comment><comment><USER57> The part where group deals fall down is the big margin that the sites are taking, this is the difference between a deal being a break even or loss leader and putting the business offering the deal in a big financial hole.

These margins are required to pay for a large sales team to convince businesses that they need to run these deals.

I think a more sustainable model is one closer to traditional affiliates marketing or self serve advertising. Where the deals site provides a platform that is largely self service and takes say a 5% cut rather than 50%.

This does loose one of the original ideals of group deals, that there was only 1 for an area (or at least a small amount each day) so each business running a deal was able to get a ton of exposure.

</comment><comment><USER58> I value the people who would be your potential co-workers and the social impact your work makes over how much stock I'd get or the "20% time" I'm given to work on non-core projects.

Startups do give you the opportunity to have a more hands-on role at the company considering the size of the engineering staff. Naturally (if you're driven and you're confident in your ideas and can work well with people), can make a bigger impact at a smaller company/startup than at some of the more established tech giants. I think experience you gain far outweighs the slim chance your 3000 shares of common stock will amount to anything. You can take that experience with you to a larger tech company.

</comment><comment><USER59> Are there any corroborating reports on this? I can't find any. I'm calling BS.

<comment><USER60> And you are correct, sir.

</comment></comment><comment><USER61> Whenever someone offers you equity or shares....

Try to remember how many times it ends up being worth something, and staying something.

otoh, getting valuable mentorship like YC is probably worth paying for.

</comment><comment><USER62> Out of curiosity: If LivingSocial files for bankruptcy and fails to pay merchants, are those merchants still required to honor any outstanding deal vouchers?

</comment><comment><USER63> $110 million seems like a drop in the bucket if they really are bleeding money and have 4000+ employees, many of whom are probably very upset at the evaporation of their stock options.

<comment><USER64> FTA: Sources said LivingSocial's Board made clear this was the final lifeline, that the company must break even by the end of the year including closing dozens of unprofitable offices and laying off thousands of employees

</comment></comment><comment><USER23> Anyone know how they are doing outside the US? Over here in Asutralia for example they seem to be selling plenty of vouchers. I know some businesses that use them often.

<comment><USER65> I was laid off in November. Last we heard, they were doing quite well in Asian countries, particularly in Korea. This is what they told us, anyway. They also told us last fall that profitability was right around the corner.

</comment></comment><comment><USER66> Will the deals already bought still be valid if they go under?

<comment><USER67> I imagine they will become unsecured debtors

</comment></comment><comment><USER68> this is extremely sad to see. hopefully this report is exaggerated and not entirely true.

that said, the daily deal model is clearly broken.

<comment><USER45> Yes, and I'd argue the daily deal model never worked in the first place. Why? No real value add to small businesses.

The daily deal model was an experiment that went on too long, overfunded by delusional investors - some playing with other people's money - and media and social media hype.

You know what model isn't broken?

Positive cash flow businesses. :)

</comment></comment><comment><USER69> I wonder what will be of talent acquisition happened along the way.

</comment><comment><USER70> An email newsletter list was valued at $5 billion.

</comment><comment><USER71> I wonder what this means for Amazon.

<comment><USER72> Would it mean anything? Genuine question - where do you see a connection?

<comment><USER11> Amazon held a 29% stake in LivingSocial as of the end of 2012.</comment></comment></comment>


Ask HN: Moving away from GoDaddy - which registrar do you recommend? - <AUTHOR>

GoDaddy is the king of bad usability and tacky marketing, but until now I've been okay with this because they're cheap. But when I heard that their DNS servers are slow I decided I'd be willing to spend a little more to get a good registrar.<p>What registrar would you recommend? I've heard a lot of good things about Gandi.net, but I can't find any new reviews of them here on HN. Are they still a good registrar, and are there other good alternatives to GoDaddy? <comment><USER2> If your domain needs are limited to classic tdls (.com, .net, .org) I'do go with nearlyfreespeech [1].

They are one of the few bullshit-free hosting/registrar companies out there.

[1] <http://www.nearlyfreespeech.net>

</comment><comment><USER3> If price is not an object, I would recommend Gandi.net - absolutely no nonsense domain hosting ( I even received a free SSL certificate, though I don't know if that offer is still on.) . Another good option is Mediatemple, who are giving away $5 domains as long as you're with them (that's a really great deal).

You can find HN archives on domain names here:

<http://remembersaurus.com/askhn.html#domain-names> [http://www.gabrielweinberg.com/startupswiki/Ask_YC_Archive#t...](http://www.gabrielweinberg.com/startupswiki/Ask_YC_Archive#toc34)

NearlyFreeSpeech an NameCheap are great alternatives as well.

</comment><comment><USER4> I've been using easydns.com for my registration and DNS hosting needs. They have an excellent feature set, as well as reasonable prices.

I haven't done any particular stress testing of their DNS servers, but their documentation suggests it should perform well. I have noticed no problems empirically.

</comment><comment><USER5> I've been using <http://register4less.com/> for a few years. The price might seem higher than some others, but it includes whois privacy protection that godaddy charges extra for, as well as a dns zone editor and a nice UI.

</comment><comment><USER6> For .com, .net, .org, and .info, I like Fabulous.com. For everything else, namecheap is a good alternative.

HOWEVER, I wouldn't use them or Godaddy for hosting or DNS or anything else. If you're fine with Godaddy as a registrar, use an alternative DNS and hosting service.

<comment><USER7> Yes, Fabulous.com too is a good alternative for domain registration.

</comment></comment><comment><USER7> We've many sites running on domains registered with GoDaddy (but hosted elsewhere) and have not noticed any problems.

Still, if you're looking for an alternative, try:

<http://www.moniker.com/>

HTH

<comment><USER8> My advice is to stay far, far away from Moniker. I use them at work, and their UI stinks: for example, when changing my domains' authoritative nameservers it will occasionally switch the nameservers back to the default (Moniker's own) without telling you. I contacted their support about this and they essentially said "yes, this is a known issue, and we don't have an ETA for a fix, so suck it up."

The reason why I was changing nameservers in the first place is because their own DNS service has gone completely offline three times in the last year and a half, making my company's websites inaccessible for hours at a time and costing us several thousand dollars in lost revenue.

I have had no issues using NearlyFreeSpeech.net for registering my personal domains.

</comment></comment><comment><USER9> I've used Namecheap and Dreamhost recently for domains. Dreamhost offers free privacy (Namecheap too but it's implied that's only free for the first year). Both are $9.9x.

Mediatemple were doing domains for $5 and I'm sure they're reliabe enough.

<comment><USER10> I wouldn't do any business with Mediatemple. They wanted me to purchase a hosting service just to do a 301 redirect whereas GoDaddy or Name.com do it for free.

</comment></comment><comment><USER11> Fabulous was recommended by another poster. My favorite registrar but they require you to either pay a lot ($30 retail) or own a lot of domains to get an account. They cater to portfolio holders.

If you don't fit, checkout NameCheap.com.

</comment><comment><USER12> <http://www.hover.com/> I haven't used it but some of my friends have. They do private registration, DNS management, and forwarding for $15/year.

</comment><comment><USER13> We used to use GoDaddy and MediaTemple but have since switched to eApps. It may be a little pricey but their support service is phenomenal and uptime is 99.9%....we're pretty happy with it

</comment><comment><USER14> I like <https://www.google.com/a/cpanel/domain/new> because they do privacy on whois by default.

<comment><USER2> Google Apps is based on eNom or GoDaddy for their domain name registering needs.

</comment></comment><comment><USER15> Currently 1and1 is running a promo for $5 domains. They are pretty good generally. Nothing special though.

Would recommend eurodns or namecheap.

</comment><comment><USER16> Name.com

Btw this question gets asked here at least once a month, so search back to get a wider set of answers.

</comment><comment><USER17> Haven't had any problems with Hover, 1and1, or Dreamhost.

</comment><comment><USER18> IWantMyName and Dynadot</comment>


Facebook's director of product design on why websites may be a dying business - <AUTHOR> http://mashable.com/2016/05/31/facebook-end-of-websites/ <comment><USER2> Next we'll have an article by the head of marketing at a bottled water company, explaining why nobody will use wells in the future.

</comment><comment><USER3> I assume this article is some speculation about how Facebook for everything or whatever it is called will be the most central piece of the internet ever. Yeah, not falling for that Facebook.

</comment><comment><USER4> so they're trying to revive AOL's business model with a little yellow pages thrown in?

<comment><USER5> Hah, I was just thinking the same thing. This was probably written in reaction to FB seeing that people are leaving FB en masse.</comment></comment>


? (Visits  PageViews) - <AUTHOR> http://www.clickz.com/showPage.html?page=3625246 <comment><AUTHOR> hm. that was supposed to be Visits (GREATER_THAN) PageViews?</comment>


Ask HN: custom sounds for mobile apps? - <AUTHOR>

Where can I buy sounds or get a custom one made for my mobile app?  Or maybe create it myself? <comment><USER2> Ever find anything on this?</comment>


Ask HN: what would you do with $10k? - <AUTHOR> If somehow your bank account received $10k, how would you spend it? Anything you don't spend, disappears. What about $100k? <comment><USER2> I've read enough about lottery winners ending up in debt so I'd just let it disappear. Or maybe donate it.

</comment><comment><USER3> 10k, pay off debt.

100k move to 3rd world country and live off 2-3 dollars a day until money runs out

</comment><comment><USER4> Save it. Boring, but money in the bank is freedom.

</comment><comment><USER5> Are you talking about phishing rewards?</comment>


Microsoft needs immigrants, Facebook doesn't - <AUTHOR> http://www.alleyinsider.com/2008/3/how_much_immigrant_labor_does_your_company_use_

<comment><USER2> This article completely misses the point. I want to know how many of the non-H1B workers at Microsoft used to be H1B's. And how about finding out percentage of engineers at all these companies. And personally I am so sick of hearing all these BS stories of H1B's stealing American jobs with low wages. I used to be on H1B and I made (and still do) more that all my friends who are American citizens or green card holders. I have green card now, and that hasnt affected my pay in any way.

</comment><comment><USER3> Ok, for those against H-1Bs, tell me how many good programmers you know that don't have a job, or can't find one? My company is hiring, and they have hard time filling slots. Even fresh undergrads are taking in multiple offers. I'd like to see a H-1B reform, where there are more safeguard put in place against fraud (body shop abuses), and more green cards available.

Some people dream that if H-1B supply is cut off, engineers will get paid as much as lawyers and doctors, it is not going to happen. Once wages get to a pain threshold, companies will outsource even more. Unlike a doctor or engineer, you don't have to be at the location to build software. The engineers in the USA will be left only for jobs that have to be done locally. A good lawyer or doctor earn knowledge thru accumulated experience, and a 10 to 15 years of experiene. In Engineering, the learning experience curve is max 5 years. There is great chance, whatever you are doing now, that in 5 years it will be obsolete, and you will be re-learning from the beginning.

</comment><comment><USER4> H1Bs are not "immigrants". We are non-immigrant alien workers.

</comment><comment><USER5> Uh, hello? Almost any one of Microsoft's mainstream product lines is bigger than Facebook. Office vs. Facebook? Office. Windows vs. Facebook? Windows. Xbox vs. Facebook? Xbox. MSN Search vs. Facebook? Probably MSN Search.

Congratulations are due to Facebook for managing to scale their one product, pre-business-model, without H1-B's.

I'm not an advocate for H1-B visas (though we could have a spirited debate about their merits vs. offshoring), but this is a pretty silly article.

<comment><USER6> You don't want foreigners coming to the country to work?

<comment><USER5> Sure I do. I just don't want special-interest employer exemptions from immigration law that deliberately creates an artifically cheap supply of temp workers.

The alternative to H1B is offshoring, which is clearly worse than immigration.

<comment><USER6> Same as I was thinking.</comment></comment></comment></comment>


How many Apple accounts do you have to remember? - <AUTHOR> http://rachelbythebay.com/w/2012/03/16/appleid/

<comment><USER2> I have one account for all this stuff. I thought this was going to be a post about how everyone else is getting it wrong :)

</comment><comment><USER3> Isnt this just the user creating multiple accounts for something they didnt have to?

I mean all this stuff would work with just one account right?

<comment><USER4> Many people didn't really have a choice. MobileMe Accounts (@me.com email addresses) were automatically set up as a new Apple ID - even if the user already had an existing Apple ID for the iTunes Store.

When iCloud was introduced, anyone who wanted to keep their old @me.com email address, also had to keep the second Apple ID.

</comment></comment><comment><USER5> This is silly. I have one Apple account that I've used for everything from iTunes logins to Appstore login to the iPhone developer account..

<comment><USER6> I've only recently begun to use one canonical email address, so I'm in the same boat as the author. By now, though, I can remember which one to use when.

</comment></comment><comment><USER7> I'm on the same boat as the author but mostly because I've lived in 3 different countries in the last 2 years, and had to register for iTunes with 3 different credit card locations.

My iPhone has apps and Audiobooks from all these 3 accounts and I cannot reliably keep them updated, sync-ed, and backed up with iTunes. It's a mess and it keeps me from using the iCloud services properly.

The iTunes & App Store experience is great for mainstream use cases but painful if your situation deviates from the norm.

</comment><comment><USER8> I have a similar problem with Google - all my analytics accounts are linked to my pro email address, and my gmail is with, er, my gmail address. So I spend the day logging in and out. Would love to be able to consolidate the two.

<comment><USER9> Google allows for multiple logins. I have one pro gmail account and one personal, and I'm signed on in both at the same time, all day. From time to time I get logged off of one or another, but it works quite well overall.

<comment><USER10> This just seems to be cookies that expire. Even with one account you have to sign in again once every blue moon.

</comment></comment></comment><comment><USER11> I have one US, Japanese, Swedish and UK account. Buying music legally has never been harder, especially since I have to have credit cards that are registered in those countries too.

</comment><comment><USER12> Cue comments about how obviously this problem could be avoided and this person is doing something wrong.

Never mind her explanation of how this happened and how it's a real problem and how real users (far less technical than the author) could run into problems.

This is a mess that happens with most companies that have been in business for a while (Microsoft, Google, Apple) and their various id schemes + services over time.

It's a real problem Apple could solve.

<comment><USER13> Indeed... In fact the _only_ problems I've ever heard anyone have with an iDevices were issues with updating (solved by OTA iCloud updates) and account issues. A page that's both comprehensive and simple that lets you manage your account(s) seems to be something they've skipped over, or at least haven't rolled out yet.

</comment></comment><comment><USER9> I have none. I have no itunes account, and no appstore account. That means that I can't use any of these apps and that's exactly how I want it to do. iTunes stopped being vaguely usable around OS X 10.4, FWIW. The AppStore may be nice enough to use, but is probably not worth the deal for me; Apple has no business knowing anything about me. As I don't like what's coming with OS X anyway, sooner or later I'll jump ships for good.

<comment><USER14> I fail to see how you not wanting to use iTunes has any relevance to the problem of joining up multiple accounts.

<comment><USER9> That's the way I solved this particular problem. No iTunes -> no account -> no problem. As I don't like what Apple products are becoming, I advise people to choose this solution. Haters (fanbois) gonna hate, etc.

</comment></comment></comment><comment><USER15> I have three: one linked to my credit card (that only works in Brazil), one with itunes credits on the american store (to buy games) and a third one for ios development (using my company's email).

Used to have a third one back on the mobileme days, but have no idea of what happened to it...

</comment><comment><USER16> I have one for iTunes, I have never needed another one.

</comment><comment><USER17> I have two out of necessity. One for my Canadian iTunes account, the other for my American. I no longer use my Canadian one as I live in the us now. However, if I want to update apps purchased from my Canadian account, I have to switch. This is painful. Switching means settings like match get switched off and aren't turned back on when I move back over. It means syncing gets disabled. It means if I switch before other downloads are finished, apps are stuck in a half state of downloading but having stopped. I have to delete them and download the again. The app store icon will of course show me how many apps need updating across all my accounts. However, I can't use the update all button because I'll be asked to log in with the right account. As mentioned before logging in to another account while apps in the previous account are downloading will usually cause problems. Logging in is painful as well. After logging in with a new account, it doesn't just log you in. No. It tells you your apps is associated with a different store, despite being on the update page, and whisks you off to some other location, which then needs to load before becoming responsive again before you can go back to the update page again. There, you staart the whole thing over again.

On the other hand, Steam doesn't care and works just fine.

<comment><USER18> Wait, why did you create US account at the first place!? You can change the country and the payment info right?

<comment><USER17> US app store has a greater selection then the Canadian app store in apps, music, movies, etc.

</comment></comment></comment><comment><USER19> I have two: my ITMS account - which is also used for iCloud/AppStore etc. - and my ADC account. Not sure what else is needed, because from 7 years of being an OS X user nothing else has sprung up.

</comment><comment><USER20> MobileMe is dead. Go to me.com/move to transition your account to iCloud and avoid this headache.</comment>


Gay Marriage: The database engineer's perspective - <AUTHOR> http://qntm.org/gay

<comment><USER2> Dupe. Burn it with fire.

<http://news.ycombinator.com/item?id=1183686></comment>


The 'Silicon Six' spread propaganda. It's time to regulate social media sites - <AUTHOR> https://www.washingtonpost.com/outlook/2019/11/25/silicon-six-spread-propaganda-its-time-regulate-social-media-sites/ <comment><USER2> I saw an article on Techdirt about this, which presented a dissenting view. [https://www.techdirt.com/articles/20191122/00412943432/sacha...](https://www.techdirt.com/articles/20191122/00412943432/sacha- baron-cohen-is-wrong-about-social-media-wrong-about-section-230-even-wrong- about-his-own-comedy.shtml)

<comment><USER3> It's a dissenting view that I'm somewhat inclined to agree with, but fails to propose any alternative remedies. I don't think the status quo is tenable.

<comment><USER4> While there is a temptation to "do something" just because someone is sane enough to recognize that an approach is doomed to failure doesn't mean they have all of the answers.

I have seen that asserted but I haven't heard explicit answers. Why do you or others think it isn't tennable? How do you think it will collapse with lack of action?

</comment></comment></comment><comment><USER4> I can't help but think "holy projection Batman" when I see that term. They may be shady but I trust vested interests and scapegoaters even less.

They do damage to their own credibility with their incessant pushing on a flimsy and selective basis.

</comment><comment><USER5> No thanks. I don't want to government regulating anything, especially as something as sensitive as free speech online.

</comment><comment><USER6> It's interesting how social convention itself causes some social media problems to not arise. Despite its infamy for being a spammy place of careerist self-promotion, LinkedIn doesn't suffer from any of the problems of these other social networks, simply because it isn't designed for that context. I've seen some terrible low quality content posts on LI, but even at its worst, they are simply asinine life/career inspirational thinkpieces intended for a professional audiene. Not dissimilar to low quality on Quora. Yet both places host material that have a general higher standard than on Facebook, YouTube, Twitter.

</comment><comment><USER7> Conflating conspiracy theories, propaganda, and racism is very problematic.

Propaganda is most often used to motivate state goals, such as war, with falsehoods. Government and government/industrial partnership is the main source of propaganda. Conspiracy theories are generally anti-propaganda in the sense that they contradict the official story.

Its true that there are many conspiracy theorists who are racist. However, its certainly not all of them. I would be considered a hardcore 'conspiracy theorist' by most but I'm not the least bit racist. I am a white man who dated asian women and lives in Mexico. I don't pretend to know anything about people who I don't know. Conspiracy theories are also extremely popular with black Americans.

The problem with large companies or the government "regulating propaganda" is that, as I mentioned, they are the biggest sources of propaganda. What you will end up with is something along the lines of Chinese government information control.

I do, however, believe that we should make an effort to reduce the propagation of racism, and extreme views that are deliberately false. But whatever form this takes, it must not be monopolized by one organization or establishment, and must be structured in the context that I described, rather than a false context where anti-establishment views are automatically censored. One possibility might be to use the legal system. For example, some legal action could disqualify political candidates who blatantly lie about their opponents. Of course, this is extremely challenging, since that would disqualify all candidates in the current system.

</comment><comment><USER8> I agree with (most of) the description of the problem - the rise of conspiracy theories online - and agree it's a serious issue. I think the proposed solution would make the problem much, much worse, though.

"What are _they_ trying to hide by controlling what we say and censoring our attempts to expose the truth?"

</comment><comment><USER9> There's a huge difference between regulating what is not ok and "telling everyone what to think". Americans seem to jump on any kind of regulation as equivalent to Big Brother thought control which is just a bizarre overreaction. Any kind of international agreement over regulating speech is going to be very mild by the nature of consensus - you won't get all the governments in the world agreeing to something extreme. You might get agreement around "don't publish lies" and "don't publish racist stuff"

</comment><comment><USER10> I like that name. Sounds sinister.

<comment><USER3> I also liked " _Freedom of speech_ is not _Freedom of reach_ " though I suspect he didn't coin that.

<comment><USER11> Curious why you think consumers and producers of speech are not free to make their own decisions about what speech is acceptable.

<comment><USER3> Huh?

I liked this expression because people regularly conflate the right to speak freely with the supposed right to have their speech amplified and distributed (at zero cost), which isn't a thing. I made no mention whatsoever about what speech is, or isn't, acceptable.

<comment><USER11> Yes it is a thing. All these platforms were built on people sharing their thoughts, pics, feelings, etc with their friends or with their subscribers. The platform was built on consent. If you don't like what someone has to say, unsubscribe or unfriend. The desire to deplatform is just censorship.

<comment><USER3> What I said was:

> "the supposed _RIGHT_ to have their speech amplified and distributed ... > isn't a thing"

No such _RIGHT_ exists, period. End of sentence. That right isn't "a thing".

I've never made a comment supporting "de-platforming", or anything of the sort, so I'm not sure where that came from. All I did, was point out the confusion people have regarding their actual _rights_. Somewhat ironically, your response perfectly illustrates my point. So, thank you.</comment></comment></comment></comment></comment></comment>


The Meaning of Allahu Akbar - <AUTHOR> http://hazlitt.net/feature/meaning-allahu-akbar <comment><AUTHOR> I didn't appreciate the versatility of this phrase until a Muslim friend said it when he found out the Falcons were headed to the Superbowl.</comment>


TELL TN:  Lots of shills now on HN - <AUTHOR>

HN has become shittiest place for discussion. During my chat with another few people I learned that there are people who downvote in group brigade fashion whatever they don't like.
Just look at this :  https://news.ycombinator.com/item?id=7951019
Lots of feminists , haters in the discussion. Anything you disagree is downvoted without consideration. I had joined considering many respected individuals discuss good issues.  What a fucked up place now. <comment><USER2> > _" there are people who downvote in group brigade fashion whatever they > don't like."_

HN is a very large site with traffic in, I believe, the 6 figure range per day. Some articles garner hundreds of comments and thousands of comment readers. It should not come as a surprise that, if you say something overly controversial, a handful of people might choose to downvote it without any collusion whatsoever. It only takes a few more downvotes than upvotes to put your comment solidly in the negatives.

Given the controversial nature of many of my views, I'd have expected to catch the ire of a downvote ring at least once if such things existed. Yet I've only ever had one comment in the negatives (and a small handful at zero.) Perhaps there are downvote rings out there, but I haven't seen any evidence of them.

</comment><comment><USER3> > During my chat with another few people I learned that there are people who > downvote in group brigade fashion whatever they don't like.

Please report the details to us at firstname.lastname@example.com. We take action against users who do that.

I don't see evidence of what you describe in the thread you linked to. But if you or anyone will provide us with more information, we'll look into it.

</comment><comment><USER4> A new community: [https://lobste.rs](https://lobste.rs) to try?</comment>


Lenovo CEO Gives His $3 Million Bonus to 10,000 Employees - <AUTHOR> http://www.dailytech.com/Lenovo+CEO+Gives+Part+of+His+3+Million+USD+Bonus+to+10000+Employees/article25227.htm

<comment><USER2> Guts. This guy has guts. Hoarding away a 3m bonus like that has an implicit statement of "I'm afraid for my own fiscal future to the tune of 3m dollars" stamped on it. Instead, he gives it away, telling the world and his employees that he is confident, nay, OPTIMISTIC about the company's future.

To contrast, take the typical American CEO: he or she would have taken this money, offshored it, spent another couple of years going to board meetings, and then jumped ship to another gig in some other company's c-suite. You know what I call that person? A COWARD.

<comment><USER3> A bit off topic, but anyway:

In buddism, the term for discipline is the same turn used for morality. ( they dont make the distinction )

You, here, interrestingly, suggest that a relationship between morality and guts.

Im not agreeing or disagreeing with anything in particular here. Just considered the contrast interesting.

<comment><USER2> I think this makes sense, personally. I have often found that it takes courage to follow one's own moral compass.

Now does it follow that it takes guts to have discipline or vice-versa? I think so, more in the sense that it takes discipline to have guts. Courage (guts) has a shelf life--it needs to be exercised to be maintained.

</comment></comment></comment><comment><USER4> The real question is, "How much did he keep?" and "What was announced in advance?" One can look at Lenovo's financial statements to find his compensation plan.

On page 66 of [http://www.lenovo.com/ww/lenovo/pdf/report/E_099220120531d.p...](http://www.lenovo.com/ww/lenovo/pdf/report/E_099220120531d.pdf) it looks like his base pay is just over $1 million. Not shabby. He has up to 300% of his base as an incentive. That would give $3 million. Seems like unless they are paying him separately under the table, he really is giving up his full bonus.

Just this once I won't be a cynic.

<comment><USER5> Maybe it's for tax reasons. Or he's going through a messy divorce and would rather set fire to the money than have to split it.

Cynicism never fails me.

</comment></comment><comment><USER6> Cynical wondering: Is this real, or a clever way to package company-wide bonuses for PR? Seems like if your company just had a great year and you wanted to boost morale with 300$ bonuses, this is a way to do it and maximize press and positive attention in the process.

<comment><USER7> I don't think that it's cynical at all to consider that. I wish people also would stop jumping all over someone just because they raise a particular possibility for consideration and debate (noting you prefaced by saying "cynical wondering" to lessen the ire of anyone who might jump on you for being cynical.)

One issue though. I wonder what the tax aspect is of getting a 3 million dollar bonus and giving it away.

The story says this:

"The CEO of Lenovo, Yang Yuanqing, recently received a fat bonus of $3 million. Rather than stuffing that big bonus away in his own bank account, Yang Yuanqing gave it away."

So by "recently received" Yang received the money. So that is a taxable event (assuming US). You can't receive money and not pay taxes on it no matter what you do with it. (Even if you throw it in the trash can it's still taxable).

To answer my own question the story might leave out an important detail. That the CEO had the right to the money but said "disburse to the employees instead". That's the same thing but lacks the tax implication as the money was never received. But it would lean more toward your "cynical" view. (Good thinking by the way).

<comment><USER8> > To answer my own question the story might leave out an important detail. > That the CEO had the right to the money but said "disburse to the employees > instead". That's the same thing but lacks the tax implication as the money > was never received. But it would lean more toward your "cynical" view.

If it was possible for him to do that, it would have been wise and there's nothing cynical about it at all. Those employees would be on the hook for income taxes regardless, so it's all the same to them. If the CEO gets the money first, the total going to employees is reduced by the fraction represented by the taxes he pays, or he pays the taxes out of pocket. None of the parties involved benefit from that.

</comment></comment></comment><comment><USER9> The corporation I work for hasn't bought a Lenovo branded anything. One could argue that the IBM PS/2s of the 80s might count. Heck, a few employees had our department order some PS/2 to USB adapters so they could keep banging away on the 20+-year-old Model M clickers that came with them.

I happen to personally own a Lenovo and it's certainly top-notch. Perhaps we should think about getting new desktops from them instead of Dell and DFO.

This classy move is another gold star for the CEO of a seemingly top-notch tech company.

</comment><comment><USER10> This is great, but this statement from the author is a pretty terrible assumption:

"It's nice to see an executive giving away a huge chunk of money to the employees that had as much to do with Lenovo's successful year as any executive within the company"

<comment><USER11> Why?

Here in the US we have a cultural flaw where we irrationally conflate equilibria in the supply/demand of labor with distribution of credit for a company's success.

The CEO gets paid a lot more because there is a much smaller supply of people who have the pedigree/qualifications to be CEO than to be a line worker. There is no chain of logic that can take you from there to the conclusion that he's more important to the success of the company than those 10,000 line workers.

<comment><USER12> I'd say it's exactly the other way round: the CEO definitely has to make decisions that impact the company far more than what 10,000 line workers do, for better or for worse. The open question is whether the commonly used pedigree/qualifications that decide who gets to be CEO actually enable people to make substantially better decisions.

<comment><USER11> Without the line workers, there is no product. Without a CEO there is no product. They're both but-for causes (in the legal sense), and in that sense equally indispensable.

What you need is a sensitivity analysis, of profitability of the company versus changes in CEO versus line worker performance. I'd imagine you'd find that a 20% efficiency jump in the line workers would have a much bigger change on the bottom line than a 20% better CEO.

<comment><USER13> CEO takes two weeks off. What happens to the company?

10,000 "low-level" employees take two weeks off (all at once.) What happens to the company?

Companies operate without CEOs while boards seek candidates. Companies can't produce product while it seeks 10,000 replacement workers.

As long as we have the chief executive on one hand and the workers on the other, that is.

<comment><USER14> If you permanently eliminate the position for one line worker, there is essentially zero impact to the company; it continues along with only a 0.01% drop of efficiency. If you permanently eliminate the CEO position, there is multiple orders of magnitude greater impact to the company. That's why the compensation for each role is different.

<comment><USER15> You've just reiterated the value theory of labor, first expressed by Karl Marx.

I take it you're a Communist then, and follow Communist thinking in other economic thought as well.

The classical economic theory of pricing holds that goods (and labor) are exchanged at a point where the supply and demand curves cross. This, according to the principles of free markets as expressed first by Adam Smith and subsequently refined, and has certain prerequisites including low barrier to entry, equal access to information, fair and open competition (and a lack of collusion on the part of either buyers and sellers), and a clear understanding of value.

All of which undoubtedly hold true for the CEO employment market, I trust.

<https://en.wikipedia.org/wiki/Labor_theory_of_value> <https://en.wikipedia.org/wiki/Free_market>

<comment><USER16> From the very interesting first link:

Karl Marx allowed for supply and demand, quoting Adam Smith himself, and I believe, describing the status quo of the era:

" It suffices to say that if supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, that is to say, with their values as determined by the respective quantities of labor required for their production."

I don't think that this disagrees with the classical economic theory you mention, in any way. Would you to care to explain your point in a little more detail please? If anything it's one of the refinements that you speak of.

I'm not being dishonest here, I genuinely can't spot the difference. I have difficulty in spotting what aspect of biot's statement is inherently communist.

In Marx's own view on how things ought to be, paraphrasing, communism was a world in which each gave according to their abilities, and received according to their needs.

In this communist scenario, what each person contributed has no bearing on their compensation. So by supporting the current status quo, biot is not in my opinion expressing Marxist views, in fact, quite the opposite.

In fact, I've heard people denounced as communists for wishing for wage caps.

<comment><USER15> My point isn't that Marx was correct (I really haven't studied him more than topically).

It's that a lot of what's passed off as free-market capitalism is anything but.

In biot's case, arguing that the _value_ generated by an individual should serve as the basis for that person's pay. It _isn't_ , but is only one input (essentially defining the demand curve, and setting a possible upper limit), but the true market pay scale being one that would also have to take into consideration supply. As I noted (somewhat snarkily), market conditions for establishing executive pay fall somewhat short of the free market definition. For a more popular treatment, Eddie Murphey and Dan Akroyd's "Trading Places" explores a similar idea. Mark Lewis's writings on the stock market provide some insight on trader qualifications and pay.

A friend some years ago provided an intriguing argument for why financial traders' pay was as high as it was. It was less a conventional market pricing argument than one of creating incentives to minimize incentives for fraud. Essentially: we're going to pay you so goddamned much money that you'd be completely mental to try to cheat on us and lose out.

I really cannot speak to the merits of this.

What that, and numerous other arguments for the rich getting ever richer _do_ suggest is that there is a class of people who are very well versed at rationalizing their income and remuneration rates.

There's also a great deal of very, very, very sloppy thinking, rationalization, reportage, etc., in economic matters.

I'm also coming to feel that much of economics as it's been taught for the past 150 years or so simply isn't so. That the conditions described by free markets are far less common and far more fragile than commonly believed. That much of macroeconomics is bunkum used, again, to rationalize why them that has gets more (though, oddly, I'm also coming to understand money, fiscal policy, and Keynesian theory better than ever before), and that much of the economic gain is really a _power_ game played for leverage and advantage, rather than for strict financial gain. A lens which makes the MPAA/RIAA, copyright, patent, trade and immigration law, etc., far more understandable.

Jonathen Nitzan's _Capital as Power_ seems to have stumbled on this same insight: [http://www.amazon.com/Capital-Power-Creorder-Political- Econo...](http://www.amazon.com/Capital-Power-Creorder-Political- Economy/dp/0415477190)

<comment><USER16> A lot of things clicked for me when I tried to wrap my head around the concept of money as debt. A debt to be paid by the rest of society to the holder, when he's in credit. Or a debt to be paid to the issuer if the holder's a borrower. I'm not going to pretend to understand economics in any great depth.

Thanks for your detailed reply, I was thrown by the communist thing, and missed your point almost entirely.

<comment><USER15> If you haven't read _Debt, the first 5000 years_ , do. I've managed to misplace my copy -- aha! just found it -- but it's among the most fascinating books I've found in 25 years on economics. That, Niall Feguson's _Ascent of Money_ (the guy is in many ways an ass, but this is a pretty good book), Nassim Taleb, Nouriel Rabini, Paul Krugman, Joseph Stiglitz, _The Ordinary Business of Life: A History of Economics from the Ancient World to the Twenty- First Century_ (Roger Backhous) -- hardly a page-turner, but a very good compendium of 3000 years of economic thought, and Neal Stephenson's _Cryptonomicon_ and _Baroque Cycle_ have been very helpful to my understanding.

One of the values in these online discussions isn't the ability to convince others nearly so much as it is to hone and refine your own arguments. I'm not sure I'm even partially cogent yet, but I'm starting to stumble in a direction I like.

</comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER17> Equates to about $314, or a month's pay per employee by reported estimates.

<comment><AUTHOR> Definitely not bad -- I can also really appreciate an even split to all employees -- I know some might view it as unfair that someone who just started might get the same bonus as a long term employee, but for just a windfall, I think it was a good idea to keep it all even.

<comment><USER18> Agree. It surely would also cost a lot of time (and therefore, money) to determine a 'correct' uneven distribution.

</comment></comment></comment><comment><USER19> Wow! All the praises aside (which Mr. Yuanqing deserves), it's interesting to see because he has ensured the loyalty of his employees to himself and to the company. It's not just a good personal move but an awesome business move too.

<comment><USER20> This is about loyalty, definitely. Good luck to the board of Lenovo when they decide to fire the CEO - he's got considerable admiration from the front line workers.

</comment></comment><comment><USER21> Smart move.

I would presume that a gesture such as this buys him and Lenovo more than $3MM worth of good will/publicity. A nice counter to the "world dominating corporate overlord" impression most people have.

</comment><comment><USER22> This is good, and I don't think it's the first time it's happened recently. I think Notch did the same if I remember right. It works well for a model, creates long lasting loyalty for employees and good public feeling.

Plus I bet the employees have got some smiles that'll take a while to shift, and that's really awesome.

</comment><comment><USER23> One of my old bosses thought that all Lenovos possessed BIOS-level malware that could be activated at a moment's notice by the Chinese government should the US ever got to war with them.

He was a weird dude.

<comment><USER24> I had a boss that thought the same thing. He shut up when we showed him an IBM branded ThinkPad with a "Made in China" sticker, but the new Lenovo branded ThinkPad had a "Made in Singapore" sticker.

<comment><USER23> That's JSUT what they want you to think!

</comment></comment></comment><comment><USER25> The question is, why does the CEO get 3 Million USD as a bonus in addition to his pay, while the secretary makes only about 300 USD a month?

Its a good guesture of the CEO, no question. But it highlights the perverse difference in income between the different levels of employees. <http://en.wikipedia.org/wiki/Gini_coefficient>

</comment><comment><USER26> I tend to agree with the cynics who think that this a nice way of packaging a $300 bonus. It's not a bad thing to be doing, but I'm unimpressed.

Non-Lenovo-specific rant: I know there's a lot of negative attention being given to "bonus" compensation for executives and high-ranking bankers, and I agree. I don't like the bonus model (for non-executives) either because it includes an implicit penalty for leaving a job except at a known time. It's why, if you're in a New York startup, you can't hire anyone from finance in October through December (or from Google in February-March).

That said, the real fuck-up in executive bonuses and compensation isn't that good executives get huge bonuses. They should. I would rather have a good CEO getting a ridiculous package than a bad one. $20 million is chump change in comparison to the difference between a large company having a good CEO vs. a bad one. It can be worth 100 times that to have a good leader. The vomit- inducing criminality is that _all_ big-company executives (even the incompetents and assholes) get million-dollar payouts, not for achieving anything necessarily but just for winning the social-climbing contest necessary to get those jobs. CEOs who actually build and maintain great companies, or who turn failing companies into great ones (as I hope Marissa Mayer does with Yahoo) deserve to get filthy rich. Shitty CEOs (most of them, since getting that job in most companies is mostly about social favor-peddling rather than competence) deserve jack shit.

The real problem with executive compensation is not a moral issue (if they're excellent, they deserve it, because they're capturing less than 1% of the value they add) but that it seems to have a negative effect on performance: [http://michaelochurch.wordpress.com/2010/11/22/pay-more- get-...](http://michaelochurch.wordpress.com/2010/11/22/pay-more-get-less/) .

</comment><comment><USER27> It'd be nice -- though it ain't never gonna happen -- if C-level types were not coerced (heavens!), but just _expected_ to tip all of their below-median workers some nominal percentage (like say 15-20 percent) of their annual bonus.

For, you know, making it physically possible for them to earn that bonus in the first place.

</comment><comment><USER28> I don't really think all that much about somebody who is fantastically rich giving away money that they won't miss. Although it's still somewhat cool because other fantastically rich people wouldn't do this and seem more concerned with increasing their own wealth to an obscene amount.

<comment><USER29> Now there's a backhanded compliment!

Dude, it doesn't matter how rich he is. He gave away his own money to the people who are making him rich as a gesture of thanks and goodwill. WTF would you find _anything_ to belittle that?

<comment><USER30> Exactly. He didn't say, "Well, I guess I don't need this. Here, I'll just let my employees deal with it." He made a conscious decision to not increase his wealth for the benefit of others.

<comment><USER31> Mark Shuttleworth (Canonical/Ubuntu) is quite good on this idea. Shuttleworth sold Thawte to Verisign for quite a lot of money. He is on record as suggesting that there is only so much you can actually _buy_. Money should be used to make things happen.

Whatever you think of Ubuntu, he has certainly done that.

</comment></comment></comment></comment><comment><USER32> Incentive Pay Considered Harmful <http://www.joelonsoftware.com/articles/fog0000000070.html>

</comment><comment><USER33> What are the odds of this behavior becoming a trend between CEOs?

</comment><comment><USER34> Considering just how expensive everything has become, maybe the employee's can use that $300 to fill the gas in their tanks all the way up!

</comment><comment><USER35> How is this any different than, for instance, Steve Jobs taking only $1 per year in CEO salary?

<comment><USER36> Steve Jobs taking $1 per year would give the benefits to the shareholders, not the employees. It would be the same if Steve Jobs gives his salary millions to the Apple employees.

<comment><USER37> What Steve did at Apple certainly did benefit employees, they're all still employed after all. And I'd guess many are shareholders as well. Double bonus.

</comment></comment></comment><comment><USER38> That's nice.

I wonder what the tax consequences were.

<comment><USER39> They should have been zero for him and an increase of $314 USD in revenue per employee.

<comment><USER40> No, not at all. At least not if this were in the US (or he was a US citizen). I'm not sure what the tax system is like in Taiwan. If this were the US, he'd still have to pay income tax on the $3 million he received for payment for services, and he'd essentially gift the money over to the 10K employees.

Your allowed to give each individual 13K (last time I checked) in gifts each year—but there's a lifetime limit to watch out for. In either case, even if there were issues with gift tax, it would be the gifter that would have to pay the tax, not the recipient. So, it would still be a win for the employees. Good for them, and for him.

<comment><USER39> I don't know Taiwan's tax laws either, but assuming they are similar to the US it is highly unlikely he structured the transaction that way. It is much more likely that before receiving the money he renegotiated a contract for the period and then had the company distribute the gain to employees rather than himself.

That should result in zero tax liability for him.

</comment></comment></comment></comment><comment><USER41> Great. But makes $300 per employee. I got better bonus from a company barely making a profit.

<comment><USER42> Don't think in terms of USD, its 2000 yuan in a country where I eat a hearty breakfast that includes bottled water (a luxury!) for 3 yuan.

</comment></comment><comment><USER43> i dun see any GS or JP exec doing such things... could it be that lenovo is being mgmt by a china inc now.. some of the replies & cynics here is just ridiculous!

</comment><comment><USER44> When will US based CEOs start giving their workers their 300 million+ bonus?

</comment><comment><USER45> Silly publicity stunt and unbecoming of the principles of the free market. He could have created a lot more value by investing the money in a high-powered startup; not passing handouts to janitors and secretaries.

<comment><USER46> People doing what they want to do with their own money is "unbecoming of the principles of the free market"? WTF?

<comment><USER47> I don't agree with the parent comment above yours, but here is something interesting to ponder:

What if he'd taken that 3 million, put it in a big pile and burnt it?

The "free market" doesn't want you to do this, because it needs that money to be back in the market somehow (investing, start up, salaries, purchases, whatever)

Doing 'whatever you want' with your own money is not exactly what the free market wants you to do.

As a slight aside, while I'm not burning my income, I'm not a good "market citizen" in the eyes of the free market. I have no debt, no cell phone, no car. I grow and hunt my own food, live off grid (no bills) and spend the least amount of money possible. This, the "free market" does not want. Imagine if even 25% of people in developed countries did this from now on. Market collapse.

<comment><USER46> There is no "free market" apart from the desires and actions of its participants. If he decided that burning the money was the thing he wanted to do with it, then that's what the "free market" wanted to do with it too.

<comment><USER48> Yep. Otherwise it isn't free.

Burning money, by the way, doesn't actually destroy value. It just increases the value of all the other money in circulation. So in effect it's a gift to other money-holders.</comment></comment></comment></comment></comment>


German banks are hoarding so many euros they need more vaults - <AUTHOR> https://www.bloomberg.com/news/articles/2020-01-31/german-banks-are-hoarding-so-many-euros-they-need-more-vaults <comment><USER3> This problem has probably been exacerbated by the fact the the $500 euro note has not been issued since 27 April 2019[1]. I wonder if making storing euros in cash 2.5 times harder (500 versus 200 euro notes) was part of the reason the 500 euro was retired.

[Edit] The legal storing of cash. The stated reason was the criminal use of cash.

[1][https://en.wikipedia.org/wiki/500_euro_note](https://en.wikipedia.org/wiki/500_euro_note)

<comment><USER4> According to that same article, the reason for retiring the note was because the people who benefited the most from its existence are criminals, who need to do their business in cash -- the fewer notes, the easier for them. That includes storage, I guess.

Still, I'm personally not in the eurozone, but in general terms for the end user high-denomination notes are not very useful unless you're gonna store them under your bed (and governments don't like this, they'd rather everybody be bancarized). Actually using them to buy things is a pain, since most businesses won't accept them. Having one in your wallet is a problem that you have to take care of, instead of just money

<comment><USER5> > According to that same article, the reason for retiring the note was because > the people who benefited the most from its existence are criminals, who need > to do their business in cash -- the fewer notes, the easier for them.

This is what they want the citizens to believe.

<comment><USER6> I wonder if we are meant to think of drug dealers but the governments are just as worried about the local handyman or small construction company getting untraceable cash payments without paying taxes.

<comment><USER7> They aren't getting enough €50 or $100 notes to be a real logistical problem. You can put 10k in your pocket, and count it in a minute or two.

<comment><USER8> If you have large piles of money to launder, one way is to build a rental property and pay all the materials/contractors in cash.

But now harder to do that with 5x the bills. Or suddenly stuck with 500s that nobody wants to take.

<comment><USER9> Wait... how do you explain the appearance of the building with no expenses shown except "from cash"?

<comment><USER8> At least in Canada, the city cares about building permits, but doesn't do any checking on how the building/construction was paid for.

Banks don't really question rent cheque's coming in every month, or a large bank transfer coming from your lawyer for the sale of property.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER10> The crazy thing is that Germany is killing their own banks. They refuse to run fiscal deficits while at the same time they criticize the ECB for lowering rates and hurting the German Saver, when the German Saver is who would benefit if they decided tomorrow to run deficits for the next 10 years.

<comment><USER11> > ... when the German Saver is who would benefit if they decided tomorrow to > run deficits for the next 10 years.

The German Saver knows better than most that inflation destroys savings.

Inflation benefits _debtors_ by allowing them to pay back their loans in depreciated currency. Germany isn't exactly a nation of debtors, although most of Europe is.

This is a looming political issue that's only just beginning.

<comment><USER12> Savers are bad for the economy at large though because they don't invest in high risk businesses, but rather in low risk assets (RE, bonds, etc) that do nothing for no one. They're like scrooge mcduck swimming in their pile of gold.

<comment><USER13> Don't banks require "savers" as their source of capital for lending?

<comment><USER14> not really tbh [https://www.bankofengland.co.uk/quarterly- bulletin/2014/q1/m...](https://www.bankofengland.co.uk/quarterly- bulletin/2014/q1/money-creation-in-the-modern-economy)

<comment><USER15> That document is widely misread. It's true that the bank doesn't have to wait around for a saver to make a loan (they can borrow from other banks), but at the same time banks do fund most of their loans through deposits. Look at the balance sheet for any commercial bank, and you will see most of their liabilities are in the form of deposits.

</comment></comment></comment></comment></comment></comment><comment><USER16> Negative interest rates are long time lethal to financial institutions such as banks and insurance companies. Hoarding printed paper is just a hilarious side effect, but the reality is that under negative rates the financial institutions are, at best, delaying their inevitable bankruptcy.

[https://moneyandmarkets.com/jeffrey-gundlach-negative- intere...](https://moneyandmarkets.com/jeffrey-gundlach-negative-interest- rates/)

<comment><USER17> This makes sense to me, but I don't see democratic countries able to stop themselves before it's too late.

What comes after?

This exact problem is why I liked Bitcoin a few years ago. Although with the scaling issues, it seems less useful than I expected.

<comment><USER18> Do you think raising the block size would create more issues? Although it seems BTC is committed to layer 2 scaling solutions.

<comment><USER19> Raising the block size creates numerous issues, especially for nodes running on consumer systems with limited storage (which is most), and the network starts to become more centralized. We don't want the majority of nodes becoming SPV clients/pruned nodes, due to full blockchain storage costs.

</comment></comment></comment></comment><comment><USER20> I don't see why Germany doesn't handle it the same way as the Bank of England where the chief cashier signs special notes called 'Giants' worth £1,000,000 and 'Titans' worth £100,000,000. These are obviously only used for inter-bank transactions.

<comment><USER21> Why do they need paper money anyway? Is there something more legitimate about a piece of paper with many 0s on it vs redundant electronic storage of record?

<comment><USER22> They don't need the pile of cash, and are free to burn it if they want and just write down in an excel sheet: "today we burned 2 billion euros", now the question is if you're willing to have your salary paid out in a digital recognition that you now own a part of that burnt cash, because you feel comfortable that others would allow you to pay using those IOU's of no longer existing cash.

If not, then the current system where the digital records refer to actual cash still needs there to be actual cash somewhere. Normally you'd have it in the national bank, but since they started charging it's better to stockpile paper.

<comment><USER21> That's a very helpful illustration, thanks.

I guess it seems...funny to me that the one level of abstraction (paper money representing the power to exchange goods and services) is so much more preferred to the other (digital representation of that power). Already now, most of my money is represented as a digital recognition that I own part of a pile of cash that I will never actually take physically.

</comment></comment></comment></comment><comment><USER23> Can someone explain to me why central banks find it so hard to create inflation? It seems to me that the difficult direction should be convincing people that your currency is worth something. Making your currency lose value should be easy, shouldn't it? If Google wanted to tank their share price they would have no problems.

<comment><USER24> I suspect the problem is creating only a little bit of inflation. Hyperinflation is easy, just ask the Weimar republic.

<comment><USER25> Or Zimbabwe or Argentina even ... but I think these extremes are absurd. They are blunders. What we are talking about here is why EU isn't taking prudent steps to provoke growth, and that's all down to keeping certain dominant nationa happy.

<comment><USER26> The reason they managed to create hyperinflation is because when you print more currency, inflation doesn't immediately change in reaction.

So they ended up printing more and more till, it all corrected at once and hyperinflation was already here before they could roll back their currency printing machines.

They took a practical approach to managing inflation yet paying off debt obligations with more currency but didn't realize it all could backfire - <USER2> didn't do something as stupid as others will have you believe.

</comment></comment></comment></comment><comment><USER27> This is a sure sign that government paper is crowding out private investment and destroying the eurozone economy. This is solvable through higher inflation.

[https://email@example.com/the-world-deserves-a-pay- rai...](https://firstname.lastname@example.com/the-world-deserves-a-pay- raise-302f25efd82a?source=friends_link&sk=cb180b2cf186b263b6c6c70ad29bc36e)

</comment><comment><USER28> Surely the banks have to declare how much cash they're holding. Couldn't they just be forced to pay negative interest on that?

..or give the money to someone else for a while so they can do something with it.

<comment><USER29> >Surely the banks have to declare how much cash they're holding. Couldn't they just be forced to pay negative interest on that?

Could they? With appropriate legislation/government action, of course.

>..or give the money to someone else for a while so they can do something with it.

You are talking about forcing them to invest the money. And what happens if that person cannot pay back what was lent to them? If there were any available investments that were safe enough, the banks would be tripping over each other to make that investment, believe me. Hoarding money _costs_ the bank money. Investing it is not only free, but it turns their money into more money. If you were to force them to make unsafe investments, then that risk is essentially passed onto the people who deposited their money in that bank, in the form of potentially not being able to withdraw their money.

</comment></comment><comment><USER30> This may be a stupid question...but is there a paper dollar corresponding to every dollar I have in my bank account?

I always assumed that some of the currency issued by governments was exclusively digital.

<comment><USER31> Most banks are required to keep 10% of the deposits

[https://www.investopedia.com/terms/f/fractionalreservebankin...](https://www.investopedia.com/terms/f/fractionalreservebanking.asp)

<comment><USER32> They have to hold 10% of deposits overall, not in physical currency.

</comment></comment></comment><comment><USER33> Additionally, the cash limit to anonymously buy gold is now 2.000 Euros (since Jan 2020). [https://news.bitcoin.com/germans-rush-to-buy-gold-as- draft-b...](https://news.bitcoin.com/germans-rush-to-buy-gold-as-draft-bill- threatens-to-restrict-purchases/) You need a lot more space to store 10.000 € in cash than in gold.

<comment><USER34> why would banks care if it is anonymous?

<comment><USER33> banks don't care but the cash owners do. If you have 10.000 euros in cash and buy gold (in order to save space in the vault) the transaction will be registered. The government gets all details (name, date, amount etc). Instead if you put the 10.000 euros directly in the vault nothing will be tracked.

<comment><USER35> you seem confused, did you read the article? I don't know about German laws but if you deposit $10k in a US bank you are definitely tracked and not anonymous. Also, no "cash owner" would buy gold to save vault space. The incentives don't make sense.

<comment><USER33> One of the main points is mentioned in the article:

> Germans were already well known for their love of physical money and data > privacy.

I think the most important point here is privacy. If you deposit $10k into a bank account, of course you are tracked. But if you put the $10k into a bank vault you are not tracked.

> Also, no "cash owner" would buy gold to save vault space.

Saving vault space is only one of the reasons. Gold is more stable than cash.

<comment><USER35> the cash in bank vaults mentioned in the headline come from cash deposited into accounts. nobody in this situation is putting cash into a safety deposit box.

banks can't just convert their cash to gold because if gold were to drop in price then they wouldn't be able to cover the money they owe their account holders.

</comment></comment></comment></comment></comment></comment><comment><USER36> Why in the world does Germany not have a decent VC/investment industry? Seems like some companies and people are loaded with cash but they'd rather keep it in a bank than risk it on a new startup. You're not going to get many innovative startups doing that...

<comment><USER37> The standard explanation to this question is that Germans are risk-averse. People don't trust stocks but better want to save their money in a savings bank book. (That won't cover the whole situation, it's rather a two sentence summary)

</comment></comment><comment><USER38> Oh, I still recall my time in Switzerland, where you could walk into any store and pay with a 1000 CHF bill and nobody would even look at you.

</comment><comment><USER39> I guess that's why the smart money in the US is buying stock in banks and financial corps. They are expecting euros to leave the EU and invest in US financial products

</comment><comment><USER40> Why don't they hold T-notes and accept the eurodollar exposure? Seems better than cash, imo.

</comment><comment><USER41> It's because they are storing zero euro notes: [https://www.thelocal.de/20180418/karl-marxs-birth-city- sells...](https://www.thelocal.de/20180418/karl-marxs-birth-city-sells-zero- euro-bills-for-his-200th-birthday)

</comment><comment><USER42> I have plenty of space in my basement. Call me. Low rates!

</comment><comment><USER43> Wait, the Germans are hoarding money again? Should I be alarmed? The UK just exited the EU.

</comment><comment><USER44> Money is a commodity, but you don't want it to behave like one. That's where fiat currency comes in.

Inflation, or at least the threat of it, prevents hoarding. It has a realistic and useful effect on value in that it makes money decay over time.

</comment><comment><USER45> There's also a long-standing rumor that the Germans have warehouses full of Deutschmark notes all printed up and ready to roll out, in the event of a currency Armageddon with the Euro.</comment>