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Robinhood lays off 23% of staff

wsj.com

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Re: Robinhood lays off 23% of staff

#301

Post by dylan604 »

groby_b wrote: post #250
BeetleB wrote: post #188

Earlier quoted context omitted.

Exactly - all these articles about CEO compensation are misleading. Case in point: Intel's CEO's 2021 salary was reported as almost $180M. In reality, he got only about $10M. He hit literally none of the targets that would allow him to get the rest of the compensation (although in theory he has a few years to hit those targets).

To be fair, if I could get paid $10M for not hitting any of my goals, I sure wouldn't complain.

To be fair, I don't think the CEO is complaining either

Re: Robinhood lays off 23% of staff

#302

Post by bdcravens »

memish wrote: post #122
paxys wrote: post #29

> As CEO, I approved and took responsibility for our ambitious staffing trajectory—this is on me Reminder that Vlad Tenev received $800M in compensation in 2021. In the same year the company made terrible bets on crypto and banking, took an irreversible reputation hit among its core user base because of the GME fiasco, had multiple user data breaches, was subject to several investigations and was fined hundreds of mi…

Reminder that Vlad Tenev founded Robinhood, an incredibly successful app that disrupted an industry and is still best in class. There really is no replacement for a founder CEO.

Not true that there's no replacement for a founder CEO. Creating a company and growing it to viability is a much different skillset than running a company of a given size. Many startups have actually eventually suffered because they didn't transition.

Re: Robinhood lays off 23% of staff

#303

Post by trelane »

tmpz22 wrote: post #158
88913527 wrote: post #113

Earlier quoted context omitted.

It's probably not that simple. Most chief executives delegate the responsibility of hiring staff to others. Sure, the buck stops with the executive, but ultimately nobody can review every single operational decision at scale. Maybe they hired for a world where the pandemic didn't happen and the monetary supply didn't tighten, then the world changed.

The entire purpose of the C-suite is to stay on top of macro level stuff, and its the boards purpose to make sure the C-suite is doing it. They didn't do their job. And they got rich not doing it.

I think it's high time to see if there aren't better ways to track the macro level stuff than hiring overlords. It seems to keep not working well.

Re: Robinhood lays off 23% of staff

#304

Post by imgabe »

jrochkind1 wrote: post #45
paxys wrote: post #29

> As CEO, I approved and took responsibility for our ambitious staffing trajectory—this is on me Reminder that Vlad Tenev received $800M in compensation in 2021. In the same year the company made terrible bets on crypto and banking, took an irreversible reputation hit among its core user base because of the GME fiasco, had multiple user data breaches, was subject to several investigations and was fined hundreds of mi…

I realize it's not something that happens, but I would say "taking responsibility" would mean taking, oh, I dunno, $50M of that $800M in compensation in 2021, and distributing it to those laid off? (How the hell is your life different with $750M instead of $800M anyway?)

For one thing, as another comment mentioned, he didn’t actually get $800M because that was contingent on hitting various price targets that didn’t happen.

For another, it’s not like it’s just cash sitting in a checking account. It would be stock in the company. Since he’s a CEO, he can’t just sell it whenever he wants, insider trader rules mean there’s only certain windows when he could buy or sell, and the CEO selling off that much of his holding would raise all sorts of questions among investors.

If he did it as a personal gift to each employee, there’d be enormous gift taxes that would eat most of it.

If he did it as part of their compensation, it would be coming from the company, not him, and he would have to justify to the board of directors and shareholders why he’s spending so much on a lavish severance package that is far beyond the industry norm (assuming they aren’t already getting generous severance packages)

It’s not as simple as “Oh rich people could just fix every problem by giving away all their money, but they’re just greedy jerks”

Re: Robinhood lays off 23% of staff

#305

Post by johnbellone »

xpe wrote: post #281
datalopers wrote: post #36

Biggest mark of utter management failure is making too small a layoff in April (9%) and needing to do another round today. Combined that’s a 30% headcount reduction since Q1-2022

Please say more. Is the idea to get the blood-letting over with all at once?

Yes, it’s much better to cut fast and deep one time.

Re: Robinhood lays off 23% of staff

#306

Post by trelane »

NegativeLatency wrote: post #160
88913527 wrote: post #113

Earlier quoted context omitted.

It's probably not that simple. Most chief executives delegate the responsibility of hiring staff to others. Sure, the buck stops with the executive, but ultimately nobody can review every single operational decision at scale. Maybe they hired for a world where the pandemic didn't happen and the monetary supply didn't tighten, then the world changed.

"With great power comes great responsibility"

Nah, there's not really responsibility when your parachute is golden.

Re: Robinhood lays off 23% of staff

#307

Post by elihu »

Spivak wrote: post #104
elihu wrote: post #98

Earlier quoted context omitted.

My own theory is that executive compensation serves a purpose that generally isn't said out loud. Usually compensation comes mostly in the form of stock, and the real reason for the large amounts is to reassure investors that if the executive finds him or herself in a situation where they have to make a choice between what's good for employees or what's good for shareholders, they'll be strongly incentivized to choos…

> owning stock And not cashing it out.

Right, selling it all looks bad and CEOs are often required to hold some minimum number of shares.

Re: Robinhood lays off 23% of staff

#308

Post by tptacek »

paxys wrote: post #204
jmyeet wrote: post #137

Earlier quoted context omitted.

> ... took an irreversible reputation hit among its core user base because of the GME fiasco God I'm so sick of hearing this. It comes from people who seriously don't know what happened. let me explain: RH had (and still has) a service that you can trade immediately on signing up and sending funds rather than waiting for them to clear. This mostly works out fine because people buy different things and you have the un…

Pretty much everything you wrote is incorrect. You are describing margin lending, which had nothing to do with the issue. Robinhood instead blocked trading even for fully funded accounts. The problem wasn't the money that Robinhood lent you, but rather the fact that they themselves didn't have enough collateral to get cleared for the increased risk posed by these stocks. They were posing as a first-class brokerage wi…

My understanding is most people aren't commenting on this coherently†. The problem that halted Robinhood's GME trades, as I understand it, was that they had insufficient collateral to cover their clearing requirements. Clearing collateral isn't customer money; it's funds that clearinghouses require brokerages to post to protect them from each other. This, as I understand it, is money Robinhood was required to have on hand regardless of whether they had the money from customers to back trades. The amount is based in large part on the volatility of the stocks they're trading, and papers the illusion that stocks trade instantly when in fact the actual trade takes days to settle, during which the price of a volatile stock can swing wildly.

My understanding is that nothing you can do with customer trading funds will mitigate or offset your clearing collateral requirements. Brokerages that want to clear trades just have to have a big chunk of segregated money set aside to keep participating in the market. Robinhood ran out.

† because it's complicated, and there are lots of simple explanations you can come up with that are wrong, and we all have an Internet nerd tendency to fixate on a couple of axioms and derive the rest of the world from them, rather than reading the huge legal documents that set these things out

Re: Robinhood lays off 23% of staff

#309

Post by bdcravens »

danwee wrote: post #17

> As CEO, I approved and took responsibility for our ambitious staffing trajectory—this is on me So, find a decent replacement for CEO.

He's basically saying, RH over-hired, and now is correcting that mistake.

With that view, a competent CEO wouldn't have hired those people to begin with.

If you use that self-admission as a reason to fire him, the excess labor still loses its job.

Re: Robinhood lays off 23% of staff

#310

Post by pram »

spaceman_2020 wrote: post #14
civilized wrote: post #8

Earlier quoted context omitted.

It should have been obvious to anyone that people would do less day trading once they had anything better to do.

Or when making money became harder. Amazing the number of people I personally know who took 1 year of day trading to be the “norm” and made big life decisions based on their results. From quitting good jobs to buying houses they can’t afford, all because they made big money in 2021 and thought they could keep repeating it every year.

Options trading in particular is really addicting, like gambling. I’ve had periods where I was completely sucked in, looking at charts and news all day.

I will admit I’ve had thoughts in the past of “I should just quit my job and do this” without any practical consideration as to how sustainable it would be. Not because I thought I would be rich, just because I wanted to trade all day! It’s kind of like being addicted to an MMO lol

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