Good to see that they at least gave some instructions on moving the money (it was the absolute minimum, to be fair). No hate to them - some business don't work out.
That said, I personally don't understand keeping my assets that I hope to retire off of someday at a startup style company. Everyone's gotta start somewhere, but financial services like this are probably a hard sell for a lot of people.
chis · 13h ago
On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.
I think the biggest problem with this startup was that the product they offered was so marginally different from Vanguard ETFs unless you have a super specific and unique investment thesis.
jjice · 12h ago
> On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.
Oh for sure - I'm sure they did. I just still wouldn't want to bother with a turbulent company and having to migrate assets from working with a company that has less of a reputation.
eweise · 13h ago
I worked for a wealth management company. The money was held at the financial institution's accounts. We just calculated when to re-balance the portfolios and executed the trades on the customer's behalf. Not sure if that's how this works.
citizenpaul · 14h ago
Yeah that's what I was thinking. There is 0 benefit to such a product unless the company can guarantee they will be in business for 10-20 years. Otherwise moving my money us just a big time wasting headache if the company shuts down before any benefit is realized. (<1 year... ouch to the users).
It seems like a good idea. It is a margin profits play though. I know that in dealing with big money there is a lot of foot guns as far as costs. If you mess up even one thing it can cost you tens or hundreds of thousands in unexpected expenses. No offense to the founders but I'm guessing that they didn't have someone with 20+ years finance experience to make absolutely sure they never stepped on those mistakes. You'd have to operate flawlessly with only margin profits.
Hopefully the founders will give us some more context on what happened.
fragmede · 13h ago
The attraction is easy. Internet company means lower overhead. I'm not paying to go into a lavish office with people in it like with Fidelity, and the money just needs to sit there generating modest returns. It's all numbers on a screen anyway.
blitzar · 13h ago
Internet company means a VC is setting a bunch of money on fire and providing you the product at a loss to them - which is your gain. They hope they can buy enough eyeballs to get their exit and the users can move on to the next revolutionary idea to giveaway a bunch of cash.
ram_rar · 14h ago
I'm curious what led to the lack of demand for this—was it the friction involved in moving brokerage accounts, or do ETFs already meet the needs of most retail investors? A post-mortem on the limited traction would be quite insightful.
lyrrad · 13h ago
There is financial friction involved.
As I understand it, this product involved using fractional shares to try to adhere to an index, while using tax loss harvesting to optimize for tax.
Fractional shares cannot be transferred between brokerages and are generally sold when transferring brokerages. If you owned on average, half a share of the largest 250 US companies, you'd may need to sell about $30,000 in shares, which could result in an unexpected tax bill.
There are large brokerages and companies offering similar direct indexing products, generally at a higher cost. However, I expect those products are less likely to be shut down.
calmbonsai · 13h ago
This was precisely their business model.
The problem was easy/trivial competition from larger brokerage firms. The core IP was all about tax optimization. The same customers who would employee direct indexing already have dedicated accounting services for exactly that purpose and the additional brokerage fees are either sunk costs or de minimis.
To use an analogy, the folks who are hedge fund customers don't care about the lack of liquidity or higher management fees. You can't capture that market on margin, volume, or any kind of flow ancillaries.
mritchie712 · 12h ago
it wasn't obvious to me how Double is significantly better than an ETF. It'd have to be MUCH better (e.g. at least 50bps to 100bps) to warrant taking a bet on an unproven company.
They had cute names for the indexes ("Founder Mode")... but do those actually make me better returns than an ETF? Probably not.
Why on earth would you trust your money to a start up like this?
Nobody with any real money and smarts is going to do that.
Now if this was somehow a crypto play, I’m sure they’d be rolling in it.
timhigins · 14h ago
Yeah this would be interesting. Also the founders should consider open sourcing some/all of the code. It could be an awesome platform for the open finance community.
pinkmuffinere · 14h ago
Reading the post, it sounds like they are
> If you are technical, we are open sourcing our optimization engine, Oracle, which does our daily Tax Loss Harvesting and rebalancing. You may be able to use this to set up your own trading bot on Alpaca. You will need to contact Alpaca support to request an ACATS of your current assets held at Double.
xur17 · 13h ago
Also note:
> Note that ETF Holding data, corporate action data, and possibly factor model data would be required to reproduce Double’s Direct Index strategies. Unfortunately this data is not generally free and would require a fair bit of work to get Oracle working.
It would be interesting to have an open source direct indexing system with plugins for different brokerages. A CLI tool that provides recommended trades and an option to accept or cancel would be perfect.
xur17 · 13h ago
Welp, looks like I am moving to Frec. Hoping the Apex -> Apex transfer means I can transfer partial shares.
Note for other folks in this situation: you should be able to find a referral link and get a $250 bonus for transferring over.
amberlyfrec · 13h ago
Frec is here to help! And going to offer a $250 bonus to clients moving over. Double will be sharing the link soon.
xur17 · 13h ago
A few questions that you might be able to help with (also happy to jump on a call to discuss, you can find my details in my profile):
- Transferring - will partial shares be liquidated (since both are part of Apex)?
- Can I see my portfolio through Apex Clearing independently (something that Double provided)?
- If I want to transfer my assets in in kind, and invest them in the Total US index, how do I ensure that nothing is sold as part of the rebalance during that transfer?
amberlyfrec · 12h ago
Absolutely.
1. We also custody with Apex so you'll be able to transfer easily between Frec <> Double and continue to see your assets held independently.
2. We can definitely setup a call to review the individual positions and the evaluate risk of positions being sold to rebalance.
Most startups fail, and you should be so lucky as to have one fail quickly and decisively. It's like landing on Free Parking in Monopoly.
apgwoz · 12h ago
> It's like landing on Free Parking in Monopoly.
I have no clue what you’re trying to convey with this analogy? “Free Parking” is different in virtually every household.
tptacek · 12h ago
I was not thinking about random house rules in the analogy.
toast0 · 11h ago
Standard rules free parking is a no-op; you get nothing and pay nothing. It just prolongs the inevitable.
tptacek · 10h ago
Yes, that's what I was referring to.
apgwoz · 9h ago
But then this analogy doesn’t hold… Has there ever been a startup in history where it’s break even everywhere? Investors don’t get their money back, customers (hopefully!) are made whole, and the founders and employees are now out of a job and _perhaps_ didn’t get their final pay check depending on how bad it is.
tptacek · 9h ago
Yeah, you're missing my point. Given most startups fail, the question isn't "at the end of the day do you still get a paycheck for your failed startup", it's "how much of your life did you burn on that failed startup".
Since we're talking about a specific startup whose founders are participants here, I think we can do without the ghoulish stuff about them not making payroll or whatever; "winding down" implies they're failing in an orderly way.
apgwoz · 8h ago
I got your point (after the Free Parking clarification).
(To be clear, my comment wasn’t on Double specifically. No clue how strapped for cash they are while winding down. They seem to be doing right be people (paying fees and such), and that’s great.)
Finally, maybe it’s unintentional, but you seem to be implying that “it’s not worth burning your life on a failed startup,” which seems like a bad take.
If you spend 5 years on a startup that shows promise but ultimately doesn’t pan out, is that always worse than spending 6 months on a startup that fails fast? First, this would be wildly hard to prove, and second, there are obviously counter examples.
tptacek · 6h ago
Yes. If you spend 5 years on a promising startup that fails, that is strictly worse than spending 6 months on a promising startup that fails.
apgwoz · 5h ago
LOL. Completely disagree.
In that 5 years, I’ve identified a shit ton of stuff that works, doesn’t work, and made relationships along the way. I’d bet money on the founder of the 5 yr startup being successful over the 6 months founder.
tptacek · 5h ago
You do that stuff in every job. Meanwhile, people with careers in startups do multiple startups. You get a finite number of them. You are literally better off working at somebody else's successful startup than you are spending 5 years on a doomed startup. The most valuable asset you have is time.
apgwoz · 5h ago
Both of us are arguing based on feelings and intuition, so this is going no where. If you can cite a study then so be it.
I think what we can both agree on is that it is pretty obvious that prior startup experience is key to the next startup being successful.
tptacek · 4h ago
I really don't think I need to cite a study that 5 years of time is a lot to give up on a company that goes nowhere. It happens! It's normal! And very painful. Which is why getting to a decisive resolution in 6 months is often a gift.
You will make more money, and probably work on equivalently interesting problems, working any other job than at a startup you cofounded that limps for years before winding down. It's really hard to see what upside you're finding here. I don't say this often, but this isn't a place I see leaving at "reasonable disagreement".
apgwoz · 3h ago
> I really don't think I need to cite a study that 5 years of time is a lot to give up on a company that goes nowhere.
I think your problem is that you have one definition of success for a startup and that’s to become a unicorn.
> working any other job than at a startup you cofounded that limps for years before winding down.
Not everyone starts a startup to become a billionaire, and not everyone seeks to _make more money_.
But aside from that, the way you’re going to _make more money_ in another job is by working at a large company that can pay you more money. That large company has lots of people and lots of jobs that are specialized… because? Lots of people are there to do them. If I work on a team in a large company, I very likely have a narrow focus and I am not “solving interesting problems” on average.
tptacek · 2h ago
You keep saying stuff like this, but I'm asking a simple question. How have you personally benefited from spending years at a startup that failed, so much so that you were better off at the doomed startup than in any other place in the industry? I'm looking for some kind of relatable experience.
> You can initiate a cash withdrawal or transfer your assets to another brokerage. We ask that you do this by July 31, 2025.
Seems to still require manual work, though? With less than 30 days to do so...
sethhochberg · 12h ago
When you work with Apex (or really any other technology bridge to the traditional financial world, Q2's Helix is common for traditional banking, Apex Clearing is common for stock trading, etc) they require you think about things like this during your implementation. Its not quite as turnkey as something like opening a Stripe account; your implementation will need to demonstrably pass a playbook of tests before your partner will allow you to play in real financial transactions - and those tests typically include things like account closure or program shutdown.
Basically, the traditional financial services partners who give startups access to these legacy networks know their clients are startups who might not fully understand the space or might want to cut corners. They're good at making sure they're protected against their clients' behavior, and in most cases legally the end users are actually the customer of the financial services company, the startup will be considered a "deposit broker" instead of a "bank" etc. Its been longer since I've touched the stock broker side so I'm fuzzy on the specific terminology but its similar there.
languagehacker · 12h ago
Can someone double-check my understanding of this?
Double is a portfolio management service that purchases shares that match the blend of a specific index for its customers. So instead of owning an index, you own the shares.
Double is winding down because they are not profitable. They are instructing their customers to either fully liquidate their holdings, or perform an ACATS transfer, which generally requires that any fractional holdings be liquidated first. However, the business model will necessarily require holding fractional shares because of the way indexes work.
So my question is, this is going to cause many of their customers to get dinged by short-term capital gains tax, right? That stinks.
citizenpaul · 14h ago
Sorry to hear. I know you are probably down right now but is there any chance you would be willing to share some details on why things didn't work out? I'd like to learn and I'm sure lots of others on HN would benifit from your experience.
That also tracks why the README would be pointing to a 404 file, since the other commit that touched that file was to change its name, and also not update the README
amberlyfrec · 13h ago
Frec is an option for customers looking for a new low cost direct indexing provider! All assets remain securely held with Apex + Frec has grown to over $300m in assets with continued rapid growth.
Beijinger · 13h ago
Would you be so kind to elaborate?
infecto · 13h ago
Saw some posts asking why and for postmortems. I am not the founder, not in the retail industry but adjacent space to understand enough of why.
1) there are already competitors in this space that have been there for a decade or longer. Higher fees but not significantly so to counter the risk of doing business with a startup.
2) If you use their calculator is a bit disingenuous, starting balance of $1mm. Those clients exist but that’s the minority. If you bring that number down to a more typical average or median for someone with a 30 year horizon you see that the difference is not material compared to their default assumptions.
3) if you are a high net worth individual where tax low harvesting matters, the product does not feel that compelling.
toomuchtodo · 13h ago
Indeed, this is ideally suited as a small team in a brokerage or other asset management firm, marketed to existing high net worth customer relationships either as part of the asset under management fee or some cut of tax savings realized. It is not a sustainable standalone business.
mizzao · 6h ago
I'm a Frec user and have never heard of Double before. Is this likely to happen to them as well?
jvanderbot · 14h ago
This is the first I'd heard of something like this.
What other services are in the area of "Cheap automated portfolio management" that HN might recommend?
khuey · 14h ago
The Target Date Retirement fund from your preferred low cost fund provider (i.e. Vanguard, Fidelity, Schwab, iShares, etc) is an excellent choice.
toast0 · 11h ago
If you're investing in a taxable account, Target Date funds might be less preferable than holding the underlying funds (or similar funds if the underlying funds aren't available). Vanguard recently made changes to their target date funds that resulted in a lot of redemptions and extra costs to those holding these funds in taxable accounts.
citizenpaul · 13h ago
>Target Date Retirement fund
Every-time I look at those they seem extremely risk adverse for such a long term investment. Sometimes with 50%+ bonds/notes. If you are looking to retire in 5 years sure but I'm guessing most HN are hoping for more than 4% returns on their retirement account 25+ years from now.
mandevil · 13h ago
Vanguard Target Date 2045 (suitable for someone born in 1980, looking to retire in about 20 years) is, as of September 2024, at 50.3% Total US Market Institutional Shares, 33.2% Total International Investor Shares, 10.9% Total US Bond Investor, and 4.8% Total International Bond Institutional.
Fidelity's 2045 fund is even higher in the market, they are 10% bonds and 95% equity (they appear to be levered by 5%).
citizenpaul · 6h ago
ITs been a while. I'm referring to the ones that have been presented for choices in various 401k's over the years. Those ones always seem quite terrible. I basically just ignore them now. There may be others that I've not seen outside the the restrictions of 401k's. Maybe I should take a another look and update my knowledge on them.
mandevil · 3h ago
401(k)'s almost always have terrible choices for funds, because of the principal-agent problem. The agent of the company makes the choices on what funds are available but it is the principals as employees who pay the fees. In half-a-dozen career stops over 20 years, I've seen good fund choices in the 401(k) maybe twice? Which is why whenever I leave a job I always roll it over into my trusty Vanguard IRA as quickly as I can, and get to have my choices for funds.
(401(k)'s and IRA's are treated differently in a divorce, which fortunately has not been a problem for me, otherwise having a IRA is so much better than a 401(k). If it wasn't for the employer matching funds I would never do a 401(k) and just do a IRA.)
khuey · 13h ago
Are you looking at ones with retirement dates well into the future? The one Vanguard suggests for people born in 1990 (VFFVX) is 90% equities.
tl;dr at age 40 (90/10) it starts increasing bonds until age 60 (60/40); age 65 (50/50), and then 72 (30/70)
nfinished · 14h ago
I use Wealthfront and highly recommend it. In addition to a normal managed portfolio they've also recently offered a direct investment option tracking SPY with a management fee equivalent to the ETF's express ratio. Great for scraping a couple dollars off your tax liabilities with loss harvesting. Can share a referral that (iirc) reduces management fees for a couple months if you're interested.
fyrabanks · 10h ago
I have money in a Fidelity retirement fund and have invested additional money into Vanguard funds. Additionally, Schwab Intelligent Portfolios have treated me well. That portfolio has total unrealized gains of +37.27%. I have read lots of anecdotal stories of people taking losses using it, though, so YMMV.
That said, I personally don't understand keeping my assets that I hope to retire off of someday at a startup style company. Everyone's gotta start somewhere, but financial services like this are probably a hard sell for a lot of people.
I think the biggest problem with this startup was that the product they offered was so marginally different from Vanguard ETFs unless you have a super specific and unique investment thesis.
Oh for sure - I'm sure they did. I just still wouldn't want to bother with a turbulent company and having to migrate assets from working with a company that has less of a reputation.
It seems like a good idea. It is a margin profits play though. I know that in dealing with big money there is a lot of foot guns as far as costs. If you mess up even one thing it can cost you tens or hundreds of thousands in unexpected expenses. No offense to the founders but I'm guessing that they didn't have someone with 20+ years finance experience to make absolutely sure they never stepped on those mistakes. You'd have to operate flawlessly with only margin profits.
Hopefully the founders will give us some more context on what happened.
As I understand it, this product involved using fractional shares to try to adhere to an index, while using tax loss harvesting to optimize for tax.
Fractional shares cannot be transferred between brokerages and are generally sold when transferring brokerages. If you owned on average, half a share of the largest 250 US companies, you'd may need to sell about $30,000 in shares, which could result in an unexpected tax bill.
There are large brokerages and companies offering similar direct indexing products, generally at a higher cost. However, I expect those products are less likely to be shut down.
The problem was easy/trivial competition from larger brokerage firms. The core IP was all about tax optimization. The same customers who would employee direct indexing already have dedicated accounting services for exactly that purpose and the additional brokerage fees are either sunk costs or de minimis.
To use an analogy, the folks who are hedge fund customers don't care about the lack of liquidity or higher management fees. You can't capture that market on margin, volume, or any kind of flow ancillaries.
They had cute names for the indexes ("Founder Mode")... but do those actually make me better returns than an ETF? Probably not.
this[0] also scared me away
0 - https://news.ycombinator.com/item?id=42377934
Nobody with any real money and smarts is going to do that.
Now if this was somehow a crypto play, I’m sure they’d be rolling in it.
> If you are technical, we are open sourcing our optimization engine, Oracle, which does our daily Tax Loss Harvesting and rebalancing. You may be able to use this to set up your own trading bot on Alpaca. You will need to contact Alpaca support to request an ACATS of your current assets held at Double.
> Note that ETF Holding data, corporate action data, and possibly factor model data would be required to reproduce Double’s Direct Index strategies. Unfortunately this data is not generally free and would require a fair bit of work to get Oracle working.
It would be interesting to have an open source direct indexing system with plugins for different brokerages. A CLI tool that provides recommended trades and an option to accept or cancel would be perfect.
Note for other folks in this situation: you should be able to find a referral link and get a $250 bonus for transferring over.
- Transferring - will partial shares be liquidated (since both are part of Apex)?
- Can I see my portfolio through Apex Clearing independently (something that Double provided)?
- If I want to transfer my assets in in kind, and invest them in the Total US index, how do I ensure that nothing is sold as part of the rebalance during that transfer?
1. We also custody with Apex so you'll be able to transfer easily between Frec <> Double and continue to see your assets held independently.
2. We can definitely setup a call to review the individual positions and the evaluate risk of positions being sold to rebalance.
You can book a demo here: https://calendly.com/frecdemo/frec-demo or feel free to email me amberly@frec.com
I have no clue what you’re trying to convey with this analogy? “Free Parking” is different in virtually every household.
Since we're talking about a specific startup whose founders are participants here, I think we can do without the ghoulish stuff about them not making payroll or whatever; "winding down" implies they're failing in an orderly way.
(To be clear, my comment wasn’t on Double specifically. No clue how strapped for cash they are while winding down. They seem to be doing right be people (paying fees and such), and that’s great.)
Finally, maybe it’s unintentional, but you seem to be implying that “it’s not worth burning your life on a failed startup,” which seems like a bad take.
If you spend 5 years on a startup that shows promise but ultimately doesn’t pan out, is that always worse than spending 6 months on a startup that fails fast? First, this would be wildly hard to prove, and second, there are obviously counter examples.
In that 5 years, I’ve identified a shit ton of stuff that works, doesn’t work, and made relationships along the way. I’d bet money on the founder of the 5 yr startup being successful over the 6 months founder.
I think what we can both agree on is that it is pretty obvious that prior startup experience is key to the next startup being successful.
You will make more money, and probably work on equivalently interesting problems, working any other job than at a startup you cofounded that limps for years before winding down. It's really hard to see what upside you're finding here. I don't say this often, but this isn't a place I see leaving at "reasonable disagreement".
I think your problem is that you have one definition of success for a startup and that’s to become a unicorn.
> working any other job than at a startup you cofounded that limps for years before winding down.
Not everyone starts a startup to become a billionaire, and not everyone seeks to _make more money_.
But aside from that, the way you’re going to _make more money_ in another job is by working at a large company that can pay you more money. That large company has lots of people and lots of jobs that are specialized… because? Lots of people are there to do them. If I work on a team in a large company, I very likely have a narrow focus and I am not “solving interesting problems” on average.
Seems to still require manual work, though? With less than 30 days to do so...
Basically, the traditional financial services partners who give startups access to these legacy networks know their clients are startups who might not fully understand the space or might want to cut corners. They're good at making sure they're protected against their clients' behavior, and in most cases legally the end users are actually the customer of the financial services company, the startup will be considered a "deposit broker" instead of a "bank" etc. Its been longer since I've touched the stock broker side so I'm fuzzy on the specific terminology but its similar there.
Double is a portfolio management service that purchases shares that match the blend of a specific index for its customers. So instead of owning an index, you own the shares.
Double is winding down because they are not profitable. They are instructing their customers to either fully liquidate their holdings, or perform an ACATS transfer, which generally requires that any fractional holdings be liquidated first. However, the business model will necessarily require holding fractional shares because of the way indexes work.
So my question is, this is going to cause many of their customers to get dinged by short-term capital gains tax, right? That stinks.
The README.md says it's MIT licensed on the very last line (https://github.com/doublehq/oracle/blob/b69ef4c940217a2fbf52...).
However, LICENCE file (not LICENSE.md file, which doesn't exist, https://github.com/doublehq/oracle/blob/b69ef4c940217a2fbf52...) says it's GPL 3.0 license.
Which one is it?
That also tracks why the README would be pointing to a 404 file, since the other commit that touched that file was to change its name, and also not update the README
1) there are already competitors in this space that have been there for a decade or longer. Higher fees but not significantly so to counter the risk of doing business with a startup.
2) If you use their calculator is a bit disingenuous, starting balance of $1mm. Those clients exist but that’s the minority. If you bring that number down to a more typical average or median for someone with a 30 year horizon you see that the difference is not material compared to their default assumptions.
3) if you are a high net worth individual where tax low harvesting matters, the product does not feel that compelling.
Every-time I look at those they seem extremely risk adverse for such a long term investment. Sometimes with 50%+ bonds/notes. If you are looking to retire in 5 years sure but I'm guessing most HN are hoping for more than 4% returns on their retirement account 25+ years from now.
Fidelity's 2045 fund is even higher in the market, they are 10% bonds and 95% equity (they appear to be levered by 5%).
(401(k)'s and IRA's are treated differently in a divorce, which fortunately has not been a problem for me, otherwise having a IRA is so much better than a 401(k). If it wasn't for the employer matching funds I would never do a 401(k) and just do a IRA.)
tl;dr at age 40 (90/10) it starts increasing bonds until age 60 (60/40); age 65 (50/50), and then 72 (30/70)
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