Kraken lays off 30% of staff (opens in new tab)

I completely agree! My point was that it's very funny to blame the macro (and even funnier to blame geopolitics), when it's clearly just serving a revelatory purpose.

Spot on. Warren Buffet put this succinctly:

"When the tide goes out you discover who's been swimming naked."

They would have gotten away with it, too, if it weren't for those pesky feds.

*Growth* is down in certain sectors. Many companies were staffing to support and capture possible future growth. When next year is expected to look like this year, a lot fewer people are actually needed.

C-levels want to blame externalities to deflect scrutiny of their poor management.

Most companies are to some extent financed with debt. When interest rates go up and loans need to be rolled over they will pay a higher interest rate. The result is a deleveraging (companies taking on less debt) but also reducing expenses (layoffs). The relationship between interest rates and inflation is also usually not linear - ie. inflation is 8% on average, you can charge 8% more for your products but your interest payments might very well double (going from 4% to 8% p.a.).

The current layoffs are concentrated in the tech sector because that sector experienced huge growth when everybody was stuck at home. With that now over, it’s just a regression to the mean and employment trends are going back to being in line with the rest of the economy.

It's just a standard thing to point at, isn't it? Like a greeting at the start of a letter? Simply what one says?

Very true! I guess "precipitation of the consequences of fraud" would have been more precise.

Yep. Honestly it’s just been a question of whether you were going to try to take advantage on the way up or not.

"It's only when the tide goes out that you find out who's been swimming naked"

Fraud and ponzis work fine for a while, but a downturn is exactly what causes its instability to show.

As is true in traditional finance as well. If you want to escape fraud altogether you might as well not have any wealth. The entire 2008 financial crises was due to fraud...

Right: to be absolutely clear, I'm not accusing Kraken of anything untoward (at least, nothing more untoward than being involved in this whole industry).

The statement just came across as very roundabout: we all understand that the current downturn in cryptocurrency is driven in part by a decline in "easy money" from retail customers, which in turn is partially driven by a lot of that "easy money" outright evaporating from fraudulent schemes.

I don't disagree, but: macro is a forcing function for the collapse of fraudulent schemes. If it was just a macro downturn, we would be seeing a filter between different firms. Instead we're seeing an implosion roughly every month, interspersed with bankruptcies and major headcount cuts.

> Sam Bankman was clearly a smooth political operator

No, he wasn’t. This is a myth he crafted for his retail audience. He threw money around. But D.C. is filled with schmucks buying photo ops for millions of dollars.

> don't have meeting with Gary Gensler the head of the SEC otherwise

You’re saying SBF’s donations, and not his role as CEO of FTX, got him a meeting with FTX’s regulator?

> He said he also donated an equivalent amount to establishment republicans via dark money channels.

where did you find that? i've not seen it (yet)

How could being the second and third largest donor to Dems/Reps respectively at the same time be a good strategy? Genuinely curious.

I think at current moment it is pretty much been shown that crypto is no hedge against other financial markets. It is entirely correlated. And then it has it own host of issues and probably have enough players who can't handle downturn in market...

More fun news to come.

Are you saying that a YoY decline of 30% in the NASDAQ index is comparable to a 30% employee haircut? I don't think that's how it works.

But doesn't huge amount of fraud dissuade new investors?

Tesla added many features vs 9 months ago and sold - what? - a million cars? Has Bitcoin even been used to sell a single pizza since then?

> Crypto simply followed the overall market effects

Crypto is performing far worse than even the riskiest decile of the stock market. Which should surprise nobody.

It's always best to be laid off first in a downturn. These packages start to disappear later in the cycle.

> Severance at most recent layoffs has been very generous.

They're following Meta's example in hopes of not getting flamed on social media. Otherwise, the packages would be half as generous.

Yeah, I was also thought that Stripe may have called themselves 'Strippers' after 14% were 'stripped' of their employment. From the top comment if I was to replace it: [0]

   * Severance pay. We will pay 14 weeks of severance for all departing 'Strippers', and more for those with longer tenure. That is, those departing will be paid until at least February 21st 2023.
   * Bonus. We will pay our 2022 annual bonus for all departing 'Strippers', regardless of their departure date. (It will be prorated for people hired in 2022.)
   * PTO. We’ll pay for all unused PTO time (including in regions where that’s not legally required).
   * Healthcare. We’ll pay the cash equivalent of 6 months of existing healthcare premiums or healthcare continuation.
   * RSU vesting. We’ll accelerate everyone who has already reached their one-year vesting cliff to the February 2023 vesting date (or longer, depending on departure date). For those who haven’t reached their vesting cliffs, we'll waive the cliff.

It works interchangeably for both 'Krackheads' and 'Strippers'. Oh dear.

[0] https://news.ycombinator.com/item?id=33450753

Is anyone actually defending effective altruism right now? SBF has effectively flushed it down the drain along with the investors he scammed.

I've come to look at it the other way. "Because that's how large companies work" is a lazy non-answer. An honest answer to this question would break it down: # of engineers, # of ops, # of sales, # of hr, etc. And ideally break it down by business division. Of course that requires some real domain knowledge.

I've personally watched morons come in, hire lots of useless employees, and destroy millions of dollars of cash while producing negative effect on the product in a company I cofounded. It happens.

Despite the common refrain, the question is genuinely interesting and it deserves an interesting answer. What's old is the retort "that's just how big companies work". It might entirely be true that 4000 employees is reasonable (or even low!) for an exchange, but I'd really like to hear the arguments.

But why is kraken a large corporation already?

Yes, large corporations tend to get bloated. It doesn't have to be that way though. Many companies will come to find they didn't need nearly as many as they have after all.

I would agree that the more employees a company has, the more the architecture/design shapes around the size of their labor force. But it also doesn't have to be that way

Let's watch Twitter and see

This is hacker news after all, lots of us are hackers that prefer non-VC boosted (nor "cryptocurrency boosted") businesses that are run a bit more lean. Although, it used to be called "Startup News" but lets just ignore that fact for a bit so we can scream at bloated companies for a bit longer.

Seriously. Everyone here seems to think every business should be a permanent bootstrapped, profitable company. If you play the venture game, which Kraken is, you need to grow fast. Typically, though not always, that means hiring people to support that growth.

WhatsApp is the exception, not the rule.

Kraken had ~$1 billion in revenue last year.

With 3,700 employees, that's a revenue-per-employee of $270k.

If you are a startup, that is ok, maybe even great!

If you are not a startup, and are in tech/finance that is NOT OK.

Kraken is not a startup.

Of course, my context is the tech sector and not the scammy free-for-all that is crypto, so I may be off-base.

Their RPE is more like a struggling, dingily-lit, zombie chain of brick-and-mortar retail stores than it is a tech firm.

I know HN doesn't like metrics like RPE, but they're never wrong.

edit: just looked it up. For comparison, Binance has around 6,000 employees and around $20 billion in annual revenue which is off the charts in terms of RPE, even for oil and gas. That's a sign they need to hire more.

HN thinks a junior developer bootstrapping a webapp over the weekend is production ready.

I mean HN runs with like three dudes.

People have no trouble understanding why Walmart has 2.3 million employees - because they roughly understand “each store has X”.

And those other 29 people are just there to ask me dumb questions.

It is a genuinely curious question. I haven't seen the abundance of "Why do they have so many employees" question as I'm new here, and that just seemed like a lot of employees to have if they can just lay off 1/3rd of their workforce overnight.

30% of Eng was cut. Multiple engineers on my team were cut. The QA team was basically wiped out. As far as I can tell, all the lawyers are still here.

“Had”

Bingo

There is a weirdness with money - it feels very similar as income whether it is profit, an investment, or a loan.

Part of the reason cash out refinancing is so fraught with peril.

Partly as leverage in other negotiations, but there was definitely a price where I would have accepted, and they came close to it. I was tempted.

Maybe they didn't apply, but was approached with an offer?

Give it a few more months

Lol. Tons of crap coins, fake stable coins, grifters launching ICOs, SBF, bridges getting hacked, being able to print a coin and then get randoms to buy it. Coins named after dogs that mean or reference nothing.

Some 20 years? in and what value has the blockchain provided? What is it being used in that has changed the world? Crypto bulls are all the same: Hayek acolytes hell bent on currency that isn’t fiat.

It is a Ponzi-scheme: it only works if you can find another putz to buy a coin.

Also only the early “investors” made any money in crypto. Just like in a Ponzi scheme. ;)

Again back to the original post though good on this “company” for doing right by its employees.

People who profit from Ponzi schemes love pretending that their returns represent real value from the economy.

You learn new things every day. Personally, I didn't know the Hallmark corporation was present at the Council of Nicaea (c. 325).

Because a lot of society buys into said consumerism and expects bonuses and stability heading into lots of potentially irresponsible gift-buying decisions for their friends and family?

And I'd expect the calculus is "we're planning to offer severance and paying out bonuses, so they have stability in their consumer choices, and we can start the clock earlier on their severance by doing it as soon as possible (including during a holiday when those employees probably weren't going to be very productive anyway)"

Because companies tend to interview less during the holiday season which means people laid off will have a harder time finding a job

Because the holiday applies additional pressure to consume. You outlined it yourself.

Your take is cliché, factually wrong, and makes you look callous all at once, congrats! Any other major religions' holidays you'd like to dismiss while you're at it?

Because the made up consumerism focused holiday is celebrated by most Americans and generally involves buying gifts for loved ones and attempting to relax with family.

Since most people use the money and PTO from their jobs to enable these goals, losing one's job during this time of year adds an extra layer of stress to those who might have hoped to celebrate the culturally dominant evil made up consumerist capitalist holiday with their loved ones.

Would you be able to expand on this? Why do they do that? Sounds shady.

Interesting, why would they do this?