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Health

Doximity CEO ignored Silicon Valley knowledge, constructed $10 billion firm

Doximity CEO ignored Silicon Valley wisdom, built $10 billion company

Jeff Tangney, CEO, of Doximity at the New York Stock Exchange for their IPO, June 24, 2021.

Source: NYSE

Jeff Tangney launched his first health-tech start-up, Epocrates, in the middle of the dot-com bubble. While the company survived the crash and eventually went public, the endgame was a disappointing acquisition for less than $300 million.

By the time Tangney started his next venture, Doximity, in 2010, he’d learned a few things: Don’t raise too much money. Don’t burn too much cash. Fix a real problem for doctors.

With Doximity, Tangney created a web service that’s both a professional network — think LinkedIn for doctors — and a secure way for medical experts to communicate and share information with patients and colleagues. It now counts 1.8 million medical pros in the U.S. as users, including over 80% of physicians.

On Thursday, Doximity debuted on the New York Stock Exchange, closing the week with a market cap of almost $10 billion after raising around $500 million in its IPO. Tangney’s stake is worth $2.9 billion.

Those are big numbers especially when you consider that, prior to this week, Doximity never showed up on a “unicorn” list of billion-dollar tech companies. Its last financing round in 2014 valued the company at under $400 million. Tangney said that because Doximity is profitable it still hasn’t touched the $50 million it raised seven years ago.

“I did resist some of the Silicon Valley wisdom of, you need to go big, you need to hire 40 more salespeople and do all these things,” Tangney, 48, said in an interview on Thursday, after ringing the bell at the NYSE.

In Doximity’s target market, there’s no point in aiming for rocketship growth, Tangney said. The company generates revenue from drugmakers, who use the site to market treatments to a very targeted audience, and health systems looking to promote content to doctors across the country. It’s also a recruiting tool hospitals and health centers use to fill key jobs.

Tangney recognized early on that he could expand only as rapidly as customer budgets would allow.

“The reality of health care and our clients, who are very staid institutions, a lot of non-profits that have been around for 100 years, is that even if you lean in and hire tons of sales and marketing people, they’re not going to let you grow,” Tangney said.

He’s also not inclined to pay for branding just for the sake of building his profile — another reason why the company has remained largely unknown in Silicon Valley even though it’s headquartered in San Francisco. Doximity’s advertising budget for last fiscal year totaled $2.6 million, or roughly the amount Uber spends on an average day.

Tangney said the best advertising has come from doctors touting the product within their practitioner networks.

Meanwhile, the company generated over $200 million in revenue last fiscal year and produced over $50 million in net income.

Climbing trip at Stanford

Tangney’s journey to Doximity started in the late 1990s while he was living in New York with a trained physician named Richard Fiedotin. From their un-air-conditioned apartment, the pair came up with the idea of creating an app for the Palm Pilot, which had just hit the market, that would allow doctors to get critical information.

Tangney and Fiedotin took that idea with them to Stanford Graduate School of Business, where they met another physician named Tom Lee. The three bonded over the intersection of tech and health care while on a teambuilding climbing trip for students in the program.

In 1998, they started what became Epocrates, and over the next two years raised about $40 million from some of Silicon Valley’s top health investors. As mobile moved to BlackBerry devices and then to iPhones, Epocrates gained traction as a way for doctors to make decisions about prescriptions and patient safety while on the move.

The venture capitalists told Tangney to hire like crazy, so he did. Then came the tech crash and the crisis from the 9/11 terrorist attacks. In 2002, Epocrates was forced to cut a bunch of jobs, Tangney said.

The company held on, but it was a slog. Fiedotin left a few years later, and Lee departed to start One Medical, a chain of primary care clinics that uses technology to improve the patient experience. Tangney stuck around a bit longer, and tried to take Epocrates public. Then came the financial crisis of 2008, and the company had to withdraw its prospectus.

Tangney finally left in late 2009, a year before the eventual IPO and four years before Athenahealth bought the company for $293 million.

“There was a point during the last couple years of my tenure where it felt like we were in this tunnel, marching toward a goal,” Tangney said. “I wasn’t having as much fun. When you’re not in that place of loving what you do, you’re not doing your best work.”

Tangney had spent the past decade selling products to medical centers and talking to doctors about the challenges they faced doing their jobs. He kept those conversations going and learned that communication was a constant point of stress, whether it’s getting in touch with patients, other doctors, administrators or recruiters. In Tangney’s estimation, 80% of communication in the industry “is done via snail mail and fax.”

“Software is indeed eating the world but it kind of choked a little bit on health care,” he said.

Shari Buck had worked with Tangney at Epocrates. She’s one of the first people he approached with the idea of creating a professional network designed for doctors. Buck said she hopped on board “without reservation,” joining as one of the three co-founders, along with Nate Gross, a doctor who is also the founder of health-tech incubator Rock Health.

Doximity co-founders Jeff Tangney (left), Nate Gross and Shari Buck

Doximity

“Before we had an office, Jeff would drive up to Marin to meet me,” Buck said. “We would meet in a workspace above the garage. We used to laugh at how Apple it was,” she said, referring to the storied location where Steve Jobs and Steve Wozniak started their computer company.

Tangney also turned to Lee as a sounding board and advisor. At One Medical, Lee had the perfect test audience for Tangney: A growing base of doctors who were enthusiastic about technology.

At the time, Tangney was not at all focused on revenue, but was rather pursuing an approach more akin to consumer internet start-ups, trying to build a big base of engaged users with the hope that money would eventually follow.

Lee said they batted around ideas for future revenue opportunities. Helping medical recruiters find talent was a clear possibility.

“Recruiting doctors is not a well-defined profession and had been done poorly,” said Lee, who’s now founder and CEO of health company Galileo. “A doctor receives a lot of job opportunities. In classic medical marketing, you’d get these glossy photos of opportunities that were completely outdated, showing glorious pictures of suburban communities and symphony life and fishing.”

Best ideas come over cocktails

For Tangney, product development at Doximity has always been centered around what doctors need. So he created a medical advisory board a decade ago, bringing together a few dozen physicians in the network for a weekend every year.

The group gets together on a Saturday afternoon to provide feedback on new products, learn about updates that could be coming and for some general brainstorming. The talks continue informally over evening drinks and then resume Sunday morning, ending with lunch.

“Software is indeed eating the world but it kind of choked a little bit on health care.”

While Doximity had to skip this year’s gathering because of Covid-19, the event has been held in Napa and at Pebble Beach, and more recently at the company’s San Francisco office.

“It’s been probably the biggest influence on our product roadmap,” Buck said. “We talk about what we plan on building, individual features and new crazy ideas that we have. The best ideas come at cocktail hour on Saturday night.”

Buck said Tangney is known for carrying around little notebooks that he diligently fills up cover to cover over the two days.

Kevin Spain of Emergence Capital attended the Napa weekend in 2012, not long after his venture firm led Doximity’s first investment, a $10.8 million financing round.

Spain was thoroughly invested in Doximity’s success, and not just because of the money Emergence had on the line. He wasn’t yet a partner at the firm but had convinced his superiors to back a pre-revenue business. It was an atypical bet for Emergence, which focuses on early-stage cloud software companies.

Spain said that while board meetings were instructive because he could see signups going in the right direction and engagement on the site increasing, the Napa weekend was much more insightful. He got to hear directly from doctors about what they needed to improve their practice.

“They felt like they had a hand in co-creating this thing Doximity was building,” said Spain, whose firm owns a $1.35 billion stake in the company as of Friday’s close. “I’d never seen that before.”

Some of those doctors ultimately made good money from the IPO. Doximity allocated up to 3.5 million shares to doctors on the platform, representing 15% of the offering. After Doximity’s stock price jumped 115% in its first two days, the value of shares owned by doctors climbed from $91 million to over $195 million.

“Physicians are sort of outsiders in the financial markets and business world,” Tangney said. “Yet in our life and world they’re the insiders, they’re the people we care about most. We’d rather the shares go to them if there’s a pop than to some hedge fund somewhere.”

One challenge for Tangney as he continues to seek expansion opportunities is that there’s a finite universe of users and the core product already reaches the vast majority of them. The company serves more than 80% of U.S. physicians and over 90% of recent medical school graduates. There are only about 1 million doctors in the country.

Still, Tangney sees a decade of revenue growth ahead. There are digital ad dollars to capture as pharmaceutical companies move spending online. And there’s the power of medical referrals, helping doctors get patients to the right places based on where the top experts work and which hospital specializes in treating a particular disease.

Doximity also just entered telehealth, a $4.3 billion market opportunity, according to the prospectus. As a response to the pandemic, Doximity launched a video-based virtual visit service that doctors can use from their existing app and patients can use without having to download anything.

The company said it signed over 150 telehealth subscription agreements with medical systems and served over 63 million virtual visits in the fiscal year that ended in March. Yet the product only accounts for 2% of its revenue.

At the highest level, Tangney said, health care accounts for 18% of the U.S. economy, so there’s no shortage of money available if Doximity’s service continues to add valuable features.

“We’re steadfastly focused on these very busy million people who really take care of the sick all day and aren’t given great tools to collaborate with each other easily and to make care better,” he said.

WATCH: Disrupting Healthcare

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World News

Australian sensible metropolis desires to be the following Silicon Valley

Australian smart city wants to be the next Silicon Valley

A computer generated aerial view of Greater Springfield near Brisbane, Australia.

Springfield City Group

If you drive the sunny coast of Australia’s Gold Coast 25 kilometers outside of Brisbane, you’ll find Greater Springfield, a city that’s different by nature.

You may never have heard of it. Not surprising; The city is not yet 30 years old. But that doesn’t hold it back. In a few years, it could be the next Silicon Valley, says developer Springfield City Group (SCG).

“The world has learned a lot from Silicon Valley,” founder Maha Sinnathamby told CNBC. “We said, this is 85 years old. Let’s design the latest version.”

Sinnathamby is the brains behind Greater Springfield, Australia’s only privately built city and its first planned city since the founding of the capital Canberra more than a century ago. The octagonal real estate tycoon, who has had a 50-year career developing residential and commercial buildings across Australia, said his most recent project, as well as his inspiration Silicon Valley, is about creating a modern business hub based on technology, Education and health care.

We are trying to attract the Microsofts and Googles of the world.

Maha Sinnathamby

Founder and Chairman of the Springfield City Group

And now he’s looking for big-name companies to help him reach the next level of his cherished $ 68 billion vision.

“We’re trying to attract the world’s Microsofts and Googles,” said Sinnathamby, noting that the group is currently in talks with a multinational tech company.

An innovation center for the Asia-Pacific region

Developed on 7,000 acres for $ 6.1 million, Greater Springfield – the 10th largest planned community in the world – is already a living, breathing city that has changed dramatically from the 1992 disused Sinnathamby forestry operation.

Sinnathamby is now home to 46,000 residents, 16,500 homes, 11 schools, a national university campus, a hospital and a railway line that connects it to neighboring Brisbane.

However, it will take more companies to make it a true hub of innovation in the Asia-Pacific region and meet its goals of triple its population and create 52,000 new jobs by 2030. To date, the SCG project has created 20,000 direct and indirect jobs, it said.

“We want to charge it with highly respected companies that are highly talented and want a lot of profit,” said Sinnathamby. “We can’t do this massive job alone.”

Greater Springfield is the first privately built city in Australia and the 10th largest planned master parish in the world.

Springfield City Group

The bait, as Sinnathamby puts it, is the city’s green field, which gives companies like Silicon Valley space to experiment. This includes offering dedicated facilities in which large companies and smaller start-ups can innovate. In the meantime, the “Living Lab” offers space to test new technologies related to intelligent working, living, learning and playing.

Engie SA is a company that is currently testing the waters. In 2018, the French utility signed a 50-year strategic alliance to make Greater Springfield Australia the first net-zero energy city.

By 2038, Engie plans for the city to generate more energy than it uses by focusing on five key pillars: urban planning, mobility, buildings, energy and technology. Improving the infrastructure for electric vehicles, prioritizing public transport, building green buildings, introducing solar panels on all available roofs, and maintaining 30% of the area’s land for open green spaces are among the different methods by which this is achieved .

Earlier this month, Sydney-based start-up Lavo chose Greater Springfield as the production center for its “world’s first” 30-year hydrogen battery set, which is designed to power a home for two days on a single charge.

Developing a knowledge workforce

The new business will be located in Greater Springfield’s Knowledge Precinct, the city’s main employment hub, designed to attract knowledge workers with skills related to the core pillars of technology, education and healthcare.

Health City, a 128-acre health district developed with Harvard Medical International, will offer world-class healthcare as well as thousands of medical jobs, Sinnathamby said. In the meantime, the city’s growing education network, which includes two new universities and a focus on indigenous communities, will nurture the new generation of professionals, he said.

I want partners to come who are committed to this vision.

Maha Sinnathamby

Founder and Chairman of the Springfield City Group

“We are working very hard to ensure that this knowledge district is not just a gift for Australia, but perhaps the world as well,” said Sinnathamby.

However, the timing of the project cannot be ignored. The pandemic has caused many people to rethink the attractiveness of key business centers. It is estimated that 53% of US tech and media workers have already left or are planning to leave the rising cost of living in large cities.

However, Sinnathamby is confident that his vision for Australia’s future city will stand – and maybe even provide a blueprint for others. With its focus on emerging industries, Greater Springfield appears to have weathered the pandemic better than some other places, recording an unemployment rate of 3.9% versus the nationwide level of 5.9% in Queensland.

“I’m committed to this as a nation-building project,” said Sinnathamby. “Now I want partners to come who are committed to this vision.”

Categories
Business

Seeing the Actual Faces of Silicon Valley

Seeing the Real Faces of Silicon Valley

By Mary Beth Meehan and Fred Turner

Mary Beth Meehan is an independent photographer and writer. Fred Turner is Professor of Communication at Stanford University.

The workers of Silicon Valley seldom look like the men idealized in its lore. They are sometimes heavier, sometimes older, often feminine, often darker. Many migrated from elsewhere. And most of them earn far less than Mark Zuckerberg or Tim Cook.

This is a place of separation.

Because the valley’s tech companies have fueled the American economy since the Great Recession, the region has remained one of the most unequal in the United States.

In the depths of the pandemic, four in ten families with children in the region couldn’t be sure they would have enough to eat on any given day, according to an analysis by the Silicon Valley Institute for Regional Studies. Just months later, Tesla CEO Elon Musk, who recently added “technoking” to his title, briefly became the richest man in the world. The average home price in Santa Clara County – home of Apple and Alphabet – is now $ 1.4 million, according to the California Association of Realtors.

For those not fortunate enough to make billionaire lists, medium-sized engineers, food truck workers, and long-time residents, the valley has become increasingly inhospitable, testing their resilience and determination.

Here are 12 of them that originally appeared in our book, Seeing Silicon Valley, from which this photo essay is taken.

Ravi and Gouthami have multiple degrees – in biotechnology, computer science, chemistry and statistics. After studying in India and working in Wisconsin and Texas, they landed in the Bay Area in 2013, where they now work as statistical programmers in the pharmaceutical industry.

They rent a one-bedroom apartment in the town of Foster City by the Bay and regularly visit a Hindu temple in Sunnyvale, which has been a center of the Indian community since the early 1990s.

Although the couple worked hard to get here and they’re making good money – their starting salaries were about $ 90,000 each – they feel like they are missing out on a future in Silicon Valley. For example, your apartment costs almost $ 3,000 a month. They could move to a cheaper location, but with the traffic they would spend hours commuting each day. They want to stay but are not sure whether they can save, invest or raise a family. Not sure what to do next.

Diane lives in a spacious house in Menlo Park, the city where Facebook is based. Her home is full of beautiful items from a travel life with her husband, a Chinese businessman and philanthropist who has since passed away. The couple moved to the Bay Area over 30 years ago when he retired, and they loved the area – the sunshine, the ocean, the open spaces.

Since then, Diane has watched the area change: “It’s crowded now. It used to be nice, you know – you had space, you had no traffic. It was absolutely a beautiful place here. Now it’s densely populated – buildings rise up everywhere like there’s no tomorrow.

“The money that is rolling in here is incredible,” she continued, “and it is now in the hands of very young people. You have too much money – there is no spiritual feeling, just materialism. “

Victor came to Silicon Valley from El Salvador more than 25 years ago. He lives in a little white trailer in Mountain View, a few miles from Google’s campus. He lived in an apartment nearby, but had to leave when the rent got too high.

His trailer is in a long line of trailers, some of which are inhabited by others who have lost their homes. Victor, now in his eighties, has no electricity or running water, but the guards in his old apartment often sneak in for him to bathe and wash his clothes.

Victor always has a jar of medicated ointment in his backpack, and when neighbors twist an ankle or have a stiff neck, they know they have to knock on Victor’s trailer door. He gives them a chair and massages the sore spot until the pain goes away.

Teresa works full time in a food truck. She prepares Mexican food for a Silicon Valley clientele: hand-ground corn tortillas, vegan tamales, organic chard burritos. The truck drives up and down the valley, serving employees at Tesla’s headquarters, students at Stanford, and buyers at Whole Foods in Cupertino.

Teresa lives in an apartment in Redwood City with her four daughters. In the fall of 2017, her parents visited Mexico for the first time in 22 years. “Bienvenidos Abuelos,” announced a colored pencil on the door. Welcome grandparents.

In business today

Updated

May 7, 2021 at 1:12 p.m. ET

“It’s very difficult for you,” she said. It’s really hard.

As a teacher, Konstance is one of the thousands of officials in Silicon Valley who cannot afford to live in the places they serve. For years she joined the commuting firefighters, cops, and nurses who sat in traffic for hours on the highways around San Francisco Bay, commuting from cheaper locations dozens of miles away.

In July 2017, Konstance won a place in a lottery operated by Facebook. It offered apartments to 22 teachers in the school district adjacent to the company’s headquarters in Menlo Park. The teachers would pay 30 percent of their wages for rent; Facebook would make all the difference. So Konstance and her two daughters moved within walking distance of the family’s school. Suddenly she was surrounded by something she had missed: time. Time to prepare hot meals at home instead of eating in the car, time for her daughter to join the Boy Scouts.

In 2019, Facebook announced it would provide $ 1 billion in loans, grants, and land to help create more affordable housing in the area. Of that pledge, $ 25 million would be used to build housing for educators: 120 apartments, including for Konstance and the other teachers in the original pilot, as long as they worked in nearby schools.

At the time of the announcement, Facebook said the money would be used over the next decade. The construction of the teacher’s house has not yet been completed.

One day Geraldine received a call from a friend: “They are taking our churches!” said her friend. It was 2015 when Facebook expanded in the Menlo Park neighborhood where she lived. Her father-in-law had started a tiny church here 55 years ago, and Geraldine, a church leader, couldn’t allow it to be demolished. The city council held a meeting for the community that evening. “So I went to the meeting,” she said. “You had to write your name on paper to be heard, so I did. They called my name and I bravely went up there and talked. “

Geraldine can’t remember exactly what she said, but she got up and prayed – and in the end the congregation was able to keep the church. “God really did it,” she said. “I had nothing to do with that. It was god. “

In 2016, Gee and Virginia bought a five-bedroom home in Los Gatos, an expensive town at the foot of the coast. The houses on her street at the time were worth nearly $ 2 million, and their houses were big enough for each of their two children to have a bedroom and their parents from Taiwan to visit them.

Together, the couple make about $ 350,000 a year – more than six times the national household average. Virginia works in Hewlett-Packard’s finance department in Palo Alto, and Gee was a former employee of a start-up that developed an online auction app.

They wanted to buy nice furniture for the house, but between their mortgage and childcare costs, they don’t think they can afford to buy it all at once. Some of their rooms are now empty. Gee said that salaries in Silicon Valley like hers sounded like real wealth to the rest of the country, but that it didn’t always feel like that here.

Jon lives in East Palo Alto, a traditionally low-income area separated from the rest of Silicon Valley by Highway 101.

By the time Jon was in eighth grade, he knew he wanted to go to college, and he was accepted into a strict private high school for low-income children. He discovered a suitability for computers and distinguished himself through school and professional internships. Yet as he progressed in his career, he found that everywhere he went there were very few people who looked like him.

“I got really worried,” he said. “I didn’t know who to talk to, and I saw that it wasn’t a problem for her. I just thought I have to do something about it. “

Jon, now in his thirties, has returned to East Palo Alto where he developed Maker Spaces and made technical education projects available to members of the community.

“It’s amazing to live here,” said Erfan, who moved to Mountain View when her husband got a job as an engineer with Google. “But it’s not a place where I want to spend my whole life. There are many job opportunities, but it’s about the technology, the speed for new technology, new ideas, everything new. “The couple had previously lived in Canada after emigrating from Iran.

“We never had these opportunities at home in Iran. I know – I don’t want to complain, ”she added. “When I tell people I live in the Bay Area, they say, ‘You’re so lucky – it has to be like heaven! You must be so rich ‘”

But the emotional toll can be weighty. “We are sometimes happy, but also very anxious, very stressed. You have to worry if you lose your job because the cost of living is very high and very competitive. It’s not that easy – come here, live in California, become a millionaire. It is not so easy. ”

Elizabeth graduated from Stanford and works as a security officer for a large technology company in the area. She is also homeless.

She was on a 2017 panel on the subject at San Jose State University and said, “Please remember that many homeless people – and there are many more of us than the census records – work in the same businesses as you. ”(She refused to indicate which company she worked for for fear of reprisals.)

While homeless workers sometimes serve food in cafeterias or clean buildings, they are often white-collar workers.

“Sometimes it just takes a mistake, a financial mistake, sometimes just a medical disaster. Sometimes it takes a tiny little insurance loss – it can be a number of things. However, the fact is that there are many middle-class people who have fallen into poverty lately, ”she said. “Their homelessness, which should only be a month or two to recover, or three months, extends for years. Please remember, there are many of us. “

Categories
Business

How Do Silicon Valley Techies Rejoice Getting Wealthy in a Pandemic?

How Do Silicon Valley Techies Celebrate Getting Rich in a Pandemic?

For Palantir, a data analytics firm that went public on February 18, it was “giraffe money” day. This marked the first day current and former employees were able to cash out all of their shares after the company went public.

On a Slack channel for former employees called Giraffe Money – an obvious hint of wealth that can support the occasional giraffe possession – many anticipated their good fortunes by sharing links, mostly in jest, to ridiculously expensive real estate listings and boats, said a former employee.

In reality, however, tech geeks spend in very different ways.

Instead of art, they buy NFTs, or non-fungible tokens, which represent ownership of digital artwork, memes, or artifacts from Internet history.

Instead of traveling around the world, they pile up in Sprinter delivery vans, which are essential for a pandemic vacation. Jackie Conlin, a personal style consultant for technical executives, said she created “van closets,” made of “comfortable clothes that look pieced together but have a laid-back vacation feeling” for clients on road trips.

Instead of designer clothes, they are looking for new outfits that look great on Zoom calls, virtual makeup lessons for the camera, and makeovers for their Zoom backgrounds. Ms. Conlin said she redecorated a client’s zoom room “to make everything the other meeting attendees see more cohesive, stylish, and pleasing to the eye.” Customers also purchase weekly “comfort” gifts for friends and family such as cozy blankets and robes, skin care products, pajamas and games.

And instead of luxury condominiums, they are looking for houses with outdoor space, fitness studios and good “zoom rooms”. In San Francisco, tech freaks are migrating from modern “white box” apartments in the SoMa neighborhood to traditional pre-war “trophy houses” in more established areas like Nob Hill, Russian Hill, Pacific Heights and Sea Cliff, Joel Goodrich said. a real estate agent at Coldwell Banker Global Luxury in town. You are enthusiastic about historical villas with elaborate shapes and architectures.

Categories
Business

Silicon Valley’s Secure House – The New York Occasions

Silicon Valley’s Safe Space - The New York Times

More than 7,500 people signed a petition urging The Times not to publish his name, including many prominent figures in the tech industry. “The petitioners gave his full name on The Times and said” would seriously damage public discourse by preventing private individuals from blogging their thoughts. “On the Internet, many in Silicon Valley believe that everyone has the right not only to say what they want, but also to say it anonymously.

In this context, I spoke to Manoel Horta Ribeiro, a computer scientist who deals with social networks at the Swiss Federal Institute of Technology in Lausanne. He was concerned that Slate Star Codex, like other communities, was allowing extremist views to invade the influential tech world. “A community like this gives marginalized groups a voice,” he said. “It provides a platform for people who hold more extreme views.”

But for Kelsey Piper and many others, the main problem was the name and attachment of the man, professionally and legally known as Scott Siskind, to his influential and controversial writings as Scott Alexander. Ms. Piper, who is herself a journalist for the news site Vox, said she disagreed with everything he wrote, but she also felt that his blog was wrongly painted as an upsurge in radical views. She feared his views could not be reduced to a single newspaper story.

I assured her that my goal was to report with rigor and fairness on the blog and the rationalists. However, she felt that it might be unfair to discuss both critics and supporters. What I had to do, she said, was to somehow statistically prove which side was right.

When I asked OpenAI’s Mr. Altman if talking on sites like Slate Star Codex could lead people to toxic beliefs, he said he had “some empathy” for those concerns. But he added, “People need a forum to discuss ideas.”

In August, Mr. Siskind restored his old blog posts on the Internet. And two weeks ago he restarted his blog about Substack, a company with ties to Andreessen Horowitz and Y Combinator. He gave the blog a new title: Astral Codex Ten. He hinted that Substack paid him $ 250,000 for a year on the platform. And he stated that the company would give him the protection he needed.

In his first post, Mr. Siskind shared his full name.

Categories
Business

The Silicon Valley Begin-Up That Induced Wall Avenue Chaos

The Silicon Valley Start-Up That Caused Wall Street Chaos

Die Online-Handels-App Robinhood wurde zu einem kulturellen Phänomen und zu einem Liebling des Silicon Valley mit dem Versprechen, den traditionellen Gatekeepern der Wall Street den Aktienmarkt abzuringen und „die Menschen handeln zu lassen“ – was es so einfach macht, Millionen von Dollar in Gefahr zu bringen, wie es ist einen Uber beschwören.

In der vergangenen Woche, mitten in einem Marktrummel zwischen Amateurhändlern und Hedge-Fonds-Bigwigs, begann dieses Furnier zu splittern. Wie sich herausstellte, war Robinhood genau der Branche ausgeliefert, deren Aufschwung er sich geschworen hatte.

Die Raserei verwandelte sich in eine Krise, als Legionen von Sesselinvestoren auf Robinhood, die Optionen und Aktien von GameStop, einem Einzelhändler für Videospiele, gekauft hatten, diese Wetten vergrößerten und auch große Geschäfte mit anderen Aktien, einschließlich AMC Entertainment, machten.

Als der Handelswahn zunahm, schalteten am Donnerstag die Risikominderungsmechanismen des Finanzsystems ein, die von unbekannten Unternehmen im Zentrum des Aktienmarkts, den sogenannten Clearinghäusern, verwaltet wurden, und zwangen Robinhood, Notgeld zu finden, um weiterhin handeln zu können. Es musste Kunden davon abhalten, eine Reihe stark gehandelter Aktien zu kaufen, und auf eine Kreditlinie von mehr als 500 Millionen US-Dollar zurückgreifen. Am Donnerstagabend nahm das Unternehmen seinen bestehenden Investoren eine Notfallinfusion von mehr als 1 Milliarde US-Dollar ab.

Ein hochfliegendes Start-up sah plötzlich wie eine überforderte, knarrende Firma aus.

“Vom Standpunkt des Marketings aus positionieren sie sich als neu, innovativ, cool”, sagte Peter Weiler, Co-Geschäftsführer des Makler- und Handelsunternehmens Abel Noser. “Ich denke, jeder wird vermisst, wenn man die Zwiebel zurückschält, sind sie nur ein stark reguliertes Geschäft.”

Die Not von Robinhood folgt einer vertrauten Erzählung: Ein Unternehmen aus dem Silicon Valley, das versprochen hat, eine Branche zu stören, wird letztendlich von den Kräften überwunden, die es freigesetzt hat, und muss von den Aufsichtsbehörden oder in diesem Fall von der Branche, die es zu ändern versprochen hat, eingedämmt werden. Sein Bogen unterscheidet sich nicht allzu sehr von Facebook und Google, die die Art und Weise verändert haben, wie Milliarden von Menschen Kontakte knüpfen und nach Informationen suchen, sondern jetzt im Fadenkreuz von Gesetzgebern und einer wütenden Öffentlichkeit gefangen sind.

“Sie versuchten, die Straßenregeln zu ändern, ohne zu verstehen, wie die Straße asphaltiert war, und ohne Rücksicht auf die vorhandenen Leitplanken”, sagte Chris Nagy, ehemaliger Handelsleiter bei TD Ameritrade und Mitbegründer der Healthy Markets Association , eine gemeinnützige Organisation, die Marktteilnehmer ausbilden will. “Es hat letztendlich ein Risiko für ihre Kunden und ein systemisches Risiko für den Markt im weiteren Sinne geschaffen.”

GameStop gegen Wall Street

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    • Die Aktien von GameStop, dem Einzelhändler für Videospiele, sind gestiegen, weil Amateurinvestoren, die bei Reddit anfangen, stark auf Aktien des Unternehmens gesetzt haben.
    • Die Welle gewann an Dynamik, als große Hedge-Fonds GameStop-Aktien leerverkauften – im Grunde wetteten sie gegen den Erfolg des Unternehmens.
    • Die plötzliche Nachfrage hat den Aktienkurs von weniger als 20 USD im Dezember auf fast 200 USD am Donnerstag erhöht. Auf dem Papier jedenfalls.
    • Es ist nicht nur GameStop. Amateurinvestoren haben andere Unternehmen unterstützt, die viele Großinvestoren gemieden hatten, wie AMC und BlackBerry.
    • Diese Blase um GameStop kann große Investoren dazu zwingen, Geld zu sammeln, um ihre Verluste zu decken, oder Aktien anderer Unternehmen zu entleeren.

Das Fiasko wird mit ziemlicher Sicherheit Konsequenzen für das Unternehmen haben. Die Securities and Exchange Commission gab am Freitag bekannt, dass sie alle Maßnahmen, die “die Anleger benachteiligen oder ihre Fähigkeit zum Handel mit bestimmten Wertpapieren auf andere Weise übermäßig behindern könnten”, genau prüfen werde. Der Gesetzgeber auf beiden Seiten des Ganges forderte Anhörungen wegen Beschwerden, dass Kunden vom Handel ausgeschlossen seien.

Nachdem Robinhood am Donnerstag den Handel eingeschränkt und der Kurs der Aktie gesunken war, überfluteten wütende Benutzer die Online-App-Stores mit kritischen Bewertungen, wobei einige Robinhood beschuldigten, das Gebot der Wall Street abgegeben zu haben. Andere verklagten das Unternehmen wegen der erlittenen Verluste. Die anhaltende Verwundbarkeit von Robinhood, selbst nach der Beschaffung von 1 Milliarde US-Dollar, wurde am Freitag deutlich, als der Handel mit mehr als 50 Aktien eingeschränkt wurde.

“Es war nicht, weil wir die Leute davon abhalten wollten, diese Aktien zu kaufen”, sagte Robinhood in einem Blog-Beitrag am Freitagabend. Das Start-up habe vielmehr den Kauf volatiler Aktien eingeschränkt, um die von seinen Clearingstellen auferlegten Einlagenanforderungen, die sich im Laufe der Woche verzehnfacht hätten, „bequem“ erfüllen zu können.

Nichts davon scheint sein Wachstum zu verlangsamen. Obwohl Robinhoods Aktionen bestehende Kunden verärgerten, gewann es neue. Laut Apptopia, einem Datenanbieter, wurde die App am Donnerstag mehr als 177.000 Mal heruntergeladen, doppelt so viel wie in der Vorwoche. Die mobile App hatte an diesem Tag 2,7 Millionen aktive Benutzer pro Tag, die höchste aller Zeiten. Das ist mehr als seine Konkurrenten – Schwab, TD Ameritrade, E * Trade, Fidelity und Webull – zusammen.

Kontroversen sind für Robinhood nicht neu.

Die beiden Stanford-Klassenkameraden, die das Unternehmen 2013 gegründet haben, sagten von Anfang an, dass ihr Fokus auf der „Demokratisierung der Finanzen“ liege, indem sie den Handel für jedermann verfügbar machten. Zu diesem Zweck hat das Unternehmen in Menlo Park, Kalifornien, wiederholt eine klassische Silicon Valley-Formel aus benutzerfreundlicher Software, dreistem Marketing und Missachtung bestehender Regeln und Institutionen angewendet.

Online-Broker hatten traditionell rund 10 US-Dollar für jeden Trade berechnet, aber Robinhood sagte, dass Kunden seiner Telefon-App kostenlos handeln könnten. Der Umzug zog Horden junger Investoren an.

Beim Aufbau seines Geschäfts ignorierte das Unternehmen akademische Untersuchungen, die zeigten, dass häufiger, reibungsloser Handel im Allgemeinen nicht zu guten finanziellen Ergebnissen für Investoren führt. Die Risiken für die Kunden wurden im vergangenen Sommer deutlich, als der Abschiedsbrief eines 20-jährigen College-Studenten einen sechsstelligen Handelsverlust für seinen Tod verantwortlich machte.

Robinhood hat auch den Optionshandel unter Anfängern populär gemacht. Eine Option ist im Allgemeinen billiger als der direkte Kauf einer Aktie, kann jedoch zu viel größeren und schnelleren Gewinnen und Verlusten führen, weshalb Regulierungsbehörden und Broker den Handel mit diesen Finanzkontrakten traditionell auf anspruchsvollere Händler beschränkt haben.

Das Marketing von Robinhood hat unterdessen die Tatsache dokumentiert, dass sein Geschäftsmodell und der freie Handel durch den Verkauf von Kundenaufträgen an Wall Street-Unternehmen in einem System bezahlt wurden, das als „Zahlung für den Auftragsfluss“ bekannt ist. Große Handelsunternehmen wie Citadel Securities und Virtu Financial zahlen Robinhood jedes Mal eine kleine Gebühr, wenn sie für ihre Kunden kaufen oder verkaufen, normalerweise einen Bruchteil eines Pennys pro Aktie. Diese Handelsunternehmen verdienen ihrerseits Geld, indem sie die als „Spread“ bezeichnete Differenz zwischen dem Kauf- und Verkaufspreis eines bestimmten Aktienhandels einstecken. Je mehr Trades sie abwickeln, desto größer sind ihre potenziellen Einnahmen. Viele andere Online-Broker verlassen sich auf ein ähnliches System, aber Robinhood hat verhandelt, für jeden Trade deutlich mehr zu sammeln als andere Online-Broker, so The Times.

Das Missverhältnis zwischen Robinhoods Marketing und den zugrunde liegenden Mechanismen führte letzten Monat zu einer Geldstrafe von 65 Millionen US-Dollar von der SEC. Die Agentur sagte, Robinhood habe Kunden in die Irre geführt, wie sie von Wall Street-Firmen für die Weitergabe von Kundengeschäften bezahlt wurden.

Robinhood hat auch gegen die Aufsichtsbehörden verstoßen, als es schnell neue Produkte herausbrachte. Im Dezember 2018 kündigte das Unternehmen an, ein Giro- und Sparkonto anzubieten, das von der Securities Investor Protection Corporation (SIPC) versichert wird und die Anleger schützt, wenn ein Maklerunternehmen ausfällt.

Der damalige Geschäftsführer von SIPC sagte jedoch, er habe nichts von Robinhoods Plan gehört, und er wies darauf hin, dass die SIPC keine einfachen Vanille-Sparkonten schützt – das wäre die Aufgabe der Federal Deposit Insurance Corporation. Es dauerte fast ein Jahr, bis Robinhood das Produkt wieder einführte und in einem Blog-Beitrag sagte, dass es mit seiner früheren Ankündigung „Fehler gemacht“ habe.

“Sie haben versucht, große Spritzer zu machen, und mussten oft wieder reingewickelt werden”, sagte Scott Smith, ein Brokerage-Analyst bei der Finanzfirma Cerulli Associates.

Die Ambitionen und der Amateurismus von Robinhood kollidierten in den letzten Wochen, als Kleininvestoren, von denen viele die Dominanz der Wall Street herausfordern wollten, ihre Freihandelsgeschäfte nutzten, um die Aktien von GameStop und anderen Unternehmen zu erhöhen. Zügellose Spekulationen über Optionskontrakte trugen dazu bei, den Anstieg der GameStop-Aktien von etwa 20 US-Dollar am 12. Januar auf fast 500 US-Dollar am Donnerstag voranzutreiben – eine Rallye, die Robinhood dazu zwang, seine eigenen Kunden zu bremsen.

Eine Institution, die Robinhood in der vergangenen Woche ausgelöst hat, ist eine Clearingstelle namens Depository Trust & Clearing Corporation. Das DTCC gehört seinen Mitgliedsfinanzinstituten, darunter Robinhood, und klärt und regelt den größten Teil des Aktienhandels. Dabei wird im Wesentlichen sichergestellt, dass das Geld und die Aktien in den richtigen Händen sind. (Optionsgeschäfte werden von einem anderen Unternehmen abgewickelt.)

Die Rolle des DTCC ist jedoch mehr als nur eine Büroarbeit. Clearingstellen sollen dazu beitragen, einen bestimmten Markt vor extremen Risiken zu schützen, indem sie sicherstellen, dass ein einzelner Finanzspieler keine Ansteckung verursacht, wenn er pleite geht. Um seine Arbeit zu erledigen, verlangt die DTCC von ihren Mitgliedern, ein Bargeldpolster aufzubewahren, das bei Bedarf zur Stabilisierung des Systems eingesetzt werden kann. Und wenn die Aktien wild schwanken oder es eine Menge Handel gibt, kann die Größe des Kissens, das von jedem Mitglied verlangt wird – bekannt als Margin Call – kurzfristig zunehmen.

Das ist am Donnerstagmorgen passiert. Der DTCC teilte seinen Mitgliedsunternehmen mit, dass das Gesamtpolster, das damals 26 Milliarden US-Dollar betrug, innerhalb weniger Stunden auf 33,5 Milliarden US-Dollar anwachsen musste. Da Robinhood-Kunden für so viel Handel verantwortlich waren, war Robinhood dafür verantwortlich, einen erheblichen Teil der Rechnung zu begleichen.

Die Forderung des DTCC ist nicht verhandelbar. Ein Unternehmen, das seinen Margin Call nicht erfüllen kann, ist praktisch aus dem Aktienhandelsgeschäft ausgeschieden, da DTCC seine Geschäfte nicht mehr abwickelt. “Wenn Sie einen Trade nicht abwickeln können, können Sie keinen Trade handeln”, sagte Robert Greifeld, ehemaliger Geschäftsführer von Nasdaq und derzeitiger Vorsitzender von Virtu Financial. „Du bist von der Insel weg. Du bist verbannt. “

Für erfahrene Spieler wie Citadel Securities und JPMorgan Chase war es kein Problem, kurzfristig zusätzliche Hunderte Millionen Dollar zu generieren. Aber für ein Start-up wie Robinhood war es ein tolles Durcheinander.

Während Robinhood das benötigte Bargeld aus seiner Kreditlinie und den Investoren zusammenschusterte, beschränkte es die Kunden darauf, GameStop, AMC und andere Aktien zu kaufen. Robinhood sagte in seinem Blogbeitrag, dass es seinen Anlegern gestattet wurde, diese volatilen Aktien zu verkaufen – aber nicht zu kaufen. Dies reduzierte das Risiko und half ihm, die Anforderungen für zusätzliches Bargeld zu erfüllen.

Letztendlich gelang es dem Unternehmen, einige seiner bestehenden Investoren, darunter die Venture-Unternehmen Sequoia Capital und Ribbit Capital, mit rund 1 Milliarde US-Dollar zusammenzubringen. Als Süßungsmittel hat Robinhood den Anlegern Sonderaktien ausgegeben, die ihnen bereits in diesem Jahr ein besseres Geschäft ermöglichen, wenn das Unternehmen an die Börse geht.

Aber der schnelle Deal ließ mehr als einen Beobachter am Kopf kratzen.

“Wie braucht ein Online-Broker eine Infusion von einer Milliarde Dollar über Nacht?” fragte Roger McNamee, ein langjähriger Investor, der die Private-Equity-Firma Elevation Partners mitbegründete. “Es gibt etwas, das besagt, dass jemand wirklich Angst vor dem hat, was los ist.”