Market fraud

Due to its decentralized and fragmented character, the crypto market has integrity difficulties.

Cryptocurrencies are an immature sector, therefore market manipulation becomes a bigger issue. Many research have attempted to uncover these abuses. CryptoCompare's newest one highlights some of the industry's most typical scams.

Why are these concerns so common in the crypto market? First, even the largest centralized exchanges remain unregulated due to industry immaturity. A low-liquidity market segment makes an attack more harmful. Finally, market surveillance solutions not implemented reduce transparency.

In CryptoCompare's latest exchange benchmark, 62.4% of assessed exchanges had a market surveillance system, although only 18.1% utilised an external solution. To address market integrity, this measure must improve dramatically. Before discussing the report's malpractices, note that this is not a full list of attacks and hacks.

Clean Trading

An investor buys and sells concurrently to increase the asset's price. Centralized and decentralized exchanges show this misconduct. 23 exchanges have a volume-volatility correlation < 0.1 during the previous 100 days, according to CryptoCompares. In August 2022, Exchange A reported $2.5 trillion in artificial and/or erroneous volume, up from $33.8 billion the month before.

Spoofing

Criminals create and cancel fake orders before they can be filled. Since manipulators can hide in larger trading volumes, larger exchanges have more spoofing. A trader placed a 20.8 BTC ask order at $19,036 when BTC was trading at $19,043. BTC declined 0.13% to $19,018 in a minute. At 18:48, the trader canceled the ask order without filling it.

Front-Running

Most cryptocurrency front-running involves inside trading. Traditional stock markets forbid this. Since most digital asset information is public, this is harder. Retailers could utilize bots to front-run.

CryptoCompare found digital wallets of people who traded like insiders on exchange listings. The figure below shows excess cumulative anomalous returns (CAR) before a coin listing on an exchange.

Finally, LAYERING is a sequence of spoofs in which successive orders are put along a ladder of greater (layering offers) or lower (layering bids) values. The paper concludes with recommendations to mitigate market manipulation. Exchange data transparency, market surveillance, and regulatory oversight could reduce manipulative tactics.

UST depegs and LUNA crashes 99.999% in a fraction of the time it takes the Moon to orbit the Earth.

Fat Man, a Terra whistle-blower, promises to expose Do Kwon's dirty secrets and shady deals.

The Terra community has voted to relaunch Terra LUNA on a new blockchain. The Terra 2.0 Pheonix-1 blockchain went live on May 28, 2022, and people were airdropped the new LUNA, now called LUNA, while the old LUNA became LUNA Classic.

Does LUNA deserve another chance? To answer this, or at least start a conversation about the Terra 2.0 chain's advantages and limitations, we must assess its fundamentals, ideology, and long-term vision.

Whatever the result, our analysis must be thorough and ruthless. A failure of this magnitude cannot happen again, so we must magnify every potential breaking point by 10.

Will UST and LUNA holders be compensated in full?

The obvious. First, and arguably most important, is to restore previous UST and LUNA holders' bags.

Terra 2.0 has 1,000,000,000,000 tokens to distribute.

• 25% of a community pool

• Holders of pre-attack LUNA: 35%

• 10% of aUST holders prior to attack

• Holders of LUNA after an attack: 10%

• UST holders as of the attack: 20%

Every LUNA and UST holder has been compensated according to the above proposal.

According to self-reported data, the new chain has 210.000.000 tokens and a $1.3bn marketcap. LUNC and UST alone lost $40bn. The new token must fill this gap. Since launch:

LUNA holders collectively own $1b worth of LUNA if we subtract the 25% community pool airdrop from the current market cap and assume airdropped LUNA was never sold.

At the current supply, the chain must grow 40 times to compensate holders. At the current supply, LUNA must reach $240.

LUNA needs a full-on Bull Market to make LUNC and UST holders whole.

Who knows if you'll be whole? From the time you bought to the amount and price, there are too many variables to determine if Terra can cover individual losses.

The above distribution doesn't consider individual cases. Terra didn't solve individual cases. It would have been huge.

What does LUNA offer in terms of value?

UST's marketcap peaked at $18bn, while LUNC's was $41bn. LUNC and UST drove the Terra chain's value.

After it was confirmed (again) that algorithmic stablecoins are bad, Terra 2.0 will no longer support them.

Algorithmic stablecoins contributed greatly to Terra's growth and value proposition. Terra 2.0 has no product without algorithmic stablecoins.

Terra 2.0 has an identity crisis because it has no actual product. It's like Volkswagen faking carbon emission results and then stopping car production.

A project that has already lost the trust of its users and nearly all of its value cannot survive without a clear and in-demand use case.

Do Kwon, how about him?

Oh, the Twitter-caller-poor? Who challenges crypto billionaires to break his LUNA chain? Who dissolved Terra Labs South Korea before depeg? Arrogant guy?

That's not a good image for LUNA, especially when making amends. I think he should step down and let a nicer person be Terra 2.0's frontman.

The verdict

Terra has a terrific community with an arrogant, unlikeable leader. The new LUNA chain must grow 40 times before it can start making up its losses, and even then, not everyone's losses will be covered.

I won't invest in Terra 2.0 or other algorithmic stablecoins in the near future. I won't be near any Do Kwon-related project within 100 miles. My opinion.

Can Terra 2.0 be saved? Comment below.

I read 1k+ page 3AC liquidation documentation so you don't have to. Also sharing revised Celsius recovery plans.

3AC's liquidation documents:

Someone disclosed 3AC liquidation records in the BVI courts recently. I'll discuss the leak's timeline and other highlights.

Three Arrows Capital began trading traditional currencies in emerging markets in 2012. They switched to equities and crypto, then purely crypto in 2018.

By 2020, the firm had $703mm in net assets and $1.8bn in loans (these guys really like debt).

The firm's net assets under control reached $3bn in April 2022, according to the filings. 3AC had $600mm of LUNA/UST exposure before May 9th 2022, which put them over.

LUNA and UST go to zero quickly (I wrote about the mechanics of the blowup here). Kyle Davies, 3AC co-founder, told Blockchain.com on May 13 that they have $2.4bn in assets and $2.3bn NAV vs. $2bn in borrowings. As BTC and ETH plunged 33% and 50%, the company became insolvent by mid-2022.

3AC sent $32mm to Tai Ping Shen, a Cayman Islands business owned by Su Zhu and Davies' partner, Kelly Kaili Chen (who knows what is going on here).

3AC had borrowed over $3.5bn in notional principle, with Genesis ($2.4bn) and Voyager ($650mm) having the most exposure.

Genesis demanded $355mm in further collateral in June.

Deribit (another 3AC investment) called for $80 million in mid-June.

Even in mid-June, the corporation was trying to borrow more money to stay afloat. They approached Genesis for another $125mm loan (to pay another lender) and HODLnauts for BTC & ETH loans.

Pretty crazy. 3AC founders used borrowed money to buy a $50 million boat, according to the leak.

Su requesting for $5m + Chen Kaili Kelly asserting they loaned $65m unsecured to 3AC are identified as creditors.

Celsius:

This bankruptcy presentation shows the Celsius breakdown from March to July 14, 2022. From $22bn to $4bn, crypto assets plummeted from $14.6bn to $1.8bn (ouch). $16.5bn in user liabilities dropped to $4.72bn.

In my recent post, I examined if "forced selling" is over, with Celsius' crypto assets being a major overhang. In this presentation, it looks that Chapter 11 will provide clients the opportunity to accept cash at a discount or remain long crypto. Provided that a fresh source of money is unlikely to enter the Celsius situation, cash at a discount or crypto given to customers will likely remain a near-term market risk - cash at a discount will likely come from selling crypto assets, while customers who receive crypto could sell at any time. I'll share any Celsius updates I find.

Conclusion

Only Celsius and the Mt Gox BTC unlock remain as forced selling catalysts. While everything went through a "relief" pump, with ETH up 75% from the bottom and numerous alts multiples higher, there are still macro dangers to equities + risk assets. There's a lot of wealth waiting to be deployed in crypto ($153bn in stables), but fund managers are risk apprehensive (lower than 2008 levels).

We're hopefully over crypto's "bottom," with peak anxiety and forced selling behind us, but we may chop around.

To see the full article, click here.

His success was unforeseeable.

2014 saw Facebook's $2.3 billion purchase of Oculus VR.

19-year-old Palmer Luckey founded Oculus. He quit journalism school. His parents worried about his college dropout.

Facebook bought Oculus VR in less than 2 years.

Palmer Luckey started Anduril Industries. Palmer has raised $385 million with Anduril.

The Oculus journey began in a trailer

Palmer Luckey, 19, owned the trailer.

Luckey had his trailer customized. The trailer had all six of Luckey's screens. In the trailer's remaining area, Luckey conducted hardware tests.

At 16, he became obsessed with virtual reality. Virtual reality was rare at the time.

Luckey didn't know about VR when he started.

Previously, he liked "portabilizing" mods. Hacking ancient game consoles into handhelds.

In his city, fewer portabilizers actively traded.

Luckey started "ModRetro" for other portabilizers. Luckey was exposed to VR headsets online.

Luckey:

“Man, ModRetro days were the best.”

Palmer Luckey used VR headsets for three years. His design had 50 prototypes.

Luckey used to work at the Long Beach Sailing Center for minimum salary, servicing diesel engines and cleaning boats.

Luckey worked in a USC Institute for Creative Technologies mixed reality lab in July 2011. (ICT).

Luckey cleaned the lab, did reports, and helped other students with VR projects.

Luckey's lab job was dull.

Luckey chose to work in the lab because he wanted to engage with like-minded folks.

By 2012, Luckey had a prototype he hoped to share globally. He made cheaper headsets than others.

Luckey wanted to sell an easy-to-assemble virtual reality kit on Kickstarter.

He realized he needed a corporation to do these sales legally. He started looking for names. "Virtuality," "virtual," and "VR" are all taken.

Hence, Oculus.

If Luckey sold a hundred prototypes, he would be thrilled since it would boost his future possibilities.

John Carmack, legendary game designer

Carmack has liked sci-fi and fantasy since infancy.

Carmack loved imagining intricate gaming worlds.

His interest in programming and computer science grew with age.

He liked graphics. He liked how mismatching 0 and 1 might create new colors and visuals.

Carmack played computer games as a teen. He created Shadowforge in high school.

He founded Id software in 1991. When Carmack created id software, console games were the best-sellers.

Old computer games have weak graphics. John Carmack and id software developed "adaptive tile refresh."

This technique smoothed PC game scrolling. id software launched 3-D, Quake, and Doom using "adaptive tile refresh."

These games made John Carmack a gaming star. Later, he sold Id software to ZeniMax Media.

How Palmer Luckey met Carmack

In 2011, Carmack was thinking a lot about 3-D space and virtual reality.

He was underwhelmed by the greatest HMD on the market. Because of their flimsiness and latency.

His disappointment was partly due to the view (FOV). Best HMD had 40-degree field of view.

Poor. The best VR headset is useless with a 40-degree FOV.

Carmack intended to show the press Doom 3 in VR. He explored VR headsets and internet groups for this reason.

Carmack identified a VR enthusiast in the comments section of "LEEP on the Cheap." "PalmerTech" was the name.

Carmack approached PalmerTech about his prototype. He told Luckey about his VR demos, so he wanted to see his prototype.

Carmack got a Rift prototype. Here's his May 17 tweet.

John Carmack tweeted an evaluation of the Luckey prototype.

Dan Newell, a Valve engineer, and Mick Hocking, a Sony senior director, pre-ordered Oculus Rift prototypes with Carmack's help.

Everyone praised Luckey after Carmack demoed Rift.

Palmer Luckey received a job offer from Sony.

• It was a full-time position at Sony Computer Europe.

• He would run Sony’s R&D lab.

• The salary would be $70k.

Who is Brendan Iribe?

Brendan Iribe started early with Startups. In 2004, he and Mike Antonov founded Scaleform.

Scaleform created high-performance middleware. This package allows 3D Flash games.

In 2011, Iribe sold Scaleform to Autodesk for $36 million.

How Brendan Iribe discovered Palmer Luckey.

Brendan Iribe's friend Laurent Scallie.

Laurent told Iribe about a potential opportunity.

Laurent promised Iribe VR will work this time. Laurent introduced Iribe to Luckey.

Iribe was doubtful after hearing Laurent's statements. He doubted Laurent's VR claims.

But since Laurent took the name John Carmack, Iribe thought he should look at Luckey Innovation. Iribe was hooked on virtual reality after reading Palmer Luckey stories.

He asked Scallie about Palmer Luckey.

Iribe convinced Luckey to start Oculus with him

First meeting between Palmer Luckey and Iribe.

The Iribe team wanted Luckey to feel comfortable.

Iribe sought to convince Luckey that launching a company was easy. Iribe told Luckey anyone could start a business.

Luckey told Iribe's staff he was homeschooled from childhood. Luckey took self-study courses.

Luckey had planned to launch a Kickstarter campaign and sell kits for his prototype. Many companies offered him jobs, nevertheless.

He's considering Sony's offer.

Iribe advised Luckey to stay independent and not join a firm. Iribe asked Luckey how he could raise his child better. No one sees your baby like you do?

Iribe's team pushed Luckey to stay independent and establish a software ecosystem around his device.

After conversing with Iribe, Luckey rejected every job offer and merger option.

Iribe convinced Luckey to provide an SDK for Oculus developers.

After a few months. Brendan Iribe co-founded Oculus with Palmer Luckey. Luckey trusted Iribe and his crew, so he started a corporation with him.

Crowdfunding

Brendan Iribe and Palmer Luckey launched a Kickstarter.

Gabe Newell endorsed Palmer's Kickstarter video.

Gabe Newell wants folks to trust Palmer Luckey since he's doing something fascinating and answering tough questions.

Mark Bolas and David Helgason backed Palmer Luckey's VR Kickstarter video.

Luckey introduced Oculus Rift during the Kickstarter campaign. He introduced virtual reality during press conferences.

Oculus' Kickstarter effort was a success. Palmer Luckey felt he could raise $250,000.

Oculus raised $2.4 million through Kickstarter. Palmer Luckey's virtual reality vision was well-received.

Mark Zuckerberg's Oculus discovery

Brendan Iribe and Palmer Luckey hired the right personnel after a successful Kickstarter campaign.

Oculus needs a lot of money for engineers and hardware. They needed investors' money.

Series A raised $16M.

Next, Andreessen Horowitz partner Brain Cho approached Iribe.

Cho told Iribe that Andreessen Horowitz could invest in Oculus Series B if the company solved motion sickness.

Mark Andreessen was Iribe's dream client.

Marc Andreessen and his partners gave Oculus $75 million.

Andreessen introduced Iribe to Zukerberg. Iribe and Zukerberg discussed the future of games and virtual reality by phone.

Facebook's Oculus demo

Iribe showed Zuckerberg Oculus.

Mark was hooked after using Oculus. The headset impressed him.

The whole Facebook crew who saw the demo said only one thing.

“Holy Crap!”

This surprised them all.

Mark Zuckerberg was impressed by the team's response. Mark Zuckerberg met the Oculus team five days after the demo.

First meeting Palmer Luckey.

Palmer Luckey is one of Mark's biggest supporters and loves Facebook.

Oculus Acquisition

Zuckerberg wanted Oculus.

Brendan Iribe had requested for $4 billion, but Mark wasn't interested.

Facebook bought Oculus for $2.3 billion after months of drama.

After selling his company, how does Palmer view money?

Palmer loves the freedom money gives him. Money frees him from small worries.

Money has allowed him to pursue things he wouldn't have otherwise.

“If I didn’t have money I wouldn’t have a collection of vintage military vehicles…You can have nice hobbies that keep you relaxed when you have money.”

He didn't start Oculus to generate money. His virtual reality passion spanned years.

He didn't have to lie about how virtual reality will transform everything until he needed funding.

The company's success was an unexpected bonus. He was merely passionate about a good cause.

After Oculus' $2.3 billion exit, what changed?

Palmer didn't mind being rich. He did similar things.

After Facebook bought Oculus, he moved to Silicon Valley and lived in a 12-person shared house due to high rents.

Palmer might have afforded a big mansion, but he prefers stability and doing things because he wants to, not because he has to.

“Taco Bell is never tasted so good as when you know you could afford to never eat taco bell again.”

Palmer's leadership shifted.

Palmer changed his leadership after selling Oculus.

When he launched his second company, he couldn't work on his passions.

“When you start a tech company you do it because you want to work on a technology, that is why you are interested in that space in the first place. As the company has grown, he has realized that if he is still doing optical design in the company it’s because he is being negligent about the hiring process.”

Once his startup grows, the founder's responsibilities shift. He must recruit better firm managers.

Recruiting talented people becomes the top priority. The founder must convince others of their influence.

A book that helped me write this:

The History of the Future: Oculus, Facebook, and the Revolution That Swept Virtual Reality — Blake Harris

*This post is a summary. Read the full article here.

The human brain is amazing. As more scientists examine the brain, we learn how much it can store.

The human brain has 1 billion neurons, according to Scientific American. Each neuron creates 1,000 connections, totaling over a trillion. If each neuron could store one memory, we'd run out of room. [1]

What if you could store and access more info, freeing up brain space for problem-solving and creativity?

Build a second brain to keep up with rising knowledge (what I refer to as a Digital Brain). Effectively managing information entails realizing you can't recall everything.

Every action requires information. You need the correct information to learn a new skill, complete a project at work, or establish a business. You must manage information properly to advance your profession and improve your life.

How to construct a second brain to organize information and achieve goals.

What Is a Second Brain?

How often do you forget an article or book's key point? Have you ever wasted hours looking for a saved file?

If so, you're not alone. Information overload affects millions of individuals worldwide. Information overload drains mental resources and causes anxiety.

This is when the second brain comes in.

Building a second brain doesn't involve duplicating the human brain. Building a system that captures, organizes, retrieves, and archives ideas and thoughts. The second brain improves memory, organization, and recall.

Digital tools are preferable to analog for building a second brain.

Digital tools are portable and accessible. Due to these benefits, we'll focus on digital second-brain building.

Brainware

Digital Brains are external hard drives. It stores, organizes, and retrieves. This means improving your memory won't be difficult. 

Memory has three components in computing:

Recording — storing the information

Organization — archiving it in a logical manner

Recall — retrieving it again when you need it

For example:

Due to rigorous security settings, many websites need you to create complicated passwords with special characters.

You must now memorize (Record), organize (Organize), and input this new password the next time you check in (Recall).

Even in this simple example, there are many pieces to remember. We can't recognize this new password with our usual patterns. If we don't use the password every day, we'll forget it. You'll type the wrong password when you try to remember it.

It's common. Is it because the information is complicated? Nope. Passwords are basically letters, numbers, and symbols.

It happens because our brains aren't meant to memorize these. Digital Brains can do heavy lifting.

Why You Need a Digital Brain

Dual minds are best. Birth brain is limited.

The cerebral cortex has 125 trillion synapses, according to a Stanford Study. The human brain can hold 2.5 million terabytes of digital data. [2]

Building a second brain improves learning and memory.

Learn and store information effectively

Faster information recall

Organize information to see connections and patterns

Build a Digital Brain to learn more and reach your goals faster. Building a second brain requires time and work, but you'll have more time for vital undertakings. 

Why you need a Digital Brain:

1. Use Brainpower Effectively

Your brain has boundaries, like any organ. This is true while solving a complex question or activity. If you can't focus on a work project, you won't finish it on time.

Second brain reduces distractions. A robust structure helps you handle complicated challenges quickly and stay on track. Without distractions, it's easy to focus on vital activities.

2. Staying Organized

Professional and personal duties must be balanced. With so much to do, it's easy to neglect crucial duties. This is especially true for skill-building. Digital Brain will keep you organized and stress-free.

Life success requires action. Organized people get things done. Organizing your information will give you time for crucial tasks.

You'll finish projects faster with good materials and methods. As you succeed, you'll gain creative confidence. You can then tackle greater jobs.

3. Creativity Process

Creativity drives today's world. Creativity is mysterious and surprising for millions worldwide. Immersing yourself in others' associations, triggers, thoughts, and ideas can generate inspiration and creativity.

Building a second brain is crucial to establishing your creative process and building habits that will help you reach your goals. Creativity doesn't require perfection or overthinking.

4. Transforming Your Knowledge Into Opportunities

This is the age of entrepreneurship. Today, you can publish online, build an audience, and make money.

Whether it's a business or hobby, you'll have several job alternatives. Knowledge can boost your economy with ideas and insights.

5. Improving Thinking and Uncovering Connections

Modern career success depends on how you think. Instead of overthinking or perfecting, collect the best images, stories, metaphors, anecdotes, and observations.

This will increase your creativity and reveal connections. Increasing your imagination can help you achieve your goals, according to research. [3]

Your ability to recognize trends will help you stay ahead of the pack.

6. Credibility for a New Job or Business

Your main asset is experience-based expertise. Others won't be able to learn without your help. Technology makes knowledge tangible.

This lets you use your time as you choose while helping others. Changing professions or establishing a new business become learning opportunities when you have a Digital Brain.

7. Using Learning Resources

Millions of people use internet learning materials to improve their lives. Online resources abound. These include books, forums, podcasts, articles, and webinars.

These resources are mostly free or inexpensive. Organizing your knowledge can save you time and money. Building a Digital Brain helps you learn faster. You'll make rapid progress by enjoying learning.

How does a second brain feel?

Digital Brain has helped me arrange my job and family life for years.

No need to remember 1001 passwords. I never forget anything on my wife's grocery lists. Never miss a meeting. I can access essential information and papers anytime, anywhere.

Delegating memory to a second brain reduces tension and anxiety because you'll know what to do with every piece of information.

No information will be forgotten, boosting your confidence. Better manage your fears and concerns by writing them down and establishing a strategy. You'll understand the plethora of daily information and have a clear head.

How to Develop Your Digital Brain (Your Second Brain)

It's cheap but requires work.

Digital Brain development requires:

Recording — storing the information

Organization — archiving it in a logical manner

Recall — retrieving it again when you need it

1. Decide what information matters before recording.

To succeed in today's environment, you must manage massive amounts of data. Articles, books, webinars, podcasts, emails, and texts provide value. Remembering everything is impossible and overwhelming.

What information do you need to achieve your goals?

You must consolidate ideas and create a strategy to reach your aims. Your biological brain can imagine and create with a Digital Brain.

2. Use the Right Tool

We usually record information without any preparation - we brainstorm in a word processor, email ourselves a message, or take notes while reading.

This information isn't used. You must store information in a central location.

Different information needs different instruments.

Evernote is a top note-taking program. Audio clips, Slack chats, PDFs, text notes, photos, scanned handwritten pages, emails, and webpages can be added.

Pocket is a great software for saving and organizing content. Images, videos, and text can be sorted. Web-optimized design

Calendar apps help you manage your time and enhance your productivity by reminding you of your most important tasks. Calendar apps flourish. The best calendar apps are easy to use, have many features, and work across devices. These calendars include Google, Apple, and Outlook.

To-do list/checklist apps are useful for managing tasks. Easy-to-use, versatility, budget, and cross-platform compatibility are important when picking to-do list apps. Google Keep, Google Tasks, and Apple Notes are good to-do apps.

3. Organize data for easy retrieval

How should you organize collected data?

When you collect and organize data, you'll see connections. An article about networking can assist you comprehend web marketing. Saved business cards can help you find new clients.

Choosing the correct tools helps organize data. Here are some tools selection criteria:

• Can the tool sync across devices?

• Personal or team?

• Has a search function for easy information retrieval?

• Does it provide easy data categorization?

• Can users create lists or collections?

• Does it offer easy idea-information connections?

• Does it mind map and visually organize thoughts?

Conclusion

Building a Digital Brain (second brain) helps us save information, think creatively, and implement ideas. Your second brain is a biological extension. It prevents amnesia, allowing you to tackle bigger creative difficulties.

People who love learning often consume information without using it. Every day, they postpone life-improving experiences until they're forgotten. Useful information becomes strength. 

Reference

[1] ^ Scientific American: What Is the Memory Capacity of the Human Brain?

[2] ^ Clinical Neurology Specialists: What is the Memory Capacity of a Human Brain?

[3] ^ National Library of Medicine: Imagining Success: Multiple Achievement Goals and the Effectiveness of Imagery

Google announced 6% layoffs recently (or 12,000 people). This aligns it with most tech companies. A publicly contrite CEO explained that they had overhired during the COVID-19 pandemic boom and had to address it, but they were sorry and took full responsibility. I thought this was "bullshit" too. Meta, Amazon, Microsoft, and others must feel similarly. I spent 10 years at Google, and these things don't reflect well on the company's leaders.

All publicly listed companies have a fiduciary duty to act in the best interests of their shareholders. Dodge vs. Ford Motor Company established this (1919). Henry Ford wanted to reduce shareholder payments to offer cheaper cars and better wages. Ford stated.

My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this we are putting the greatest share of our profits back in the business.

The Dodge brothers, who owned 10% of Ford, opposed this and sued Ford for the payments to start their own company. They won, preventing Ford from raising prices or salaries. If you have a vocal group of shareholders with the resources to sue you, you must prove you are acting in their best interests. Companies prioritize shareholders. Giving activist investors a stick to threaten you almost enshrines short-term profit over long-term thinking.

This underpins Google's current issues. Institutional investors who can sue Google see it as a wasteful company they can exploit. That doesn't mean you have to maximize profits (thanks to those who pointed out my ignorance of US corporate law in the comments and on HN), but it allows pressure. I feel for those navigating this. This is about unrestrained capitalism.

When Google went public, Larry Page and Sergey Brin knew the risks and worked hard to keep control. In their Founders' Letter to investors, they tried to set expectations for the company's operations.

Our long-term focus as a private company has paid off. Public companies do the same. We believe outside pressures lead companies to sacrifice long-term opportunities to meet quarterly market expectations.

The company has transformed since that letter. The company has nearly 200,000 full-time employees and a trillion-dollar market cap. Large investors have bought company stock because it has been a good long-term bet. Why are they restless now?

Other big tech companies emerged and fought for top talent. This has caused rising compensation packages. Google has also grown rapidly (roughly 22,000 people hired to the end of 2022). At $300,000 median compensation, those 22,000 people added $6.6 billion in salary overheads in 2022. Exorbitant. If the company still makes $16 billion every quarter, maybe not. Investors wonder if this value has returned.

Investors are right. Google uses people wastefully. However, by bluntly reducing headcount, they're not addressing the root causes and hurting themselves. No studies show that downsizing this way boosts productivity. There is plenty of evidence that they'll lose out because people will be risk-averse and distrust their leadership.

The company's approach also stinks. Finding out that you no longer have a job because you can’t log in anymore (sometimes in cases where someone is on call for protecting your production systems) is no way to fire anyone. Being with a narcissistic sociopath is like being abused. First, you receive praise and fancy perks for making the cut. You're fired by text and ghosted. You're told to appreciate the generous severance package. This firing will devastate managers and teams. This type of firing will take years to recover self-esteem. Senior management contributed to this. They chose the expedient answer, possibly by convincing themselves they were managing risk and taking the Macbeth approach of “If it were done when ’tis done, then ’twere well It were done quickly”.

Recap. Google's leadership did a stupid thing—mass firing—in a stupid way. How do we get rid of enough people to make investors happier? and "have 6% less people." Empathetic leaders should not emulate Elon Musk. There is no humane way to fire 12,000 people, but there are better ways. Why is Google so wasteful?

Ambition answers this. There aren't enough VP positions for a group of highly motivated, ambitious, and (increasingly) ruthless people. I’ve loitered around the edges of this world and a large part of my value was to insulate my teams from ever having to experience it. It’s like Game of Thrones played out through email and calendar and over video call.

Your company must look a certain way to be promoted to director or higher. You need the right people at the right levels under you. Long-term, growing your people will naturally happen if you're working on important things. This takes time, and you're never more than 6–18 months from a reorg that could start you over. Ambitious people also tend to be impatient. So, what do you do?

Hiring and vanity projects. To shape your company, you hire at the right levels. You value vanity metrics like active users over product utility. Your promo candidates get through by subverting the promotion process. In your quest for growth, you avoid performance managing people out. You avoid confronting toxic peers because you need their support for promotion. Your cargo cult gets you there.

Its ease makes Google wasteful. Since they don't face market forces, the employees don't see it as a business. Why would you do when the ads business is so profitable? Complacency causes senior leaders to prioritize their own interests. Empires collapse. Personal ambition often trumped doing the right thing for users, the business, or employees. Leadership's ambition over business is the root cause. Vanity metrics, mass hiring, and vague promises have promoted people to VP. Google goes above and beyond to protect senior leaders.

The decision-makers and beneficiaries are not the layoffees. Stock price increase beneficiaries. The people who will post on LinkedIn how it is about misjudging the market and how they’re so sorry and take full responsibility. While accumulating wealth, the dark room dwellers decide who stays and who goes. The billionaire investors. Google should start by addressing its bloated senior management, but — as they say — turkeys don't vote for Christmas. It should examine its wastefulness and make tough choices to fix it. A 6% cut is a blunt tool that admits you're not running your business properly. why aren’t the people running the business the ones shortly to be entering the job market?

This won't fix Google's wastefulness. The executives may never regain trust after their approach. Suppressed creativity. Business won't improve. Google will have lost its founding vision and us all. Large investors know they can force Google's CEO to yield. The rich will get richer and rationalize leaving 12,000 people behind. Cycles repeat.

It doesn’t have to be this way. In 2013, Nintendo's CEO said he wouldn't fire anyone for shareholders. Switch debuted in 2017. Nintendo's stock has increased by nearly five times, or 19% a year (including the drop most of the stock market experienced last year). Google wasted 12,000 talented people. To please rich people.