Double is winding down

https://double.finance/blog/wind_down

by NetOpWibby • 1 year ago

61 83 1 year ago

double.finance

bckmn• 1 year ago

Previously (launch): https://news.ycombinator.com/item?id=42377018

3D30497420• 1 year ago

Only 6 months ago? Oof.

tptacek11• 1 year ago

Most startups fail, and you should be so lucky as to have one fail quickly and decisively. It's like landing on Free Parking in Monopoly.

axus• 1 year ago

I like that they had already written their "destructor function": https://news.ycombinator.com/item?id=42379135

ezekg• 1 year ago

You can initiate a cash withdrawal or transfer your assets to another brokerage. We ask that you do this by July 31, 2025.

Seems to still require manual work, though? With less than 30 days to do so...

sethhochberg• 1 year ago

When you work with Apex (or really any other technology bridge to the traditional financial world, Q2's Helix is common for traditional banking, Apex Clearing is common for stock trading, etc) they require you think about things like this during your implementation. Its not quite as turnkey as something like opening a Stripe account; your implementation will need to demonstrably pass a playbook of tests before your partner will allow you to play in real financial transactions - and those tests typically include things like account closure or program shutdown.

Basically, the traditional financial services partners who give startups access to these legacy networks know their clients are startups who might not fully understand the space or might want to cut corners. They're good at making sure they're protected against their clients' behavior, and in most cases legally the end users are actually the customer of the financial services company, the startup will be considered a "deposit broker" instead of a "bank" etc. Its been longer since I've touched the stock broker side so I'm fuzzy on the specific terminology but its similar there.

jjice2• 1 year ago

Good to see that they at least gave some instructions on moving the money (it was the absolute minimum, to be fair). No hate to them - some business don't work out.

That said, I personally don't understand keeping my assets that I hope to retire off of someday at a startup style company. Everyone's gotta start somewhere, but financial services like this are probably a hard sell for a lot of people.

citizenpaul8• 1 year ago

Yeah that's what I was thinking. There is 0 benefit to such a product unless the company can guarantee they will be in business for 10-20 years. Otherwise moving my money us just a big time wasting headache if the company shuts down before any benefit is realized. (<1 year... ouch to the users).

It seems like a good idea. It is a margin profits play though. I know that in dealing with big money there is a lot of foot guns as far as costs. If you mess up even one thing it can cost you tens or hundreds of thousands in unexpected expenses. No offense to the founders but I'm guessing that they didn't have someone with 20+ years finance experience to make absolutely sure they never stepped on those mistakes. You'd have to operate flawlessly with only margin profits.

Hopefully the founders will give us some more context on what happened.

fragmede• 1 year ago

The attraction is easy. Internet company means lower overhead. I'm not paying to go into a lavish office with people in it like with Fidelity, and the money just needs to sit there generating modest returns. It's all numbers on a screen anyway.

blitzar• 1 year ago

Internet company means a VC is setting a bunch of money on fire and providing you the product at a loss to them - which is your gain. They hope they can buy enough eyeballs to get their exit and the users can move on to the next revolutionary idea to giveaway a bunch of cash.

citizenpaul8• 1 year ago

You completely ignored my argument. If all the product does is give you razor thin better returns than an average low cost retirement. The money you put in would need to be there for several years at miniumum. The company apparently cannot guarantee they will be in business which means you as a customer are assuming huge risk with little potential return value, in something you are supposed to be minimizing risk as a top priority.

If you want to take on risk there are much better risk return ratios for your retirement money.

chis• 1 year ago

On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.

I think the biggest problem with this startup was that the product they offered was so marginally different from Vanguard ETFs unless you have a super specific and unique investment thesis.

jjice2• 1 year ago

On the one hand I don't think there's risk of losing money with something like this, they kept the money in a third party broker and it's SIPC-insured. But it's probably good to have some humility and admit that even for me I'm not 100% confident, these rules and systems are hard to parse.

Oh for sure - I'm sure they did. I just still wouldn't want to bother with a turbulent company and having to migrate assets from working with a company that has less of a reputation.

eweise• 1 year ago

I worked for a wealth management company. The money was held at the financial institution's accounts. We just calculated when to re-balance the portfolios and executed the trades on the customer's behalf. Not sure if that's how this works.

ram_rar• 1 year ago

I'm curious what led to the lack of demand for this—was it the friction involved in moving brokerage accounts, or do ETFs already meet the needs of most retail investors? A post-mortem on the limited traction would be quite insightful.

timhigins• 1 year ago

Yeah this would be interesting. Also the founders should consider open sourcing some/all of the code. It could be an awesome platform for the open finance community.

pinkmuffinere• 1 year ago

Reading the post, it sounds like they are

If you are technical, we are open sourcing our optimization engine, Oracle, which does our daily Tax Loss Harvesting and rebalancing. You may be able to use this to set up your own trading bot on Alpaca. You will need to contact Alpaca support to request an ACATS of your current assets held at Double.

lyrrad• 1 year ago

There is financial friction involved.

As I understand it, this product involved using fractional shares to try to adhere to an index, while using tax loss harvesting to optimize for tax.

Fractional shares cannot be transferred between brokerages and are generally sold when transferring brokerages. If you owned on average, half a share of the largest 250 US companies, you'd may need to sell about $30,000 in shares, which could result in an unexpected tax bill.

There are large brokerages and companies offering similar direct indexing products, generally at a higher cost. However, I expect those products are less likely to be shut down.

calmbonsai• 1 year ago

This was precisely their business model.

The problem was easy/trivial competition from larger brokerage firms. The core IP was all about tax optimization. The same customers who would employee direct indexing already have dedicated accounting services for exactly that purpose and the additional brokerage fees are either sunk costs or de minimis.

To use an analogy, the folks who are hedge fund customers don't care about the lack of liquidity or higher management fees. You can't capture that market on margin, volume, or any kind of flow ancillaries.

pragmatic• 1 year ago

Why on earth would you trust your money to a start up like this?

Nobody with any real money and smarts is going to do that.

Now if this was somehow a crypto play, I’m sure they’d be rolling in it.

mritchie712• 1 year ago

it wasn't obvious to me how Double is significantly better than an ETF. It'd have to be MUCH better (e.g. at least 50bps to 100bps) to warrant taking a bet on an unproven company.

They had cute names for the indexes ("Founder Mode")... but do those actually make me better returns than an ETF? Probably not.

this[0] also scared me away

0 - https://news.ycombinator.com/item?id=42377934

NetOpWibby2• 1 year ago

Damn, not even a year?!

citizenpaul8• 1 year ago

Sorry to hear. I know you are probably down right now but is there any chance you would be willing to share some details on why things didn't work out? I'd like to learn and I'm sure lots of others on HN would benifit from your experience.

jvanderbot• 1 year ago

This is the first I'd heard of something like this. What other services are in the area of "Cheap automated portfolio management" that HN might recommend?

stilldavid• 1 year ago

I've been pretty happy with Betterment.

ajoseps• 1 year ago

generally ETFs as a whole and if you want direct indexing like they offered, fidelity has something similar: https://www.fidelity.com/direct-investing/overview

khuey2• 1 year ago

The Target Date Retirement fund from your preferred low cost fund provider (i.e. Vanguard, Fidelity, Schwab, iShares, etc) is an excellent choice.

citizenpaul8• 1 year ago

Target Date Retirement fund

Every-time I look at those they seem extremely risk adverse for such a long term investment. Sometimes with 50%+ bonds/notes. If you are looking to retire in 5 years sure but I'm guessing most HN are hoping for more than 4% returns on their retirement account 25+ years from now.

toast02• 1 year ago

If you're investing in a taxable account, Target Date funds might be less preferable than holding the underlying funds (or similar funds if the underlying funds aren't available). Vanguard recently made changes to their target date funds that resulted in a lot of redemptions and extra costs to those holding these funds in taxable accounts.

nfinished• 1 year ago

I use Wealthfront and highly recommend it. In addition to a normal managed portfolio they've also recently offered a direct investment option tracking SPY with a management fee equivalent to the ETF's express ratio. Great for scraping a couple dollars off your tax liabilities with loss harvesting. Can share a referral that (iirc) reduces management fees for a couple months if you're interested.

liveoneggs2• 1 year ago

vanguard life strategy funds

timothylaurent• 1 year ago

M1 Finance is quite like this.

fyrabanks• 1 year ago

I have money in a Fidelity retirement fund and have invested additional money into Vanguard funds. Additionally, Schwab Intelligent Portfolios have treated me well. That portfolio has total unrealized gains of +37.27%. I have read lots of anecdotal stories of people taking losses using it, though, so YMMV.

devy• 1 year ago

Re: License for https://github.com/doublehq/oracle

The README.md says it's MIT licensed on the very last line (https://github.com/doublehq/oracle/blob/b69ef4c940217a2fbf52...).

However, LICENCE file (not LICENSE.md file, which doesn't exist, https://github.com/doublehq/oracle/blob/b69ef4c940217a2fbf52...) says it's GPL 3.0 license.

Which one is it?

mdaniel• 1 year ago

Seems to be a failure to update the README, since https://github.com/doublehq/oracle/commit/7923eee62bccb565c8... was an explicit change away from MIT to GPLv3

That also tracks why the README would be pointing to a 404 file, since the other commit that touched that file was to change its name, and also not update the README

didip• 1 year ago

Why gave up so soon? I remembered reading this on HN not too long ago.

xur175• 1 year ago

Welp, looks like I am moving to Frec. Hoping the Apex -> Apex transfer means I can transfer partial shares.

Note for other folks in this situation: you should be able to find a referral link and get a $250 bonus for transferring over.

amberlyfrec7• 1 year ago

Frec is here to help! And going to offer a $250 bonus to clients moving over. Double will be sharing the link soon.

xur175• 1 year ago

A few questions that you might be able to help with (also happy to jump on a call to discuss, you can find my details in my profile):

- Transferring - will partial shares be liquidated (since both are part of Apex)?

- Can I see my portfolio through Apex Clearing independently (something that Double provided)?

- If I want to transfer my assets in in kind, and invest them in the Total US index, how do I ensure that nothing is sold as part of the rebalance during that transfer?

infecto• 1 year ago

Saw some posts asking why and for postmortems. I am not the founder, not in the retail industry but adjacent space to understand enough of why.

1) there are already competitors in this space that have been there for a decade or longer. Higher fees but not significantly so to counter the risk of doing business with a startup.

2) If you use their calculator is a bit disingenuous, starting balance of $1mm. Those clients exist but that’s the minority. If you bring that number down to a more typical average or median for someone with a 30 year horizon you see that the difference is not material compared to their default assumptions.

3) if you are a high net worth individual where tax low harvesting matters, the product does not feel that compelling.

toomuchtodo• 1 year ago

Indeed, this is ideally suited as a small team in a brokerage or other asset management firm, marketed to existing high net worth customer relationships either as part of the asset under management fee or some cut of tax savings realized. It is not a sustainable standalone business.

ramesh31• 1 year ago

SEC is a complete joke at this point. Zero due diligence being done on companies like this, and as always, the consumer is left footing the bill.

amberlyfrec7• 1 year ago

Frec is an option for customers looking for a new low cost direct indexing provider! All assets remain securely held with Apex + Frec has grown to over $300m in assets with continued rapid growth.

Beijinger• 1 year ago

Would you be so kind to elaborate?

amberlyfrec7• 1 year ago

Absolutely - what details are you curious about? I am on the Frec team and happy to provide a demo.

languagehacker• 1 year ago

Can someone double-check my understanding of this?

Double is a portfolio management service that purchases shares that match the blend of a specific index for its customers. So instead of owning an index, you own the shares.

Double is winding down because they are not profitable. They are instructing their customers to either fully liquidate their holdings, or perform an ACATS transfer, which generally requires that any fractional holdings be liquidated first. However, the business model will necessarily require holding fractional shares because of the way indexes work.

So my question is, this is going to cause many of their customers to get dinged by short-term capital gains tax, right? That stinks.

mizzao• 1 year ago

I'm a Frec user and have never heard of Double before. Is this likely to happen to them as well?

amberlyfrec7• 1 year ago

Frec team here. We're in a very different position and confident we're here for the long haul. We manage over $300 million in assets, have grown 5x year-over-year, and are on a clear path to profitability without needing additional capital. The business is built on sustainable AUM-based fees with strong unit economics.

Double is winding down

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