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[dupe] LinkedIn shares drop 40%, erasing $10B of company's value (businessinsider.com)
1012 points by danso on Feb 5, 2016 | hide | past | web | favorite | 635 comments

A lot of people hating on LNKD here, but this isn't really company-specific. This is a macro shift. LNKD being down by 40% by only guiding down 8% below estimates is a big warning of how the market is about to treat all bloated growth stocks. In 2013, if they reported the same results, the stock would have been flat or slightly down. It's a major shift in investor sentiment.

Bubble bursts always start in the public markets. Next, VC-backed "unicorns" with ludicrous multiples will soon find themselves unable to raise cash at even half their previous valuations. Then those companies will have to tighten their spending which means layoffs and smaller revenue growth which is a vicious cycle towards even lower valuations, bankruptcies and ultimately a much worse job market for tech workers.

I'm expecting a 30-40% decline in S&P 500, 30% decline in bay area real estate values, 30% of bay area "well-funded" startups going bust, and 25% reduction in market rate pay for software engineers over the next 2 years. Hopefully that will turn out to be a gloomy forecast, but it's best to prepare for the worst.

Stop scaring the kiddos with your ghost stories. At least let them enjoy their weekend.

The problem is shrinking global liquidity. Losses in the Chinese financial system and in the global energy sector are forcing governments, central banks and sovereign wealth funds to sell assets around the world. These are some of the biggest asset managers in the world.

It is unclear to me how this will end. When the mortgage market melted down and destroyed the balance sheets of banks, the Federal Reserve liquified their illiquid assets using QE. For better or worse, QE restarted the jammed shut credit engine.

At the moment, outside of wholly energy dependent countries (Middle East, Latin America, Nigeria, etc.), there does not appear to me a 2008-like financial system shutdown.

Coming back to tech. IMHO, big tech companies with inflated multiples (as benchmarked against the FCF generating engines at GOOG and AAPL) now have a target on their backs. Unicorns that aren't cashflow positive are going to learn how to negotiate down rounds. Real estate values are sticky and will hold up longer than people think. Engineer salaries are not going to drop a whole lot. The number of people employed might.

In terms of property, I wonder how much is being sold to foreign investors. This article came up recently about London


I give it more credence than the usual "property market correction incoming" because certain fundamentals have actually changed, oil is dirt cheap, China as you say is volatile having blown multiple bubbles and now dealing with the consequences.

Perhaps those who previously bought for investment purposes may need to liquidate?

Hard to know, because High end London property is pretty weird. It's basically a piggy bank, a tax dodge, a money laundering vehicle and a fashion accoutrement all tied up in one dirt cheap currency.

London is a weird spot for property. I see it as more inline with the gold market. A "safe" investment for people who need to invest. That makes your last point more likely if anything I'm saying is true, but what happens when in London is unlikely to reflect the properly market in general, which is based somehat on fundamentals.

> The number of people employed might.

It will.

> Engineer salaries are not going to drop a whole lot.

Basic economics say that will follow.

None of these events are isolated. They're interconnected and cascade. Everyone will be affected, even those who are flipping burgers in the Bay Area.

> Everyone will be affected, even those who are flipping burgers in the Bay Area.

hey sure there is a bubble there, but last time I checked BA wasn't caput mundi yet. Plenty non inflated startups do exist, even if not specifically there.

Where the whole economy is sustained by VC money, well, there's gonna hit the hardest. But doesn't seem that the whole IT world is following that model.

That doesn't matter in the short term. Once the inflated startups tank, everything will take a dive. Remember 2000?

Maybe not. Seems like many here are too young. I'm only in my early 30s and am already feeling deja vu. Life is strange.

When the dot.com economy crashed, Google and Apple weren't producing billions in quarterly profits. Facebook didn't even exist. Today, the local economy is a very different thing. There's a new layer of massive and massively profitable companies that are not relying on venture money to keep their doors open. Meanwhile, a number of truly fundamental breakthroughs in AI, A/VR, genetics (CRISPR), transportation, and energy are happening simultaneously. Any one of them could trigger another tech boom, especially when corporate balance sheets have ludicrous amounts of liquidity. All five at once indicates a world-historical event in the making (think Second Industrial Revolution).


Accordingly, there's no reason to be investing in fluff like file sharing, app-based bike delivery, or "valuable" services like Shazam when there's real work to be done. In other words, the VC correction unfolding now is exactly that, a correction (long overdue, to my mind, and an unambiguously healthy thing). It will hurt a lot of overextended people to be sure, and unprofitable companies with dubious valuations that are laying people off now are wise to get ahead of the crunch.

As the squeeze tightens, salaries will even out, the balance of power will shift to employers, traffic may improve (slightly), and rents may even stop climbing. But 20-30% declines in the overall housing market? Dream on. Prices here are a function of a massive shortage, off-the-charts desirability, and deeply-rooted peculiarities in the tax code (Prop. 13), not Florida-style speculation. All of these factors are far more impervious to temporary downturns in the employment market.

Having lived through the dot.com crash, I can certainly hear echoes, but deja vu it isn't. The world is now a very different place.

I recall sending my resume to over 50-60 companies for junior web dev work @ $15/hr after college and only getting two answers back. It was pretty brutal.

Actually, basic economics says that wages tend to be sticky.

/Average wages/. On a macro scale.

That's not the same situation. Of course you're going to see the $150-200k premium for engineers fall once startups, funding, and jobs disappear. It's already happening in the form of cutting RSUs and bonus packages.

And it has happened before. Why is it so hard to understand this?

Oh, I was around.

Regardless, I was stating that your dismissal of "basic economics" was wrong. It's not basic economics, there's a lot that goes into the equation. Wages might go down. Wages might not go down by a ton. They might drop like a rock. It all depends on a number of factors, but blithely dismissing people with some nonesense about econ 101 is not being intellectually honest.

You're still talking macro 101. I'm not talking about nationwide unemployment figures here.

The key is that wages for /engineers/ will fall if funding and jobs disappear in the tech sector. Today's wages for engineers are high and will be unsustainable when things go bust.

How much they will fall is anyone's guess. But the reasoning behind why they will fall is very straightforward.

Wages probably will fall but it's probably also more complex than that.

Your extremely talented engineers who build things at scale and understand the fundementals, who are basically a safe per of hands, are still going to be in deep demand. Profitiable companies that work at scale are still going to have real problems and are unlikely to turn around and tell their engineers that they're going to be getting significantly less money, as those engineers are already in their own market and these companies will still want to compete for them.

The startups filled with architecture astronauts who spend most of their time overdesigning, learning new tools, and basically doing anything that isn't meeting user needs, delivering the product or tackling some tough engineering problem, then you're likely going to see a drop because they're not really worth it in the first place.

This strikes me as a bit of a fantasy. Very few people can recognize, and even fewer value, a "safe pair of hands". Let's not also forget this industry's rampant ageism, which even in good times sidelines experience in favor of hipness. I have no idea why you think this will magically change just because times are tough.

I'm not sure the industry suffers from ageism in the way most people here think it does. The start-up community hiring cocky 24 year old team leads who refuse to heed advice from their seniors definitely aren't going to be hiring the older guy, sure.

However, remove the funding and force these companies to actually compete on merit and only those who are actually capable of delivering will still exist. At that point, hopefully, we'll see a rise of new leaders who actally value excellence.

The point is, we can only afford to value hipness over experience in bubbles and it looks like this one's about to burst. Of course, I'm not from the future, so I could be wrong.

Most management can't tell the difference between the two.

True, but you're assuming they won't be part of the same cull.

Culls occur from the bottom up. Engineers, then management.

I disagree completely. I think there are really two markets for dev jobs: the startup economy which is over-inflated but also exists in a smaller high COL location, and everyone else which had lower COL and wages to begin with and likely won't see much of a drop in wages due to the fact that their company needs those services to function efficiently.

You can argue that the drop in employment in startup land may see some movement outside the bay area and into boring lower paid dev jobs, but I doubt that it will be more than a small blip.

TL;DR: If you're at a start up the good times might be over. If you're not, don't expect much change (maybe less likely to see a pay rise). If you're just coming out of Uni and into the job market, you may see interesting times.

Because most people here weren't around for 1999-2001.

Agreed. But I'm still a little surprised by this. I would expect anyone at least 30 yro to have /some/ recollection of what happened, if not a good understanding. Or to have the curiosity to find out what did. I'm 31 myself, but knew what was happening with the bubble during highschool (thanks pud and F'd company).

Maybe the typical age on HN is 21? :)

Young people are just smarter, apparently. Sit back and enjoy the show.

Yup. Most guys here are in their 20s: https://news.ycombinator.com/item?id=5536734

And as a result, unemployment higher.

"Real estate values are sticky and will hold up longer than people think."

This may be true in the general case, but there is a more relevant (IMO) general case here, and that is: demand outstripping supply causes prices to ramp up steeply ... but if that condition wavers at all they will drop.

That is to say, if there is even a single marginal house for sale in the SFBA that can't clear, the whole market drops. Right now that doesn't exist. All (normal, conforming) homes in SF are clearing. If that changes - if there are even one or two marginal houses left unsold - the price plummets.

What do you mean by "clear"? Is that a synonym for "sell"?

If a house does not sell at a certain price, typically the owner can lower the sale price.

Can you say a bit more about this? How does a quantity of one affect supply so much?

> At the moment, outside of wholly energy dependent countries (Middle East, Latin America, Nigeria, etc.), there does not appear to me a 2008-like financial system shutdown.

There's nothing stopping central banks from creating more liquidity through progressive rounds of QE, each of them buying in because they know their country will suffer in the short run if they do not follow suit. Of course this will lead to deflation and another recession in the long run with many losing faith in monetary policy/central banks altogether, but we're not quite there yet. We've still got another couple of years before we hit that phase.

Could you explain how you see QE leading to deflation, when it's an explicitly inflationary policy?

Sure. QE pushes money into the supply side (banks) which goes primarily into rent seeking activities such as equity markets and real estate due to a lack of aggregate demand.

This allows the economy to stay afloat as those with assets enjoy increases in nominal wealth as long as more and more liquidity is injected into the system.

But it hurts the economy in the long run by distorting market signals (wage, unemployment, asset prices) that would take a major correction if the market was allowed to match supply and demand in these respective markets efficiently.

Short summary: QE hurts aggregate demand in the long run through the misdirection of resources and the creation of rent seeking asset bubbles. Weak aggregate demand leads to deflation, regardless of how much liquidity we have on the bank side.

So, shorter summary: QE doesn't work.

QE works well. It's just limited in how much impact it can have because it's monetary policy. Fiscal policy is the other half of the equation and one that is much more politically charged. Bernanke did what he could with the tools at his disposal at a time when government was seized with deep partisanship. That's now coming home to roost as liquidity is removed from the system. Luckily, or appropriately, it's happening as unemployment is low and there is finally some upward wage pressure. You only have to look at many countries in Europe to understand what the US would have looked like had we not had the monetary firehose, with all of its imperfections, opened.

Which countries in Europe would that be?

It works perfectly well in the short run, but it makes things worse in the long run, possibly necessitating (non-nuclear) war to boost aggregate demand through government spend (fiscal policy) and a reduction in the supply of excess labor.

QE leads to deflation?

I think at this point we're more likely to see NIRP than QE.

Gloomy, but likely correct. A lot of these current valuation numbers just don't make sense.

The implied growth rates in many tech stocks is unrealistically high.

The Bay Area's long-term employment prospects simply cannot support current home values or rental rates.

Once public and private equity valuations drop a lot of software development projects are going to get cut and with them the jobs of many software engineers. Engineers who keep their jobs probably won't experience pay cuts, but new hires are going to be expected to take much lower pay packages.

Why? Because the talent is going to be available at lower pay rates. So why pay more?

This is not necessarily a bad thing. There's a lot of irrationality in the tech business now and it's crowding out the rational participants. There needs to be a weeding out process. It is good that it has begun.

Remember to think long-term. Technology and the Bay Area are here to stay. Let's get the creative destruction process over with as quickly and painlessly as possible so that we can get on with making real innovations.

So what if you're one of those new hires (or hope to be one)?

I'd say keep polishing your resume. If you dropped out of school, look for a school with low tuition that isn't University of Phoenix but finish your degree. Stay on your toes: work your way through to graduation, get internships each September (as much as you can).

And though the retire-as-a-millionaire thing might have vanished, you'll land on your feet.

Build your own product now that generates revenue and profit. Make your own job.

What will you eat, old newspaper clippings? If we could all do this, VCs would not exist in the first place.

Bay Area's real estate is actually pretty cheap, considering how much economical output the area has and how desirable the location has been historically.

Look at Vancouver, Hongkong, Shanghai, Moscow, Tokyo, all have waaaaay lower average household income than San Francisco Bay Area, yet wil much more expensive realestate price.

Living in British Columbia, I had always assumed Bay Area real estate would be astronomical. I found it surprising to see single family detached homes in the Bay Area for $300,000. That's entirely reasonable considering the potential incomes.

Which part of the bay area? Those homes are probably > 1.5 hr commutes for most jobs.

How long ago did you see that? And where?

The median price for a single-family home in the Bay Area is $841,560 as of Summer 2015.

>The Bay Area's long-term employment prospects simply cannot support current home values or rental rates.

Why not? What are you basing this on?

Common sense? Median rents are $5500 a month. No one can afford that. A city can't exist if people can't live there.

Don't forget that the median rent is determined by the very small slice of rentals that are changing hands.

I'd love to know what the median rent across all rentals is in SF! ~70% are rent controlled. I'd guess the median rent is maybe half? Around $2000? Just a guess.

You say no one can afford it, but all the apartments are rented out.

Sure, but that class of people can't do all the things required to run the city (food service, child care, etc). Those people have been priced out and are moving elsewhere. The city suffers; it becomes difficult to sustain the current pattern.

I mean other cities are like this too. Chicago is a very cheap big city. But how many server workers live in Gold Coast or River North? The difference is I guess cheap housing is closer compared to SF?

Except none of the doomsday predictions have come true. There are still of services like food service, child care, etc.

He's reasonably and appropriately worried about both the shaky unicorns and the seed funding bubble, neither of which seems terribly sustainable.

There are other games in town, but those two games were seriously inflating salaries here.

> 30% decline in bay area real estate values.

that won't happen. During the 2008 big burst everywhere in USA was felling apart but in SF real-estate was just down 5%-10%.

SF can't expand easily since it's water 3/4 all around. Demand still high and supply very low.

That won't change dramatically, with or without a collapse in the public market.

During the 2001-2002 bust, bay area rents fell 50% in marginal neighborhoods. In desirable neighborhoods, rents fell maybe 10%. Prices to buy came down, but not nearly as much. In marginal areas 20%, in desirable neighborhoods, maybe 1%. Small houses and fixer-uppers in the 10/10/10 school districts (ie, Palo Alto) kept going up. One reason is that construction prices fell 30%, so there was allot of tears downs and renovation happening.

"During the 2001-2002 bust, bay area rents fell 50% in marginal neighborhoods. In desirable neighborhoods, rents fell maybe 10%. Prices to buy came down, but not nearly as much. In marginal areas 20%, in desirable neighborhoods, maybe 1%. Small houses and fixer-uppers in the 10/10/10 school districts (ie, Palo Alto) kept going up. One reason is that construction prices fell 30%, so there was allot of tears downs and renovation happening. "

It was a bit more complicated than that ...

You are correct that rents/prices fell much more in marginal areas, but "marginal" can mean a lot of things. Very expensive, 3-4 million dollar homes are also marginal (or at least, they were at the time) and those fell a lot. There just wasn't a healthy demand for 4 million dollar homes in SF and Marin during that period, and those prices dropped a lot.

So, yes - mid-range (mid-range for SF) houses in desirable areas did not fall a lot ... but just like houses in undesirable areas dropped a lot, so did a lot of other marginal properties - namely, very expensive ones.

Very true. In 2001, landlords of rent-controlled apartments wouldn't even pause the rent increases in the best neighborhoods.

what happened to the Small houses and fixer-uppers in the 9/8/8 school districts?

What's the meaning of 10/10/10 or 9/8/8?




> SF can't expand easily since it's water 3/4 all around. Demand still high and supply very low.

That might easily change.

If average salaries go down, people won't be able to afford pay rent they once used to. There will be less people living on their own and more people sharing with others. This will create oversupply of rental properties which means rent prices will go down.

If rent prices go down, property prices will go down too as property investors won't be able to justify holding a relatively expensive property yielding low rental returns. So they might as well put the property on the market creating more supply of properties for sale. Thus bursting the bubble.

SF is heavily relying on the high-tech, high salary population to sustain its high market value. So SF is always at risk of having market breakdown. But because giants like Google and Facebook have offices in SF, or near SF, as long as that population remain, SF market will survive, no matter what. If SF only relies on startup, SF will doom. Startup population, however, is dragging the price higher, so high that even the workers from the giant tech feel wallet drain, and that's really bad, because Google wouldn't pay everyone $200,000 annually, and even if Google does, only a handful of companies can, thus the market will bloat with a huge economic gap.

I'll get hammered for this, but I just wonder if we will be talking about Google, and Facebook ten years from right now?

I know both have diversified, and Google has become best friends with the Obama administration.

I just wonder if they will be relevant? These tech companies main reason for living is advertising, and their algorithms.

I look back, and Apple had a physical product. Other than Apple, exactly what companies will be here in a decade?

Actually, I don't think I would buy another new Apple product for myself. I still buy them as presents. It's a nice gift. For myself, I will still buy used while their is a surplus of parts.

I went into my Corte Madera Apple Store on 2-1-16. There's no cash registers. A few printers are attached under the counters for receipts. It's ambience was that of a operating room. I walked out, with a $39.00 iPad mini case. I said to myself, "Is this my last visit?" The case was not the quality I expected from Apple either.

Please don't beat me up. I won't even be back. Just thinking out loud. My prediction of future events have a poor track record.

Google and Facebook are completely different animals. They both make money through advertising[1], but the use cases are different. Even their algorithms have different implications. In Google's case for example, their search is like an ever improving AI, increasingly hard to overtake. And assuming search is going to continue to be a need, it may become increasingly hard for a competitor to overcome them. I do understand nothing lasts forever, but only thing is I don't see it coming yet.

Sibling comment, compares Goog with MS 10 years back. My humble submission is several people saw it coming even then. I remember reading a book called 'The Search', and also having some discussions with friends, where we felt that Google will overtake MS. But there is no such thing in the horizon, which challenges Google. And people tried - Blekko was noteworthy. DDG is also liked by hackers, but it remains to be seen in the long term.

Now talking about FB's algos (or AI). Its purely anecdotal, but till I was using FB, I found it highly irritating. Imagine if your email was trying to guess which email you like to read, rather than simple time sorted one (and brief categorization, which gmail does).

[1] This analogy of comparing Google to advertising company has become a bit tiring now as well. I think, thats their current way of making money, we should judge them by what their intrinsic value is - Search/self-driving cars/Youtube/etc. As the means may change (micro-payments via Bitcoin/etc who knows?)

The Google <-> Microsoft analogy is especially relevant with Google becoming the owner of the operating system of the world's most dominant computing platform. The resemblance of Microsoft of the nineties is uncanny; commoditized hardware made by a plethora of companies at razor-thin margins and Google sitting on top of all of them collecting the profits. Funny enough, both of those operating systems were arguably ripped off from Apple. History does rhyme.

Only Google is a lot more diversified than MS was back then, since Android isn't even their main business.

Ownership means something different when you charge for it, however.

I think you might be right. I remember about 10 years ago having a discussion with a coworker. He was bemoaning the fact that Microsoft was so far entrenched that nobody would ever be able to challenge them. Back then Microsoft looked like Google does today. Nobody stays on top forever.

I agree with @monkeywork, i think Microsoft is now in better than what it was in 2003/4, At the time when i worked there we knew Linux was a challenge, MSSQL, AD, Exhcange all had still competition(sun one Ldap, domino mail/workflow) and was fighting hard in fact i would say Domino with it's workflow was in better position. With Azure, SQL Always on, .net and solid Windows server i expect Microsoft to be around for long atleast another 1o to 12 years in dominant position in enterprise segment.

but Microsoft is still in top in terms of market share on desktop, and they have started to put a dent into the prosumer tablet market, and they compete well in the gaming market. I'd say they are still "on top"

Microsoft is long past "nobody would ever be able to challenge them." Maybe on desktop, provided you exclude the server market.

You didn't used to have to exclude the server market. They owned that too. Then Linux challenged them and won.

In fact, they used to own all PCs. Then Apple challenged them for laptops and won.

Microsoft isn't doing badly, but it's not an unchallengeable juggernaut any more.

And Google won't be forever either.

Advertisement is relevant. http://finance.yahoo.com/q?s=KO produces nothing of intrinsic value, yet it is valued at $185B. Why? Because they've built and maintained a very valuable brand, via advertisement. The day CocaCola is headed for bankruptcy is the day I start worrying about Google and Facebook.

Market cap is not the same thing as book value, and the book value of the Coca Cola brand is less than $80 billion.

Google is up with Apple and Coca Cola as most valuable brands, but Facebook is not even top 10.

San Francisco had 35% decline from peak in the years following the 2007 bust, across all market segments. Less 'prime' fell first and hardest. But decline was comprehensive.


SF and Texas is where the fugitive capital from the mortgage meltdown was running to. It's not about demand; it's about how many high rollers go bust.

Exactly. Property values might not continue to grow at such a high rate but they aren't going to decrease by 30%. That's ludicrous.

It just happened! Not more than 7-8 years ago!

It happened in many, many markets across the US and the world.

We just saw it happen!

That was part of a massive, global housing bubble popping. A better point of reference is the dot.com crash (the worst of which was a local event) and the worst you saw, at least in decent areas, were valuations that stopped climbing.

How quickly people forget :)

There are areas that do not follow Bay Area realestate economics.

I have watched Bay Area realestate for too many years. I do agree the decline will be at least 30%. I think it will be more like 40%, but who knows.

That said certain areas (Rich areas--Pacific heights, etc.) of San Francisco do not follow the trends. Marin county, with the exception of Novato, do not follow the trends.

Rich areas are "tightly held," they usually don't have mortgages and the owners are wealthy enough to not need to sell at a loss in downturns. These are the safest areas but don't get the huge appreciation in the upswings

For the bay area, I think compensation drop will be far worse. The base salary of bay area companies has never been that impressive. Even the big tech companies like Google and Facebook, base salary is not much more than other regions. The impressive compensation numbers are always because of bonus+RSU. These will probably be massively reduced or even eliminated completely if the tech downturn gets bad enough.

Tech employees making $200k+ are the only ones who can afford a $4k per month apartment in SF. If salaries drop then rent drops. I don't see this being a bad thing.

This is a huge misconception: tech is actually a small percentage of SF employment, especially at the high end. Those $4k+ rents are being paid by bankers and lawyers. It's still called the "Financial District" for a reason. The finance sector laughs at our $200k salaries. They are the ones inflating the rental market because a few k per month is a rounding error.


I know a thing about tech, lawyers, and banking. You're talking about misconceptions about tech while feeding misconceptions about law and banking.

In reality, most people in all three industries don't make $200K salaries. A big chunk (but by no means all) of Bay-area FANG engineers, New York bankers and Biglaw lawyers get this type of remuneration. Should be said too that most (not all) of these are pulling off insane, crazy-making hours as well.

If you think lawyers are rolling in it you have not been paying attention to what's happened to the profession over the past decade. Simply anachronistic. If you're going to generalize, it's a much better time to be an engineer than a lawyer in 2016.

All three of these professions have massive disparities in remuneration.

He said that (most of) the 4k rents are paid by bankers and lawyers. He did not say that most bankers and lawyers pay 4k rent.

I doubt there are more lawyers than engineers paying $4K rent in SF. But whatevs.


For all this talk about how engineers "might" get laid off, this completely ignores the massive contraction of the legal market that has already happened.

Outside of a few specific areas of law, and a few high powered law firms, lawyers don't make that much money.

My ex, a nationally renowned family lawyer in literally the richest area of the country doesn't make more money than i do (and she runs her own firm, so it's not like she is being kept down by partners).

Yeah the comment about lawyers and bankers making more than engineers is straight out of 1995. Outside of highly specialized degrees in medicine there really isn't any other jobs out there paying a white collar wage ($100K +).

(F)acebook,(A)pple,(N)etflix,(G)oogle? 200k is also fairly easily attainable by NYC engineers.

> If salaries drop then rent drops. I don't see this being a bad thing.

Maybe I'm being irrational, but I suspect that the drops won't be proportional and the housing isse in SF will just get worse.

We moved into a new apartment in NYC in the summer of 2009. The previous tenant had a two-year lease at $4500 (struck in July '07). Our rent was $2800.

In the rental market a big driver of the landlord decision cycle is needing, at a minimum, to have a reputable tenant and to cover the cost of carry of the asset (mortgage, etc). In many cases if their cost of carry is met (and that's often a low bar....many landlords in both NYC and SF own their apartments outright, or are paying tiny monthlies on a refinanced mortgage that was originated in the 90's), then the priority is getting a reputable tenant who won't destroy the place or create drama.

If the above paragraph is confusing, basically what I am trying to say is that a landlord often prefers, for example, $3000/month from a tenant who they think is 98% likely to be an "easy tenant" to $3500/month from one who they think is 80% likely to be the same. In other words, there's a market premium on reliable tenants, especially in places like SF that have aggressive tenant-protection laws which make landlords even more antsy.

As layoffs start happening (as they did in the nine months before we signed our lease back in '09) landlords of reliably-paying, drama-free tenants start getting antsy about keeping their current tenant or finding a suitable replacement.

As such, what drives prices in markets like NY/SF isn't just supply-demand equilibrium; there's also a significant behavioral economics angle aspect to it as well, as landlords are willing to pay a premium for peace of mind.

Therefore, I would expect a significant drop in SF rents if layoffs start coming.

This times 100. A bad tenant can cost you tens of thousands of dollars, not to mention peace of mind. I once had one who lied about owning my property to have a 60 year old tree cut down. It was a nightmare (it turned out he had sued his previous landlord in a bogus sexual harrassment and basically extorted a hundred grand from an elderly woman).

I would much rather have someone who pays less, but is financially and mentally stable. So yeah, rents will drop pretty fast once the market softens.

SF in particular is a unique market because you have one population that is hell bent on staying here, and another that is primarily here for work opportunities. The latter population will clear out pretty quick once the work starts to dry up.

They even made a movie about it: Pacific Heights.

It is a supply-demand equilibrium, it's just that tenants aren't fungible. Even Homo Economicus would pay a premium for a more reliable tenant.

Probably not, because people don't ask. In 2008 when I was living in NYC, I asked and received 10-15% year over year decreases in rent (3 years). Long time NYers thought I was crazy to even ask. Incredulous I got it. And this was in Manhattan, doorman building, a few blocks from Lehman Bros.

So yeah ask. And be prepared to move. If you aren't prepared to move, you're not ready to save.

Just curious, what do you mean, be prepared to move? Did you tell the landlord, "I will move if you don't give me a 10% decrease in rent"? I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount.

It also depends on the kind of property taxes prevalent in the states. e.g. in California, property taxes are set at the time of purchase, while in Texas they are reassessed every year. So, my landlord (in Texas) basically increases the rent to cover for the increase in property taxes.

> I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount.

I was able to do the same thing when re-signing the lease for my NYC (East Village) apartment in June 2009. My roommates and I drafted a letter requesting a 10% reduction, citing decreased rents 1) in the neighborhood and 2) in the rest of the city - specifically in the financial district where "luxury" buildings were giving away multiple months of free rent as a signing bonus - and the management company accepted it without a word.

Tenant protection laws in NYC are very tenant-friendly, to a degree where someone who is sufficiently motivated and knows the system can effectively live in an apartment rent-free for up to a year at a time, if not longer.

Landlords are scared to death of deadbeat tenants like this, it costs a lot of legal fees to get rid of them, and they're freeloading while you're walking through the necessary legal processes.

Every time the apartment goes onto the market they're rolling the dice again - so the value of an existing pleasant tenant is substantial vs. the risk of a tenant of unknown quality.

Which isn't to say you can just get your rent slashed whenever you want, but it's part of the negotiation, and coupled with a recession it can be a powerful argument.

I'm a landlord in New York and I've been a tenant in NYC and this just isn't true.

Vast majority of rentals in NYC if you asked the super for a discount in rent you'd be requested not to let the door hit your ass on the way out.

Depends if you are talking about private small landlords or corporate institutional (ie, Related). The former has totally different motivations and needs. I haven't received rent reductions but I have fought off rent increases in strong markets.

only works if prices are plateauing or dropping in your market

Yes exactly. Its not a negotiation if you wont walk. Car dealer won't change price? Walk and buy a different car. If you are too in love to walk you already lost the negotiation.

I think that that threat is more dependent on how fast they can fill the apartments. If the apartment ends up on the market for 2 months... well 10% decrease is the better option isn't it?

I didn't literally say I will move. I was more coy and diplomatic about it. I just said the market is different, rents are coming down in the neighborhood, it's a great location and apartment and I'd really like to stay here but economic good sense tells me it's reasonable to request lower rent right now, and I think $x is reasonable.

2008 is the keyword here. Lehman B going bankrupt. Fear.

Just that simple folks.

The parent poster was suggesting that compensation would drop, but not necessarily salary. In other words, the $200k engineer might be making $120k in salary and $80k in other forms of deferred pay. That $80k will be gone in this example, but the $120k will remain. People pay rent out of their actual cash income, not out of unvested stock options.

Two engineers with average compensation could split at apartment at that price, and many do. So do married couples with dual incomes.

Yeah, at the cost of increased volatility. If two engineers, each with a 10% chance of losing their job in the next 2 years, do this then they both are much more likely (19% chance) to face uncertainty in that time.

They're all young. They don't think like that.

You may be missing the point. Say most tech engineers double up (as if they aren’t often doing this already). Guess what? You just significantly reduced demand for high-rent apartments

Renters will increase the price knowing full well that people will double up. Also if the renters are ruthless they would directly tell you to have more people packed in an apartment to pay their price and if people are helpless they would have to cough up or find some other job in another state where you can live decently with lesser pay. Also a lot of shitty apartments will increase their rents which puts more pressure. This I feel is simple price discovery at work. This is why it is better for the company to spread itself in different places rather than hole up in a single place and pay very salaries which are not sustainable. I really don't understand start ups which are supposed to be tight on cash sitting on one of the costliest real estate and expect to be profitable.

Eh, you exaggerate. Me and my girlfriend make about $160k together and we can afford[1] a $3.5k apartment in SF.

If we made $200k+ each, or if even just one of us did, $4k wouldn't even be worth thinking about.

[1] by "afford" I mean that there is money left at the end of the month.

You're spending 50% of your monthly post tax income on rent. That's not what I would call affordable.

So then they have $3.5k left after rent each month, while living in the middle of one of the most popular cities in the country.

Meanwhile, the average American couple would have less than $3.5k before paying, regardless of what their rent is.

Right. I guess it depends on what your other expenses you have. For example, $2k out of that extra $3.5k would got to student loans for me. So spending $3.5k on rent just doesn't work. If you don't have student loans or any major debts sucking up your income then I envy you.

I'm pretty fortunate in that not only do I not have any debt, but my fuck you fund has enough for several months of full living/lifestyle costs. If I move back to my home country, then I have enough for two years.

Just curious, did you fund your FU fund living in the current place?


Closer to 45% really. But it's still cheaper than paying less rent and owning a car. Not having any dependents is also pretty handy in keeping money piling around instead of spending it.

We also save a lot (and are healthier and save time) by cooking at home instead of going out to eat.

So, really, we get to both live in downtown SF, and travel pretty much whenever we feel like it.

What's your reason for living in SF and still traveling frequently? Access to work in SF?

I ask because I'm a remote worker for an SF startup, home base in a low cost of living area, but I travel frequently as well (but the home was purchased somewhere where the house is paid in full already and the monthly upkeep is ~$500/month).

Access to work is about the same as remote with social network in SF.

Two reasons why I choose to stay here: 1) building said network so I can go back to proper nomading easier, and 2) access to the startup lottery; nobody gives shares/options to remote workers and/or independent consultants/freelancers

Lottery is a nice potential upside with next to zero downside as an engineer

> nobody gives shares/options to remote workers

I received equity as part of my remote worker compensation (my entire team is remote though).

You're crazy if you think spending 12-24% of your gross income isn't "even ... worth thinking about", even as hyperbole.

What is special about 12%? Are you saying that someone is spending excessively on housing if their rent is $500/mo and they are making $4k/mo gross income?

Salaries tend to be sticky. A more likely outcome is the bottom ~25% of engineers being laid off or moved to contract status.

Even more likely - hiring comes to a screeching halt. That's what brings the rental market down. There are a lot of new apartments being added to the market and bam, oversupply of rental units if the hiring slows down or stops.

Just clarifying, are you speaking of SF, or the US more generally...?

It's likely to spread throughout the country.

That is highly overestimating the amount of tech jobs in the rest of the country. For SF, yes, I agree.

Sticky for people already employed, perhaps, but probably not for new hires, I'd guess.

Also, anecdotally, in 2008 some of those fired were expensive new hires. "The bottom 25%" might be defined as those fired but otherwise I don't think there is a definition of "bottom" those who get fired all fit. Say, if a project or a department is terminated, often everyone is let go, instead of trying to keep "the best" and replacing "worse" people elsewhere with them, etc.

The biggest risk is actually China devaluing the yuan. They are reporting their forex reserves on Sunday. If the yuan gets devalued this year this means China starts to export deflation. One or 10 stocks losing 50% in value is not a big deal. The Fed needing to cut rates in the face of slowing growth would be an issue.

Both energy and China are the big risks. It'll be interesting to see how much of their foreign reserves were used up in January.

To some extent, it is easier for the Chinese to defend the on-shore yuan market (CNY) through capital controls. It is harder to defend in the off-shore yuan market (CNH). Great discussion from a few days ago here: https://news.ycombinator.com/item?id=11008872

I personally have tremendous admiration and respect for managers of the Chinese economy and I think betting against the Chinese government is just a money-losing, dumb idea.

IMHO, the big threat continues to be oil. Cheap dollar funding has pumped up global supply to well past demand. This is crushing the economies of oil-exporting nations through currency devaluation. Ruble, CAD$, Nigerian Naira, Krone, Bolivar, etc. have gotten crushed.

Developed Market banks and investors have poured a lot of money in emerging markets in the past decade. Some of that investment is going to be lost.

It is an open question whether we are working up to an event that is similar to the 1997 Asian financial crisis, 1998 Russian default, the 2012 European debt crisis, the 2008 Global financial crisis, or something milder, or something much worse.

This is going to be the most interesting question. China worked pretty hard to get the Yuan in the reserve currency basket, and they worked even harder to reassure the world after they pulled the devaluing stunt in August. From the WP article: "But the Chinese central bank argued on Tuesday that its goals were more mundane than spurring exports and growth. Rather, the bank said that the change was a one-time event to allow it to set exchange rates in line with free market practices. And in their initial responses, many analysts agreed."

If they do it again then they lose all credibility with the rest of the world. And how the world responded would change China's trajectory.

So its interesting to see what they do.

[1] https://www.washingtonpost.com/news/wonk/wp/2015/08/11/china...

Ironically getting that reserve currency status could be biting them in the ass in the short term. You need to have fairly free currency flows as part of the deal. Which means its tricky for them to impose capital controls now.

Every made in China product I've bought has been cheaper and/or much more capable than the one it replaces. Haven't they been exporting deflation this whole time?

When you are trading at a P:E ratio of 50 you are expecting some phenomenal growth and at LinkedIn's size that growth is pretty hard to get. Scaling it back to 25 seems pretty damned reasonable honestly.

I'm expecting a 30-40% decline in S&P 500, 30% decline in bay area real estate values, 30% of bay area "well-funded" startups going bust, and 25% reduction in market rate pay for software engineers over the next 2 years

And by expecting, you mean investing accordingly?

Hopefully that will turn out to be a gloomy forecast, but it's best to prepare for the worst.

Actually, it's not. Being right at the wrong time is arguably the worst kind of "wrong" you can be. It doesn't pay to be the only sane guy in the asylum.

As a wise economist once said, the market has ability to stay irrational longer than your ability to stay solvent.

You really don't know what you're talking about. LNKD was not in S&P 500, "only" 8% off consensus earnings is not a small number, P/E multiples are nowhere what they were in 2000, there's been relatively little IPO activity. It's a different world. It may be a tough market but there's no basis for (most of) the numbers you are throwing around.

I could definitely see a decline in engineer salary, which could be significant in certain markets. But who knows.

It’s probably even a too optimistic forecast.

The readjustment of the market to reality is going to be a big issue, especially when one looks at just how many companies are operating at huge losses. Most people already know that it can’t continue like this.

The good thing is, real estate values will decrease like the pay, so people can rent at cheaper rates in the bay areas.

The bad thing is, those who have bought a house are f~~~~~d.

We’ll probably see a lot of tech giants like Twitter (no income? really?) tumble, and others take a small hit (like Google).

>The good thing is, real estate values will decrease like the pay, so people can rent at cheaper rates in the bay areas. The bad thing is, those who have bought a house are f~~~~~d.

This needs to happen. We need to see housing as more a consumption item than an investment item. The more people see it as an investment, the more the NIMBY policies we see to increase home values to levels which price young and low earners out of the market.

I don't see TWTR dying. They make too much money. What I do see is a major correction in their head count.

I could see them operating with 100-200 employees.

> We’ll probably see a lot of tech giants like Twitter (no income? really?) tumble, and others take a small hit (like Google).

What do you mean by no income? Twitter makes billions in revenue...

The relationship valuation/income is vastly off with twitter, and I’m not sure how long the investors are going to wait.

Except the last time the markets dropped, real estate prices went up.

If there is a problem, the Fed will drop interest rates, maybe even go negative, and that will cause bond rates and conceivably mortgage rates to drop as well.

The Fed wants inflation, and most importantly home price inflation. They will do whatever it takes to stop deflation, they've already said this. Bernanke said he would drop bags of money out of helicopters, obviously an exaggeration, but basically this is how critical the Fed views the fight against deflation.

> If there is a problem, the Fed will drop interest rates, maybe even go negative, and that will cause bond rates and conceivably mortgage rates to drop as well.

The Fed has very little room to drop interest rates and won't do so to prop up the NASDAQ while the economy continues to grow and add jobs.

It's not to prop up the Nasdaq. In the doomsday scenario referred to above, housing prices dropping 30%, salaries went down 25%, etc. This is unacceptable to the Fed and they will do whatever it takes to counter this, including dropping as much money as possible.

And they can go negative interest rates which would be crazy, but it's happened before, and currently going on in Japan.

Outside of a few areas home prices are not absurd. The Fed doesn't care if studios in SF fall to under $2k a month. Same for Valley salaries.

It seems like home prices are pretty high historically in a lot of places, not just a few.

They've bubbled up again not only in SF, but also in most every single area with job growth - SoCal, the whole I95 megalopolis, Denver, SE Florida, Dallas and Austin, Minneapolis, and the Pacific Northwest.

In fact, only parts in the rust belt, South, and Midwest remain affordable, based on historic standards. Unfortunately, the majority of job growth is not in these areas.

I do not see how homes can retain their value when Boomers begin dying and down sizing, as they own the majority of wealth in real estate and the next generation is loaded in debt already and not forming large households at the historic rate.

The Fed is all out of bullets, except for NIRP. And yes, it would (will) be crazy, but only slightly more so than 7 years of ZIRP.

That works until it doesn't, see Japan.

what about japan

I'm assuming this was an offhand remark, but if you are looking for a serious answer: the Japanese Govt. has been trying a similar thing for over a decade to kick the economy into growth and has failed rather spectacularly and persistently in doing this.

[0]: https://en.wikipedia.org/wiki/Lost_Decade_%28Japan%29

"The Fed" is not all one thing, and the majority of the members don't behave as if they want inflation. They want bank balance sheet stability.

The "helicopter" thing is a metaphor, not to be taken internally. The is a related action to be taken but it's not nearly as exciting as helicopters :)

I hope very much that you are correct, but I'm kinda droopy about the prospects, frankly.

There are many macro risks that can be applied, and people here are right to highlight the bigger issues but LinkedIn's troubles are of their own making.

It's a poor business founded on poor assumptions

A strange game.. the only way to win is not to play...

As an engineer working at a "well-funded" startup, how can I prepare for the worst?

Have 6-12 months in an emergency fund and be prepared to move out of SF if you'll burn through all of that fund.

Don't sign a new lease or buy a house or a new car.

Diversify. Put money in things that are uncorrelated with tech money. Keep your CV up to date and work on transferrable skills - e.g. see if you can get your job title changed to one that implies some level of management responsibility.

be good at programming?

Being good at programming is useful, but planning what happens if random changes in the business screw you is still useful.

I've been a software engineer for going on 20 years now. Have a plan, just in case, even if you're good at programming (I am.)

Not necessary, still less sufficient.


The current tech bubble has some fundamental differences to the last one. Specifically, while some of the pain will hit public markets the vast majority of people left holding bags of burning crap this time around are the VC firms and other private investors. The SF Bay region is going to have an implosion but the impact on the broader stock market and US economy will be quite limited.

In short, if you just bought a big chunk of San Francisco real estate on the basis that you pay it off in a few years when you cash out the options in your hyped up tech startup... well good luck with that.

A lot of that private money/VC funds are institutional money chasing alternative asset class returns.

I'm expecting a 30-40% decline in S&P 500, 30% decline in bay area real estate values, 30% of bay area "well-funded" startups going bust, and 25% reduction in market rate pay for software engineers over the next 2 years. Hopefully that will turn out to be a gloomy forecast, but it's best to prepare for the worst.

I don't dispute your gloom, but I challenge your %s.

- "Well Funded Startups" have a >1 correlation to the overall stock market. (Market moves 10%, they move higher than 10%) So if we see a several year 30-40% decline in the S&P, this will cause more than 30% of the "well-funded" startups to go bust. Anyone who can't switch to cash flow positive would have a high likelihood of going under.

- Real Estate values tend to move slower than stock market prices. (People can ride the market out, and just not sell the house) It would take a very sustained market hit to cut real estate by 30%. Also, much of the money fleeing China is coming to the Bay Area. (This isn't to say that it couldn't happen, but you'd need to see 5+ years of a depressed stock market) The reason it tanked so much in 2008 was that the bubble was in the financing mechanism.

- I think if you count equity, the market rate pay for engineers would get hit worse. Options that on-paper are worth 500K can quickly go to zero in a down round. Other variable comp will get hit too. Not sure about base salaries. Even in an enormous down market, most of the world will still be short engineers. In 2001 the folks who got crushed were the Marketing majors posing as Web Engineers.

You didn't mention my big hope though... A 30-50% reduction in Bay Area commute times! :-)

One bright side to a crash - it is better to start a company where good talent is plentiful and cash is scarce, than the other way around.

I think what we're seeing is institutional money moving around. Mutual funds, pension plans, and other such entities need to retain a certain ROI to ensure their primary objectives get completed--i.e. making pension payments every month. We need to look at the downturn on the public markets in the context of the public markets and who is doing the selling. If institutions are selling across the board, that's going to depress everything. A lot of it depends on the valuation model and how the companies generate revenue. The problem with tech companies, especially ones that aren't "essential" is that in an economic contraction the value they provide is negligible. If LinkedIn disappeared tomorrow, the job market would go on much like it always has. The only people who would have a more difficult job are recruiters and even then platforms like ZipRecruiter and Indeed.com make it possible for them to do their jobs. On the other hand, if FB / Google disappears tomorrow, there'd be a gaping hole in the internet. The primary social media platform vanishes, all the cat pictures disappear, and we go back to mailing(!!!) grandma pictures of the kids. Similarly, if Google dies, a lot of people's concepts of search go with it. Google has become a verb. Ergo, I think investors know this and move the money accordingly. In boom times, people are flush with cash and can spend it on "non-essential" goods and services. When contractions start, things that aren't essential begin getting reprioritized and the company revenues start falling - and investors will move their money to places more likely to survive an extended downturn.

With regards to VCs and Unicorn investing, we really only saw institutional money get serious about investing in tech startups after 07/08 when the markets shifted and traditional asset classes didn't return as much as they used to. It's easy to look at startups, see the ones that survive and their high ROI and think it's a great place to invest without seeing all the other ones that morph into lifestyle businesses and don't go anywhere or flame out. Throwing near limitless amounts of institutional money into a very noisy market leads to the rise of cheap capital and the ability for anyone to get funding regardless of the extent of their business plan. I think we will see a retraction of available capital which will lead to an increase in bootstrapping and an increase in vetting by serious VCs who need to improve the hit/miss ratio since capital will be tighter.

I need to drum up more capital to invest. Best time to buy and hold is in a major downswing. You get durable assets for cheap!

what are some durable assets? I was just planning on buying index funds

I usually go funds as well. However, if there are individual stocks that are getting hammered not because they're doing poorly but because the overall market sentiment is pushing people to sell, I'll grab those too. I.E. The Apple Bounce from a couple years ago where people would see off right before a major product announcement from Apple and artificially suppress the price. Buy it on the push down and when everyone buys back in because they think $NEW_PRODUCT_IS_AWESOME, you get the delta gain.

I tend to look for things that are strong on fundamentals and get murdered because of market sentiment and not because of business performance.

Man, you can say that again. I bought some Netflix stock last year, because they seemed to be doing a lot of things right. It's been a roller coaster, and the last couple of weeks have been a steep drop.

The markets have been pricing in a higher risk of recession in the past few months. Financials have been hit very hard which is one signal of this

I am getting giddy at the opportunity to making dumb stupid money again. It will be like 2008 with 30% returns per month. Oh how I miss those days!

I'm curious, what do you mean?

he means he shorts the stock market... although it can be difficult to get the borrow when everything is tanking.

I took it as waiting for the bottom and investing his cash, and seeing a big upswing. The real trick is starting at the bottom.

Yeah, that's what I wasn't sure about. Shorting is fine but it's also difficult to time right. And yeah guessing when it's the actual bottom is also not that self evident (at least for me).

So I'm kind of curious to hear any anecdotes from users here profiting in 2008...

By investing in the entire market continuously, and squeezing every spare penny to invest even more when there's blood on the streets.

You don't have to time anything right or pick any winners with this strategy, because you'll invest all the way down and all the way back up. You might not have made money from Jan 1 2008 through Dec 31 2008, but that money would have made a killing subsequently.

Of course if you were out of work in 2008 that is easier said than done.

OTOH If you try to make a killing by shorting, there's an infinite number of ways to end up broke by getting the timing wrong. If you bet everything on picking bottom, you can miss the boat or miss the bottom. Not nearly as risky as shorting, but certainly not as reliable as staying the course.

I never invested in direct stocks until 2008. Markets were going up just before the crash and a investing friend suggested why not buy stocks. But my demat account got delayed and when i received it markets were going down hard. I ended up investing very small amount. But i got nearly 4 times the return(I did wait few years)

Timing is very difficult, I've been told over and over again. I personally think it's easier to time the top rather than the bottom. The reason: the fall is always preceded by lots and lots of people forecasting doom and gloom. I got out of Sun Microsystems stock (and some others) at the end of 1999 for that reason. Sold at $150+. Months later it was at $5. Now, I'm no prognosticator. I was looking to buy a house in the future and knew I needed to convert to cash at some point. So, I was sort of hyper aware of what was going on and at the end of 1999 I just couldn't take it anymore.

I'd love to hear how people timed the upswing from 2008.

Got in close to the bottom with the QQQ in 2009. Chickened out and thought we'd reached a top in 2013 and cashed out. Was sitting in cash for 2 years.

Now I believe we're going down. I'm shorting through options to get some bigger action. 3x from SQQQ not good enough- so buying 6-12 month puts on Cloud companies and QQQ. Didn't get in it at the top - started at about 10% below the top.

Is it bad when I'm thinking of selling some bitcoin in order to take advantage of a volatile stock?


Why? Bitcoin is at least as volatile as the most volatile stocks.

Should I have added some sort of sarcasm tag to my comment? It was a joke :).

It was a joke mostly because Bitcoin is legitimately innovative and Linkedin is yet-another-social-media-platform-except-for-Serious-Business. No one gripes about investing in stocks even though they (they being one of the biggest companies) can obviously tank 50% in one year. However, every post even remotely related to cryptocurrency will have, guaranteed, a comment or 10 about how "No one will ever invest in this because it is too volatile." It's just an observation of mine.

Do both

> 30% returns per month

Care to share how you did that?

You will always hear stories like this. And they are true, but what you dont hear about are all the people who were not lucky enough to time the market and how much they lost.

Well said.


thats fuked up can some one do something ? should it be stopped or should it be fueled ?

Honestly I am feeling a bit of joy watching LinkedIn take a hit. Not because I think their product is terrible but because of the endless spam emails I keep receiving from them, despite how many times I click unsubscribe.

Or how about the phony "people you may know". They suggested I may know my 4 year old Niece because somebody uploaded the email address created for her into their system. She definitely doesn't have a LinkedIn account, but they portray a profile-photoless "shadow profile" as-if she does.

I see newer social networks that are taking the LinkedIn playbook and making it even worse.

As a recovering academic, I find myself getting incredibly scummy e-mails from ResearchGate which actually purport to be from people I have done research with, putting their name as the sender, without that person even taking any action to send the e-mails. It's a spamming/phishing tactic that for some reason hasn't gotten them banned from the major e-mail services.

How do I know that the person named in the e-mail is not choosing to send these e-mails? Someone I once did research with passed away last year, sadly. He started supposedly sending me ResearchGate invitations six months after he died.

ResearchGate seemed nice for a week. It showed every time a paper quoted one of mine, so it was a small confidence boost to know my older stuff is being read.

Then they sent an e-mail with pictures of me, and said "are any of these people you?" Apparently RG thinks I need a photo so bad, it tried to search for one on the internet, and asked for confirmation.

It's not a huge deal in the grand scheme of things, but it is creepy.

LinkedIn's "shadow profiles" are absolutely horrific.

I deleted my LinkedIn account over five years ago, and hunted down every "no, really delete" option I could find on the site and in their emails. It didn't work. LinkedIn will still happily let users and recruiters find my old ghost profile and try to connect with it. I have quite a number of former co-workers who think they have a contact channel with me in LinkedIn even though it would never reach me. LinkedIn isn't just a nuisance, it's actively poisonous and dangerous.

I'll be doing all my future job hunting on StackOverflow Careers, thanks.

The fact that they intermingle "add this person to my network" with "invite this person to LinkedIn" on that page drives me insane.

I accidentally sent my friends a bunch of annoying messages to their school email addresses as I sat there clicking and asking myself, "How are we not connected, we've known each other for years?". Really we are but LinkedIn creates these shadow profiles for each of their email addresses.

Especially since they seem to never go away and you can invite repeatedly, like once a quarter when you scroll through asking yourself, "How are we not connected, we've known each other for years?"

When I signed up, I made the mistake of giving LinkedIn access to my Gmail address book. Somehow this meant they actually had access to a list of every person I had ever e-mailed, even if only once.

So ever since then, LinkedIn has been trying to trick me into sending invites to people I've never met who I've briefly inquired about sharing an apartment with, various administrators at the schools I attended, and women who I went on some dates with back in 2009. Having an interface that's designed to funnel me into an inauthentic and embarrassing social gesture means I have to keep a state of anxious vigilance whenever I use it.

Hopefully you've learned something important about not giving your login credentials for any service, to another service. ;)

[And yeah, I'm aware of people doing this for other services too, eg financial account management. Expecting they'll become further anecdotes later one... :(]

I signed up with an email alias specifically created for LinkedIn, and it still managed to associate my Facebook friends as possible connections. What the frick.

Keep an eye on mobile apps that steal your address book.

I fell for this a couple of times. They grabbed my friends email and created a fake profile for her.

When I clicked connect, I thought I would invite her to my network, but it ended up with an invite to LinkedIn to her email.

That is an invite to your network.

The difference is that you were not aware of how interested in LinkedIn the contact was, and you were not aware you were ALSO inviting her to join LinkedIn

The difference is that sending a request to someone within the social network to form a connection in that social network is different than sending an invite to someone's separate social network (email), which encourages them to join a whole new social network are two separate actions, and to represent one while doing the other is a bait-and-switch. This is a problem because they have separate social and cultural expectations, so you may feel comfortable doing one and not the other.

That happens to me too. But you know who is a thousand times worse than Linkedin when it comes to these things? Facebook.

At this point, I honest /just/ /don't/ /know/ how to stop getting emails from them. In my entire life I've only had a facebook account for a few hours (created one out of necessity a few years ago -- closed it after just a few hours of use at that time). And I still get emails. I've clicked unsubscribed probably fifty times by now, but I still keep getting emails. I just don't know how to stop it. Incidentally this is one of the reasons I cheer for blackhats taking shots at Facebook, I'd love to see the behemoth shot down. They don't respect me or my time, I don't respect them.

Anything from a Facebook domain hitting my mail server is bounces them back to Facebook's abuse and postmaster addresses. I know categorically that it is abuse, because I am the sole user of my mail server and do not now and have never had a Facebook account, and have repeatedly asked them in various ways to stop spamming me.

Useless, of course. But just because they ignore internet norms of decent behavior doesn't mean I will.

For what it's worth I have a Facebook account and have all the email notification settings off and can't remember seeing an email from Facebook in over a year.

I noticed that when I stopped checking my Facebook account, Facebook started sending me FOMO messages ("Hey! You have messages! People are saying things! Please come look!")

I noticed them doing that as well, and did what I usually do with companies that get too chatty: First, turn off the notifications, unsubscribe, etc. Then, if they ignore my preferences or keep adding new categories of notification that are enabled by default, I add a client-side rule to throw away everything they send. This way they get to keep thinking that I receive their spam, and I don't have to see it, which is a win-win (though a sad loss for email in general as an obsessively reliable communication system).

This worked out fine for Facebook: I visit their webpage when I want to know what's going on over there, and they never send me email.

Facebook's email messages used to be pretty useful; they used to contain the actual content of posts. That means if you also turn off remote images, you can actually read Facebook posts without Facebook having realized that you've read it. I've always done this for privacy, until they stopped putting the actual post in their emails.

Yes, but it also stops sending you normal e-mail notifications, which is IMHO only annoying because I prefer to use my e-mail client to read messages, invites, etc.

Hell, I haven't received an email from Facebook since about 2009, I think?

That seems like it would make it harder for Facebook's abuse team to deal with actual abuse reports.

I am making an actual abuse report.

You'd probably have more luck marking them as spam in your client. If you're using a webmail service of any note, you're helping to train the filters used by others, and as a bonus, your own profile means you're less likely to get them in the inbox in the future.

Also, if you're in the USA, you should report those messages to the FTC.

If you try to unsubscribe from an email list and your request is not honored, file a complaint with the FTC. via https://www.consumer.ftc.gov/articles/0038-spam

You appear to have missed the part about this being my own mail server.

And I don't need any more luck; my initial problem is solved (I no longer see spam from Facebook, and I am taking steps to ensure they are aware of their problem, in case they weren't).

The problem was worth the time I spent on the config; it is manifestly a waste for me to involve the FTC, since I don't have to worry about Facebook's spam anymore and am willing to eat the tiny amount of bandwidth involved.

I am pretty sure a Facebook dev has already set up a rule on the abuse inbox to delete any emails coming from your domain.

Thereby resulting in facebook being a worse software for the average user due to their abuse of this one user. Win win for someone who doesn't like facebook.

It would probably be pretty trivial to set up a filter or two to automatically delete those emails. Or maybe just leave your account open (though it sounds like you would refuse to do this on principle). I never receive emails from Facebook.

I think it's a bit extreme to cheer for hackers to take down a big company just because they send you a few emails. How much time has it really cost you, in total, to delete their emails? 5 minutes? And for that the "behemoth" should be "shot down?"

> I think it's a bit extreme to cheer for hackers to take down a big company just because they send you a few emails.

It really just isn't the emails, it's rather that they're one of the biggest pioneers of dark patterns: https://www.eff.org/deeplinks/2010/04/facebooks-evil-interfa...

I'm extremely conflicted about all of this. I want the open web to thrive, but I'm beginning to realize that in a free and open internet parasites who partake in these such practices are rewarded all too well.

I've noticed a lot of user hostile behavior like this from all of the large public social companies (LinkedIn, Twitter, Facebook, etc...)

It's really a shame but I think that when your business is built off of trying to monetize user engagement with ads and you're under the scrutiny of the public market it's only a matter of time before this starts to crop up. I imagine there are/were many people at all of these companies against this sort of thing but with enough employees and enough outside pressure to deliver growth I suspect it's nearly impossible to avoid (without an extremely explicit mandate from the top)


> I've noticed a lot of user hostile behavior like this from all of the large public social companies (LinkedIn, Twitter, Facebook, etc...)

It appears so. This is amusing to me -- because when I was involved in a startup setting 2 years ago, I remember distinctly having conversations with my coworkers about the frequency of emails we were sending. We argued against sending too many emails because it would waste the user's time, it wasn't right, etc. And in the end we followed through - we were very mindful of not bothering our users with anything other than what is very necessary and important. But Facebook et al. have more of a 'fuck the user' philosophy and they seem to be faring well for it. This is very much a trend, little players are playing strange tippy toe games while the big players selfishly and shamelessly mess it all for everyone.

I don't get any emails from Facebook. Have you not set up the account the way you like it? Do you still have stock wallpaper, ringtones etc on your devices? I find out about events in Facebook at the right time; when I'm using Facebook.

Did you miss the point where the poster said "had a FB account for a couple of hours"? I assume this means they deleted their account.

Exactly. If it's 5 minutes per 1 billion customers, 5 billion minutes wasted. That's 9512 years. 135 lives.

> 1 billion customers...135 lives

That's close to the proportional death rate from air travel accidents (3.6 billion passengers/year, around 500 deaths).

Facebook takes---in Fermi numbers---about as many lives as plane crashes.

This calculus doesn't make much sense. Multiply any enormous number of people by a few minutes and you'll get hundreds of lives equivalent time.

That's pretty much the kind of fallacy behind "if all people on Earth give 10$ for <cause> we can solve <big problem mankind hadn't solve in a century>."

It's not a fallacy. We really could solve those big problems. It's better than thinking about the huge problem and your tiny ego. It puts things in perspective. Facebook really wastes the equivalent of 135 lives. That's the reverse operation. It takes the relatively trivial 5 minutes from your life and puts it in global perspective. When you're that big and you annoy people in a systematic way you deserve this characterization.

I don't see the fallacy in it. It's just pointing out that a little time wasting at scale actually has a big impact.

The point is that everything at scale as an impact that looks big when aggregated... if you don't actually look at the scale.

135 out of 1B isn't big at all, it just looks big because of the biases we have when interpreting big numbers. Not mentioning the fact that the aggregation isn't very relevant (it's not like 135 people will have their entire life wasted while the others are not annoyed at all).

If you're one of the 135 people's lives they've wasted... you might take it a bit more personally. :D

But that's his point: Facebook's emails are not wasting anybody's entire life. The 135 number is an aggregate.

Sure, and he's trying to downplay it.

They're wasting 135 people's entire lives worth of time. Every single day. :(

I can think of many things waste more of my time than having to delete promotional emails here and there. I get that it's annoying, but let's have some perspective...

Where are you getting that 1b number from? Most of Facebook's active users are presumably not receiving these emails or not being particularly enraged by them, since they like using Facebook.

Facebook is not wasting emails on 1 billion people. Honestly I'm an active user and dont get a single email. It's a few clicks to turn off all email notifications. If you're not a user then you should get nothing unless someone else is trying to invite you, which is the fault of that person, not the service.

Why the hyperbole?

How do they keep getting around your spam filters? Blocking the domain has worked well for me.

If you read the button it's not an CTA to connect with her but a CTA to invite her to LinkedIn. She would then get an email basically saying "Uncle Uptown would like you to join LinkedIn!"

Agree it's scummy and they are mixed in with actual folks on LinkedIn but they are not creating shadow profiles.

This is on mobile. It shows her name, her email address, and a circular button with a human silhouette and a plus symbol on it. All in a section titled "People you may know". The implication is absolutely that she is a user of the site.

IIRC there was one very subtle difference on mobile to differentiate users vs. non-users, but it was something easily overlooked. On desktop it's slightly more obvious, but still misleading IMO.

A friend of mine died almost a decade ago before linkedin became a thing and I see those occasionally. Someone must have done the same for him.

Linkedin also wanted to connect me with my dead grandfather a few weeks after he died. I'm pretty sure he never had an account there. Felt a bit weird to have that email pop up suddenly.

I scraped my 'people you may know' page over 30 days to make sure LinkedIn removed 2000 of my 'stolen contacts' from it. Once they did, 99% of them never appeared again. http://009co.com/?p=9

> because somebody uploaded the email address

You mean they scrapped it from your email account because you clicked on one of their links in your email.

I have literally several hundred request from random people to become a contact. Linkedin (years ago) lost what it had which originally attracted me to the service. That was some kind of real and exclusive way to have contacts that you either knew or you felt would be beneficial in some way.

The biggest joke is the entire concept they have of using a connection to connect you to someone else who they know. Which of course depends on the definition of "know" which with linkedin means literally nothing.

They used to give guidance about what 'know' meant and I still adhere to the 'I will only link with you if I have properly worked with you' line. The fact that few other people do have devalued its use.

At some point, LinkedIn changed its mind and decided that you should connect to anyone you're barely acquainted with and/or have exchanged an email with. They're actively encouraging forming these "devalued" links. They even use shady practices like borderline forgery of invitations.

> LinkedIn changed its mind and decided that you should connect to anyone you're barely acquainted with

This was all in the interest of keeping the numbers going up which is obvious. And that's fine if that is your business model. But the business model here seems to be showing growth for the sake of wall street as opposed to growing the business in a meaningful manner.

Linkedin does serve a purpose it allows people to humble brag which is helpful even if they aren't looking for a job and don't need the connections because, say they own a business (and I don't mean a startup but it could be that as well). It's become an acceptable way to show where you went to school, what you have done in the past, and where you work or what you are the owner of. There really aren't that many other ways you can do that w/o appearing to be actually bragging and trying to impress someone (meaning it's not the same as having a personal website or even pointing people to a link "about me" page on your business website or a wikipedia page.

What's amazing is that they apparently don't want to filter the bogus requests as opposed to merely the requests that are from legitimate people (not bots) and simply trying to build what appears to be a network.

> But the business model here seems to be showing growth for the sake of wall street as opposed to growing the business in a meaningful manner.

Welcome to the world. Version 2.0. Codename: pointless.

This about sums it up

To be fair, there is evidence that weaker ties can be highly valuable in job search: http://changingminds.org/explanations/theories/weak_ties.htm

For this reason, I'm somewhat lenient in adding LinkedIn connections, as long as I at least have some idea who the people are. Unfortunately, many connection requests are from people I've never met before.

Yes. And I think was a terrible decision.

I remember the point in time when joining Facebook required a .edu email address.

My how things have changed.

But.. how do they know who you've emailed? I don't get how LinkedIn knows this from Gmail

In gmail, everyone you've ever emailed is in automatically added your address book. LinkedIn provides an easy (maybe too easy) way to upload your address book to LinkedIn.

Your "too easy" is my "deceptive dark pattern".

At Linkedin you are the product. Don't ever think otherwise. They are mercenaries about building up the social graph because it is how they build up the data they need to sell to the job spammers. The biggest "secret" of LI is that you get a score based on the "quality" of the people you are linked to. Know lots of ivy leaguers and fancy MBAs? You get a +10 bonus. Rockstar talent with no high rated buddies to link to? -10 for you.

They have also made it over time exceptionally hard to deny a connection request. It used to be in the e-mail notification, then it wasn't and on the profile page, now it seems to only be in the event/notification drop down from your home page.

Eh? Just ignore them. No need to actively deny anything. My attitude; it's just LinkedIn. Accept everyone, you never know when someone will be useful in finding you a job, which is all I use LinkedIn for. Turn off all email notifications and just add to spam any you do get. I get emails from recruiters all the time and they're in my spam folder too. I'll take them out/search spam when I next need a new job.

So much this. I revel in every bad result for LinkedIn, because they've built a wasteland of growth hacking dark patterns and practically demand I participate in it.

I am completely happy with this. LinkedIn is showing off as a site to facilitate businesses while indeed is a service for recruiters. Some examples, posting original stuff to groups with thousands of members and not receiving a single comment or click to some link. Very basic bugs in their mobile offering that makes you think nobody cares about developing a good one or it was developed by a freelancer on vacation. The worst is not innovating (yes, like Tinder!) to match businesses: if after years all they have to offer is sending an In-Mail or contact someone through a middleman we are lost.

And... I can't forget the fake invitations I receive every week with fake photos that I detect searching on Google images by an image.

For me, this is the most surprising missed opportunity:

"posting original stuff to groups with thousands of members and not receiving a single comment or click to some link"

LinkedIn had the chance to build some amazing forums. LinkedIn should be the place that you think about when you want to have a conversation about business. They clearly have the traffic. They could have done something amazing with their groups and discussions. They have wasted all of their chances.

Every time they touch Groups, they make them that much worse.

They made a big (incomplete) UI overhaul which managed to make them less easy to use, and half the time fails to load posts (every 1-2 posts as you scroll down is loaded via script, fails a surprising amount of the time, or simply refuses to fire!).

I'm at a total loss as to why they hate Groups so much. Not enough page loads / ad impressions? We run a few groups - ranging from 10L to 90K in size, some of which are quite active. But discussions tend to engage ~.001% of users.

From my perspective, discussion groups at linkedIn fails to deliver because 99% of posts in the groups are shameless self-promotion. Posters and group creators are not seeking knowledge or discussion, but wish to promote their own new product, company. The same goes for nearly all posts on linkedin: the site is treated as an advertising channel by all involved.

At our company we kept getting emails from them on email addresses that are only used to send data to our service. This was starting to become a problem, so we called them up and asked them to block that domain. They said no. Eventually they said they'd blacklist the email addresses individually. Our response was "OK so we're going to send about 20,000 email addresses for you to blacklist, and probably about 1,000 more every 2 months or so". They blacklisted our domain.

I also couldn't be happier watching linkedin fall. I recently deleted my account because of all the spam and creepy things linkedin does and they still send me emails!

Am I the only one not getting LinkedIn email?

I have an account, turned off all email-based notifications, and stop by every half-year or so to see what's in my inbox. It's usually full of messages, but I never get any emails from them.

Am I just lucky? What's up?

Same here. I get an email when someone asks to connect but nothing else, and I get that because I want it. They have pretty explicit settings. Just checked and "Introductions and InMail" are only thing enabled. You can also adjust frequency for individual types of messages so you get batch updates.

LinkedIn is generally crappy at what is supposed to be its primary purposes, and they do shady UX stuff. But they have very granular controls for email and push notifications.

I get zero spam to the email I have a LinkedIn account on. I get a shit ton to my gmail, no matter how often I click unsubscribe, send to spam and whatever else.

So both your experience and the grandparent's are possible - they respect you, once you've signed up.

Interesting. That could explain the disparity of experiences being discussed here. I have all my emails in LinkedIn to be discoverable by colleagues, so that means LinkedIn also knows they are specifically me and I'm signed up.

You're not lucky. People are just lazy and like to complain rather than spend the 2 minutes to update their email settings.

I ended up deleting my LinkedIn account with hundreds of connections and recreating it with an email I use for spam. I haven't worried about linkedin emails since. Another recommendation I have: when you go on the job hunt, create an email just for that job hunt. Once you get the job, throw that email away. Next time you get a job, make a new email address. Your recruiter spam will stop.

My parents are always very sad and disappointed when I turn down a recruiter phone call. "This is a headhunter for you, son!" Jobs have somehow become a commodity, so massively available that spammy behaviours appeared.

One of my biggest technological accomplishments and one of my biggest improvements in quality of life is when I finally managed (after 2 years of regular attempts) to delete my LinkedIn account and halt all emails.

LinkedIn is the only mainstream service I've completely shitcanned in a Gmail filter.

Agreed. In the end I deleted my account and haven't looked back. It gave me no value and just pissed me off.

Email from my 88 year old Father:

"I am on linkined now. What do I do?"

I think this is actually dangerous for any older and/or not web saavy person. It's a point of entry for identity theft the reason I don't even want my mother to do online banking actually. I can't police her desktop to my liking and I am afraid that somehow someway her having online access could result in countless problems.

I always dread computer related questions from family, but this one is easy - just send the link to close the account.

Some parts of their product ARE terrible, like their search. It almost never works. I sometimes have to go to Google to find someone on LinkedIn.

I find doing anything on linkedin via mobile to be the worst experience.

I am pretty surprised that in SV, they have one of the worst performing mobile experiences. It is always super slow, lags, unclicks, takes me back to an entirely previous page when hitting back, as opposed to the screen I was looking at before I read that profile... etc...

My Mom asked me if I was recently on LinkedIn. Apparently they emailed her after I made some new connections.

I turned off all email notifications and despise the fact that they email my contacts about my activity.

Just curious - why did you give them your contacts? I've been on it for years and have never uploaded a single contact. I've just manually connected with people I know. Whenever a service asks for my contacts, I know it's because they want to spam them.

Many people are literally tricked into uploading their contacts. Example with screenshots.[1] The UI/UX practice is called "dark patterns".

On a monthly basis, I get LinkedIn "invites" from friends who simply didn't understand LinkedIn's hostile and deceptive user interface. They think they're just importing their contacts to conveniently++ find existing profiles but in reality, they're unwittingly giving permission to LinkenIn to spam their address book to recruit new members.

You may be good at defensive web surfing to keep your contacts private but most others are not.

Btw, there was a previous discussion from Feb 2014 about it: https://news.ycombinator.com/item?id=7276032


++ (understandably because they don't want to manually retype each contact name into Linkedin. Ain't nobody got time for that.)

Nice link! I'm glad I haven't signed up yet. But then again, I don't use gmail either so importing the address book would be considerably more difficult.

I wonder if you can prevent them from stealing the address book if you install their Android app?

If people have my contacts details that's not really a problem for me. A friend once said he wasn't going to get a gmail account because he didn't want Google knowing all his contacts but Google already had them because they all had gmail accounts. The value of keeping other people's email addresses secret is overrated. Spam is a fraction of the problem it was 10 years ago and there's always filters.

The "spam" we're talking about here is from LinkedIn itself. That is, you give them your contacts, and it will spam them to sign up too.

If gmail started emailing your friends because you used gmail, that would be a good reason to not use gmail.

I'm not saying gmail (google) spam people; i'm saying that not using gmail because you don't want google to know your contacts is silly. it doesn't matter if google knows that you, for instance, are in my contact list. they're not going to spam you. i'm not going to not use linkedin because i'm concerned you're going to get an email from them; that's your problem, and not really a problem at that. You just mark as spam and move on. It's hard to imagine a single person has even decided to not share their contact list with an app or service because they're concerned one of their contacts might get contacted by them.

> It's hard to imagine a single person has even decided to not share their contact list with an app or service because they're concerned one of their contacts might get contacted by them.

You seem to be a little out of touch here. There are several examples of people withholding their contacts list from services like LinkedIn right here in this thread. It's not hard to imagine at all -- just read the posts.

In fact, right above your post that you responded to, the hn user vitd wrote, "why did you give them your contacts? I've been on it for years and have never uploaded a single contact."

Lastly, you're trivializing the situation by suggesting that recipients just mark it as spam and move on. The issue is that LinkedIn deliberately crafted the emails with header "FROM: YOU" and your photo in the message body to make it look like you explicitly sent the email inviting them to join. It's clever social engineering so that the recipients harvested from your contacts list do not treat it as spam. Some recipients know the disguised nature of LinkedIn spam and know you didn't actually send it but many do not (especially older executives). In those cases, they think that you are one of those clueless flakes that signs people up for multi-level-marketing vitamins and vacation timeshares. People genuinely got embarrassed by LinkedIn's spam practices.

Enough people were angry about spam being sent behind their back that they sued LinkedIn: http://www.businessinsider.com/linkedin-settles-class-action...

They have some tricks on how things are placed on your personal page so you accidentally import your contacts. I've almost done so a few times.

Maybe I'm misunderstanding something. Don't you have to give them your gmail password or some other Google auth? That doesn't seem easy to do accidentally.

Yes they need your password but they mix things in the UI making things close to each other, things pop in and out. Its basically a big trap trying to fish as much as they can from you. I don't even install their phone app knowing they will get access to my contacts.

I tried the android app, bam - all my contacts are now in "do you know", I thought it would be "click to upload contacts". mistake!

The app came pre-installed on my sony xperia phone. Wasn't even given any reasonable warning about it.

The emails are bad, but I also think their product is terrible.

This is true. The newsfeed has turned into meme and inspirational quote sharing. I am unfollowing individual people now (just like FB, yay!)

It really is a poor product for what it looked like it might become.

I created my account so they would stop sending me so many invite emails. At least with an account I have some control over what they send me :(

I've noticed quite a lot of LinkedIn e-mail is actually spam and phishing attempts. We are blocking about 5 mails per day per employee that aren't real.

Their product IS terrible. Remember they actually charge users for this unlike other networks that monetize purely from advertising. LinkedIn can and should be far better but it's incredibly how bad it really is.

This worked of me:


Not sure if this is still valid.

If is. There are very granular controls to control which emails you get and then, separately, how often, including "No emails". Looks like I did all that a year or so ago, since I only get a message now and then for new connect request. Now those are random strangers maybe 30% of the time, but I do want the notifications.

this... I've refused to ever sign up for LinkedIn despite many peers asking me why not and acting like I should be on there.. I've thought their spam tactics were dispicable and harassing. I've unsubscribed but still get emails trying to get me to sign up. No one "has" to use LinkedIn or any other software for that matter...

I'm afraid this will result in even more spammy emails.

You should not.

If anything, this will cause them to send even more emails!

also the "your Lynda trial is about to end! sign up now!" emails they keep sending

Die, Linkedin, die!

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