Financial Misstatements
blog.samaltman.com
Financial Misstatements
1–10 of 194 posts
Re: Financial Misstatements
#2I can recommend Brian Bushee's accounting course on Coursera:
https://www.coursera.org/course/whartonaccounting
http://www.investopedia.com/ is helpful for occasional reference
Re: Financial Misstatements
#3There are so many startup accelerators that take a team of engineers / product people and do their best to make businesspeople out of them. I'm one of those CEOs, for sure, and learning about the financial world, accounting, and trying to make sure to not mis-speak was quite difficult.
The primary training I received during the accelerator helped a lot, but it was more along the lines of how to more accurately model in excel. It was up to the CEO (?CFO? if you're lucky) to get all this exactly right, and it's not easy.
I think that when an accelerator knows that its teams are not well-versed in the financial part of running a startup, there should be more emphasis on helping them learn. It's daunting to try to do that alone.
Re: Financial Misstatements
#4https://en.wikipedia.org/wiki/Gross_merchandise_volume
https://en.wikipedia.org/wiki/Letter_of_intent
for people like me who weren't aware of the term.
This is yet another way in which Y Combinator can differentiate themselves as a place for startups. A once a week course on this type of material would probably be very useful for most founders, I'm working under the assumption that most Y Combinator founders are first time founders.
As a side note, it feels like this type of communication straddles the boundary between something that could have been a tweet vs a blog post.
Re: Financial Misstatements
#5>This is a felony and it’s called fraud, even though it’s usually unintentional.
This is incorrect. Fraud requires intent. Otherwise it's just negligence.
Should probably throw a legal dictionary in with the financial one.
Re: Financial Misstatements
#6Anybody else have solid resources to learn this stuff?
Re: Financial Misstatements
#7> Although investors should be doing more diligence than is currently in fashion, this issue is on the founders to fix.
What incentive do founders have to "fix" this when investors aren't doing adequate due diligence?
Re: Financial Misstatements
#8Here's the biggest offenders I see when talking to founders:
revenue vs GMV
(if you give GMV, give me your cut/margin)
contract vs LOI
burn vs expenses
users vs customers
(customers pay)
signups vs users vs active users
(you should give active with time interval and measurement of active.
eg. logged in last 30 days)
profitable vs cash flow positive
diff between retention rate vs churn rate
(both should be given with time interval.
eg. 30 day retention rate is...
monthly churn rate is...)
voluntary churn vs involuntary churn
gross vs net
top line vs bottom lineRe: Financial Misstatements
#9>This is a felony and it’s called fraud, even though it’s usually unintentional. This is incorrect. Fraud requires intent. Otherwise it's just negligence. Should probably throw a legal dictionary in with the financial one.
But you can still get in legal hot water, and getting (mostly) back out involves having to prove that you were ignorant of the rules rather than deliberately trying to deceive. It's still going to be an incredible mess, and it's still going to wreck your reputation.
Re: Financial Misstatements
#10> Although investors should be doing more diligence than is currently in fashion, this issue is on the founders to fix. What incentive do founders have to "fix" this when investors aren't doing adequate due diligence?
[deleted]