41–50 of 194 posts
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"What are the reasons startups can't hire good finance people?" I think the reason is that you are in stage where the CEO personally empties the rubbish bins in the office, that's why.
Offloading finance should arguably come before offloading janitorial. You can be thinking about other things while emptying rubbish bins.
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IANAL, and Sam mentioned a felony charge. Are there any legal protections for investors (or.... whoever this is protecting) for e.g. misrepresenting "signups vs users vs active users"? Surely that falls under subjective fraud rather than a straight up objective lie, especially for sites e.g. reddit where the line between "active user" and "lurker" is extremely murky. EDIT: Clearly I have no understanding of fraud.
Usually and investor makes a Due Diligence in the company. Depending on the stage of the company, investor profile, this due diligence can be a formal one, where you hire external auditors to make the process or in a more early-stage phase you can do VC firm (or angel) makes the due diligence themselves. Either way, at least in Brazilian Law (I work with VC in Brazil, but I imagine there is something similiar in USA)…
It works the other way around with all the ways people get screwed over by the other side.
Earlier quoted context omitted.
"What are the reasons startups can't hire good finance people?" I think the reason is that you are in stage where the CEO personally empties the rubbish bins in the office, that's why.
Offloading finance should arguably come before offloading janitorial. You can be thinking about other things while emptying rubbish bins.
the "CEO" personally does finances for the same reason the "CTO" personally codes. If either of them can't do something they learn it.
Sam is saying: learn these words.
Earlier quoted context omitted.
IANAL, and Sam mentioned a felony charge. Are there any legal protections for investors (or.... whoever this is protecting) for e.g. misrepresenting "signups vs users vs active users"? Surely that falls under subjective fraud rather than a straight up objective lie, especially for sites e.g. reddit where the line between "active user" and "lurker" is extremely murky. EDIT: Clearly I have no understanding of fraud.
RE: "Subjective fraud". Regardless of whether the fraud is intentional or accidental, misstating something to investors (i.e. "our revenue was $1 million last month" when you're talking about GMV) will still subject you to a lawsuit and/or arrest.
I mean, the whole model of YC is to take kids straight out of college (if not before) and turn them into startup CEOs. If those CEOs come out of that process not understanding the legal obligations of their new position, whose fault is that, exactly? It's not like they're bringing decades of business experience to the gig. The only thing they know about what being a CEO requires is what YC teaches them.
If their only preparation for the post is YC, and they're ending up ignorant of stuff that could get them slapped with a felony charge, I would think that would say more about YC than it does about them.
>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.
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I don't think it's even negligence. When you are a startup, you are not required to file official SEC disclosures or anything of the sort. So you can use whatever you want as your terminology. Having said that, it's a really bad idea to use misleading terminology, because any sophisticated investor will know it and will consider you full of shit anyway
while its true that you may not have to file disclosures with the SEC, do not kid yourself, the second you discuss a potential investment in your company with someone you have to conform to both federal (sec) and state securities laws...
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RE: "Subjective fraud". Regardless of whether the fraud is intentional or accidental, misstating something to investors (i.e. "our revenue was $1 million last month" when you're talking about GMV) will still subject you to a lawsuit and/or arrest.
Your point stands, and this is a nit, but... Fraud, by legal definition, must be intentional. It is a deliberate attempt to mislead.
But another to not know the definitions of words you are using when you should know that? Can you say "I have a million dollars in the bank" when you honestly believe "a million" = 1000?
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What are the reasons startups can't hire good finance people? Or at least contract with an expert? Is it a difficulty in judging their abilities when it's not your area? Is it something where only at a certain size would it be worth the reduced financial risk to have someone on it? Learning from scratch has to be the slowest, highest risk way of doing it -- which is the exact opposite of what a startup should be opti…
> What are the reasons startups can't hire good finance people? Or at least contract with an expert? Its the exact same problem with hiring quality engineers. The good ones have many options. So a startup's offer of $150,000/year plus 5% of a company that might not be around in 3 years just isn't that appealing. I'm guessing the good ones have job options starting around $400,000/year, whether in Finance or public co…
If your startup is past the garage stage, you should probably have a corporate accountant on retainer so you have an "expert" with whom to discuss these terms. They're not super-expensive.