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Financial Misstatements

blog.samaltman.com

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101–110 of 194 posts

Re: Financial Misstatements

#101

Post by cbhl »

someear wrote: post #90
tkiley wrote: post #85

I agree with Sam's message, but I sympathize with founders who make mistakes here. Founders are told to hustle, to aggressively push themselves and their visions in order to build momentum for their businesses. Founders are encouraged to bend - if not break - the rules in order to get things done. First-time founders are thrown into the world of finance with a good deal of ignorance about the meanings and conventions…

Sell and outsell your vision, dreams, and potential, not the facts.

This requires founders to be mindful and realistic with what the facts are.

See also: http://www.npr.org/sections/money/2015/07/03/419543470/episo...

Re: Financial Misstatements

#102

Post by tptacek »

7Figures2Commas wrote: post #62
tptacek wrote: post #11

Earlier quoted context omitted.

The fact that they can be prosecuted for it.

How many Silicon Valley startup founders have faced felony charges for making financial misrepresentations in recent years?

Current bubble? I believe the answer is zero. Last bubble? I believe the answer is nonzero.

Re: Financial Misstatements

#104

Post by cwp »

w1ntermute wrote: post #39

It's pretty amusing to see this post coming from a guy who's publicly stated: > I can't read a balance sheet or income statement or anything like that. I have to have someone explain it to me, every Board meeting. http://www.econtalk.org/archives/2014/07/sam_altman_on_s.htm...

As an engineer it's pretty easy to get used to dismissing opinions about technology from people that don't understand it. At times that's reasonable, but it's also easy to take it way too far.

Sam seems to have a healthy respect for his own ignorance, and encourages others do to do the same, particularly in areas where that ignorance can have significant practical consequences. That's not "amusing", it's commendable.

Re: Financial Misstatements

#105

Post by cbhl »

codemac wrote: post #21
cryptoz wrote: post #3

There 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…

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…

I cannot disagree more strongly with this. It is essential for a small business owner and/or startup founder to understand the fundamentals of business finance -- at a minimum the basic accounting equation (A = L + OE). Outsourcing that knowledge to someone in finance is a recipe for the "accountant" to steal all the money in the corporate bank account. Only once they understand how to do it, should they then proceed to outsource the work to someone else to minimize the distraction to the core business.

Re: Financial Misstatements

#107

Post by anu_gupta »

mildbow wrote: post #94
zaidf wrote: post #83

Earlier quoted context omitted.

By your logic, Harvard should be to blame for the millionaires and billionaires from Harvard that are in prison for insider trading.

It's not about blame. Everyone makes mistakes. It's about seeing a recurrent problem, then helping people by fixing it

> It's about seeing a recurrent problem, then helping people by fixing it

And perhaps this is the first step in that process.

Re: Financial Misstatements

#109

Post by 001sky »

tptacek wrote: post #102
7Figures2Commas wrote: post #62

Earlier quoted context omitted.

How many Silicon Valley startup founders have faced felony charges for making financial misrepresentations in recent years?

Current bubble? I believe the answer is zero. Last bubble? I believe the answer is nonzero.

The nuance is that the SEC prosecutes under the civil code by default.

https://www.sec.gov/News/Article/Detail/Article/135612578701...

Re: Financial Misstatements

#110

Post by joshjkim »

OliverJones wrote: post #70
joshjkim wrote: post #56

Interesting idea: VCs should have in-house finance folks specifically meant to work with portfolio companies who spent a few days a month for year 1 after investment, or until the company gets it own finance team. Most VCs do less than 10-15 deals a year, so this seems tolerable and a relatively low cost way of to really know what's going on with the portfolio. (I know some VCs already kind of do this (Vantage Point)…

Not such a great idea, in my opinion. There are honest and competent people willing to work one day a week as contract CFO. Such a person works as part of the management team and doesn't have divided loyalty (management / investors).

you are right, I've worked with a few. Problem is that it's a cost to the company they often don't want and they don't value the work (I think this is what SA is trying to change). Also, vetting/hiring folks etc. is it's own burden. VC pushing this gets rid of the friction and forces founders to take this seriously.

Agreed they may have divided loyalty, hopefully mitigated by a very temporary relationship and the fact that at early stages, VCs and founders should be super aligned, at least around the ops numbers (sale decisions, etc. are a totally different ballgame for sure).

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