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Ask HN: Should I inform investors that my startup employer is a scam?

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Re: Ask HN: Should I inform investors that my startup employer is a scam?

#61

Post by throwawaywork0 »

cordialthank wrote: post #56
imdsm wrote: post #37

Earlier quoted context omitted.

Could be that they're siloed and there is product but OP is poorly informed. If they don't work there, then how could OP truly know?

Didn't stress on this point, but CEO is delusional and megalomaniac. They think their plan is going to work and they keep hiring people for stuff that supposedly will build up the SaaS. They are emotionally abusive to dissidents and people who disagree. It's a lost cause. I'm not poorly informed, otherwise I wouldn't be making this post. After everyone left I am in the most senior engineer position (lead) and there w…

I'd recommend you get out of there in that situation. I've personally had something similar and it wasn't fun being caught in the wreckage when it turned out the CEO had lied about certain investments.

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#62

Post by fauigerzigerk »

heassler wrote: post #9

If you see fraud and you don't shout fraud, you are a fraud. Document your findings and do what is appropriate. After all, those VCs are managing people's money. They need to know.

>If you see fraud and you don't shout fraud, you are a fraud.

No, you are not. Employees do not have an obligation to act purely based on morals without considering the balance of potentially very one-sided legal and financial risks to themselves.

These are professional investors with the means and the obligation to do their own due diligence. They don't need individuals making potentially life changing sacrifices in order to save them some money.

Fraud is only fraud if a judge says so. Until then, it's an accusation. The accused will defend themselves and potentially hit back at the accuser.

I would take legal advice, both on whether I have a legal obligation to report what I have seen and on how/if it can be done without taking on outsize risk myself.

Edit: Consider the moral situation from the other end for a moment. I'm a small investor myself, far too small to even be allowed to invest in venture capital funds.

Would I want some employee somewhere to take potentially life changing risks in order to protect me from losing a percentage or two of my money? Certainly not. How could I expect anyone to take on far more risk than I'm taking myself?

What I would say to the employee is, stop contributing to the deception! If there's anything more you can do safely, I would be grateful.

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#63

Post by qwerty456127 »

mkl wrote: post #32
qwerty456127 wrote: post #27

This is a moral choice you should make yourself.

There's nothing wrong with asking for advice.

But it hardly is of much use in morally ambiguous situations. When a partner of yours (I'd suggest even imagine it's your best friend to make the thing more vivid) is a real criminal inflicting real harm to real innocent people (rather than smoking weed in a wrong state) you have to choose whom to betray. There is no single right solution here. One has to decide for himself. It is just an act of will.

I don't mean he should not have asked, I just share the way I view such a problem.

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#64

Post by lemonscoop »

Based on a similar experience, I would say it's best to leave.

Around a year ago I also left a 8-9 year "startup" with some of the same fundamentals issues but at least we had a basic demo even though it was very insecure. That wasn't the primary reason for me leaving but their attempt at A funding was taking a lot longer then expected and the contract was up.

Interesting enough the company I used to work for was mentioned on hn at one point, but this was many years ago. They changed industries which is understandable.

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#65

Post by mousetree »

cordialthank wrote: post #56
imdsm wrote: post #37

Earlier quoted context omitted.

Could be that they're siloed and there is product but OP is poorly informed. If they don't work there, then how could OP truly know?

Didn't stress on this point, but CEO is delusional and megalomaniac. They think their plan is going to work and they keep hiring people for stuff that supposedly will build up the SaaS. They are emotionally abusive to dissidents and people who disagree. It's a lost cause. I'm not poorly informed, otherwise I wouldn't be making this post. After everyone left I am in the most senior engineer position (lead) and there w…

It doesn't sound like a scam to me. It seems there is intent to actually build something, just poor execution and bad management possibly?

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#67

Post by mkl »

qwerty456127 wrote: post #63
mkl wrote: post #32

Earlier quoted context omitted.

There's nothing wrong with asking for advice.

But it hardly is of much use in morally ambiguous situations. When a partner of yours (I'd suggest even imagine it's your best friend to make the thing more vivid) is a real criminal inflicting real harm to real innocent people (rather than smoking weed in a wrong state) you have to choose whom to betray. There is no single right solution here. One has to decide for himself. It is just an act of will. I don't mean he…

I think it's very useful in such situations to hear other people's points of view, similar experiences, and so on.

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#68

Post by heassler »

fauigerzigerk wrote: post #62
heassler wrote: post #9

If you see fraud and you don't shout fraud, you are a fraud. Document your findings and do what is appropriate. After all, those VCs are managing people's money. They need to know.

>If you see fraud and you don't shout fraud, you are a fraud. No, you are not. Employees do not have an obligation to act purely based on morals without considering the balance of potentially very one-sided legal and financial risks to themselves. These are professional investors with the means and the obligation to do their own due diligence. They don't need individuals making potentially life changing sacrifices in…

I appreciate your points, I think this is an interesting debate. What I mean is that the right thing to do is to call things out if you know they are wrong, even if that involves risk. Assuming that you are absolutely certain that it is indeed a fraud and that the investors are not aware, that is the right and honourable thing to do. Not only that, but looking away is wrong. Think about the hundreds of Theranos employees who were too busy considering risk/benefit and decided to look the other way vs the whistleblower guy. Of those two, who do you think will have their career impacted? who do you think have their reputation tarnished?

Unless you live in China or another poor governance country, whistleblowing is actually encouraged. It signals integrity and honesty. If the thing is indeed a fraud, it will eventually collapse. When that happens, you will have a pretty embarrassing spot in your CV. When you look back in 10-20 years, on what side do you want to be?

Another minor point:

>I'm a small investor myself, far too small to even be allowed to invest in venture capital funds. Would I want some employee somewhere to take potentially life changing risks in order to protect me from losing a percentage or two of my money? Certainly not..

Pension funds invest in VC so even if you make minimum wage, you still most likely have money invested in VCs. The longer you wait, the more of people's money (pensions, endowments, etc) will be lost in this fraud.

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#69

Post by jzellis »

I'm gonna agree with qikInNdOutReply here: you work for a laundromat. If this has happened multiple times, it's entirely possible that all of the VCs involved are aware of it, and are in fact getting their money's worth. :-)

Here's my advice to you, and I'm not going to say IANAL because you don't need to be a lawyer to know this: you are working for shady people. If it is, as seems likely, a laundering front, the very last thing you want to do is "go to the investors", unless you really enjoy the feeling and weight of a custom pair of concrete shoes.

I would find another gig ASAP, and then and only then would I sit down and have a serious think about how much I cared about seeing these people get punished for what they're doing. Because the only people you should probably be going to are the SEC, and that would probably turn into a criminal case, and then you'd be getting the very strict attention of whomever set this up. And those people are probably not tech bros.

Up to you, man, but I would seriously suggest you consider this possibility.

Re: Ask HN: Should I inform investors that my startup employer is a scam?

#70

Post by triceratops »

qikInNdOutReply wrote: post #38

Its a money laundering machine.. the oligarch invest dirty money into it, they buy equipment from other oligarch conglomerate companies, washing the money in the process. Just build your dream project there, and then take it with you. Its basically a mafiosi incubator and the software is decoration and they do not recognize the value of it missing or ever having existed. Could be other things to. Empty houses in the…

Can you explain? "Money laundering" businesses are cash businesses. If the money is already in the legitimate banking system it doesn't need to be laundered, even if it's from an "oligarch". How does this help?

As someone below commented, it seems more likely that the VCs are stealing from their investors.

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