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OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

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Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#71

Post by JumpCrisscross »

PeterisP wrote: post #13
sql-spy wrote: post #9

Earlier quoted context omitted.

Ofcourse it is an oversimplification but it really is that simple. If the business is profitable, it will survive. If its still relying on free money to pay the bills, its time to make it profitable.

The fact whether a startup has positive cashflow or not isn't really reflective of whether that is a worthwhile startup or a bad one, but rather whether it's at an early stage or a relatively mature one. The most bestest startup in the world would still be relying on investor's money to pay the bills if it's just starting to build its product and the time to make it profitable will come in a year or two or more (e.g.…

> whether a startup has positive cashflow or not isn't really reflective of whether that is a worthwhile startup or a bad one

A start-up that fails because of this mismanaged their treasury, didn’t pull money in time, couldn’t borrow against their claims and couldn’t convince anyone to advance payroll. That’s reflective on leadership. It’s a teachable moment. But it points to deeper naivety.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#72

Post by choppaface »

icelancer wrote: post #47
roboy wrote: post #41

Q from outside the US: why is capital needed for payroll mid month? Are there some automatic insolvency processes if it is missed by a day? Why do the companies fall apart if there is just a few days of payment delay? (I mean it is obviously a shit situation, and having to tell the team payment might take a few days more than usual is bad, I am just surprised how 2 days of no-cash seem to wreak havoc…)

Wage payment delays in the state of California are severely punishable under law: https://www.ottingerlaw.com/blog/wages-hours/employer-not-pa...

Except Musk has established precedent at Twitter that you can just fire employees for cause.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#73

Post by rdl »

physicsguy wrote: post #59
rdl wrote: post #49

Earlier quoted context omitted.

Most companies in the US do payroll on either a 2 week cycle (which sucks because some months you do 3 and some times you do 2), or 1st and 15th (or otherwise twice a month). March 15 is a very common payroll date. They're batch processes, done by dedicated payroll firms, since there are lots of tax/other obligations as well. Missing payroll by even one day causes 1) lots of drama with employees 2) starts some legal…

Quite interesting, here in the U.K. it’s generally monthly payroll, usually towards the end of the month, something like closest working day after the 25th is common

In Puerto Rico (where I live) there's an even weirder system -- people usually get/expect (and certain classes of employment obligate) a "13th month" check. Pretty common in LaLtAm; exists in some of Southern Europe too.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#74

Post by 0xEFF »

kfrzcode wrote: post #36
rdl wrote: post #16

Earlier quoted context omitted.

Not a lawyer, but I would be pretty comfortable with SVB -> personal account if you documented why and communicated about it in advance with board/counsel. (Obviously the next step would be opening a Chase/etc. account and sending the funds on to that, not using your personal account for company business on an ongoing basis, but a limited number of emergency transactions should be fine.)

If you're not a lawyer, in this case, it's not really relevant what your comfort level is with business dealings. If you're a professional with appropriately relevant skills and expertise, I'd rescind my comment.

I’m a business owner with payroll married to a attorney.

I’m comfortable doing exactly as GP described to make payroll.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#75

Post by jll29 »

inconceivable wrote: post #50
leetrout wrote: post #43

Earlier quoted context omitted.

How much cash do you have available? Other threads over the past few days scoffed at having 100-200k in cash available.

after being here for over 10 years (not on this account), i've observed that hn is basically split into two groups: people with money, and people who don't have much of it. the people with less money are much more vocal about it, for obvious reasons.

What you state is perhaps obvious, I would not even bother to open a new account to conceal my identity just to say that...

It is a bimodal distribution of (1) the lucky ones and (2) the ones either "not yet lucky" ones (1/10) or the "never lucky"ones (9/10).

I find it refreshing to hear stories about how things did _not_ work out (from the sources). It is much harder to get the real stories behind the successes because people tend not to ascribe things to luck but create some story after the fact in the same way, as they say, "the winner writes the history".

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#78

Post by phphphphp »

grey-area wrote: post #58
phphphphp wrote: post #33

Earlier quoted context omitted.

Maybe it’s not fair to compare Garry Tan to sama in this situation because Garry is the current president and sama is the former, but, it’s nice to see sama’s measured response compared to Garry’s. Garry is shouting from the rooftops that more than a million jobs are going to be lost if the fed doesn’t immediately do something (that we all know it isn’t going to do). I wouldn’t want to be a YC startup right now, list…

The fdic and fed probably will do exactly what Gary Tan and many others recommended - no bailout of the company or shareholders but organise a facility so that the depositors get 100%. They’re trying to sell it first but if that doesn’t work they don’t really have other options if they don’t want to be dealing with massive job losses and multiple bank runs next week.

That’s not necessary though unless we are to believe that a meaningful amount of money has disappeared. The FDIC offers insurance with a limit for a reason, it’s a fantasy to believe that the FDIC are going to invent a brand new standard of deposit protection because some companies might be forced to take a small haircut on their money.

The bank will re-open, companies will get most of their money, and life will carry on. The FDIC aren’t going to guarantee 100% of deposits, and shouting from the rooftops that a million jobs will be lost if the FDIC don’t do it (which they won’t) is panic-inducing for no discernible reason.

Edit: I intentionally took one for the team by embarrassing myself with a claim disproven less than an hour later. You’re welcome.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#79

Post by roboy »

physicsguy wrote: post #59
rdl wrote: post #49

Earlier quoted context omitted.

Most companies in the US do payroll on either a 2 week cycle (which sucks because some months you do 3 and some times you do 2), or 1st and 15th (or otherwise twice a month). March 15 is a very common payroll date. They're batch processes, done by dedicated payroll firms, since there are lots of tax/other obligations as well. Missing payroll by even one day causes 1) lots of drama with employees 2) starts some legal…

Quite interesting, here in the U.K. it’s generally monthly payroll, usually towards the end of the month, something like closest working day after the 25th is common

Yep, in Germany too, hence my surprise.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#80

Post by kkielhofner »

rdl wrote: post #16
gfsdgsfgfds wrote: post #12

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do w…

Not a lawyer, but I would be pretty comfortable with SVB -> personal account if you documented why and communicated about it in advance with board/counsel. (Obviously the next step would be opening a Chase/etc. account and sending the funds on to that, not using your personal account for company business on an ongoing basis, but a limited number of emergency transactions should be fine.)

Given the disaster and nearly unprecedented nature of these events I doubt anyone would bat an eye at a CEO taking the decisive action to do what needs to be done to survive (and fix it later). For many the past few days have been the startup equivalent of "fog of war".

As others have noted it's not embezzlement/commingling and given the scenario "Wire out from SVB corp account to personal, document exact amount, and wire back to corp $NEWBANK a week/days later, document again" would hardly cause any heartburn now or down the road. Many would see it as responsible, proactive, and heroic.

Depending on the amount the only issue would likely come from your personal bank - I know of people with ~$10m at SVB and I have to imagine all of sudden wiring those kinds of funds to a personal account with an average daily balance that's a fraction of that would raise some alarms on the personal account - or maybe not as I can imagine the big big banks (BoA, etc) probably saw a lot of this on Thursday...

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