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My startup banking story (2023)

mitchellh.com

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Re: My startup banking story (2023)

#61

Post by dilyevsky »

bigstrat2003 wrote: post #11
mitchellh wrote: post #8

Funny to see this pop up again (I'm the author). The year is now 2025 and I still use Chase as a personal bank and I'm now discovering new funny banking behaviors. I'll use this as a chance to share. :) My company had an exit, I did well financially. This is not a secret. I'm extremely privileged and thankful for it. But as a result of this, I've used a private bank (or mix) for a number of years to store the vast ma…

I read the whole story and I'm still struggling to understand what you did wrong here. You indicated many times "I know, that was a mistake" (or similar phrases), but each time I was baffled because I saw no mistakes. It was your business, and you had every right to move around the funds within your account. What gives anyone at Chase the right to say diddly squat about how you manage your business' finances?

The biggest thing to me imo is that everything was in one account while fdic insurance is only 250k although if chase goes out of business you probably wont need the money anyway. Also specialized startup banks come with a lot of perks for companies and founders and chase evidently didnt (or just had account rep who sucked at his job)

Re: My startup banking story (2023)

#62

Post by stephen_g »

gwbas1c wrote: post #20
bigstrat2003 wrote: post #11

Earlier quoted context omitted.

I read the whole story and I'm still struggling to understand what you did wrong here. You indicated many times "I know, that was a mistake" (or similar phrases), but each time I was baffled because I saw no mistakes. It was your business, and you had every right to move around the funds within your account. What gives anyone at Chase the right to say diddly squat about how you manage your business' finances?

TFA didn't really explain the mistake. What I think it was: 1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling. 2: When your bank calls you after a very, very large money transfer, you should take the call. That being said: In today's world where every other phone call is some telemarketer trying to scam you or otherwise sell you som…

They basically had no problems through $35M+ of money coming in except a few phone calls trying to sell him some banking services... I wouldn't really call it 'not appropriate' for a startup... All it was is probably the guy trying to say "hey maybe you'd be interested in parking some of that capital in a term deposit" or offering some credit products...

It is a bit weird how actively the guy tried to engage but it probably is just because it was one of the largest accounts opened through that branch - if they'd opened an account with the same bank but a branch in down-town SF instead of in the suburbs of LA then they would have had an account manager more accustomed to that kind of business and it presumably wouldn't have been as weird...

Re: My startup banking story (2023)

#63

Post by mitchellh »

sneak wrote: post #56
dpkirchner wrote: post #34

Earlier quoted context omitted.

At what point does it make sense to sign up for private banking? I've been happy with our credit union for day to day stuff but we don't keep a ton of cash around (most of our money is in a brokerage account (ETFs)). Is private banking just for folks that want to have a lot of cash around but not have it in an easy to use account?

When you are managing a $500k-1M+ liquid net worth. I think Chase starts “Private Client” at $250 or $300k. (Don’t use Chase, however.) It might in some cases be more trouble than it is worth, if you are right around the threshold. A “normal” retail checking account and a brokerage account at another institution with the ability to transfer between them is probably sufficient for most. If you need loans or mortgages…

Private client isn’t private bank. They name is like that so you think it is though. :) private banking services start around $10 to $15M with higher tiers as you go.

(Not trying to diminish private client services. But they’re night and day different services.)

Re: My startup banking story (2023)

#64

Post by jt2190 »

chao- wrote: post #47
gwbas1c wrote: post #44

Earlier quoted context omitted.

The bank account was appropriate for small businesses. IE, restaurant, laundromat, ect. This became clear when the article explained that there was education for tellers about what a tech startup is. Mitchell didn't take the call. He ended the call as quickly as he politely could, short of hanging up on Alex. Edit: I've had a few bank tellers advise me on how to adjust my bank account correctly in the past. I'm going…

Thanks for answering! So there is some set of services that are useful specifically to a tech startup but not a restaurant, but then there are a category of services that "nobody" wants, neither restaurant nor startup. Do you have an examples of any of those categories? I am not asking because I disbelieve you. I am asking because I find this all fascinating, but it seems my imagination is lacking! What would I want…

(I’m not the person you replied to.)

My understanding is that people with financial training don’t think about money, they think about risk. If you are a banker and ask yourself “What is the probability that this 100 deposit will be here in another 30 days?” you might answer differently depending on what you know about your customer.

- If you think that your customer will withdraw 50 in the next 30 days, you might take the other 50 and invest it in a 30-day CD, and take the other 50 and just hold on to it.

- If you think all 100 will remain in the account the entire time you could invest all 100.

- etc.

If you are the customer you want a bank that understands what kind of inflows/outflows you’ll typically have. The bank wants to manage the risk, and you want a bank that doesn’t freak out at what seem to you to be very mundane transactions.

Re: My startup banking story (2023)

#66

Post by [deleted] »

gwbas1c wrote: post #44
chao- wrote: post #31

Earlier quoted context omitted.

Your answers are appreciated, but they beg further questions. Do you mind that I inquire further? >1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling. What properties make it inappropriate for a tech startup, specifically? What would be appropriate instead, and why? >2: When your bank calls you after a very, very large money transfer…

The bank account was appropriate for small businesses. IE, restaurant, laundromat, ect. This became clear when the article explained that there was education for tellers about what a tech startup is. Mitchell didn't take the call. He ended the call as quickly as he politely could, short of hanging up on Alex. Edit: I've had a few bank tellers advise me on how to adjust my bank account correctly in the past. I'm going…

[deleted]

Re: My startup banking story (2023)

#68

Post by mkl »

welder wrote: post #30
mitchellh wrote: post #8

Funny to see this pop up again (I'm the author). The year is now 2025 and I still use Chase as a personal bank and I'm now discovering new funny banking behaviors. I'll use this as a chance to share. :) My company had an exit, I did well financially. This is not a secret. I'm extremely privileged and thankful for it. But as a result of this, I've used a private bank (or mix) for a number of years to store the vast ma…

You should start a business for your construction projects, then use a business bank like Mercury instead of Chase and get all the nice business features.

What are the nice business features you're referring to?

Re: My startup banking story (2023)

#69

Post by jaggederest »

dilyevsky wrote: post #61
bigstrat2003 wrote: post #11

Earlier quoted context omitted.

I read the whole story and I'm still struggling to understand what you did wrong here. You indicated many times "I know, that was a mistake" (or similar phrases), but each time I was baffled because I saw no mistakes. It was your business, and you had every right to move around the funds within your account. What gives anyone at Chase the right to say diddly squat about how you manage your business' finances?

The biggest thing to me imo is that everything was in one account while fdic insurance is only 250k although if chase goes out of business you probably wont need the money anyway. Also specialized startup banks come with a lot of perks for companies and founders and chase evidently didnt (or just had account rep who sucked at his job)

It's quite a lot more important to diversify funds for procedural risk than bank failures, although SVB certainly illustrates that they do happen.

More likely, the bank will put a ~$1b hold on your account while they investigate suspicious transactions, and your options are to whistle, sing, scream, or twiddle your thumbs until they are done.

So having 4-5 total accounts, ideally unrelated to each other in terms of legal owners (differently-named subsidiaries are usually the way to go, I understand, though I am far from an expert in such matters), will enable you to continue to operate your business while bank A does compliance on your accounts.

If you run into a situation where banks A through F all put holds on your account, you need a good RICO lawyer or equivalent. Different class of problem, and different likelihood of happening, and the kind of thing a great CFO plans around.

Re: My startup banking story (2023)

#70

Post by josh2600 »

Once upon a time my wife went to close a bank account in Italy.

She went to the post office which is also a bank in Rome. She asked to closed her account. She was told that she needed to go to the branch where she opened her account in Florence.

We rented a car and drove to Florence.

When we arrived at the bank in Florence, the teller informed us that we would have to come back “domani” which is Italian for tomorrow because the only person who could help us was the banker who had originally opened the account for my wife when she was a student many moons ago.

We came back the next day and met the banker who immediately recognized my wife including recanting that she was an artist. He informed her that he could not close her account, she would have to speak to the Director of the bank.

We waited in line for the director of the bank but we were told it was too close to the end of the day and the bank was out of money so we’d have to come back… Domani.

Domani arrived and my wife again waited. The Director willfully ignored her for 2 hours and it wasn’t until my wife began to cry that the Director finally called her over and allowed her to close her account.

This for €2500. That was a balance that meant a lot to us at the time.

I will never forget banking in Italy.

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