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My startup banking story (2023)

mitchellh.com

111–120 of 170 posts

Re: My startup banking story (2023)

#111

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…

Chase has a decent private banking operation, which you might consider (so does BofA, and most large banks) which can give you the best of both worlds.

Re: My startup banking story (2023)

#112
post #101

> I never told them what my business does or what I'd use the money for. This stuck out to me. I'm in the process of opening a bank account in Singapore for a newly registered company, and boy is it difficult. Hour-long KYC interview. Details of what the business does. Anything remotely controversial could be a red flag. They want to hear about boring B2B services. They want to see evidence of customer communications…

It's likely because of the nature of the country. Singapore and the UAE (another similar country) are notoriously difficult for getting started with business banking because banks often expect you to be either well-funded (from elsewhere) or matured as a business. For a long time, they haven't ever evolved their thought to expect startups to natively grow, and even of late, they expect startups to be these well-capit…

Also international accounts have more stringent KYC of course.

Re: My startup banking story (2023)

#113

The author imagines that all readers obviously know why his actions were so wrong. My understanding of banks is much like his naive version. So what's the more enlightened understanding?

Yeah I'm not sure why I would really care about the motivations of the bank. If I need them to be a store of money that I can move in and out and I'm happy with that then leave me alone. When you're big enough for that to be a problem, like in the story, then someone who knows more that you've hired will have a stronger opinion of that.

I can explain a little bit

1- KYC, the bank is a highly regulated entity, regulated by the state, they are a branch of the executive, they enforce banking laws set by the legislative, and can get involved in cases of fraud, money laundering, or other illegal activities. If they see a million dollar transaction, they usually want to know where the money came from, if they don't they would essentially be looking the other way. In general know what your business partner needs, in any walk of business. Let them know that you have a such and such business, that you got a round of funding. Also know what kind of bad actors you want to differentiate yourself from, let them know you are not a drug dealer, you are not laundering money, or running a ponzi scheme, and that the money won't be frozen putting them in trouble.

2) Money is a very complex subject, the fact that you think of money as "something that is stored in a bank" is testament to the fact that banks do a good job, it's an illusion, there's a lot going on behind the scenes that you are unaware of, similar to how there's a lot going on behind the scenes in Google or ChatGPT, which have simple interfaces but complex inner workings.

3) In general, a bank is a vendor, a supplier a business partner, you pay them for services. Maybe in your personal life you don't care and you are used to anonymous transactions because of the low amounts. But in business, these are strategic relationships, you want to get the most out of your money and establish a relationship with your vendor. Loyalty goes a long way, although switching vendors is always possible, it's a tradeoff with consequences that needs to be considered, and not ignored.

Re: My startup banking story (2023)

#114
post #6

Chase sucks so bad, I would spend a lifetime encouraging anyone to bank elsewhere. I know Mitch is nice enough to say Chase wasn't the problem, but their "controls" are so archaic it makes doing business with them a chore and not a pleasure.

I'm not a fan of Chase, and I don't think I'd bank with them again, but they are a 'large national bank'. If you value having local branches mostly where ever you go, they're part of that group. That comes with all the usual exciting attractions like negligible interest on balances, and miscellaneous fees. But if you want a large national bank, eh, I guess they're fine? My California based credit union doesn't even o…

Lots of local branches sounds great for personal banking, but for businesses? Unless you have a nation wide franchise business or a logistics business, doesn't seem as important.

On the contrary, a highly concentrated bank might be better, everyone is on the same building, there are no encapsulated branches, you get assigned a banker that is the best fit, rather than the one who was born closest to you.

Re: My startup banking story (2023)

#115
post #56

Earlier quoted context omitted.

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.)

> start around $10 to $15M

That sounds high to me. Maybe American banks? The smaller Swiss banks will start taking your calls at about $2m.

Re: My startup banking story (2023)

#116
post #115

Earlier quoted context omitted.

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.)

> start around $10 to $15M That sounds high to me. Maybe American banks? The smaller Swiss banks will start taking your calls at about $2m.

Maybe. All the retail banks I know don’t start true private banking until there. For example, here is an article about JPM requiring 10 back in 2016 (it’s higher now): https://www.wsj.com/articles/at-j-p-morgan-9-million-in-asse...

The non retail banks that have a good reputation are even higher.

They don’t outwardly advertise their minimums because “it depends.” For example if you’re an up and comer in your field where it seems like you’re LIKELY to one day hit the mins, they’ll start the relationship early.

Re: My startup banking story (2023)

#117
post #92
post #47

Earlier quoted context omitted.

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…

> You said you were "advised to adjust" your account. Again, I apologize if I come across as ignorant, but what kind of adjustments? A few months ago, a teller offered to move my savings account to a higher interest version. I just had to maintain a minimum balance. A similar thing happened when I had my first summer job before college: A teller offered me a higher-interest money market account, it was just limited t…

> I'm going to assume that Silicon Valley Bank has products built around the fact that a startup has a large sum of money that it spends very slowly, versus a restaurant that needs loans and spends money as quickly as it comes in.

That's what SVB assumed, and they were very wrong.[1]

[1] https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Ban...

Re: My startup banking story (2023)

#118

Earlier quoted context omitted.

This is somewhat funny to read because if you were a JPM(chase) Private Bank client you wouldn't have any of these issues (zelle works, you can deposit checks, pull from any/all ATMs).

Or just plain Schwab One. Don't know about Zelle but ATMs and checks work just fine. (Better than fine, in fact, in that they refund your ATM fees.)

Chase Private Client refunds ATM fees too. It's especially nice if you live in a location where a substantial fraction of Chase ATMs and branches are shuttered!

Re: My startup banking story (2023)

#119
post #48
post #39

Earlier quoted context omitted.

I would imagine this phone call's primary goal is trying to sell you higher margin financial products/services.

The way you phrase that, it sounds like these services are more advantageous to the bank, but possibly not to the account holder? If so, that goes against the tone of the article, where Mitchell implies (I think?) that he would have benefited more from speaking to Alex than the other way around.

This reminds me of a call I got from Schwab, which is my brokerage and one of my two banks where I keep checking accounts as well. I had a bunch of money that I had transferred in and stupidly, lazily, just left sitting around earning basically nothing. A nice guy called me one time and pointed out that I could be earning a few hundred bucks (maybe $800?) a month just by putting it all into a very safe money market fund. I did do that (and also got around to investing most of it at a later date).

I'm sure Schwab would rather me have my money in a mutual fund than have a bunch of cash, for the reasons the other commenter pointed out (more complex arrangements and a view of the bank as a partner rather than an interchangeable "money box" is 'stickier') but this was a real double win for me and one of the handful of stories I call upon when I am asked why I do most of my financial business with that company.

Re: My startup banking story (2023)

#120

Earlier quoted context omitted.

Yeah I'm not sure why I would really care about the motivations of the bank. If I need them to be a store of money that I can move in and out and I'm happy with that then leave me alone. When you're big enough for that to be a problem, like in the story, then someone who knows more that you've hired will have a stronger opinion of that.

I can explain a little bit 1- KYC, the bank is a highly regulated entity, regulated by the state, they are a branch of the executive, they enforce banking laws set by the legislative, and can get involved in cases of fraud, money laundering, or other illegal activities. If they see a million dollar transaction, they usually want to know where the money came from, if they don't they would essentially be looking the ot…

> similar to how there's a lot going on behind the scenes in Google or ChatGPT

I would caution against maling this sort of comparison to tech companies. Speaking from personal experience, my vantage point is limited to Denmark, but banking isn't complicated like tech is. In tech the complications are all self inflicted, all serve to make the product. Banking interacts directly with the foundation of society. Most of the complication of banking is therefore not in service of the product, but in service of democracy.

That distinction affects the mentality and the "feel" of the complications a lot.

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