Mistakes You Should Never Make • Hacker News Board

Re: Mistakes You Should Never Make

#231

Post by Aqueous » Thu, Jul 24, 2014, 9:47 PM UTC

king_jester wrote: post #200

rwallace wrote: post #190

Earlier quoted context omitted.

This kind of comment is remarkably shitty. Someone performs the extremely unpleasant and stressful task of publicly admitting to his mistakes so the rest of us can learn from them, and xcubed responds by spitting in his face. What's the result going to be if we tolerate this sort of behavior? Well we don't have to guess, it was documented in the original post: most founders are not willing to admit their mistakes in…

When someone does a bunch of shitty things that directly affects the lives of others, anger is a wholly reasonable response. While it's nice that the OP is being open about mistakes, you don't deserve a pat on the back for telling the truth, it's the default behavior we expect of people.

Do we? Human beings tell half-truths and lies pretty frequently. I bet if you examine the history of your own utterances for the past several years. you'd find that you do, too.

There are obviously different scales of truth-telling and deception. "It's your baby." is a lot different than, "Ah - I can't make it. I'm just too tired!" But it's still lying. In fact human lying is so frequent that a lot of the smaller lies we tell to be polite or avoid hurting feelings barely even register as lies, even though that's what they are, plain and simple. Clearly Kant's maxim that lying is permissible under no circumstances is false.

In business lying is rampant. You are competing with liars. Marketing is institutionalized lying. People are constantly embellishing the features of their product so that it purports to do something magical when on closer inspection most features are much more mundane. Sales is even more about convincing the person you're talking to that they can't live without something they probably can live without. In other words, being a good liar is pretty much a qualification for the position.

Does that make it ok? No. But does it mean our expectations are lowered? Yes. So when someone goes out of their way to come clean and tell the truth at great disadvantage to themselves, especially in business, we should recognize that for the exceptional event that it is. I don't think that makes lying more acceptable - but it incentivizes truth-telling.

Re: Mistakes You Should Never Make

#232

Post by MortenK » Thu, Jul 24, 2014, 9:49 PM UTC

It's absolutely astonishing to me that SV investors and incubators pass along ~4 million USD to a team of people with so little business experience, as to neglect hiring an accountant. End result being unpaid payroll tax for almost 3 full years!

No one ever asked what accounting firm Amicus used? No one ever just glanced at the finances and thought hey, where's the frigging payroll tax? Is valley capital so readily available as to warrant this kind of extremely low investor engagement in funded companies?

No written founders agreement either. I mean this is basics, and it should have been caught or taught by the accelerators and the investors.

This is not a shot at the OP, who I think is exceedingly brave to write such a public, honest and informative account of their screw-ups. Competence comes from experience and everybody in business has been incompetent at some point.

Rather, this is a massive failure on the investors' and accelerators part. With all the talk of "funding the team, not the idea", you'd think there was a bit deeper understanding of team experience and competence, than just some degrees from an ivy.

It's mind blowing that investors can be so careless with their cash. I wonder if it's a common occurrence or if this is an outlier situation.

Re: Mistakes You Should Never Make

#233

Post by lutorm » Thu, Jul 24, 2014, 9:50 PM UTC

michaelvkpdx wrote: post #172

Poor founders and your VC-funded pain. How about some empathy for each of those employees you are firing, who have to go home and face families and lives that they've shared with you and you have essentially shat upon? They are not "resources". They are people, humans, and their lives and loves are just as important as yours. They shared a piece of their humanity with you to help you in your dream. A dream which, mak…

You really skimmed the post so quickly you didn't notice any empathy with the employees?

Re: Mistakes You Should Never Make

#234

Post by nwenzel » Thu, Jul 24, 2014, 9:52 PM UTC

Poor bank UI crushes startup's bank account.

Thanks for posting Seth. Must have been a tough one to write.

I can't say this enough, use Zenpayroll.

In a prior company I had one of the other payroll giants (Zenpayroll didn't exist 10 years ago). It was awful. We switched from one giant to another to make 401k easier. But in the switch, both companies reported earnings to the IRS. All my employees received notices from the IRS saying they each owed $10k+ in back taxes and penalties. No one ended up having to pay, but when the IRS comes calling, it's stressful even when you're not wrong.

Zenpayroll is fantastic. New game, new level.

https://zenpayroll.com/

Re: Mistakes You Should Never Make

#235

Post by jacquesm » Thu, Jul 24, 2014, 9:53 PM UTC

will_brown wrote: post #75

tptacek wrote: post #33

Of all the financial mistakes you can possibly make running a company, withholding payroll taxes and then failing to remit them is probably the worst. Be thankful you caught this before the liability exceeded your available funds, because company operators are apparently routinely held personally liable when there's a shortfall, and I'm not sure that debt is even dischargeable in bankruptcy. What's worse, minor versi…

As a former transactional/commercial litigation attorney I too would see this issue regularly. One interesting "hack" I would see clients do regularly as owner/employees, they would minimize their own salary to avoid payroll taxes, maximizing their distributions (distributions are not subject to payroll taxes). Unfortunately for them the IRS accounts for this hack , and if an IRS audit finds the salary isn't reasonab…

In NL we actually do have such a 'bright line', a very reasonable amount that anybody in the hot seat is required to pay out of their business on an annual basis as a salary.

If the business is not doing well you can negotiate that down to ridiculously low levels provided you do not borrow from the company at the same time. That last bit is the bit that bites, many business owners already have a line of credit with their company from the founding days and they'd have to pay that back before they can reduce their salary.

On the whole that arrangement works well though, and the one time that I needed it I found that the tax people were very much understanding of the situation and offered a few suggestions that helped making things easier.

If all government institutions were as reasonable as the tax office in my dealings with them this would be a much better country.

Re: Mistakes You Should Never Make

#236

Post by luma » Thu, Jul 24, 2014, 9:53 PM UTC

dragontamer wrote: post #214

afro88 wrote: post #207

Earlier quoted context omitted.

> 2. I think people can reasonably disagree here. An example: a potential customer asks a sales guy during a demo "...and will we be able to export a list of our users?" Answer: "yes, absolutely". The customer signs. The sales person then runs to dev team and says "we need to build this export functionality before they launch". Did the potential customer think that feature already existed? Probably. Is anyone being h…

Agreed. It is great that he is being open and honest about his morals. But if I ever learned that a business partner were so dishonest with me, I'd drop them in a heartbeat. Business relations are all about trust and integrity.

He's not being open and honest about anything here. He's a liar. He lied to his partners, he lied to his investors, he lied to his employees, he lied to his customers, he lied to the IRS, and he lied to the press. Every single item on his list here is the result of him stretching the truth and calling it "hacks".

That's fun new word for "lies".

Re: Mistakes You Should Never Make

#237

Post by roel_v » Thu, Jul 24, 2014, 9:53 PM UTC

pyre wrote: post #183

matwood wrote: post #108

Earlier quoted context omitted.

Interesting about your grandfather. Mine taught me a similar integrity lesson when I was a kid. Back when there were payphones I would always check them for spare quarters. One time when I was with my grandfather I checked a phone that has broken and dumped ~ $6 in change out. I pulled all the money out super excited about my find. He explained it wasn't mine and when we got home he mailed the local phone a check for…

Two thoughts: 1. Was that really the phone company's money? My first thought on hearing that story was that the $6 in change was from people putting money into the broken phone, realizing it was broken, and leaving without their money. Does the phone company really deserve money that the phone 'eats' when it doesn't deliver the service that people are giving it money for? 2. If you sent the phone company that $6 toda…

"2. If you sent the phone company that $6 today, they would file criminal charges, because that cheque is an admission of guilt for stealing money from them."

Uhm, yeah, pardon my French, but that's complete bullshit.

Re: Mistakes You Should Never Make

#238

Post by bravo22 » Thu, Jul 24, 2014, 9:54 PM UTC

cullenking wrote: post #182

tptacek wrote: post #153

Earlier quoted context omitted.

It's taxed as regular income, but the premise under which it's exempt from the payroll taxes every other worker has to pay is that it's not normal income, but rather the return from an investment in the company. For people in our industry, it's hard to see a definition of "reasonable" that would be financially beneficial. You start a tech company. You pull $100k out every year, putting you right smack in the middle o…

Sure, but you just mentioned an unreasonable salary. If the median is $100k, then that's reasonable, and the person only gets to avoid SS and medicare on any additional profit. I operate as an s-corp and pay myself a reasonable salary, matching that of the salary I could get in the current job market in the area I live in. Anything I clear above this is only taxed with my regular taxes. If I was running a C-Corp inst…

Exactly. You could pull in sometimes 250-500K as a consulting company, specially if you outsource some aspects of projects. S-Corp is ideal for that.

Re: Mistakes You Should Never Make

#239

Post by roel_v » Thu, Jul 24, 2014, 9:56 PM UTC

rdwallis wrote: post #167

larrys wrote: post #159

Earlier quoted context omitted.

"I asked him about his unwillingness to do what others have done (at the time it was drive faster than the speed limit on an empty road) " The above (parent comment) as well as your comment "I pulled all the money out super excited about my find. He explained it wasn't mine" ... well, I can't agree that it teaches the proper lesson, even to a child. Forgetting whether he is even right "it isn't yours" (I could argue…

I've chosen to never speed because it reduces my cognitive load. Nobody speeds all the time. Even people who speed a lot will try to slow down for speed traps. So everyone who speeds even those who speed only every now and then have to be constantly making a choice for when to speed. They must constantly assess whether the benefits of speeding in this specific moment outweigh the disadvantages. There are dozens of va…

"I've chosen to never speed because it reduces my cognitive load."

That's a utilitarian approach which is completely orthogonal to what this thread is about.

Re: Mistakes You Should Never Make

#240

Post by jacquesm » Thu, Jul 24, 2014, 9:57 PM UTC

larrys wrote: post #193

tptacek wrote: post #33

Of all the financial mistakes you can possibly make running a company, withholding payroll taxes and then failing to remit them is probably the worst. Be thankful you caught this before the liability exceeded your available funds, because company operators are apparently routinely held personally liable when there's a shortfall, and I'm not sure that debt is even dischargeable in bankruptcy. What's worse, minor versi…

"Without making any value judgements about the operations of this particular company, one valuable lesson from the post is: do not ever use the Bank of America Payroll feature." There are actually all sorts of gotchas in business that happen as a result of some assumption that you make as far as a process being carried out that never has happened. Using BofA wasn't the sole problem here it was being asleep at the swi…

IMO the biggest problem here was not accurately forecasting liquidity, if they had done that they would have seen within two months that something was badly wrong. Excess cash in a business that can not be explained should be just as worrisome as having too little. The latter is an indication that someone is raiding the till in some creative way, the former that you are not paying someone that you should be paying, which can lead to the sudden demise of your business if the creditor has a long enough arm.

No matter how small your business you should at least have a general ledger and a liquidity forecast running 6 months to a year into the future.