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Mistakes You Should Never Make

sethbannon.com

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Re: Mistakes You Should Never Make

#31

Post by x0x0 »

greenyoda wrote: post #18
methodover wrote: post #9

> In the early days I would often let potential customers think we already had a feature they wanted What. How is this even remotely acceptable? If discovered it destroys your credibility. Among your employees it destroys your credibility. If I was an employee and found out that this was happening, I'd be extremely upset. I wouldn't trust a thing you say. If you'll lie to customers, you'll lie to me.

It also puts employees under constant pressure, since every feature is already "late" as soon as implementation begins, and extraordinary effort is required on an ongoing basis just to keep the company from embarrassing itself. At the company I work for, executives and sales people frequently make "commitments" to our customers for features that don't yet exist. People who make commitments on my behalf without even m…

I worked for a founder who did this all the time and it's incredibly stressful as an employee. It would be fine in the limited case where the features are fast and easy to implement: say two days' work at most. I enjoy my paychecks clearing every other week, and losing a sale over small amounts of effort is dumb, particularly since sales where relatively large (low hundreds of thousands of dollars). But this founder didn't know and frankly didn't care about that; he talked about features we'd just begun to do basic research on as if they existed.

I'm being intentionally somewhat vague here, so it's hard to really relate the details, but in one case he discussed a feature (having to do with distributed markov chains) that not only didn't exist but, afaik, nobody in the world even understands how to do and is the subject of active research. Needless to say, not something that could be implemented in a couple days. Worse, we where talking to some phds who fucking understood the above, and they immediately started asking me how the fuck we did it!

And yes, it often made us look like complete assholes in front of customers.

Re: Mistakes You Should Never Make

#32

Post by dreamweapon »

SilasX wrote: post #24
dreamweapon wrote: post #21

Mistake 1: Taxes This thing about not noticing that you weren't paying payroll taxes wasn't a "mistake." It was pure head-in-assery. How can you "miss" the fact that you weren't being subtracted for payroll taxes? One quarterly / annual review after another, for 3 years? It's like running a personal budget, and "missing" the fact that you aren't paying rent.

Except that if you miss paying rent, they let you know, and quickly.

Oh, the IRS and other tax authorities will definitely "remind" you, eventually. But yeah, it tends to take a bit longer.

And if you don't have visceral awareness of this fact -- you shouldn't be hiring people, and handing out salaries.

Re: Mistakes You Should Never Make

#33

Post by tptacek »

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 versions of this mistake turn out to be easy to make; I've seen (much smaller, much more easily fixed) incidents in multiple companies with things like state taxes and unemployment insurance. So: you can't assume this is a mistake that won't happen to you.

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.

Unremitted payroll taxes can come with a one hundred percent penalty, and you can be liable for that penalty even if you had no knowledge of the failure to remit. Payroll tax screwups are the scary story big startups tell to baby startups at bedtime. Shudder.

Re: Mistakes You Should Never Make

#34

Post by nicholasjbs »

[deleted] wrote: post #29
smalter wrote: post #19

Amazing article. As advertised, it's not a self-aggrandizing "mistakes" post that points you at the end to the author's next venture. It's full of the kinds of things that keep me up at night. It reminds me of something similar that happened to me: I was running Adwords for the first time. The dashboard wasn't showing that any of my ads had run, and it kept telling me to up my bid amount. I kept upping it and upping…

[deleted]

From the first paragraph of the post:

On the way, my co-founder and our CTO stopped me and said “I’m resigning. And I’m going to tell the team why.” He then told me that he had lost trust in me as a CEO and as a person.

Re: Mistakes You Should Never Make

#35

Post by recalibrator »

dreamweapon wrote: post #21

Mistake 1: Taxes This thing about not noticing that you weren't paying payroll taxes wasn't a "mistake." It was pure head-in-assery. How can you "miss" the fact that you weren't being subtracted for payroll taxes? One quarterly / annual review after another, for 3 years? It's like running a personal budget, and "missing" the fact that you aren't paying rent.

I've done it when I incorporated my consulting business. I didn't know how to do my own payroll.

Hey, it happens, oh ye wise and holy one!

Re: Mistakes You Should Never Make

#36

Post by paulhauggis »

sethbannon wrote: post #11
jlas wrote: post #3

Wait, so are you telling me that in 3 years no one noticed that taxes weren't being deducted from their pay?

The Bank of America payroll system we used was automatically withholding the payroll taxes from all of our paychecks every two weeks. It then just left that money in our company's bank account instead of sending it to the government because I never discovered the "submit tax" button.

even so, didn't you notice extra money in your business bank accounts?

Re: Mistakes You Should Never Make

#37

Post by otterley »

MadManE wrote: post #28
matthewmacleod wrote: post #13

Earlier quoted context omitted.

What. How is this even remotely acceptable? If discovered it destroys your credibility. Among your employees it destroys your credibility. If I was an employee and found out that this was happening, I'd be extremely upset. I wouldn't trust a thing you say. If you'll lie to customers, you'll lie to me. Your optimism is endearing, but the vast majority of companies I've done business with do this. Often companies I've…

This cannot be overstated. If you give the sales team any room or freedom, they will make your life hell trying to keep up with "features" that outdo everyone else just so they can get their commission check. They don't have to deal with anything beyond signing of the purchase, so they don't care that it sinks everyone else to get that purchase.

Salespeople who sell products by providing false information are committing fraud on behalf of the company and should be fired.

Re: Mistakes You Should Never Make

#38

Post by jgreen10 »

SilasX wrote: post #24
dreamweapon wrote: post #21

Mistake 1: Taxes This thing about not noticing that you weren't paying payroll taxes wasn't a "mistake." It was pure head-in-assery. How can you "miss" the fact that you weren't being subtracted for payroll taxes? One quarterly / annual review after another, for 3 years? It's like running a personal budget, and "missing" the fact that you aren't paying rent.

Except that if you miss paying rent, they let you know, and quickly.

Making sure your bills are paid is the responsibility of any adult. If you're running a business, messing up your taxes should be one of your deepest fears.

The general sense I got from the story was: We were young and stupid, but instead of doing drugs, we convinced VCs to give us $3.8 million, which made us believe that we knew what we were doing.

Re: Mistakes You Should Never Make

#39

Post by ebiester »

[deleted] wrote: post #29
smalter wrote: post #19

Amazing article. As advertised, it's not a self-aggrandizing "mistakes" post that points you at the end to the author's next venture. It's full of the kinds of things that keep me up at night. It reminds me of something similar that happened to me: I was running Adwords for the first time. The dashboard wasn't showing that any of my ads had run, and it kept telling me to up my bid amount. I kept upping it and upping…

[deleted]

What are you expecting? He's trying to keep his company afloat and keep enough of his reputation intact in the case his company dies.

True honesty is rarely rewarded in failure.

Re: Mistakes You Should Never Make

#40

Post by otterley »

methodover wrote: post #9

> In the early days I would often let potential customers think we already had a feature they wanted What. How is this even remotely acceptable? If discovered it destroys your credibility. Among your employees it destroys your credibility. If I was an employee and found out that this was happening, I'd be extremely upset. I wouldn't trust a thing you say. If you'll lie to customers, you'll lie to me.

It is also fraudulent and could lead to litigation against you. I have no sympathy for companies and people who do this.
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