Clicked on this expecting to see another millennial self entitled "why I left" rant, but found a well written, horrifying article on deception and underhanded shenanigans.
The CEO of this startup qualifies be listed under the other discussion on here about psychopaths running companies.
Odd, I've never come across a rant like that. But I do seem to see self satisfied "millennial" bashing pretty often. (I don't think I'll ever understand this impulse to ascribe vague personality traits to broad groups of people across a large number of birth years.)
Apologies, it was probably a little too judgemental and unnecessarily tarred a lot of people with a wide brush, but there was a phase about 12 months ago where Medium was full of posts, to paraphrase what someone else said: "By unknown twenty-something year olds posting angst driven articles about leaving some unknown valley startup as if they were Jimmy Page leaving Led Zeppelin"...
It's weird, because the person said "another one of those..." The Talia Jane article came to mind but I'm quite sure there aren't others. Seems kind of weird to imply this happens all the time when its happened exactly once.
If I'm understanding the article correctly this goes beyond not getting paid because the CEO is juggling accounts - the Wells Fargo thing is probably criminal.
In most European countries, not paying your employees in the course of delaying bankruptcy on purpose will be a jail term. I was under the impression that California (as opposed to the rest of the US of A) had pretty strict workforce protection laws, too.
Laws still require enforcement. And from what I've seen California is a bit over-hyped in many ways, including how liberal/progressive it is, how hard it is to start and run a business, and how well it protects employees.
My tl;dr layman's understanding is that in CA, missing a payroll equates to the company is no longer a going concern. It's a serious problem to miss a payroll, and this is a good thing. If you are responsible for payroll at a CA company, you need to see a potential shortfall coming well in advance and respond preemptively by negotiating [hopefully] temporary salary cuts with your employees or preparing the team to go on unpaid leave (this is legal - you should continue paying their insurance premiums though).
Usually not a good idea. This opens you up to: defamation lawsuits, contract violations, and provides cause for firing which could hurt your own claims.
Scumbag Startup: "We fired Screwed Employee for cause."
Screwed Employee: "No you didn't! It was retaliation."
Scumbag Startup: "Sure we did. Look at what he/she posted publicly after leaving the company. Screwed Employee behaved similarly around the office and was negatively impacting the work environment."
When I said blow things up and make things public, I meant make all my communications with management and the company very out in the open, CC everybody.
That way, if they do fire you for cause, you have a paper trail, and you tend to keep a lid on their worst tendencies because then they have to justify their words/actions to their own employees.
No, you never escalate publicly, not to people outside the company. As long as everybody is CCed while the conversation is going on, they don't have a leg to stand on, since everything is factual.
Even doing this with unrelated parties inside the company is dangerous. The best thing to do is just CC your own lawyer. It's sad, but you potentially open yourself up to liability by warning your co-workers. If you do want to warn them, the best way would be through a quiet, short conversation in a private place away from the company. Possibly your lawyer's office.
I don't see how you open yourself up to liability.
This is before anything is really bad, but you are getting suspicious.
If you hire a lawyer, you're instantly at DEFCON 1. CCing all your teammates has plausible deniability, especially if they're in the same boat you are.
You're not trying to warn anybody here. You're raising a gigantic red flag saying "Hey this is happening to me. If this is happening to you too, let people know instead of just suffering in silence."
> If you hire a lawyer, you're instantly at DEFCON 1.
No, when you hire a lawyer and provide them documentation on what has transpired and is transpiring, you are just building an arsenal to be prepared in case of further escalation.
When you have your lawyer contact the company, even then, you aren't at DEFCON 1, though that is a significant escalation (or a response to one.)
When you file legal action against the company, then you are at DEFCON 1.
If you ever email your coworkers, and CC your boss/fellow employees that you've done so, you're at DEFCON 1.
That implies that legal action is imminent.
If you BCC your lawyer, or just save up the information for later, that doesn't escalate the situation quite as much and allows people to back down more.
> WrkRiot pulls signals from your resume and matches them to job posts. That's right, we do the searching for you. We'll be updating this section with videos, walk thru's and more.
Just look at the blog too. I'm not sure who thought that a blog post entitled "10 WAYS TO SURVIVE AT WORK WITHOUT SLEEP" would be a hit with job seekers. (Not to mention that 100% of their blog content -- 7 posts -- was posted 3 days ago)
It's too bad no one archived that blog post about how to get by without sleeping. It was very personal, and very stupid. If anything, it was evidence that this company didn't have a clue and was letting its social media person fill the blog with crap (which was unread by the executives) just so that it looked like the company was doing stuff.
"Isaac Choi" - I'm starting to imagine the lie was that he had a Chinese company scrub his name and he's not called Isaac or Michael. Having other people pay the cheques saves giving his name away too.
this is a South Korean name.
And the author of this article is also Korean.
That's why she mentions they use "second language" to mimic Chinese employees
This is just pure opinion, but to me it is hard to read and unprofessional. It is certainly unique, but it doesn't project seriousness, which is what I want out of a job discovery service. Omitting the vowel just has the ring of a shady knockoff, scammer, or malware site that capitalizes on typos. Maybe I'm just not used to seeing the consonant string in trademarks or company names, but it strikes me as peculiar rather than creative or edgy.
Second thought: this is a company which can't even manage to register "workriot.com". Even if "WrkRiot" is the brand, I would expect them to grab the domain with the more obvious spelling and have it redirect to wrkriot, but it turns out "workriot.com" is registered to a Finnish hosting provider sitting on the domain. So to recap: the domain with the more obvious alternate spelling of the company is (very likely) up for sale but they still haven't managed to acquire it. That does not engender much confidence in their marketing or management.
In general misspellings are considered bad for SEO because search engines suggest correcting their name to something else. I'm not sure whether that applies here but I have seen it for startups that vowel drop weirdly, etc.
*WrkRiot. 1forOne's twitter and facebook profiles are gone and WrkRiot matches the description perfectly (including the doggy avatar and a large number of Asian employees).
It's actually dangerously obvious who some of the people mentioned in the story are, just from the descriptions. It might be a good idea to anonymize characters further by changing ethnicity/nationality and gender.
"Name and shame" feels good but there's a huge danger in pillorying people just based on a single person's account.
WrkRiot seems to be the company in question and their online presence is so laughable nobody here likely feels bad for making fun of them, especially because of the behaviour the author describes. But the story is not just about a company but also about individuals.
Consider WrkRiot's head of marketing, for example. The author portrays her very negatively (outright trying to take the author's credit, being generally incompetent and engaging in deceptive and hostile practices). Whether you personally find the author trustworthy or not, if you only go by the article this is essentially hearsay.
Whether the allegations are true or not, she might face problems because of them (e.g. when trying to apply to new jobs). The author OTOH can maintain plausible deniability because the article never explicitly named any names (just gave enough identifying information to allow HNers to deduct the identity of the company and the employees).
I'm not saying the author is lying. I'm not saying WrkRiot or its CEO is innocent. I'm just saying there's no way to know as an outside how much of the story is true and what details have been left out (knowingly or not).
This is why in criminal investigations "due process" is a thing. Otherwise you end up with mob rule and character assassination -- and accusations tend to stick even if they're proven wrong and malicious.
It should be noted that the criminal justice system is not there to give justice to individuals. The district attorney functions as the representative of state interests.
If you are a victim of medical malpractice, the district attorney will not find healing for you. If someone wrongfully injures you, a criminal case will not return even an inch of your wholesomeness. If someone cheats or robs you of $50k, the district attorney will not help you pay your bills.
Civil court is the provided forum for issues of individual justice, and there individuals will find themselves paying alone, and in a position of imbalance, only a stupid person would fight for themselves. In the game of civil justice, where one might seek healing or remedy, you must pay for the prerogative to play.
True, but at least some of the accusations seem to imply criminal behaviour on part of the founder(s). Manipulating screenshots from the bank and passing them off as real sounds like forgery to me -- but I admit I'm not intimately familiar with the US criminal justice system.
That said, of course there are safe conclusions to draw from this story (especially the ones that hold true in general) but all personal accusations should always be taken with a grain of salt, especially if you have no personal knowledge of any of the people involved.
> If you are a victim of medical malpractice, the district attorney will not find healing for you. If someone wrongfully injures you, a criminal case will not return even an inch of your wholesomeness. If someone cheats or robs you of $50k, the district attorney will not help you pay your bills.
This is not entirely true. While the general civil/criminal purpose distinction you make is broadly correct, there are provisions for "restitution" within the criminal court system that overlap substantially with the compensatory function of the civil court system, so its not accurate to say that the DA will not help you recover funds or that a criminal case will not restore your losses.
I understand where you're coming from, and initially had upvoted your comment. The problem is that there are shifting goalposts as to the definition of "fuck over". Here specifically it's pretty clear some unethical and illegal behavior occurred. There's no question it was right to out the shitty company. But encouraging people to out people they feel they've been wronged by sets the stage for tragic mistakes. The media is especially guilty of this, even if it isn't outright libel. I would be much more agreeable to your suggestion if people were generally much less trusting. But people are really awful at critical thinking with this kind of thing.
Yes, we should out bad actors. But we should also avoid witch hunts. I agree with pluma 100% here. Plausible deniability is important as there are always at least two sides to every story.
That said, Penny's account of life at the mystery startup sounds startlingly like that of my experience at Motionloft many years ago. The difference there is that the (ex-)CEO was convicted, and my experience was corroborated by another ex-employee and by one extremely pissed off vendor.
I wasn't crazy about the idea, but the stack was interesting (and gave me some great learning opportunities). Ultimately Motionloft was more marketing than tech driven and I bailed right around the time Mills hoovered up all the money.
Amusingly the `whois` records for wrkroit.com mention 1FOR.ONE CORPORATION as the registrant organization. Here is a snippet of the records:
Domain Name: WRKRIOT.COM
Creation Date: 25-aug-2016
Registrant Name: ISAAC CHOI
Registrant Organization: 1FOR.ONE CORPORATION
Registrant Street: 2005 DE LA CRUZ BLVD
Registrant Street: SUITE 131
Registrant City: SANTA CLARA
Registrant State/Province: CA
Registrant Postal Code: 95050
Registrant Country: US
Registrant Phone: +1.4083447484
Registrant Email: MYSUBS@HALLFORONE.COM
> Isn't the photoshopped wire transfer literally outright criminal fraud?
Its not clear to me that it is criminal fraud; its clearly deceptive, and its clearly intended to defuse expected responses to the already-criminal failure to pay regular payroll, but I'm not sure its an independent crime.
But, you know, there are people who taxpayers pay to investigate the kind of thing described in this article (like the local DA and the California Department of Industrial Relations) and I'd defer to them on exactly which bits of this affair are which crimes.
Welcome to the club. It's pretty much a rite of passage here to spend some time with a psychopath VC, a completely self absorbed CTO with a rich investor dad that fuels his fantasies, or an idiotic CEO with an ego problem, and to pay the price for it (just time if you're lucky, time+money if you're not).
I've encountered this myself several times (down to the CEO using hire fast fire fast as a mantra), and judging from my friends' stories, most people have or will. When there are large amounts of money at stake, I guess it makes sense for charlatans and sharks to flock.
There are very few ways to tell accurately from the outset at first who's going to screw you over - I've heard horror stories of the sort from friends at startups backed by high profile entities like YC, famous startups that are often in the media for being "the best places to work at", companies with celebrity founders who have reputations for being "the nicest guys in the world", etc.
It's the kind of thing that you can only learn through a few painful experiences, I think. You do learn your lessons: never pay in advance for anything, don't put your own savings or core livelihood on the line for someone else's dreams, get everything in writing, talk to former employees of a company/colleagues of a founder before getting involved, never ever assume that what you have is anything more than an employer/employee relationship, etc.
I have to say that I'm impressed by how the poster handled it - keeping documentation, filing wage claims, etc. - the only thing she could have done better was not staying on so long when she wasn't getting paid, but it's an understandable mistake when you're in the moment.
I for one am glad I learned my lessons at 22 rather than at 45 with a family to care for and a mortgage to pay. The upside is that there are plenty of genuinely nice, passionate people - when you find them, stay close to them.
> It's pretty much a rite of passage here... most people have or will
That's pretty silly. Plenty of people working in startups never put themselves through that kind of BS.
There are at last two obvious strategies for avoiding the whole problem: (1) be a founder, (2) work in a more established tech company until you have the experience, personal network, and finances to intelligent pick a startup to work for.
Been down that route. Overall, my CEO co-founder was a very honest person; so I've continued our friendship. About 6 months after the business fell apart, he helped me meet my wife and was on the alter when we married.
When we last talked, he indicated that he was going back to what he did before starting companies. I hope it works well for him, because if he can keep within the (not CEO) role that plays to his strengths; I'd happily work with him again.
This is good advice, but I think everyone is best suited to doing number 2 before number 1. Most people are not ready to be a founder right out of the gate, and that's where a lot of the douchebag founder horror stories come from. Not because they want to be douchebags, just because they are so arrogant.
One should spend five years building stuff before becoming a CEO.
You think as founder you don't have to deal with that? Oh boy, you're in for quite a few surprises. And how do you learn about how to handle this if you work at more established companies?
It's the kind of thing we all already know of because of tv shows like game of thrones. But experiencing and actually handling it is another topic.
A psychopathic peer is not the same thing as a psychopathic boss.
If you're doing your job, you know how much money is in the bank and you know what the value proposition of the business is, so the failure modes described in the article don't apply.
I'm not saying a slipper cofounder can't also try to cheat you, but they have a lot less room to maneuver when you're not a subordinate.
The first thing you learn when you become the boss: You will never get rid of having a boss. Usually the boss's boss is the customer, because he's the one who pays the boss. And as long as there are no (or not enough) customers the boss's boss is the investor.
So you won't ever be high enough to only deal with harmful people in equally powerful positions. Maybe being the president of the US or the owner of the biggest company can think like that. All other 7 billion people can't.
And there is another vector we also shouldn't forget: The higher you get the higher the stakes. Getting f'd as an intern may mean you lose a few hundred bucks. Being an engineer or mid level manager means you play in the 4-6 digit range. And on officer level or above you play for at least a few hundred thousand dollars and with a lot of possibilities to break laws (or appear to break laws) and go to jail. So you probably won't have more safety, but more risk.
If you really want to be save from these people, go live somewhere in the countryside far away from civilisation, grow your own food, and be nice to the other villagers.
Often the worst companies put pressure on their employees to give fake positive surveys and pretend their company is a great place to work to trick people into a year or two while management moves on.
Seen it happen at a company that was voted top xx best places to work for a few years running in the local press.
I've seen HR at a major abuser massage Glassdoor rankings by disputing/threatening them with legal action for negative reviews and shilling/creating fake accounts to put in positive reviews. I believe Glassdoors policy is that they are not interested in lawsuits, so all it takes is a letter from a lawyer. Maybe even less than that.
My new best signal is if they don't seem to listen during a conversation. They only talk and occasionally pause while waiting to make their next point.
Agreed. Startups are incredibly hard, and this can bring out the best in people... or the worst.
Just like you, I'm early on in my career. I appreciate the incredibly valuable and lifelong lessons that I've learned from them. I feel that in the long run I'll be better off for them since I know exactly what to look for to identify bad situations before I'm in them, and how to protect myself if I do end up in one.
Most importantly, I've learned what not to do to other people and find that I've developed stronger ethics as a result.
Biggest mistake is thinking you have to "get" experience.
I'm 42 and at the other end of the scale. To me the line now that "it's a good learning experience" and "I'll know better in the future" are just ways of saying "I'm making mistakes".
From someone who has been there and done that, best not to make the mistakes in the first place. I had strong ethics to begin with and compromised them many times because I thought that's what you had to do to get on. I was wrong.
Learn from listening to experience and watching others fail or succeed, much smarter.
You can never have enough advice before making decisions. Find successful people you trust and listen to them.
Much easier than having to go through your own hassles.
I totally agree! I have a number of trusted family members and advisors that have saved my bacon many times.
But I accept that I will make mistakes throughout my life. When I do, I think about them to figure out why I made the mistake and how I can avoid it next time. Then I let it go- beating myself up doesn't help. Honestly, if I'm going to make a mistake at some point, I'd prefer that it be sooner rather than later.
I'd say I had strong ethics to begin with, and these situations gave me a chance to test (and uphold) them.
Outside of the edit window for my comment, but wanted to add: the H1B situation sounds fishy as hell. 8 H1Bs costs a lot of money, which the company does not seem to abound with.
It seems like something weird might be going on here - if the founders are willing to forge receipts and lie about the company, it might not be beyond them to hold on to passports or some such for "immigration reasons", which would then explained the unwavering loyalty. If something like that is going on, I hope the devs get out of it unburned.
The easiest solution is that they've simply lied to the 'H1Bs' and immigration officials as well - brought them in on tourist visas or some other arrangement.
Once you're in the country, even if you overstay your visa nobody is going to come to deport you. The problem arises once you leave the US and want to come back again - visa overstays will be a huge black mark then.
I want to add that with the H1b lottery being around 20-30% for the past couple of years, being able to hire 8 H1Bs mean that they applied for ~30-40 people. I definitely would lean toward the other comments here that the situation is extremely phony
H1Bs aren't that much money, especially if it is a transfer [0]. You will of course need legal help but since H1B has become so popular that process has been streamlined and attorneys now use it as a loss leader in order to expand their business.
The other aspect, is that yes it'll be about $4k to transfer an H1B all in, but... consider the savings. A Level 1 "Computer Programmer" in Santa Clara has a minimum wage of $52k[1]. I'm not too familiar with Santa Clara but that is probably a 50% savings over a typical software engineer wage. Paying $30k for 8 H1B transfers all in looks really attractive when payroll is shrunk by $300k+...
EDIT: looking at some of their linkedin profiles they fit the profile of an F1 OPT employee (Bachelors from an unknown university in china, masters from a large state university STEM degree mill, recently graduated), which is even better for the employer, you get a built in tax benefit discount on their wage.
a company, that is not really a company, keeps applying for tons of h1b. they usually have some title like consulting.
they get the h1b and don't even bring the programmers from India. they become "visa holders" companies.
the h1b's then start to look for work on their own, or the holder. and once the programmer is hired, the visa holder company gets paid, take 70% (or 60% if the programmer found the position themselves).
and this is how most h1b contractors that work on Google and such live. they will endure it for the 10 years the us forces them to stay as h1b. always trying to get transferred to the hiring company directly, and almost always failing.
the final company pays much more for a contractor via a visa holder, but they have the benefit of paying it via a small consulting company, so it won't show up as head count for the investors. everyone but the programmer wins.
Never have I seen this laid out before like this, and so I thank you for that! I think it's a real tragedy that we can't just have a rational Visa system- you get an offer from a company, then you should be able to get a work visa. Work visas continue for as long as you are employed plus one year. That gives you a year to get a new job.
This is how you attract the best and the brightest and this is what america needs.
There are plenty of organizations that use H1-Bs properly and correctly, but when people talk about H1-B fraud it's exactly as you describe. They've poisoned the well. It also explains why there are people that can honestly claim we need more H1-Bs because legitimate use is being choked out.
That's exactly right. It has always costs every company I have been with more to hire an H-1 than a local person so we have only done it if we can't get anyone local -- which is exactly the way the system is supposed to work, and that intended system seems perfectly fair to me.
they can endure such jobs only for 6yrs, beyond which the company that sponsored the visa has to file for a green card (if they do, then the employee can continue suffering for a few more years).If they dont file for a GC, then its a one way ticket back to their home country (or go to Canada with a PR ready).
the 70-30 split, is something I used to fume about, thinking its unfair to the employee etc. But that is how contracting companies work (not just for H1b employers). They pay the employee $.7X, and charge the client $X for every hr worked.
the benefit for the final company is that the headcount of H1b employees on paper remains low, and the cost of H1b kinda gets prorated into the hourly rate. It doesn't make sense to hire an H1b if the company knows for sure that they need her for just one/six months or a year. But a staffing consultancy can certainly justify filing for the H1b, if the same employee can work with 3 clients for 1 year each.
Though this looks like they (the companies filing for H1b visa) are doing something illegal, it is not, as long as a LCA (Labor Condition Application) is filed for the client's location and is approved, its totally kosher with USCIS, DHS and DoL.
Sadly, its hell for those on such H1bs (and I'm glad to never have worked with such consultancies)
the problem exists with those h1b consulting companies, that fudge resumes, fake phone interviews to get someone with zero knowledge into a job with a client. Those are the companies that are poisoning the well and making it tough for people like us and employers like mine, who are using the H1b option the way it is meant to be. In fact, its worse for those who who studied in US, and worked with an employer for ~2 years on Optional Practical Training (work auth while on student visa after graduation), lose out on H1b lottery because it was oversubscribed by such fraudsters. Its not just the employee losing out, even the company that invested in that employee is losing out.
Once, I interviewed a senior engineer to join my team and it was shocking for me to come across a resume that was as experienced as I was, but had zero knowledge. Later did some prodding on the candidate's past experience, realized its a fake resume with fake experience.
I can only pity those h1b employees at this scamming company. The sad H1b rules, that tie them to the sponsoring employer, is the reason such practices exist.
> They pay the employee $.7X, and charge the client $X for every hr worked.
That's a failing consulting company. A profitable consulting company needs to bill at 3x to 5x wages to support the overhead of sales and management. Even an individual, with no overhead but themselves, needs to bill at 2x what their desired wage would be if full-time.
I read original comment far above as saying that the company takes 70%, leaving 30% for the H1b employee. Or if the employee finds their own "job" (consulting gig), then the company only takes 60%. As you say, that seems more in line with typical consulting hourly mark-up.
as an H-1B myself, you don't need to hold on to passports to buy that sort of "loyalty". moving here from anywhere in asia is a huge sunk cost, and the natural impulse is to hope against hope that you don't have to bite the bullet and go back home, essentially eating that cost and starting over.
plus (at least from an indian perspective) there was a time when the indian job market for programmers was so bad that people would put up with all sorts of abusive conditions, simply because they knew that if they went back home it would be to a long and depressing job search that would likely end up with a low-paying position. (i believe that has gotten better in recent years; i'm not sure what the situation in china is)
> a psychopath VC, a completely self absorbed CTO with a rich investor dad that fuels his fantasies, or an idiotic CEO with an ego problem, and to pay the price for it
For some reason we are not educated about this. We learn it the hard way by being taken in with what seems a good opportunity, then getting abused and then going our own way. We naively believe people empathise for others in the mistaken idea that there is some semblance of 'compassion' in everyone.
Even if we have gone through the mill several times we may not be educated as to what is only going on. You have to be done over by someone at the extreme end of the spectrum of personality disorder to understand what really goes on with the tyrants and bullies that frequently own companies, start-up or otherwise. We even elect these 'personality disorder' types to high office without anyone pointing out that they are not fit for the role due to having these psychopath tendencies.
This really does have to be a regulatory issue as those that cannot think through the consequences of their actions or empathise with others or understand the harm they do need to be rendered powerless. Otherwise they will not learn their lesson and go on to waste yet more lives. They can do so near indefinitely, taking people on a ride for six months or more before their victims cotton on to what is happening.
There is a second problem in that the people with these personality disorders really do attract others. Cult leaders do it, to attract others with personality problems of their own, elsewhere on the spectrum. For instance, in this case, marketing. What type of person does marketing in the first place? What leads them to believe they have the secret sauce to market the product they know nothing about? There is some self-belief going on there, some belief that isn't grounded in a strong product that the customer-base will 'market' using word-of-mouth. Sure there may be some good experience and education that can be brought to the problem but often there is not.
It is important to learn the 'tells' - as other commentators have noted it is how people treat restaurant staff that says it all with these rogues. Also the 'there is no I in team' really does matter - do they say 'we' or 'I'? Sometimes we overlook these 'tells' for reasons we invent - maybe they have were brought up that way... We give them excuses for their behaviour. We keep our anger at them to ourselves and don't burn our own bridges by letting that anger out.
It is a pity that most people only get 'lightly burned' in these situations and not fully toasted. Only when you get fully toasted can you work it out properly and end up knowing about the rogue personality types and how toxic they are.
It's really infuriating how few people will believe you and follow up on the 'tells'. Even people who must have experienced that before. The only reason I can think of for that behavior is an inate hope that other people are reasonable.
I just got out of a relationship with someone who is borderline. It makes me really, really sad that borderline personality disorder is even a thing :(
obviously, there are personality traits and disorders which predispose a person to doing bad things. But that isn't a reason to assume that's what happened here, unless you happen to be that person's licensed psychiatrist.
and yet silicon valley says it's impossible that discrimination on the basis of gender, sexual orientation, race, and age isn't happening. Not you, per se, just in general everyone believes the scam but the rest is "just a matter of opinion."
As for me I am entirely unsurprised because I've literally seen it all. and it happens more often than most people realize. the more desperate you are to be here, the more people will take advantage of you.
It's very similar to the way young girls who want to be actresses or models get "discovered" by pornographers.
Wow, that whole tale of woe is giving me flashbacks to a startup game studio I worked at once upon a time. They never resorted to outright fraud in the 'lets not pay them, but say we did' sense but there was plenty of the other sketchy behaviour.
Anyone with an account on crunchbase can contribute any information about a company. The information is not official. It is crowd-sourced. Which means the info can be fake.
They don't at all. I've seen significant errors before. It's usually vaguely correct, but when you've got a manipulative liar running your company, Crunchbase isn't going to help.
Interesting, because I saw a very similar scenario play out at the very first job I had after college. A coworker's paycheck was delayed then when the check did arrive it bounced. Coworker complained to CEO. Coworker was then fired. As a sibling comment says: this kind of thing happens often enough that everyone has seen it at least once.
Definite bonus points for the fake wire transfer receipts though. Above and beyond!
Singaporean startup founder here who moved from the US. I have yet to meet a psychopathic CEO here in Singapore, but I've met and heard about quite a few in Silicon Valley / Bay Area. It may just be selection bias (a lot more companies are founded in the Bay Area) but I wonder if there's something more. Any other insights into Bay Area startups vs. international startups here?
I've had the [dis]pleasure of having an even more fraudulent co-founder in China. Heard plenty of stories too. Perhaps stories from SV are just more likely to get exposed to the public (and get attention).
I had a Singaporean (from Inida) "investor" sign docs only to stall, lie, and eventually fake wire transfers (also from wells fargo, which is ironic in this article). Tried to forget the guy, but think he first name was Sumanth. Be careful if anyone comes across this fraud!
okay i can understand why the title got changed. but why to what it is currently? feels like a "missed the lede" kinda title which isn't any better than the original title.
For control. A US employee can walk away from the sinking ship any time without too much repercussions, not the case for foreign nationals staying on company sponsored visas
> A US employee can walk away from the sinking ship any time without too much repercussions, not the case for foreign nationals staying on company sponsored visas
and the lawyer would tell them "don't bother, just go" unless the lawyer just wants to make free money. honestly, getting H1B is tough enough already - trying to secure an extension or transfer of H1B when your first one is entangled in fraud, practically impossible.
I got the impression that the "founders" are Chinese and were only hiring H1B's because 1-They too are Chinese, 2: Cheaper than local. 3: easy to control with the H1B hanging over their heads.
If the company and employees identified by other people in this thread are correct, then yes, it would seem that this company has a Korean CEO who enjoys the loyalty of a Korean clique within the company. Some of the Caucasian employees have close ties to Korea as well. OP was ostracized and eventually kicked out because she didn't go along with the clique despite sharing their ethnicity.
The H1B's are Chinese and probably have no influence over how the Korean clique runs their company. The quote from "Michael" suggests that he has little more than contempt for the "Chinese kids". I can almost hear the Korean version of that remark in my head, and unfortunately this kind of racism is all too common among the assholes who give my country a bad rep.
I once worked for a startup here in boston that didn't pay me for a few months until I threatened to file a wage claim (did't work) and to quit (worked). I got the hell out of there as soon I got paid - some of my coworkers weren't so lucky.
It seems crazy to me now that I wound up in such a situation, but what it is happening to you, it is usually accompanied by a healthy helping of lies, misinformation and hope.
It wont happen again. But it was fun getting ~3 months salary in cash and going to Jordan's to buy furniture with my girlfriend like a gangsta'
Has there ever been an instance of late payroll (as opposed to eg sales commission checks being calculated wrong) where the company actually pulled out of the nosedive? It seems like it's almost always the death knell.
Absolutely yes, though it depends on the transparency of the rest of the team really. I have been involved with three companies in my career which pulled out of this seeming nosedive. One of the companies was going through a really horrible time. They had just got done releasing software that was horribly behind schedule which relieved their customers, but it was still stressful. They were working on settling two law suits. And it was almost Christmas time (first pay check of December, I remember it well). The owner came in and said he couldn't make payroll and that he would be able to as soon as a few customers paid. Everyone was upset. Later that afternoon the CEO's daughter rolled up in a brand new Subaru which he had bought for her over the weekend. I was the head of development, my buddy was the head of operations. We walked the CEO outside and broke the news to his daughter and him that the car was going back. We took the cash and made payroll. We never allowed the CEO to make financial decisions again and about 10 months later closed the sale of the entire business for a windfall profit for him and us. Ultimately everyone got paid well and everything worked out.
The second place, the C level executives literally didn't know how to calculate runway and more or less ignored the bank accounts. Checks started to bounce from the bank accounts two days before the payroll was to be cashed. The executives freaked out and honestly felt horrible. Payroll bounced but we warned all of the employees. I was again development manager and the CEO asked me if I knew anyone who could help. We brought in a friend of mine who is a consulting turn around expert. We got one of the existing investors to make payroll, three days late, by signing a personal check. My friend, the turn around expert, wrangled the books (after not sleeping for numerous days to try to figure out the financial situation). We turned the company around, and in a few months had it to a level of profitability it had never seen before.
It is possible to turn things around. Really the biggest problems come when people aren't honest with themselves and their employees about the situation they are in. The first CEO in my example had to be honest with himself and realize he had to spend on his employees before he could spend on his family. When he relinquished control of the financial decisions and stuck to what he was good at, the company turned around quickly. The second executive team had to realize that they were young and inexperienced and needed help. When they did and asked for it, the company turned around quickly.
Not trying to pick over semantics, but in both of those cases, payroll was in fact met almost immediately, just via "extraordinary measures". Going a full pay period without a paycheck should be the signal to stop showing up and start seizing assets.
I wasn't as involved with the third company's solution as I was with the first two I mentioned. The third company was a real estate software company. The problem was there was a down turn in the market that was rather unexpected (this wasn't the '08-'09 down turn, this was much much smaller than that). The company couldn't absorb the slowing of revenue as much as they wanted to be able to and ultimately they got into trouble. The company was completely bootstrapped, single owner, no investors, as it is to this day. Payday was set for a Friday. On Wednesday the owner knew there would be trouble. He told everyone that payroll wouldn't make it by Friday and to give him the weekend to find the money needed to pay everyone off. By Tuesday he would decide whether the company was still viable or needed to be shuttered.
This lead to a number of interesting situations. He did make payroll the next Monday (he literally sold everything he had, went to his elderly parents and begged them for some, and made it happen. Someone had to drive him into work on Monday because he sold his cars). A good percentage of the employees left that day and never returned. Some of us stayed, believing in the business, his honesty and integrity. I was just an engineer but we did turn it around and actually he had some great plans on how to never get into that situation again. He actually did very well after the 08'-09' market downturn and his business is still very profitable to this day.
That's an incredible set of stories. What strikes me is the ability and confidence to take the CEO aside and say no, that's not happening. That sounds pretty nerve racking.
The things that stick out to me here are how excellent teams took the mantle and provided radical turn arounds from a trajectory pointing to failure.
I would say the first time I went through this it was very nerve-racking. However, the CEO of the first company (which I spoke about in another comment, the real estate software company) really changed my attitude on working and being an employee forever. I remember sitting with him at an Applebee's late at night. We were talking about the downturn of the market and the financial problems the company had during the time and how scary it was for me as "just an employee". He said to me, "You're not 'just an employee', you're an investor in my business. You invest your time, talents, and efforts to make me succeed. I pay you dividends more regularly but honestly you should never act as just an employee. If you do amazing work you'll be rewarded just like an investor, if you act like an investor."
I know what a lot of people will say to that. "No way, you're just an employee, you won't be treated like an investor." Well, true, if you have that attitude you won't be treated like an investor. You'll be treated like an employee. However, if you start acting like an investor, you'll be treated as one. Ask intelligent questions about the business and its financials. Talk to the board. Give intelligent and thoughtful advise to help the company. Be an asset far above the code you write.
If you do that, and then all of the sudden everything starts to nosedive, you will be in a position to help fix the problem and reap the rewards. You are an investor, not an employee.
I remember reading a couple years ago about a company where the CEO came in and announced that they weren't going to be able to make payroll so he was going to have to lay everybody off; some of the employees left, but others stuck around working "for free", and the company turned around within a few months. A couple years later they exited and the CEO gave large gifts to the employees who stuck around because they didn't own any stock but he knew that the company would have failed if they had left when he couldn't make payroll.
But that was a case of a CEO who was honest with the employees about the state of the company; I don't know of any cases where a company succeeded after a CEO lied about failing to make payroll.
as an ex-CEO who offered stock to employees in lieu of pay because my startup was running low on funds, it was all rejected. i later found out when i left the room, some of the employees actually mocked me and made it seem like i was just trying to scam them. one of them said something like "he's offering us stock in a company that is basically worthless, does he think we are idiots?"
just to be clear, the company was not worthless. we were actually somewhat breakeven at that point, monthly revenue was around $15k and employee salaries were somewhere around $15-16k. the idea at the time was that if they accepted stock compensation instead of cash, the company could theoretically afford to hire more developers, or launch a more ambitious marketing campaign. i did not factor in the fact that these employees weren't invested in the company, and to them, the fact that we weren't making millions in revenue means we are broke. so they value the stock at zero.
just to conclude the story: i ended up selling my company to another large company for a small profit (not headline-making numbers), enough that i can live comfortably and continue pursuing entrepreneurship dreams while not being employed. the employees who would have received stock back when i offered it would have made a profit, although in all honesty it's not Google or Facebook money. just for fun, i did a quick calculation on how much one of the employees who refused the offer would have made in stock - it was roughly about $250,000 worth.
Eh, I can see that going both ways.
As far as fluidity is concerned, stocks in a small, private company may as well be worth $0 since you can't pay rent or buy groceries with them.
Nice gesture on your part though: still didn't deserve mockery. Hopefully it was just their fear talking. :)
well, a few months ago i actually ran into one of the ex-employees, in fact i believe he was one of the main ones who mocked me. he's now working for some small tech company as a web developer. we had a quick 10 minute chat about how life was, but in a moment of pettiness, i took the last minute as an opportunity to kind of mock him back. the conversation was kind of winding down, and i said "hey by the way, no hard feelings about that whole saga back in the day. honestly, i actually understand your position now so it's all good. not going to lie, if all of you had not rejected the offer, i would be a few million dollars short when the acquisition happened!"
i walked away with a smile, and that dude kind of just shrugged and walked away.
"According to Business Insider, Pandora co-founder Tim Westergren admitted at a San Francisco startup conference that, between 2002 and 2004, it didn't pay its 50 employees at all. "
If all correspondence is done on the phone and not through email. I communicate through writing much better than on the phone so I wrote long and explicit emails. I don't feel like I have anything to hide. The phone only people are the ones who go back on their word.
The other thing is one size fits all NDA / non compete contract. Maybe it makes sense for the sales people but for writing code every day inventing things it doesn't make sense for the employee. If people don't want to take the time to write an appropriate NDA / non compete contract I have no time for them.
I think the title should be changed back. The author glosses over the single, real biggest red flag:
She never received any paystubs and the company was late on payroll as of before she was hired
I have never, ever been paid without either a paystub (as an employee) or generating an invoice which the business then paid (as a freelancer). The outright refusal to share how they arrived at the figure on her cashier's cheque should have sent her looking for a new job in the Bay Area or back to Texas.
The real lesson from this story is to always have a backup plan when making a big move: what do you do if you arrive and there is no job/no money? what do you do if you arrive and there is no apartment/room/house/etc.? Scammers exist and there is only so much you can do from a distance to avoid them.
> You can invoice the company. It's not a big deal.
Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard.
"Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard."
No - you are completely wrong.
There is absolutely nothing wrong - or even remotely immoral - about paying using invoicing while a company gets going. It's common and normal.
And payroll is not easy - it's a huge mess - and it can be very complicated.
If a founder, with funding, told me: "Invoice us for the first two months until October when we are up with payroll" I would have no problem with that so long as I was getting paid.
Again - of all things, it's not the issue.
The non-payment, the lies about funding, the loans from staff, and all the rest were bad signals.
What's odd is how nobody seemed to have anything to say about the product itself ...
If my contract says I'll be paid monthly on the 15th, when do I send in the invoice? Are the payment terms net-10, net-30, or longer?
Do I need to break out sick or vacation days as its own line item? What about the deductions?
Who is responsible for figuring out and paying the payroll tax? Because it sounds like asking for an invoice is a way for the company to avoid paying unemployment tax, social security, etc. That in itself would be a red flag.
If the invoice is not paid, can I file it as a wage claim or do I use some other mechanism?
These are the obvious questions. If as you say it a common and normal practice, there must be some place which describes the basic details.
If payroll is hard for a company, why is it any easier for the employee to figure out these payroll details?
"Could you enlighten me as to the mechanics?
If my contract says I'll be paid monthly on the 15th, when do
I send in the invoice? Are the payment terms net-10, net-30, or longer?
Do I need to break out sick or vacation days as its own line item? What about the deductions?"
If you are having difficulty grasping this - you should not work for an early stage startup that is pre-funding. You are expecting very standard 'employeeship'.
If you are an 'employee' of the company - yes - you are required to be paid with W2's etc. - of course.
But if you're not obligated to be an employee of a company to accept equity - or other kinds of payment for services rendered.
As far as 'invoicing' - either you're being sarcastic or you've never done such a thing. You send an invoice, and you get paid. You have to claim it yourself in terms of taxation. As far as 'terms' - I'm hoping you are kidding. Either you get paid or you don't.
The company in this article I think was well past the time wherein they should have had had payroll set up - no doubt about it.
At the same time - it's absurd how confused many of you seem to be about the simple mechanics of getting paid.
You do not need a payroll system (i.e. W2s) while you are in the most early stages of a company.
Actually it seems you're confused. You don't need a payroll system but you do need payroll done correctly by the company. There is no such thing as a "standard employeeship" - either you are an employee or you're not. Laws do not discriminate between a serious business or a sloppy startup that doesn't have it together.
You should really talk to an HR/tax attorney before you continue to spread misinformation.
Everyone is downvoting you because the conversation is about an employee relationship. Quoting atria, "You don't understand the difference between a statutory employee and independent contractor."
There is no special exception for startups where employee salaries are exempt from payroll taxes. It is also illegal for a company to pay you as a contractor when you are really an employee. What you propose sounds exactly like breaking the law.
Also, a company which proposes this arrangement takes on the liability that the 1099 contractor could come back in the future and sue for the taxes and benefits that a W2 employee would have received. That happened to Microsoft a few years ago.
I was giving you a chance to demonstrate that this practice is common and that you know what you are talking about.
However, given your posting history I should have expected continued blustering where you demean others for lack of knowledge. Why, just the other day you said that I, spouse of an Army vet who did two tours in Iraq, didn't have exposure to family members in the military. Now you say that I, employee of two startups and founder of two more, have no startup experience.
No one in this thread says a startup company needs a payroll system. The question is about paystubs for employees, which the employer can even do by hand.
You are spreading very bad MIS-information, and it doesn't matter why -- stop it.
The fact, for a number of different states in which I've employed people (including MA, CA, NH...) is that there are very specific requirements for hiring people, and
NO, YOU CANNOT SIMPLY "pay using invoicing while a company gets going".
Federal and state laws specify that all employees are W2 status, and you are REQUIRED to withhold taxes. Management is even personally on the hook for these tax liabilities.
There are exceptions under certain limited criteria in which you can hire people as outside contractors -- commonly referred to as "1099s" -- the Federal laws are quite tight (the famous '20 questions'), and state laws are even tighter. E.g., in MA you cannot hire any person who performs core functions of your company as a 1099, so if your company writes software you cannot hire anyone to work on that software as a 1099 (but you could hire someone to, say, customize your office accounting package as long as you are only using it). Yes, it is that tight.
Just because some founders decide to break the law, and you would be happy to go along with them, does not make it legal.
Just wow. This is terrible. You don't understand the difference between a statutory employee and independant contractor.
If you are an employee, the company is required by law to withhold taxes and pay you regularly. Every state in the U.S. has an agency that will take and prosecute wage claims. People have gone to jail for messing with witholding taxes.
If you just invoice, you are effectively an independant contract, they might not pay you, and you are on the hook for paying your taxes. A big difference.
You also are unable to avail yourself of worker's compensation if you get hurt and unemployment compensation when you are laid off.
It astonishes me that anyone could be so ignorant as to say there is nothing wrong with making people invoice you. As you've correctly stated, it's a completely different relationship. Even the liability is different.
If you're a contractor and the guy who signs your checks says "nice ass! Now shut up and do your work" He's pretty much just pissed you off and as a self-employed contractor, you're free to decline and move on to another "client". If that same person is your employer, he's broken several civil laws and in most jurisdictions, committed an actual crime.
We could both go on for hours on the differences which is why this whole thing amazes me.
Employees cannot invoice their earnings, they must be paid according to the law and the employment agreement you signed with them.
Yes payroll is complex but this is exactly why it needs to be done correctly and timely. The earnings, taxes, insurance, and other liabilities must match up along with all the reporting requirements. There is no way around this. You cannot just skip the complexity by telling them to invoice you.
"The actual exchange of money is 100x a stronger indicator of health than the presence of a stub."
Real companies with people running them who want to do things on the up and up and who know how to run a successful company want to keep a paper trail of every dollar going in or out the door. This includes having a pay sub with every single paycheck or invoice paid that shows what was paid, how much was paid, why it was paid, and when it was paid. That's How to Business 101.
"Real companies with people running them who want to do things on the up and up and who know how to run a successful company want to keep a paper trail of every dollar going in or out the door."
Most of you it seems have never run a business, have never consulted, have never invoiced for anything.
--> You don't need a W2 to pay someone legally
--> You don't need a 'pay stub' to have perfectly organized and legal books.
OTOH, you can generate paystubs through literally any halfway-decent bookkeeping software. I get running a lean shop, but once you expand from one employee to two, one of your first investments should be in some sort of accounting system in order to make sure every last goddamn penny is tracked with as long and complete a paper trail as possible.
Any good entrepreneur knows that if you don't know where every cent of your VC money is going, you're going to get eaten alive at your next investor meeting or VC round. On the other hand, if you can pull out a spreadsheet that says "We spent exactly xx% of our previous round on payroll, xx% on rent and utilities, xx% on chinese food, etc." you're going to have a much easier time convincing investors that you're a business that knows what the hell they're doing.
Not having decent bookkeeping can't be chalked up to "fast-moving startup woes", it's just irresponsible, and there's no excuse for not being on top of it.
Wasn't one of the excuses the CEO had for missing pay dates that his money was tied up in IRS dealings? Maybe a copy of QuickBooks would've helped with that.
> Again - of all flags - lack of pay stubs is the least of them
Its not the least, though it may be less than just being late on payroll. Posted paydays, of a certain minimum frequency, and timely payment on those paydays is a bare minimum legal requirement in most jurisdictions for which there are generally fairly significant liabilities that attach for failure. [0] A business that fails this in any broad way (for lots of employees and/or for multiple pay periods) is seriously and fundamentally broken.
(OTOH, tax withholding and lots of the other things that go on paystubs are similar bare minimum legal requirements with significant liabilities for failures, and if you are doing them correctly in the first place, actually providing paystubs is trivial -- the hard part is doing the required things that end up getting reflected on paystubs. So missing paystubs is at least nearly as big of a red flag as late payroll.)
[0] In California, for instance, failure to either post paydays meeting the legal requirements or to pay on those posted paydays as required by law is a crime (misdemeanor) by the employer. http://www.dir.ca.gov/dlse/faq_paydays.htm
The CEO blamed ADP for the payroll being late. When you combine that with the lack of paystubs, if alarm whistles aren't going off, you are just not paying attention.
It is a big deal, running a business requires following the law. There is no special "startup" case where you're allowed to be loose on your obligations.
Accurate payroll costs somewhere between $50-100 per month per employee with dozens of great vendors available. This is an incredibly trivial cost (especially compared to the fines for breaking these laws) and means there's no excuse to not have things in order. If you can afford a salary, you can afford accurate payroll and bookkeeping - otherwise you have no business being in business.
"It is a big deal, running a business requires following the law."
Again - I would suggest that maybe you have never started a company or done payroll, or paid anyone yourself.
It is not required to have 'payroll' to pay individuals for services rendered, nor have properly managed books.
I once created a 'side company' to manage some IP. The company had no employees. All participants (there were five of us over time, but only three at any given time) - were paid as consultants. Two of us had equity.
This arrangement was far superior than having payroll for this particular situation.
You're right, in that case. In the case of contractors invoicing is normal and legally acceptable. In the use case you mention here, contractors are appropriate and legal.
It is, however, illegal to pay employees like contractors. When you are hired to work full time for a start up you almost always meet the test of being an employee. The author of this article did. It IS therefore illegal to not give her a paystub or ask her to invoice.
This is generalizable to start ups. I've worked for start ups. Every time I was hired as an employee and treated as one. It would have been a red flag and illegal for them not to pay me as an employee.
Again, everything you're saying for the most part is true if you're talking about paying IC's. Where you are demonstrably wrong is assuming that you can treat start up employees as ICs You can't. Therefore doing what you're claiming is "normal" is actually illegal on many levels.
I've started several companies with my own employees and I've always paid them correctly and on time with proper payroll and accounting. That's because it's the right and legal way to conduct business.
If you're talking about instances where you use contractors instead, then that's an entirely different scenario.
As long as you treat employees and contractors separately and properly, there are no issues - but having employees and paying them like contractors is illegal. Invoicing is not a replacement for payroll.
I know that things are different in Canadia, but in the US you appear (up thread) to be conflating W2 employees and 1099 contractors. Yes, you can pay the latter as vendors - because that's what they are. No worries about vacay, health benefits either.
I would suggest that your little side gig did not provide you panoptic insight.
> When a company has just started, they may have not set this up.
The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees.
If you can't calculate withholdings and all those other things that get listed on a paystub correctly (which is the only thing that would stop you from generating a paystub), you are breaking the law (civilly and perhaps criminally under federal and state tax and other laws, that require the withholdings, deductions, etc.)
If you don't (in California, where this occurred) have posted paydays with at least the legally specified frequency, or don't pay employees on those paydays, you are breaking the law (criminally, under state employment laws, as well as possibly civilly.)
So, if you haven't figured this out, you have no business hiring employees.
"When a company has just started, they may have not set this up. The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees."
This is false.
For any of you interested - here is the actual law in California:
It's perfectly normal and very common to submit invoices for services rendered that you claim on your 1099.
There's no way you could have run a business without grasping how common paying people via invoicing is.
Some major companies - such as Wordpress - tend not to hire people for a while. For the first little while, they have you work on 'projects', remotely, until they decide they want to bring you on long term. The founder indicated that they pay them for the work and only bring some of them on. Obviously, they are getting paid via invoicing.
Startups will often bring someone on for a project/consulting, and then decided to keep them full time. This is not uncommon. It's also happened to me.
I'm going to guess that most of you commenting have actually never run a business, paid an invoice, or submitted and invoice.
Independent contractors and employees are two different things.
It's quite legal to hire people to serve in roles that are not, under the tax code, employees but independent contractors, without being able to handle payroll. But that's not a status that a company can freely choose independent of the nature of the work, it's a status that is controlled by the nature of the work by rules set out in the tax code.
You seem to think that employees hired as employees can elect invoicing and 1099 status if the company isn't up to handling employment law requirements, order that the company can hire people as employees and then treat them as contractors until it is ready to handle employment law requirements. Neither is the case, and either is a situation in which the company violates many aspects of the law (and more if it doesn't pay timely on a regular schedule but instead waits for invoices.)
You seem to persist in not understanding the difference between a w2 and a 1099.
fyi, as alluded to elsewhere in this thread, the government deems payroll taxes to be paid by the employee on the date he or she receives his or her share of the paycheck. At that point, the business is holding the taxes on behalf of the government. Officers of the company are regularly held personally liable for unpaid payroll taxes. The irs and state tax agencies choose a "fuck you, pay me" approach to these taxes. You should probably not screw about with them, but to each his own...
"Startup or not, you don't offload the risks of making payroll onto your employees."
What are you talking about?
Invoicing your startup for a payment is perfectly normal, and has nothing to do with 'offloading the risks of making payroll'.
Again - getting paid without a pay stub is utterly irrelevant to a new startup.
What matters is getting paid and hopefully it's done in an above the board manner, but the transfer of money is the primary indicator of risk - not the pay stub.
There is absolutely nothing wrong with not using payroll services for the first little while while a startup gets going, and it has nothing to do with the ability of an entity to pay you.
If you are getting paid consistently - through invoicing or whatever means, this is a good signal.
By the way - although the story is pretty scary (and hilarious) - the author is also a little bit naive. Everyone involved seems to be a little inexperienced.
The contract you sign is only as valid as the parties backing it up! Just because someone gives you a 'piece of paper' that may be legally binding, does not mean it has any integrity. The author should have done a basic bit of homework or point blank asked some very basic questions about funding status. He joined a company 'assuming' there was a round of funding, but that turned out to not be true. From my reading of the article, it doesn't seem as though the founder lied, but rather mislead the author. A few simple questions such as: "who has backed you, for how much" - or even a check on Crunchbase would have sufficed.
Again - a contract is only has the amount of real integrity as the people signing it. Your ability to enforce it is not just a matter of law - it's a matter of the reality of the entities ability to do so.
Anyhow, I'm glad it was written up so that people can learn form it.
"If you are getting paid consistently - through invoicing or whatever means, this is a good signal."
But that's not what happened, because they were late, enough so that people were filing their rent late. How about -- "Startup or not, don't take your employees for 'free credit'"?
Or, more brief: "Fake it till you make it, but don't break the flippin' law".
No, don't fake it. The reality is, investors know you are starting out. It's not a problem to write checks. All you need is a business account. Yes, make the pay stubs but they can be made on a typewriter.
Just don't fake it. Don't fake anything. Don't sell products that don't exist. Don't lie to your employees about your financial state (I see this happen a lot because people are ashamed to admit that the company is having troubles... this is a bad strategy). Don't lie about the state of the product (something that happens when people are naive enough to not realize how much testing is needed.)
If a company can't produce a paystub with a paycheck, I doubt that they are handling accounting and taxes properly.
Paystubs don't need to come from ADP. They can be typed up or even hand-written if you want. But they demonstrate, and record, that the company is fulfilling its legal obligations as an employer, and give the employee the information the employee needs to fulfill their legal obligations as a taxpayer.
I wonder how this will play out in April. I seriously doubt the company is properly withholding & paying the payroll taxes. I guess it's not even clear whether or not they'll be filing a W2 for her.
No, this is huge. Paystubs are a major thing. And if you can't get the money operating, then you shouldn't be hiring people. And if you are, you should be up front about it.
You are NOT entitled to people working for you for free, under deceptive pretenses.
That's not what matters. What matters is that the information is correctly documented. Taxes man. They make a difference. Say I make $100 a day before taxes. I get a check that shows they took out $25 for federal, $5 for State, etc. Whoopie, my take home is $70. At the end of the year I get a W-2 showing all the taxes they company took out etc..
But what if they just give me a hand written check for $70 made out to me, Joe Blow. There is no indication of taxes being taken out, but hey, I got $70, so all is great right? Wrong..
At the end of the year I get a W-9. They say I wasn't an employee but a contractor. I have no proof that they took out taxes and now suddenly I am on the hook to pay taxes to the government that were already taken out by the crappy employer and pocketed.
I know this to be the biggest red flag from personal experience. Happened to me at a small start up in Illinois of all places 20+ years ago. I was fresh out of college the naive to things, trusted in the owner. Got royally screwed. It was a formative experience that I wouldn't wish on anyone but it taught me a very valuable lesson the result of which is that I have only worked at well established companies since.
Hey guys, just wanted to clear the air on some of the speculation: I'm actually with WrkRiot and can guarantee you we're not the company in question: I've got many weeks of paid on time pay stubs sitting right here. Plus we didn't have anyone matching any of the descriptions in this article.
Interesting article though, it's really shitty some have bad experiences like this.
This is so transparent (pun intended) and clumsy that it's hilarious. You would think someone supposedly having several million in net worth could do better.
Disregarding everything else pointed out in this thread, there's also the part where the website for the older name of the company, 1for.one, still lists Penny Kim as the Marketing Director: http://web.1for.one/digital-press-kit/
On their new site, the screenshot under the "HOW IT WRKS" section still references their old company name;"1for.one": http://www.wrkriot.com/#tour-section
One of their employees now lists "JobSonic" as their employer. Ironically, searching for "Job Sonic" results in the Jobs page for Sonic, the fast food chain. Bunch of rocket scientists over there.
That might mean Penny actually meant JobSonic when she called the company name "anti SEO". Amazing they replaced it with one that's almost as bad (1for.one). At least the new one (WrkRiot) is googleable...
This must have been a traumatizing experience but the one thing I would want to add to it based upon my own experience is that things don't get that much better at the unicorns. Having worked for one that's still chugging along, I've seen the fake-it-til-you-make-it paradigm persist well into the 'mature' phase of a company. The industry at large feels like such a house of cards. It's not that value isn't being generated, but rather that it has been so dramatically overvalued.
I feel bad for the employees. This song will repeat itself many times over. Selfish deluded egomaniac taking advantage of people and their livelihood. Good luck to the rank and file.
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[ 0.45 ms ] story [ 582 ms ] threadThe CEO of this startup qualifies be listed under the other discussion on here about psychopaths running companies.
I'm almost certain that this is the post he had in mind while writing this comment.
In this case, the phrase "criminal acts" seems more appropriate.
See California Labor Code Secs. 204 & 215.
http://leginfo.legislature.ca.gov/faces/codes_displayText.xh....
In most European countries, not paying your employees in the course of delaying bankruptcy on purpose will be a jail term. I was under the impression that California (as opposed to the rest of the US of A) had pretty strict workforce protection laws, too.
Each name worse than the last...
This might be counterproductive in some instances, but if something doesn't smell right, I'll try to blow it up and make all the dealings very public.
I mean, there are no personal feelings involved. You are paying me to be a worker. No pay? No work.
Scumbag Startup: "We fired Screwed Employee for cause."
Screwed Employee: "No you didn't! It was retaliation."
Scumbag Startup: "Sure we did. Look at what he/she posted publicly after leaving the company. Screwed Employee behaved similarly around the office and was negatively impacting the work environment."
When I said blow things up and make things public, I meant make all my communications with management and the company very out in the open, CC everybody.
That way, if they do fire you for cause, you have a paper trail, and you tend to keep a lid on their worst tendencies because then they have to justify their words/actions to their own employees.
No, you never escalate publicly, not to people outside the company. As long as everybody is CCed while the conversation is going on, they don't have a leg to stand on, since everything is factual.
This is before anything is really bad, but you are getting suspicious.
If you hire a lawyer, you're instantly at DEFCON 1. CCing all your teammates has plausible deniability, especially if they're in the same boat you are.
You're not trying to warn anybody here. You're raising a gigantic red flag saying "Hey this is happening to me. If this is happening to you too, let people know instead of just suffering in silence."
No, when you hire a lawyer and provide them documentation on what has transpired and is transpiring, you are just building an arsenal to be prepared in case of further escalation.
When you have your lawyer contact the company, even then, you aren't at DEFCON 1, though that is a significant escalation (or a response to one.)
When you file legal action against the company, then you are at DEFCON 1.
If you ever email your coworkers, and CC your boss/fellow employees that you've done so, you're at DEFCON 1.
That implies that legal action is imminent.
If you BCC your lawyer, or just save up the information for later, that doesn't escalate the situation quite as much and allows people to back down more.
> WrkRiot pulls signals from your resume and matches them to job posts. That's right, we do the searching for you. We'll be updating this section with videos, walk thru's and more.
"walk thru's"? This website looks like garbage
Guess employees are the target audience for this post.
Replace employees with robots and write a blog post: HOW WE WORK 24x7
(not trolling, I'm serious)
Second thought: this is a company which can't even manage to register "workriot.com". Even if "WrkRiot" is the brand, I would expect them to grab the domain with the more obvious spelling and have it redirect to wrkriot, but it turns out "workriot.com" is registered to a Finnish hosting provider sitting on the domain. So to recap: the domain with the more obvious alternate spelling of the company is (very likely) up for sale but they still haven't managed to acquire it. That does not engender much confidence in their marketing or management.
Yes, I think I would pass on this venture.
It's actually dangerously obvious who some of the people mentioned in the story are, just from the descriptions. It might be a good idea to anonymize characters further by changing ethnicity/nationality and gender.
WrkRiot seems to be the company in question and their online presence is so laughable nobody here likely feels bad for making fun of them, especially because of the behaviour the author describes. But the story is not just about a company but also about individuals.
Consider WrkRiot's head of marketing, for example. The author portrays her very negatively (outright trying to take the author's credit, being generally incompetent and engaging in deceptive and hostile practices). Whether you personally find the author trustworthy or not, if you only go by the article this is essentially hearsay.
Whether the allegations are true or not, she might face problems because of them (e.g. when trying to apply to new jobs). The author OTOH can maintain plausible deniability because the article never explicitly named any names (just gave enough identifying information to allow HNers to deduct the identity of the company and the employees).
I'm not saying the author is lying. I'm not saying WrkRiot or its CEO is innocent. I'm just saying there's no way to know as an outside how much of the story is true and what details have been left out (knowingly or not).
This is why in criminal investigations "due process" is a thing. Otherwise you end up with mob rule and character assassination -- and accusations tend to stick even if they're proven wrong and malicious.
If you are a victim of medical malpractice, the district attorney will not find healing for you. If someone wrongfully injures you, a criminal case will not return even an inch of your wholesomeness. If someone cheats or robs you of $50k, the district attorney will not help you pay your bills.
Civil court is the provided forum for issues of individual justice, and there individuals will find themselves paying alone, and in a position of imbalance, only a stupid person would fight for themselves. In the game of civil justice, where one might seek healing or remedy, you must pay for the prerogative to play.
That said, of course there are safe conclusions to draw from this story (especially the ones that hold true in general) but all personal accusations should always be taken with a grain of salt, especially if you have no personal knowledge of any of the people involved.
This is not entirely true. While the general civil/criminal purpose distinction you make is broadly correct, there are provisions for "restitution" within the criminal court system that overlap substantially with the compensatory function of the civil court system, so its not accurate to say that the DA will not help you recover funds or that a criminal case will not restore your losses.
See, e.g., http://www.cdcr.ca.gov/victim_services/docs/restitution_guid...
Just because it's "hearsay" in the sense that it's only one person's account doesn't mean one should have to anonymize everything.
That said, Penny's account of life at the mystery startup sounds startlingly like that of my experience at Motionloft many years ago. The difference there is that the (ex-)CEO was convicted, and my experience was corroborated by another ex-employee and by one extremely pissed off vendor.
Definitely fraudulent.
Its not clear to me that it is criminal fraud; its clearly deceptive, and its clearly intended to defuse expected responses to the already-criminal failure to pay regular payroll, but I'm not sure its an independent crime.
But, you know, there are people who taxpayers pay to investigate the kind of thing described in this article (like the local DA and the California Department of Industrial Relations) and I'd defer to them on exactly which bits of this affair are which crimes.
I've encountered this myself several times (down to the CEO using hire fast fire fast as a mantra), and judging from my friends' stories, most people have or will. When there are large amounts of money at stake, I guess it makes sense for charlatans and sharks to flock.
There are very few ways to tell accurately from the outset at first who's going to screw you over - I've heard horror stories of the sort from friends at startups backed by high profile entities like YC, famous startups that are often in the media for being "the best places to work at", companies with celebrity founders who have reputations for being "the nicest guys in the world", etc.
It's the kind of thing that you can only learn through a few painful experiences, I think. You do learn your lessons: never pay in advance for anything, don't put your own savings or core livelihood on the line for someone else's dreams, get everything in writing, talk to former employees of a company/colleagues of a founder before getting involved, never ever assume that what you have is anything more than an employer/employee relationship, etc.
I have to say that I'm impressed by how the poster handled it - keeping documentation, filing wage claims, etc. - the only thing she could have done better was not staying on so long when she wasn't getting paid, but it's an understandable mistake when you're in the moment.
I for one am glad I learned my lessons at 22 rather than at 45 with a family to care for and a mortgage to pay. The upside is that there are plenty of genuinely nice, passionate people - when you find them, stay close to them.
That's pretty silly. Plenty of people working in startups never put themselves through that kind of BS.
There are at last two obvious strategies for avoiding the whole problem: (1) be a founder, (2) work in a more established tech company until you have the experience, personal network, and finances to intelligent pick a startup to work for.
When we last talked, he indicated that he was going back to what he did before starting companies. I hope it works well for him, because if he can keep within the (not CEO) role that plays to his strengths; I'd happily work with him again.
One should spend five years building stuff before becoming a CEO.
It's the kind of thing we all already know of because of tv shows like game of thrones. But experiencing and actually handling it is another topic.
If you're doing your job, you know how much money is in the bank and you know what the value proposition of the business is, so the failure modes described in the article don't apply.
I'm not saying a slipper cofounder can't also try to cheat you, but they have a lot less room to maneuver when you're not a subordinate.
So you won't ever be high enough to only deal with harmful people in equally powerful positions. Maybe being the president of the US or the owner of the biggest company can think like that. All other 7 billion people can't.
And there is another vector we also shouldn't forget: The higher you get the higher the stakes. Getting f'd as an intern may mean you lose a few hundred bucks. Being an engineer or mid level manager means you play in the 4-6 digit range. And on officer level or above you play for at least a few hundred thousand dollars and with a lot of possibilities to break laws (or appear to break laws) and go to jail. So you probably won't have more safety, but more risk.
If you really want to be save from these people, go live somewhere in the countryside far away from civilisation, grow your own food, and be nice to the other villagers.
Seen it happen at a company that was voted top xx best places to work for a few years running in the local press.
Pay close attention to how they treat others.
Particularly look at:
1 How they treat their customers
2 How they treat their affiliates
3 How they encourage their affiliates to treat their customers.
Just like you, I'm early on in my career. I appreciate the incredibly valuable and lifelong lessons that I've learned from them. I feel that in the long run I'll be better off for them since I know exactly what to look for to identify bad situations before I'm in them, and how to protect myself if I do end up in one.
Most importantly, I've learned what not to do to other people and find that I've developed stronger ethics as a result.
I'm 42 and at the other end of the scale. To me the line now that "it's a good learning experience" and "I'll know better in the future" are just ways of saying "I'm making mistakes".
From someone who has been there and done that, best not to make the mistakes in the first place. I had strong ethics to begin with and compromised them many times because I thought that's what you had to do to get on. I was wrong.
Learn from listening to experience and watching others fail or succeed, much smarter.
You can never have enough advice before making decisions. Find successful people you trust and listen to them.
Much easier than having to go through your own hassles.
You'll be happier.
But I accept that I will make mistakes throughout my life. When I do, I think about them to figure out why I made the mistake and how I can avoid it next time. Then I let it go- beating myself up doesn't help. Honestly, if I'm going to make a mistake at some point, I'd prefer that it be sooner rather than later.
I'd say I had strong ethics to begin with, and these situations gave me a chance to test (and uphold) them.
It seems like something weird might be going on here - if the founders are willing to forge receipts and lie about the company, it might not be beyond them to hold on to passports or some such for "immigration reasons", which would then explained the unwavering loyalty. If something like that is going on, I hope the devs get out of it unburned.
The biggest indicator I have seen when it comes to H1B1 is if the company is run by recent foreign immigrants.
I have seen 5 man team able to get hold of H1B1 - since they were that dedicated.
The process is not actually that hard if there is a will from the top for it.
The other aspect, is that yes it'll be about $4k to transfer an H1B all in, but... consider the savings. A Level 1 "Computer Programmer" in Santa Clara has a minimum wage of $52k[1]. I'm not too familiar with Santa Clara but that is probably a 50% savings over a typical software engineer wage. Paying $30k for 8 H1B transfers all in looks really attractive when payroll is shrunk by $300k+...
EDIT: looking at some of their linkedin profiles they fit the profile of an F1 OPT employee (Bachelors from an unknown university in china, masters from a large state university STEM degree mill, recently graduated), which is even better for the employer, you get a built in tax benefit discount on their wage.
[0] https://www.uscis.gov/forms/h-and-l-filing-fees-form-i-129-p...
[1] http://www.flcdatacenter.com/OesQuickResults.aspx?code=15-11...
a company, that is not really a company, keeps applying for tons of h1b. they usually have some title like consulting.
they get the h1b and don't even bring the programmers from India. they become "visa holders" companies.
the h1b's then start to look for work on their own, or the holder. and once the programmer is hired, the visa holder company gets paid, take 70% (or 60% if the programmer found the position themselves).
and this is how most h1b contractors that work on Google and such live. they will endure it for the 10 years the us forces them to stay as h1b. always trying to get transferred to the hiring company directly, and almost always failing.
the final company pays much more for a contractor via a visa holder, but they have the benefit of paying it via a small consulting company, so it won't show up as head count for the investors. everyone but the programmer wins.
This is how you attract the best and the brightest and this is what america needs.
That's exactly right. It has always costs every company I have been with more to hire an H-1 than a local person so we have only done it if we can't get anyone local -- which is exactly the way the system is supposed to work, and that intended system seems perfectly fair to me.
These scammers fuck it up for the rest of us.
they can endure such jobs only for 6yrs, beyond which the company that sponsored the visa has to file for a green card (if they do, then the employee can continue suffering for a few more years).If they dont file for a GC, then its a one way ticket back to their home country (or go to Canada with a PR ready).
the 70-30 split, is something I used to fume about, thinking its unfair to the employee etc. But that is how contracting companies work (not just for H1b employers). They pay the employee $.7X, and charge the client $X for every hr worked.
the benefit for the final company is that the headcount of H1b employees on paper remains low, and the cost of H1b kinda gets prorated into the hourly rate. It doesn't make sense to hire an H1b if the company knows for sure that they need her for just one/six months or a year. But a staffing consultancy can certainly justify filing for the H1b, if the same employee can work with 3 clients for 1 year each.
Though this looks like they (the companies filing for H1b visa) are doing something illegal, it is not, as long as a LCA (Labor Condition Application) is filed for the client's location and is approved, its totally kosher with USCIS, DHS and DoL.
Sadly, its hell for those on such H1bs (and I'm glad to never have worked with such consultancies)
the problem exists with those h1b consulting companies, that fudge resumes, fake phone interviews to get someone with zero knowledge into a job with a client. Those are the companies that are poisoning the well and making it tough for people like us and employers like mine, who are using the H1b option the way it is meant to be. In fact, its worse for those who who studied in US, and worked with an employer for ~2 years on Optional Practical Training (work auth while on student visa after graduation), lose out on H1b lottery because it was oversubscribed by such fraudsters. Its not just the employee losing out, even the company that invested in that employee is losing out.
Once, I interviewed a senior engineer to join my team and it was shocking for me to come across a resume that was as experienced as I was, but had zero knowledge. Later did some prodding on the candidate's past experience, realized its a fake resume with fake experience.
I can only pity those h1b employees at this scamming company. The sad H1b rules, that tie them to the sponsoring employer, is the reason such practices exist.
That's a failing consulting company. A profitable consulting company needs to bill at 3x to 5x wages to support the overhead of sales and management. Even an individual, with no overhead but themselves, needs to bill at 2x what their desired wage would be if full-time.
plus (at least from an indian perspective) there was a time when the indian job market for programmers was so bad that people would put up with all sorts of abusive conditions, simply because they knew that if they went back home it would be to a long and depressing job search that would likely end up with a low-paying position. (i believe that has gotten better in recent years; i'm not sure what the situation in china is)
https://en.wikipedia.org/wiki/Cluster_B_personality_disorder...
For some reason we are not educated about this. We learn it the hard way by being taken in with what seems a good opportunity, then getting abused and then going our own way. We naively believe people empathise for others in the mistaken idea that there is some semblance of 'compassion' in everyone.
Even if we have gone through the mill several times we may not be educated as to what is only going on. You have to be done over by someone at the extreme end of the spectrum of personality disorder to understand what really goes on with the tyrants and bullies that frequently own companies, start-up or otherwise. We even elect these 'personality disorder' types to high office without anyone pointing out that they are not fit for the role due to having these psychopath tendencies.
This really does have to be a regulatory issue as those that cannot think through the consequences of their actions or empathise with others or understand the harm they do need to be rendered powerless. Otherwise they will not learn their lesson and go on to waste yet more lives. They can do so near indefinitely, taking people on a ride for six months or more before their victims cotton on to what is happening.
There is a second problem in that the people with these personality disorders really do attract others. Cult leaders do it, to attract others with personality problems of their own, elsewhere on the spectrum. For instance, in this case, marketing. What type of person does marketing in the first place? What leads them to believe they have the secret sauce to market the product they know nothing about? There is some self-belief going on there, some belief that isn't grounded in a strong product that the customer-base will 'market' using word-of-mouth. Sure there may be some good experience and education that can be brought to the problem but often there is not.
It is important to learn the 'tells' - as other commentators have noted it is how people treat restaurant staff that says it all with these rogues. Also the 'there is no I in team' really does matter - do they say 'we' or 'I'? Sometimes we overlook these 'tells' for reasons we invent - maybe they have were brought up that way... We give them excuses for their behaviour. We keep our anger at them to ourselves and don't burn our own bridges by letting that anger out.
It is a pity that most people only get 'lightly burned' in these situations and not fully toasted. Only when you get fully toasted can you work it out properly and end up knowing about the rogue personality types and how toxic they are.
obviously, there are personality traits and disorders which predispose a person to doing bad things. But that isn't a reason to assume that's what happened here, unless you happen to be that person's licensed psychiatrist.
It doesn't take a mental disorder to be shitty.
As for me I am entirely unsurprised because I've literally seen it all. and it happens more often than most people realize. the more desperate you are to be here, the more people will take advantage of you.
It's very similar to the way young girls who want to be actresses or models get "discovered" by pornographers.
Where's the 4M here that the OP was writing about? She could have checked crunchbase to see that the startup doesn't have money.
Definite bonus points for the fake wire transfer receipts though. Above and beyond!
The Qatar school of management.
If a man had written this, they'd be accused of being a misogynist, and they wouldn't be posting under their real name.
Kim (the writer) is a korean last name, is the company CEO korean too?
The H1B's are Chinese and probably have no influence over how the Korean clique runs their company. The quote from "Michael" suggests that he has little more than contempt for the "Chinese kids". I can almost hear the Korean version of that remark in my head, and unfortunately this kind of racism is all too common among the assholes who give my country a bad rep.
It seems crazy to me now that I wound up in such a situation, but what it is happening to you, it is usually accompanied by a healthy helping of lies, misinformation and hope.
It wont happen again. But it was fun getting ~3 months salary in cash and going to Jordan's to buy furniture with my girlfriend like a gangsta'
Fo' shizzle, if I'm ever gonna buy a nailgun, it's gonna be paid in cash.
https://youtu.be/JDpvkwBBu6U
The second place, the C level executives literally didn't know how to calculate runway and more or less ignored the bank accounts. Checks started to bounce from the bank accounts two days before the payroll was to be cashed. The executives freaked out and honestly felt horrible. Payroll bounced but we warned all of the employees. I was again development manager and the CEO asked me if I knew anyone who could help. We brought in a friend of mine who is a consulting turn around expert. We got one of the existing investors to make payroll, three days late, by signing a personal check. My friend, the turn around expert, wrangled the books (after not sleeping for numerous days to try to figure out the financial situation). We turned the company around, and in a few months had it to a level of profitability it had never seen before.
It is possible to turn things around. Really the biggest problems come when people aren't honest with themselves and their employees about the situation they are in. The first CEO in my example had to be honest with himself and realize he had to spend on his employees before he could spend on his family. When he relinquished control of the financial decisions and stuck to what he was good at, the company turned around quickly. The second executive team had to realize that they were young and inexperienced and needed help. When they did and asked for it, the company turned around quickly.
This lead to a number of interesting situations. He did make payroll the next Monday (he literally sold everything he had, went to his elderly parents and begged them for some, and made it happen. Someone had to drive him into work on Monday because he sold his cars). A good percentage of the employees left that day and never returned. Some of us stayed, believing in the business, his honesty and integrity. I was just an engineer but we did turn it around and actually he had some great plans on how to never get into that situation again. He actually did very well after the 08'-09' market downturn and his business is still very profitable to this day.
The things that stick out to me here are how excellent teams took the mantle and provided radical turn arounds from a trajectory pointing to failure.
Honestly made my day.
I know what a lot of people will say to that. "No way, you're just an employee, you won't be treated like an investor." Well, true, if you have that attitude you won't be treated like an investor. You'll be treated like an employee. However, if you start acting like an investor, you'll be treated as one. Ask intelligent questions about the business and its financials. Talk to the board. Give intelligent and thoughtful advise to help the company. Be an asset far above the code you write.
If you do that, and then all of the sudden everything starts to nosedive, you will be in a position to help fix the problem and reap the rewards. You are an investor, not an employee.
But that was a case of a CEO who was honest with the employees about the state of the company; I don't know of any cases where a company succeeded after a CEO lied about failing to make payroll.
just to be clear, the company was not worthless. we were actually somewhat breakeven at that point, monthly revenue was around $15k and employee salaries were somewhere around $15-16k. the idea at the time was that if they accepted stock compensation instead of cash, the company could theoretically afford to hire more developers, or launch a more ambitious marketing campaign. i did not factor in the fact that these employees weren't invested in the company, and to them, the fact that we weren't making millions in revenue means we are broke. so they value the stock at zero.
just to conclude the story: i ended up selling my company to another large company for a small profit (not headline-making numbers), enough that i can live comfortably and continue pursuing entrepreneurship dreams while not being employed. the employees who would have received stock back when i offered it would have made a profit, although in all honesty it's not Google or Facebook money. just for fun, i did a quick calculation on how much one of the employees who refused the offer would have made in stock - it was roughly about $250,000 worth.
i walked away with a smile, and that dude kind of just shrugged and walked away.
"According to Business Insider, Pandora co-founder Tim Westergren admitted at a San Francisco startup conference that, between 2002 and 2004, it didn't pay its 50 employees at all. "
The other thing is one size fits all NDA / non compete contract. Maybe it makes sense for the sales people but for writing code every day inventing things it doesn't make sense for the employee. If people don't want to take the time to write an appropriate NDA / non compete contract I have no time for them.
She never received any paystubs and the company was late on payroll as of before she was hired
I have never, ever been paid without either a paystub (as an employee) or generating an invoice which the business then paid (as a freelancer). The outright refusal to share how they arrived at the figure on her cashier's cheque should have sent her looking for a new job in the Bay Area or back to Texas.
The real lesson from this story is to always have a backup plan when making a big move: what do you do if you arrive and there is no job/no money? what do you do if you arrive and there is no apartment/room/house/etc.? Scammers exist and there is only so much you can do from a distance to avoid them.
He got paid - that's what matters.
The paystub is a minor thing/
Seriously, though, ADP delivers paystubs. If they were using ADP, they would have gotten paystubs.
You can invoice the company. It's not a big deal.
Again - of all flags - lack of pay stubs is the least of them if it's just a garage startup with 3-ish people.
The actual exchange of money is 100x a stronger indicator of health than the presence of a stub.
That is not "a garage startup with 3-ish people."
Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard.
No - you are completely wrong.
There is absolutely nothing wrong - or even remotely immoral - about paying using invoicing while a company gets going. It's common and normal.
And payroll is not easy - it's a huge mess - and it can be very complicated.
If a founder, with funding, told me: "Invoice us for the first two months until October when we are up with payroll" I would have no problem with that so long as I was getting paid.
Again - of all things, it's not the issue.
The non-payment, the lies about funding, the loans from staff, and all the rest were bad signals.
What's odd is how nobody seemed to have anything to say about the product itself ...
If my contract says I'll be paid monthly on the 15th, when do I send in the invoice? Are the payment terms net-10, net-30, or longer?
Do I need to break out sick or vacation days as its own line item? What about the deductions?
Who is responsible for figuring out and paying the payroll tax? Because it sounds like asking for an invoice is a way for the company to avoid paying unemployment tax, social security, etc. That in itself would be a red flag.
If the invoice is not paid, can I file it as a wage claim or do I use some other mechanism?
These are the obvious questions. If as you say it a common and normal practice, there must be some place which describes the basic details.
If payroll is hard for a company, why is it any easier for the employee to figure out these payroll details?
I send in the invoice? Are the payment terms net-10, net-30, or longer?
Do I need to break out sick or vacation days as its own line item? What about the deductions?"
If you are having difficulty grasping this - you should not work for an early stage startup that is pre-funding. You are expecting very standard 'employeeship'.
If you are an 'employee' of the company - yes - you are required to be paid with W2's etc. - of course.
But if you're not obligated to be an employee of a company to accept equity - or other kinds of payment for services rendered.
As far as 'invoicing' - either you're being sarcastic or you've never done such a thing. You send an invoice, and you get paid. You have to claim it yourself in terms of taxation. As far as 'terms' - I'm hoping you are kidding. Either you get paid or you don't.
The company in this article I think was well past the time wherein they should have had had payroll set up - no doubt about it.
At the same time - it's absurd how confused many of you seem to be about the simple mechanics of getting paid.
You do not need a payroll system (i.e. W2s) while you are in the most early stages of a company.
You should really talk to an HR/tax attorney before you continue to spread misinformation.
There is no special exception for startups where employee salaries are exempt from payroll taxes. It is also illegal for a company to pay you as a contractor when you are really an employee. What you propose sounds exactly like breaking the law.
Also, a company which proposes this arrangement takes on the liability that the 1099 contractor could come back in the future and sue for the taxes and benefits that a W2 employee would have received. That happened to Microsoft a few years ago.
I was giving you a chance to demonstrate that this practice is common and that you know what you are talking about.
However, given your posting history I should have expected continued blustering where you demean others for lack of knowledge. Why, just the other day you said that I, spouse of an Army vet who did two tours in Iraq, didn't have exposure to family members in the military. Now you say that I, employee of two startups and founder of two more, have no startup experience.
No one in this thread says a startup company needs a payroll system. The question is about paystubs for employees, which the employer can even do by hand.
The fact, for a number of different states in which I've employed people (including MA, CA, NH...) is that there are very specific requirements for hiring people, and
NO, YOU CANNOT SIMPLY "pay using invoicing while a company gets going".
Federal and state laws specify that all employees are W2 status, and you are REQUIRED to withhold taxes. Management is even personally on the hook for these tax liabilities.
There are exceptions under certain limited criteria in which you can hire people as outside contractors -- commonly referred to as "1099s" -- the Federal laws are quite tight (the famous '20 questions'), and state laws are even tighter. E.g., in MA you cannot hire any person who performs core functions of your company as a 1099, so if your company writes software you cannot hire anyone to work on that software as a 1099 (but you could hire someone to, say, customize your office accounting package as long as you are only using it). Yes, it is that tight.
Just because some founders decide to break the law, and you would be happy to go along with them, does not make it legal.
If you are an employee, the company is required by law to withhold taxes and pay you regularly. Every state in the U.S. has an agency that will take and prosecute wage claims. People have gone to jail for messing with witholding taxes.
If you just invoice, you are effectively an independant contract, they might not pay you, and you are on the hook for paying your taxes. A big difference.
It astonishes me that anyone could be so ignorant as to say there is nothing wrong with making people invoice you. As you've correctly stated, it's a completely different relationship. Even the liability is different.
If you're a contractor and the guy who signs your checks says "nice ass! Now shut up and do your work" He's pretty much just pissed you off and as a self-employed contractor, you're free to decline and move on to another "client". If that same person is your employer, he's broken several civil laws and in most jurisdictions, committed an actual crime.
We could both go on for hours on the differences which is why this whole thing amazes me.
Employees cannot invoice their earnings, they must be paid according to the law and the employment agreement you signed with them.
Yes payroll is complex but this is exactly why it needs to be done correctly and timely. The earnings, taxes, insurance, and other liabilities must match up along with all the reporting requirements. There is no way around this. You cannot just skip the complexity by telling them to invoice you.
Real companies with people running them who want to do things on the up and up and who know how to run a successful company want to keep a paper trail of every dollar going in or out the door. This includes having a pay sub with every single paycheck or invoice paid that shows what was paid, how much was paid, why it was paid, and when it was paid. That's How to Business 101.
Most of you it seems have never run a business, have never consulted, have never invoiced for anything.
--> You don't need a W2 to pay someone legally
--> You don't need a 'pay stub' to have perfectly organized and legal books.
Any good entrepreneur knows that if you don't know where every cent of your VC money is going, you're going to get eaten alive at your next investor meeting or VC round. On the other hand, if you can pull out a spreadsheet that says "We spent exactly xx% of our previous round on payroll, xx% on rent and utilities, xx% on chinese food, etc." you're going to have a much easier time convincing investors that you're a business that knows what the hell they're doing.
Not having decent bookkeeping can't be chalked up to "fast-moving startup woes", it's just irresponsible, and there's no excuse for not being on top of it.
There is absolutely no excuse for not doing this. None.
Its not the least, though it may be less than just being late on payroll. Posted paydays, of a certain minimum frequency, and timely payment on those paydays is a bare minimum legal requirement in most jurisdictions for which there are generally fairly significant liabilities that attach for failure. [0] A business that fails this in any broad way (for lots of employees and/or for multiple pay periods) is seriously and fundamentally broken.
(OTOH, tax withholding and lots of the other things that go on paystubs are similar bare minimum legal requirements with significant liabilities for failures, and if you are doing them correctly in the first place, actually providing paystubs is trivial -- the hard part is doing the required things that end up getting reflected on paystubs. So missing paystubs is at least nearly as big of a red flag as late payroll.)
[0] In California, for instance, failure to either post paydays meeting the legal requirements or to pay on those posted paydays as required by law is a crime (misdemeanor) by the employer. http://www.dir.ca.gov/dlse/faq_paydays.htm
Accurate payroll costs somewhere between $50-100 per month per employee with dozens of great vendors available. This is an incredibly trivial cost (especially compared to the fines for breaking these laws) and means there's no excuse to not have things in order. If you can afford a salary, you can afford accurate payroll and bookkeeping - otherwise you have no business being in business.
Again - I would suggest that maybe you have never started a company or done payroll, or paid anyone yourself.
It is not required to have 'payroll' to pay individuals for services rendered, nor have properly managed books.
I once created a 'side company' to manage some IP. The company had no employees. All participants (there were five of us over time, but only three at any given time) - were paid as consultants. Two of us had equity.
This arrangement was far superior than having payroll for this particular situation.
It is, however, illegal to pay employees like contractors. When you are hired to work full time for a start up you almost always meet the test of being an employee. The author of this article did. It IS therefore illegal to not give her a paystub or ask her to invoice.
This is generalizable to start ups. I've worked for start ups. Every time I was hired as an employee and treated as one. It would have been a red flag and illegal for them not to pay me as an employee.
Again, everything you're saying for the most part is true if you're talking about paying IC's. Where you are demonstrably wrong is assuming that you can treat start up employees as ICs You can't. Therefore doing what you're claiming is "normal" is actually illegal on many levels.
If you're talking about instances where you use contractors instead, then that's an entirely different scenario.
As long as you treat employees and contractors separately and properly, there are no issues - but having employees and paying them like contractors is illegal. Invoicing is not a replacement for payroll.
I would suggest that your little side gig did not provide you panoptic insight.
The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees.
If you can't calculate withholdings and all those other things that get listed on a paystub correctly (which is the only thing that would stop you from generating a paystub), you are breaking the law (civilly and perhaps criminally under federal and state tax and other laws, that require the withholdings, deductions, etc.)
If you don't (in California, where this occurred) have posted paydays with at least the legally specified frequency, or don't pay employees on those paydays, you are breaking the law (criminally, under state employment laws, as well as possibly civilly.)
So, if you haven't figured this out, you have no business hiring employees.
This is false.
For any of you interested - here is the actual law in California:
http://www.dir.ca.gov/dlse/faq_independentcontractor.htm
It's perfectly normal and very common to submit invoices for services rendered that you claim on your 1099.
There's no way you could have run a business without grasping how common paying people via invoicing is.
Some major companies - such as Wordpress - tend not to hire people for a while. For the first little while, they have you work on 'projects', remotely, until they decide they want to bring you on long term. The founder indicated that they pay them for the work and only bring some of them on. Obviously, they are getting paid via invoicing.
Startups will often bring someone on for a project/consulting, and then decided to keep them full time. This is not uncommon. It's also happened to me.
I'm going to guess that most of you commenting have actually never run a business, paid an invoice, or submitted and invoice.
It's quite legal to hire people to serve in roles that are not, under the tax code, employees but independent contractors, without being able to handle payroll. But that's not a status that a company can freely choose independent of the nature of the work, it's a status that is controlled by the nature of the work by rules set out in the tax code.
You seem to think that employees hired as employees can elect invoicing and 1099 status if the company isn't up to handling employment law requirements, order that the company can hire people as employees and then treat them as contractors until it is ready to handle employment law requirements. Neither is the case, and either is a situation in which the company violates many aspects of the law (and more if it doesn't pay timely on a regular schedule but instead waits for invoices.)
fyi, as alluded to elsewhere in this thread, the government deems payroll taxes to be paid by the employee on the date he or she receives his or her share of the paycheck. At that point, the business is holding the taxes on behalf of the government. Officers of the company are regularly held personally liable for unpaid payroll taxes. The irs and state tax agencies choose a "fuck you, pay me" approach to these taxes. You should probably not screw about with them, but to each his own...
Your posts in this thread are the most egregiously wrong I have seen on HN in recent times.
Contractors never get Paystubs
and yes there it is a HUGE red flag (and likely illegal) for a EMPLOYEE to invoice a company for their wages.
What are you talking about?
Invoicing your startup for a payment is perfectly normal, and has nothing to do with 'offloading the risks of making payroll'.
Again - getting paid without a pay stub is utterly irrelevant to a new startup.
What matters is getting paid and hopefully it's done in an above the board manner, but the transfer of money is the primary indicator of risk - not the pay stub.
There is absolutely nothing wrong with not using payroll services for the first little while while a startup gets going, and it has nothing to do with the ability of an entity to pay you.
If you are getting paid consistently - through invoicing or whatever means, this is a good signal.
By the way - although the story is pretty scary (and hilarious) - the author is also a little bit naive. Everyone involved seems to be a little inexperienced.
The contract you sign is only as valid as the parties backing it up! Just because someone gives you a 'piece of paper' that may be legally binding, does not mean it has any integrity. The author should have done a basic bit of homework or point blank asked some very basic questions about funding status. He joined a company 'assuming' there was a round of funding, but that turned out to not be true. From my reading of the article, it doesn't seem as though the founder lied, but rather mislead the author. A few simple questions such as: "who has backed you, for how much" - or even a check on Crunchbase would have sufficed.
Again - a contract is only has the amount of real integrity as the people signing it. Your ability to enforce it is not just a matter of law - it's a matter of the reality of the entities ability to do so.
Anyhow, I'm glad it was written up so that people can learn form it.
But that's not what happened, because they were late, enough so that people were filing their rent late. How about -- "Startup or not, don't take your employees for 'free credit'"?
Or, more brief: "Fake it till you make it, but don't break the flippin' law".
Just don't fake it. Don't fake anything. Don't sell products that don't exist. Don't lie to your employees about your financial state (I see this happen a lot because people are ashamed to admit that the company is having troubles... this is a bad strategy). Don't lie about the state of the product (something that happens when people are naive enough to not realize how much testing is needed.)
Paystubs don't need to come from ADP. They can be typed up or even hand-written if you want. But they demonstrate, and record, that the company is fulfilling its legal obligations as an employer, and give the employee the information the employee needs to fulfill their legal obligations as a taxpayer.
You are NOT entitled to people working for you for free, under deceptive pretenses.
If you're in "this may fail at any time" mode you can pay people 1099 as contractors.
going from w2 with pay stubs to no pay stubs means they're out of money and saving as much as they can be not paying payroll tax.
But what if they just give me a hand written check for $70 made out to me, Joe Blow. There is no indication of taxes being taken out, but hey, I got $70, so all is great right? Wrong..
At the end of the year I get a W-9. They say I wasn't an employee but a contractor. I have no proof that they took out taxes and now suddenly I am on the hook to pay taxes to the government that were already taken out by the crappy employer and pocketed.
See the problem now?
Interesting article though, it's really shitty some have bad experiences like this.
That's just outright lying
http://www.wrkriot.com/team-1/
Coincidence?
Do you think he uses Ruby?
So you don't have a CEO whose headshot in the Team page is a bulldog? Or a Facebook page full of SpongeBob memes for that matter?
There you go, don't think he could change this picture into a bulldog.
"The last time I checked the team page on the site, Michael changed his profile picture to a bulldog."
On your staff page, your CEO is using a picture of a bulldog:
http://www.wrkriot.com/team-1/
In case they change it, it's also this image: https://pbs.twimg.com/profile_images/563942218440798208/hmNB...
There also appear to be 9 people with Chinese names and pictures, which matches the article.
At-least, this was my thinking.
* WrkRiot's CEO has a dog as profile picture and stock photo on LinkedIn
* Team page is mostly Asians (names were identified as Chinese and Korean by others here)
* Company went through several iterations and was previously called "1for.one", which is as "anti SEO" as a name can get
* Facebook page has old posts with Spongebob memes
* Head of marketing is a woman called "Tess" who blogs about "gonzo journalism"
* JobSonic/1for.one CTO left the company earlier this month
There's probably more.
lol
And, just in case they now decide to remove that, I also saved it to the wayback machine, available here: https://web.archive.org/web/20160829104022/http://web.1for.o...
So good try, scumbag.
goo.gl/FxH2KB -> https://www.linkedin.com/in/isaacchae1981
Then on Isaac Choi's profile, click the "1for.one Corporation" link listed in his experience.... which takes you to the Job Sonic linkedin page: https://www.linkedin.com/company/7587861?trk=prof-exp-compan...
On that page, you have a list of employees who are the same cast of characters in the previous incarnations of the companies.