Rather than invest in a productive, useful and frankly unprecedented product such as FaceCash, venture capital and angel investors have focused their time and billions of dollars of their money in companies and entrepreneurs that have, in serial fashion, deceived co-founders, deceived employees, and deceived customers.
Rather than hiring a brilliant, hard working, and frankly outstanding engineer such as myself, technology companies have focused their time and billions of dollars of their money on engineers that have demonstrated, in a consistent fashion, lack of talent, skills, and integrity.
That's very cute and all, but do you care to skim TechCrunch or something and say, with a straight face, that primarily worthwhile endeavors are getting funded?
I don't think that is very honest considering FaceCash (not entirely sure) didn't beat Square to market, and I don't believe his idea was very "wild and unprecedented" as he claimed.
Yes, seemingly dumb start up ideas get funded, but at the same time a lot of dumb and smart ideas don't get any attention, and there are still a good number of smart ideas that do get funded.
If he couldn't get anyone to back his mobile payments idea, I think it says more about him and his character more than his idea. It's my belief that the reason someone funds/works for you can be attributed to less than half to how good your idea was, especially something that is really early stage.
Forgive my ignorance, but he talks about "necessary capital", and fails to explain why and what it is for. Is this something the regulators demand in order to protect his customers? Isn't that desirable?
Further, if he has put $1m in to the project, should he not have checked that laws and regulation first?
Perhaps the writer assumes a lot of knowledge on the part of the reader.
This is called regulatory risk. This story seems like a good example of why anyone starting a business in an industry that is already highly-regulated, such as finance, must assume that future regulations could increase the cost of doing business, or threaten the viability of the business outright.
i'm not going to go into specifics because i'm scared of retaliation/retribution. there, i said it. i'm scared like a little bitch. especially now that i've got plenty to lose (read on...)
imagine the following scenario.
CEO (not me) of self-funded startup hires prestigious silicon valley law firm to incorporate and represent his new company.
recruits 4 cofounders including big-name software company engineers and big-name b-school MBAs. however, nobody is 'connected' per se.
ostensibly law firm does its job, and helps coordinate meetings with the TOP valley and seattle VCs. like top 3 in each area. like 'holy shit' what am i doing in this board room right now. like 'wow i can't believe i actually delivered my pitch without tripping over my own tongue'.
during the fund raising process it's discovered the name of the company may be a copyright/trademark infringement on another company also represented by the law firm.
founders are assured by law firms and VCs it's no big deal. it happens all the time. this sort of thing is very common! law firm could stand to charge 10 thousand in fees for a name change, so it seems like an honest opinion.
during the fund raising process it's also discovered that the core business model of startup is in sort-of competition with another startup, already funded, represented by both the law firm, and a VC firm that lawfirm set startup up with to pitch. (of course no NDA's were signed). however, the business models are not identical, only similar. assurances all around, of course.
fast forward 2 months. startup is getting traction. 10,000 users, some high profile sites are using startup's technology.
fast forward another month. threats of lawsuit from represented company whose trademark claim is now becoming serious.
fast forward another month. sort-of competitor is now full-on competitor. exact same concept is now implemented and deployed.
no need to fast forward anymore. funding is never realized, company is under legal threat from multiple parties. other mistakes are made, but greatly exacerbated by a name change, which effectively kills the product. company implodes. kaput.
the conclusion of whether this was purely due to founder incompetence or naiveté (which there is certainly a component) or there was a large component of malicious VC/lawyer/funded collusion is left as an exercise for the reader.
however, i posit that the startup would have done FAR BETTER to not even get involved with the SV ecosystem IN THE FIRST PLACE. once you get involved, they will enforce their iron rule of SINK OR SWIM. and they WILL sink you.
my current startup is making $millions/year in revenue WITHOUT ANY OUTSIDE HELP. cofounders own 100% because we said FUCK IT over 2 glasses of scotch whisky and dumped $250k of our own money into it. we get multiple emails and calls per month from VC and PE firms inquiring. lollerskates. fuck off assholes. i would rather go bankrupt and steal loaves of stale bread from my local bagel shop than work for those people.
so that's just one data point for you. it's a jungle out there. keep your wits about you.
If you're going to get into the SV ecosystem, in order to stay away from the bad actors, I think you have to align yourselves with the forces for good. You think anyone will fuck with a YC company like that? Only if they want to be lambasted among most of the new / best / most promising startup founders in the valley.
In some societies, the organized crime contingent is morally better (and sometimes more competent) than the official police force.
In the private sector where "law" is the whim of powerful people, that's almost invariably true.
Whatever the good guys form (possibly centered around YC, and possibly something else) is going to be likened to the Mafia, a "don't fuck with us" collective that protects its own. After all, one of the Mafia's first (entirely just) social functions was to protect people against Pinkertons and other company police forces.
The thing is, those with capital and connections have been using their social power for extortion ("you'll never raise another dime") for decades. If talent starts to fight back, that's a good thing.
Yeah, I'm not sure if the threat--justified or not--of a sort of mob outrage and harassment is really a sign of a healthy ecosystem.
It's one thing to promote a culture where people help each other, another to promote one where people are cautioned about bad actors, and another still to seek to defame "bad actors".
I'm not sure, especially in an industry whose demographics tend to the young and aggressive, that we want to be encouraging this sort of gang mentality.
We've got shit to build and code to ship--who has time to beat their chest?
To be clear, the bad guys are not the startup founders. They're the old school VCs and lawyers spoken of, who are used to taking advantage of startup founders.
YC is a force for good in that without doing anything, bad actors are weeded out because nobody wants to be mean / do bad things to a YC company.
during the fund raising process it's discovered the name of the company may be a copyright/trademark infringement on another company also represented by the law firm.
Just to play devil's advocate a little bit... shouldn't the founders of this startup have known about a possible name conflict earlier? It's not that hard to use Google and/or the USPTO database to do a basic search that will turn up potential name collisions.
That said, the law firm should certainly have disclosed any possible conflict of interest immediately and probably should have sent you to a different firm.
And the moral of this story, as far as I can tell, is "If you're working with any law firm or VC and even a hint of conflict of interest shows up, run, do not walk, away as fast as you can".
> second of all, law firm client lists and VC client lists are not complete. you think they put all that shit on their website???
I agree, they wouldn't put that on their website. And, if they are an ethical firm, they would both disclose the conflict AND send you somewhere else as soon as any hint of a conflict appears.
That the firm in question didn't do that says something very sad about the state of business ethics among some people in this world. :-(
Well said. You don't need OPM to make millions and quietly live well if your product offers value to your customer.
For everyone else, if you're more motivated by a potential 15 seconds of fame and lottery-like odds of becoming a billionaire if lightning strikes and enough is left after every non-producer takes his cut ahead of you, by all means, play the VC game and keep them distracted.
If the law firm had been trying to screw you over, they wouldn't have told you about the trademark conflict. But they told you. Are you blaming them that you ignored the advice?
Do your homework. Choose deliberately the VCs you pitch, review their portfolio. Check if a name is already trademarked.
VCs are likely to share information learned, although they usually "anonymize" the facts. They're more likely to share market insights than product features. And when they do it, they _feel_ like they are sharing their general learnings, not sharing your secrets. Factor that into your planning.
But, startups are usually too busy to use suggestions that come in from VCs. I've never heard of a startup taking a new business strategy from a law firm. Nor have I ever had a law firm share sensitive information about another client with me, and I've spent thousands of hours working with different Silicon Valley lawyers over the last 20 years.
> Are you blaming them that you ignored the advice?
uh, their advice was to NOT change the name, which could be interpreted as
a) they wanted us to not lose momentum or
b) they wanted to set a trap for us in the future
probably all of the above.
you probably skipped more than just a couple lines of my story if you didn't even catch that little detail. read it again, the style is casual but it's fairly fact-dense.
i wasn't the CEO, i was just a kid. i probably would have changed the name.
and it might shock you to learn VCs/lawyers deal with different people differently. you look like an oldconnectedwhiteguy from your linkedin profile.
> If the law firm had been trying to screw you over, they wouldn't have told you about the trademark conflict. But they told you. Are you blaming them that you ignored the advice?
> founders are assured by law firms and VCs it's no big deal.
The problem is exactly that they took the advice. Without supposed experts telling them it wasn't a problem, they would probably have changed the name.
Is this a federal law or a state law? The content of the article seems to imply state law, but the "gloom and doom" tone implies that FaceCash can't just move out of CA.
It's state law, but virtually every state licenses money transmitters, and you need a license from each state you want to transmit money into (where your customers are). No matter where you start, you need the licenses, and CA is particularly important since that's where the early adopters and investors are. Here's the list of 50 state licenses PayPal needs to operate:
I don't know about his past with Zuckerberg, but this guy's basically a hero for calling VC-istan out for what it is: a rigged, corrupt mess where one's personal level of power determines which laws one must actually follow and which ones can be ignored.
Consider all the co-funding and note-sharing that goes on among supposedly competing investors. That's clearly anti-competitive activity, but it's never enforced because of the power of the people who do it.
It sounds like his particular lawsuit is without legal ground and will fail, but he deserves major props for bringing public attention to VC-istan's collusion problem.
As I wrote, he's already morally entitled to an EIR position (at the very least, if not a real VC job) from VC-istan for his courage, intellect, and ethical above-board-ness, which are well into the top 5% by VC-istan standards (although that's not saying much).
Like most things, we simply hold the rich and the powerful to a different standard. Steve Cohen can rob the American economy blind and even if the multiple teams of FBI agents surveiling him actually catch him and prosecute him, he will be in jail for a few years at most, only to slink back to his billions of dollars in wealth right after that will enrich his family for generations. Meanwhile the homeless guy who did some crack on the corner? 15 years.
I really wonder sometimes if it is actually possible to fail in some of these situations. If you don't have to follow the same laws as everyone else and know there won't be consequences, you're going to crush your competition of not rich people who actually applied for permits and stuff. Because your competition knew if they didn't get them, they would pretty much be shut down, while these other companies basically said "lol laws" and like most companies who do, reaped massive rewards.
I think Aaron Greenspan is (as I am, to a lesser extent) a moral mysophobe. Most people know the world is run by scumbags and human garbage, but they adapt. It just becomes another landscape feature to them, like bad weather or dogshit on the sidewalk.
Then there are other people who see unethical behavior and, for whatever reason, can't "just get over it" like normal people. They end up taking some immensely energy-consuming moral stands that often aren't in their individual interests.
Such people are immensely beneficial to society, but it's not fun to be one.
>Then there are other people who see unethical behavior and, for whatever reason, can't "just get over it" like normal people. They end up taking some immensely energy-consuming moral stands that often aren't in their individual interests.
Mahatma Gandhi, Martin Luther King, Jr., and Nelson Mandela fall in that category to name a few. It is no coincidence all three suffered similar injustices to the extent they did including subjugation by the Government (Powers that be)not limited to incarceration, but when most would give up their spirit prevailed and they never waivered in their sense of justice.
For every Gandhi, King, and Mandela, there were a thousand others like them who were subjugated or killed without ever seeing any success in creating social change. Don't allow survivorship bias[0] to cloud your logic.
The entire notion of calling a broad class of people whom you seemingly know nothing of beside accusing them of 'running the world' (itself an idea worthy of closer examination) 'scumbags' and 'human garbage' ought to be giving you very, very serious moral pause.
To be powerful in a corrupt society is a sign of corruption is it not?
When you live in a world where the highest levels of society are literally "above the law", torture as policy is considered acceptable, might makes right, and democracy has been for sale for so long that it's newsworthy when a politician refuses sponsorship; it is very hard to make an argument that anyone who pays attention to the news does not have a very clear idea of the moral status of our ruling elites.
It doesn't really matter what you or I think or whether we agree on the moral status of 'our ruling elites'.
We do have, though, concrete empirical evidence of the eventual consequences of casually thinking of and referring to others, any others at all, as 'human garbage'.
The moral status of that line of thought is much more clear - it's noxious and if there's some sort of moral thing we ought to agree on is that it's to be rejected and opposed, wherever it pops up.
[Edit: and to completely Godwin up this thread - if there's a day to take 30 seconds to think about the implications of such rhetoric, today, V-E day, is a good one].
Well, if we're going full Godwin; it might be good for you and all those of us who are US Citizens to reflect on the fact that our country is currently the one running the most notorious concentration camp on the planet and has admitted to running such camps in Iraq, Afghanistan and even Diego Garcia. When the histories of this era are written we probably won't be the good guys; if we ever were.
Sure but then it's not a contest of moral turpitude. Gitmo is probably better than any camp in North Korea, it doesn't make it any less despicable.
Calling VC 'human garbage' is, at the end of the day, just nerd message-board hyperventilating. And it's still completely repugnant and talking about other repugnant things doesn't make it any less so.
I actually never said that VCs were human garbage. Some of them are, some are not. I tend to think that most are not, but that many of the "cool kids" are.
My direct experience (which is not with VCs) is that the VC-darling startups are mostly run by human garbage, which raises questions about who funds them. Does this mean there are probably some horrible VCs? Yes, absolutely. Does it mean that all VCs are that way? Of course not. There are plenty of good ones out there, too.
My feelings about this suit are complicated. Look, Al Capone was nabbed on tax fraud, rather than the harder-to-prove but more vicious shit he did. If the Greenspan suit starts a process that puts an end to VC note-sharing and co-funding and social-proof calls-- against the spirit of the law, but hard to prove on an individual basis-- then I'm all for it.
Well, you could go out and protest in a nice ways, but the media will just make jokes and tell people you believe something you don't. "Just getting over it" might be the sane thing to do.
if you can forget about it and get on with your life -- you (like me) have already got more power/comfort/privilege than most people, who are reminded all the time how much power jerks have to make the lives of those without power miserable.
Unless ones views lead them down the path to end up taking the lives of innocent people who have for the most part "just get over it" when it comes to nearly everything in their life, then the media will try to seek every nook and cranny out to try to rationalize the incident in such a manor that there will be those in power who will use it for their own purposes (whatever they may be) ultimately drowning out any deeper discussion on how such a an incident came to be.
Mostly when you post it ends up being the top comment in a thread. I wouldn't have a problem with this except that all (or maybe 99%) of your comments are about the same thing: people in positions of corporate or financial power abusing that authority. I don't even think it's necessarily a problem to say these kinds of things, but I was just wondering if you could also post some random comments about other stuff.
A rigged, corrupt mess where one's personal level of power determines which laws one must actually follow and which ones can be ignored.
Do you have a shred of evidence to support any of these accusations? Not that I think the VC industry is devoid of problems, but in my experience it is neither rigged nor corrupt, and the people with the most power actually tend to be the most morally conscious people I've ever met.
I think your language indicates some bias here. To play Devil's advocate for a moment, the bankers that manipulated LIBOR did so for quite some time without being caught. Those whom submitted the rates they thought their bank could borrow from other banks at wielded incredible power, magnitudes more than any VC, i.e. contracts worth $300 TRILLION were influenced by LIBOR. It was shown that these bankers acted, most would agree completely immorally, without conscience, artificially influencing the rates to suit their own trader's positions.
No, he's biased because, by his own admission, he's basing his opinions on anecdotal evidence, i.e. those VCs he has met are very ethical people. Whereas we have a ton more data points to prove that power = corruption. Considering the amount of power VCs yield in Silicon Valley, it's pretty much a given that they break the law and get away with it.
Aaron Greenspan has made a name for himself as someone who's accomplished nothing but still holds irrational grudges and is totally incapable of letting go to the point of repeatedly constructing epic narratives in which he's the victim, in the mistaken belief that this somehow reflects on others more than it does him. I can see why you identify with him.
I greatly appreciate the fact that someone is trying to innovate in this space and I wish him success. I don't know or care if he self identifies as a victim like you describe. I just appreciate him for his actions and tenacity.
Tenacity implies honest attempts to succeed. Aaron Greenspan reads as someone who sets himself up to fail in order to reinforce his own persecution complex. Tenacious people adapt and go around obstacles, they don't run straight into them and waste their time whining about it to everyone who will listen.
Just a side-note, making a name via accomplishing nothing is common, various sub-types such as that you hint at above are perhaps further taxonomy ?
Rebels eventually wish to be kings. Some actually get there. Then the cycle repeats.
My worry here is that individuals are paying more attention to specific actors who as powerful as they appear to be are not as formidable as systems they represent.
Its almost rare to see such wounded attitudes from an equally matched adversary.
The other direction is full scale martyr which was also displayed recently .. I'd rather not take the name to avoid pain for those close to the kid.
True, I'm no one special. That's even what it says if you click through to my profile on here. But at least I don't live my entire life as a self-perpetuating persecution complex, pausing only to write self-righteous screeds about those whom I perceive to have wronged me (or worse yet, file lawsuits).
I don't. When Aaron Greenspan makes the front page of HN for honestly trying to accomplish something rather than whining about how the world is out to get him or suing a who's who of Silicon Valley, I'll be the first to congratulate him.
I was with you until "if not a real VC job". Why would anyone offer him a VC job? Is his investment track record such that it beats the index funds? Or is it the name recognition and ability to get into the top deals (following A16Z's model where only 5-10 companies really matter long-term)?
Think Computer Corporation has documented their dispute with the State of California in great detail, including scans of all the physical correspondence.
If you read through the history, it's pretty clear that Think Computer Corporation got screwed by California. California classified him as a money transmitter, but refused to clearly define the bar needed for him to become one. It's obviously a case of favoring the big guy for now reason. Facebook and BoA can be money transmitters, because they're big. You're not big, you're a scrub, now go to get job at Facebook like the other scrubs.
Obviously, this latest lawsuit makes him look like an obnoxious dickhead. I can nevertheless sympathize with his action here, which is to lash out at an obviously unfair system.
In large part because they chose to flout the law, and California chose not to prosecute them (yet). Be careful before you celebrate people who succeed because they choose to break the law. It's a very slippery slope.
I don't think this is necessarily a fair assessment.
In my brief reading the documents at the link referenced above, it appears that the author originally contacted the state of California, believing that he may be subject to the Money Transmission Act (MTA) based on his reading of the law. In his initial correspondence, he asks for clarification: is he actually engaged in operating a money transmission service, or is he an exempt payment processor?
That seems like a simple question but the bureaucrats he's dealing with don't provide an answer. Instead, they appear to latch on to his correspondence and treat it as a representation that he is engaged in money transmission and therefore subject to the MTA. That's not exactly surprising: if he is subject to the MTA, there's a license involved, which generates revenue for the state.
This leaves an interesting unanswered question: was the author ever subject to the law in the first place? Perhaps the competitors who you suggest are flouting the law brought the matter to their legal counsel, who concluded that they were exempt. That doesn't mean that they aren't, but the lack of prosecutions hints that this isn't an unreasonable possibility.
One final comment about breaking the law: financial services are highly regulated and given the number of laws and regulations at the federal and state levels, I don't think any company in this space can ever be certain that it is not breaking some law. One thing is for sure however: if you're running a financial services company and have questions about a law, allowing legal counsel to research the matter and handle any correspondence with regulators is the best approach.
> was the author ever subject to the law in the first place? Perhaps the competitors who you suggest are flouting the law brought the matter to their legal counsel, who concluded that they were exempt.
You can read the law and decide for yourself. The text is actually fairly clear: if you receive money from one party for the purpose of transmitting it to another party then you need a license.
That tells us something about the nature of what passes for "law" in contemporary times, doesn't it? I mean, there's no particular reason that every single citizen shouldn't understand what is and what isn't illegal, without any need for a specialized class of judges, lawyers, etc. to interpret, debate, spin and mangle things.
Limit the scope of government very narrowly, to about what Bastiat argued for[1] and a lot of this problem would go away.
The copyright reads 2001-2013, so I assume the code has evolved over time in design, but kept the old-school table layouts. If you look at the (admirably short) CSS file, most of it has to do with fonts and colors (and one block for drop shadows). All of the positioning is being handled by the table layout.
It's "bad" code by today's web standards, but was once considered normal so I'm going to have to side with the developer here since the site functions well and displays beautifully.
Rather than hiring a brilliant, hard working, and frankly outstanding engineer such as myself, technology companies have focused their time and billions of dollars of their money on engineers that have demonstrated, in a consistent fashion, lack of talent, skills, and integrity.