6 ms·

I can't put my finger on it exactly but there's something about this story that isn't making sense.

by viburnum 4y ago

yellow_lead 4y ago
Like agreeing to contract terms you are entirely unable to uphold?
- Ekaros 4y ago
  Or understanding exactly what you are signing up for and what is in the papers you sign. And what does each and every term used mean.
- kulshan 4y ago
  They didn't even understand the terms they agreed to. The distributor didn't "grift" them. They weren't swindled, it was just bad business decision making and lack of understanding their terms.
  - ArmandTanzarian 4y ago
    Perhaps not a grift, but surely the guy who arranged this deal (who they have since ceased doing business with) could have more clearly communicated to them to what it was they were agreeing. There are multiple points of failure, and it seems the company accepted the crippling responsibility on their end.
    - yellow_lead 4y ago
      I understand that but unless he is an attorney he has no business explaining contract terms to you. Always read contracts yourself or have an attorney read them.
  - mattkrause 4y ago
    Sure, but this definitely happens. In college, I worked in a lab that used disposable pipette tips to measure/move samples around, which come in small "racks" like these https://www.coleparmer.ca/i/thermo-fisher-molecular-bioproducts-a22221prx-mbp-universal-fit-pipette-tips-1000-ul-3-racks-x-200-tips/2571164 https://www.coleparmer.ca/i/thermo-fisher-molecular-bioprodu... We normally got a copy-paper box or two of these at a time, which lasted for a few months. However, one day one of my colleagues, who did not grow up speaking English, placed the order and asked for a huge number of cases, thinking "case" was a synonym for the individual plastic boxes that they came in. It...was not, as we found out when a delivery man appeared up with a motorized pallet jack. He's a bit miffed too: "Is there an easier way to bring up the rest?" The order ended up filling an entire closet and then some. They were still working through them when I left a year later. In retrospect, the price was obviously too high, but it was a small part of a big equipment order--and science stuff is often eye-wateringly expensive anyway.
sva_ 4y ago
Hint: At the point at which they agreed to sell 6000 units, they must've agreed to a price for those units. Then later they figured out that the trader meant cases and upped the number. I'm thinking they expected to get paid about 6 times more (6 packs per case) ...
- nerdawson 4y ago
  That's not the way I read it. Like you said, they must have agreed a per unit price. The mistake had to have been purely in volume. When they recognised the mixup with cases / bags, they wouldn't have pushed to deliver the actual expected volume had the unit pricing been a problem.
  - theptip 4y ago
    They agreed a per-unit price. But they thought a unit was a bag, when it was actually a case of 6. So they thought they were getting 6x per bag. As someone that has gone through the process of trying go to build a business that sells to distributors, I cannot understand how you’d miss a 6x discrepancy in your price model. Your margins are slim, a 6x markup means you’re seeing more than 500% profit margin. (Probably by not having a price model, if I had to guess…)
    - nebulous1 4y ago
      > They agreed a per-unit price. But they thought a unit was a bag, when it was actually a case of 6. So they thought they were getting 6x per bag. The problem with this interpretation is that it would mean that the entire second half of the story would realistically have to be a lie. Once they realized that they were getting 1/6th of what they thought, they would have to find a way to get out of the contract or go bust, which is the opposite of what they say happened. As such, it's too much of an accusation to make with essentially no evidence. There's definitely something odd about the unit pricing and unit ordering though.
      - theptip 4y ago
lotsofpulp 4y ago
For me, the first thing that does not make sense is investing all of the below into a venture has a 99% track record of being low profit margin and low ROI (prepared food business, especially something as fungible, nonessential, and low barrier to entry as coffee): > Mid July, after 6 weeks of roasting 21 hours a day on the roaster in 3 shifts, working 12-16 hour days, regularly working until 11 pm to finish bagging and boxing, bringing in every friend, young and old, to help get this order done, we sent off the last pallet. In the end we produced 34,000 bags of coffee, an insurmountable feat. We were exhausted, mentally, physically, and emotionally, but we did it. We figured it would take a couple of weeks to move to the retailer’s warehouses and then the payments should be released. To make this order happen, we had to take $45,000 in personal loans from friends and family, $65,000 in business credit card debt, $35,000 from a business loan, $60,000 in personal credit card debt, $20,000 in outstanding invoice debt, and $11,000 in loans from us personally to the business, for a total of $216,000 in debt. We maxed out every credit card and depleted our personal and business savings. We had no other choice but we reassured ourselves that the $250,000 that this opening order would pay us and continued future orders from this retailer would be worth it in the end.
- phphphphp 4y ago
  There's important context: they had a signed contract that they were half way through executing on and they had been told to realise the full value of the contract they had to deliver the coffee. The natural conclusion in that situation is "we must do anything and everything to get across the finish line so all of our effort is not for nothing" and if the contract is due to pay out $250k in a few weeks, then taking on $200k of debt is plausible. Sure, an expert in the field wouldn't make these mistakes and wouldn't take on the risk however these aren't experts and so they did not understand the risk, they thought the $250k was guaranteed if they could just get to the finish line. The debt did not exist prior to execution of the contract, the debt and contract are linked. Your comment supposes that they started out by borrowing $216k.
  - lotsofpulp 4y ago
    Yes, I see that now. I should not have read so hastily.
mindslight 4y ago
The obvious reason the details of their story don't make full 100% correct post-facto sense is because they hired someone specifically to facilitate their interaction with the larger market. They trusted this person to get these details right, so that they could focus on their actual business of making coffee. It turns out that person was some kind of incompetent, and they themselves were left holding the bag(s). I'd guess that the reason they don't name names is that most of their ire is directed at this facilitator, their attorney has advised that naming them could end them up in a nasty libel suit, and the last thing they want is any more "excitement". I'd also guess that the title/narrative puts the focus on the big company for better virality.
- krisoft 4y ago
  > It turns out that person was some kind of incompetent, and they themselves were left holding the bag(s). I understand that that is the story they want to tell us. But that story doesn’t add up. If you are selling anything you need to know at the point of signing the contract how many you need to deliver, for how much each, and what is the total. Even if the person negotiating completely drops the ball at worst you will realise something is very bad when you look at these three numbers. Either the price you receive will be 6 times as much as you expect, or the count won’t match your expectations, or the total won’t match.
  - mindslight 4y ago
    Or the price was listed in $/lb, $/bag, or the distributor even played sloppy with the definition of "unit" where it meant bag in some places, and carton in others. As practical advice to avoid getting burnt, yes what you say is true. But as condemnation from an Internet Investigator who's going to get to the bottom of this company's possibly flimsy story to save us from some possible omitted details? meh. I can totally see how the attorney reviews the contract, the consultant explains the terms, and the business owner is mistaken about what they're signing up for. They did think they knew, that was the entire problem.

I can't put my finger on it exactly but there's something about this story that isn't making sense.

yellow_lead 4y ago

Like agreeing to contract terms you are entirely unable to uphold?

Ekaros 4y ago
Or understanding exactly what you are signing up for and what is in the papers you sign. And what does each and every term used mean.
kulshan 4y ago
They didn't even understand the terms they agreed to. The distributor didn't "grift" them. They weren't swindled, it was just bad business decision making and lack of understanding their terms.
- ArmandTanzarian 4y ago
  Perhaps not a grift, but surely the guy who arranged this deal (who they have since ceased doing business with) could have more clearly communicated to them to what it was they were agreeing. There are multiple points of failure, and it seems the company accepted the crippling responsibility on their end.
  - yellow_lead 4y ago
    I understand that but unless he is an attorney he has no business explaining contract terms to you. Always read contracts yourself or have an attorney read them.
- mattkrause 4y ago
  Sure, but this definitely happens. In college, I worked in a lab that used disposable pipette tips to measure/move samples around, which come in small "racks" like these https://www.coleparmer.ca/i/thermo-fisher-molecular-bioproducts-a22221prx-mbp-universal-fit-pipette-tips-1000-ul-3-racks-x-200-tips/2571164 https://www.coleparmer.ca/i/thermo-fisher-molecular-bioprodu... We normally got a copy-paper box or two of these at a time, which lasted for a few months. However, one day one of my colleagues, who did not grow up speaking English, placed the order and asked for a huge number of cases, thinking "case" was a synonym for the individual plastic boxes that they came in. It...was not, as we found out when a delivery man appeared up with a motorized pallet jack. He's a bit miffed too: "Is there an easier way to bring up the rest?" The order ended up filling an entire closet and then some. They were still working through them when I left a year later. In retrospect, the price was obviously too high, but it was a small part of a big equipment order--and science stuff is often eye-wateringly expensive anyway.

sva_ 4y ago

Hint: At the point at which they agreed to sell 6000 units, they must've agreed to a price for those units. Then later they figured out that the trader meant cases and upped the number. I'm thinking they expected to get paid about 6 times more (6 packs per case) ...

nerdawson 4y ago
That's not the way I read it. Like you said, they must have agreed a per unit price. The mistake had to have been purely in volume. When they recognised the mixup with cases / bags, they wouldn't have pushed to deliver the actual expected volume had the unit pricing been a problem.
- theptip 4y ago
  They agreed a per-unit price. But they thought a unit was a bag, when it was actually a case of 6. So they thought they were getting 6x per bag. As someone that has gone through the process of trying go to build a business that sells to distributors, I cannot understand how you’d miss a 6x discrepancy in your price model. Your margins are slim, a 6x markup means you’re seeing more than 500% profit margin. (Probably by not having a price model, if I had to guess…)
  - nebulous1 4y ago
    > They agreed a per-unit price. But they thought a unit was a bag, when it was actually a case of 6. So they thought they were getting 6x per bag. The problem with this interpretation is that it would mean that the entire second half of the story would realistically have to be a lie. Once they realized that they were getting 1/6th of what they thought, they would have to find a way to get out of the contract or go bust, which is the opposite of what they say happened. As such, it's too much of an accusation to make with essentially no evidence. There's definitely something odd about the unit pricing and unit ordering though.
    - theptip 4y ago

lotsofpulp 4y ago

For me, the first thing that does not make sense is investing all of the below into a venture has a 99% track record of being low profit margin and low ROI (prepared food business, especially something as fungible, nonessential, and low barrier to entry as coffee): > Mid July, after 6 weeks of roasting 21 hours a day on the roaster in 3 shifts, working 12-16 hour days, regularly working until 11 pm to finish bagging and boxing, bringing in every friend, young and old, to help get this order done, we sent off the last pallet. In the end we produced 34,000 bags of coffee, an insurmountable feat. We were exhausted, mentally, physically, and emotionally, but we did it. We figured it would take a couple of weeks to move to the retailer’s warehouses and then the payments should be released. To make this order happen, we had to take $45,000 in personal loans from friends and family, $65,000 in business credit card debt, $35,000 from a business loan, $60,000 in personal credit card debt, $20,000 in outstanding invoice debt, and $11,000 in loans from us personally to the business, for a total of $216,000 in debt. We maxed out every credit card and depleted our personal and business savings. We had no other choice but we reassured ourselves that the $250,000 that this opening order would pay us and continued future orders from this retailer would be worth it in the end.

phphphphp 4y ago
There's important context: they had a signed contract that they were half way through executing on and they had been told to realise the full value of the contract they had to deliver the coffee. The natural conclusion in that situation is "we must do anything and everything to get across the finish line so all of our effort is not for nothing" and if the contract is due to pay out $250k in a few weeks, then taking on $200k of debt is plausible. Sure, an expert in the field wouldn't make these mistakes and wouldn't take on the risk however these aren't experts and so they did not understand the risk, they thought the $250k was guaranteed if they could just get to the finish line. The debt did not exist prior to execution of the contract, the debt and contract are linked. Your comment supposes that they started out by borrowing $216k.
- lotsofpulp 4y ago
  Yes, I see that now. I should not have read so hastily.

mindslight 4y ago

The obvious reason the details of their story don't make full 100% correct post-facto sense is because they hired someone specifically to facilitate their interaction with the larger market. They trusted this person to get these details right, so that they could focus on their actual business of making coffee. It turns out that person was some kind of incompetent, and they themselves were left holding the bag(s). I'd guess that the reason they don't name names is that most of their ire is directed at this facilitator, their attorney has advised that naming them could end them up in a nasty libel suit, and the last thing they want is any more "excitement". I'd also guess that the title/narrative puts the focus on the big company for better virality.

krisoft 4y ago
> It turns out that person was some kind of incompetent, and they themselves were left holding the bag(s). I understand that that is the story they want to tell us. But that story doesn’t add up. If you are selling anything you need to know at the point of signing the contract how many you need to deliver, for how much each, and what is the total. Even if the person negotiating completely drops the ball at worst you will realise something is very bad when you look at these three numbers. Either the price you receive will be 6 times as much as you expect, or the count won’t match your expectations, or the total won’t match.
- mindslight 4y ago
  Or the price was listed in $/lb, $/bag, or the distributor even played sloppy with the definition of "unit" where it meant bag in some places, and carton in others. As practical advice to avoid getting burnt, yes what you say is true. But as condemnation from an Internet Investigator who's going to get to the bottom of this company's possibly flimsy story to save us from some possible omitted details? meh. I can totally see how the attorney reviews the contract, the consultant explains the terms, and the business owner is mistaken about what they're signing up for. They did think they knew, that was the entire problem.