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My startup banking story

616 points by cdme 4y ago

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RulerOf 4y ago
Interesting story, but I've got to complain about the inset text boxes: > Someone out there is probably mentally screaming at me "you fool!" at this point. These are each clearly building up to "some explanation" of what the author should have done instead, indicating precisely what his foolish actions were and why. Perhaps we're just supposed to know that, but this is never directly explained in the story and I found it a little upsetting.
- A_D_E_P_T 4y ago
  Same. I don't really understand what he did wrong, and it seems as though everything worked out okay in the end. As as for "lessons learned," I really don't know if there are any. Just an amusing story of Chase coming to grips with "startup banking" and the founder gaining some local notoriety.
  - op00to 4y ago
    He didn’t do anything legally wrong. He didn’t consider the practical implications of deposit banking. For most of us our balances are low and things just work. Pulling $1M can be problematic if not planned in advance. Kinda what happened to SVB. They’d likely have been fine if they didn’t tell people they needed money.
  - hmahncke 4y ago
    I wonder how Alex and Alex's boss would tell this story? [edited below - because threaded comments can come across wrong] I wonder if how Alex's boss would tell this story is - my employee landed a $35m account, then failed to manage the account successfully, and when $35m walked out the door, we never understood what we did wrong
    - Aeolun 4y ago
      Yeah, but that’s a problem with Chase, not a problem with the guy telling this story. I don’t know about you, but it seemed fairly obvious to me that our protagonist didn’t see the bank as anything other than a convenient stash of money.
      - margalabargala 4y ago
        Yeah, for sure. If anyone made a real "mistake" here, it was Alex, who failed spectacularly at managing the account. If our protagonist saw a bank as a convenient stash of money, then that's all it was for him. If it were to be anything else, Alex would have been the person who would inform him of that, something he clearly massively failed to do. If I happened to start a startup and be given a $35M check, I would do exactly what the person in this story did, for the same reasons, and unless a bank person told me otherwise I wouldn't think anything more of it. A bank is a bank is a bank until they demonstrate otherwise to their customer, not the other way around.
  - swatcoder 4y ago
    > I don't really understand what he did wrong He was just clueless to how banking worked at the time and how bankers expected to be involved with helping new clients gradually grow their banking relationship. He was a young kid who intuitively engaged in anonymous, electronic, modern banking before bank branches were really there themselves. To young people who came up after him, his intuitive way became more the norm — especially for VC startups — and the idea that you might buy your banker a bottle of nice whiskey for the holidays makes no sense. But for Alex, the banker, who had a kid come in and grow an account to $35M and then silently drain it without ever consulting with him, the whole experience was alien and absolutely bewildering. You can think of it as a culture clash or maybe a missed opportunity. More awkward than wrong.
    - pjdesno 4y ago
      By 2012, the banking industry had spent two or three decades educating customers to teach them that banking is an impersonal transaction which takes place via ATM machines and the internet, and never, ever, ever involves talking to a bank teller behind a counter. They've been trying to de-personalize banking since back when I got my first ATM card in 1983 or so.
      - jldugger 4y ago
        Yea, the story isn't how banking online is anonymous and magic, its about how branch banking is extremely regional, and how few of them deal with "pre money" startup financing, and were _structurally_ unprepared to handle it. "I have 35M but need to slowly spend it down until the next funding round" is not what most businesses in LA look like, and the cash infusion presumably allowed the bank to expand lending in the area, and business banking. And when those funds leave, well, there might even have been layoffs.
      - eropple 4y ago
        > They've been trying to de-personalize banking since back when I got my first ATM card in 1983 or so. For personal banking, absolutely. But the property management business I bought, and then sold, had dedicated account managers at both banks we used, and both they (and the previous owner of my company) had an expectation of personal contact and fairly regular conversations--both because our customers also used those banks, but also just because it's the norm. This was in 2020, for reference. Business banking isn't all startups.
- bvanderveen 4y ago
  The proper procedure for interacting with banks as a startup is knowledge that isn't meant to be disseminated. The entire point this piece is the asides: to make sure the uninitiated know their place by signalling over their heads. The initiated have nothing to learn here, it's just a funny story. Move along, citizen.
- jmillikin 4y ago
  > Perhaps we're just supposed to know that, but this is never > directly explained in the story and I found it a little upsetting. This might be an age / generational thing, but all of the issues described in the article are immediately obvious to people who grew up before internet banking. The default for business accounts in "traditional" banks is that they're handled by a specific named account manager, who is given the credit (or blame) for that account's growth over the years. So walking into some remote branch and opening an account will tie that account directly to the political success of whoever was sitting across the desk from you when you signed the paperwork. It's a failure mode that doesn't need an explanation to people who are the expected audience of the article. In software terms, imagine an article about launching an MVP that starts off with "so I copy-pasted some PHP from StackOveflow and ran it with default permissions in the same database that stores customer credit card details ...". There doesn't need to be a long digression about why that's bad.
  - walrus01 4y ago
    > will tie that account directly to the political success of whoever was sitting across the desk from you when you signed the paperwork. I don't think the end user of a bank's services can or should be expected to know about, or take this factor into consideration when choosing to close their account or drastically change how they use it, however. It's not personal, it's business, and to a certain extent any large US domestic bank is functionally equivalent to the other in features, fees and risk level. If I closed everything I have with Wells Fargo tomorrow and reopened it with BOA or Chase I would expect about the same functionality.
    - swatcoder 4y ago
      It’s not the historical or national norm to be handed a $1M check, drop it into a bank account like birthday card money, and then conduct all your banking business digitally. Some of that’s a startup thing and some of that’s a generational modern thing. Traditionally, businesses establish relationships with their banker (a person), who helps steward their accounts, apply for loans, understand and pursue savings and investment options for held balances, etc Banking organizations are built around this very very long-standing model. There are processes and spreadsheets and powerpoints and dumb little mugs for high performers and all those things. Clearly, with the consolidation of banks and the pervasiveness of online banking, this is in the process of changing. This story captures one of those transitional moments, where a young kid with a startup is completely blind to what bankers expect to be doing. But your version of “how things are” is very contemporary, and wasn’t quite the way of things when this story takes place.
- deleted 4y ago
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- jacooper 4y ago
  According to other comments here[1], he missed on a lot of cool stuff by not engaging with Alex, as usually multimillion dollar account managers have a very personal relationship with the CEO of that company. 1. https://news.ycombinator.com/item?id=35161313 https://news.ycombinator.com/item?id=35161313
  - walrus01 4y ago
    But what if you don't want to have business dinners with people after work hours, don't play golf and don't have any kids for the name memorization? Anecdotally I've worked for a company that bought a lot of lasers. Like, really, a lot. Enough lasers to make the laser vendor fly our sales representative out to our city and hang out visiting us for a few days. They would offer to take the whole team out for dinner and drinks. It was just weird and uncomfortable. I have other things to be doing with my personal evening between 5:30 and 9pm.
    - zie 4y ago
      A good professional banker, would have helped with essentially every finance related issue the poster may have had. Including getting accounts more organized to help with earning more than the .01% banks usually pay for their checking accounts. It's like concierge banking, you get 1 person that will just make all of your bank and finance problems go away. You need a house loan, your person would just make it happen. You need financing, they can help with loans, going public, seed rounds whatever you need. They can also help you locate attorneys to help draft financial contracts, etc. Tax specialists that can help you minimize taxes, etc. There isn't much of a limit around both personal and business finance they wouldn't at least help get you pointed in a semi-sane direction with. Assuming Alex was any good, which clearly they weren't that good, since they did such a terrible job of explaining all they could offer to the blog post writer. That's partly on Chase, but probably mostly on Alex. We have a banker and I needed to buy a car recently, I told them my plans and they analyzed various payment options(loan, leasing, paying cash) and gave me a recommendation(just pay cash). When it came time to actually buy the car, the dealer wouldn't take a credit card for the entire cost, so my banker organized a cashiers check so I just walked into the closest local branch, picked up the check and was back at the dealer in 5 minutes(not including travel time). Sure they can do the whole smooozhy mess as well if you really want that, but we don't, so my banker doesn't do any of those things with me. They know the sorts of charities and things I like, so if the bank ends up sponsoring something in my area, they will let me know and organize tickets or whatever if I wanted. I rarely do those sorts of events, but there are certain ones I like and my banker knows that and just organizes tickets and what not for those events once or twice a year that I like doing.
ghiculescu 4y ago
I’ve had plenty of debates about SVB where a key argument is “the bank’s depositors should have known better!” This kid is now a billionaire(?). I think this is a good example of the financial acumen of a typical SVB customer. I don’t say this to promote or defend a bail out. To me it says that if we are regulating the system to protect deposits, we should come up with rules that actually work. For better or for worse, a bank is a bank is a bank is how most people see it.
- quickthrower2 4y ago
  Yes and how does one do due diligence on a bank anyway?
  - ghiculescu 4y ago
    That is possible. Here’s an example: https://twitter.com/RagingVentures/status/1615826088038473733 https://twitter.com/RagingVentures/status/161582608803847373... But I think it’s beyond the ability of many.
    - vkou 4y ago
      It's possible, just like it's possible to do a detailed food safety inspection on every single thing you bring home from the grocery, but why would anyone want to live in a buyer-beware world where that is expected?
- zamnos 4y ago
  Yes, back in 2021. > Hashimoto, the original CEO, is a new billionaire, worth $1.2 billion based on the IPO price. https://www.forbes.com/sites/kenrickcai/2021/12/09/hashicorp-shares-rise-in-latest-open-source-ipo-minting-new-billionaire/ https://www.forbes.com/sites/kenrickcai/2021/12/09/hashicorp...
- hn_throwaway_99 4y ago
  > I think this is a good example of the financial acumen of a typical SVB customer. While I totally wouldn't expect startup founders to behave hardly any different than Hashimoto, I would expect VCs to have done a much better job helping their startups do cash management. I mean, isn't that a pitch so many VCs give, in that it's not just "we give you money", but we also help connect you with experts for different parts of the business? Even for pure self interest, if VCs are going to write a "kid" a check for $10 million, wouldn't they want to ensure it was properly safeguarded? Regardless of the above, I 100% agree with your "we should come up with rules that actually work" statement.
theyknowitsxmas 4y ago
> the amount the cashier's check is made out for has to be available at that local branch (or, whichever branch issues it). And, well, local branches I guess don't usually have $1M cash lying around. Or, if they do, its not enough to cover other business activities for the day so they're not willing to part with it. I guess a flight to New York is worth it.
- op00to 4y ago
  Banking with companies that understand your specific needs is worth a lot.
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dangrossman 4y ago
I get those voicemails from "my personal banker" at a branch of my bank I've never actually walked into a few times a year, "just checking in to see if we're meeting all your needs" or something like that. I hadn't noticed those calls are correlated with me moving around large amounts of money, e.g. when I pool money into a checking account to buy a house or whatnot. I suspected some department is responsible for watching that kind of thing for fraud, but never thought it'd be some random banker at a specific branch.
- walrus01 4y ago
  In general, whenever some business I have a vague professional relationship starts calling me on the phone because clearly some CRM system has prompted them into "just checking in!", it only bothers me and becomes a source of annoyance. I don't like getting calls from people who want to sell me new things or who work on commission. The likelihood of me continuing as a happy customer is inversely proportional to the number of unsolicited calls I get. Mostly all this means is these days I give out the main number to my pbx IVR menu and never my direct cellphone number.
  - Aeolun 4y ago
    I dunno, I kind of like that it’s the same person all the time. If they’re happy with me saying ‘everything is fine’ until everything is not fine and I call them back, that works for me.
- UncleEntity 4y ago
  You can probably turn those events into a free toaster with a little unease in your voice about how well the bank is doing their job.
- astura 4y ago
  Is it Wells Fargo? I get these exact phone calls from Wells Fargo because they bought my mortgage, I don't have any other accounts with them. Since they bought my mortgage I've never even been in a WF branch. They call from the closest one, which isn't very close. They are the only bank that's ever called me like this. I have had accounts with many different banks.
dave333 4y ago
My Dad was in banking in the UK and told stories about inter-bank transfers in London in the 1930s that were effected by two low level employees physically exchanging documents. He said he was always very careful to get a firm grip on the receivable briefcase before releasing his grip on the deliverables.
- walrus01 4y ago
  Bearer bonds?
  - linksnapzz 4y ago
    Or actual bills. In the US, at that time, the Federal Reserve used to issue $10000 && $100000 notes exclusively for settlements between member banks.
    - dave333 4y ago
      I am not certain, but I recall he said it was something to do with settlement of foreign exchange transactions.
flandish 4y ago
So a neat story … but it trends like “newbie does big thing. Possibly messes up but is ok.” Like a lot of people in startups. Some of which fail. Some due to svb. Some to other reasons. Same “newbie taking serious action” trend. Like 17/18 yo kids getting signed up with predatory college loans. We’ll bail out capital owning class members… but those same folk laugh at the student loan cohort…
shruubi 4y ago
I'll be honest, all these asides feel like there is some kind of explanation or big reveal that never comes. I can understand a bank identifying a large-sum account and wanting to look after them, being annoyed by that account moving banks as well as a local branch having to take precautions on such large withdrawals. But otherwise, I feel like I'm missing something here that isn't spelled out.
- jmillikin 4y ago
  The author is used to thinking of their bank account as an anonymous number, with operations handled impassively by whoever happens to be staffing the bank's reception desk that day. They probably never considered 35 million dollars to be an amount worth fussing over ("this is not a lot of money to a big bank, they'll barely notice"). The bank thinks of multi-million dollar business accounts as a deeply personal relationship between the CEO and account manager, where the AM takes the CEO to fancy dinners and golf outings and remembers the names of the CEO's children. HashiCorp's account might have been the largest that had ever been opened at that particular branch. This article is an amusing(?) story about those two worldviews making contact.
  - jacooper 4y ago
    Now I understand what's wrong, so he missed on a lot of cool stuff by just not engaging with Alex. Doesn't seem like that a big of deal, but a bummer for sure!
    - jldugger 4y ago
      It's more like "this Alex dude's entire career was at the whim of a naive young startup founder who was oblivious to this fact."
      - op00to 4y ago
        I'm thinking of that scene in Billy Madison where Steve Bucscemi is crossing names off a list. Poor Alex!
duxup 4y ago
I remember when I bought my first house someone told me to make an appointment to get the cashiers check for the closing day. I assume it was semi related as you want to be sure they are ready for you / have the money on hand for you to issue the check. Not that they wouldn’t have the money but depending on some else(s) showing up looking to empty the local branch inadvertently… you want to be sure they got you covered.
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thwayunion 4y ago
One of my landlords was a guy like "Alex", and had a similar fate. I can't say I shed a single tear for him or Alex. What services did Alex render in this story to justify being a "rising star"? That one account likely earned him significant compensation -- multiples of what I made doing 80 hour weeks in my 20s at 20k/yr -- for a significant chunk of his earning career. For what? A few phone calls to someone who didn't want to be contacted. The rent seeking component of the American economy needs to be competed out of existence. Their margin is everyone else's broken back.
- pepy 4y ago
  Alex did nothing to get that account, he did not put any meaningful effort into better that client's experience and did nothing to lose it. It was all outside of his actions and any benefit he received was purely accidental.
- brandonmenc 4y ago
  In other SVB threads commenters are like, if you have this much money it should go into a CD ladder or whatever instead of sitting in a big pile where only $250k of it is actually insured by the FDIC. Maybe that's one of the things Alex wanted to sell him.
- intelVISA 4y ago
  Big corps (like HashiCorp) make their margins on SWE and FOSS' backs - do you owe them the same ire as landlords?
  - x-complexity 4y ago
    > Big corps (like HashiCorp) make their margins on SWE and FOSS' backs - do you owe them the same ire as landlords? There is a false equivalency made here, in that it assumes that the debate regarding labor & the debate regarding capital are interchangeable. Landlords (& possibly account managers like "Alex") derive their compensation from the maintenance & management of the capital's safety & utility: The quality of said capital (whether cash or real estate) should remain constant if they did their job. The debate enters in when the capital owners/managers put in little documented effort & receive large compensations in response. For Software Corps, their compensations are derived from difference between the value created from the creative, technical, & outreach labor put in from their SWEs, designers, marketers, etc., and the cost of compensating that labor + maintaining the necessary equipment to make the labor usable. For this, the debate enters in on how much they should be compensated for the labor put in. The two debates are not strictly equal.
a5seo 4y ago
I founded a startup. We raised $2.5M, not all at once. We banked at SVB. It sucked. Subpar online tools. $200/mo “analysis fee,” never once had a “relationship” with anyone. Maybe we were never big enough to be relevant. That’s fair. My advice: use a retail bank until you have a few million in revenue, then shop around. Make the SVB’s of the world earn your business. SVB in particular was so incredibly entitled. I’m glad they failed more spectacularly than my little startup.
- commandersaki 4y ago
  Even Bernie Madoff had $5B sitting in a Chase Bank account.
- koolba 4y ago
  We’re you forced to use them as a bank as part of the funding agreement? Otherwise why put up with that crap?
  - dcow 4y ago
    AFAIU this only happened when taking out "loans" from SVB and it's not a general practice to add banking stipulations to terms sheets.
  - gerad 4y ago
    When you start a startup, especially a venture-funded one, you really only want to be innovative in one area: your core offering. It doesn't make sense to spend an innovation token on your bank. So you go with something tried and true, that's done it a million times before with a million other startups. That was SVB. Going with something else has potential downsides that you may not even be aware of (as the OP describes).
    - sanderjd 4y ago
      Seems like this conventional wisdom about innovation tokens was actually very poor in this particular area. Makes me wonder what other bad decisions might be lurking behind that best practice.
par 4y ago
I'm more curious how the author secured the $1m cashiers check during transport and deposit to the next bank!
- samspenc 4y ago
  And I'm curious whatever came out of the fraud investigation at Chase. I mean, there was some fraudster who had control of a well known startup's bank account (granted, the older one) and moving six-figure amounts out of it regularly, what in the world happened?
  - rippercushions 4y ago
    Four-figure ("thousands of dollars out every few weeks"), presumably specifically to avoid tripping any automated checks on moving over $10k. But yeah, it's still kind of mind-boggling that they could do this for apparently years without anyone noticing. And not just on Chase's side: how do you not notice that the money customers claim to be paying you is not actually landing in your main bank account?
- Aeolun 4y ago
  Put it in his pocket and walk to the next branch over? What exactly do you expect to happen? He can make that trip a thousand times and never encounter any issues. Whether there’s a 1M check in his pocket is immaterial.
- nodesocket 4y ago
  Typically when buying a house the down payment is either a wire or cashiers check. I did a cashiers check, just drove right from the bank to the title and escrow company.
- NSMutableSet 4y ago
  Manhattan Beach is a nice city. The median for SFH is close to 4 million.
- neilknowsbest 4y ago
  I wanna know how he managed to initiate a wire for $35MM online (and approximately 100% of account balance), presumably to a brand new recipient, and only got a single phone call and the wire request wasn't rejected. Maybe things have changed, but my experience now is that I'd have to go into a branch to do that wire, and I'd probably get the normal verification call plus another from the account manager.
yesimahuman 4y ago
I don’t know why the author cringes so much or feels like they made mistakes. You don’t owe Chase anything, it’s on them to earn your business and treat you like the major account you are. We had a similar situation and Chase treated us poorly, ultimately denying my wife and I a relatively small home mortgage, despite having millions in a business account with them. I will never forget how they made us feel. All I see in this story is more cluelessness from Chase, not any mistakes by the author. They’ve been chasing our business ever since we moved to SVB post Series A. They’re going to get it since we wired our money out of SVB today (not my decision), but do they deserve it? Absolutely not.
- dcow 4y ago
  You don't plop 35MM into a single bank account and sit on it. The cringe isn't about feeling bad for Chase. It's about watching a 22 year old learn how to manage incredible amounts of cash.
  - jojobas 4y ago
    Are startups expected to hire a guy to stage fixed-term deposits across multiple banks and gamble on stocks and foreign exchange? Pretty sure they are not.
    - zer00eyz 4y ago
      Depends on how big you are. If your first friend at any company isn't someone in accounting your doing it wrong. Good accounting is not something you outsource, and a good accounting team is worth their weight in gold. If your concerned about exchange rates, you better have competent folks in accounting.
      - mcherm 4y ago
        > Good accounting is not something you outsource I'm happy to believe you on that point, but can you explain WHY? It appears to me that accounting is the exact type of generalized skill with well-established standards that makes sense to outsource.
dcow 4y ago
The last week has made me really question why VC firms don't provide cash management crash courses to founders, or something of the like (cash management consultants or something). It seems like a huge flight risk to write $10MM and $20MM checks and just hand them to a founder with no financial staff whatsoever who only cares about finding PMF and who couldn't care less about cash management. It's great that Mercury is doing all this stuff for founders, just seems like it should be table stakes for VCs to require some sort of cash plan to be approved before handing over the check. But what do I know maybe 10MM is peanuts.
- throwawaaarrgh 4y ago
  VCs are psychopaths. They don't care if the world burns down as long as 1 out of 50 investments turns into a huge valuation. Poor cash management? They wouldn't care if he was feeding stray cats to an ML algorithm and burning $1000 bills to power a crypto miner.
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nodesocket 4y ago
What a crazy story, love it. I'm a HashiCorp shareholder and was quite concerned about their SVB exposure as I was pretty sure they banked with them. Thankfully it worked out, at least thus far.
- quickthrower2 4y ago
  Yeah that share hasn’t been performing :-(
jacknews 4y ago
I don't get it, what was the big problem? Just that 35M is a big deal to a local bank branch?
- dharmab 4y ago
  Traditional banks' risk models don't work well for startups. SVB was more willing to work with startups, e.g. accepting shares as collateral
  - gaadd33 4y ago
    I don't think that's relevant to the post though. It's essentially saying that a big bank has bankers that want to check on accounts once they get large enough and he didn't understand that
rietta 4y ago
The author must have never seen a rerun of Beverly Hill Billies growing up. The bank President was constantly courting the attention of Jed Clampett and his family!
twelve40 4y ago
With so much dramatic build up I was fully expecting him to lose a bunch of money, but what followed was... nothing. Like, nothing happened. "My final check was delayed by a few days and I got weird looks from bank employees", that's it.
- greenie_beans 4y ago
  i enjoyed the story. it was entertaining enough without some big ending.
rietta 4y ago
I wonder if this would have gone differently if the author had originally opened business account with the local teacher's credit union. That could have really been interesting to see how the account manager handled his account. And @jmillikin's comment about the author being used to treating banking as an anonymous store for cash and executor of transactions vs how they have traditionally worked is spot on.
quickthrower2 4y ago
The oddest thing to me is being given round after round of cash, and not needing it. Sure it could be 'invested' in an index or something. But wasn't it meant to be 'invested' in the actual startup?
donnythecroc 4y ago
Isn't the biggest thing here that he never spent any of the VC money of he had $35m in the bank he bootstrapped!!!!
- NSMutableSet 4y ago
  What happens if you don't actually spend VC money? Do they still get partial ownership? This is the first time I hear of a situation like this, and I'm really curious.
  - lmm 4y ago
    > What happens if you don't actually spend VC money? Do they still get partial ownership? Yes. Just like you still pay interest on a loan even if you just let the cash all sit in a bank account.
    - jojobas 4y ago
      A lot of banks will set up an offset account with your loan so you only pay interest on the money you use. A loan is fundamentally different from a share purchase though, you can try to buy back you shares but that would be a separate negotiation.
    - NSMutableSet 4y ago
      What's the reasoning for not using it?
      - lmm 4y ago
        I have no idea why Hashicorp didn't use it. The point is just that if you made a contract for something and they hold up their end, you've gotta hold up your end, even if you ended up not using what they provided.
        NSMutableSet 4y ago
        Are there VC contracts where actually spending the money is a stipulation?
paultopia 4y ago
TBH, I don't really think that the author of this post screwed up. There's a lot of self-flagellation, but, ultimately, Chase offered accounts. The company used the services written on the tin. It's far from obvious that one needs to show up in person to close bank accounts. (I've certainly closed bank accounts without showing up in person, or, hah, at least I think I have.) It's far from obvious that a bank wouldn't be able to handle large amounts of money without confusedly celebrating and then condemning the poor fool who types the information into the computer. And ultimately, it all got fixed, and the only serious hitch to fixing it was the fact that for some weird-ass reason the bank had some rule that it couldn't issue a cashiers check unless there was a wad of cash that size in a particular branch, which is completely nutso given that 99.999999% of bank money is just bits anyway.
- re-thc 4y ago
  Maybe he did in that he shouldn't have used Chase :p
- mypalmike 4y ago
  Yeah the "poor fool who types the information into the computer", or "Alex" in this case, is really the most enlightening thing in the story for me. It's amazing that this person who has exactly zero impact on account sizes... is rewarded for and takes credit for account sizes.
  - jletienne 4y ago
    people are rewarded for things outside of their control everyday. people are crushed for things outside of their control everyday
- hummus_bae 4y ago
  [dead]
ironic_otter 4y ago
I think all the replies here about people describing all their personal interactions with their banker is hiliarious. I'm in my 40s, started "banking" well before internet banking was a thing, and I still had no idea why the author was cringing at his naivety. Until the people here with actual money spelled it out for me. My banker never knew me from Adam, and my typical withdrawal was to buy ramen... Oh how the rest of you live!
ficklepickle 4y ago
Here's the twist: the closing of the Chase account led to Alex's career tanking. Thus began a downward spiral of his life. His wife left him and took the kids. He turned to the bottle and it got worse from there. He became indebted to the wrong people. It was then he remembered that Hashicorp account. When he was shown the door at Chase, the account had a few hundred grand in it. Through knowledge of internal procedures and some social engineering, he began fraudulently obtaining funds from the account. He hoped they had forgotten that the account existed. It must be pennies to those people, they shuffle around millions without batting an eye. Then, one day the cops show up at his seedy motel room. He was arrested for the fraud and found guilty. The judge was particularly heavy-handed and gave him 10 years, despite no priors. Alex kept a picture of the founder of Hashicorp on the wall of his cell all those years, blaming him for the turn his life took. He did push ups and other exercises to keep himself somewhat sane. All the while, dreaming of the day he would get out and take his revenge. Fast forward to today and Alex is recently released from prison. Biding his time, plotting his revenge... Alex spends a lot of time on hacker news, hate-reading about these startup types that ruin lives. Getting into the mind of his enemy. One last twist, Alex is me! /s
- xyst 4y ago
  I approve this for a Hallmark film
  - nwatson 4y ago
    "The Year Santa Wore Orange"
- lawgimenez 4y ago
  True Detective Season 5 then.
- deleted 4y ago
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- recuter 4y ago
  Hi Alex, I am a Hollywood producer working at a major motion picture studio responsible for films getting greenlit. Everybody around the office was buzzing about your idea as the basis for a potential screenplay and I was just about to offer you $750,000 for the story rights until an intern pointed to another story (we don't understand what most of the things discussed on your forum are) and we found out about this ChatGPT4 thing. A few phone calls later and with early access to their product acquired - suffice it to say we were able to generate more ideas of similar caliber than we know what to do with for $0.75 and will be reevaluating our business practices going forward. I wish you best of luck on your murderous rampage.
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IncRnd 4y ago
This can all be understood by not thinking of your bank as a bank. Every bank employee, except a teller, is a salesperson trying to make a living by upsells. They are paid commission. Since your bank really isn't a bank, the one thing they don't have is cash money. You might have problems withdrawing $10,000 at one time.
repiret 4y ago
I’ve always been shocked by how non-fungible branches of huge national banks are. “We can’t give you a megabuck of cash because we don’t keep that much in the vault” would make sense, but “we can’t write a cashiers check for a megabuck because something about this branch” is bonkers. I keep a BofA account and every once in a while it somehow matters what branch I opened it in 15 years ago.
- rwmj 4y ago
  On the very rare occasions when I get a paper cheque, I still have to send it (thankfully, by post) to the branch where I opened the account nearly 50 years ago. This is at a reasonably large national bank, now owned by a huge international bank. It's pretty weird. Also I'm fairly sure they just scan it in to their computer, which I could do myself if the bank offered a functional app. The postscript to this is the bank has been closing branches left and right, so I imagine one day they'll close "mine" and then I don't know what I'll do with cheques. Hopefully they'll have finally died out by then.
kevmo314 4y ago
> For over a year, someone had been wiring thousands of dollars out every few weeks. We were short over $100,000 due to fraud. Did the VP of Finance point out the ridiculous amount of lost interest by keeping $35M idly sitting as cash? Definitely a lot more than $100k.
- renonce 4y ago
  Interest rate between 2008 and 2015 was around 0.1% per year. Not much I think.
- jaclaz 4y ago
  The VP of finance is the same one that took two years + to realize (through an internal audit) that some 1,100,000 worth of invoice payments were paid on that account instead of the main one. This makes little sense, bordering to impossible, pairing invoices and payments received is weekly or at most monthly routine.
jongjong 4y ago
I will never trust a bank with any amount over $50k. It's weird. I remember 5 years ago, when I got involved in blockchain space, I was seeing people holding $20k in crypto and I was thinking that they're crazy. Now I'm holding over $20k in crypto myself and it feels like the safest asset on earth. I don't even trust company shares. I would never trust any human being with more than a new car's worth of value. I worked too hard for it and humans are not trustworthy enough.
- renonce 4y ago
  In what crypto? Holding in USDC means trusting your money with Circle, and holding BTC means trusting whatever exchange that you're going to deposit your money into.
  - mattdesl 4y ago
    Holding BTC doesn’t require trust in a single exchange, only trust that it continues to hold some market value. If you have $20K of non-blacklisted BTC you will probably be able to find a buyer somewhere in the world, though the exchange rate might not be as efficient as a CEX like Coinbase. GP’s logic seems poor though. In US or EU, probably safer to hold up to the insurance limit in local banks. Beyond that, or for higher risk assets or in countries with poor banking infra, crypto becomes a viable option.
  - jongjong 4y ago
    I hold some tokens from a project I worked on for 2 years (I hold everything on-chain) and also from my own project which I built (and designed the signature algorithm from scratch) so it's hard to get more security than that.
RektBoy 4y ago
How the fck is this possible in US? Try similar things in EU and you would have police commando waiting for you in wrecked offices. Because this would be viewed as major fraudulent activity. No reporting, no nothing. Also why some random guy in random small branch is responsible for money on the account? Here, nobody cares. You close the account, ok no problem see ya.
jgilias 4y ago
This really highlights the difference between what banks think they are, and what most of their customers think they are. Also, this makes me think how in a world where stablecoins are regulated with clear rules of what their issuers can and can’t do, you’d be better off having your funds in something like USDC instead of a bank account. It’s basically the same thing as a bank account but with full instead of fractional reserve, and the ability to hold and transfer the ‘I Owe U’ units without involving ‘the bank’ itself.
janandonly 4y ago
American banking stories always read as an '90 comedy to me, as a European. Furthermore, once I visited Philadelphia, and I saw several people standing in queue. I asked what restaurant or place that was. My driver said it's where people wait in line to pay their rent. He did not laugh. That was not a joke. People do that for real in the USA.
- smcl 4y ago
  I think it can vary greatly in Europe, though. I know my friend (in the 2010s) had a bit of a culture shock trying to deal with how old-fashioned banking was in Italy, having previously only lived in the UK. And it goes both ways, there are things here that Americans would think are a bit backwards. Like if I'm ordering something online here in Czech Republic it's really common to allow payment via direct bank transfer - i.e. they'll give you a bank account number and a variabilní číslo ("variable number" - a way they can identify the payment on their end), you make the transfer using these values and they'll send out the order when they confirm they received the payment. Nowadays a QR code will often be generated for this and you'll just scan it in your banking app, but it could seem a little backwards if you're used to paying via debit/credit card.
- ubermonkey 4y ago
  That's ... wild. Most of my friends who rent where I live (Houston) pay their rent through an automatic bank draft.
- jll29 4y ago
  In Venezuela, people pay their rent in the bank branch in cash, often from a bag hanging around the tenant's neck and spacious enough to accommodate the substantial inflation. Then a photo and fingerprints are taken from the depositor (every month!). The capital Caracas has a tunnel, in which gangs often stop cars and shoot through the window (cost of bullet = $0.10) in order to collect any change the driver or other passengers may hold - if someone was on their way to pay the monthly rent at the bank it would be their lucky day, but if the driver had just $20 in their wallet, it's still a profit of $19.90 minus the cost of the assassin's time. Good there are electronic standing orders in most countries.
- 4y ago
niffydroid 4y ago
I'm in the UK, why on earth does it matter about the branch? In the UK it's about the bank not the branch. The branches left generally are pretty small now doing the most basics of tasks.
- tcldr 4y ago
  Banking in the US had quite a few surprises for me. Often masked as 'for security' when it's anything but. A few examples spring to mind. 1) Chip and pin took the US forever to adopt. I've heard arguments that this is because chip and pin is 'insecure'. Insecure compared to a signature or magnetic stripe? Really? 2) SSL certificates. A lot of the retail banks use the cheapest grade SSL certificates. No extended validation. So you don't get that reassuring green padlock. No idea why. Something about compliance I read once. Bizarre. 3) ACH payments take three days to wire. Again, I've heard the argument for this is that it helps security as it gives you a chance to cancel the payment before it finally completes. More plausibly though, I think it helps the banks generate fees. Granted, it took legislative intervention in the EU to get this right, but clearly it's a net win for the economy. A lot of people buy the arguments, too. Banking in the UK/EU is like living in the future when compared to the US. EDIT: Oh, and I forgot about cheques (checks). The US still loves a check. The banking equivalent of the Penny Farthing.
  - quesera 4y ago
    > So you don't get that reassuring green padlock. No idea why. Something about compliance I read once. Bizarre. All major browsers have removed the green padlock for EV certificates. It did not improve user security behaviour. There are some arguments that it had a detrimental effect. You can still distinguish certificate types by clicking on the small padlock icon in the URL bar. But of course no one does that. Consequently there is no current reason to pay (in cost and time) for an EV certificate.
    - tcldr 4y ago
      That's fair. Maybe Wells Fargo and others were on the cutting edge of this change. But somehow, I doubt it.
asah 4y ago
-1000. Of course your banker calls - in fact, what OP should've done is email the banker beforehand, "headsup: big day! We just closed our series A financing with <fund>. I've got $x coming in by wire." and they respond "congrats, I'll be on the lookout for it." You don't want to surprise your TradFi bank or banker, and you do want to "build a relationship" with them. The WHOLE POINT and the key feature of TradFi banking is the personal relationship. No, you don't need to invite your banker to your kid's graduation. But yes, spend 15 minutes playing get-to-know-you in an RL branch, talk a little about the business (source of funds, what you do, types of customers, etc), bring them treats you know they like (important: must be tiny$) and then when Stuff Happens or You Need Something, the banker is suddenly your ally in dealing with the banking system. Remember, when you deposit $1M+ you're now part of "the club" and the bank and banking system is there to help you. I've had a private bankers at multiple institutions for decades and have numerous stories where they untangled messes, worked around the pandemic, helped me "skip the line" and more. Friends tell me about wasting hours on banking issues but I've rarely experienced that, thanks to my private bankers. When things do get messed up, my banker explains what's going on, e.g. "yeah it's stupid and affecting other customers too - bank policy is ridiculous this year, but I'm sure they'll fix it because everybody's complaining and threatening to leave." And sure enough, a few months later it's fixed. Like Google, you report serious bugs and then wait, and if the fix is feasible and affecting other people, they eventually get fixed. There are downsides: bankers are human and don't work 24x7x365 so you need to also make friends with the branch manager or an assistant, and of course TradFi isn't crypto and you can't transact at certain times/days, e.g. wire cutoff deadlines. Also, bankers retire, get promoted, move branches, etc so you need to plan to rebuild the relationship every 5-10 years. Finally, bankers vary in quality and "fit" - if you don't get someone you like, ask around. I once had a kickass banker but she switched branches and her replacement was too junior to help me, so I begged a little and got my account reassigned to her & her branch and life is good again. tl;dr: TradFi is your friend if you play by its rules and work the system. DM me for intro to a kickass Chase banker - direct referral in NYC, otherwise she'll refer you (so far, her referrals have been solid, but YMMV by location)
- emddudley 4y ago
  You expect a 22 year old to know this? How was Mitchell supposed to have discovered this?
rowls66 4y ago
What surprised me most about the story is that despite a very unusual pattern of transactions for a business banking account at a local branch, the OP only received occasional calls from the local branch banker. I would have expected at least one call from the bank's compliance department inquiring about the source of the funds, and requesting more information about the nature of the OP's business. Bank's are legally required to know their customers and to report potentially illegal activity. This account clearly did not go unnoticed. I have received such a call from Chase only once in my 35 adult years, and it was triggered by a deposit much smaller than 35M.
- jsty 4y ago
  They wouldn't have looked at it as a one-off $35M deposit though, but as one of many increasingly large deposits into a tech company that could all be traced back to a VC firm - all of which could be verified by information the bank has available without needing to query the customer, not least a series of effervescent PR pieces by said VC funds about their new investment
fnbr 4y ago
I’m a naive techie. What, exactly, did Mitchell do wrong here? What could he have done better?
welder 4y ago
> For over a year, someone had been wiring thousands of dollars out every few weeks. How's this even possible? Anyone can wire out money from any bank account without authorization?
fakedang 4y ago
It's not the bank, it's the banker. Like seriously. When we were starting up, we were just a bunch of bright-eyed 18-year-olds, with nothing to our name, except $3000. We didn't know the basic shit about opening a business account and shopping around, so we went to the name-brand small private bank we could find that was "sexy", cold called them and explained our situation. We were all broke, still in college, no real revenue so to speak of, and the person handling the call literally did not know where to guide us (or she misunderstood us?), so she sent us off to a relationship manager, to whom we relayed our story. He told us to go look elsewhere. Actually, yeah, he told us to go look elsewhere because that bank was not suited to handling corporate accounts, but mostly private wealth management. And their minimum deposit was $200,000 for the basic accounts, with a $1 million being the usual expected deposit. Instead, he himself referred us to another bank, which gladly took us on, because of his referral. We thanked him so much, created our account, whatever. Fast forward to 3 years later, we sold the company and were flush with cash, so obviously y'all know to whom we went to handle our accounts. By then he was in a much larger bank. When he left that one for Credit Suisse, we all followed him. Over these years, he might have received a collective amount of more than $200 million in banking business from our relationship (not from our startup alone, other investments too).
Nifty3929 4y ago
Why are so many looking for a villain here? I don’t think anyone did anything wrong at all. Alex correctly assessed that he was giving his customer everything they wanted, and left it at that. It doesn’t sound like he was pushy. He didn’t call more than once in a while after big deposits. Mitchel just needed a place to hold cash. Seems like they both got everything they needed out of the relationship. If anybody here was deluded, maybe it was Alex’s leadership who mistakenly thought there was a chance to sell huge financial products to this “whale.” Alex understood otherwise, and probably spent most of his time managing that impedance mismatch with his boss.

616 points by cdme 4y ago

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Interesting story, but I've got to complain about the inset text boxes: > Someone out there is probably mentally screaming at me "you fool!" at this point. These are each clearly building up to "some explanation" of what the author should have done instead, indicating precisely what his foolish actions were and why. Perhaps we're just supposed to know that, but this is never directly explained in the story and I found it a little upsetting.

A_D_E_P_T 4y ago
Same. I don't really understand what he did wrong, and it seems as though everything worked out okay in the end. As as for "lessons learned," I really don't know if there are any. Just an amusing story of Chase coming to grips with "startup banking" and the founder gaining some local notoriety.
- op00to 4y ago
  He didn’t do anything legally wrong. He didn’t consider the practical implications of deposit banking. For most of us our balances are low and things just work. Pulling $1M can be problematic if not planned in advance. Kinda what happened to SVB. They’d likely have been fine if they didn’t tell people they needed money.
- hmahncke 4y ago
  I wonder how Alex and Alex's boss would tell this story? [edited below - because threaded comments can come across wrong] I wonder if how Alex's boss would tell this story is - my employee landed a $35m account, then failed to manage the account successfully, and when $35m walked out the door, we never understood what we did wrong
  - Aeolun 4y ago
    Yeah, but that’s a problem with Chase, not a problem with the guy telling this story. I don’t know about you, but it seemed fairly obvious to me that our protagonist didn’t see the bank as anything other than a convenient stash of money.
    - margalabargala 4y ago
      Yeah, for sure. If anyone made a real "mistake" here, it was Alex, who failed spectacularly at managing the account. If our protagonist saw a bank as a convenient stash of money, then that's all it was for him. If it were to be anything else, Alex would have been the person who would inform him of that, something he clearly massively failed to do. If I happened to start a startup and be given a $35M check, I would do exactly what the person in this story did, for the same reasons, and unless a bank person told me otherwise I wouldn't think anything more of it. A bank is a bank is a bank until they demonstrate otherwise to their customer, not the other way around.
- swatcoder 4y ago
  > I don't really understand what he did wrong He was just clueless to how banking worked at the time and how bankers expected to be involved with helping new clients gradually grow their banking relationship. He was a young kid who intuitively engaged in anonymous, electronic, modern banking before bank branches were really there themselves. To young people who came up after him, his intuitive way became more the norm — especially for VC startups — and the idea that you might buy your banker a bottle of nice whiskey for the holidays makes no sense. But for Alex, the banker, who had a kid come in and grow an account to $35M and then silently drain it without ever consulting with him, the whole experience was alien and absolutely bewildering. You can think of it as a culture clash or maybe a missed opportunity. More awkward than wrong.
  - pjdesno 4y ago
    By 2012, the banking industry had spent two or three decades educating customers to teach them that banking is an impersonal transaction which takes place via ATM machines and the internet, and never, ever, ever involves talking to a bank teller behind a counter. They've been trying to de-personalize banking since back when I got my first ATM card in 1983 or so.
    - jldugger 4y ago
      Yea, the story isn't how banking online is anonymous and magic, its about how branch banking is extremely regional, and how few of them deal with "pre money" startup financing, and were _structurally_ unprepared to handle it. "I have 35M but need to slowly spend it down until the next funding round" is not what most businesses in LA look like, and the cash infusion presumably allowed the bank to expand lending in the area, and business banking. And when those funds leave, well, there might even have been layoffs.
    - eropple 4y ago
      > They've been trying to de-personalize banking since back when I got my first ATM card in 1983 or so. For personal banking, absolutely. But the property management business I bought, and then sold, had dedicated account managers at both banks we used, and both they (and the previous owner of my company) had an expectation of personal contact and fairly regular conversations--both because our customers also used those banks, but also just because it's the norm. This was in 2020, for reference. Business banking isn't all startups.
bvanderveen 4y ago
The proper procedure for interacting with banks as a startup is knowledge that isn't meant to be disseminated. The entire point this piece is the asides: to make sure the uninitiated know their place by signalling over their heads. The initiated have nothing to learn here, it's just a funny story. Move along, citizen.
jmillikin 4y ago
> Perhaps we're just supposed to know that, but this is never > directly explained in the story and I found it a little upsetting. This might be an age / generational thing, but all of the issues described in the article are immediately obvious to people who grew up before internet banking. The default for business accounts in "traditional" banks is that they're handled by a specific named account manager, who is given the credit (or blame) for that account's growth over the years. So walking into some remote branch and opening an account will tie that account directly to the political success of whoever was sitting across the desk from you when you signed the paperwork. It's a failure mode that doesn't need an explanation to people who are the expected audience of the article. In software terms, imagine an article about launching an MVP that starts off with "so I copy-pasted some PHP from StackOveflow and ran it with default permissions in the same database that stores customer credit card details ...". There doesn't need to be a long digression about why that's bad.
- walrus01 4y ago
  > will tie that account directly to the political success of whoever was sitting across the desk from you when you signed the paperwork. I don't think the end user of a bank's services can or should be expected to know about, or take this factor into consideration when choosing to close their account or drastically change how they use it, however. It's not personal, it's business, and to a certain extent any large US domestic bank is functionally equivalent to the other in features, fees and risk level. If I closed everything I have with Wells Fargo tomorrow and reopened it with BOA or Chase I would expect about the same functionality.
  - swatcoder 4y ago
    It’s not the historical or national norm to be handed a $1M check, drop it into a bank account like birthday card money, and then conduct all your banking business digitally. Some of that’s a startup thing and some of that’s a generational modern thing. Traditionally, businesses establish relationships with their banker (a person), who helps steward their accounts, apply for loans, understand and pursue savings and investment options for held balances, etc Banking organizations are built around this very very long-standing model. There are processes and spreadsheets and powerpoints and dumb little mugs for high performers and all those things. Clearly, with the consolidation of banks and the pervasiveness of online banking, this is in the process of changing. This story captures one of those transitional moments, where a young kid with a startup is completely blind to what bankers expect to be doing. But your version of “how things are” is very contemporary, and wasn’t quite the way of things when this story takes place.
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jacooper 4y ago
According to other comments here[1], he missed on a lot of cool stuff by not engaging with Alex, as usually multimillion dollar account managers have a very personal relationship with the CEO of that company. 1. https://news.ycombinator.com/item?id=35161313 https://news.ycombinator.com/item?id=35161313
- walrus01 4y ago
  But what if you don't want to have business dinners with people after work hours, don't play golf and don't have any kids for the name memorization? Anecdotally I've worked for a company that bought a lot of lasers. Like, really, a lot. Enough lasers to make the laser vendor fly our sales representative out to our city and hang out visiting us for a few days. They would offer to take the whole team out for dinner and drinks. It was just weird and uncomfortable. I have other things to be doing with my personal evening between 5:30 and 9pm.
  - zie 4y ago
    A good professional banker, would have helped with essentially every finance related issue the poster may have had. Including getting accounts more organized to help with earning more than the .01% banks usually pay for their checking accounts. It's like concierge banking, you get 1 person that will just make all of your bank and finance problems go away. You need a house loan, your person would just make it happen. You need financing, they can help with loans, going public, seed rounds whatever you need. They can also help you locate attorneys to help draft financial contracts, etc. Tax specialists that can help you minimize taxes, etc. There isn't much of a limit around both personal and business finance they wouldn't at least help get you pointed in a semi-sane direction with. Assuming Alex was any good, which clearly they weren't that good, since they did such a terrible job of explaining all they could offer to the blog post writer. That's partly on Chase, but probably mostly on Alex. We have a banker and I needed to buy a car recently, I told them my plans and they analyzed various payment options(loan, leasing, paying cash) and gave me a recommendation(just pay cash). When it came time to actually buy the car, the dealer wouldn't take a credit card for the entire cost, so my banker organized a cashiers check so I just walked into the closest local branch, picked up the check and was back at the dealer in 5 minutes(not including travel time). Sure they can do the whole smooozhy mess as well if you really want that, but we don't, so my banker doesn't do any of those things with me. They know the sorts of charities and things I like, so if the bank ends up sponsoring something in my area, they will let me know and organize tickets or whatever if I wanted. I rarely do those sorts of events, but there are certain ones I like and my banker knows that and just organizes tickets and what not for those events once or twice a year that I like doing.

ghiculescu 4y ago

I’ve had plenty of debates about SVB where a key argument is “the bank’s depositors should have known better!” This kid is now a billionaire(?). I think this is a good example of the financial acumen of a typical SVB customer. I don’t say this to promote or defend a bail out. To me it says that if we are regulating the system to protect deposits, we should come up with rules that actually work. For better or for worse, a bank is a bank is a bank is how most people see it.

quickthrower2 4y ago
Yes and how does one do due diligence on a bank anyway?
- ghiculescu 4y ago
  That is possible. Here’s an example: https://twitter.com/RagingVentures/status/1615826088038473733 https://twitter.com/RagingVentures/status/161582608803847373... But I think it’s beyond the ability of many.
  - vkou 4y ago
    It's possible, just like it's possible to do a detailed food safety inspection on every single thing you bring home from the grocery, but why would anyone want to live in a buyer-beware world where that is expected?
zamnos 4y ago
Yes, back in 2021. > Hashimoto, the original CEO, is a new billionaire, worth $1.2 billion based on the IPO price. https://www.forbes.com/sites/kenrickcai/2021/12/09/hashicorp-shares-rise-in-latest-open-source-ipo-minting-new-billionaire/ https://www.forbes.com/sites/kenrickcai/2021/12/09/hashicorp...
hn_throwaway_99 4y ago
> I think this is a good example of the financial acumen of a typical SVB customer. While I totally wouldn't expect startup founders to behave hardly any different than Hashimoto, I would expect VCs to have done a much better job helping their startups do cash management. I mean, isn't that a pitch so many VCs give, in that it's not just "we give you money", but we also help connect you with experts for different parts of the business? Even for pure self interest, if VCs are going to write a "kid" a check for $10 million, wouldn't they want to ensure it was properly safeguarded? Regardless of the above, I 100% agree with your "we should come up with rules that actually work" statement.

theyknowitsxmas 4y ago

> the amount the cashier's check is made out for has to be available at that local branch (or, whichever branch issues it). And, well, local branches I guess don't usually have $1M cash lying around. Or, if they do, its not enough to cover other business activities for the day so they're not willing to part with it. I guess a flight to New York is worth it.

op00to 4y ago
Banking with companies that understand your specific needs is worth a lot.

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dangrossman 4y ago

I get those voicemails from "my personal banker" at a branch of my bank I've never actually walked into a few times a year, "just checking in to see if we're meeting all your needs" or something like that. I hadn't noticed those calls are correlated with me moving around large amounts of money, e.g. when I pool money into a checking account to buy a house or whatnot. I suspected some department is responsible for watching that kind of thing for fraud, but never thought it'd be some random banker at a specific branch.

walrus01 4y ago
In general, whenever some business I have a vague professional relationship starts calling me on the phone because clearly some CRM system has prompted them into "just checking in!", it only bothers me and becomes a source of annoyance. I don't like getting calls from people who want to sell me new things or who work on commission. The likelihood of me continuing as a happy customer is inversely proportional to the number of unsolicited calls I get. Mostly all this means is these days I give out the main number to my pbx IVR menu and never my direct cellphone number.
- Aeolun 4y ago
  I dunno, I kind of like that it’s the same person all the time. If they’re happy with me saying ‘everything is fine’ until everything is not fine and I call them back, that works for me.
UncleEntity 4y ago
You can probably turn those events into a free toaster with a little unease in your voice about how well the bank is doing their job.
astura 4y ago
Is it Wells Fargo? I get these exact phone calls from Wells Fargo because they bought my mortgage, I don't have any other accounts with them. Since they bought my mortgage I've never even been in a WF branch. They call from the closest one, which isn't very close. They are the only bank that's ever called me like this. I have had accounts with many different banks.

dave333 4y ago

My Dad was in banking in the UK and told stories about inter-bank transfers in London in the 1930s that were effected by two low level employees physically exchanging documents. He said he was always very careful to get a firm grip on the receivable briefcase before releasing his grip on the deliverables.

walrus01 4y ago
Bearer bonds?
- linksnapzz 4y ago
  Or actual bills. In the US, at that time, the Federal Reserve used to issue $10000 && $100000 notes exclusively for settlements between member banks.
  - dave333 4y ago
    I am not certain, but I recall he said it was something to do with settlement of foreign exchange transactions.

flandish 4y ago

So a neat story … but it trends like “newbie does big thing. Possibly messes up but is ok.” Like a lot of people in startups. Some of which fail. Some due to svb. Some to other reasons. Same “newbie taking serious action” trend. Like 17/18 yo kids getting signed up with predatory college loans. We’ll bail out capital owning class members… but those same folk laugh at the student loan cohort…

shruubi 4y ago

I'll be honest, all these asides feel like there is some kind of explanation or big reveal that never comes. I can understand a bank identifying a large-sum account and wanting to look after them, being annoyed by that account moving banks as well as a local branch having to take precautions on such large withdrawals. But otherwise, I feel like I'm missing something here that isn't spelled out.

jmillikin 4y ago
The author is used to thinking of their bank account as an anonymous number, with operations handled impassively by whoever happens to be staffing the bank's reception desk that day. They probably never considered 35 million dollars to be an amount worth fussing over ("this is not a lot of money to a big bank, they'll barely notice"). The bank thinks of multi-million dollar business accounts as a deeply personal relationship between the CEO and account manager, where the AM takes the CEO to fancy dinners and golf outings and remembers the names of the CEO's children. HashiCorp's account might have been the largest that had ever been opened at that particular branch. This article is an amusing(?) story about those two worldviews making contact.
- jacooper 4y ago
  Now I understand what's wrong, so he missed on a lot of cool stuff by just not engaging with Alex. Doesn't seem like that a big of deal, but a bummer for sure!
  - jldugger 4y ago
    It's more like "this Alex dude's entire career was at the whim of a naive young startup founder who was oblivious to this fact."
    - op00to 4y ago
      I'm thinking of that scene in Billy Madison where Steve Bucscemi is crossing names off a list. Poor Alex!

duxup 4y ago

I remember when I bought my first house someone told me to make an appointment to get the cashiers check for the closing day. I assume it was semi related as you want to be sure they are ready for you / have the money on hand for you to issue the check. Not that they wouldn’t have the money but depending on some else(s) showing up looking to empty the local branch inadvertently… you want to be sure they got you covered.

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thwayunion 4y ago

One of my landlords was a guy like "Alex", and had a similar fate. I can't say I shed a single tear for him or Alex. What services did Alex render in this story to justify being a "rising star"? That one account likely earned him significant compensation -- multiples of what I made doing 80 hour weeks in my 20s at 20k/yr -- for a significant chunk of his earning career. For what? A few phone calls to someone who didn't want to be contacted. The rent seeking component of the American economy needs to be competed out of existence. Their margin is everyone else's broken back.

pepy 4y ago
Alex did nothing to get that account, he did not put any meaningful effort into better that client's experience and did nothing to lose it. It was all outside of his actions and any benefit he received was purely accidental.
brandonmenc 4y ago
In other SVB threads commenters are like, if you have this much money it should go into a CD ladder or whatever instead of sitting in a big pile where only $250k of it is actually insured by the FDIC. Maybe that's one of the things Alex wanted to sell him.
intelVISA 4y ago
Big corps (like HashiCorp) make their margins on SWE and FOSS' backs - do you owe them the same ire as landlords?
- x-complexity 4y ago
  > Big corps (like HashiCorp) make their margins on SWE and FOSS' backs - do you owe them the same ire as landlords? There is a false equivalency made here, in that it assumes that the debate regarding labor & the debate regarding capital are interchangeable. Landlords (& possibly account managers like "Alex") derive their compensation from the maintenance & management of the capital's safety & utility: The quality of said capital (whether cash or real estate) should remain constant if they did their job. The debate enters in when the capital owners/managers put in little documented effort & receive large compensations in response. For Software Corps, their compensations are derived from difference between the value created from the creative, technical, & outreach labor put in from their SWEs, designers, marketers, etc., and the cost of compensating that labor + maintaining the necessary equipment to make the labor usable. For this, the debate enters in on how much they should be compensated for the labor put in. The two debates are not strictly equal.

a5seo 4y ago

I founded a startup. We raised $2.5M, not all at once. We banked at SVB. It sucked. Subpar online tools. $200/mo “analysis fee,” never once had a “relationship” with anyone. Maybe we were never big enough to be relevant. That’s fair. My advice: use a retail bank until you have a few million in revenue, then shop around. Make the SVB’s of the world earn your business. SVB in particular was so incredibly entitled. I’m glad they failed more spectacularly than my little startup.

commandersaki 4y ago
Even Bernie Madoff had $5B sitting in a Chase Bank account.
koolba 4y ago
We’re you forced to use them as a bank as part of the funding agreement? Otherwise why put up with that crap?
- dcow 4y ago
  AFAIU this only happened when taking out "loans" from SVB and it's not a general practice to add banking stipulations to terms sheets.
- gerad 4y ago
  When you start a startup, especially a venture-funded one, you really only want to be innovative in one area: your core offering. It doesn't make sense to spend an innovation token on your bank. So you go with something tried and true, that's done it a million times before with a million other startups. That was SVB. Going with something else has potential downsides that you may not even be aware of (as the OP describes).
  - sanderjd 4y ago
    Seems like this conventional wisdom about innovation tokens was actually very poor in this particular area. Makes me wonder what other bad decisions might be lurking behind that best practice.

par 4y ago

I'm more curious how the author secured the $1m cashiers check during transport and deposit to the next bank!

samspenc 4y ago
And I'm curious whatever came out of the fraud investigation at Chase. I mean, there was some fraudster who had control of a well known startup's bank account (granted, the older one) and moving six-figure amounts out of it regularly, what in the world happened?
- rippercushions 4y ago
  Four-figure ("thousands of dollars out every few weeks"), presumably specifically to avoid tripping any automated checks on moving over $10k. But yeah, it's still kind of mind-boggling that they could do this for apparently years without anyone noticing. And not just on Chase's side: how do you not notice that the money customers claim to be paying you is not actually landing in your main bank account?
Aeolun 4y ago
Put it in his pocket and walk to the next branch over? What exactly do you expect to happen? He can make that trip a thousand times and never encounter any issues. Whether there’s a 1M check in his pocket is immaterial.
nodesocket 4y ago
Typically when buying a house the down payment is either a wire or cashiers check. I did a cashiers check, just drove right from the bank to the title and escrow company.
NSMutableSet 4y ago
Manhattan Beach is a nice city. The median for SFH is close to 4 million.
neilknowsbest 4y ago
I wanna know how he managed to initiate a wire for $35MM online (and approximately 100% of account balance), presumably to a brand new recipient, and only got a single phone call and the wire request wasn't rejected. Maybe things have changed, but my experience now is that I'd have to go into a branch to do that wire, and I'd probably get the normal verification call plus another from the account manager.

yesimahuman 4y ago

I don’t know why the author cringes so much or feels like they made mistakes. You don’t owe Chase anything, it’s on them to earn your business and treat you like the major account you are. We had a similar situation and Chase treated us poorly, ultimately denying my wife and I a relatively small home mortgage, despite having millions in a business account with them. I will never forget how they made us feel. All I see in this story is more cluelessness from Chase, not any mistakes by the author. They’ve been chasing our business ever since we moved to SVB post Series A. They’re going to get it since we wired our money out of SVB today (not my decision), but do they deserve it? Absolutely not.

dcow 4y ago
You don't plop 35MM into a single bank account and sit on it. The cringe isn't about feeling bad for Chase. It's about watching a 22 year old learn how to manage incredible amounts of cash.
- jojobas 4y ago
  Are startups expected to hire a guy to stage fixed-term deposits across multiple banks and gamble on stocks and foreign exchange? Pretty sure they are not.
  - zer00eyz 4y ago
    Depends on how big you are. If your first friend at any company isn't someone in accounting your doing it wrong. Good accounting is not something you outsource, and a good accounting team is worth their weight in gold. If your concerned about exchange rates, you better have competent folks in accounting.
    - mcherm 4y ago
      > Good accounting is not something you outsource I'm happy to believe you on that point, but can you explain WHY? It appears to me that accounting is the exact type of generalized skill with well-established standards that makes sense to outsource.

dcow 4y ago

The last week has made me really question why VC firms don't provide cash management crash courses to founders, or something of the like (cash management consultants or something). It seems like a huge flight risk to write $10MM and $20MM checks and just hand them to a founder with no financial staff whatsoever who only cares about finding PMF and who couldn't care less about cash management. It's great that Mercury is doing all this stuff for founders, just seems like it should be table stakes for VCs to require some sort of cash plan to be approved before handing over the check. But what do I know maybe 10MM is peanuts.

throwawaaarrgh 4y ago
VCs are psychopaths. They don't care if the world burns down as long as 1 out of 50 investments turns into a huge valuation. Poor cash management? They wouldn't care if he was feeding stray cats to an ML algorithm and burning $1000 bills to power a crypto miner.

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nodesocket 4y ago

What a crazy story, love it. I'm a HashiCorp shareholder and was quite concerned about their SVB exposure as I was pretty sure they banked with them. Thankfully it worked out, at least thus far.

quickthrower2 4y ago
Yeah that share hasn’t been performing :-(

jacknews 4y ago

I don't get it, what was the big problem? Just that 35M is a big deal to a local bank branch?

dharmab 4y ago
Traditional banks' risk models don't work well for startups. SVB was more willing to work with startups, e.g. accepting shares as collateral
- gaadd33 4y ago
  I don't think that's relevant to the post though. It's essentially saying that a big bank has bankers that want to check on accounts once they get large enough and he didn't understand that

rietta 4y ago

The author must have never seen a rerun of Beverly Hill Billies growing up. The bank President was constantly courting the attention of Jed Clampett and his family!

twelve40 4y ago

With so much dramatic build up I was fully expecting him to lose a bunch of money, but what followed was... nothing. Like, nothing happened. "My final check was delayed by a few days and I got weird looks from bank employees", that's it.

greenie_beans 4y ago
i enjoyed the story. it was entertaining enough without some big ending.

rietta 4y ago

I wonder if this would have gone differently if the author had originally opened business account with the local teacher's credit union. That could have really been interesting to see how the account manager handled his account. And @jmillikin's comment about the author being used to treating banking as an anonymous store for cash and executor of transactions vs how they have traditionally worked is spot on.

quickthrower2 4y ago

The oddest thing to me is being given round after round of cash, and not needing it. Sure it could be 'invested' in an index or something. But wasn't it meant to be 'invested' in the actual startup?

donnythecroc 4y ago

Isn't the biggest thing here that he never spent any of the VC money of he had $35m in the bank he bootstrapped!!!!

NSMutableSet 4y ago
What happens if you don't actually spend VC money? Do they still get partial ownership? This is the first time I hear of a situation like this, and I'm really curious.
- lmm 4y ago
  > What happens if you don't actually spend VC money? Do they still get partial ownership? Yes. Just like you still pay interest on a loan even if you just let the cash all sit in a bank account.
  - jojobas 4y ago
    A lot of banks will set up an offset account with your loan so you only pay interest on the money you use. A loan is fundamentally different from a share purchase though, you can try to buy back you shares but that would be a separate negotiation.
  - NSMutableSet 4y ago
    What's the reasoning for not using it?
    - lmm 4y ago
      I have no idea why Hashicorp didn't use it. The point is just that if you made a contract for something and they hold up their end, you've gotta hold up your end, even if you ended up not using what they provided.
      - NSMutableSet 4y ago
        Are there VC contracts where actually spending the money is a stipulation?

paultopia 4y ago

TBH, I don't really think that the author of this post screwed up. There's a lot of self-flagellation, but, ultimately, Chase offered accounts. The company used the services written on the tin. It's far from obvious that one needs to show up in person to close bank accounts. (I've certainly closed bank accounts without showing up in person, or, hah, at least I think I have.) It's far from obvious that a bank wouldn't be able to handle large amounts of money without confusedly celebrating and then condemning the poor fool who types the information into the computer. And ultimately, it all got fixed, and the only serious hitch to fixing it was the fact that for some weird-ass reason the bank had some rule that it couldn't issue a cashiers check unless there was a wad of cash that size in a particular branch, which is completely nutso given that 99.999999% of bank money is just bits anyway.

re-thc 4y ago
Maybe he did in that he shouldn't have used Chase :p
mypalmike 4y ago
Yeah the "poor fool who types the information into the computer", or "Alex" in this case, is really the most enlightening thing in the story for me. It's amazing that this person who has exactly zero impact on account sizes... is rewarded for and takes credit for account sizes.
- jletienne 4y ago
  people are rewarded for things outside of their control everyday. people are crushed for things outside of their control everyday
hummus_bae 4y ago
[dead]

ironic_otter 4y ago

I think all the replies here about people describing all their personal interactions with their banker is hiliarious. I'm in my 40s, started "banking" well before internet banking was a thing, and I still had no idea why the author was cringing at his naivety. Until the people here with actual money spelled it out for me. My banker never knew me from Adam, and my typical withdrawal was to buy ramen... Oh how the rest of you live!

ficklepickle 4y ago

Here's the twist: the closing of the Chase account led to Alex's career tanking. Thus began a downward spiral of his life. His wife left him and took the kids. He turned to the bottle and it got worse from there. He became indebted to the wrong people. It was then he remembered that Hashicorp account. When he was shown the door at Chase, the account had a few hundred grand in it. Through knowledge of internal procedures and some social engineering, he began fraudulently obtaining funds from the account. He hoped they had forgotten that the account existed. It must be pennies to those people, they shuffle around millions without batting an eye. Then, one day the cops show up at his seedy motel room. He was arrested for the fraud and found guilty. The judge was particularly heavy-handed and gave him 10 years, despite no priors. Alex kept a picture of the founder of Hashicorp on the wall of his cell all those years, blaming him for the turn his life took. He did push ups and other exercises to keep himself somewhat sane. All the while, dreaming of the day he would get out and take his revenge. Fast forward to today and Alex is recently released from prison. Biding his time, plotting his revenge... Alex spends a lot of time on hacker news, hate-reading about these startup types that ruin lives. Getting into the mind of his enemy. One last twist, Alex is me! /s

xyst 4y ago
I approve this for a Hallmark film
- nwatson 4y ago
  "The Year Santa Wore Orange"
lawgimenez 4y ago
True Detective Season 5 then.
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recuter 4y ago
Hi Alex, I am a Hollywood producer working at a major motion picture studio responsible for films getting greenlit. Everybody around the office was buzzing about your idea as the basis for a potential screenplay and I was just about to offer you $750,000 for the story rights until an intern pointed to another story (we don't understand what most of the things discussed on your forum are) and we found out about this ChatGPT4 thing. A few phone calls later and with early access to their product acquired - suffice it to say we were able to generate more ideas of similar caliber than we know what to do with for $0.75 and will be reevaluating our business practices going forward. I wish you best of luck on your murderous rampage.

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IncRnd 4y ago

This can all be understood by not thinking of your bank as a bank. Every bank employee, except a teller, is a salesperson trying to make a living by upsells. They are paid commission. Since your bank really isn't a bank, the one thing they don't have is cash money. You might have problems withdrawing $10,000 at one time.

repiret 4y ago

I’ve always been shocked by how non-fungible branches of huge national banks are. “We can’t give you a megabuck of cash because we don’t keep that much in the vault” would make sense, but “we can’t write a cashiers check for a megabuck because something about this branch” is bonkers. I keep a BofA account and every once in a while it somehow matters what branch I opened it in 15 years ago.

rwmj 4y ago
On the very rare occasions when I get a paper cheque, I still have to send it (thankfully, by post) to the branch where I opened the account nearly 50 years ago. This is at a reasonably large national bank, now owned by a huge international bank. It's pretty weird. Also I'm fairly sure they just scan it in to their computer, which I could do myself if the bank offered a functional app. The postscript to this is the bank has been closing branches left and right, so I imagine one day they'll close "mine" and then I don't know what I'll do with cheques. Hopefully they'll have finally died out by then.

kevmo314 4y ago

> For over a year, someone had been wiring thousands of dollars out every few weeks. We were short over $100,000 due to fraud. Did the VP of Finance point out the ridiculous amount of lost interest by keeping $35M idly sitting as cash? Definitely a lot more than $100k.

renonce 4y ago
Interest rate between 2008 and 2015 was around 0.1% per year. Not much I think.
jaclaz 4y ago
The VP of finance is the same one that took two years + to realize (through an internal audit) that some 1,100,000 worth of invoice payments were paid on that account instead of the main one. This makes little sense, bordering to impossible, pairing invoices and payments received is weekly or at most monthly routine.

jongjong 4y ago

I will never trust a bank with any amount over $50k. It's weird. I remember 5 years ago, when I got involved in blockchain space, I was seeing people holding $20k in crypto and I was thinking that they're crazy. Now I'm holding over $20k in crypto myself and it feels like the safest asset on earth. I don't even trust company shares. I would never trust any human being with more than a new car's worth of value. I worked too hard for it and humans are not trustworthy enough.

renonce 4y ago
In what crypto? Holding in USDC means trusting your money with Circle, and holding BTC means trusting whatever exchange that you're going to deposit your money into.
- mattdesl 4y ago
  Holding BTC doesn’t require trust in a single exchange, only trust that it continues to hold some market value. If you have $20K of non-blacklisted BTC you will probably be able to find a buyer somewhere in the world, though the exchange rate might not be as efficient as a CEX like Coinbase. GP’s logic seems poor though. In US or EU, probably safer to hold up to the insurance limit in local banks. Beyond that, or for higher risk assets or in countries with poor banking infra, crypto becomes a viable option.
- jongjong 4y ago
  I hold some tokens from a project I worked on for 2 years (I hold everything on-chain) and also from my own project which I built (and designed the signature algorithm from scratch) so it's hard to get more security than that.

RektBoy 4y ago

How the fck is this possible in US? Try similar things in EU and you would have police commando waiting for you in wrecked offices. Because this would be viewed as major fraudulent activity. No reporting, no nothing. Also why some random guy in random small branch is responsible for money on the account? Here, nobody cares. You close the account, ok no problem see ya.

jgilias 4y ago

This really highlights the difference between what banks think they are, and what most of their customers think they are. Also, this makes me think how in a world where stablecoins are regulated with clear rules of what their issuers can and can’t do, you’d be better off having your funds in something like USDC instead of a bank account. It’s basically the same thing as a bank account but with full instead of fractional reserve, and the ability to hold and transfer the ‘I Owe U’ units without involving ‘the bank’ itself.

janandonly 4y ago

American banking stories always read as an '90 comedy to me, as a European. Furthermore, once I visited Philadelphia, and I saw several people standing in queue. I asked what restaurant or place that was. My driver said it's where people wait in line to pay their rent. He did not laugh. That was not a joke. People do that for real in the USA.

smcl 4y ago
I think it can vary greatly in Europe, though. I know my friend (in the 2010s) had a bit of a culture shock trying to deal with how old-fashioned banking was in Italy, having previously only lived in the UK. And it goes both ways, there are things here that Americans would think are a bit backwards. Like if I'm ordering something online here in Czech Republic it's really common to allow payment via direct bank transfer - i.e. they'll give you a bank account number and a variabilní číslo ("variable number" - a way they can identify the payment on their end), you make the transfer using these values and they'll send out the order when they confirm they received the payment. Nowadays a QR code will often be generated for this and you'll just scan it in your banking app, but it could seem a little backwards if you're used to paying via debit/credit card.
ubermonkey 4y ago
That's ... wild. Most of my friends who rent where I live (Houston) pay their rent through an automatic bank draft.
jll29 4y ago
In Venezuela, people pay their rent in the bank branch in cash, often from a bag hanging around the tenant's neck and spacious enough to accommodate the substantial inflation. Then a photo and fingerprints are taken from the depositor (every month!). The capital Caracas has a tunnel, in which gangs often stop cars and shoot through the window (cost of bullet = $0.10) in order to collect any change the driver or other passengers may hold - if someone was on their way to pay the monthly rent at the bank it would be their lucky day, but if the driver had just $20 in their wallet, it's still a profit of $19.90 minus the cost of the assassin's time. Good there are electronic standing orders in most countries.
4y ago

niffydroid 4y ago

I'm in the UK, why on earth does it matter about the branch? In the UK it's about the bank not the branch. The branches left generally are pretty small now doing the most basics of tasks.

tcldr 4y ago
Banking in the US had quite a few surprises for me. Often masked as 'for security' when it's anything but. A few examples spring to mind. 1) Chip and pin took the US forever to adopt. I've heard arguments that this is because chip and pin is 'insecure'. Insecure compared to a signature or magnetic stripe? Really? 2) SSL certificates. A lot of the retail banks use the cheapest grade SSL certificates. No extended validation. So you don't get that reassuring green padlock. No idea why. Something about compliance I read once. Bizarre. 3) ACH payments take three days to wire. Again, I've heard the argument for this is that it helps security as it gives you a chance to cancel the payment before it finally completes. More plausibly though, I think it helps the banks generate fees. Granted, it took legislative intervention in the EU to get this right, but clearly it's a net win for the economy. A lot of people buy the arguments, too. Banking in the UK/EU is like living in the future when compared to the US. EDIT: Oh, and I forgot about cheques (checks). The US still loves a check. The banking equivalent of the Penny Farthing.
- quesera 4y ago
  > So you don't get that reassuring green padlock. No idea why. Something about compliance I read once. Bizarre. All major browsers have removed the green padlock for EV certificates. It did not improve user security behaviour. There are some arguments that it had a detrimental effect. You can still distinguish certificate types by clicking on the small padlock icon in the URL bar. But of course no one does that. Consequently there is no current reason to pay (in cost and time) for an EV certificate.
  - tcldr 4y ago
    That's fair. Maybe Wells Fargo and others were on the cutting edge of this change. But somehow, I doubt it.

asah 4y ago

-1000. Of course your banker calls - in fact, what OP should've done is email the banker beforehand, "headsup: big day! We just closed our series A financing with <fund>. I've got $x coming in by wire." and they respond "congrats, I'll be on the lookout for it." You don't want to surprise your TradFi bank or banker, and you do want to "build a relationship" with them. The WHOLE POINT and the key feature of TradFi banking is the personal relationship. No, you don't need to invite your banker to your kid's graduation. But yes, spend 15 minutes playing get-to-know-you in an RL branch, talk a little about the business (source of funds, what you do, types of customers, etc), bring them treats you know they like (important: must be tiny$) and then when Stuff Happens or You Need Something, the banker is suddenly your ally in dealing with the banking system. Remember, when you deposit $1M+ you're now part of "the club" and the bank and banking system is there to help you. I've had a private bankers at multiple institutions for decades and have numerous stories where they untangled messes, worked around the pandemic, helped me "skip the line" and more. Friends tell me about wasting hours on banking issues but I've rarely experienced that, thanks to my private bankers. When things do get messed up, my banker explains what's going on, e.g. "yeah it's stupid and affecting other customers too - bank policy is ridiculous this year, but I'm sure they'll fix it because everybody's complaining and threatening to leave." And sure enough, a few months later it's fixed. Like Google, you report serious bugs and then wait, and if the fix is feasible and affecting other people, they eventually get fixed. There are downsides: bankers are human and don't work 24x7x365 so you need to also make friends with the branch manager or an assistant, and of course TradFi isn't crypto and you can't transact at certain times/days, e.g. wire cutoff deadlines. Also, bankers retire, get promoted, move branches, etc so you need to plan to rebuild the relationship every 5-10 years. Finally, bankers vary in quality and "fit" - if you don't get someone you like, ask around. I once had a kickass banker but she switched branches and her replacement was too junior to help me, so I begged a little and got my account reassigned to her & her branch and life is good again. tl;dr: TradFi is your friend if you play by its rules and work the system. DM me for intro to a kickass Chase banker - direct referral in NYC, otherwise she'll refer you (so far, her referrals have been solid, but YMMV by location)

emddudley 4y ago
You expect a 22 year old to know this? How was Mitchell supposed to have discovered this?

rowls66 4y ago

What surprised me most about the story is that despite a very unusual pattern of transactions for a business banking account at a local branch, the OP only received occasional calls from the local branch banker. I would have expected at least one call from the bank's compliance department inquiring about the source of the funds, and requesting more information about the nature of the OP's business. Bank's are legally required to know their customers and to report potentially illegal activity. This account clearly did not go unnoticed. I have received such a call from Chase only once in my 35 adult years, and it was triggered by a deposit much smaller than 35M.

jsty 4y ago
They wouldn't have looked at it as a one-off $35M deposit though, but as one of many increasingly large deposits into a tech company that could all be traced back to a VC firm - all of which could be verified by information the bank has available without needing to query the customer, not least a series of effervescent PR pieces by said VC funds about their new investment

fnbr 4y ago

I’m a naive techie. What, exactly, did Mitchell do wrong here? What could he have done better?

welder 4y ago

> For over a year, someone had been wiring thousands of dollars out every few weeks. How's this even possible? Anyone can wire out money from any bank account without authorization?

fakedang 4y ago

It's not the bank, it's the banker. Like seriously. When we were starting up, we were just a bunch of bright-eyed 18-year-olds, with nothing to our name, except $3000. We didn't know the basic shit about opening a business account and shopping around, so we went to the name-brand small private bank we could find that was "sexy", cold called them and explained our situation. We were all broke, still in college, no real revenue so to speak of, and the person handling the call literally did not know where to guide us (or she misunderstood us?), so she sent us off to a relationship manager, to whom we relayed our story. He told us to go look elsewhere. Actually, yeah, he told us to go look elsewhere because that bank was not suited to handling corporate accounts, but mostly private wealth management. And their minimum deposit was $200,000 for the basic accounts, with a $1 million being the usual expected deposit. Instead, he himself referred us to another bank, which gladly took us on, because of his referral. We thanked him so much, created our account, whatever. Fast forward to 3 years later, we sold the company and were flush with cash, so obviously y'all know to whom we went to handle our accounts. By then he was in a much larger bank. When he left that one for Credit Suisse, we all followed him. Over these years, he might have received a collective amount of more than $200 million in banking business from our relationship (not from our startup alone, other investments too).

Nifty3929 4y ago

Why are so many looking for a villain here? I don’t think anyone did anything wrong at all. Alex correctly assessed that he was giving his customer everything they wanted, and left it at that. It doesn’t sound like he was pushy. He didn’t call more than once in a while after big deposits. Mitchel just needed a place to hold cash. Seems like they both got everything they needed out of the relationship. If anybody here was deluded, maybe it was Alex’s leadership who mistakenly thought there was a chance to sell huge financial products to this “whale.” Alex understood otherwise, and probably spent most of his time managing that impedance mismatch with his boss.