9 ms·
My startup banking story (2023)
- supportengineer 1y agoI also don't understand banking. "Do you need help?" when I'm making a deposit, or when my investments are set a certain way? Here's a better idea, guys. Tell me your value proposition. How can I get access to your luxury box? Will you lend me money at ultra-low rates? How about a free toaster? Anything?
- dang 1y agoDiscussed at the time: My startup banking story - https://news.ycombinator.com/item?id=35157959 https://news.ycombinator.com/item?id=35157959 - March 2023 (257 comments)
- heyflyguy 1y agoChase sucks so bad, I would spend a lifetime encouraging anyone to bank elsewhere. I know Mitch is nice enough to say Chase wasn't the problem, but their "controls" are so archaic it makes doing business with them a chore and not a pleasure.
- toast0 1y agoI'm not a fan of Chase, and I don't think I'd bank with them again, but they are a 'large national bank'. If you value having local branches mostly where ever you go, they're part of that group. That comes with all the usual exciting attractions like negligible interest on balances, and miscellaneous fees. But if you want a large national bank, eh, I guess they're fine? My California based credit union doesn't even offer business accounts. And using the co-op network to do in-branch business at other credit unions is not as easy as the marketing lead me to believe, so I had to get a local credit union account where I moved as well. My Washington credit union does do business accounts, so that's a nice option if I need one. Plus, it's fun being a member of two aerospace/defense employee credit unions when I only worked in tech :P
- TZubiri 1y agoLots of local branches sounds great for personal banking, but for businesses? Unless you have a nation wide franchise business or a logistics business, doesn't seem as important. On the contrary, a highly concentrated bank might be better, everyone is on the same building, there are no encapsulated branches, you get assigned a banker that is the best fit, rather than the one who was born closest to you.
- toast0 1y agoDepends... If you want to be able to go in and do business banking when you're visiting your parents? Might be nice. I dunno.
- TZubiri 1y agoThe thing is that if there is a single branch (or few branches), then there's processes designed to be able to be completed remotely, with phone calls or faxes, etc... When the bank has many branches, there will always be some steps that require visiting the main branch, and the opening branch. With a single branch bank, the main branch and the opening branch are one and the same. And it's the best branch.
- fabiensanglard 1y agoWould have been interesting to read what the author would have done differently with what he learned. You create a startup -> Do you need to do anything special with regard to the bank you chose?
- bobmcnamara 1y agoOne man run on the bank!
- joelesler 1y agoSo let's say a startup was funded through a Chase bank account and now everyone on this thread is saying "yeah don't do that"... Let's say that a friend of mine has a startup funded account at Chase, and where should they go?
- greyb 1y ago>Let's say that a friend of mine has a startup funded account at Chase, and where should they go? Silicon Valley Bank... oh wait. In all seriousness, the approachability and flexibility of SVB bankers was really unparalleled at the time. Not like Alex in this story, that made really half-baked attempts to engage with a client model he was entirely unfamiliar with (but got all the credit for). This being said, Silicon Valley Bank, a division of First Citizens Bank continues to exist. I see a lot of Fintech players on the scene now. Brex, Mercury and Rho are common ones, through Brex has taken steps to distance itself from true, seed-stage startups as of late. Given what happened with Synapse's failure [1], I have doubts that they have the same protections and regulations of a brick and mortar FDIC bank. Diversification is key too - so having multiple accounts. Some non-fintech banks I've seen floating around, ironically, JP Morgan Startup Banking, Wells Fargo Technology Banking Group, Citigroup Commercial Bank, PNC Technology Finance. All big banks, just not their retail banking divisions (as the author was experienced using). [1] https://en.wikipedia.org/wiki/Synapse_Financial_Technologies https://en.wikipedia.org/wiki/Synapse_Financial_Technologies
- deleted 1y ago[deleted]
- mitchellh 1y agoFunny to see this pop up again (I'm the author). The year is now 2025 and I still use Chase as a personal bank and I'm now discovering new funny banking behaviors. I'll use this as a chance to share. :) My company had an exit, I did well financially. This is not a secret. I'm extremely privileged and thankful for it. But as a result of this, I've used a private bank (or mix) for a number of years to store the vast majority of my financial assets (over 99.99% of all assets, I just did the math). An unfortunate property of private banks is they make it hard to do retail-like banking behaviors: depositing a quick check, pulling cash from an ATM, but ironically most importantly Zelle. As such, I've kept my Chase personal accounts and use them as my retail bank: there are Chase branches everywhere, its easy to get to an ATM, and they give me easy access to Zelle! I didn't choose Chase specifically, I've just always used Chase for personal banking since I was in high school so I just kept using them for this. Anyways, I tend to use my Chase account to pay a bunch of bills, just because it's more convenient (Zelle!). I have 3 active home construction projects, plus pay my CC, plus pretty much all other typical expenses (utilities, car payments, insurance, etc.). But I float the money in/out of the account as necessary to cover these. We do accounting of all these expenses at the private bank side, so its all tracked, but it settles within the last 24-48 hours via Chase. Otherwise, I keep my Chase balance no more than a few thousand dollars. This really wigs out automated systems at Chase. I get phone calls all the time (like, literally multiple times per week) saying "we noticed a large transfer into your account, we can help!" And I cheekily respond "refresh, it's back to zero!" And they're just confused. To be fair, I've explained the situation in detail to multiple people multiple times but it isn't clicking, so they keep calling me. I now ignore the phone calls. Hope I don't regret that later lol.
- JoshTriplett 1y ago> I've used a private bank (or mix) for a number of years to store the vast majority of my financial assets Which one(s)?
- bigstrat2003 1y agoI read the whole story and I'm still struggling to understand what you did wrong here. You indicated many times "I know, that was a mistake" (or similar phrases), but each time I was baffled because I saw no mistakes. It was your business, and you had every right to move around the funds within your account. What gives anyone at Chase the right to say diddly squat about how you manage your business' finances?
- ajd555 1y agoGreat read - as a young startup with Chase, this is an interesting story. As Mitch says, this isn't inherently an issue with Chase, but interesting bank behavior. I'll be sure to keep this story in mind, if we ever get to these amounts of cash!
- bdcravens 1y agoDuring COVID, I took a major haircut in my day job, and ended up doing a lot of side work to stay solvent. All my banking was with Chase; I setup a new checking account for my side work. One day they just took about $900. No matter who I spoke to, they bounced me around and never gave me an answer why. I can only guess there was a fraud trigger or something, but to this day, I've never gotten the money back or even gotten an answer as to what happened. I'm fortunate enough in life that $900 isn't a big deal, but at the time, it was HUGE. As a result, I will never, never do business with Chase again (and it would be very convenient, given how many branches I have around me)
- gwbas1c 1y agoTake them to small claims court. (Also close the account. No bank should lose money like that.)
- sneak 1y agoPayPal did this to me in 2004 or so when I tried to use a debit card to withdraw cash and it didn’t give me the cash but still debited the account. Hours on the phone, never got the $400 back. I closed my account and have never directly used PayPal since.
- astrange 1y ago
- holman 1y agoAmusing to read this and think back on GitHub's seed round ($100M). At the time we just had a small business account from Bank of America... going from relatively thin cushion in the account over the previous few years to suddenly dropping in $100M was pretty amusing. I believe we moved to a more sophisticated setup quickly thereafter.
- gwbas1c 1y agoOne of the more frustrating things in life are cleaning up novice mistakes from people who should know better. I wonder why the investors didn't at least do some due diligence into where the money was being stored?
- deleted 1y ago[deleted]
- Giorgi 1y agoWould never thought there is so much money to be made in cloud services.
- dabeeeenster 1y agoFavourite part of this story is how the casually realise there's $1M in funds sent from customers that they didnt notice.
- lackbeard 1y agoThis was a super-interesting read, but I'm disappointed there isn't a description of what, exactly, was wrong about what he did, and what one should do instead. The only thing that comes to mind is the obvious one: you don't want more than the FDIC limit in a single bank account.
- chihuahua 1y ago> you don't want more than the FDIC limit in a single bank account especially when you're talking about Silicon Valley Bank, ironically.
- fakedang 1y agoEh, depends. It's perfectly alright to put in more than the FDIC limit in a bank with consumer banking services. The amount of scrutiny and shit they have to put up with means that they can't really try SVB type shenanigans. You can bet your ass if Wells Fargo, UBS or Chase goes under, the Fed will bail them (you) out. The alternative would be having bigger problems in your plate than that. Source: I'm a recent Credit Suisse business banking customer. Now UBS.
- dragonwriter 1y ago> you don't want more than the FDIC limit in a single bank account. If the FDIC limit is a concern, you don't want to make the mistake of thinking it applies on a per account basis (it applies per depositor per institution per account class.)
- laksmanv 1y agoWhat banks are recommended for startups if not chase?
- jabo 1y agoMercury
- recursive 1y agoThe author imagines that all readers obviously know why his actions were so wrong. My understanding of banks is much like his naive version. So what's the more enlightened understanding?
- jackvalentine 1y agoYeah I'm not sure why I would really care about the motivations of the bank. If I need them to be a store of money that I can move in and out and I'm happy with that then leave me alone. When you're big enough for that to be a problem, like in the story, then someone who knows more that you've hired will have a stronger opinion of that.
- TZubiri 1y agoI can explain a little bit 1- KYC, the bank is a highly regulated entity, regulated by the state, they are a branch of the executive, they enforce banking laws set by the legislative, and can get involved in cases of fraud, money laundering, or other illegal activities. If they see a million dollar transaction, they usually want to know where the money came from, if they don't they would essentially be looking the other way. In general know what your business partner needs, in any walk of business. Let them know that you have a such and such business, that you got a round of funding. Also know what kind of bad actors you want to differentiate yourself from, let them know you are not a drug dealer, you are not laundering money, or running a ponzi scheme, and that the money won't be frozen putting them in trouble. 2) Money is a very complex subject, the fact that you think of money as "something that is stored in a bank" is testament to the fact that banks do a good job, it's an illusion, there's a lot going on behind the scenes that you are unaware of, similar to how there's a lot going on behind the scenes in Google or ChatGPT, which have simple interfaces but complex inner workings. 3) In general, a bank is a vendor, a supplier a business partner, you pay them for services. Maybe in your personal life you don't care and you are used to anonymous transactions because of the low amounts. But in business, these are strategic relationships, you want to get the most out of your money and establish a relationship with your vendor. Loyalty goes a long way, although switching vendors is always possible, it's a tradeoff with consequences that needs to be considered, and not ignored.
- awl130 1y agoI had the same experience at Citibank. We started at a small branch in downtown LA with our Series Seed round check for $3M. Even then we barely got any attention, and dealt with just a local branch manager. Later we closed $7.5M, still no attention; except this time due to consolidation we were kicked to a regional team that handled our account as a team. In fact we never had a dedicated banker, we were just handled like so many SMB by calling a banking center. Over the years we asked for things like corporate credit cards and the like, but it always seemed we were just a little too small (I guess with Fortune 50 clients, we were small to them). Anyway we eventually moved to a smaller independent bank for different reasons.
- krashidov 1y agoChase Bank Story time - We sold our company in 2020. Anticipating the wire I decided I needed to upgrade to a big boy bank from my small regional bank that I've been using since I was 16. What finer institution is there than J.P. Morgan Chase? I opened an account with them. I called them telling them there was going to be a larger than average transfer. I put in $500 to "warm up" the account (stupid in retrospect). Acquisition goes through. Champagne for everyone. I try to login to look at the funds and my account has been closed. I call Chase and ask them "wtf?" They say there's been fraud in the account. We've closed it. We will mail the check to your address. So I'm thinking they're going to mail me my acquisition funds over check?? FML. 24 agonizing hours and 10 calls to them later (all leading nowhere), I eventually got the funds to be wired to my original regional bank lmao. No thanks to Chase, this was all because of PNC who was in charge of the acquisition. This is probably my fault for using a new account like this (I think someone told me to use a large bank or something I don't remember), but I will forever hold a grudge against Chase. P.S. I never got back my $500 that they stole from me
- astrange 1y agoFile a CFPB complaint!
- apt-apt-apt-apt 1y agoSemi-interesting, but it felt like it was leading up to something big or interesting knowledge all the way up to the end. Seems like it could have been way shorter, the plot is essentially "Deposited more and more money into a local Chase branch, made some guy named Alex a rising star. They called once in awhile, not sure why. Moving lots of money around isn't super straightforward."
- ungreased0675 1y agoI’m curious why this company raised money, only to park it in a bank account? What was the raise for?
- urbandw311er 1y agoMy take on that was that they did use a lot of the money but were also generating revenue that came in to replace it.
- wmf 1y agoPretty much the best case for a startup is you don't need money -> VCs are begging to invest -> you take the money just in case -> you never need the money. Especially if it's a top tier VC the PR from raising is worth the dilution.
- jancsika 1y ago> Ultimately, there was no long term negative impact of the events that transpired (except maybe for Alex, but I truly don't know) and I can now look back on it with amusement. So a software guy who didn't understand people or banking opens an account at Chase. And a guy from Chase who didn't understand people or software calls him-- repeatedly over years-- and fails to ever connect on any human level whatsoever. Now when first guy withdraws millions from Chase, he unwittingly causes the second guy to lose his job. This means the the second guy isn't around to help the first guy when he needs him the most-- to help him navigate banking fraud on that same account. This just seems tragic. Second guy's success as a banker and first guy's ease of mind as a customer were inextricably linked. Yet neither of them knew how to form the simple social bond of two 4 year-olds playing in the same sandbox. Seriously-- how did Chase not hand the account to someone who could connect with this guy? For a multi-million dollar account this just doesn't pass the smell test.
- gck1 1y agoBanker was probably asked daily by his managers if the multi-million dollar client was happy and the banker probably always responded with-yes, very.
- deleted 1y ago[deleted]
- TZubiri 1y agoI think daily is an overstatement, but it does sound like the guy took credit for some type of relationship that wasn't there, which is kind of unnecessary because maybe what he did was the right move, he gave the client exactly what he wanted.
- TZubiri 1y agoThis is one of the takeaways I wasn't able to formulate. Author added some disclaimers which already clarified their inexperience with the world. But I think that a.. preference for avoid human interactions, and a worldview of computer systems with no human systems are what explains why Author wasn't able to quickly adapt to this adult experience. What sealed the deal of this interpretation to me: "He literally writes down a phone number on a piece of paper. This is all feeling so surreal." Why would this feel so surreal? Gauging by the dates, Author was born in around 1994, phones where definitely a thing, and phone numbers more so. My interpretation is that this guy was absolutely absorbed in computers, every social interaction occured in dms, or emails or posts, or articles. Both the 'unsophisticated' act of transmitting numbers and the need to deal with a human in real time were foreign. Without going into harsher labels like autism or antisociality, I think it's definitely the type of behaviour (described as being heads down), that is necessary to be competent enough with computers to build a hypertechnical security product over the span of almost a decade. The point of view of the banker and how he fumbled this as well is a nice touch, illustrates the advantages of throwing a bone to your business partners. I mean even if you think of it from a non social perspective, only business, this is a supplier like any other, loyalty and gifts go a long way in general. But I guess that you don't need business acumen for a startup, you can just hyperfocus on your product and have your investors worry about the rest.
- whalesalad 1y agoQuite happy with Mercury. I had really terrible experiences with Chase and will never give them my money again.
- papa-ja 1y ago[dead]
- sneak 1y agoI too have a “Chase is pathological and untrustworthy” business banking story. https://sneak.berlin/20191119/your-money-isnt-yours/ https://sneak.berlin/20191119/your-money-isnt-yours/ I finally just closed all my accounts there. It feels great. Fuck Chase.
- josh2600 1y agoOnce upon a time my wife went to close a bank account in Italy. She went to the post office which is also a bank in Rome. She asked to closed her account. She was told that she needed to go to the branch where she opened her account in Florence. We rented a car and drove to Florence. When we arrived at the bank in Florence, the teller informed us that we would have to come back “domani” which is Italian for tomorrow because the only person who could help us was the banker who had originally opened the account for my wife when she was a student many moons ago. We came back the next day and met the banker who immediately recognized my wife including recanting that she was an artist. He informed her that he could not close her account, she would have to speak to the Director of the bank. We waited in line for the director of the bank but we were told it was too close to the end of the day and the bank was out of money so we’d have to come back… Domani. Domani arrived and my wife again waited. The Director willfully ignored her for 2 hours and it wasn’t until my wife began to cry that the Director finally called her over and allowed her to close her account. This for €2500. That was a balance that meant a lot to us at the time. I will never forget banking in Italy.
- dml2135 1y agoThis is everything in Italy, not just banking. I remember studying abroad there, it took us a week and a half of “domani” to get the wifi password for the dorm!
- epolanski 1y agoI'm Italian and both the previous story as well as your comment trigger me. 1) You could've asked the password to literally anybody in the dorm. 2) Unless this was geological ages ago, by law, all you need to close a bank account is a certified email (or PEC) or a certified letter (you go to the post office with a document and a simple form that specifies where you want your stuff transferred) you don't need to go in person anywhere at all.
- koliber 1y agoRegarding closing the account, it's probably just like you describe. However, the author was told something else. Not everyone knows the "proper" procedure by heart, and many people rely on what they are told from officials in a given institution. The fact that the bank personel in the first bank did not share what you just shared only adds to the misfortune.
- nshelly 1y agoWhen I was an American PhD student in Zurich, none of the Swiss banks would accept me—except the official post office bank. This was due to the stringent FATCA laws, which made U.S. citizens too burdensome for the traditionally privacy-centric Swiss banks. Within the first few months, I accumulated around 40K CHF in salary that the university owed me (technically from the Swiss government, since researchers were federal employees). Eventually, the university emailed me to ask if I’d like to pick up my money in cash (Bargeld). Apparently, this wasn’t uncommon. One day I went to the office to collect it. They asked which denomination I preferred (I assumed 20s or 100s). I asked for a mix, and they handed me several envelopes filled with 1,000 CHF notes and smaller bills. I distinctly remember carrying multiple envelopes. At one point, as I walked back to my office on top overlooking Zurich, a gust of wind blew behind me. I turned around and saw colorful 200 CHF and 1,000 CHF notes scattered along the road. I calmly walked back and picked them up. For a few months, I paid my rent and groceries entirely in cash. The Swiss didn’t think anything of it—in fact, it was fairly common. Eventually, I was able to open an account and received a yellow two-factor authentication device that looked like an old calculator. I deposited the rest of the money and, for the remainder of my studies, used the “yellow calculator” to pay bills online by debit. https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQhylNXQyg3e730F1KUydE0AhBduAeh8akeFw&s https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQhylNX... I never did receive an official Swiss credit card which was fine. However, I did accumulate funds a Swiss 401K which is another story unto itself.
- FinnKuhn 1y agoOne thing that has always amused me as a German is that for every banking/investing account I have ever opened they always included one question: Do you have an USA citizenship? I assume with online banking this has become less of an issue, but apparently having US clients as a non-US bank is a massive hassle that no one wants to touch.
- immibis 1y agoIt's still a thing. The US thinks it's hot shit, wants banks all over the world to comply with extra requirements for US citizens, which no other country does. Banks don't want to deal with it. Ordinarily they'd just ignore stupid requirements coming from stupid countries like China, but when it's the US they don't want to be sanctioned. Thankfully, the US is now trying to delete its special position so we may soon be in the situation where stupid requests from the US are treated the same as stupid requests from Russia.
- didibus 1y agoI'm not sure I understand why there's anything wrong, strange or embarrassing about what the author did? Can some finance person tell me why the author feel they did did in not smart ways and maybe made some mistakes?
- s_dev 1y agoHe didn't do anything wrong, the takeaway is that he made Alex a rising star in his bank who was supposed to be giving him 'white glove' treatment but to the Founder it was a just a bank account. Years later he decides to move money to another bank. Alex can't stop it because he has no personal relationship or rapport to lean on. A few years later he encounters some fraud on the account the kind of exact situation that Alex could uniquely help with but Alex had presumably been let go for not giving the white glove treatment and built a rapport to the Founder. Personally I found the whole thing frustrating to read as it underscores how traditional banks operate 'look after rich people' and 'be indifferent to not rich people'.
- eadmund 1y ago> Personally I found the whole thing frustrating to read as it underscores how traditional banks operate 'look after rich people' and 'be indifferent to not rich people'. Would you expect the fellow who earns the bank $20,000/year and the fellow who earns the bank $200/year to be treated the same? I also think it’s less about ‘looking after rich people’ as offering the right services to the right customers. Someone who lives paycheque to paycheque and bridges the gap with credit cards and someone who has a few tens of thousands of dollars in cash have different needs; someone who has a few hundreds of thousands has still different ones; someone who has a few millions has yet different ones. Different products make sense to use — and from the bank’s perspective, to offer — at those different points. Remember, too, that it costs different amounts for the bank to offer different products. Technology can help reduce those costs, which is a good part of how we all have jobs, and a good part of how so many people are so much better off than fifty years ago (back in the day, one had to place orders for 100-share blocks of stock, and pay a broker a commission on it — now it is possible to purchase fractional shares with no commission, enabling anyone with even a few extra bucks to get started compounding returns). But some costs, particularly regulatory costs, cannot be reduced.
- merek 1y ago> I never told them what my business does or what I'd use the money for. This stuck out to me. I'm in the process of opening a bank account in Singapore for a newly registered company, and boy is it difficult. Hour-long KYC interview. Details of what the business does. Anything remotely controversial could be a red flag. They want to hear about boring B2B services. They want to see evidence of customer communications or contracts, so they can see you're a legit business and not a shell company. This is very difficult for a company that hasn't started operating yet. Why would I start operating without banking? How can I show business activity before commencing operating? By comparison, I've opened business accounts in both AU and the US without hassle.
- fakedang 1y agoIt's likely because of the nature of the country. Singapore and the UAE (another similar country) are notoriously difficult for getting started with business banking because banks often expect you to be either well-funded (from elsewhere) or matured as a business. For a long time, they haven't ever evolved their thought to expect startups to natively grow, and even of late, they expect startups to be these well-capitalized entities with angel/VC funding. That, I presume, is because of the fact that these countries tend to be conduits for money rather than destinations themselves - they'll roll out the red carpet for you if you went with another, more "matured" objective in mind like laundering money or expanding into the country. On the other hand, Switzerland has been surprisingly very easy to get started with quickly, even though Switzerland falls in the same category. You can easily obtain a (shitty service) Postfinance account to get started, and UBS is a breeze to work with, despite being bulge-bracket - even for new companies. Or you can also opt for a cheaper Kantonalbank, which are surprisingly very open to new businesses.
- TZubiri 1y agoAlso international accounts have more stringent KYC of course.
- decimalenough 1y agoAre you Singaporean? I found opening my business account (UOB) extremely straightforward.
- 64d032fe 1y ago[dead]
- kjellsbells 1y agoWhenever I move significant sums into my bank account, I guarantee that my bank is going to do an "Alex" call. I can also guarantee that there is no freaking way I am going to do a call with some rando not already in my contacts to discuss my financials. I really don't know why banks don't understand this. Chase is not the only offender but they are unhilariously, shockingly bad at this: if you do a large transfer, they will sometimes cancel it unilaterally and without warning because of their fraud detection. And then they'll call you, but the dude speaking won't know anything about your account and ask you about what you just did. "We are clean on opsec" is very much not the vibe. Lest this be just me moaning, Fidelity gets it right. When you log on you can see who your banker is and how to reach them. A real human with a phone! And that person is the one who calls you, emails you, and you can set up a call/mtg with, so you don't have these random calling you.