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TFA didn't really explain the mistake. What I think it was: 1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the

TFA didn't really explain the mistake. What I think it was: 1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling. 2: When your bank calls you after a very, very large money transfer, you should take the call. That being said: In today's world where every other phone call is some telemarketer trying to scam you or otherwise sell you something you don't want or need, I can sympathize with why Mitchell blew off the first call.

chao- 1y ago
Your answers are appreciated, but they beg further questions. Do you mind that I inquire further? >1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling. What properties make it inappropriate for a tech startup, specifically? What would be appropriate instead, and why? >2: When your bank calls you after a very, very large money transfer, you should take the call. He did take the call, but I take your answer to mean that Mitchell and Alex didn't have the right kind of conversation on the call. Is that correct? If so, what ought to occur on a call that follows a large transfer?
- bigstrat2003 1y ago
  > He did take the call, but I take your answer to mean that Mitchell and Alex didn't have the right kind of conversation on the call. Is that correct? If so, what ought to occur on a call that follows a large transfer? I would echo this question. If my bank called me and asked if I needed help, why would I say yes? I got money, the bank is holding it, everything is going great! This really feels like Alex was trying to ingratiate himself with a big client but communicated that really poorly, such that the message of "you are a big deal so I want to give you top tier service" never came across.
  - gwbas1c 1y ago
    > I got money, the bank is holding it, everything is going great! Until your account is many orders of magnitude larger than the other accounts. I suspect the typical "business" account was well under a million. See https://news.ycombinator.com/item?id=45058480 https://news.ycombinator.com/item?id=45058480 to understand why this was a big deal for the bank.
  - fakedang 1y ago
    Honestly this was partly on Alex, but again, largely on Chase's banking practices. When a transaction of that size comes on the radar, you don't just ring up compliance to verify records internally. You also bring in the big guns from Main Office (aka the regional business banking HQ) and, along with Alex (as the point of contact), educate the business customer as to what can be done. This was what happened to me at Credit Suisse (RIP) after I had a similar, albeit smaller, transaction happen for my personal account. They were also extremely helpful when I wanted to get started with setting up my current trading business. Oh, and I'm still in touch with most of the people who helped me through that journey, even though they've left for other shores. But again, Alex would not have been able to do this because Chase might not have had any policy about how to redirect customers to the appropriate type of banker. Which is kind of stupid for a megabank of its size.
- gwbas1c 1y ago
  The bank account was appropriate for small businesses. IE, restaurant, laundromat, ect. This became clear when the article explained that there was education for tellers about what a tech startup is. Mitchell didn't take the call. He ended the call as quickly as he politely could, short of hanging up on Alex. Edit: I've had a few bank tellers advise me on how to adjust my bank account correctly in the past. I'm going to assume this is what Alex was trying to do. I might also point out that, around this time, Wells Fargo tellers were very pushy and would make calls like this. (I got one) It later came out that they were under intense pressure to sell banking services that nobody wanted.
  - chao- 1y ago
    Thanks for answering! So there is some set of services that are useful specifically to a tech startup but not a restaurant, but then there are a category of services that "nobody" wants, neither restaurant nor startup. Do you have an examples of any of those categories? I am not asking because I disbelieve you. I am asking because I find this all fascinating, but it seems my imagination is lacking! What would I want from a bank account as a tech startup, versus a non-tech startup, versus a restaurant, that the bank wouldn't already give me when I sign up for a normal business account? You said you were "advised to adjust" your account. Again, I apologize if I come across as ignorant, but what kind of adjustments?
    - jt2190 1y ago
      (I’m not the person you replied to.) My understanding is that people with financial training don’t think about money, they think about risk. If you are a banker and ask yourself “What is the probability that this 100 deposit will be here in another 30 days?” you might answer differently depending on what you know about your customer. - If you think that your customer will withdraw 50 in the next 30 days, you might take the other 50 and invest it in a 30-day CD, and take the other 50 and just hold on to it. - If you think all 100 will remain in the account the entire time you could invest all 100. - etc. If you are the customer you want a bank that understands what kind of inflows/outflows you’ll typically have. The bank wants to manage the risk, and you want a bank that doesn’t freak out at what seem to you to be very mundane transactions.
stephen_g 1y ago
They basically had no problems through $35M+ of money coming in except a few phone calls trying to sell him some banking services... I wouldn't really call it 'not appropriate' for a startup... All it was is probably the guy trying to say "hey maybe you'd be interested in parking some of that capital in a term deposit" or offering some credit products... It is a bit weird how actively the guy tried to engage but it probably is just because it was one of the largest accounts opened through that branch - if they'd opened an account with the same bank but a branch in down-town SF instead of in the suburbs of LA then they would have had an account manager more accustomed to that kind of business and it presumably wouldn't have been as weird...
- crooked-v 1y ago
  I certainly wouldn't label that 'do you need help' opening as 'engagement'. Something as simple as 'that's a lot of cash just sitting in that checking account, there are a few better options that could get you good returns on that while still being easy to use for expected expenses' would have been actually engaging.
- gwbas1c 1y ago
  See in this thread: https://news.ycombinator.com/item?id=45058480 https://news.ycombinator.com/item?id=45058480 > If you are the customer you want a bank that understands what kind of inflows/outflows you’ll typically have. The bank wants to manage the risk, and you want a bank that doesn’t freak out at what seem to you to be very mundane transactions. https://news.ycombinator.com/item?id=45058894 https://news.ycombinator.com/item?id=45058894 > A bank account is only insured up to $250k by the FDIC.
- Workaccount2 1y ago
  My guess is that there were millions sitting in a checking account earning 0.015% interest. Interest rates weren't great back then, but even still you could get 1.5% easily. All in he probably left a few hundred thousand on the table.
elzbardico 1y ago
I thought he was very lucky his account didn't get flagged by Chase. Big Banks have a really hard time understanding startups, and the whole post 9/11 institutional paranoia (that the bank bureaucracy takes to the heart) just made things way worse.

chao- 1y ago

Your answers are appreciated, but they beg further questions. Do you mind that I inquire further? >1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling. What properties make it inappropriate for a tech startup, specifically? What would be appropriate instead, and why? >2: When your bank calls you after a very, very large money transfer, you should take the call. He did take the call, but I take your answer to mean that Mitchell and Alex didn't have the right kind of conversation on the call. Is that correct? If so, what ought to occur on a call that follows a large transfer?

bigstrat2003 1y ago
> He did take the call, but I take your answer to mean that Mitchell and Alex didn't have the right kind of conversation on the call. Is that correct? If so, what ought to occur on a call that follows a large transfer? I would echo this question. If my bank called me and asked if I needed help, why would I say yes? I got money, the bank is holding it, everything is going great! This really feels like Alex was trying to ingratiate himself with a big client but communicated that really poorly, such that the message of "you are a big deal so I want to give you top tier service" never came across.
- gwbas1c 1y ago
  > I got money, the bank is holding it, everything is going great! Until your account is many orders of magnitude larger than the other accounts. I suspect the typical "business" account was well under a million. See https://news.ycombinator.com/item?id=45058480 https://news.ycombinator.com/item?id=45058480 to understand why this was a big deal for the bank.
- fakedang 1y ago
  Honestly this was partly on Alex, but again, largely on Chase's banking practices. When a transaction of that size comes on the radar, you don't just ring up compliance to verify records internally. You also bring in the big guns from Main Office (aka the regional business banking HQ) and, along with Alex (as the point of contact), educate the business customer as to what can be done. This was what happened to me at Credit Suisse (RIP) after I had a similar, albeit smaller, transaction happen for my personal account. They were also extremely helpful when I wanted to get started with setting up my current trading business. Oh, and I'm still in touch with most of the people who helped me through that journey, even though they've left for other shores. But again, Alex would not have been able to do this because Chase might not have had any policy about how to redirect customers to the appropriate type of banker. Which is kind of stupid for a megabank of its size.
gwbas1c 1y ago
The bank account was appropriate for small businesses. IE, restaurant, laundromat, ect. This became clear when the article explained that there was education for tellers about what a tech startup is. Mitchell didn't take the call. He ended the call as quickly as he politely could, short of hanging up on Alex. Edit: I've had a few bank tellers advise me on how to adjust my bank account correctly in the past. I'm going to assume this is what Alex was trying to do. I might also point out that, around this time, Wells Fargo tellers were very pushy and would make calls like this. (I got one) It later came out that they were under intense pressure to sell banking services that nobody wanted.
- chao- 1y ago
  Thanks for answering! So there is some set of services that are useful specifically to a tech startup but not a restaurant, but then there are a category of services that "nobody" wants, neither restaurant nor startup. Do you have an examples of any of those categories? I am not asking because I disbelieve you. I am asking because I find this all fascinating, but it seems my imagination is lacking! What would I want from a bank account as a tech startup, versus a non-tech startup, versus a restaurant, that the bank wouldn't already give me when I sign up for a normal business account? You said you were "advised to adjust" your account. Again, I apologize if I come across as ignorant, but what kind of adjustments?
  - jt2190 1y ago
    (I’m not the person you replied to.) My understanding is that people with financial training don’t think about money, they think about risk. If you are a banker and ask yourself “What is the probability that this 100 deposit will be here in another 30 days?” you might answer differently depending on what you know about your customer. - If you think that your customer will withdraw 50 in the next 30 days, you might take the other 50 and invest it in a 30-day CD, and take the other 50 and just hold on to it. - If you think all 100 will remain in the account the entire time you could invest all 100. - etc. If you are the customer you want a bank that understands what kind of inflows/outflows you’ll typically have. The bank wants to manage the risk, and you want a bank that doesn’t freak out at what seem to you to be very mundane transactions.

stephen_g 1y ago

They basically had no problems through $35M+ of money coming in except a few phone calls trying to sell him some banking services... I wouldn't really call it 'not appropriate' for a startup... All it was is probably the guy trying to say "hey maybe you'd be interested in parking some of that capital in a term deposit" or offering some credit products... It is a bit weird how actively the guy tried to engage but it probably is just because it was one of the largest accounts opened through that branch - if they'd opened an account with the same bank but a branch in down-town SF instead of in the suburbs of LA then they would have had an account manager more accustomed to that kind of business and it presumably wouldn't have been as weird...

crooked-v 1y ago
I certainly wouldn't label that 'do you need help' opening as 'engagement'. Something as simple as 'that's a lot of cash just sitting in that checking account, there are a few better options that could get you good returns on that while still being easy to use for expected expenses' would have been actually engaging.
gwbas1c 1y ago
See in this thread: https://news.ycombinator.com/item?id=45058480 https://news.ycombinator.com/item?id=45058480 > If you are the customer you want a bank that understands what kind of inflows/outflows you’ll typically have. The bank wants to manage the risk, and you want a bank that doesn’t freak out at what seem to you to be very mundane transactions. https://news.ycombinator.com/item?id=45058894 https://news.ycombinator.com/item?id=45058894 > A bank account is only insured up to $250k by the FDIC.
Workaccount2 1y ago
My guess is that there were millions sitting in a checking account earning 0.015% interest. Interest rates weren't great back then, but even still you could get 1.5% easily. All in he probably left a few hundred thousand on the table.

elzbardico 1y ago

I thought he was very lucky his account didn't get flagged by Chase. Big Banks have a really hard time understanding startups, and the whole post 9/11 institutional paranoia (that the bank bureaucracy takes to the heart) just made things way worse.