
Ask HN: A large community owner is trying to strong-arm us. What should I do? - cod3boy
I am the founder of StartGlobal https:&#x2F;&#x2F;startglobal.co&#x2F; where we help anyone incorporate a business in the US, get EIN, bank account, phone number, and address. Recently we’ve been experiencing delays from IRS to get the EIN. IRS was shut down and they are slowly getting back to speed.<p>Even though it was not our mistake, I think it was our responsibility. At first, I tried to design some beautiful logos for the client to keep them happy. By this time we already finished the incorporation process at the state and registered agent.<p>When the EIN delay was going beyond expectations, I agreed to do a full refund without taking any cut (after issuing a full refund, we were at a loss because we already paid for registered agent, filings, state fee, even out of pocket logo design). I then sent the following email taking the blame and issuing a full refund.<p><i></i>I&#x27;ve issued a full refund, you should have an email with details. You may keep the fully incorporated company, registered agent service paid for 1 year, and the EIN application set to IRS and the logo we did. I am really sorry you had to go through this experience, and greatly appreciate your patience until now. I truly understand your situation and I&#x27;d be no different. But please be aware that this was not the experience I hoped for, and I hope you forgive me for wasting your time.<i></i><p>Now after the refund, the client asked us for some edits in the logo and also to work again on the EIN followup with IRS and see if we can get it, and we did it on a good faith that client might pay after we get it. After many followups with the IRS, we were able to finally get the EIN and when I asked the client if they’d like to continue the process and pay us, he is saying he’d like the EIN for free because I “promised” to get him everything for free. He is a founder member of a large startup community and being an early-stage company I am afraid if this will affect our reputation if we don&#x27;t do this. What should we do?
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codegeek
If you issued a full refund, you are not obligated to do anything more for
them. You already accepted responsibility by issuing a full refund even though
the IRS delays are unprecedented and your client needs to understand that. I
would say "We are happy to continue the work but we need to re-establish
formal relationship again through a new contract/payment in order to ensure we
are able to provide quality service to you".

If they don't like it, you can tell them to go somewhere else politely unless
you are at their mercy and begging for their business. A client that takes a
full refund AND then still expects free work is not a client you want to work
for. They will continue to make your life worse.

~~~
cod3boy
Thanks for the input! I am trying to see how we can solve this. I offered a
$200 discount (our total price was $599) and they were still not ready to
accept.

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sloaken
You need to add in a 'force majeure clause' to your contracts.

The IRS issue was not your fault. There was NOTHING you could do about it. EIN
number, was probably the easiest part of setting up the company. Value ...
maybe a 10% refund.

I think your taking the blame, was not a good business practice. Explain what
happened, offer a discount, or offer a logo, or cancel everything (eating
expenses, but not giving it away free).

Write this off as a lesson learned.

~~~
kyleishie
I completely agree with this. Taking 100% blame for something you had 0%
control over was a bad move. Your intentions were good but as sloaken said
“maybe a 10% refund”.

The issue you have now is that this client has been trained to walk all over
you and expect everything they ask for. Not too dissimilar to that of a dog
that learns to cry for table scraps.

The bottom line is that your clients come to you because they need you as
much, if not more than, you need them. You don’t have to throw it their face
but it’s extremely useful to remind yourself of it from time to time as it
will help you take up for yourself when, and hopefully before, these types of
situations arise.

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giantg2
If the premise of your company is to make it easier for people to start a
company, I'd say just do this one for free. If they tell others that it was a
still a lot of back and forth then it people might not think that it's worth
the extra money to start the company. I set up my own LLC and it was really
pretty cheap and easy (the sales tax system is another story).

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sharemywin
If you promised it deliver it.

you're not getting paid because you offered to do it for free. chalk it up as
a life lesson. sales 101.

going forward, you need to position your service for what it is. Dealing with
government BS so the client doesn't have to. and set that expectation early
there will be problems but that's what your there to deal with(for a price).
You need to explain how much pain and frustration your saving them.

And if they can't appreciate what you are doing for them you need to find
other customers.

~~~
sharemywin
I know one thing I would like a button to close a company down. I still get
letters from the state from all kinds of agencies I have know idea about.
quarterly reports I didn't file.

~~~
cod3boy
Thanks for the input. We are trying to figure this out now. It should be easy
to start a company, but more easier to close one down.

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advocateone
I know this is obvious, but it's important to look at your online agreement or
terms of service for customers to see what they've agreed to.

If you're not legally culpable, I don't see the reason for the refund. The
fact is most people, especially in the US, will understand that delays caused
by the government's servers are not at all unusual, and they might just side
with you. Perhaps you're concerned about social dislikes before you've even
gotten your startup off the ground. I find communication is really the most
important thing; if there are few enough customers to contact, I'd call every
one of them; it may see like a waste of time, but they're really key to your
business, and having the founder contact them may bring tears to their eyes.

We are dealing with human beings, and so-called disasters could be turned
around to super-power you. Remember that Intel's biggest growth was when there
was a rare problem with their pentium chip, and they fixed and returned every
one, and made a huge marketing campaign around it; if you have already
refunded, you should make sure to let everyone know about it, and reach out to
customers, perhaps via email directly. Testimonials are a really big deal in
the social world, and every one of them could be your biggest advocate for
lots of new customers.

Regarding what you're apparently most worried about, the bigshot late stage
startup, that wouldn't be a concern to me. Some bigshot, who can't afford an
EIN number; rmember what YC awards on here, it's called karma, and it goes
around. If they try to injure you, they may have a lot more to worry about
when you tell your side of the story, especially if they are bigger.

Let me tell you a true story that happened to me just today. I had an investor
on my podcast some weeks ago. This person seems really nice, and has a huge
social following, so I offered something that really goes against the way we
operate, to do some free legal work for this person, so they could view our
work, and if they were satisfied, to establish a regular working relationship
together.

A few weeks later, this person reached out to take me on my suggestion (and
was actually mad that I hadn't contacted the person earlier, but apparently
the email had ended up in spam) and not only did we do the work namely fixing
a really bad contract bringing a ray of sunshine to it (sorry for the
braggadocio), and they kept all the changes, but I did a full video of
explanation for this person and their partner.

Yesterday, they reached out to me again, this time stating that we could work
together but that their partner is cheap, so watch the fees, then telling me
how much we could charge, and when we mentioned our customary retainer for
this sort of work, refused but did mention they needed the work done right
away.

My response was to say sorry, we can't do it, and send them a polite email,
and fortunately as founder like you I don't have to answer for it. I'm just
letting you know about own experience, acquired over decades.

This is my hugely wordy way of saying to stay away from time wasters, big-
shots or otherwise, and put your time into what counts. I've seen lots of
folks like this, and all they do is waste your time, because you've got finite
time, and let it be spent with the good customers, who love you and want to
work with you. The 'big shot's' power is mostly a perception, and most people
are fair minded. Don't give into it.

My only caveat is that I don't know the exact circumstances and I'm taking
your word for it.

