
YC S12 company refuses to pay for my design. "Send your claim to our legal team" - venturebros
http://www.reddit.com/r/web_design/comments/vlrp7/yc_s12_company_refuses_to_pay_for_my_design_send/
======
_delirium
I'm going to go out on a limb and register a slight discomfort with the
increasing use of HN as a "court of public opinion" in very fact-bound
disputes like this one. I can sort of see resorting to it out of desperation,
but I'm afraid the Internet Lynch Mob has a very high ratio of outrage to
effort spent actually investigating. This post has 84 upvotes in 21 minutes,
which suggests a _very_ quick investigation! So, the potential for erroneous
snap judgments in such a Court seems high. The designer here may very well be
in the right, but I don't feel qualified to judge or do anything about it
based on the available information, any more than I do with the hundreds of
other designer-client disputes that happen on a regular basis.

~~~
ximeng
YC also seems discomforted, it's only about half way down the front page with
196 votes in an hour. (Top item has 117 points in 3 hours).

Perhaps this is due to flags from people who don't like the story, or maybe
mods have manually down-ranked it.

~~~
mixmax
The algorithm takes many things into account, one of which is the url. Self-
posts for instance need a lot more upvotes to get high up on the frontpage. So
You can't quite know.

~~~
ximeng
It jumped from first to tenth in a few minutes... But yes you can't quite
know.

------
tptacek
I don't understand what happened here. The CEO told him to submit his invoice
to legal@. Did he do that? What did their legal say? Did the company formally
decline to pay the invoice? Or did he just assume he wasn't going to get paid
and jump the gun?

But anyways: LESSON LEARNED for startup CEOs. Here it is, it's very simple:

If you want to question or slowroll an invoice, direct it to finance@, not
legal@.

You have exactly the same set of options with finance@, and your legal can
still review the invoice, ping the vendor, or what-have-you, but you haven't
escalated the situation.

~~~
Silhouette
Surely the lesson for start-up CEOs is even simpler: you are responsible for
_everything_ in your organisation.

Like most here, I wouldn't have let myself get into the position of this
freelance designer or chosen to air my dirty laundry in public. On the other
hand, if I had sent a legitimate invoice and a CEO tried to fob me off with
the kind of attitude claimed here (he says, noting that we haven't heard the
other side of the story yet) then I would be extremely unsympathetic to
flippant comments and requests to mess around with underlings. I imagine my
response would be to send the final claim letter by registered post with a
note that legal action would follow if the invoice remained unpaid after a
reasonable period.

Of course, in this case, it doesn't matter: the Internet hype machine has been
started, and if the reported claims are accurate, it is presumably a matter of
time before everyone who has anything to do with this start-up starts
forgetting to return their calls. Who wants to be associated with someone who
thinks it's funny not to pay their bills, particularly when it's a small
business working with another small business?

~~~
kika
Especially you're responsible for what you say in the email.

------
il
Hey everyone: can we hold on for just one minute before forming an Internet
Lynch Mob and maybe try to get the other side's perspective? Because we only
have one side of the story right now. How do you know the OP isn't lying? Or
that OP isn't a competitor trying to destroy this company's credibility? Or,
maybe this was just a simple misunderstanding/miscommunication? I'm not
accusing the OP of lying, but there's zero evidence here right now. Think
rationally and consider every possibility.

I don't know the founders and I have no connection to the company in question
(other than participating in a previous YC batch).

------
patio11
Without saying anything about this particular situation, can I just point out
for the four hundredth time that $780 invoices generate far, far, far more
stupidity than $7,800 or $78,000 invoices do? This is the fault of both people
who send $780 invoices and people who generate work likely to cause $780
invoices. Many of you will be able to pick whether you are either of these
types of people. I suggest being neither.

~~~
Silhouette
_Without saying anything about this particular situation, can I just point out
for the four hundredth time that $780 invoices generate far, far, far more
stupidity than $7,800 or $78,000 invoices do?_

Your argument is a classic case of the correlation/causation fallacy.

A modest invoice does not "generate" stupidity. Millions of freelancers around
the world make a good living doing relatively small jobs for satisfied
customers and submitting modest invoices that get paid on time.

If you are in a position to work on higher-value deals, then naturally you
will be dealing with other people of the same level. To get to that level
typically requires a certain degree of professionalism, whichever side of the
deal you're on. So sure, people working with higher-value contracts tend to
have less hassle.

But being messed around by someone who won't pay your invoice doesn't
mysteriously become your fault just because the invoice amount was under
$1,000. That really is akin to saying that it's your fault you were robbed
because you forgot to lock your home, or that she was asking for it because
she was wearing a short skirt and had a couple of drinks.

 _Many of you will be able to pick whether you are either of these types of
people. I suggest being neither._

I usually agree with your comments, but in this case, I'm afraid your advice
is like saying "Make sure you run a successful business and deal only with
great clients!" If it were that easy, everyone would be doing it. In reality,
even those of us who are successful today were the new guy once, and I expect
that almost all of us have made at least one deal we would have preferred to
avoid, so that we could pay the rent or fund a side project.

~~~
tptacek
I'm really not sure I see how you're able to get 4 paragraphs of objections
from such a simple point.

We're talking about a $780 invoice. The invoice was generated before written
contracts were completed because... it's a $780 invoice. The project was worth
so little to the client and was so trivial to the vendor that it was able to
commence with neither a full spec, nor a master agreement, nor a simple
statement of work.

This isn't about "pick great clients"; it's about avoiding the rats nest of
potential projects where there will always be a temptation to work under fly-
by-night terms like this.

And once again, every time someone says "pick better clients", someone here
has to come out of the woodwork to preach the gospel of the freelancer- who-
makes- a- great- living- servicing- small- clients- and- we- can't- all- be-
Patrick- Mckenzie. Well, with all due respect to my friend Patrick, but I have
hung out with him many times and I can _assure_ you he has not been bitten by
any radioactive spider, at least so that I can perceive it. The guy built a
_bingo card generator_ \--- a kind of Platonic minima for value derivable from
software --- and parlayed it into his current business.

For cripes sake, you're on the same message board as he is; do what he did,
get better clients. Stop complaining when people in very similar situations as
you, or who started in very similar situations to you, tell you how to do
better. Look at the advice you're getting: none of it involves kissing the ass
of some financier at a VC firm. (1) Pick a specialization more narrow than
"software development" so you're not competing on oDesk; (2) Segment your
market so you can identify the most lucrative clients; (3) Tailor what you get
good at to that market; (4) Be choosier; (5) Get paid. More.

~~~
Silhouette
I don't know whether English is your native language, Thomas, so perhaps that
is the problem here. In any case, do you realise that you come across as
extremely rude sometimes? In particular, you often seem to assume that others
(me, in this particular case, but I've seen you do it to people before too)
are not successful or do not know what we are talking about because we happen
to disagree with you or someone you agree with. That is a very annoying habit,
and it does nothing to promote interesting and informative discussions. I hope
you will forgive my bluntness here, but you seem like a man who prefers
honesty.

As it happens, I run multiple businesses today, one of which does work on
bespoke projects for outside clients, and we do just fine with our calibre of
clients and we send them invoices for a lot more than $1,000. In other words,
I have no axe to grind here. But I don't see how that is relevant, really,
anyway.

I simply objected to Patrick's characterisation of people who have problems
with clients as being at fault themselves. I also object to the implication,
which you seem to be making as well, that $780 is somehow a trivial amount of
money and not worth bothering about, which is obviously not true for a lot of
people out there particularly in the current economic climate.

It is not OK for someone to act unprofessionally, including not paying
legitimate invoices within a reasonable period, regardless of the size of the
deal. It would not be OK at $100,000. It would not be OK at $1,000. It would
not be OK at $10. Whether or not it is worth involving lawyers as a practical
matter has nothing to do with the ethics of the situation.

I therefore found the implication that someone new to the industry -- a
position we were all in once -- somehow brought such poor behaviour upon
themselves merely by taking on a relatively small job to be distasteful, the
casual dismissal of the value of sub-$1,000 contracts to be rather conceited,
and the whole post unnecessarily discouraging towards beginners who are taking
their first steps into what often feels like a new and uncertain world.

~~~
tptacek
I am sorry that you are getting lumped in with a caricature of all the
objections to this "pick better clients" message that exists mostly in my
head. That's not fair.

But my points stand:

* It does not matter what you think is "OK" or "Not OK". Taking a month to pay an invoice is standard practice. Even if you negotiate Net-15 payment, it's standard practice: nobody pays on time. Complaining about a receivable when it has taken single-digit days to pay out is unprofessional.

* By working without a written contract, and in particular without any agreement as to how invoices will be paid, the freelancer _has_ taken some of the responsibility for the payment drama.

* Choosing better clients, or (if it makes you feel better to say it this way) different kinds of projects to work on for clients, _will_ produce better results for freelancers. If only because high-value projects almost never execute this carelessly.

* $780 is a trivial amount of money. Even for this person. By their own admission, we're talking about 12 billable hours. If you're a day and a half from bankruptcy, you're not ready to be working for yourself. Real clients will drag 9 months on invoices whether you think that's OK or "ethical". You can complain to them about it, or to the public, but you'll get paid on the same schedule either way, and you'll poison your reputation in the process.

------
arihant
It's just 3 days of work. Did she seriously point to her lawyers to fight 3
days worth of wages? Not only is the CEO irresponsible, she sounds
pretentious. Does Eligible have a legal team?

------
kika
I don't understand this, people. They're YC funded, in the worst case they
have how much now, 10k? Risk your reputation for a few hundred dollars, having
a few thousand in the pocket, why?

~~~
alttab
They didn't sign anything, and the "CEO" of any YC startup early enough to
need to outsource product development isn't promising anything despite their
words.

~~~
kika
I outsource my startup development heavily and I didn't bother signing
anything either. Yes, I've lost a few hundred (probably even a couple of
thousand) this way, paying for the job that went directly to the dumpster.
It's a cost of doing business. And I didn't raise money this time, this is all
my consulting revenue, I could have paid an income tax on it and put it in my
pocket. But if you want to build a beautiful house there will be sawdust.
These money is the sawdust.

~~~
kika
BTW, I'm looking for a designer. Contacts open.

------
ohashi
It's the response that bothers me the most:

>I figured :)

It's hard for me to comprehend how little they value their reputation with
such a response. $<1000 apparently. Shameful.

------
brackin
You get what you pay for I guess. Their mobile app looks terrible, tries to
copy the Path sharing functionality in a completely strange context. When
something like this could be created with a far cleaner interface.

In a strange way I understand the position the CEO may be in. They may have
thought because they weren't going to use it they shouldn't have to pay. In
the past I've paid a designer for work only to change my mind on a product but
that isn't the designer's fault. You still have to pay whomever completes work
for you, even if you don't use it.

Just sounds like across the board naivety, rather than malice especially with
the legal department comment. It's always best to sort problems out
immediately and directly or they get in the way.

~~~
geekfactor
Based on the screenshot currently gracing the eligibleapp.com home page,
perhaps the CEO specifically requested a Path knock-off. ("We really love the
Path app, can you make it look like that?")

------
bradleyland
My advice? Get up, dust yourself off, and move on.

These scenarios might result in a deluge of support from others in your field,
but for a lot of managers, this puts you on a special kind of blacklist. We
can't know all the details of the circumstance, but we do know for sure that
you were willing to "name & shame" the client here on HN. For some, that's
enough.

Just to be clear, it definitely sounds like you got a raw deal here, but I've
only heard your side of the story. Experience tells me that people who find
themselves in this position are there because they cut corners (work order and
statement of work), or trusted someone too early. Both of these are poor
judgement calls. Take ownership of that, learn from it, and go find new
clients. If you're not in a financial position to take it on the chin, file
your small claims paperwork and have your day in court. I just doubt that the
name & shame approach is the best thing for the future of your career as a
freelancer.

~~~
mrobataille
Shut up and deal with it?

I really wonder what this world would be like if everyone who had a career,
family, or life to risk over being a whistleblower took the safe, sure path
and shut up and dealt with it.

~~~
tptacek
Yes, because whipping up an Internet mob over not having an invoice instantly
paid is _exactly_ the same as leaking the Pentagon Papers.

Sheesh.

------
bocmaxima
This happened to me as well with a YC company. I then found out that YC
companies are known for this kind of thing since they're so early-stage.
Always get a contract.

------
Cushman
How much does it really matter in these situations whether or not you have a
"signed contract"? My understanding is that any agreement to do work for
compensation _is_ a contract, and these days even a "signed" contract is
likely to just be a PDF which is as easily faked as an emailed "$65/hr? Sounds
good, go ahead and get started."

Is it just one of those things where someone's less likely to try to rip you
off if they put their signature on something? Or is it more to make sure you
get the words in front of a couple of lawyers who are much less likely to lie
than the involved parties?

~~~
tptacek
It matters a LOT. A you-said they-said dispute over a verbal contract can be
expensive to resolve --- almost certainly way more expensive than the total
value of this dev contract.

Startups who hire outside vendors should be very careful to foreclose on any
potential verbal contract --- "do not start working for us until we have a
signed master agreement and a statement of work" --- and that's for a lot of
reasons, not just misunderstandings like this.

Obviously, if a company operator deliberately leads a vendor to believe
there's an authorization to start work, they're morally on the hook for billed
hours. But in reality, consultants go into engagements like that knowing that
_they're_ on the hook if anything goes wrong. This comes up a lot in
consulting, because legal negotiation over master agreements can take weeks
and sometimes threaten to ice deals that can be kept alive by just starting
ahead of the contract.

~~~
Cushman
But it's not a verbal contract if it's over email, right? It's right there in
writing, we both have copies of it, it can (theoretically) be verified by a
third party.

If I go to small claims with a copy of an email, what can they say that they
couldn't say just as well if I go in with a piece of paper I claim they
signed?

I've never seen someone say "Don't start working without a _notarized_
contract", but that's the hidden message, right? Otherwise we're just playing
at semantics.

Edit: As above, I notice now the OP did have a purely verbal contract. I was
referring to emailed agreement which is common in our line of work, though.

------
MRonney
This is fucked up. Not the only YC company I know that has done this to a
designer, I really hope this gets voted up.

------
inuhj
I'm delighted to see that disputes are being solved this way instead of tying
up the assets of our judicial system. Remember the days when we actually tried
to resolve our problems and court was a last resort? Now the sentiment seems
to be that you should file in small claims court instead of writing a post on
reddit.

I'm glad to see 'court of public opinion'(AKA reputation) make a comeback. The
concept of reputation is, in my humblest of opinions, more important than our
legal system when it comes to keeping people from behaving badly. Being
publicly shamed is a deterrent for unethical behavior in a way that our courts
can not be because of the ridiculously high cost of litigation.

------
consultutah
The op has, hopefully, learned a valuable lesson: don't work without a signed
contract.

That said, the comp should have just paid or, at very least, tried to
negotiate the amount thought I don't think that's worth the effort either.
This is such a paltry amount as to not be worth the effort to fight.

~~~
smackfu
The other lesson people may take away is don't do contract work for startups.

~~~
Silhouette
The thing is, this can (and sometimes does) happen with larger and better
established businesses too.

A common rule of thumb in the design industry is that if the amount of fees in
question isn't going to be worth going to court over, then a 50% deposit paid
up-front is a reasonable request.

------
javajosh
Small claims court and a public shaming. Done and done.

------
bmac27
I've also been in the equally unenviable position of having to pay for someone
who completed work according to a scope that was too vaguely defined. The guy
I contracted to do the work did the work according to the broad outline I
originally set out.

Being young & stupid at the time, I blamed him for thinking he took shortcuts
and refused to pay him all of what he was owed at first. But it was my fault
for not being more specific in the original job. I eventually apologized and
paid him the rest of the money. Lesson learned.

I believe design work is especially prone to this. But none of this is an
excuse. If you have a signed contract, you honor it. Period.

------
donnfelker
My advice - Watch Mike Monterios talk: Fuck You Pay Me.
<http://vimeo.com/22053820>

------
clarky07
Seriously? Who refers someone to legal for $780? Especially considering they
are YC funded. That seems absurd. (Obviously only one side of the story here,
but it seems clear they wanted the work done asap)

------
pbiggar
I feel really sorry for the CEO. She's inexperienced, she didn't know to just
pay the money, and in her first disagreement with a contractor, she got an
internet lynch mob on her back. She did the wrong thing, of course, but the
cost was much higher than this merits. Even if she does the right thing now,
there are many who will consider this a black mark on the company
indefinitely.

------
brudgers
To the CEO if the report is substantially accurate:

The cost of attorneys and more importantly the distraction isn't worth the
worst case invoice for three days work. It's not going to cost you your shirt,
just one sleeve. Be glad it's a cheap lesson.

------
jmharvey
There's a lesson here on the other side, as well: when you're hiring any kind
of contractor (designer, lawyer, etc.) you need to specify not just an hourly
rate, but also an estimated number of hours. One person's idea of "getting
started" on a project may be an hour or two of work, another's may be several
dozen hours. Getting an invoice for many times what you thought you were
agreeing to is an unpleasant shock, regardless of how it's resolved.

------
tzs
Pedant point: a lot of people are writing about "verbal contracts" when they
mean "oral contracts". A "verbal contract" is a contract in words--whether
spoken or written, as opposed to a contract that is inferred from actions or
implied by law.

Both contracts in this story (the one possibly agreed to on the phone, and the
one offered in writing by email) were verbal contracts--one oral and one
written.

------
guelo
This is off-topic and I couldn't really figure out what it is that eligibleapp
does, but why would they not come out with a web app first? Restricting
whatever it is they're doing to the iPhone seems shortsighted.

~~~
xrty3
It's mint.com for health insurance.

I'm trying to figure out what additional value Eligible's supposed to add that
outweighs just logging into your insurance company's website. And how they're
supposed to make a profit.

------
venturebros
Oh this isn't me by the way I just saw it on Reddit.

------
goronbjorn
What company was it?

~~~
ebzlo
Looks like eligibleapp.com

~~~
uptown
If it's them, maybe ask Katelyn Gleason if his version of the story is true:

<http://www.linkedin.com/in/katelyngleason>

~~~
untog
She's on Twitter, too. I'm hesitant to link to it, lest we unleash the
internet lynch mob.

~~~
peetahb
Well her info is on the linkedin profile, so no need to make it easier for the
internet lynch mob to find it.

------
Jonanin
If hiring a lawyer doesn't work out, surely YCombinator itself could do
something about it, since they are in the current batch?

------
pdufour
I wonder how long this post will be up before the designer gets paid.

------
Aaronontheweb
At $65 / hour, how big of a bill could the designer have possibly generated
over three days?

Just pay him and get it over with - anything under $1,000 is chump change.

------
douglascalhoun
I believe this is what you're looking for:

(a) <http://www.eligibleapp.com/>

(b) <https://eligibleapp.desk.com/customer/portal/emails/new>

------
wglb
_On a side note: If any startups are looking for part-time designers, I am now
available._

This coming at the end of the rant, may not push another potential client over
the threshold of decision after all that came before it.

------
Dystopian
Well. Your design looks nicer at least, and you're probably getting more than
$XXX exposure now (Their current one.. doesn't - but it could be worked on as
a first revision - hopefully their current designer iterates hard!)

------
suresk
I don't get it - did he actually email legal@ and get a negative response, or
are we just spawning internet lynch mobs the second we run into the slightest
amount of resistance now?

------
Estragon
In the screenshot, what the heck do those pie and bar graphs represent?

Also, seems strange that he's coy about the name in the text, but seems to
show it on the screenshot.

------
nwmcsween
This is what you don't do if things don't work out. Go to small claims court,
do not post it on the internet and open yourself to getting sued for libel.

~~~
jbigelow76
If the same legal team that reviews the invoices would be in charge of
pursuing the lawsuit the chances of the OP getting sued are pretty slim ;)

------
zachwill
Pay the guy his money, but man, that design is pretty bad.

~~~
incongruity
It's not so much bad, per se, as it is just... well... inert. There's no
there, there.

~~~
learc83
Presumably there would have been some further iterations and back and forth
between the client and the designer had the contract continued.

------
nirajd
Seriously? Please learn how to properly freelance before publicly flaming a
bootstrapped startup. Always get your task/rate in writing before continuing..

~~~
gorbachev
So just because he didn't have the foresight to have a signed contract, it's
grounds for him to get f __*ed by a well funded startup?

Seriously?

------
nmeiring
pretty ironic that this is posted on reddit

------
taskstrike
One key point is that YC is a great brand in the tech community. If you are a
YC graduate, your have the credibility of it behind you as if someone was a
Harvard grad. Doing stuff like this erodes the brand for an trivial amount of
money.

Work was done here, and if they weren't a YC company and some other guy, it is
less likely that a designer would work for them without some kind of written
agreement.

------
dr42
I hope the screenshot is fake data and not violating anyone's HIPPA rights,
otherwise this designer is going to be in a lot of very hot water over this.

~~~
untog
If Eligible sent confidential data to a contract designer for the purposes of
a mockup then they deserve everything they get. I don't- for a second- think
that they did.

~~~
dr42
Well they (Eligible) have already demonstrated a flagrant disregard for other
people with this whole incident.

~~~
bigiain
This is a good point - would _you_ trust your medical data/history to someone
who'd screw over a graphic designer for $780? With no other indicators of
reputation - what's everybody else's opinion on what this startup might do
when a medical insurance company show up and says "$10,000 to see $persons
medical history"?

Maybe the designer is misleading us all, and there's a very good reason with
the company are reluctant to pay $780 for some work the designer thought
they'd asked for. But surely in the field they've chosen, reputation and
appearance of trustworthiness have orders of magnitude more value that this
spat?

------
faramarz
Not handled professionally on the designers part. He could have turned this
into a win by being their go-to-guy for future contract work or getting
referrals to other YC residents instead.

I don't think it was worth resorting to public shaming for a few grand. I
guess Eligible got some free press out of this now. Well done!

~~~
javajosh
If what the designer saying is true, then Eligible breached contract. Verbal
contracts are binding in CA. And he is within his rights to get paid for his
work. It should not damage his reputation at all.

~~~
tptacek
Oral contracts are binding everywhere in the US.

What's damaging to his reputation isn't pursuing the invoice based on an oral
contract. What's damaging to his reputation is if he jumped the gun, whipping
up drama about a receivable that he reasonably could have expected to get paid
if he simply invoiced persistently.

I suspect this thread might be a bit of a litmus test for people who have done
a lot of freelancing. From working with designers a bit, I can tell that this
is a hot-button issue for them: a lot of clients do shirk payment, and so they
tend to insist on upfront payment of some sort before they commence work. But
having said that, I have to believe _every_ freelancer is familiar with
delayed payments on invoices. Your most lucrative clients might pay _many
months_ late, and then only after persistent reminders.

~~~
learc83
Just because it happens doesn't mean it's right. Yes companies drag out
payment and make you jump through hoops to get paid (the you here is a
hypothetical freelancer).

The reason they do this is to hold on to _your_ money as long as possible with
the outside hope that you'll just go away and they get away with theft.

It's bad enough with larger companies where the people you're working with may
not actually be the people who are writing the checks, but at a small company
like this it is unacceptable.

Assuming the story is true, the CEO agreed to pay then decided that she didn't
want to pay anymore. To accomplish this she's doing her best to get the
designer to give up and go away.

How is this acceptable behavior? Again I realize it's common, but it's flat
out dishonorable.

~~~
capsule_toy
I like how you assumed malice when bureaucracy is a much more plausible
explanation.

~~~
learc83
I acknowledge that bureaucracy might be partly to blame in larger companies,
but we are talking about a small company where the designer was dealing
directly with the _CEO_.

~~~
tptacek
Again: are you familiar with the concept of "payment terms"? Has anything been
disclosed to suggest that this vendor hasn't had timely payment? Are we all
clear on what "timely" means in the context of freelancing?

------
forlio
I wouldn't pay you for that design. It's mediocre and needs major refinement.
I would tell you to redo it. Get over it and learn to hustle better, Otherwise
you won't make it very long as a designer. Verbal agreements don't mean
anything any more. Clients just don't care and designers are a dime a dozen
these days. If we fail then our competitors pick up our mess. Again I will
say, get over it and find some other work. If you are as good as you think you
are then you should have no problem finding work, right?

~~~
lancewiggs
I've flagged you as you've (so far) said this three times, and the abusive
style is not welcome here.

