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Scammed By A Silicon Valley Startup (medium.com/pennykim)
1311 points by davidkhess on Aug 29, 2016 | hide | past | favorite | 558 comments

The fake wire transfer receipt is fraud. That's a criminal offense. Have a talk with the local DA. California has a large prison system, with cell space available.

I've never heard of a startup going that far.

The article says "That afternoon in the office, Michael emailed each employee a personalized PDF receipt of a Wells Fargo wire transfer ...". The sample shown is for $12,000. The total for all employees is probably over $100,000.

If this happened in Silicon Valley, the Santa Clara County District Attorney's office has jurisdiction. They have a Major Fraud Unit. "The Major Fraud Unit is responsible for prosecuting cases involving serious and complex fraud, also known as White Collar Crime, where the loss exceeds $100,000. The Unit emphasizes theft cases that are accomplished by lying or the breach of a trusted or fiduciary relationship with the victim as opposed to the taking of property covertly, or by force or fear." Any questions?

The Santa Clara DA's office has a staff of over 500 people. This is one of the things they do. White-collar crime prosecutions often start at the DA's office, rather than coming from police agencies. The DA's office has their own investigators. There's also a process for getting restitution from convicted criminals. This routinely "pierces the corporate veil" and means the criminal is ordered to pay up as part of their punishment.

[1] https://www.sccgov.org/sites/da/prosecution/DistrictAttorney...

+1 for pursuing the criminal angle, not because it would make it right for you, or be easy, but simply because it's the right thing to do.

That was 17 real crimes committed. Our society is better off when we collectively do our part to make sure that criminals like that face the justice system.

Apparently, the company posted on their facebook that they are taking legal action against OP as: "a disgruntled former employee who has launched a slanderous campaign against WrkRiot and some of its employees via social media". https://www.facebook.com/WrkRiot/

They just took down the facebook page

edit: its back up

Haha wow here is what they wrote before they took it down http://imgur.com/a/Tf5bM

While $50K sounds like a lot of money, it actually sounds reasonable for 3 months severance + back pay + her "signing bonus" (relocation).

They should have consulted their lawyer before making that "press release," as they call it. Perhaps she could have explained to them the difference between libel and slander.

Thank you!

This is probably just Tess on her own thinking she's being proactive and in charge of corporate image.

Someone should tell her that accusing someone of extortion without proof is likewise libelous.

Tess, i don't remember that character in the saga? Or do you mean Jess, as in Jessica?

Yes, the name to which I've referred is the pseudonym Jessica though her real name is not a matter of record, though powers-that-be consider discussion of her on this forum now to be a witch hunt and off-topic.

That is correct. Please see https://news.ycombinator.com/item?id=12395442.

now, they hire someone to delete comments in facebook !

So... they are admitting they fired her for cause - which, given the cause, is illegal under CA law?

Yeah, some real geniuses at work here. No wonder they took it down.

Now the page is down again. (NOTE: I wanted to see if they had posted anything else in their defence in interest of hearing both sides to the story.)

Ignoring whether they were in the right or wrong, they're certainly not handling this very well as a company. If they now re-brand themselves again that would not be a great move if they maintain any link to their former selves. As a start-up I'm sure getting investor finance after a media fiasco like this may be particularly difficult, regardless of a name change.

why would a company ever post anything like that on their FB page?

Inexperience leads to ignorance (in the classic meaning of the word). The CMO discussed in the story is 23.

Did you not see what else these guys have said?

Posting on FB is the least of their mistakes at this point..

Although there's still time to f* up even worse!

> The fake wire transfer receipt is fraud. That's a criminal offense.

True. Of course, in CA, not having posted paydays or not paying on the posted paydays is also a criminal offense.

> California has a large prison system, with cell space available.

Well, given that it only just cleared below the threshold set in the long case over unconstitutional overcrowding, and is still well over 125% of capacity, I don't know that I'd characterize it as having "cell space available".

If this guy is actually fighting some sort of tax fraud charge in NY (possibly a cover story, but that's a pretty bad cover story to instill trust) it might be a matter of handing over evidence to the prosecutors who are already working against him.

Completely agreed. This is beyond "bad startup" and is actually an issue not just for HN but also for the criminal justice system. The tax issues mentioned suggest a history of this kind of behavior.

I have, in the 90s bubble. Founder went to jail for securities fraud. A friend of mine never got paid for a lot of work.

Overcrowding is still a problem with California's prisons [0], to the point where inmates are getting dumped into smaller communities through realignment under AB 109 [1].

Hopefully the perps involved will get plenty of hotbunking time, though.

[0] www.mercurynews.com/crime-courts/ci_24980457/california-prison-overcrowding-governor-asks-court-more-time

[1] http://patch.com/california/gilroy/bp--ab-109-californias-fe...


I fear that they don't even know the real name of their CEO!

It's okay, the DA office would find out for them.

This was by far the biggest red flag. I'd completely forget about the wage claims and wrongful termination suit and pursue this instead.

You can only think in these morally high ways if your rent is paid for by other means. Otherwise the most important thing is getting any money.

+1 . Talk to DA. I wonder if there is any lawyer who would do pro bono

Pro bono work is usually to take someone with limited money OUT of a bad situation, for example help abused foster kids petition for being placed in a new foster home, or help an illegal immigrant from being deported with their children.. not "punish a CEO committing fraud to people earning 6 figure salaries".

On the other hand, the right government contact (police? employment? ) will be happy to go after the scammer for "free".

Now that you mention it, is it even allowed that someone outside the DAs office try criminal cases? The DA is the legal representative of the state in that case, and I don't know if someone else can just step in there.

The concept of "private prosecution" exists, but my understanding is that it's not usually practiced (anymore). Some states prohibit it completely, and of those that do allow it some judicial authority is still usually required to sign off on it before it can proceed.

You're confusing Criminal Charges which is what a DA would handle vs. Civil (suing for back pay) which some attorneys will take on a contingency (30% of payout) but not pro-bono.

Pro-Bono is usually for criminal defense for folks who can't afford a lawyer and when public defenders aren't available.

What they did was felony forgery under California law. PENAL CODE SECTION 470-483.5

One felony count (anything over $950) is 16 months minimum. I have no idea what the formula is for multiple counts.

What they did is felony forgery under California law.

I would second talking to the DA. The photoshopped Wells Fargo receipt is just too much.

You'll be doing someone downstream a huge service. Someone these guys would end up scamming otherwise.

OP would be doing a service to society by taking it to the DA.

These guys are going to end up seriously scamming some innocent party in the future.

Welcome to the club. It's pretty much a rite of passage here to spend some time with a psychopath VC, a completely self absorbed CTO with a rich investor dad that fuels his fantasies, or an idiotic CEO with an ego problem, and to pay the price for it (just time if you're lucky, time+money if you're not).

I've encountered this myself several times (down to the CEO using hire fast fire fast as a mantra), and judging from my friends' stories, most people have or will. When there are large amounts of money at stake, I guess it makes sense for charlatans and sharks to flock.

There are very few ways to tell accurately from the outset at first who's going to screw you over - I've heard horror stories of the sort from friends at startups backed by high profile entities like YC, famous startups that are often in the media for being "the best places to work at", companies with celebrity founders who have reputations for being "the nicest guys in the world", etc.

It's the kind of thing that you can only learn through a few painful experiences, I think. You do learn your lessons: never pay in advance for anything, don't put your own savings or core livelihood on the line for someone else's dreams, get everything in writing, talk to former employees of a company/colleagues of a founder before getting involved, never ever assume that what you have is anything more than an employer/employee relationship, etc.

I have to say that I'm impressed by how the poster handled it - keeping documentation, filing wage claims, etc. - the only thing she could have done better was not staying on so long when she wasn't getting paid, but it's an understandable mistake when you're in the moment.

I for one am glad I learned my lessons at 22 rather than at 45 with a family to care for and a mortgage to pay. The upside is that there are plenty of genuinely nice, passionate people - when you find them, stay close to them.

Outside of the edit window for my comment, but wanted to add: the H1B situation sounds fishy as hell. 8 H1Bs costs a lot of money, which the company does not seem to abound with.

It seems like something weird might be going on here - if the founders are willing to forge receipts and lie about the company, it might not be beyond them to hold on to passports or some such for "immigration reasons", which would then explained the unwavering loyalty. If something like that is going on, I hope the devs get out of it unburned.

here how it happens:

a company, that is not really a company, keeps applying for tons of h1b. they usually have some title like consulting.

they get the h1b and don't even bring the programmers from India. they become "visa holders" companies.

the h1b's then start to look for work on their own, or the holder. and once the programmer is hired, the visa holder company gets paid, take 70% (or 60% if the programmer found the position themselves).

and this is how most h1b contractors that work on Google and such live. they will endure it for the 10 years the us forces them to stay as h1b. always trying to get transferred to the hiring company directly, and almost always failing.

the final company pays much more for a contractor via a visa holder, but they have the benefit of paying it via a small consulting company, so it won't show up as head count for the investors. everyone but the programmer wins.

There are plenty of organizations that use H1-Bs properly and correctly, but when people talk about H1-B fraud it's exactly as you describe. They've poisoned the well. It also explains why there are people that can honestly claim we need more H1-Bs because legitimate use is being choked out.

> "They've poisoned the well. "

That's exactly right. It has always costs every company I have been with more to hire an H-1 than a local person so we have only done it if we can't get anyone local -- which is exactly the way the system is supposed to work, and that intended system seems perfectly fair to me.

These scammers fuck it up for the rest of us.

Never have I seen this laid out before like this, and so I thank you for that! I think it's a real tragedy that we can't just have a rational Visa system- you get an offer from a company, then you should be able to get a work visa. Work visas continue for as long as you are employed plus one year. That gives you a year to get a new job.

This is how you attract the best and the brightest and this is what america needs.

I really dig your .plan!

In EU it's called a Blue Card.

most of what you say is true.

they can endure such jobs only for 6yrs, beyond which the company that sponsored the visa has to file for a green card (if they do, then the employee can continue suffering for a few more years).If they dont file for a GC, then its a one way ticket back to their home country (or go to Canada with a PR ready).

the 70-30 split, is something I used to fume about, thinking its unfair to the employee etc. But that is how contracting companies work (not just for H1b employers). They pay the employee $.7X, and charge the client $X for every hr worked.

the benefit for the final company is that the headcount of H1b employees on paper remains low, and the cost of H1b kinda gets prorated into the hourly rate. It doesn't make sense to hire an H1b if the company knows for sure that they need her for just one/six months or a year. But a staffing consultancy can certainly justify filing for the H1b, if the same employee can work with 3 clients for 1 year each.

Though this looks like they (the companies filing for H1b visa) are doing something illegal, it is not, as long as a LCA (Labor Condition Application) is filed for the client's location and is approved, its totally kosher with USCIS, DHS and DoL.

Sadly, its hell for those on such H1bs (and I'm glad to never have worked with such consultancies)


the problem exists with those h1b consulting companies, that fudge resumes, fake phone interviews to get someone with zero knowledge into a job with a client. Those are the companies that are poisoning the well and making it tough for people like us and employers like mine, who are using the H1b option the way it is meant to be. In fact, its worse for those who who studied in US, and worked with an employer for ~2 years on Optional Practical Training (work auth while on student visa after graduation), lose out on H1b lottery because it was oversubscribed by such fraudsters. Its not just the employee losing out, even the company that invested in that employee is losing out.

Once, I interviewed a senior engineer to join my team and it was shocking for me to come across a resume that was as experienced as I was, but had zero knowledge. Later did some prodding on the candidate's past experience, realized its a fake resume with fake experience.

I can only pity those h1b employees at this scamming company. The sad H1b rules, that tie them to the sponsoring employer, is the reason such practices exist.

> They pay the employee $.7X, and charge the client $X for every hr worked.

That's a failing consulting company. A profitable consulting company needs to bill at 3x to 5x wages to support the overhead of sales and management. Even an individual, with no overhead but themselves, needs to bill at 2x what their desired wage would be if full-time.

I read original comment far above as saying that the company takes 70%, leaving 30% for the H1b employee. Or if the employee finds their own "job" (consulting gig), then the company only takes 60%. As you say, that seems more in line with typical consulting hourly mark-up.

H1Bs aren't that much money, especially if it is a transfer [0]. You will of course need legal help but since H1B has become so popular that process has been streamlined and attorneys now use it as a loss leader in order to expand their business.

The other aspect, is that yes it'll be about $4k to transfer an H1B all in, but... consider the savings. A Level 1 "Computer Programmer" in Santa Clara has a minimum wage of $52k[1]. I'm not too familiar with Santa Clara but that is probably a 50% savings over a typical software engineer wage. Paying $30k for 8 H1B transfers all in looks really attractive when payroll is shrunk by $300k+...

EDIT: looking at some of their linkedin profiles they fit the profile of an F1 OPT employee (Bachelors from an unknown university in china, masters from a large state university STEM degree mill, recently graduated), which is even better for the employer, you get a built in tax benefit discount on their wage.

[0] https://www.uscis.gov/forms/h-and-l-filing-fees-form-i-129-p...

[1] http://www.flcdatacenter.com/OesQuickResults.aspx?code=15-11...

The easiest solution is that they've simply lied to the 'H1Bs' and immigration officials as well - brought them in on tourist visas or some other arrangement.

Excellent point. Which would make the developers even less likely to go anywhere or talk to authorities.

A tourist could only stay for 6 months AFAIK. If that's indeed the case, then those guys are insane.

Once you're in the country, even if you overstay your visa nobody is going to come to deport you. The problem arises once you leave the US and want to come back again - visa overstays will be a huge black mark then.

(speaking from a very informed position on this)

The biggest indicator I have seen when it comes to H1B1 is if the company is run by recent foreign immigrants.

I have seen 5 man team able to get hold of H1B1 - since they were that dedicated.

The process is not actually that hard if there is a will from the top for it.

I want to add that with the H1b lottery being around 20-30% for the past couple of years, being able to hire 8 H1Bs mean that they applied for ~30-40 people. I definitely would lean toward the other comments here that the situation is extremely phony

You can bet that those were transfers from some outsourcing company.

as an H-1B myself, you don't need to hold on to passports to buy that sort of "loyalty". moving here from anywhere in asia is a huge sunk cost, and the natural impulse is to hope against hope that you don't have to bite the bullet and go back home, essentially eating that cost and starting over.

plus (at least from an indian perspective) there was a time when the indian job market for programmers was so bad that people would put up with all sorts of abusive conditions, simply because they knew that if they went back home it would be to a long and depressing job search that would likely end up with a low-paying position. (i believe that has gotten better in recent years; i'm not sure what the situation in china is)

> It's pretty much a rite of passage here... most people have or will

That's pretty silly. Plenty of people working in startups never put themselves through that kind of BS.

There are at last two obvious strategies for avoiding the whole problem: (1) be a founder, (2) work in a more established tech company until you have the experience, personal network, and finances to intelligent pick a startup to work for.

You think as founder you don't have to deal with that? Oh boy, you're in for quite a few surprises. And how do you learn about how to handle this if you work at more established companies?

It's the kind of thing we all already know of because of tv shows like game of thrones. But experiencing and actually handling it is another topic.

A psychopathic peer is not the same thing as a psychopathic boss.

If you're doing your job, you know how much money is in the bank and you know what the value proposition of the business is, so the failure modes described in the article don't apply.

I'm not saying a slipper cofounder can't also try to cheat you, but they have a lot less room to maneuver when you're not a subordinate.

The first thing you learn when you become the boss: You will never get rid of having a boss. Usually the boss's boss is the customer, because he's the one who pays the boss. And as long as there are no (or not enough) customers the boss's boss is the investor.

So you won't ever be high enough to only deal with harmful people in equally powerful positions. Maybe being the president of the US or the owner of the biggest company can think like that. All other 7 billion people can't.

And there is another vector we also shouldn't forget: The higher you get the higher the stakes. Getting f'd as an intern may mean you lose a few hundred bucks. Being an engineer or mid level manager means you play in the 4-6 digit range. And on officer level or above you play for at least a few hundred thousand dollars and with a lot of possibilities to break laws (or appear to break laws) and go to jail. So you probably won't have more safety, but more risk.

If you really want to be save from these people, go live somewhere in the countryside far away from civilisation, grow your own food, and be nice to the other villagers.

Can confirm, did 1) and ended up with a deluded CEO cofounder, now in 2) and feeling much better.

Been down that route. Overall, my CEO co-founder was a very honest person; so I've continued our friendship. About 6 months after the business fell apart, he helped me meet my wife and was on the alter when we married.

When we last talked, he indicated that he was going back to what he did before starting companies. I hope it works well for him, because if he can keep within the (not CEO) role that plays to his strengths; I'd happily work with him again.

This is good advice, but I think everyone is best suited to doing number 2 before number 1. Most people are not ready to be a founder right out of the gate, and that's where a lot of the douchebag founder horror stories come from. Not because they want to be douchebags, just because they are so arrogant.

One should spend five years building stuff before becoming a CEO.

Often the worst companies put pressure on their employees to give fake positive surveys and pretend their company is a great place to work to trick people into a year or two while management moves on.

Seen it happen at a company that was voted top xx best places to work for a few years running in the local press.

I've seen HR at a major abuser massage Glassdoor rankings by disputing/threatening them with legal action for negative reviews and shilling/creating fake accounts to put in positive reviews. I believe Glassdoors policy is that they are not interested in lawsuits, so all it takes is a letter from a lawyer. Maybe even less than that.

Agreed. Startups are incredibly hard, and this can bring out the best in people... or the worst.

Just like you, I'm early on in my career. I appreciate the incredibly valuable and lifelong lessons that I've learned from them. I feel that in the long run I'll be better off for them since I know exactly what to look for to identify bad situations before I'm in them, and how to protect myself if I do end up in one.

Most importantly, I've learned what not to do to other people and find that I've developed stronger ethics as a result.

Biggest mistake is thinking you have to "get" experience.

I'm 42 and at the other end of the scale. To me the line now that "it's a good learning experience" and "I'll know better in the future" are just ways of saying "I'm making mistakes".

From someone who has been there and done that, best not to make the mistakes in the first place. I had strong ethics to begin with and compromised them many times because I thought that's what you had to do to get on. I was wrong.

Learn from listening to experience and watching others fail or succeed, much smarter.

You can never have enough advice before making decisions. Find successful people you trust and listen to them.

Much easier than having to go through your own hassles.

You'll be happier.

I totally agree! I have a number of trusted family members and advisors that have saved my bacon many times.

But I accept that I will make mistakes throughout my life. When I do, I think about them to figure out why I made the mistake and how I can avoid it next time. Then I let it go- beating myself up doesn't help. Honestly, if I'm going to make a mistake at some point, I'd prefer that it be sooner rather than later.

I'd say I had strong ethics to begin with, and these situations gave me a chance to test (and uphold) them.

> a psychopath VC, a completely self absorbed CTO with a rich investor dad that fuels his fantasies, or an idiotic CEO with an ego problem, and to pay the price for it


For some reason we are not educated about this. We learn it the hard way by being taken in with what seems a good opportunity, then getting abused and then going our own way. We naively believe people empathise for others in the mistaken idea that there is some semblance of 'compassion' in everyone.

Even if we have gone through the mill several times we may not be educated as to what is only going on. You have to be done over by someone at the extreme end of the spectrum of personality disorder to understand what really goes on with the tyrants and bullies that frequently own companies, start-up or otherwise. We even elect these 'personality disorder' types to high office without anyone pointing out that they are not fit for the role due to having these psychopath tendencies.

This really does have to be a regulatory issue as those that cannot think through the consequences of their actions or empathise with others or understand the harm they do need to be rendered powerless. Otherwise they will not learn their lesson and go on to waste yet more lives. They can do so near indefinitely, taking people on a ride for six months or more before their victims cotton on to what is happening.

There is a second problem in that the people with these personality disorders really do attract others. Cult leaders do it, to attract others with personality problems of their own, elsewhere on the spectrum. For instance, in this case, marketing. What type of person does marketing in the first place? What leads them to believe they have the secret sauce to market the product they know nothing about? There is some self-belief going on there, some belief that isn't grounded in a strong product that the customer-base will 'market' using word-of-mouth. Sure there may be some good experience and education that can be brought to the problem but often there is not.

It is important to learn the 'tells' - as other commentators have noted it is how people treat restaurant staff that says it all with these rogues. Also the 'there is no I in team' really does matter - do they say 'we' or 'I'? Sometimes we overlook these 'tells' for reasons we invent - maybe they have were brought up that way... We give them excuses for their behaviour. We keep our anger at them to ourselves and don't burn our own bridges by letting that anger out.

It is a pity that most people only get 'lightly burned' in these situations and not fully toasted. Only when you get fully toasted can you work it out properly and end up knowing about the rogue personality types and how toxic they are.

It's really infuriating how few people will believe you and follow up on the 'tells'. Even people who must have experienced that before. The only reason I can think of for that behavior is an inate hope that other people are reasonable.

and good old fashioned "it cant/wont happen to me"

I just got out of a relationship with someone who is borderline. It makes me really, really sad that borderline personality disorder is even a thing :(

witch hunt much?

obviously, there are personality traits and disorders which predispose a person to doing bad things. But that isn't a reason to assume that's what happened here, unless you happen to be that person's licensed psychiatrist.

It doesn't take a mental disorder to be shitty.

and yet silicon valley says it's impossible that discrimination on the basis of gender, sexual orientation, race, and age isn't happening. Not you, per se, just in general everyone believes the scam but the rest is "just a matter of opinion."

As for me I am entirely unsurprised because I've literally seen it all. and it happens more often than most people realize. the more desperate you are to be here, the more people will take advantage of you.

It's very similar to the way young girls who want to be actresses or models get "discovered" by pornographers.

> There are very few ways to tell accurately from the outset at first who's going to screw you over

Pay close attention to how they treat others.

Totally second this.

Particularly look at:

1 How they treat their customers

2 How they treat their affiliates

3 How they encourage their affiliates to treat their customers.

And how they tread people they consider to be 'below' them, such as waiters, cab drivers and so on. That's a pretty good tell.

My new best signal is if they don't seem to listen during a conversation. They only talk and occasionally pause while waiting to make their next point.

How they treat wait staff in a restaurant is often extremely illuminating.

Since it comes down to "is this CEO a psychopath", most of the classic red flags can be seen quite soon. E.g. charm, lack of history, quick rage.

Not for borderlines, sadly.

I think the title should be changed back. The author glosses over the single, real biggest red flag:

She never received any paystubs and the company was late on payroll as of before she was hired

I have never, ever been paid without either a paystub (as an employee) or generating an invoice which the business then paid (as a freelancer). The outright refusal to share how they arrived at the figure on her cashier's cheque should have sent her looking for a new job in the Bay Area or back to Texas.

The real lesson from this story is to always have a backup plan when making a big move: what do you do if you arrive and there is no job/no money? what do you do if you arrive and there is no apartment/room/house/etc.? Scammers exist and there is only so much you can do from a distance to avoid them.

Also this really isn't a Buzzfeed list - it's a rather personal story, with a little fraud sprinkled in for funsies.

I know this to be the biggest red flag from personal experience. Happened to me at a small start up in Illinois of all places 20+ years ago. I was fresh out of college the naive to things, trusted in the owner. Got royally screwed. It was a formative experience that I wouldn't wish on anyone but it taught me a very valuable lesson the result of which is that I have only worked at well established companies since.

This is not a huge flag. When a company starts up, it's difficult for them to get the money operating as per regular.

He got paid - that's what matters.

The paystub is a minor thing/

If a company can't produce a paystub with a paycheck, I doubt that they are handling accounting and taxes properly.

Paystubs don't need to come from ADP. They can be typed up or even hand-written if you want. But they demonstrate, and record, that the company is fulfilling its legal obligations as an employer, and give the employee the information the employee needs to fulfill their legal obligations as a taxpayer.

I wonder how this will play out in April. I seriously doubt the company is properly withholding & paying the payroll taxes. I guess it's not even clear whether or not they'll be filing a W2 for her.

Startup or not, you don't offload the risks of making payroll onto your employees.

"Startup or not, you don't offload the risks of making payroll onto your employees."

What are you talking about?

Invoicing your startup for a payment is perfectly normal, and has nothing to do with 'offloading the risks of making payroll'.

Again - getting paid without a pay stub is utterly irrelevant to a new startup.

What matters is getting paid and hopefully it's done in an above the board manner, but the transfer of money is the primary indicator of risk - not the pay stub.

There is absolutely nothing wrong with not using payroll services for the first little while while a startup gets going, and it has nothing to do with the ability of an entity to pay you.

If you are getting paid consistently - through invoicing or whatever means, this is a good signal.

By the way - although the story is pretty scary (and hilarious) - the author is also a little bit naive. Everyone involved seems to be a little inexperienced.

The contract you sign is only as valid as the parties backing it up! Just because someone gives you a 'piece of paper' that may be legally binding, does not mean it has any integrity. The author should have done a basic bit of homework or point blank asked some very basic questions about funding status. He joined a company 'assuming' there was a round of funding, but that turned out to not be true. From my reading of the article, it doesn't seem as though the founder lied, but rather mislead the author. A few simple questions such as: "who has backed you, for how much" - or even a check on Crunchbase would have sufficed.

Again - a contract is only has the amount of real integrity as the people signing it. Your ability to enforce it is not just a matter of law - it's a matter of the reality of the entities ability to do so.

Anyhow, I'm glad it was written up so that people can learn form it.

"If you are getting paid consistently - through invoicing or whatever means, this is a good signal."

But that's not what happened, because they were late, enough so that people were filing their rent late. How about -- "Startup or not, don't take your employees for 'free credit'"?

Or, more brief: "Fake it till you make it, but don't break the flippin' law".

No, don't fake it. The reality is, investors know you are starting out. It's not a problem to write checks. All you need is a business account. Yes, make the pay stubs but they can be made on a typewriter.

Just don't fake it. Don't fake anything. Don't sell products that don't exist. Don't lie to your employees about your financial state (I see this happen a lot because people are ashamed to admit that the company is having troubles... this is a bad strategy). Don't lie about the state of the product (something that happens when people are naive enough to not realize how much testing is needed.)

Pay people in regular ways through regular channels.

Seriously, though, ADP delivers paystubs. If they were using ADP, they would have gotten paystubs.

When a company has just started, they may have not set this up.

You can invoice the company. It's not a big deal.

Again - of all flags - lack of pay stubs is the least of them if it's just a garage startup with 3-ish people.

The actual exchange of money is 100x a stronger indicator of health than the presence of a stub.

OTOH, you can generate paystubs through literally any halfway-decent bookkeeping software. I get running a lean shop, but once you expand from one employee to two, one of your first investments should be in some sort of accounting system in order to make sure every last goddamn penny is tracked with as long and complete a paper trail as possible.

Any good entrepreneur knows that if you don't know where every cent of your VC money is going, you're going to get eaten alive at your next investor meeting or VC round. On the other hand, if you can pull out a spreadsheet that says "We spent exactly xx% of our previous round on payroll, xx% on rent and utilities, xx% on chinese food, etc." you're going to have a much easier time convincing investors that you're a business that knows what the hell they're doing.

Not having decent bookkeeping can't be chalked up to "fast-moving startup woes", it's just irresponsible, and there's no excuse for not being on top of it.

Wasn't one of the excuses the CEO had for missing pay dates that his money was tied up in IRS dealings? Maybe a copy of QuickBooks would've helped with that.

Very probably. It's much easier to deal with an audit if you have a button to print exactly the report the IRS is asking for.

> You can invoice the company. It's not a big deal.

Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard.

"Nonononono. You're hired as an employee. There is a legal and ethical agreement for them to pay you at the intervals agreed upon in your contract. There are no ifs or buts about it, no invoicing them, no excuses for 'just started'. Payroll is NOT hard."

No - you are completely wrong.

There is absolutely nothing wrong - or even remotely immoral - about paying using invoicing while a company gets going. It's common and normal.

And payroll is not easy - it's a huge mess - and it can be very complicated.

If a founder, with funding, told me: "Invoice us for the first two months until October when we are up with payroll" I would have no problem with that so long as I was getting paid.

Again - of all things, it's not the issue.

The non-payment, the lies about funding, the loans from staff, and all the rest were bad signals.

What's odd is how nobody seemed to have anything to say about the product itself ...

Could you enlighten me as to the mechanics?

If my contract says I'll be paid monthly on the 15th, when do I send in the invoice? Are the payment terms net-10, net-30, or longer?

Do I need to break out sick or vacation days as its own line item? What about the deductions?

Who is responsible for figuring out and paying the payroll tax? Because it sounds like asking for an invoice is a way for the company to avoid paying unemployment tax, social security, etc. That in itself would be a red flag.

If the invoice is not paid, can I file it as a wage claim or do I use some other mechanism?

These are the obvious questions. If as you say it a common and normal practice, there must be some place which describes the basic details.

If payroll is hard for a company, why is it any easier for the employee to figure out these payroll details?

"Could you enlighten me as to the mechanics? If my contract says I'll be paid monthly on the 15th, when do

I send in the invoice? Are the payment terms net-10, net-30, or longer?

Do I need to break out sick or vacation days as its own line item? What about the deductions?"

If you are having difficulty grasping this - you should not work for an early stage startup that is pre-funding. You are expecting very standard 'employeeship'.

If you are an 'employee' of the company - yes - you are required to be paid with W2's etc. - of course.

But if you're not obligated to be an employee of a company to accept equity - or other kinds of payment for services rendered.

As far as 'invoicing' - either you're being sarcastic or you've never done such a thing. You send an invoice, and you get paid. You have to claim it yourself in terms of taxation. As far as 'terms' - I'm hoping you are kidding. Either you get paid or you don't.

The company in this article I think was well past the time wherein they should have had had payroll set up - no doubt about it.

At the same time - it's absurd how confused many of you seem to be about the simple mechanics of getting paid.

You do not need a payroll system (i.e. W2s) while you are in the most early stages of a company.

Everyone is downvoting you because the conversation is about an employee relationship. Quoting atria, "You don't understand the difference between a statutory employee and independent contractor."

There is no special exception for startups where employee salaries are exempt from payroll taxes. It is also illegal for a company to pay you as a contractor when you are really an employee. What you propose sounds exactly like breaking the law.

Also, a company which proposes this arrangement takes on the liability that the 1099 contractor could come back in the future and sue for the taxes and benefits that a W2 employee would have received. That happened to Microsoft a few years ago.

I was giving you a chance to demonstrate that this practice is common and that you know what you are talking about.

However, given your posting history I should have expected continued blustering where you demean others for lack of knowledge. Why, just the other day you said that I, spouse of an Army vet who did two tours in Iraq, didn't have exposure to family members in the military. Now you say that I, employee of two startups and founder of two more, have no startup experience.

No one in this thread says a startup company needs a payroll system. The question is about paystubs for employees, which the employer can even do by hand.

Actually it seems you're confused. You don't need a payroll system but you do need payroll done correctly by the company. There is no such thing as a "standard employeeship" - either you are an employee or you're not. Laws do not discriminate between a serious business or a sloppy startup that doesn't have it together.

You should really talk to an HR/tax attorney before you continue to spread misinformation.

Just wow. This is terrible. You don't understand the difference between a statutory employee and independant contractor.

If you are an employee, the company is required by law to withhold taxes and pay you regularly. Every state in the U.S. has an agency that will take and prosecute wage claims. People have gone to jail for messing with witholding taxes.

If you just invoice, you are effectively an independant contract, they might not pay you, and you are on the hook for paying your taxes. A big difference.

You also are unable to avail yourself of worker's compensation if you get hurt and unemployment compensation when you are laid off.

It astonishes me that anyone could be so ignorant as to say there is nothing wrong with making people invoice you. As you've correctly stated, it's a completely different relationship. Even the liability is different.

If you're a contractor and the guy who signs your checks says "nice ass! Now shut up and do your work" He's pretty much just pissed you off and as a self-employed contractor, you're free to decline and move on to another "client". If that same person is your employer, he's broken several civil laws and in most jurisdictions, committed an actual crime.

We could both go on for hours on the differences which is why this whole thing amazes me.

In most states now you can claim sexual harassment even as a contractor.

It might actually be federal, I'd have to check though.

Apparently there is no product...

You are spreading very bad MIS-information, and it doesn't matter why -- stop it.

The fact, for a number of different states in which I've employed people (including MA, CA, NH...) is that there are very specific requirements for hiring people, and

NO, YOU CANNOT SIMPLY "pay using invoicing while a company gets going".

Federal and state laws specify that all employees are W2 status, and you are REQUIRED to withhold taxes. Management is even personally on the hook for these tax liabilities.

There are exceptions under certain limited criteria in which you can hire people as outside contractors -- commonly referred to as "1099s" -- the Federal laws are quite tight (the famous '20 questions'), and state laws are even tighter. E.g., in MA you cannot hire any person who performs core functions of your company as a 1099, so if your company writes software you cannot hire anyone to work on that software as a 1099 (but you could hire someone to, say, customize your office accounting package as long as you are only using it). Yes, it is that tight.

Just because some founders decide to break the law, and you would be happy to go along with them, does not make it legal.

YOU are completely wrong.

Employees cannot invoice their earnings, they must be paid according to the law and the employment agreement you signed with them.

Yes payroll is complex but this is exactly why it needs to be done correctly and timely. The earnings, taxes, insurance, and other liabilities must match up along with all the reporting requirements. There is no way around this. You cannot just skip the complexity by telling them to invoice you.

"The actual exchange of money is 100x a stronger indicator of health than the presence of a stub."

Real companies with people running them who want to do things on the up and up and who know how to run a successful company want to keep a paper trail of every dollar going in or out the door. This includes having a pay sub with every single paycheck or invoice paid that shows what was paid, how much was paid, why it was paid, and when it was paid. That's How to Business 101.

"Real companies with people running them who want to do things on the up and up and who know how to run a successful company want to keep a paper trail of every dollar going in or out the door."

Most of you it seems have never run a business, have never consulted, have never invoiced for anything.

--> You don't need a W2 to pay someone legally

--> You don't need a 'pay stub' to have perfectly organized and legal books.

It is a big deal, running a business requires following the law. There is no special "startup" case where you're allowed to be loose on your obligations.

Accurate payroll costs somewhere between $50-100 per month per employee with dozens of great vendors available. This is an incredibly trivial cost (especially compared to the fines for breaking these laws) and means there's no excuse to not have things in order. If you can afford a salary, you can afford accurate payroll and bookkeeping - otherwise you have no business being in business.

"It is a big deal, running a business requires following the law."

Again - I would suggest that maybe you have never started a company or done payroll, or paid anyone yourself.

It is not required to have 'payroll' to pay individuals for services rendered, nor have properly managed books.

I once created a 'side company' to manage some IP. The company had no employees. All participants (there were five of us over time, but only three at any given time) - were paid as consultants. Two of us had equity.

This arrangement was far superior than having payroll for this particular situation.

You're right, in that case. In the case of contractors invoicing is normal and legally acceptable. In the use case you mention here, contractors are appropriate and legal.

It is, however, illegal to pay employees like contractors. When you are hired to work full time for a start up you almost always meet the test of being an employee. The author of this article did. It IS therefore illegal to not give her a paystub or ask her to invoice.

This is generalizable to start ups. I've worked for start ups. Every time I was hired as an employee and treated as one. It would have been a red flag and illegal for them not to pay me as an employee.

Again, everything you're saying for the most part is true if you're talking about paying IC's. Where you are demonstrably wrong is assuming that you can treat start up employees as ICs You can't. Therefore doing what you're claiming is "normal" is actually illegal on many levels.

I've started several companies with my own employees and I've always paid them correctly and on time with proper payroll and accounting. That's because it's the right and legal way to conduct business.

If you're talking about instances where you use contractors instead, then that's an entirely different scenario.

As long as you treat employees and contractors separately and properly, there are no issues - but having employees and paying them like contractors is illegal. Invoicing is not a replacement for payroll.

I know that things are different in Canadia, but in the US you appear (up thread) to be conflating W2 employees and 1099 contractors. Yes, you can pay the latter as vendors - because that's what they are. No worries about vacay, health benefits either.

I would suggest that your little side gig did not provide you panoptic insight.

> When a company has just started, they may have not set this up.

The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees.

If you can't calculate withholdings and all those other things that get listed on a paystub correctly (which is the only thing that would stop you from generating a paystub), you are breaking the law (civilly and perhaps criminally under federal and state tax and other laws, that require the withholdings, deductions, etc.)

If you don't (in California, where this occurred) have posted paydays with at least the legally specified frequency, or don't pay employees on those paydays, you are breaking the law (criminally, under state employment laws, as well as possibly civilly.)

So, if you haven't figured this out, you have no business hiring employees.

"When a company has just started, they may have not set this up. The correct (and only non-criminal) order of operations is (1) figure this out, (2) start hiring employees."

This is false.

For any of you interested - here is the actual law in California:


It's perfectly normal and very common to submit invoices for services rendered that you claim on your 1099.

There's no way you could have run a business without grasping how common paying people via invoicing is.

Some major companies - such as Wordpress - tend not to hire people for a while. For the first little while, they have you work on 'projects', remotely, until they decide they want to bring you on long term. The founder indicated that they pay them for the work and only bring some of them on. Obviously, they are getting paid via invoicing.

Startups will often bring someone on for a project/consulting, and then decided to keep them full time. This is not uncommon. It's also happened to me.

I'm going to guess that most of you commenting have actually never run a business, paid an invoice, or submitted and invoice.

Independent contractors and employees are two different things.

It's quite legal to hire people to serve in roles that are not, under the tax code, employees but independent contractors, without being able to handle payroll. But that's not a status that a company can freely choose independent of the nature of the work, it's a status that is controlled by the nature of the work by rules set out in the tax code.

You seem to think that employees hired as employees can elect invoicing and 1099 status if the company isn't up to handling employment law requirements, order that the company can hire people as employees and then treat them as contractors until it is ready to handle employment law requirements. Neither is the case, and either is a situation in which the company violates many aspects of the law (and more if it doesn't pay timely on a regular schedule but instead waits for invoices.)

Perhaps you should read (all the way to the end) the law you cited?

Your posts in this thread are the most egregiously wrong I have seen on HN in recent times.

You seem to persist in not understanding the difference between a w2 and a 1099.

fyi, as alluded to elsewhere in this thread, the government deems payroll taxes to be paid by the employee on the date he or she receives his or her share of the paycheck. At that point, the business is holding the taxes on behalf of the government. Officers of the company are regularly held personally liable for unpaid payroll taxes. The irs and state tax agencies choose a "fuck you, pay me" approach to these taxes. You should probably not screw about with them, but to each his own...

> Again - of all flags - lack of pay stubs is the least of them

Its not the least, though it may be less than just being late on payroll. Posted paydays, of a certain minimum frequency, and timely payment on those paydays is a bare minimum legal requirement in most jurisdictions for which there are generally fairly significant liabilities that attach for failure. [0] A business that fails this in any broad way (for lots of employees and/or for multiple pay periods) is seriously and fundamentally broken.

(OTOH, tax withholding and lots of the other things that go on paystubs are similar bare minimum legal requirements with significant liabilities for failures, and if you are doing them correctly in the first place, actually providing paystubs is trivial -- the hard part is doing the required things that end up getting reflected on paystubs. So missing paystubs is at least nearly as big of a red flag as late payroll.)

[0] In California, for instance, failure to either post paydays meeting the legal requirements or to pay on those posted paydays as required by law is a crime (misdemeanor) by the employer. http://www.dir.ca.gov/dlse/faq_paydays.htm

This account had a dev team of 8 when she interviewed in May and 17 when she arrived in July, with an office in Santa Clara.

That is not "a garage startup with 3-ish people."

The CEO blamed ADP for the payroll being late. When you combine that with the lack of paystubs, if alarm whistles aren't going off, you are just not paying attention.

If you are "invoicing" the company you are not employee but an independent contractor

Contractors never get Paystubs

and yes there it is a HUGE red flag (and likely illegal) for a EMPLOYEE to invoice a company for their wages.

Then set it up when you start hiring people.

There is absolutely no excuse for not doing this. None.

That's not what matters. What matters is that the information is correctly documented. Taxes man. They make a difference. Say I make $100 a day before taxes. I get a check that shows they took out $25 for federal, $5 for State, etc. Whoopie, my take home is $70. At the end of the year I get a W-2 showing all the taxes they company took out etc..

But what if they just give me a hand written check for $70 made out to me, Joe Blow. There is no indication of taxes being taken out, but hey, I got $70, so all is great right? Wrong..

At the end of the year I get a W-9. They say I wasn't an employee but a contractor. I have no proof that they took out taxes and now suddenly I am on the hook to pay taxes to the government that were already taken out by the crappy employer and pocketed.

See the problem now?

No, this is huge. Paystubs are a major thing. And if you can't get the money operating, then you shouldn't be hiring people. And if you are, you should be up front about it.

You are NOT entitled to people working for you for free, under deceptive pretenses.

It takes about 8 minutes to setup gusto to create w2 pay stubs at a cost of $25/mo +$4/employee.

If you're in "this may fail at any time" mode you can pay people 1099 as contractors.

going from w2 with pay stubs to no pay stubs means they're out of money and saving as much as they can be not paying payroll tax.

I've been burned repeatedly by startups recruiting me for one role which matches my experience/skillset, then after a month or so radically changing the role to one which I'd had no experience with. I get pivoting, I get needing to be flexible, but why would you hire someone skilled in networking operations and four weeks later decide that person need to design/develop your Windows application instead?

I've always been paid, however I now check to see if startups have actually filed the SEC paperwork when they claim to have raised a round, and verify with the investors they claim to have backing from that they've actually invested in the company. One startup I worked for lead the employees to believe we had a solid 18 month runway, when in fact the founders were covering payroll from home equity lines of credit. They didn't actually close the round until a year after most of the initial employees left as payroll became erratic.

Another startup I worked for on the basis of a handshake...never do that. After a year of developing the company's MVP the founder formalized the structure and equity of the company, cutting the four early employees out as co–founders and reducing our equity from 2% to 0.5%. As were were all working on handshakes, none of us had legally committed to working for him, so we all walked away. He lost the MVP since I had the only copy.

The last startup I worked for (and will ever work for), I was recruited by the CEO to come in and build a mixed-discipline technical team in a supporting role. Within a month it became fairly clear that I'd been hired over the objections of pretty much the entire management team, which had I known I wouldn't have taken the role. I was clearly pegged as "a bad hire" which would not have happened had anyone I'd interviewed with spoke up.

Throwaway account…

> verify with the investors they claim to have backing from that they've actually invested in the company.

I'm curious, how would you go about doing this?

As mooreds wrote, I'd start with Edgar and the SEC. I'd also check state records (i.e. are they a Delaware C corp? I should be able to pull public information about the filing, same for most states at varying levels of difficulty).

I used to get annoyed at all of the chest-beating press releases about how much money a company had raised until I realized it was a form of external validation. None of the companies which burned me on equity/funding issues wanted to talk publicly about their fundraising rounds, it was always "we're going to a do a press release, it's just not the right time now". If you publicly state "We raise a $2.5MM Series A from the following investors" I can go out and verify that.

Bonus story: a "company" recruited me hard to be their CTO. Some wining and dining. But a lot of handwaving about the business model and where the funding was sourced from. The founders wanted me to bring their "vision" of social e-commerce to market utilising a proprietary algorithm which would be disclosed to me only upon taking the role. When pressed about corporate structure and funding they eventually disclosed that funding was coming in the form of personal checks written to cover bills as they came in, by the domestic partner of one of the founders. No C Corp, not even an LLC. I declined.

Late followup…in addition to Edgar/SEC I'd look at Mattermark, Crunchbase and Angelist. Meant to mention them earlier.

If they are a US company, I'd start with Edgar: https://www.sec.gov/edgar/searchedgar/companysearch.html

For example, you can see the amount of money FullContact raised in 2015 here: https://www.sec.gov/Archives/edgar/data/1523064/000152306415...

why didn't you just use the MVP as leverage? surely he would have given in?

I did, he held fast to his belief that we hadn't contributed enough to be co–founders nor to get the equity stakes he’d promised when he recruited us. He never raised the money he kept claiming to be raising, and never replaced us with a new team. The startup (if you can call it that) died pretty much when the founder decided to screw the rest of us.

What would be the point? Would you want to continue working for someone who would pull that crap? Would you have any kind of confidence in a company run by someone who would pull that crap?

Yep. Looks like it's now called "1for.one". Their CEO has a stock photo on LinkedIn and owned a mining corp.

*WrkRiot. 1forOne's twitter and facebook profiles are gone and WrkRiot matches the description perfectly (including the doggy avatar and a large number of Asian employees).

It's actually dangerously obvious who some of the people mentioned in the story are, just from the descriptions. It might be a good idea to anonymize characters further by changing ethnicity/nationality and gender.

Why? Shouldn't we be encouraging people who out bad actors?

"Name and shame" feels good but there's a huge danger in pillorying people just based on a single person's account.

WrkRiot seems to be the company in question and their online presence is so laughable nobody here likely feels bad for making fun of them, especially because of the behaviour the author describes. But the story is not just about a company but also about individuals.

Consider WrkRiot's head of marketing, for example. The author portrays her very negatively (outright trying to take the author's credit, being generally incompetent and engaging in deceptive and hostile practices). Whether you personally find the author trustworthy or not, if you only go by the article this is essentially hearsay.

Whether the allegations are true or not, she might face problems because of them (e.g. when trying to apply to new jobs). The author OTOH can maintain plausible deniability because the article never explicitly named any names (just gave enough identifying information to allow HNers to deduct the identity of the company and the employees).

I'm not saying the author is lying. I'm not saying WrkRiot or its CEO is innocent. I'm just saying there's no way to know as an outside how much of the story is true and what details have been left out (knowingly or not).

This is why in criminal investigations "due process" is a thing. Otherwise you end up with mob rule and character assassination -- and accusations tend to stick even if they're proven wrong and malicious.

It should be noted that the criminal justice system is not there to give justice to individuals. The district attorney functions as the representative of state interests.

If you are a victim of medical malpractice, the district attorney will not find healing for you. If someone wrongfully injures you, a criminal case will not return even an inch of your wholesomeness. If someone cheats or robs you of $50k, the district attorney will not help you pay your bills.

Civil court is the provided forum for issues of individual justice, and there individuals will find themselves paying alone, and in a position of imbalance, only a stupid person would fight for themselves. In the game of civil justice, where one might seek healing or remedy, you must pay for the prerogative to play.

True, but at least some of the accusations seem to imply criminal behaviour on part of the founder(s). Manipulating screenshots from the bank and passing them off as real sounds like forgery to me -- but I admit I'm not intimately familiar with the US criminal justice system.

That said, of course there are safe conclusions to draw from this story (especially the ones that hold true in general) but all personal accusations should always be taken with a grain of salt, especially if you have no personal knowledge of any of the people involved.

> If you are a victim of medical malpractice, the district attorney will not find healing for you. If someone wrongfully injures you, a criminal case will not return even an inch of your wholesomeness. If someone cheats or robs you of $50k, the district attorney will not help you pay your bills.

This is not entirely true. While the general civil/criminal purpose distinction you make is broadly correct, there are provisions for "restitution" within the criminal court system that overlap substantially with the compensatory function of the civil court system, so its not accurate to say that the DA will not help you recover funds or that a criminal case will not restore your losses.

See, e.g., http://www.cdcr.ca.gov/victim_services/docs/restitution_guid...

Disagree. If somebody fucks you over, you out them.

Just because it's "hearsay" in the sense that it's only one person's account doesn't mean one should have to anonymize everything.

I understand where you're coming from, and initially had upvoted your comment. The problem is that there are shifting goalposts as to the definition of "fuck over". Here specifically it's pretty clear some unethical and illegal behavior occurred. There's no question it was right to out the shitty company. But encouraging people to out people they feel they've been wronged by sets the stage for tragic mistakes. The media is especially guilty of this, even if it isn't outright libel. I would be much more agreeable to your suggestion if people were generally much less trusting. But people are really awful at critical thinking with this kind of thing.

I guess that's true.

Yes, we should out bad actors. But we should also avoid witch hunts. I agree with pluma 100% here. Plausible deniability is important as there are always at least two sides to every story.

That said, Penny's account of life at the mystery startup sounds startlingly like that of my experience at Motionloft many years ago. The difference there is that the (ex-)CEO was convicted, and my experience was corroborated by another ex-employee and by one extremely pissed off vendor.

Context for the Motionloft story (it's a good read): https://techcrunch.com/2013/12/30/motionloft-jon-mills/

I loved the idea of MotionLoft, FWIW

I wasn't crazy about the idea, but the stack was interesting (and gave me some great learning opportunities). Ultimately Motionloft was more marketing than tech driven and I bailed right around the time Mills hoovered up all the money.

Probably for cya reasons, especially when filing for retaliation.

Amusingly the `whois` records for wrkroit.com mention 1FOR.ONE CORPORATION as the registrant organization. Here is a snippet of the records:

  Domain Name: WRKRIOT.COM
  Creation Date: 25-aug-2016
  Registrant Name: ISAAC CHOI
  Registrant Organization: 1FOR.ONE CORPORATION
  Registrant Street: 2005 DE LA CRUZ BLVD
  Registrant Street: SUITE 131
  Registrant City: SANTA CLARA
  Registrant State/Province: CA
  Registrant Postal Code: 95050
  Registrant Country: US
  Registrant Phone: +1.4083447484

I think 1for.one is the old name, then they changed it to jobsonic and, more recently, to wrkriot.com.

I've looked at a bunch of things and you're correct. the 1for.one precedes jobsonic. Basically just this summer it's had 3 separate names.

Wow, the author's description "anti-SEO name" doesn't quite do these justice. "1for.one" is cringey but "wrkriot.com" is just straight VC repellent.

Not disputing you, but why is WrkRiot so repellent? It's unique and recognizable. I'll admit that "Riot" is just weird, but is that the main reason?

(not trolling, I'm serious)

This is just pure opinion, but to me it is hard to read and unprofessional. It is certainly unique, but it doesn't project seriousness, which is what I want out of a job discovery service. Omitting the vowel just has the ring of a shady knockoff, scammer, or malware site that capitalizes on typos. Maybe I'm just not used to seeing the consonant string in trademarks or company names, but it strikes me as peculiar rather than creative or edgy.

Second thought: this is a company which can't even manage to register "workriot.com". Even if "WrkRiot" is the brand, I would expect them to grab the domain with the more obvious spelling and have it redirect to wrkriot, but it turns out "workriot.com" is registered to a Finnish hosting provider sitting on the domain. So to recap: the domain with the more obvious alternate spelling of the company is (very likely) up for sale but they still haven't managed to acquire it. That does not engender much confidence in their marketing or management.

Yes, I think I would pass on this venture.

In general misspellings are considered bad for SEO because search engines suggest correcting their name to something else. I'm not sure whether that applies here but I have seen it for startups that vowel drop weirdly, etc.

Thank you for the SEO-specific reply. I was curious about that aspect, opinions on professionalism aside.

Because misspelling your name, while quirky, doesn't exactly express professionalism.


The website doesn't look like anything that would come out from a team of developers/designer. It looks like one man side project really...

The pixelation on those step headers made me cry a little on the inside.

It's profoundly terrible.

And analyst at JP Morgan...

jobsonic.com = expired squarespace site...

On crunchbase they are now wrkriot: http://www.wrkriot.com/team-1/

Landing page:

> WrkRiot pulls signals from your resume and matches them to job posts. That's right, we do the searching for you. We'll be updating this section with videos, walk thru's and more.

"walk thru's"? This website looks like garbage

Just look at the blog too. I'm not sure who thought that a blog post entitled "10 WAYS TO SURVIVE AT WORK WITHOUT SLEEP" would be a hit with job seekers. (Not to mention that 100% of their blog content -- 7 posts -- was posted 3 days ago)

10 WAYS TO SURVIVE AT WORK WITHOUT SLEEP: www.wrkriot.com/blog/2016/8/26/10-ways-to-survive-at-work-without-sleep

Guess employees are the target audience for this post.

Yeah, but shouldn't all 10 steps be "find a new job"?

Guess this company needs to work on robots.

Replace employees with robots and write a blog post: HOW WE WORK 24x7

The content to it was horrendous. Just scanned the 10 points out of morbid curiosity, and the last one is "see a doctor."

Seems like they think its normal to work tirelessly through out the day and night.

I'm blocked by a sign in page. Did they take down the blog in the last day?

It's too bad no one archived that blog post about how to get by without sleeping. It was very personal, and very stupid. If anything, it was evidence that this company didn't have a clue and was letting its social media person fill the blog with crap (which was unread by the executives) just so that it looked like the company was doing stuff.

It was up a couple of hours ago. Seems like they went full retard and nuked a lot of things, including their websites, tweets, etc.

All of their blog posts seem to have been posted on the same day...

it's all behind a password wall now though you can find some pages via google cache

Yep. Just looked at the Wrkriot Facebook page. Previous posts have the old name... and the Spongebob memes

Almost all the reviews are from people working there which I'm sure you're not supposed to do. It's dishonest at the very least.

"Isaac Choi" - I'm starting to imagine the lie was that he had a Chinese company scrub his name and he's not called Isaac or Michael. Having other people pay the cheques saves giving his name away too.

this is a South Korean name. And the author of this article is also Korean. That's why she mentions they use "second language" to mimic Chinese employees


At this rate I wouldn't be surprised if it was "Mr Bean".

How can you tell that this is probably his real name?

Phonetically similar. It's one way to choose an English name.


The page now requires a password. The page cached by Google: http://webcache.googleusercontent.com/search?q=cache:cMRXCID...

wrkriot.com is a current squarespace site.


Penny, if you do end up reading the comments on here, be sure of a few things:

You have generated more traffic to their site than Jess ever will.

You are not alone in your experiences.

You are obviously a great professional and you will probably do well.

You have shamed the company into probable closure (which is a good thing) as the guy would get worse with more money and bigger teams.

For everyone involved in a startup there are huge risks. Most of the risks are borne by the founders, they get handsomely rewarded if things go well.

But they often don't. I wish the startup community would take heed at this great story and be more honest about the risks, instead of following the hype train.

Macho ego bullshit is to blame for a lot of wasted effort.

But it's really good to hear that you are back with your cat.

A rant: I hate the "in crowd" subtext that goes on with all these postmortem posts.

People in-the-know know what company and people are being discussed in these posts. Accordingly, "I know privileged information." banter is thrown around.

I wish that, for the sake of those outside the loop (me at least), people either name-names or take the wink-nods to a private message.

This is probably going to be a very unpopular (ie: negative karma) rant, but those of us outside the SV echo-chamber get hit by this all the time.

    > People in-the-know know what company and people are
    > being discussed in these posts.
    > I wish that, for the sake of those outside the loop (me
    > at least), 
Read on to the comments below. You are "in the loop" ;)

Hit by it all the time? Where do you live? Vegas?

If the SV echo chamber extends to Texas, you might be right about the club.

She's just being careful! If she has brought the company down by explaining her position she may get in all sorts of trouble by naming them too.

Lawyers would love to take her down if there's been a lot of money creamed. He'll probably use this HN thread to blame her for his company failure.

Wage theft causes American workers to lose an estimated $50 billion dollars per year.

Usually low-income workers, many of whom are not in a social class where they're friends with a smart lawyer, are the victims.

This is just the SV flavor of what millions of American workers suffer from year-round.

"About a month in, our interim leader returned to Korea, and a woman was brought in who had worked at several video game companies. She used to know our CEO’s in college. She was kind, thoughtful, and attentive. I knew the company would eat her alive.

After our boss departed, I took over a few of his duties. One of them was “viral marketer.” I was now creating ad campaigns on Facebook in an attempt to bring monthly active users to the site.

I had no training. I was acting on one hunch and instinct after another. Yet, I was good.

A month or two passed without incident, and then we lost a team member. Unable to withstand the workload and the move, she left to be with her boyfriend. We all made fun of her for it."

Seems like the "other side of the story" from Tess. Doesn't make her look any better...


CAREFUL! That link has a boobytrapped payload that roots Android devices and installs malware (latest Android 6.0 device). Probably a dodgy ad network injecting it.

Best visit with noscript enabled.

Well, what if we already opened the link on a 6.0 Android device? Can I check in some manner whether it's infected or do I just have to treat it as untrustworthy and trash it?

You would have to download the app they spammed with vibrates and let it install.

Thanks for the reply! This isn't very clear to me. I actually opened the link in a new tab with Firefox for Android, had Firefox ask me for permission to access my camera and mike(?), denied those and closed the tab as I read pascalmemories' comment i.e. I never actually saw the content, so "you would have to download the app they spammed with vibrates" doesn't mean anything to me. Perhaps that's a good thing? :)

I've turned off the phone for now, and it's not 6.0, rather it's 6.x (up to date with August 2016 patches IIRC), not sure if that makes a difference. I'm mostly worried about the malware being a drive-by download/infection.

I was browsing in Chrome with a brand new phone which thankfully did not have anything on it. Despite clearing all the app data (which normally cleans out browse-by if it's just annoying page javascript in my experience) the damn vibrate, play noises and throw multiple pop-ups just kept on coming and would not let me close them.

I had to resort to a factory wipe to clean it; it was not a great deal since it was a phone I'd literally today just taken out the box, but if it had been something I had data on and used for a while, it would have been a serious PITA.

I suspect the ad network malware pumper saw the visit spike and decided the traffic volume warranted an exploit delivery instead of their usual junk ad content.

So, if I start my phone and browse normally, and don't see, hear, or feel any popups, noises, or vibrations, I'm good? And perhaps I should clear out my Firefox app data? I shut it down because you mentioned root and malware, and if the malware can root a device, it probably can hide itself pretty well and make it impossible to get it out.

Wow... good find!

"A real start up company is populated by a shark tank full of thieves, corrupt business people, unscrupulous investors, and fickle employees" WTF? So you're not a 'real start up' unless you've got a bunch of corrupt criminals running the show?

That must be a typo, I'm sure she meant "Jail"

that was about another company, and in the last few minutes the site turned into some kind of scam. I guess someone is actively monitoring this thread.

I don't know. The very next sentence is:

> We worked through Christmas, and were given no time off for the holidays. Our boss, being a kind soul, offered us New Year’s Eve as a consolation.

AFAICT, Christmas hasn't come yet.

Thought so too, but the timelines don't match, since she mentions stuff about Xmas. Still, my jaw dropped a few more cm after reading those sentences, and believe me, it was already on the floor after reading the medium piece.

i'm seriously laughing my ass off literally right now... this chick just keeps finding herself scammed by startups time after time, it's kind of hilarious and sad at the same time, especially because it seems like she's still kind of positive about it lol.

great find, thank you!


Amazing point of view. they've either really drunk the koolaid, or are trying to force it down someone else's throats.

linkedin, indeed and monster are "not helping anyone but themselves". really? that's really how you are pitching (internally or externally)? that's how you view linkedin? only helping themselves? There's many criticisms you can level at LI, indeed and others, but they do help many people beyond themselves. This shows an incredible naïveté about the business world, imo, or maybe just an incredible "rah rah - let's just keep repeating stuff" mindset.

> Digital Don Draper.


What's crazy to me is the company didn't expect anyone to take their story public. Not even the woman in marketing.

I hope you guys continue to expose fraudulent startups and CEOs like this. It really is a service to us all.

I once worked for a startup here in boston that didn't pay me for a few months until I threatened to file a wage claim (did't work) and to quit (worked). I got the hell out of there as soon I got paid - some of my coworkers weren't so lucky.

It seems crazy to me now that I wound up in such a situation, but what it is happening to you, it is usually accompanied by a healthy helping of lies, misinformation and hope.

It wont happen again. But it was fun getting ~3 months salary in cash and going to Jordan's to buy furniture with my girlfriend like a gangsta'

> But it was fun getting ~3 months salary in cash and going to Jordan's to buy furniture with my girlfriend like a gangsta'

Fo' shizzle, if I'm ever gonna buy a nailgun, it's gonna be paid in cash.


As a cheapo freelancer born and working in a country that ranks quite low in transparency, trust and justice system ratings, I'm used to getting shafted by people who hire my services, fail to pay, and leave me with no option to turn to for help.

But I've to say I'm shocked something like that happens even in Silicon Valley, and based on other comments here, quite often too. I don't know whether to cry for my fellow shaftees or laugh at them out of cynical schadenfreude. All I can ask is please do something to fix it effectively, because the broken window effect only makes things worse with time.

It's just over saturation. Not everyone can work for a reputable, well paying company. Hopefully with stories like people will become more privy to the talent shortage myth. It's a money grab that allows startups like this to survive. If there really was a talent shortage no one in their right mind would ever work for a shady startup in Silicon Valley where the rent is 3x the national average.

Interesting, because I saw a very similar scenario play out at the very first job I had after college. A coworker's paycheck was delayed then when the check did arrive it bounced. Coworker complained to CEO. Coworker was then fired. As a sibling comment says: this kind of thing happens often enough that everyone has seen it at least once.

Definite bonus points for the fake wire transfer receipts though. Above and beyond!

I've dealt with late payroll before and the fear, uncertainty, and stress really sucked. I was even considering offering the company a 50% haircut on the wages that I rightfully earned already just so the stress would go away.

Is there any bank or payroll company that offers a wage escrow service? As in, the company pays X months of wages in advance into a per-employee escrow account that's FDIC insured, and the employee can log in at any time to verify its balance.

When Target declared bankruptcy and pulled out of Canada, they setup a trust (or something) to give all employees 4 months of wages. They all got 4 months of wages, but some stores closed sooner than others, so some people ended up working for 4 months while others ended up basically getting paid to do nothing. You might look into what Target used to set this up.

Good for them. Sounds like they had to setup a trust:

>“Therefore, in what we believe is an unprecedented move, Target Corp. is voluntarily seeking to establish a trust that we will fund with C$70 million. Those funds are designed to provide nearly all Target Canada employees with a minimum of 16 weeks of wages and benefits coverage during the wind-down period.”


From what I understand, at the point they declared bankruptcy they (Target Canada) didn't have enough money to meet payroll obligations, and the trust was seeded from Target's US operation. It Target Canada had just been standalone chain (i.e. no Target USA), then this probably wouldn't have been possible.

Great brand management and value culture by Target there. They are fortunate to have deep pockets to be able to do this, of course

A lot of companies would really struggle to put more than one or two pay cycles of pay in escrow.

I'd imagine less so for tech startups, since in their early life most of their money comes in big chunks of funding, but for a lot of smaller businesses that are self profitable (restaurants come to mind), they can't afford to keep wages in escrow, because that's money they'd have to borrow.

The State of California takes a VERY dim view of employers who can't/don't make payroll. There should theoretically be no need for escrow; the prospect of going to jail should give management sufficient incentives. I wonder if this isn't well known tho' from the number of startup stories on here about late/withheld wages.

I think it would surprise you to know the number of companies that lack the cashflow to be able to do this.

It's a good thing you didn't go for the 50% haircut. I did that once many years ago & it backfired horribly. I got around 40% in the end - dragged out over 8 months - and the MD used my 'willingness' to take the haircut as a sign that I knew that I didn't deserve the full amount and hadn't really earned it. He's still merrily scamming away all these years later I hear as well.

> The names have been changed to protect the innocent and guilty.

Assuming the writer is as scrupulously honest as they seem to be, how legally exposed would they be in actually naming names? And assuming they are exposed, are astute commenters who use clues from the article to reveal the company also liable?

It seems to me that it would be a HUGE public good to name the names. Employees and investors absolutely need the right to know about the people doing this; being able to safely expose them would go a long way to stopping such scum.

They might open themselves up to lawsuits. Even if they will win the lawsuits, that's a money/time sink to deal with.

Instead of getting into specifics, would simply listing them as "someone I would never work with again" suffice? If enough people do this then the specifics don't really matter... the warning sign is clear.

This seems to avoid the defamation issue because it is a personal statement (about yourself / your thoughts) instead of a statement about them. They could still sue you for defamation, but hopefully you could get it thrown out early at a low cost?

I'm not a lawyer, but I would assume that even that could be grounds for someone to file a lawsuit. I would like to believe that a judge wouldn't let that get very far, but if the person tried to claim material losses due to (e.g.) not being able to find work "due to your comments" then you might have to sit out a trial or settle.

Is it still libel or defamation if it's all true?

No, but that's not the point.

Not everyone has $50k and the time to fight a libel/defamation suit.

True, but the alternative is letting people like this get away just because they have power and/or money. Tough situation to be in.

Not really. She left enough clues that people on HN could figure it all out pretty quickly. Seems like a good middle ground to exposing them but protecting yourself.

California has a broad anti-SLAPP law that would keep this from costing $50K. She would likely win attorney fees as well. IANAL.

That acronym should really not exist.

What's wrong with SLAPP?

I assumed it was a problem with IANAL.

> Is it still libel or defamation if it's all true?

No, but that's part of what would be at issue in a lawsuit.

> Assuming the writer is as scrupulously honest as they seem to be, how legally exposed would they be in actually naming names?

Anyone involved who wanted to claim that the negative portrayals (of which there are plenty) were false and caused economic harm -- both individuals and the company as a company -- could file libel claims for the damages caused. Even if no liability was actually found in the end, the cost of fighting the lawsuits could be significant.

> And assuming they are exposed, are astute commenters who use clues from the article to reveal the company also liable?

Its harder to see liability there, though its not impossible that someone could try to make a case.

They would have to specify which statements are libelous.

Has there ever been an instance of late payroll (as opposed to eg sales commission checks being calculated wrong) where the company actually pulled out of the nosedive? It seems like it's almost always the death knell.

I remember reading a couple years ago about a company where the CEO came in and announced that they weren't going to be able to make payroll so he was going to have to lay everybody off; some of the employees left, but others stuck around working "for free", and the company turned around within a few months. A couple years later they exited and the CEO gave large gifts to the employees who stuck around because they didn't own any stock but he knew that the company would have failed if they had left when he couldn't make payroll.

But that was a case of a CEO who was honest with the employees about the state of the company; I don't know of any cases where a company succeeded after a CEO lied about failing to make payroll.

An honest CEO would have awarded stock in lieu of pay.

as an ex-CEO who offered stock to employees in lieu of pay because my startup was running low on funds, it was all rejected. i later found out when i left the room, some of the employees actually mocked me and made it seem like i was just trying to scam them. one of them said something like "he's offering us stock in a company that is basically worthless, does he think we are idiots?"

just to be clear, the company was not worthless. we were actually somewhat breakeven at that point, monthly revenue was around $15k and employee salaries were somewhere around $15-16k. the idea at the time was that if they accepted stock compensation instead of cash, the company could theoretically afford to hire more developers, or launch a more ambitious marketing campaign. i did not factor in the fact that these employees weren't invested in the company, and to them, the fact that we weren't making millions in revenue means we are broke. so they value the stock at zero.

just to conclude the story: i ended up selling my company to another large company for a small profit (not headline-making numbers), enough that i can live comfortably and continue pursuing entrepreneurship dreams while not being employed. the employees who would have received stock back when i offered it would have made a profit, although in all honesty it's not Google or Facebook money. just for fun, i did a quick calculation on how much one of the employees who refused the offer would have made in stock - it was roughly about $250,000 worth.

Eh, I can see that going both ways. As far as fluidity is concerned, stocks in a small, private company may as well be worth $0 since you can't pay rent or buy groceries with them. Nice gesture on your part though: still didn't deserve mockery. Hopefully it was just their fear talking. :)

well, a few months ago i actually ran into one of the ex-employees, in fact i believe he was one of the main ones who mocked me. he's now working for some small tech company as a web developer. we had a quick 10 minute chat about how life was, but in a moment of pettiness, i took the last minute as an opportunity to kind of mock him back. the conversation was kind of winding down, and i said "hey by the way, no hard feelings about that whole saga back in the day. honestly, i actually understand your position now so it's all good. not going to lie, if all of you had not rejected the offer, i would be a few million dollars short when the acquisition happened!"

i walked away with a smile, and that dude kind of just shrugged and walked away.

You sound like a kind, empathetic guy

What's the name of the startup you sold if you don't mind sharing.

IIRC it was a small business which didn't do stock/option grants. Actually I can't remember if it was even incorporated.

Absolutely yes, though it depends on the transparency of the rest of the team really. I have been involved with three companies in my career which pulled out of this seeming nosedive. One of the companies was going through a really horrible time. They had just got done releasing software that was horribly behind schedule which relieved their customers, but it was still stressful. They were working on settling two law suits. And it was almost Christmas time (first pay check of December, I remember it well). The owner came in and said he couldn't make payroll and that he would be able to as soon as a few customers paid. Everyone was upset. Later that afternoon the CEO's daughter rolled up in a brand new Subaru which he had bought for her over the weekend. I was the head of development, my buddy was the head of operations. We walked the CEO outside and broke the news to his daughter and him that the car was going back. We took the cash and made payroll. We never allowed the CEO to make financial decisions again and about 10 months later closed the sale of the entire business for a windfall profit for him and us. Ultimately everyone got paid well and everything worked out.

The second place, the C level executives literally didn't know how to calculate runway and more or less ignored the bank accounts. Checks started to bounce from the bank accounts two days before the payroll was to be cashed. The executives freaked out and honestly felt horrible. Payroll bounced but we warned all of the employees. I was again development manager and the CEO asked me if I knew anyone who could help. We brought in a friend of mine who is a consulting turn around expert. We got one of the existing investors to make payroll, three days late, by signing a personal check. My friend, the turn around expert, wrangled the books (after not sleeping for numerous days to try to figure out the financial situation). We turned the company around, and in a few months had it to a level of profitability it had never seen before.

It is possible to turn things around. Really the biggest problems come when people aren't honest with themselves and their employees about the situation they are in. The first CEO in my example had to be honest with himself and realize he had to spend on his employees before he could spend on his family. When he relinquished control of the financial decisions and stuck to what he was good at, the company turned around quickly. The second executive team had to realize that they were young and inexperienced and needed help. When they did and asked for it, the company turned around quickly.

Not trying to pick over semantics, but in both of those cases, payroll was in fact met almost immediately, just via "extraordinary measures". Going a full pay period without a paycheck should be the signal to stop showing up and start seizing assets.

That's an incredible set of stories. What strikes me is the ability and confidence to take the CEO aside and say no, that's not happening. That sounds pretty nerve racking.

The things that stick out to me here are how excellent teams took the mantle and provided radical turn arounds from a trajectory pointing to failure.

Honestly made my day.

I would say the first time I went through this it was very nerve-racking. However, the CEO of the first company (which I spoke about in another comment, the real estate software company) really changed my attitude on working and being an employee forever. I remember sitting with him at an Applebee's late at night. We were talking about the downturn of the market and the financial problems the company had during the time and how scary it was for me as "just an employee". He said to me, "You're not 'just an employee', you're an investor in my business. You invest your time, talents, and efforts to make me succeed. I pay you dividends more regularly but honestly you should never act as just an employee. If you do amazing work you'll be rewarded just like an investor, if you act like an investor."

I know what a lot of people will say to that. "No way, you're just an employee, you won't be treated like an investor." Well, true, if you have that attitude you won't be treated like an investor. You'll be treated like an employee. However, if you start acting like an investor, you'll be treated as one. Ask intelligent questions about the business and its financials. Talk to the board. Give intelligent and thoughtful advise to help the company. Be an asset far above the code you write.

If you do that, and then all of the sudden everything starts to nosedive, you will be in a position to help fix the problem and reap the rewards. You are an investor, not an employee.

These are great stories, thank you! What about the third company..?

I wasn't as involved with the third company's solution as I was with the first two I mentioned. The third company was a real estate software company. The problem was there was a down turn in the market that was rather unexpected (this wasn't the '08-'09 down turn, this was much much smaller than that). The company couldn't absorb the slowing of revenue as much as they wanted to be able to and ultimately they got into trouble. The company was completely bootstrapped, single owner, no investors, as it is to this day. Payday was set for a Friday. On Wednesday the owner knew there would be trouble. He told everyone that payroll wouldn't make it by Friday and to give him the weekend to find the money needed to pay everyone off. By Tuesday he would decide whether the company was still viable or needed to be shuttered.

This lead to a number of interesting situations. He did make payroll the next Monday (he literally sold everything he had, went to his elderly parents and begged them for some, and made it happen. Someone had to drive him into work on Monday because he sold his cars). A good percentage of the employees left that day and never returned. Some of us stayed, believing in the business, his honesty and integrity. I was just an engineer but we did turn it around and actually he had some great plans on how to never get into that situation again. He actually did very well after the 08'-09' market downturn and his business is still very profitable to this day.

That's even more remarkable. If only more had such noblesse oblige and integrity!


"According to Business Insider, Pandora co-founder Tim Westergren admitted at a San Francisco startup conference that, between 2002 and 2004, it didn't pay its 50 employees at all. "

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