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"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.)




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