I Got Scammed By A Silicon Valley Startup
Penny Kim

BTW, all startups are scams. . .

Update: when I say all startups are scams I’m not suggesting that they are “scams” in the criminal tradition — but by design. More than 90% of them are going to run out of money and close down — rarely in an orderly way.

Laying in bed this morning I was surprised when I saw someone I knew had the top story on Medium. Penny Kim is a fixture in the Dallas startup scene and I’ve chatted with her several times over the years. After reading her account I have no doubt she was screwed over, but I thought it was worth mentioning that the major themes she faced are common at ALL startups.

If you’re joining a startup with fewer than ten employees you better be ready for chaos. First of all, building a company is a lot like trying to finish building the engine of a Cessna as you’re hurtling towards the ground. If you don’t finish you’ll crash. For example, once the co-founders have raised seed money they’ll often start hiring employees despite the fact that they don’t have enough money in the bank to make it six months — they won’t be able to raise more without your help. So they’ve got to do this dance. They’ve got to convince you that everything is going to be great — and the reality is that if everything works perfectly it will be great. Sadly, it is a rare occurrence when everything works perfectly.

Early stage startups rarely have concepts like vacation time, probationary hiring periods, and retirement plans. Hiring fast and firing fast is sort of a strange strategy — but it might be necessary given how constrained the talent pool is in the Valley. The traditional advice is to hire slowly and fire fast — most of us do the opposite in practice. If you want to be happy at a startup you’ve got to find a way to be comfortable being uncomfortable. You’re not going to have the resources or the time you need to do your optimal work — this is always the case. There aren’t going to be processes and procedures in place to manage hiring and firing — there are going to be screwups. Lots of people like the chaos you find in a startup, but there are many people who prefer the structure and security of a more mature company — there is no right or wrong — just different strokes for different folks.

Knowing when to leave a startup is important. Startups are fragile creatures. Optics matter. If you’re unhappy you’ve got to get out and get out fast. If the company’s latest investment round has fallen through and you’re missing payrolls you’ve got a decision to make. If you can’t afford to miss a payroll it is time to go. If you can afford it you need to decide if it is worth it and how long you’re willing to hang on. Once you’ve made the decision to stay you’ve got to be ALL-IN. You have to show up everyday. You’ve got to smile. You’ve got to be supportive. Anything less and you’re going to sabotage the company. Before you start giving advice to other employees about filing wage claims and taking legal action against the company — you need to leave the company. The co-founders are desperately trying to convince an investor to take a risk on the company — if the investor were to learn there were disgruntled employees running around filing various claims and lawsuits there isn’t a chance in hell they would invest. Even if you leave the company you want the company to get money — so they can pay you back. There is never a reason to sabotage the startup.

My mother taught me an important lesson early on — “Life isn’t fair, and Mickey Mouse is a rat.” Don’t spend any time worrying about what is fair — do what is best for your career.

A parting thought. The whole fake wire transfer thing is so strange. I can’t imagine what he thought he was buying? Literally? A day? I would love to know what he was thinking. Everything about your experience sounds really normal with the sole exception of that — still scratching my head.