Comment by akashs | Hacker News Reader

Comment by akashs | Hacker News Reader

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I'm a little confused, perhaps I was unclear. It sounds like I'm in agreement with you that I don't think the numbers are crazy. However, accounting is more of an art, and you can play games with numbers. E.g., large companies typically have two sets of books (and are allowed to), one for investors, one for the IRS. The latter typically makes things look worse so you don't have to pay as much tax.

I'm no lawyer, but given the company has investors, I'm pretty sure the SEC can still come after them if they're misleading their investors. Sending out a press release saying your company is making $100B would be very much like what Madoff did. They can still come after you.

Also, think revenue numbers are a bit harder to fudge, so doing a sanity check off of those based on how many people they have, I think it's in the right ballpark.

Edit: Falsifying statements: http://www.law.cornell.edu/uscode/18/usc_sec_18_00001001----...

Tax evasion: http://en.wikipedia.org/wiki/Tax_avoidance_and_tax_evasion

Agreed that if you're misleading investors that's generally going to be fraud of some type of another. But presumably his investors already had his numbers, they aren't waiting for a blog post linked to by tech crunch to find out.

It seems like you're blurring the line between a public company and a private company. Why use accounting tricks? This isn't a 10Q, it isn't certified, it wasn't prepared by an auditor. It also isn't his tax return, or testimony to the government.

I also think you're overestimating your ability to back out rev numbers from headcount. I've worked at a similar sized company that booked $0 in rev, and I'm sure plenty of 1 person companies book more than that.

My point really isn't about the numbers, it's about credibility. This guy got barred from the securities industry by the SEC for telling the public one thing when he believed the opposite.

All I'm saying is you can't tell how accurate it is, but it doesn't sound like to me they are fudged. Companies play with numbers to make one set look favorable to investors, and another set look poor to the government at the same time so you avoid taxes. For all you know, that could be the number he reported to the government for his tax return. But there are laws saying you can't lie about it, especially if you have investors (public or private - linked a couple above). Tax evasion comes into play because even if you have two sets of books, those have to tie out at some point, and if you're lying, there's likely some issue you're running into with the IRS.

I'm not estimating revenue. I'm saying ~4.8M rev - (45 ppl * ~80-100K avg all in comp) - operating costs checks out to around the break-even profit. Nothing more. Both numbers could be fudged - I don't know.

Agreed with you that he has questionable credibility. And I'm also saying that that could certainly be happening here as well. But we have no way of knowing, even if we had the numbers in hand

>> But presumably his investors already had his numbers, they aren't waiting for a blog post linked to by tech crunch to find out.

For clarification, from the OP's OP, TC didn't exactly have to do any investigative journalism to get this data. BI released it voluntarily themselves from the beginning. TC got their data from that post:

"Well, we're a private company, and we've never disclosed any of that stuff, either. But I'm honestly not sure why. So we're going to try an experiment. We're going to disclose that stuff. Then we're going to see if something horrible happens to us.

If it does, we'll probably never disclose that stuff again. If it doesn't, maybe we'll still never disclose that stuff again--because, you know, it's "confidential" and "competitive" and "we're private, so we don't have to disclose that stuff."

But, in any event, here goes."

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