Hacker News Reader

Comment by yesimahuman | Hacker News Reader

I don’t know why the author cringes so much or feels like they made mistakes. You don’t owe Chase anything, it’s on them to earn your business and treat you like the major account you are. We had a similar situation and Chase treated us poorly, ultimately denying my wife and I a relatively small home mortgage, despite having millions in a business account with them. I will never forget how they made us feel. All I see in this story is more cluelessness from Chase, not any mistakes by the author.

They’ve been chasing our business ever since we moved to SVB post Series A. They’re going to get it since we wired our money out of SVB today (not my decision), but do they deserve it? Absolutely not.

View on HN

How could have Chase earned their business better when the person on the account says everything is fine and gets off the phone as fast as possible? I'm pretty sure more phone calls would have soured things. If the author was saying that chase then turned them down for a loan or something, sure that would be comparable.

Give better information by email, something that doesn't interrupt me and make me deal with it right now?

Other than that, it's not clear from this story why they chose Silicon Valley Bank - it sounds like this VP of Finance is the person who could explain what (if anything) they did better than Chase.

Most people (especially here) would find those emails to be spam and never read them. Is that seriously your suggestion?

Spammy emails are somewhat annoying, but they're 10x better than spammy phone calls. Any company that wants me to do things over the phone will drop right to the bottom of my list, especially if they want to do it by them calling me rather than me calling them.

Maybe offer assistance or discounts or anything else?

The usual emails of credit cards, better interest on savings (money sat in the account for nothing) or others if it didn't happen?

At least from the recount there was no mention of e.g. we realised you're a big customer and we have some special packages for you. Services like AWS would immediate assign an account manager, want to know you more and offer training, assistance and all sorts of things and not just when you make a transfer.

Instead of asking if everything was okay, and could they do something for them, Alex should have said something like:

"Hi, are you actually a startup? Because with a regular business account you're missing out on a lot of money. I would very much like to schedule a few minutes with your CFO and talk over what could be done."

Maybe he bites maybe he doesn't, but he's no longer so naïve.

By having an actual conversation with open questions? Showing interest in your client?

You don't plop 35MM into a single bank account and sit on it. The cringe isn't about feeling bad for Chase. It's about watching a 22 year old learn how to manage incredible amounts of cash.

Are startups expected to hire a guy to stage fixed-term deposits across multiple banks and gamble on stocks and foreign exchange?

Pretty sure they are not.

Depends on how big you are.

If your first friend at any company isn't someone in accounting your doing it wrong.

Good accounting is not something you outsource, and a good accounting team is worth their weight in gold.

If your concerned about exchange rates, you better have competent folks in accounting.

> Good accounting is not something you outsource

I'm happy to believe you on that point, but can you explain WHY? It appears to me that accounting is the exact type of generalized skill with well-established standards that makes sense to outsource.

Thats the point, good accounting ISNT a generalized skill at all.

Once you get past "how much is in the checking account" and into the why attached to quantity then you get insight. What is the cost and value of a client? Are there fixed costs (acquisition, setup) and variable (AWS/Usage).

The ebb and flow of money and someone keeping an eye on it matter. Where and how you bank matters (lesson some are just learning). Hell just pricing a product internationally is a task that genuinely requires an accountant.

Go hang with accountants, learn what they do and see the insight they provide.

Accountants should be the ones running the companies. Mine is run by them, and it's great. There are some incredible perks, like always knowing the company is financially in a very good place and taking appropriate risks, a culture of transparency and collaboration ... I could go on.

First time I've heard a positive review about a company being run by the bean counters, who are generally more known for being brought in and cutting tiny luxuries which don't generate money or make financial sense, like free sodas in the break room.

“Being brought in” could be the crucial difference, yeah? When a company starts with beans on staff from the start, maybe there’s more of a sense of security

They're accountants, but I wouldn't call them "bean counters". They have a vision for the office of the CFO, and it's that the accounting team rises above mere bean counting into financial leadership.

The company was also a VC-backed startup and is on the road to IPO, so it's run like an investment, not a cost center -- and hiring and keeping great employees is a priority. The perks and benefits are really great. It has won awards for the last ~5 years for being the "best company to work for in $region".

You might be confusing accounting with financial management. Accounting is outsourced by nearly 100% of startups.

Financial management for startups with respect to "how big you are" is almost always "not big enough" until you have tens of millions. Both seed and series a are usually to be spent within a couple of years and hiring a full time financial manager to represent 5%-10% of payroll is just not worth it, he won't recoup his salary even by excellent trickery.

All the same right? Something with money and numbers.

Just like everybody in tech is doing something with computers and writing code

Oh you're a software developer? Can you fix my dishwasher?

Be careful what jokes you make about samsung iot appliances

some are doing laddered treasury bills

Being focused on his startup instead of maximizing the yield of these $35M allowed him to turn it into a $5.5Bn company.

This. It applies in personal life too.

In the post covid world, I find many young engineers fall into the trap of squeezing more yield out of their meagre savings early in their career through financial engineering rather than focusing on their personal development and growing in their actual professional lives.

All the amateur investors who made big returns in the 2020-22 period and thought they figured it out will now have a hard time making sense of the markets in the new regime of high interest rates.

>All the amateur investors who made big returns in the 2020-22 period and thought they figured it out

Chasing big returns generally leads to massive losses so I cant fault people for sitting in cash but I dont recommend taking inflation lightly. The least one should do is beat that hurdle rate and conserve value.

But it’s not bad to diversify risk early on and have a plan for that. High yield savings accounts and treasury notes are standard practice. We’re not talking about founders taking moonshots in the market. We’re talking about $35MM in a bank account that doesn't even match inflation.

To put that into perspective. That's $1MM a year (at %3 inflation) going into the toilet just because you don't want to do some minimal cash management. You could hire a CFO for that price and it would pay for itself 3 times over. I mean I get the vibe and totally agree that you don't want to overthink things. But I also think it's easy to underestimate the value you're leaving on the table and the risk you're exposing yourself to by not giving it any thought.

Definitely! They forgot that there are two type of revenues for a company, and that it can be applied for personal finance as well :

Operational revenues : the real job, the thing that is making money. The yield on the operational one is

Financial revenues : cash sitting around non-invested yet into operations, waiting for the next project to invest in.

The yield on the operational revenues is much higher and the investment in it could be transposed as for example : spending for some certifications, go to online or physical classes, etc

With the resulting 15,714% return over 11 years, the guy could be forgiven for getting 0% on cash on the $35m at the time. Theres a real opportunity cost if you were to spend your time optimizing your return on $35m of cash via financial instruments instead of running your startup.

> Being focused on his startup instead of maximizing the yield of these $35M allowed him to turn it into a $5.5Bn company.

In this case. I'd bet there are more than a few startups who would have survived if they'd spent a few hours on the phone with their bank to help manage funding cash more efficiently.

The cringe isn't that he failed to maximize yield, it's that he failed to protect that $35m from tail risks, by parking the lion's share of it in T-bills.

"Maximizing yield" would mean earning a few % annually in interest. "Minimizing insolvency risk" means paying a few % to ensure it doesn't go to (effectively) zero in an SVB-like situation, and requires literally a day or two of work.

However, it's difficult to fault Mitchell for knowing these things. It sounds like the VP of Finance was brought in at the right time (Series B), and did the right things.

With what Mitchell knows now, and especially given the industry's recent experience at SVB, I'd guess that he would advise any young founders he works with to cover this base at their own companies even earlier than he did.

There’s a difference between maximizing yields and diversifying risk. I’m talking about diversifying risk. The yield is the company’s equity.

Agreed with this. The story written from Alex's perspective would probably be: "how I blew a once in a lifetime shot to be the best business banker in America but I took the opportunity for granted."

Yeah, it seems super weird this Alex guy didn't just send them some kind of brochure or information of "These are all the services Chase offers to businesses, give us a call".

Also, the implication that the Alex guy was fired or something because a customer decided to switch banks seems to only indicate that Chase has a toxic internal culture. Customers switching banks is not unheard of...

> didn't just send them some kind of brochure or information of "These are all the services Chase offers to businesses, give us a call"

It wouldn’t be read and now Alex is spamming him.

What more was Chase expected to do here? What would treating Hashicorp as a major account have entailed? A phone call to find out what else was needed?

In our experience there was so much they could have done. I just compare it to our experience with SVB which got us no-personal guarantee credit cards, availability of venture debt, access to mortgages (something I would have done if a local credit union hadn’t stepped up). Chase never did any of those things with us. They need to step it way up if they want to win startup business long term and not just in the wake of a crisis.

Well, chase won't lose your money, which sort of trumps all of that.

Very fair. Let’s hope JPM doesn’t rest on their laurels here and can actually learn how to serve startups, because they have a long ways to go still

If you have enough assets, Chase will absolutely lend against that collateral.

“Enough” is likely the key word. But if you have business or personal accounts with over a couple million (and certainly $10+ million), I would be shocked if someone higher up than a clerk hadn’t personally reached out to you, tried to take you out to coffee, and let you know the perks applicable to your personal situation they can provide you that you can’t find on a website.

Sure, they likely weren’t as enticing as SVB’s perks nor as willing to lend to an account that had $0 yesterday and millions the next, but they absolutely will offer personal loans/mortgages against stock compensation on the guarantee you keep your account with them above a certain threshold, etc.

I'm surprised no one is publishing tiered perks/pricing on a website for founders to browse. That's how they like to interact.

Similar to the reason mortgage APR will differ among seemingly similar homebuyers at the same point in time (and even then, only after you actually send over your financial documentation can you see your rate), my guess would be one can't exist because everything is based upon not just the financial situation of the bankee but also (as we've seen with SVB) the banker.

To be fair, neither has DINB

Many of the West Coast "Chase" branches and operations are just rebranded WaMu ones from when they collapsed during the GFC. Probably the new JPM Chase won't lose your money but the predecessor came pretty close.

Yup, you can check the routing numbers to find this out. I haven’t dealt with east coast Chase but I’d be willing to bet it’s a completely different experience.

all this partially incentivized startups founders/execs to stay private imo

I would expect them to say hey, now that you've got so much more capital in your account I'd like to set up a short meeting to learn more about your company. Then they meet with you, learn a bit about your business trajectory (for their own planning) and pitch some significantly increased benefits to keep you around.

And what if I say yeah, thanks, whatever, and try to end the call as quickly as possible?

You don't have to accept, but they should at least actively try to bring you in if your account is a bug or important one.

There are plenty of ways to get you in the conversational door like offering a better rate or to help protect the account.

Eventually someone from hashicorp "...notices we have ~$35M sitting in cash in a Chase bank account. This is obviously not a smart thing to do, so he suggests some financial plans for how to better safeguard and utilize this mountain of cash". The bank could have been the party to preemptively explain this to the author, and if they did they might have been able to be a part of the solution (or at least try to negotiate for it) instead of losing the entire account.

It sounds like the bank manager was being too delicate, asking the author if they had any banking needs when he didn't really think he had any. They should have been more blunt and said look dude you have a ton of money in here, you're probably not used to managing this amount of money, we need to take just a bit of time to discuss it and we'll make it easy and worth your while.

> chasing our business

i see what you did there

Reply on news.ycombinator.com