Recently a friend of mine sent me a link to this CNBC article: http://www.cnbc.com/2016/08/30/i-got-scammed-by-a-silicon-valley-start-up-commentary.html that tells the sad tale of the messy collapse of a Silicon Valley start-up. This New York Times article strips away the pseudonyms and gives some additional details: http://www.nytimes.com/2016/09/01/technology/a-silicon-valley-dream-collapses-in-allegations-of-fraud.html?_r=0
Aside from the allegations of fraud, I think this story is all too common here in Silicon Valley. After all, I’ve heard that 90% of start-ups fail. And I’m sure many of them involve non-payment of salary toward the end. I would like to think that most entrepreneurs are more honest than to engage in the kinds of fraudulent behavior alleged by Ms. Kim in her post. But as with any activity involving humans, there’s bound to be some bad players.
Anyway I thought I would relate my own experience with start-ups. There have been three:
- My first encounter was doing some moonlighting creating a design for a specific interface needed by some start-up. (I don’t even remember their name.) I provided the requested design, they paid me and that was the end of our relationship. (They offered me a longer-term position, but I was headed for a two-year assignment in Japan, which I considered a much better offer.) They later failed, but I wasn’t involved by then and don’t know the details.
- MS2. (I don’t mind giving company names since my experiences were positive.) This company was providing planning software, that was probably intended for other start-ups, but ended up being mainly of interest to more mature and larger companies. They were doing pretty well and had some customers until the “dot-com crash” happened in 2000. Our potential customers stopped buying software and we stopped getting new revenue. Then 9/11 happened and that was the final blow. One of our largest customers was headquartered in the World Trade Center towers, and the company along with most of its employees were killed in the attack. I survived two rounds of layoffs and was hit by the third. I was paid until the end of my employment, and even got two-week’s severance pay. The management went out of their way to assure me that it wasn’t me, it was the circumstances that led to my separation. During the months of the company’s collapse, the management was always open and (to my knowledge) honest about our situation. The company struggled for another year with a skeleton staff; the fourth round of layoffs was the last and took everyone remaining. I’m sure the investors lost their money (but that’s a risk they understood); I don’t believe anyone else did.
- Roku: I worked there until my retirement. The company is still viable. In fact, it’s well known and has a large customer base. (www.roku.com). Roku went public in September 2017 and we all made some money from our options. They’ve never missed a paycheck, and I believe they’re honest with us.
I would guess my experience with startups is more positive than the average, and was certainly better than Ms. Kim’s. I think she was naive if she didn’t understand the risks of working for a startup. I think filing a wage claim against a failing startup, as she did, is a waste of effort. The fact that she apparently ended up working for allegedly dishonest management is (I hope) not common and not to be expected, and for that she has my sympathy.
I know people who go from start-up to start-up. Some of them have been in the situation where their employer runs out of money and can’t pay them. Most of them probably hope they’ll pick a winner and get rich. But it is my experience that most of them do it for the satisfaction of building a product and the sheer joy of writing software. They understand the risks, and they know that when one start-up fails, there will be another one waiting for their talents.
I feel lucky to live and work in Silicon Valley, where so many innovations have been born. I’m sorry Ms. Kim’s experience wasn’t as positive.