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Losing our business – we didn’t see it coming

193 点作者 schwuk将近 9 年前

22 条评论

themgt将近 9 年前
<i>That week was fraught, as it was the week of a major conference that we were working with. It was the first time we were displaying adverts on someone else’s site through our system, but we couldn’t trust Simon — we had no guarantee that he wouldn’t try and display something malicious.<p>We had to rebuild the ad system from scratch to ensure that no one could maliciously inject adverts onto our system. It was too much of a risk to leave it in the control of Simon.<p>Once we got control over the ad system we realised that the adverts were affiliate links, i.e. not unique to us. The companies advertising had no idea they were advertising on our site. We had no relationship with them.<p>It slowly dawned on us that the financial forecasts we were basing the raise on were useless. It was based on information from Simon on adverts that were not real, and deals that did not exist. The financial model was broken.</i><p>I&#x27;m sorry but ... what? They ran a company for &quot;a couple years&quot; with at least a handful of staff, and let this one guy come in and overnight effectively take over an utterly critical part of the business even though &quot;He hasn’t paid any of his invoices. We were expecting around £25k from him&quot;<p>And then they depend on the same individual both to finance and to provide the financial forecasts justifying their must-have funding round, and after it blows up they say &quot;we didn’t see it coming&quot;
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ChuckMcM将近 9 年前
Interesting discussion here, slamming both Reframed and Simon.<p>If you are reading this and wondering, the Simon character in this play follows a very common pattern for the &quot;Ad Fraudster.&quot; This particular con takes advantage of two victims, a web site which thinks it can make money with advertising, and advertising networks who have excess advertising to sell.<p>One convinces the web site to host the javascript that will fetch ads from the network (they do that with an ads API call or when they are super bold they ask the web site to host a script that will fetch the script from the ad site and run it (yes people actually do this)) Then our fraudster drives traffic to the web site (botnets, click farms, what have you) to generate traffic and ad clicks. Which they collect from the ad agencies (and if they add affiliate tags affilliate fees) but tell the web site that it will take &quot;90 days for the transactions to settle given everyone wants to limit click fraud.&quot;<p>Now depending on how much work they want to do and how much organic traffic the website gets, they can leech thousands of dollars a day off a web site. They feed fraudulent traffic in that keeps clicking on their ads, they spew affiliate cookies like confetti, and try to gather that revenue, and they sometimes &quot;mirror&quot; back to the actual advertiser network (taking one click on one ad and tell several networks it was a click on their ad)<p>And here is the sad bit, while its fraud, if the advertiser gets upset they go after the web site, if the web site is upset they go after the advertiser, if everyone starts yelling our fraudster just moves on with all the cash they have pocketed.
johnwheeler将近 9 年前
This article is damage control for the author&#x27;s naiveté.<p>The problem: Reframed did the due diligence <i>after</i> talking to Simon and seeking additional investment.<p>It&#x27;s also not clear if Reframed ever provided any real value, but it&#x27;s clear they we&#x27;re willing to take <i>real</i> money and assign themselves a $4M valuation. That might not be a sham straightaway, but it&#x27;s probably one in the making--good intentions aside.<p>Your investors will rightfully blame you if you get them scammed. You&#x27;re expected to be competent enough to protect them because that&#x27;s part of your job as &quot;The Management&quot;.<p>Thank goodness the deal stopped dead in its tracks before more people got hurt.
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apatters将近 9 年前
I think the most important lesson here is that you need to have really good accounts receivable to survive in business. In a small business AR is a founder&#x2F;owner-level concern. You should spend some portion of your time personally making sure you get paid--on time!<p>If you manage your receivables actively then you become aware very quickly if someone doesn&#x27;t pay on time. This flushes out fraudsters, keeps you directly connected to your cashflow situation, and gives you early warning signs of any possible financial problems. These are the ways that actively managing AR mitigates risk.<p>It also carries a lot of upside. People who pay you regularly are some of the best people you can partner with. When someone&#x27;s paid you on time for years it&#x27;s a very big sign that they can be trusted (and have money!). And when you&#x27;re directly involved in collecting money from those people you inevitably end up having discussions with them that are very frank and carry real stakes. If these discussions are successful that is another sign they could make a good partner.<p>If one of the founders at Reframed had stayed directly involved with AR on some level this story would have had a much better outcome. Simon would not have been a vendor for long. They would have found a new vendor and learned through direct experience whether that vendor could be a good partner&#x2F;investor or not.<p>The other acronym I never let go of is HR. If I remember correctly Bill Gates was personally involved in Microsoft&#x27;s first 500 hires!
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dexwiz将近 9 年前
The revolving door of employees is a big red flag. If you cannot keep employees, you are either 1) an asshole or 2) doing something shady. Either way, they are not someone you want involved in your business.
nullcipher将近 9 年前
Why do companies wait till the dying moments before informing employees? I have seen many articles now which read like &#x27;we went to back to the drawing board to realize that we have to close down in 2 days. Our bank was empty&#x27;. Is this just dramatization? I cannot believe people can run business without something so basic. Like paratroopers jumping out of an aeroplane and then saying &#x27;we checked before hitting the ground, only to realize we had no parachutes&#x27;.
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brianwawok将近 9 年前
I literally do not understand. What is the other side of the story? Why would someone go through all this trouble of a fake investment? Clearing buying 10% of a company for 200k with no check is a game that only lasts for a few weeks???
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qaq将近 9 年前
OK sorry if this sounds harsh but it seems if your whole revenue model is based on selling ads it would be a good idea to really understand the ad market.
ebarock将近 9 年前
For me it sounds so strange a company that does not does a basic &quot;due diligence&quot;. Even with people that I&#x27;ve just met I will do my personal due diligence.<p>We live in days that &quot;trust&quot; is something that you acquire after a time, not something that you suppose that others may have.
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Disruptive_Dave将近 9 年前
&quot;Just because you can doesn&#x27;t mean you should&quot; is what comes to mind for me when reading this. It also reminds me of how often, in the past two years, I&#x27;ve had to push younger founders to adapt a more pessimistic (I call it realistic) view of the business world than they naturally have. A deal is on the table - start by asking how it could fall apart, where the holes are, what&#x27;s wrong with it. If you&#x27;re owning&#x2F;operating a business, you should have a nice healthy dollop of distrust in almost all your doings. That could solve so many of these &quot;problems&quot; that are simply born of naivete.
mtrycz将近 9 年前
&quot;due diligence&quot;, &quot;due diligence&quot;, &quot;due diligence&quot;<p>I mean, I know it&#x27;s a term, but the literal meaning... If they had been diligent where&#x2F;when diligence was due, all of this was evitable.<p>Also, they should really do some legal action on the guy. Not because of revenge, but to try to save others from future actions of the con man. Public shaming is just not so stylish.
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boxcardavin将近 9 年前
A bizarre story that should be a reminder to everyone that your gut will often point in the direction of a problem.<p>Also, the article is written as a reminder, a warning, to not overuse commas when I type.
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cloudjacker将近 9 年前
ex-google loooool I never thought about it but you could totally say that even here in SF and get a lot of irrational clout and respect
tag2将近 9 年前
It&#x27;s difficult to see the logic that some of these guys have with their &quot;investment&quot; cons. I really wonder the psychology of someone who&#x27;d go through a fake investment proposal like this. Do they just want to feel important? I recall a similar incident with someone on HN that I have saved from a few years back: <a href="http:&#x2F;&#x2F;www.shaf.co&#x2F;post&#x2F;75399291209&#x2F;the-fake-vc-eccentric-german-millionaire-and-the" rel="nofollow">http:&#x2F;&#x2F;www.shaf.co&#x2F;post&#x2F;75399291209&#x2F;the-fake-vc-eccentric-ge...</a>
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exolymph将近 9 年前
A comment from one of my Facebook friends: &quot;No offense to the guy or his partners, but his whole story is like an advertisement not to invest with his next venture. Maybe the next one down the line.&quot;<p>I agree.
barkingcat将近 9 年前
Due diligence is to be done prior to contract or prior to entering into agreement. The poster learned that, but it&#x27;s too late.
binarymax将近 9 年前
Surprised HMRC hadn&#x27;t caught up with them, preventing them from being directors or secretaries on any other companies.
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krmmalik将近 9 年前
Sorry to hear that man. At least you took it on the chin and dealt with it. Its all part of the learning experience. These kind of stories are unfortunately far too common but its like a rite of passage for each of us. I feel bad for your staff, but hopefully they&#x27;ll find something soon.
seesomesense将近 9 年前
SUMMARY<p>Dealt with a scammer.<p>Told the board that he wanted to invest a fortune.<p>Failed to do due diligence.<p>The scammer failed to pay his bills or invest.<p>Became insolvent.<p>DO DUE DILIGENCE EARLY
seesomesense将近 9 年前
Too many red flags around management actions. I would avoid their next start up.
arkad将近 9 年前
[OT] My mind somehow associated &quot;Amanda Wood&quot; with &quot;Jessica Hyde&quot;. Where is Jessica Hyde?
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iamleppert将近 9 年前
I wouldn&#x27;t discount the guy completely and frame him as the &quot;bad guy&quot; here. Most of the ad sales industry guys are very similar to this guy. They operate in a realm going from deal to deal, sometimes only a single deal separates them from extreme success and utter destruction. Sadly, this guy seems to have a grouping on the negative side of things and might have been just starting out in the ads business himself. I would have even given him another chance, after he&#x27;s been humbled a bit. Just make sure you have cash up front when dealing with these kinds of people -- they shouldn&#x27;t be discounted immediately, rather just treat them like an untrustworthy child.<p>Just goes to show you shouldn&#x27;t bank on any one deal coming through. As the management of a company, its your job to have not only one deal in the works, but preferably multiple deals, so called &quot;deal flow&quot; or &quot;sales&#x2F;prospect pipeline&quot;. You should be in constant prospect mode, and never give any one prospect any significant portion of your time. It&#x27;s not like it takes a lot of effort to just talk to people. I realize its time consuming, but what we&#x27;re you guys doing in between talking to this guy? You should have been working on other deals. That way if one doesn&#x27;t work out, you can rely on the others and leverage them until your own bullshit wears out.<p>This is the proverbial case of &quot;all eggs in one basket&quot;.
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