My startup banking story (2023)
68 comments
·August 28, 2025mitchellh
chao-
The fraud story is interesting, but something I had hoped would be addressed by the end of the post, wasn't. You wrote:
>Someone out there is probably mentally screaming at me "you fool!" at this point. With hindsight, I agree...
I was hoping the piece would end with what you would do now (or what should you have done) when Alex called you. Did I fail to understand something in the piece, and simply staying on the phone with Alex would have somehow avoided the fraud situation down the line? It doesn't seem so?
If I were to get such a call, today, my instincts would be to engage in the same "I'm fine" get-off-the-phone-fast actions. What is the alternative?
trillic
I would imagine this phone call's primary goal is trying to sell you higher margin financial products/services.
chao-
The way you phrase that, it sounds like these services are more advantageous to the bank, but possibly not to the account holder? If so, that goes against the tone of the article, where Mitchell implies (I think?) that he would have benefited more from speaking to Alex than the other way around.
sneak
Perhaps not directly/immediately - banks like others know that “relationships” drive long term repeat sales.
bigstrat2003
I read the whole story and I'm still struggling to understand what you did wrong here. You indicated many times "I know, that was a mistake" (or similar phrases), but each time I was baffled because I saw no mistakes. It was your business, and you had every right to move around the funds within your account. What gives anyone at Chase the right to say diddly squat about how you manage your business' finances?
gspencley
I don't think he was trying to imply that he did anything wrong. He was admitting the ignorance regarding how banks and banking work... plus acknowledging that a lot of readers will have had experiences that would make them think "Oh you young fool."
In 2022 I lost my business banking and had to shut down a business that I owned for 20 years because it was related to the adult entertainment industry and, despite being completely legal and aboveboard, a single wire transfer that got a little bit of scrutiny resulted in them asking questions about what we did and, knowing that I was doing absolutely nothing wrong, I answered all of their questions truthfully and completely. A few months later I was told that we "fell outside of their risk appetite", our accounts were being closed... and for two months we searched for any bank or credit union in Canada but none would take us.
A lot of industry insiders had that exact reaction: "Are you stupid? Did you not know?! You NEVER admit that you're in this industry you moron!" etc. We even had a very sympathetic branch manager suggest that we re-incorporate, re-brand and hide what we do (a front, in other words). I couldn't do that. And I mean, we had no issues for 20 years. 10 of which were banking as a corporation (was personal accounts before that since we ran it as a proprietorship) and I thought that being in Canada we were pretty progressive. No one I told on a personal or professional level had ever cared. So why would the banks? We were lawful so why should they care?
sneak
Chargebacks. Tons of people buy porn on a card then later deny it when their SO finds the bill.
The industry is rife with this kind of fraud, and chargebacks represent tangible risk of financial loss, so banks just blanket ban working with certain industries.
People who sell precious metal jewelry for credit card payments are another.
dilyevsky
The biggest thing to me imo is that everything was in one account while fdic insurance is only 250k although if chase goes out of business you probably wont need the money anyway. Also specialized startup banks come with a lot of perks for companies and founders and chase evidently didnt (or just had account rep who sucked at his job)
jaggederest
It's quite a lot more important to diversify funds for procedural risk than bank failures, although SVB certainly illustrates that they do happen.
More likely, the bank will put a ~$1b hold on your account while they investigate suspicious transactions, and your options are to whistle, sing, scream, or twiddle your thumbs until they are done.
So having 4-5 total accounts, ideally unrelated to each other in terms of legal owners (differently-named subsidiaries are usually the way to go, I understand, though I am far from an expert in such matters), will enable you to continue to operate your business while bank A does compliance on your accounts.
If you run into a situation where banks A through F all put holds on your account, you need a good RICO lawyer or equivalent. Different class of problem, and different likelihood of happening, and the kind of thing a great CFO plans around.
conductr
It's not even an indication of fault. It's actually their internal sales/marketing system that flagging these messages. When they notice something like a large deposit, it triggers a message because they want to sell you a new account. Maybe it's savings, a CD, or you're getting ready to buy a house and they can help you with a mortgage. The average teller or even customer service person can't turn off these notifications, although, you may have some ability to opt out of them. Unfortunately, I find opting into useful notifications also opts me into useless ones, so I just ignore the texts...
Your whole arrangement of having an operating account separate from your wealth accounts is highly regular.
Edit - sorry realized I replied to a reply! Put air quotes on You/Your
gwbas1c
TFA didn't really explain the mistake.
What I think it was:
1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling.
2: When your bank calls you after a very, very large money transfer, you should take the call.
That being said: In today's world where every other phone call is some telemarketer trying to scam you or otherwise sell you something you don't want or need, I can sympathize with why Mitchell blew off the first call.
stephen_g
They basically had no problems through $35M+ of money coming in except a few phone calls trying to sell him some banking services... I wouldn't really call it 'not appropriate' for a startup... All it was is probably the guy trying to say "hey maybe you'd be interested in parking some of that capital in a term deposit" or offering some credit products...
It is a bit weird how actively the guy tried to engage but it probably is just because it was one of the largest accounts opened through that branch - if they'd opened an account with the same bank but a branch in down-town SF instead of in the suburbs of LA then they would have had an account manager more accustomed to that kind of business and it presumably wouldn't have been as weird...
chao-
Your answers are appreciated, but they beg further questions. Do you mind that I inquire further?
>1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling.
What properties make it inappropriate for a tech startup, specifically? What would be appropriate instead, and why?
>2: When your bank calls you after a very, very large money transfer, you should take the call.
He did take the call, but I take your answer to mean that Mitchell and Alex didn't have the right kind of conversation on the call. Is that correct? If so, what ought to occur on a call that follows a large transfer?
dpkirchner
At what point does it make sense to sign up for private banking? I've been happy with our credit union for day to day stuff but we don't keep a ton of cash around (most of our money is in a brokerage account (ETFs)). Is private banking just for folks that want to have a lot of cash around but not have it in an easy to use account?
0x3f
When you need the specialized services they offer, e.g. Lombard loans, unique mortgage products.
sneak
When you are managing a $500k-1M+ liquid net worth.
I think Chase starts “Private Client” at $250 or $300k. (Don’t use Chase, however.)
It might in some cases be more trouble than it is worth, if you are right around the threshold. A “normal” retail checking account and a brokerage account at another institution with the ability to transfer between them is probably sufficient for most. If you need loans or mortgages or other stuff, it might be worth the hassle (and phone calls).
mitchellh
Private client isn’t private bank. They name is like that so you think it is though. :) private banking services start around $10 to $15M with higher tiers as you go.
(Not trying to diminish private client services. But they’re night and day different services.)
meistertigran
What I took from this is that you have a really engaging writing style. Was interesting to read from start to finish.
JoshTriplett
> I've used a private bank (or mix) for a number of years to store the vast majority of my financial assets
Which one(s)?
welder
You should start a business for your construction projects, then use a business bank like Mercury instead of Chase and get all the nice business features.
mkl
What are the nice business features you're referring to?
attentive
What's the point of a private bank or do you mean investement/brokerage?
hankthecat
This is somewhat funny to read because if you were a JPM(chase) Private Bank client you wouldn't have any of these issues (zelle works, you can deposit checks, pull from any/all ATMs).
CamperBob2
Or just plain Schwab One. Don't know about Zelle but ATMs and checks work just fine.
(Better than fine, in fact, in that they refund your ATM fees.)
gnerd00
yeah agree -- it seems like a mistake to use retail banking for real business amounts of money and transactions. I suspect that young adults focused on a fast-moving tech world really did not live the hard lessons of the past with business restrictions. On the one hand, it is a new world now (no one would have come up with the kind of money referenced here, with Mom and Pop business pace); on the other hand, maybe you really are trying to load a trucking worth of transactions onto the top of your used Honda Accord, so to speak.
bdcravens
During COVID, I took a major haircut in my day job, and ended up doing a lot of side work to stay solvent. All my banking was with Chase; I setup a new checking account for my side work. One day they just took about $900. No matter who I spoke to, they bounced me around and never gave me an answer why. I can only guess there was a fraud trigger or something, but to this day, I've never gotten the money back or even gotten an answer as to what happened. I'm fortunate enough in life that $900 isn't a big deal, but at the time, it was HUGE. As a result, I will never, never do business with Chase again (and it would be very convenient, given how many branches I have around me)
gwbas1c
Take them to small claims court.
(Also close the account. No bank should lose money like that.)
righthand
I agree small claims would be an easy win.
sneak
PayPal did this to me in 2004 or so when I tried to use a debit card to withdraw cash and it didn’t give me the cash but still debited the account. Hours on the phone, never got the $400 back.
I closed my account and have never directly used PayPal since.
jancsika
> Ultimately, there was no long term negative impact of the events that transpired (except maybe for Alex, but I truly don't know) and I can now look back on it with amusement.
So a software guy who didn't understand people or banking opens an account at Chase. And a guy from Chase who didn't understand people or software calls him-- repeatedly over years-- and fails to ever connect on any human level whatsoever. Now when first guy withdraws millions from Chase, he unwittingly causes the second guy to lose his job. This means the the second guy isn't around to help the first guy when he needs him the most-- to help him navigate banking fraud on that same account.
This just seems tragic. Second guy's success as a banker and first guy's ease of mind as a customer were inextricably linked. Yet neither of them knew how to form the simple social bond of two 4 year-olds playing in the same sandbox.
Seriously-- how did Chase not hand the account to someone who could connect with this guy? For a multi-million dollar account this just doesn't pass the smell test.
gck1
Banker was probably asked daily by his managers if the multi-million dollar client was happy and the banker probably always responded with-yes, very.
holman
Amusing to read this and think back on GitHub's seed round ($100M). At the time we just had a small business account from Bank of America... going from relatively thin cushion in the account over the previous few years to suddenly dropping in $100M was pretty amusing. I believe we moved to a more sophisticated setup quickly thereafter.
supportengineer
I also don't understand banking. "Do you need help?" when I'm making a deposit, or when my investments are set a certain way?
Here's a better idea, guys. Tell me your value proposition. How can I get access to your luxury box? Will you lend me money at ultra-low rates? How about a free toaster? Anything?
heyflyguy
Chase sucks so bad, I would spend a lifetime encouraging anyone to bank elsewhere. I know Mitch is nice enough to say Chase wasn't the problem, but their "controls" are so archaic it makes doing business with them a chore and not a pleasure.
toast0
I'm not a fan of Chase, and I don't think I'd bank with them again, but they are a 'large national bank'. If you value having local branches mostly where ever you go, they're part of that group. That comes with all the usual exciting attractions like negligible interest on balances, and miscellaneous fees. But if you want a large national bank, eh, I guess they're fine?
My California based credit union doesn't even offer business accounts. And using the co-op network to do in-branch business at other credit unions is not as easy as the marketing lead me to believe, so I had to get a local credit union account where I moved as well. My Washington credit union does do business accounts, so that's a nice option if I need one. Plus, it's fun being a member of two aerospace/defense employee credit unions when I only worked in tech :P
recursive
The author imagines that all readers obviously know why his actions were so wrong.
My understanding of banks is much like his naive version. So what's the more enlightened understanding?
awl130
I had the same experience at Citibank. We started at a small branch in downtown LA with our Series Seed round check for $3M. Even then we barely got any attention, and dealt with just a local branch manager. Later we closed $7.5M, still no attention; except this time due to consolidation we were kicked to a regional team that handled our account as a team. In fact we never had a dedicated banker, we were just handled like so many SMB by calling a banking center. Over the years we asked for things like corporate credit cards and the like, but it always seemed we were just a little too small (I guess with Fortune 50 clients, we were small to them). Anyway we eventually moved to a smaller independent bank for different reasons.
dang
Discussed at the time:
My startup banking story - https://news.ycombinator.com/item?id=35157959 - March 2023 (257 comments)
fabiensanglard
Would have been interesting to read what the author would have done differently with what he learned.
You create a startup -> Do you need to do anything special with regard to the bank you chose?
apt-apt-apt-apt
Semi-interesting, but it felt like it was leading up to something big or interesting knowledge all the way up to the end.
Seems like it could have been way shorter, the plot is essentially "Deposited more and more money into a local Chase branch, made some guy named Alex a rising star. They called once in awhile, not sure why. Moving lots of money around isn't super straightforward."
ungreased0675
I’m curious why this company raised money, only to park it in a bank account? What was the raise for?
wmf
Pretty much the best case for a startup is you don't need money -> VCs are begging to invest -> you take the money just in case -> you never need the money. Especially if it's a top tier VC the PR from raising is worth the dilution.
urbandw311er
My take on that was that they did use a lot of the money but were also generating revenue that came in to replace it.
Funny to see this pop up again (I'm the author). The year is now 2025 and I still use Chase as a personal bank and I'm now discovering new funny banking behaviors. I'll use this as a chance to share. :)
My company had an exit, I did well financially. This is not a secret. I'm extremely privileged and thankful for it. But as a result of this, I've used a private bank (or mix) for a number of years to store the vast majority of my financial assets (over 99.99% of all assets, I just did the math). An unfortunate property of private banks is they make it hard to do retail-like banking behaviors: depositing a quick check, pulling cash from an ATM, but ironically most importantly Zelle.
As such, I've kept my Chase personal accounts and use them as my retail bank: there are Chase branches everywhere, its easy to get to an ATM, and they give me easy access to Zelle! I didn't choose Chase specifically, I've just always used Chase for personal banking since I was in high school so I just kept using them for this.
Anyways, I tend to use my Chase account to pay a bunch of bills, just because it's more convenient (Zelle!). I have 3 active home construction projects, plus pay my CC, plus pretty much all other typical expenses (utilities, car payments, insurance, etc.). But I float the money in/out of the account as necessary to cover these. We do accounting of all these expenses at the private bank side, so its all tracked, but it settles within the last 24-48 hours via Chase.
Otherwise, I keep my Chase balance no more than a few thousand dollars.
This really wigs out automated systems at Chase. I get phone calls all the time (like, literally multiple times per week) saying "we noticed a large transfer into your account, we can help!" And I cheekily respond "refresh, it's back to zero!" And they're just confused. To be fair, I've explained the situation in detail to multiple people multiple times but it isn't clicking, so they keep calling me.
I now ignore the phone calls. Hope I don't regret that later lol.