A Thought About Ransackgate

by Krishna on July 31, 2011

The topic of the week is the horrible experience of a customer of the online vacation rental service Airbnb who had her house trashed and valuables stolen. It has been a major public relations disaster for the company. Hopefully it will end with the perpetrators captured, the victim properly compensated and Airbnb able to continue their business.

This is one example of the enormous risks that small companies run into day after day. People tend to romanticize start-ups. After all, who doesn’t want to the founder of a company like Google or Facebook? But the focus is all on the idea or the implementation of the idea. But there is a lot happening behind the scenes. Some of these are:

  • Public Relations issues like this where an aggrieved customer takes an incident to the press, some of whom sensationalize the event in a completely one-sided way.
  • Legal issues with violations of copyrights, patents, or trademarks, or running into some conflict with the laws of your country, state or municipality.
  • Accidental, negligent or criminal conduct of your employees or vendors. For instance, if some employee loses a laptop containing confidential medical records.
  • Managing taxes. The reason why the tax code is so huge is not just because of your personal income taxes.
  • Accounts receivable. Did you “sell” something? Is that money ever going to reach your bank account? How do you manage your payroll in the interim?

In some of my previous articles, I talked about the difficulty of management when companies become bigger more in terms of managing more people. But it is not just the number of employees that increases. Other problems also multiply and some new problems appear on the scene.

All this is a way of saying that starting a company is not the same as keeping it running. You need to acquire the skills to do it, but that may not be possible because of your capability or your lack of time. You can hire other people to do it and you probably should. But if you don’t have the money to hire the right people, perhaps you should sell to someone who does and can take it from there. It is far better than trying to do the impossible and finally ending up empty-handed.

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