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> But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think

The line maybe isn't bright, but faking data to a potential buyer to make it appear like you have 15x your actual number of users is clearly way past the line you cannot see.

That would be like saying it's hard to know if noon is during the day or night because the exact moment that qualify as "dawn" is hard to discern.

I think the difference is PG faked it until he could make it work at some future endpoint, Charlie Javice gave up on trying to make it work and instead faked it at the endpoint

But my point upthread is that that "difference" is a post hoc rationalization. She needed to close that deal to save the company, in which she presumably believed. The money would change everything, right? She probably did picture this as "faking until they made it".

PG "got caught" at a moment when Yahoo (the acquirer, I think?) had already decided on a deal it valued and was willing to deal with some accounting mess to close it. Javice got caught by an investment bank with rather different ideas about value who perceived the "accounting mess" as active fraud.

In a culture (this culture!) where everyone cheats, the actors lose sight of how to judge what cheating is acceptable.

> But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under.

Not prosecuted, and not prosecutable, are two different things.

> And they got stinking rich!

Which in no way validates their actions, ethically nor legally.

The takeaway here is that you can defraud people and you can defraud the state, and will likely get away with it with a slap on the wrist (unless you steal a crazy big amount like FTX did). If you defraud rich and powerful investors, well that's a different story.

I guess it all depends on how you're cheating. Are you defrauding others in your cheating? Or are you just bypassing bureaucracy like not having a Taxi service license?

Potato/potatoe. Existing taxi medallion holders were absolutely harmed by Uber. Existing licensed hotel operators were absolutely harmed by AirBnB. And we all celebrated that to great effect here. But it was breaking the rules. We just think THOSE rules were bad but THESE rules are good.

Well, it's not our call to make, it's the prosecutors'. And you (yes, you personally) aren't nearly as insulated from this kind of risk as you think.

The clear takeaway is to ensure that the people you are harming while breaking the law do not have an abundance of money and lawyers.

Did they sue for damages? JP Morgan did not waste time.

What was the fraud? Limo services were always allowed in NYC, and didn't have to abide by the medallion system. All Uber did was make it more efficient to find and book a Limo.

Limo services are also regulated by the TLC in NYC.

The rules are different between taxis and black cars, but there are still rules.

Uber drivers need a TLC license in NYC and fall under the same regulations.

Was this true from the very start of Uber in NYC?

Has the Taxi & Limousine Commission always regulated limo services in NYC? Yes, since it replaced the Hack Bureau fifty years ago.

> Existing taxi medallion holders were absolutely harmed by Uber. Existing licensed hotel operators were absolutely harmed by AirBnB.

Then they should have sued and sought a judgment if they had a claim.

This is the NIMBY argument in a different market: Can't let anyone else build anything because it might reduce the value of what I have, thereby harming me.

It's not the same as materially misrepresenting a financial investment.

> We just think THOSE rules were bad but THESE rules are good

That's kind of how society evolves isn't it? Rules are always changing and that's generally a good thing. Some rules are pretty set in stone throughout history - eg. murder and fraud are generally bad. Other rules around free speech, slavery, energy usage/production, social safety nets, etc., have changed for the better.

You could argue that Uber and Airbnb are worse but I think the fact that they've stuck around despite allegedly breaking rules means that most people prefer the new state of affairs that they resulted in. If something else comes up that breaks rules set by Uber and results in something better (eg. autonomous vehicles?) then I'm sure people will gravitate to that new thing as well.

No, your logic doesn't hold. The distinction being drawn here is between civil and criminal liability. Operating an unlicensed taxi service in most municipalities (maybe all of them) is a civil infraction, not a crime.

Sure, because it's not my logic!

The founder in the linked article thought that she was on the right side of the line. She wasn't. You personally might think you're too smart to[1] fall afoul of this kind of thing and that all your cheating[2] will be non-prosecutable.

But quite frankly most "criminally liable" misrepresentations to investors aren't prosecuted (basically none of them are), so the fact that this one was is more a statement about the influence of JP Morgan and the mind of this one prosecutor. And blanket statements that absolutely none of Uber's shenanigans were prosecutable seem laughable. Crimes abound.

The point wasn't to nitpick about crimes and penalties. It was that this crime happened in the context of a culture that structurally encouraged it, and we would all do well to recognize that instead of nitpicking fake reasons why it would never happen to us.

[1] The ironic analogy to hubris in security analysis isn't lost on me

[2] Because again in this world All Founders Cheat a Little Bit. We all know it.

I agree that people shouldn't kid themselves about criminal liability, but not that criminal liability is routinely incurred by startups.

Not really the same thing.

Material misrepresentation of a business is blatant financial fraud.

If you sell someone a yellow-painted piece of metal but you tell them it's solid gold, you're not bending the rules a little bit. You're just defrauding them.

classic article: Everything Everywhere is Securities Fraud. https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...

Nice paywall.

Are you an internet virgin? Make yourself a shortcut to archive.is and stop whining.

> But the line between "just cutting a few corners" and prosecutable criminality isn't nearly as bright as we in the peanut gallery like to think. Lots of very successful startup launches (Uber and AirBnB are famous examples) were kinda/sorta/prettymuch illegal by the plain language of the laws they were (not) operating under. And they got stinking rich!

I, for one, would hope "don't commit crimes!" is taught in business school ethics. (LMAO as if an MBA has ethics)