My startup seems to be padding numbers

Question

Startup is a marketplace.Recently I've noticed healthy growth, hitting and exceeding VC targets. Looked into it.Turns out a couple of orders are being processed every month for one of the co-founders other business. The niches are totally different so there is no way to claim that they're legitimate orders.I'm struggling to find a legitimate explanation. Either, the orders are used to pad our numbers and make us look better, or something to do with the financials of the other business.What should I do? Could there be a legitimate explanation that I'm not thinking of? Am I wrong to be concerned?e: it's money, not just users/traffic, it's also a significant percentage.

one2know · Accepted Answer

Find another job. Chances are all of management, VC's, board, everyone is in on it.

muzani · Answer

I know startups that 'padded' their numbers by buying their own stuff. The justification was that people who sold their stuff through the app became regular users, so it's not so bad. Some justify it as a "marketing cost", still more effective than putting it on Facebook ads.
I don't think it's too bad, as long as they disclose it honestly, and not straight up fraud where they make up fake numbers and then selling those numbers to advertisers/investors.
But in the end, product market fit makes everything easy, so it could be a hint of much deeper problems.

everybodyknows · Answer

Best to confide in no one who could possibly leak your knowledge back to the company. Whatever you do, do not confront the perp with the evidence.
Related-party transactions are something investors would demand be disclosed. Read through any investment contract docs you have.
If the amounts are increasing, the game's on a path to blowing up.
Options:
1. Consult a lawyer.
2. Go to the financial authorities.
3. Wait and hope reality improves enough to obviate the fakery.
4. Look for another job.

dyeje · Answer

Why do you care? If you're worried that the company isn't going to survive, go elsewhere. If you're acting out of a sense of morality, I encourage you to think about the pros and cons of making a fuss over this (you'll probably find that there is no upside and alot of downside).

corporateslave5 · Answer

Just go work somewhere else

mattbillenstein · Answer

Proper metrics should discount any employee-driven traffic - it's not usually real and it's sorta a hard thing to account for entirely.
We had a table of email addresses we would mark as employees and periodically refresh this manually against actual user traffic. Then this table would get joined to anything generating KPIs or real metrics so we could discount those events.
I'd point this out to the relevant teams dealing with data and KPIs - they shouldn't want to be counting this traffic, but if they insist, I'm not sure where you go from there.

rajacombinator · Answer

I&rsquo;d be surprised if this doesn&rsquo;t happen very frequently tbh...