Why I'm Furious with Silicon Valley
The sad tale of a boy who cried "regulation!"

June 14, 2011
Also published on Quora

Topics = { Financial Regulation + Payments + Silicon Valley }

We've reached the moment of truth. The law in California, as I have described repeatedly (see In Fifty Days, Payments Innovation Will Stop In Silicon Valley and In Thirty Days, Payments Innovation Will Stop In Silicon Valley), has changed. Companies that hold money on behalf of others must meet certain tangible net worth and surety bond requirements that are essentially impossible to acheive without significant venture capital investment.

I've said basically all that there is to say on this topic. I think the law is poorly designed, and I think so because it affects me directly. This afternoon, the Deputy Commissioner of the California Department of Financial Institutions instructed me to shut down my company's FaceCash mobile payment system, because he does not believe that I am capable of raising the necessary capital in the next fifteen days. I haven't shut it down yet, but I've written the code to do it.

It's really a shame. I've already invested over a million dollars of my own money in FaceCash. The business model is clear: we make money on every transaction. The product works. It solves not one, not two, but closer to a hundred real problems that confront just about every small business owner in the country. It lowers interchange fees. It lowers fraud. It encourages loyalty. It improves transparency. It improves the operating efficiency of small businesses. It automates millions of hours of aggregated data entry. It makes reimbursement forms completely obsolete. It actually does your business taxes. It's cross-platform. It's handshake-agnostic. The list goes on and on.

This is not an incremental change we're talking about. FaceCash redefines the financial infrastructure, in a way that most bankers shudder to think about. It makes financial data easily accessible to those who need it, not obscured behind walls of fees and contracts. It's the kind of you-must-be-crazy innovation that Silicon Valley is known for—and yet we are clearly not in that Silicon Valley anymore.

Rather than invest in a productive, useful and frankly unprecedented product such as FaceCash, venture capital and angel investors have focused their time and billions of dollars of their money in companies and entrepreneurs that have, in serial fashion, deceived co-founders, deceived employees, and deceived customers. In many cases, shareholders are next. Meanwhile, they've left companies like my own for dead.

It's not the first time I've been left for dead, so I have some training in this department and I may yet survive. Or I may not. The message, however, should still send chills down any serious entrepreneur's spine. I am an educated person. I am a driven person. I am an honest person. I am an intelligent person. One thing I am not, however, is a fabulously wealthy person.

You shouldn't need to be fabulously wealthy to get funded. You also shouldn't need to lie. I've proven myself time and again in enormously difficult situations. Instead of receiving funding, today I received a threat that if I did not stop, I could be looking at criminal charges.

If you're an investor that I've spoken with, you should be asking yourself if you made the right choice. (There are, after all, still fifteen days left.)

If you're an investor that I have not spoken with, there are still fifteen days left.

If you're not an investor at all, then you should be thankful for that much. Then you should be asking yourself if you or your company could be next.


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What is the total when you put 3 and 3 together and add one hundred?


Nassir Khan
November 16, 2012 at 3:28 PM EST

Hello Aaron,

You have articulated some interesting points. Over-regulation always marginalizes the smallest of individuals and businesses first. Those with "superior" credentials and correct networks are able to get away with just about anything.

Regarding your Face Cash platform, have you ever thought of launching in a less regulated market e.g. East Africa ?




May 8, 2013 at 11:14 PM EDT

Why in the world would you stay in Silicon Valley if California no longer serves your needs? Why do you continue to stay in a State that costs as much as it does to live; taxes its populace the way it does? Sounds like, to me, that you would be better served elsewhere -- your business and talent better served elsewhere. Leave California, don't bend to their threats. They're the ones that ought to be bending over backwards to keep minds like yours there -- show that State what they've lost by taking your idea & business elsewhere to flourish.

It's time to get out of California & Silicon Valley.


May 8, 2013 at 11:24 PM EDT

While I understand it's difficult to do for a variety of reasons (lack of time and distaste for the need being two of them), this is a situation that would benefit from political intervention. Have you contacted your political representatives and sought their help? This seems like an issue that would play well for them - innovative, successful entrepreneur being shut down by idiot regulators, etc. Jes' sayin'...and I wish you good luck.


Aaron Greenspan (
May 9, 2013 at 12:28 AM EDT


You may find of interest.



May 9, 2013 at 5:05 AM EDT

I hope you smash these good ole boy network asshats. This is clearly scratching at the heart of the banking and financial clique and I hope this case and your enormous and persistent efforts bring awareness to your cause, if not the downfall of bullshit legislation designed to protect and defend the power of those who have written these laws. Best of luck to you, sir.


Punk Brewster
May 9, 2013 at 8:01 AM EDT

What? You wade into Big Finances backyard and thought they would let you steal their lunch?

Welcome to fascism pal.


Tarik Ansari
May 9, 2013 at 2:56 PM EDT

I second Adam, move the company out of California, problem solved. I did that a few weeks ago and am not looking back. CA is overrated. Check out Austin, it's pretty awesome.


May 26, 2013 at 1:15 PM EDT

I enjoyed the link you posted!
I'll be keeping these tabs open in my browser from now on
to read more of what gets posted, and hopefully an
"I'm a winner" judgement gets posted here so we all get to
read the rest of the story.

Dito on what fapjacks said!

Crush them!
This is a retarded game of Ring-Around-The-Rosie if I ever saw one!
You should raise the amount your asking for after putting up with
the amount of tripe and ridiculous time frames your being forced to
deal with.

Might I suggest a small town in Indiana to move to?

Keep us updated!

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