I read articles this morning on (i) corporate jets, which to the IRS, me and probably most everyone are rightly deemed taxable compensation if used by executives for non-work purposes, and (ii) free food at Google, Zynga and Twitter (and lots of other tech companies), which to me and probably most everyone are rightly deemed non-taxable FOOD when consumed at work.  Note that I did not put the IRS in that last clause.

Apparently the IRS sometimes takes the view that free food, under the right circumstances, should be taxable compensation to the employee.  I just scratch my head and say “what the burrito!!” (substitute “burrito” with any unsavory word you like).  Sometimes I just truly dislike the tax code.  It is a complicated mess; this is really true for those like me in the VC/PE world (but I am not getting into that now).

Quoting from a Wall Street Journal article (“Silicon Valley’s Mouthwatering Tax Break” April 7, 2013; here is link, but I think it requires a subscription), the “Tax rules around fringe benefits are complex, but in general they categorize meals regularly provided by an employer as a taxable perk, similar to personal use of a company car. That leads several tax experts to wonder if some companies providing free food may be skirting the rules.”  Yet, “Other lawyers point to an exception that allows meals to remain untaxed if they are served for a “noncompensatory” reason for the ‘convenience of the employer.’  The exception generally has been applied to workers in remote locations or in professions where reasonable lunch breaks aren’t feasible. But these lawyers argue that some technology firms could qualify, in part because free food encourages longer work hours and is a crucial part of Silicon Valley’s collaborative culture.”

This debate roasts me.  How about an exception that says “Free food is okay because it helps keep employees motivated and produces a boat load of benefits for society not to mention happy employees that spend money…..after they have paid taxes on their money income”.

When the academics chime in it gets downright funny.  Again, from the WSJ, “I buy my lunch with after-tax dollars,” said Mr. McMahon, the University of Florida professor. “And I have to pay taxes to support free meals for those Google employees.”

Ugggg, yeah, I guess I am feeling sorry for Professor McMahon….NOT.

I am not sure where the line is between corporate jets and free food, but come on….free food….taxable??  Holy Burrito!

Most of you know about the huge snow storm that we got in the Northeast this past Friday evening.  In Ithaca, we got only about 6 inches of snow.  At my sister’s house in Amherst, MA, they got over 20 inches.  Our local ski area, Greek Peak, got about 8 inches.  And, luckily, me and my family (wife and 2 kids ages 7 and 11) were skiing during the storm.  We got to the ski area around 3:30pm and left there around 8pm.  It is only about 30 minutes from Ithaca.

It was actually unbelievable skiing.  I had not been night skiing since middle school.  It was my wife’s first time and same for my kids.  It was warm (for night skiing) – about 28 degrees.  And there was no wind.  Just snow coming down in buckets at the rate of like 1 to 2 inches an hour.  Almost surreal.  It was Epic Powder Skiing.  Here is a funny picture when the night was done:

So, what does any of this have to do with startups and business?  Well, Greek Peak filed for bankruptcy last year.  They overbuilt the resort and cannot handle the debt load.  They now have a really nice hotel, indoor water park, adventure rides, zip lines, and a very cool ropes course.

The problem:  the mountain is in the middle of no where and there is not enough “people traffic” to support the amenities.  To me this is a great example of why “build it and they will come” does not work.  Pushing products out into an non-receptive or non-existent market is a risky strategy.  All it produces is a lot of forced hot air being blown out.  Like pushing a rope uphill.  Rarely works.

I am sure that the marketing folks at Greek Peak hired consultants to justify the build out. Perhaps the consultants’ reports were wrong.  I really don’t know.  But I do think a smarter approach would have been a slow build based on real customer demand, followed by critical mass building, followed by more build out, etc.

Sound familiar?  Even some startups have to take a slow and steady build approach.  All depends on the business model.  I hope Greek Peak survives.  As my son said “it would be really sad if the mountain closes down!”.