The cynic in me says this letter is less about bailing out the small companies trying to make payroll and more about the VC's not wanting to lose massive investments.
Absolutely not sure why these world beaters hacking everything under Sun need to be bailed out by some stodgy old institution anyway.
- Repackaging an existing codebase or business model
- ... as a black box
- ... attempting to rent it out
- ... with worse data privacy
- ... exploiting systemic economic excesses
- ... ... inflicting societal harm
- ... ... often with minimal upside to the consumer short-term
- ... ... or long-term
- ... colluding with large existing players
- ... ... to create a treadmill of declining product quality
- ... ... to facilitate government surveillance and information operations
- ... ... to "play defense" against competitors
It's kind of like how OOP was intended to stratify and contain developers, except instead of abstracting commodity PCs there's a whole different calculus which basically implies that the ultimate consumer of computing equipment is like, 2 or 3 big companies, because financing. You know how the old democratic saying goes, "none of us is as strong as the 2-3 permanent CEOs of reality."
Average Joe is swindled by con-men into bad deals and/or is subject to events outside his control: should have known better/worked more
Huge company in the business of risk management fucks up: bad luck, the taxpayer will cover you, no civil or criminal responsibility will come to anyone regardless of the magnitude of the fallout
Isn't it possible to think that both small businesses/startups and average joes deserve to be bailed out when shit goes sideways?
i also don't think either average joe or bigco necessarily deserve to be bailed out. if i see a tv on fb marketplace and send the asking price to the seller only later to find out that they're scamming me, should i be bailed out for that? if so nobody has any incentive to take basic risk-aversion precautions in economic dealings.
Sure! Either both of them or none of them, that's the point! But we see bailouts for "systemically critical" banks, but not for the average joe.
It's both. VCs don't want to lose their cash accounts and see their investments become insolvent. At the same time, it doesn't help society if all these workers suddenly find themselves jobless. There's also a risk of contagion. If companies suddenly discover their deposits aren't de-facto safe, they'll flee other banks with similar risk profiles, causing more bank runs.
Banks going under and taking lots of funds with them is bad because it undermines confidence in the system. It's financial infrastructure that's supposed to always work. Sure, if it doesn't, you can work around it, but it becomes a drag on the economy, and things start looking like a developing country.
There are potentially millions of workers under a great deal of pressure to not lose their jobs to some disruptor or another. Are we somehow less sympathetic to them than these tech workers?
Right now, it is mostly a regional problem, since the “startup industry” did not diversify much outside the Bay Area, or the Pacific Coast. Industries with a broader national reach maintain a broader and deeper lobbying presence in Washington and thus get more Federal attention. Might be a lesson-learned here. Along with the most elemental due diligence in financial risk management.
I mean, if you can save the jobs of the people you funded, great. But, founding a startup is risky, blah blah blah... and losing a few or a few thousand hardly seems like a reason to call congress. At least no more than any other industry getting disrupted. We've seen, and perhaps you've been part of, putting huge swaths of people put out of work. Huge swaths of business out of business. Industries that came crashing down at no fault of the business owner, other than not being prepared for some an unseen stealth startup who leveraged prior institutional knowledge to come and take it all in a flash.