Silicon Valley Bank failure could wipe out 'a whole generation of startups' | Hacker News Reader

Silicon Valley Bank failure could wipe out 'a whole generation of startups'

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15 pointsmiiiiiike10 comments

Totally absurd justification for a bailout coming from the people who will most benefit. When airlines go bankrupt they don't burn the planes. Someone else finances them at a discount. Same thing here: if you have a good idea, a good business model, good people, someone will fund you. Sure, the startup's legal entity may dissolve and the equity holder wiped out, but everything else survives.

The guys at the helm here are making every apocalyptic argument they can think of. No more innovation. China will win. Think of the workers' mortgages. It's all so that they, careless VCs, can get a taxpayer bailout.

If you really think some rank and file programmer is going to suffer for an extended period of time (he/she won't, but just for the sake of argument), then let the Federal Government cut them an unemployment check directly. But any investor, in anything, who loses due to this: suck it up, it's your job to hold the bag.

>If you really think some rank and file programmer is going to suffer for an extended period of time (he/she won't, but just for the sake of argument), then let the Federal Government cut them an unemployment check directly

Saving the employees is not a motivating argument to me, anyway. These people work for risky companies, and should be prepared for their employers to evaporate overnight anyway. Functionally this is no different than the company running out of money or being sold and laying everyone off or any other of a half dozen scenarios where an early stage startup or otherwise small business could disappear overnight

> Saving the employees is not a motivating argument to me, anyway. These people work for risky companies, and should be prepared for their employers to evaporate overnight anyway.

If the business fucks up, sure. Not if their bank goes down!

But they should be prepared for it to happen regardless of the cause/reason is my point

Anyone feel that everything from the Facebook Hail Mary pivot to Meta, to the gutting of Twitter, to the cargo cult mass layoffs, and now all this entire SVB affair has just completely ripped off the mask of the tech industry?

It used to be obvious charlatans like Theranos or not-even-tech hucksters like WeWork, marginal one-offs like Fast, an easily derided industry like crypto. But in the last few months, both established FAANG companies, once-hyped unicorns, now even YC startups are being drawn into vast resonating cascades of incompetence and fail. Interest rates have risen and the entire industry (Apple aside) has been exposed as naked all along. All of the pontificating tech thought leaders and VCs of the last decade? Nothing against the whims of the Fed.

Incompetence has been spreading throughout all industries for the past few years. I frequently think back to this Ask HN from September 2020 asking if anyone else has noticed the trend. [0]

That said, it seems a bit (outrageously) disingenuous to blame this on "tech" incompetence, when these startups are failing through no fault of their own, and when in fact the failure is due solely to the incompetence of bankers.

The CFO of Lehman Global Investment Bank was an executive at SVB, having started there in 2007 just one year prior to Lehman going bankrupt.

[0] https://news.ycombinator.com/item?id=24421934

Only YC is out there with this kind of histrionics (and maybe a few others like David Sacks). You don't see it from any other prominent Silicon Valley figures

Hah! Welcome to the old timers club, my friend. This has all happened before and will all happen again.

If this is the real bust we’ve been due for on this cycle, a few years will pass and you’ll watch a new generation of inexperienced young founders believe they have it all figured out, while filthy rich outsiders throw play money at them like a casino game, and you watch mirthfully from your modest and stable careerist work as it all goes up up up and down down down again.

Those who fear-monger like this should be held responsible

This has always been the way of Silicon Valley.

I was there in San Francisco during the first dot-com bubble. https://en.wikipedia.org/wiki/Dot-com_bubble

I remember when the market crashed and being on Market and watching all these young people walk around shell-shocked by the crash and everyone getting laid off. I saw these code warriors, soon to be unemployed, with my own eyes. They were like walking zombies, I swear to you. Fear permeated everywhere.

High risk and bullshit has always been the game in the Bay Area. It always will be.

Venture capital companies look at thousands of business plans a year. One out of a thousand get funding. Of those, maybe one out of 200 makes money, and 1 out of 10,000 of those is a unicorn. And that unicorn is where all the venture capitalists make their money back to cover all the other losses in the companies that don't make it.

If the whole USA economy doesn't crash from a ripple effect on Silicon Valley Bank, don't you worry none - Silicon Valley will be back to its old tricks in no time.

It will be back because this is what the entire Bay Area is geared to - high risk, high reward. Just like Hollywood is geared to entertainment and Taiwan to the chip industry. There are thousands and thousands of other companies all geared to those ecosystems, and it cannot be duplicated elsewhere.

As far as Silicon Valley, it is worth it - consider all the tech - computers, networking, and all the different IT categories, and then all the specific companies exploiting those industry categories. It would never exist without Silicon Valley and the synergies found there.

The risks that Silicon Valley takes filter throughout the entire world and help the entire world. Mostly. I consider social media as filth, as well as privacy stuff, but besides that...

Will a lot of businesses go out of business? Undoubtedly. But those that fail are the weak companies, just like Silicon Valley Bank. And the space that the failing companies leave can be filled by new stronger companies, just like after the dot-com bust. The Bay Area didn't go down the tubes after the dot-com bubble bust. It won't now. California would be the 5th or 6th largest economy in the world, and SF Bay Area and Los Angeles by themselves would be the 16th and 17th largest economies in the world. It's not going to go away. The ecosystem is too big. All the highly trained specialized people will still be there, ready for their next conquest. The Bay Area is all about failure, too. Startups go up in smoke all the time.

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