Comment by shadowgovt | Hacker News Reader

Comment by shadowgovt | Hacker News Reader

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> is it a headcount requirement?

Headcount and age. Etsy is a +1,000 employee company that's been around over a decade. Practically bedrock by Valley standards. I personally draw the line between "small" and "big enough to know better" at 100+ employees (around where the EEOC draws the line for mandatory reporting). I acknowledge people may disagree on this topic; that's where my line happens to be.

FWIW, I don't disagree on the mechanics of your suggestion for back-stopping SVB enough for most folks to be made whole. I'm more concerned about the mechanisms that led to one bank becoming such a linchpin for the whole system. We should have learned about "too big to fail" already.

> It seems like choosing a random 30% of Silicon Valley companies to put in hard mode is a close approximation to the Vegas slot machine.

Yes... That's what SV just did to its ecosystem due to over-reliance on one bad bank because "optimization is king" is the mantra of the whole machine. For us to not find ourselves in this boat again in 20 years, the people with money power in SV need to un-learn the lesson that's been driving SV for decades. Someone needs to be less-than-optimal for the system to not be so fragile.

> Headcount and age. Etsy is a +1,000 employee company that's been around over a decade. Practically bedrock by Valley standards. I personally draw the line between "small" and "big enough to know better" at 100+ employees (around where the EEOC draws the line for mandatory reporting). I acknowledge people may disagree on this topic; that's where my line happens to be.

To be clear, Etsy is not my concern here. They will probably survive just fine regardless of whether we deem them to be responsible or not. That's part of the point. The sole question was the sellers, and trying to examine why they inspire more sympathy to similar-sized companies that may be directly banking with SVB. Hence my question of whether the mere existence of a legal entity is the difference, given that in fact many Etsy sellers do of course have simple LLCs set up. I would fine "Hey, Etsy sellers need to look into Etsy's bank to be responsible too" consistent with "3 person YC companies need to be responsible about the bank they choose", or acknowledging that's a tall order for both. But not one and not the other, was my only point here.

> Yes... That's what SV just did to its ecosystem due to over-reliance on one bad bank because "optimization is king" is the mantra of the whole machine.

If it puts your mind at ease, I think the result is going to be the same regardless of what happens to depositors: everyone now will try to spread out their money and sweeps will become part of startups 101, etc. In that sense, the system has worked: the irresponsible bankers are being punished, they and their investors lost their bank. I promise no one is going to wake up and say "well, glad that got magically solved" and not be super paranoid going forward. If anything, if depositors aren't made whole, this particular demographic is more likely to, to your point, over-optimize in that direction (perhaps create investment vehicles to short regional banks or something, who knows).

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