rexreed

The Valley of Genius is another great book and doesn't hide much about Steve Jobs and his opportunism. That said, he sure knew how to raise money, build a team, and get attention.

It sure seems that of all the people who could coordinate and convince others not to run, this list of investors with several thousand overall portcos would be just the right people. A moment of stability at a time of crisis would sure be better than a run for the doors NOW approach that set off the stampede.

Imagine the ALL-CAPS tweets and backdoor phone calls that could have been possible if these very same investors (who now rally behind the shuttered and reopened bank) could have called for calmness instead of panic. But that's not what happened. Once the run starts, you can't stop it.

The best way to prevent a bank run is not to run. A stampede isn't caused by the movement of a lone animal, but by the herd. It's a classic feedback loop.

It will be just fine: https://en.wikipedia.org/wiki/Newquay_Airport

"The airport handled 461,300 passengers in 2017, a 24.2% increase over the previous year.[2] Newquay has a CAA Public Use Aerodrome Licence that allows flights for the public transport of passengers or for flying instruction. The Cornwall Air Ambulance is based at the airport. Since 2012, the airport has hosted the Aerohub enterprise zone.

The airport is also the base for Spaceport Cornwall / Virgin Orbit space satellite launches."

Not that much was actually invested or committed, relatively speaking:

"In June 2019, the UK government and Cornwall Council announced they were prepared to invest up to £20M into the airport to create the Spaceport Cornwall as a base for Virgin Orbit. On 5 November 2019, the UK Space Agency announced that it would provide £7.35M to establish Virgin Orbit operations at Spaceport Cornwall."

Not all of that was provided.

Right now there aren't many satisfactory options for insuring excess deposits but here are a few strategies (including your aforementioned "shotgunning" approach): https://www.forbes.com/advisor/banking/ways-to-insure-excess...

Clearly there needs to be some sort of reckoning when it comes to bailouts. That's a political problem for which I don't have any simple answer.

I think this is a case of insurance coverage. The fact that there's some implicit coverage of excess amounts is not sustainable long-term. Just like we buy insurance in the unlikely event that our house is flooded or damaged by an earthquake, so too should companies with significant assets in banks purchase, on their own, insurance to cover the potential possible, but unlikely, situation of a bank bust causing them to lose most of their bank account funds. In this way the government can focus on insuring the general public, and those "too big to fail" can get private insurance to cover their own risks. This is just my opinion and a possibility. Certainly if governments want to come to the rescue or we have a "survival of the fittest" with the loudest, angriest parties getting their way, then we can run things that way as well.

Yes that's correct. I'm suggesting an additional fee that is paid by the account holder who holds excess funds above the amounts that are already covered by the bank in their fees for FDIC insurance coverage. I'm aware of the existing bank-paid insurance that covers the mandatory $250k FDIC coverage up to the cap. The difference that I am suggesting is that the umbrella insurance is paid by the account holder to the bank for excess insurance coverage. This allows insurance coverage for account holders over $250k, of which there is no insurance coverage, optional or of any kind, available today.

Wait till you find out about the International Red Cross or American Red Cross. They definitely don't need your money.

The simplest answer is "excess deposits insurance". Banks (or third-party insurers) could charge a monthly insurance fee for balances over $250k that provides insurance over the FDIC $250k cap. This allows everyone else under the $250k cap to bank without paying fees (the bank already paying insurance on those as per FDIC), and provides greater coverage to those above the cap. Think of it like an Umbrella Insurance policy. Some banks might provide the insurance for their most favored clients if they so choose, or embed the insurance inside other services.

That's already well-known news. The above seems to imply research fraud, possibly tied to grants, which is now "overrunning the Institute" and I'd like to know more.

Tell me more about the fraud that's overrunning the Institute. I'd like to dig into it more.

I understand the concept of this particular fund raise / action. I totally get it.

You don't understand my sadness. The money is there from wealthy individual investors to rescue SVB depositors who might miss a payroll or otherwise risk solvency, but it's not there to rescue other startups who are already going bust. Amazing that $300M just can appear like that over a weekend to save startups in one case, and yet doesn't exist in the other case. And it makes me sad. It's a feeling, and you might feel joy or even excitement. But I feel sadness, and that's just how I feel.

Where and how do you have contacts where you can make a weekend call to get $300M in commitments?

Just want to say that as a startup founder, running tech companies for the past many decades, this post makes me sad, not grateful or joyous. It makes me feel like there's plenty of money on the sidelines to fund $300M+ at-a-whim larks to bail out Startup founders who are mostly going to go bust anyways (those are just the facts of startup life), but meanwhile startup founders outside of that bubble can't raise a penny and go bust / layoff anyways. Layoffs.fyi tracker hasn't been slowing down.

So it's just a feeling, but it's not of happiness - it's of profound sadness and disappointment.

How has the startup world devolved to the point that it's primarily about financial movements and shenanigans and not related to technology innovation? I feel we're so far past where technology innovation has come from, and now we simply trade startups as financial products.

What is this post? Someone who can casually raise $300M in a weekend? Gets rescued by a government bailout and then said the whole experience is fun? Talks about trading deposits and making loans against them, asking startups to take a haircut while he profits? Is this what the startup universe is now about? Sometimes I feel like I'm in another universe.

They are firing 10k people they have already hired, and not hiring for 5k roles where they haven't yet hired. So 10k are leaving, and the planned 5k they were going to add will not add. This means they are losing 10k.

I'm fairly certain that's how a bank run operates, and what we have here is a bank run. Each individual person who withdraws isn't to blame, but it's the collective actions that cause the problem. In fact, all that is needed to cause a bank run is just the idea / notion of instability. Once it gets into people's heads that something is unstable, it will be made to be so, even if all that was needed was calmness. Probably hitting the panic button wasn't the best move.

You might not be familiar with this key component of the SVB collapse story: https://www.msn.com/en-us/money/other/svb-collaps-peter-thie...

It does seem that VCs are not just a convenient scapegoat, but a big part of the story.

Let me acquaint you with Peter Thiel, a libertarian VC: https://www.wired.com/story/the-libertarian-logic-of-peter-t...

And lest you think he's the only libertarian VC: https://www.newstatesman.com/quickfire/2023/03/silicon-valle...

And to them railing against bailouts while asking for them now (from the above article):

“Where is [the chairman of the Federal Reserve, Jay] Powell? Where is [the Treasury secretary, Janet] Yellen? Stop this crisis NOW,” tweeted the venture capitalist David Sacks – the same David Sacks who is a friend of Thiel and Musk, and who has previously heavily criticised “special-interest corruption” and bank bailouts. Bill Ackman, a billionaire hedge fund manager and Donald Trump supporter that has in the past complained about attempts by the government’s Securities and Exchange Commission to regulate one of his investment funds, performed some spectacular mental gymnastics over the weekend, calling on the FDIC to “guarantee all bank deposits”.

They also dramatically and unilaterally devalued their rewards: https://news.ycombinator.com/item?id=35121124 as well as had a big layoff round: https://techcrunch.com/2022/10/11/fintech-brex-layoffs-restr.... Be wary, manage your risk, don't overconcentrate, diversify.

Personally, I'd stay with a "boring" bank for at least one account. You can always open more than one account. Don't put all your eggs in one basket. Brex sure, but they could be a flash in the pan. Have "boring" banks as a backup. I bank with Chase and a local FCU in addition to anything else.

Also, Brex isn't a bank. They make this very clear: https://www.brex.com/support/is-brex-cash-a-bank-account

You should read carefully for anything where you put your hard-earned money.

"Brex Cash is not a bank account; it is a cash management account offered by Brex Treasury (a FINRA-registered broker-dealer) that functions very much like a business bank account.

You can use your Brex Cash account to securely deposit checks (including via mobile app); send and receive payments via ACH, check, and wire—even internationally; and manage spend for your company’s different users.

Brex Cash also allows you to choose how your money is stored. You can elect to keep your deposits at a Brex partner bank, and if you do, you’ll be eligible for FDIC insurance up to $2,250,000 in total. The other option is to invest your deposits into a government money market mutual fund. You can also use any combination of these two options.

No matter how you choose to store your funds, your Brex account gives you unlimited corporate credit cards for secure, convenient spending. The cards are automatically paid daily like a debit card—while giving you cash back on every purchase and building your business credit.

Note: Unlike debit cards, Brex cards cannot be used to make cash deposits or ATM withdrawals."

Your FDIC insurance and exposure is entirely up to you at Brex.

Always have a backup. I have 2 corporate bank accounts (at least). Neither of them are SVB. Chase is solid. Avoid shiny objects. Startups have enough risk in their daily existence, the last thing you need is to introduce unnecessary risk. Be a revolutionary where it matters. Be boring, steady, and predictable everywhere else.

I was also surprised to see the dramatic drop in this post's HN ranking. I can't believe it's organic, but maybe it is. I agree a 2001 article on a Tiny C compiler probably has as lot less impact to the general HN readership than this post here. My comment below on "diversify your sources of information" as one of the bullets is highly relevant.

Too many areas:

* Executive-level hiring. How many startup founders bring entire crews of executives that are recommended by VCs. Those transplanted execs then bring in their own "crew", and proceed to not only change the culture, but also repeat many of the same mistakes, pursue the same processes, repeat the same groupthink that has been done before. It reminds me of the exec hired in HBO's Silicon Valley who developed the "box" and brought in those sales and VPs.

* Processes. How many startup founders blindly adopt OKRs, growth strategies, and methods without even thinking if they are relevant to their industry, business, culture, or skills?

* Technologies. VCs push (forcefully sometimes) the use of technology by their other portfolio companies, leading to lots of misfit applications. There's too much cloud-centric thinking which causes problems. The cloud is great, but its not a one-size fits all. Some independent thinking is helpful. Not everything needs to be in the cloud

* Grow grow grow, then fire fire fire. The grow-fast then fire-fast approach mentality is really harmful.

* Following VC recommendations for core business operations, such as who to hire for law firms, accounting, HR, and other operations. Is it a wonder that so many startups make the same mistakes, do the same things, and run the same processes when they are all using the same vendors? Not too long ago, banking with SVB was "just a thing we all did". Look where that group think gets you. Maybe you don't need that law firm, accounting firm, or HR just because every other startup you know is using them.

* Idolization. There's too much worship of enterpreneurs, investors, etc. Yeah some of these folks have done some great things. But don't take every word they say as if it's gospel. It's ok to disagree with PG, Elon Musk, Peter Thiel, YC, etc. etc. whomever you idolize. They're not always right, and perhaps they're often wrong. Groupthink often happens when people exhibit cult-like behavior by following the herd or guru.

* Diversify your sources of information. Don't read so much HN or TechCrunch or whatever without balancing that information diet with other sources that aren't part of the same sphere of thinking. Groupthink happens in echo chambers and information bubbles. HN is one.

Maybe startups shouldn't blindly follow Silicon Valley recommendations and make their own decisions on operational matters like who they hire, where they bank, and what systems they use. There's too much groupthink and cult-following especially in the Silicon Valley venture community, where the investor's word is taken as Gospel to be followed to the letter. A bit of independent thinking goes a long way.

Is this from personal experience? I can tell you a lot of East Coast, Southern US, non-Silicon Valley and non-US Startups have no problems finding banking partners outside of SVB. The adage that only SVB knows how to bank startups hasn't been true for decades.

Much of the Silicon Valley ecosystem are these sort of tight loops: VCs / law firms / banks / accounting firms / HR firms / marketing agencies / senior management / key hires / etc. It's a tight clique. If you're in with the right circles, you're in with all of it. For a community that prides itself on innovation and disruption, there's remarkably very little of it when it comes to operations. Much of it is herd mentality, from the investing decisions to even the structure of HR. C-level execs also float between these circle of companies, bringing the same decisions with them everywhere.

I wonder how many startups would have predicted "bank failure" as their root cause of failure. The problem is not the fragility of each individual startup, which everyone knows. The real issue is that one singular bank failure could tip so many over at the same time. Part of the issue is Silicon Valley-centric CEOs following guidance of Silicon Valley-centric VCs, who no surprise, recommend SVB. A little independent thinking goes a long way to make your fragile startup a bit less fragile. All these startups would have had to do is hedge their bets a bit and not go all-in with Silicon Valley and their already fragile startups wouldn't have been made that much more fragile.

Besides, I'm talking about the fragility of the ecosystem, not just individual startups. While everyone knows each startup is just a flash in the pan, here one day, very likely gone the next, the same was not said about a whole ecosystem. Silicon valley as a whole seemed remarkably stable until recently.