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Good. Investors like Ackman and Cuban seem so concerned about payroll for tech workers. The truth is that the vast majority of this cash was dry powder for acq

Good. Investors like Ackman and Cuban seem so concerned about payroll for tech workers. The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising. Isn’t it these same folks who remind us all the time that most startups fail? Why bail out an entire bank when 99% of its startup depositors wouldn’t have made it anyway? If anything, taxpayers should be able to sit at the front of a new cap table with preferred position, like any other entity providing a bridge. But at that idea, I am sure they’d warn of government interference.

mgfist 4y ago
> Good. Investors like Ackman and Cuban seem so concerned about payroll for tech workers. ? The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising. You seem confused. The "cash" you're talking about here is the deposited cash, which Yellen is saying will get funded. I think you're confusing that with bank equity.
- SkyPuncher 4y ago
  Cash flow is currently the issue for many businesses. They literally cannot afford to pay people on Monday if their deposits are not returned.
chipgap98 4y ago
> The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising Any sources for this? This seems like an opinion with nothing backing it up. > Isn’t it these same folks who remind us all the time that most startups fail? There is a big difference between a single startup being able to fail at any time and many of them failing all at once.
- colinmorelli 4y ago
  There's also a big difference between a startup failing because it doesn't deliver a product that people want and will pay for, and a startup failing because of "random chance" (in quotes because I can't prove that bank choice is a random distribution among startups, but it's not clear that it's a proxy for quality of founder or company)
skwirl 4y ago
> Investors like Ackman and Cuban seem so concerned about payroll for tech workers. They weren’t calling for a bailout of SVB. They were calling for protection of depositors, which is what Yellen is trying to make happen.
- aodin 4y ago
  Both Ackman and Cuban have called for measures beyond "protection of depositors". Ackman: "What should the FDIC do? @FDICgov to guarantee all bank deposits by Sunday night before Asia open and call a time out. Run a process to recapitalize @SVB_Financial while managing liquidation of UST and MBS portfolios ... Equity holders pre-recap are wiped out, bond holders are protected." [1] Cuban: "The Fed should IMMEDIATELY buy all the securities/debt the bank owns at near par, which should be enough to cover most deposits. Any losses paid for in equity and new debt from the new bank or whoever buys it. The Fed knew this was a risk. They should own it" [2] In a following tweet, Cuban claimed "this isn't a bailout" [3]. Their tweets, like many of the comments here, seem to be arguing the semantics of a "bailout". However, both Ackman and Cuban are calling for financial assistance from the Fed, which is absolutely a bailout, if only "partial". [1] https://twitter.com/BillAckman/status/1634694924707807236 https://twitter.com/BillAckman/status/1634694924707807236 [2] https://twitter.com/mcuban/status/1634416692301373442 https://twitter.com/mcuban/status/1634416692301373442 [3] https://twitter.com/mcuban/status/1634418925331968007 https://twitter.com/mcuban/status/1634418925331968007
rib3ye 4y ago
I guess that’s true if you are a Roku or a Roblox, but how can you say that about sub-50 person company still trying to find its footing?
- lotsofpulp 4y ago
  The same thing people tell 22 year olds trying to find their footing who invested in the wrong degree.
  - rib3ye 4y ago
    Depositing money in a bank is not supposed to be an investment with associated risk. Yes there may be an interest yield and services rendered, but these customers were not greedily looking for a sizable return.
    - ffggffggj 4y ago
      There are literally stickers on the doors of every bank explaining that depositing money beyond $250,000 incurs risk. These naive smol bean founders don’t struggle to figure out the most tax advantageous way to get paid, let’s not pretend they’re too stupid to read a huge sticker.
      - rib3ye 4y ago
        You're not wrong, but the purpose of "moral hazard" is to punish risky investments. What are you trying to punish here? Founders who didn't want to waste time messing around with multiple banks?
        ffggffggj 4y ago
        The VCs who advised them to behave this way, if you ask me. In my ideal resolution, the government does their own valuation of the startups, rescues in excess of insurance the ones that seem promising, and proportionally takes the VC equity in these companies that got special rescue consideration. If the investment is getting bailed out, the VCs who started this mess shouldn’t get their equity returns. They can invest again in the next round if they really believe their convictions. Practically, the VCs should have made some bridge loans to solve the short term problems while we wait to see what comes out of receivership. Some did, and good on them for sticking with it in the hard times.
deleted 4y ago
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mgfist 4y ago

> Good. Investors like Ackman and Cuban seem so concerned about payroll for tech workers. ? The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising. You seem confused. The "cash" you're talking about here is the deposited cash, which Yellen is saying will get funded. I think you're confusing that with bank equity.

SkyPuncher 4y ago
Cash flow is currently the issue for many businesses. They literally cannot afford to pay people on Monday if their deposits are not returned.

chipgap98 4y ago

> The truth is that the vast majority of this cash was dry powder for acquisitions, staying liquid for new new investments, fresh VC money for advertising Any sources for this? This seems like an opinion with nothing backing it up. > Isn’t it these same folks who remind us all the time that most startups fail? There is a big difference between a single startup being able to fail at any time and many of them failing all at once.

colinmorelli 4y ago
There's also a big difference between a startup failing because it doesn't deliver a product that people want and will pay for, and a startup failing because of "random chance" (in quotes because I can't prove that bank choice is a random distribution among startups, but it's not clear that it's a proxy for quality of founder or company)

skwirl 4y ago

> Investors like Ackman and Cuban seem so concerned about payroll for tech workers. They weren’t calling for a bailout of SVB. They were calling for protection of depositors, which is what Yellen is trying to make happen.

aodin 4y ago
Both Ackman and Cuban have called for measures beyond "protection of depositors". Ackman: "What should the FDIC do? @FDICgov to guarantee all bank deposits by Sunday night before Asia open and call a time out. Run a process to recapitalize @SVB_Financial while managing liquidation of UST and MBS portfolios ... Equity holders pre-recap are wiped out, bond holders are protected." [1] Cuban: "The Fed should IMMEDIATELY buy all the securities/debt the bank owns at near par, which should be enough to cover most deposits. Any losses paid for in equity and new debt from the new bank or whoever buys it. The Fed knew this was a risk. They should own it" [2] In a following tweet, Cuban claimed "this isn't a bailout" [3]. Their tweets, like many of the comments here, seem to be arguing the semantics of a "bailout". However, both Ackman and Cuban are calling for financial assistance from the Fed, which is absolutely a bailout, if only "partial". [1] https://twitter.com/BillAckman/status/1634694924707807236 https://twitter.com/BillAckman/status/1634694924707807236 [2] https://twitter.com/mcuban/status/1634416692301373442 https://twitter.com/mcuban/status/1634416692301373442 [3] https://twitter.com/mcuban/status/1634418925331968007 https://twitter.com/mcuban/status/1634418925331968007

rib3ye 4y ago

I guess that’s true if you are a Roku or a Roblox, but how can you say that about sub-50 person company still trying to find its footing?

lotsofpulp 4y ago
The same thing people tell 22 year olds trying to find their footing who invested in the wrong degree.
- rib3ye 4y ago
  Depositing money in a bank is not supposed to be an investment with associated risk. Yes there may be an interest yield and services rendered, but these customers were not greedily looking for a sizable return.
  - ffggffggj 4y ago
    There are literally stickers on the doors of every bank explaining that depositing money beyond $250,000 incurs risk. These naive smol bean founders don’t struggle to figure out the most tax advantageous way to get paid, let’s not pretend they’re too stupid to read a huge sticker.
    - rib3ye 4y ago
      You're not wrong, but the purpose of "moral hazard" is to punish risky investments. What are you trying to punish here? Founders who didn't want to waste time messing around with multiple banks?
      - ffggffggj 4y ago
        The VCs who advised them to behave this way, if you ask me. In my ideal resolution, the government does their own valuation of the startups, rescues in excess of insurance the ones that seem promising, and proportionally takes the VC equity in these companies that got special rescue consideration. If the investment is getting bailed out, the VCs who started this mess shouldn’t get their equity returns. They can invest again in the next round if they really believe their convictions. Practically, the VCs should have made some bridge loans to solve the short term problems while we wait to see what comes out of receivership. Some did, and good on them for sticking with it in the hard times.

deleted 4y ago

[deleted]