10 ms·
Peter Thiel's Founders Fund pulled cash from SVB before collapse: Report
- credit_guy 4y ago[flagged]
- d23 4y agoI’m going to guess this has little to do with whether you were watching TV and everything to do with whether you’re a highly connected billionaire.
- kkielhofner 4y agoYikes. It shouldn't surprise anyone that deeply entrenched and connected SV power players are in a better position vs "everyone else" in scenarios like this. That said, scenarios like these highlight the gross imbalances in tech which is often portrayed as a relatively pure meritocracy. Getting at least a half-day jump on everyone else is a big enough lead - not to mention the access they have. Once the situation was known outside of the SV insider-insider circle I assure you startup founders and teams - threatened with the scenario of potentially losing their hard earned capital, potentially not being able to make payroll, and even shutting their doors were not "staying at home and watching TV". They were working a lot harder under far worse conditions than calmly being one of the first to make a phone call or send an e-mail Thursday morning.
- wjnc 4y agoTo be honest, the analysis of recent days show that the public information was there from Q3 on. So Thiel could just have hired financials with a tad more professionalism than SVB. Even the plain reported story is plausible. Don’t use a bank ever again if they do not make their SLA. Pretty simple reasoning and risk management can save you a lot of hassle.
- hd95489 4y agoWhat was there in Q3 that could have tipped folks off?
- mannerheim 4y agohttps://twitter.com/itsurboyevan/status/1634603869752766471 https://twitter.com/itsurboyevan/status/1634603869752766471 This thread was in January: https://twitter.com/RagingVentures/status/1615826088038473733 https://twitter.com/RagingVentures/status/161582608803847373...
- hd95489 4y agoThanks followed both of be those. Looks like #FRB might be next
- kkielhofner 4y agoThere were also short positions on SVB taken out after some of those financials. Startup founders/teams should not be spending their time reading their 40 year old bank's quarterly financials, analyzing various short positions, or hiring resources to do so. Then there's (as always) the absurdity of making significant financial decisions for your startup based on a more-or-less random fund/personality twitter account that may have an undisclosed short position spreading FUD (or just be flat-out wrong). Hindsight is 20/20 and even the most sophisticated actors taking short positions have failed spectacularly. For cases as dramatic as this ($200b bank failure) it's the stuff they make movies of ("The Big Short"). The fact remains that other than a few hawks this came out of nowhere last Thursday, and as the article and other sources describe not even Thiel and other sophisticated insiders were that far ahead but as we all know when it comes to a bank run those hours are precious.
- ttoinou 4y agoAnother proof how smart this guy is ? Or for those who hate him, he might be te reason of its collapse
- fullshark 4y agoIt's both, also it's a sign of how this industry is full of followers, once word got out Thiel fled the bank the run started and it was over within what 30 hours?
- kypro 4y agoFor the record I like Thiel but I don't think it's controversial to say that he was a large catalyst in SVBs demise. It was probably also a smart move to remove the funds, but I'm not sure it was sensible for someone with his level of influence to encourage a bank run. Even if you believe a bank run is likely telling people to withdrawal their funds doesn't solve the problem that some people will be too late. If you want to help you should try to ease nerves if anything.
- toiletfuneral 4y ago[dead]
- itsoktocry 4y ago>If you want to help you should try to ease nerves if anything. Why would Thiel want to "help"? The bank literally put customer's deposits at risk.
- sidibe 4y agoThere's a difference between "at risk" and doomed and Thiel at the least accelerated things to the latter. Something probably could have been worked out with a little bit of cooperation instead of screaming fire, but I think he likes chaos and this helps his startups by damaging competitors. I'm sure we'll find out a lot more in the future about the timing of things and whether he was really reacting to urgent problems or just creating them.
- iakh 4y agoNext story will be much more interesting about how he shorted SVB before he started a bank run.
- cloudking 4y agohttps://www.bloomberg.com/news/articles/2023-03-09/founders-fund-advises-companies-to-withdraw-money-from-svb https://www.bloomberg.com/news/articles/2023-03-09/founders-... Advised his companies to withdraw on Thursday, bank shutdown on Friday
- SkyPuncher 4y agoTo be clear, most VCs advised the same. This was a massively-multiplay prisoners dilemma - with withdrawing your being the safest option. Same thing happened at the start of the pandemic. Even if you thought the panic buying was overblown, you couldn't afford to be left with empty shelves if things got bad.
- collegeburner 4y agoman just did another double on his roth IRA
- bastardoperator 4y agoThank god we saved the billionaire...
- paulgb 4y agoI’m worried about setting a precedent that the right thing to do is head to the exits the moment rumors start to circulate. It’s hard to argue now that that wasn’t the right move for any individual depositor in retrospect. I can easily imagine this being weaponized by short sellers and foreign actors.
- itsoktocry 4y ago>I can easily imagine this being weaponized by short sellers and foreign actors. Hate to break it to you, bank runs have been a thing for hundreds of years. This isn't new. You put your own money at risk by participating. One of Elon's biggest achievements is normalizing demonizing "the shorts". In this case the Bank took took much risk and was insolvent; the shorts would be right.
- warent 4y agodemonizing short sellers is nonsense. They help markets correct and they lessen the damage of a crash by slowing the velocity of the drop
- toss1 4y agoOf course demonizing short sellers is nonsense. But if your venture relies on excessively inflated stock values to harvest the capital you want/need, then you really don't want short sellers exposing that discrepancy. So, yes, anyone in that position demonizing short sellers should be pretty much ignored (or taken as a sign that this is a good short oppo). That said, short sellers trying to manipulate the market or stocks can actually do real damage that would not otherwise occur. I see strong indications that Peter Theil is in this category. It looks very much like he made first significant public "Pull Your Money Out!" calls; if he was short SIVB at the time (or had other positions or situations that would gain from SVB's failure), that's very suspicious.
- sidibe 4y ago>(or had other positions or situations that would gain from SVB's failure) Like for example he and all his startups keeping their money while some of their competitors don't? No need for any other bets for a bank run to benefit him
- mmastrac 4y agoGiven the massive outflows and impact on the bank, I wonder if there will be some clawback from the government here.
- Ekaros 4y agoIf special considerations is given to any depositors. I think it is reasonable to clawback any money withdrawn outside what could be considered normal operations in past week or fortnight.
- JumpCrisscross 4y ago> it is reasonable to clawback any money withdrawn outside what could be considered normal operations in past week or fortnight There is no legal basis for this.
- UncleEntity 4y agoThe government makes whole all deposits except the ones that were able to be withdrawn before they pulled the plug on the servers? How’s that work?
- leftcenterright 4y agoRelated discussion: > Peter Thiel’s fund wound down 8-year Bitcoin bet before market crash: https://news.ycombinator.com/item?id=34444980 https://news.ycombinator.com/item?id=34444980
- penguin_booze 4y agoI recall seeing that title at the time. I wonder how their "foresight" works so effectively, "stepping in" just before an adverse incident happens. Is it superior acumen, or insider information?
- moomoo11 4y agoIt’s self interest pursuit at all costs. It’s his and his followers core beliefs to always do everything out of self interest. Always.
- hoofhearted 4y agoI recently listened to an episode of the How I Built This podcast with one of the members of the PayPal mafia. He mentioned that one of Peter Thiels greatest abilities is to spot and predict upcoming economic declines. Max Levchin said that Peter seemed to always know when to get in and out of markets. https://podcasts.apple.com/us/podcast/how-i-built-this-with-guy-raz/id1150510297?i=1000565164682 https://podcasts.apple.com/us/podcast/how-i-built-this-with-...
- joseftexas 4y agoThere is nothing lucky about his pull. When you are super rich you get access to highly restricted network. You will know people and have access to them directly that ordinary peasants like us cant. He most likely have been warned months ago. And his own ai tech can piece together how reliable his warnings are.
- mannerheim 4y agoThere were newsletters saying SVB was insolvent in January.
- ayewo 4y agoDo you have any links handy?
- mannerheim 4y agohttps://twitter.com/itsurboyevan/status/1634603869752766471 https://twitter.com/itsurboyevan/status/1634603869752766471
- jboggan 4y agoHere, buried in the bottom of the comments, is the most useful piece of information in the entire section. My question is what else has this fellow identified and what have Thiel et al. read and internalized?
- dopeboy 4y agoAgreed. The headline and article are classic click bait. Folks should read the tweet above for the full details.
- reducesuffering 4y agoSIVB's issues were outlined far before that Twitter analysis https://seekingalpha.com/article/4565388-svb-financial-blow-up-risk https://seekingalpha.com/article/4565388-svb-financial-blow-... Dec. 2022: "Unfortunately, the flipside of the tech bubble is fairly ugly for the company with added pressure coming from higher operating costs, higher costs of deposits, and unrealized losses in its htm (hold to maturity) fixed income portfolio. Both these htm losses and potential losses from the loan portfolio could wipe out book equity value."
- deleted 4y ago[deleted]
- pfannkuchen 4y agoI'm a bit confused by some of the discussion here. Many people talk as if there was factually no underlying issue with the bank, and the run was caused purely by panic. For that to be true though, I think the rationale presented alongside the urging to pull out would need to have been fabricated, or "mistaken". But I haven't seen anyone explicitly claim that. Am I missing something? Is there just a lack of general understanding of the prisoner's dilemma?
- metalspot 4y agothere is a very concerted pr effort to spin it that way, and people regurgitate pr memes. the underlying issue was that SVB knew they were f'd and so they were begging VCs to stop taking money out because they knew they couldnt cover and those VCs turned around and pulled money faster, because that is what smart money does. SVBs bargaining chip was that the VCs wouldnt want the books being opened, which is what happens when the fed takes over, but the VCs called their bluff, because they figured they were well enough insulated from any potential fall out. this is america, so we have the keating S&L scandal, ltcm, enron, worldcom, countrywide financial, 2008. the game never stops.
- dataangel 4y agoThis is the only place I've read the idea of SVB hoping VCs wouldn't want their books opened. Is it common when the FDIC comes in for them to be auditing for criminal behavior and not just looking at what balances are so they know how much money to give each account? Is there precedent?
- metalspot 4y agoit doesnt have to be criminal behavior. if a startup had X cash balance with SVB because they got a loan from SVB, then that startup is looking very f'd right now, because their runway just got bombed. nothing criminal, but it changes market perception a lot.
- akiselev 4y agoIt's not a question of criminal behavior but the bank's interpretation of the law versus the government's. As long as banks don't draw attention to themselves and don't get sued, they can operate largely in gray areas of the law to get and keep clients, make a little extra profit, take a little extra risk, etc. Once they are getting audited with a fined toothed comb, anything that comes up where the bank's interpretation is at odds with the government's can be easily found out and people can get punished. This can be anything from how the bank values its assets (which... who cares, they're going bankrupt anyway, right?) to director malfeasance or negligence which can result in jail time. In normal circumstances almost all businesses operate this way at least a little bit, but in banking there's a paper trail and when it's under a regulator's microscope, it's much more likely to get noticed and punished.
- Overtonwindow 4y ago"There are three ways to make a living in this business: be first; be smarter; or cheat. Now, I don't cheat. And although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first." -Margin Call
- jimnotgym 4y agoWon't this get called back in as a preferential creditor if it turns out there are not enough funds to pay back all deposits?
- metalspot 4y agono, your deposits in a bank are yours. you can withdraw them at any time. the bank has a contractual obligation to return your money whenever you demand it.
- jimnotgym 4y agoOut of interest, why did so many VC funds and their playthings bank with SVB?
- MaxfordAndSons 4y agoIt's in the name
- metalspot 4y agobecause SVB was making loans to the startups they invested in. startups had a contractual obligation to bank exclusively with SVB and then SVB would give them loans, so they had a fat cash balance on their balance sheet, but they couldnt actually withdraw the money. SVB was getting paid to make startups look good so they could raise more money.
- jimnotgym 4y agoSo it sounds like the depositors did know they were working with a higher risk bank?
- cjbenedikt 4y agoEasy one: he pulled his money and then triggered the run https://mobile.twitter.com/jonsarlin/status/1634712724117794817 https://mobile.twitter.com/jonsarlin/status/1634712724117794...