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> prominent VCs behaved during the brief period of uncertainty A ton of the prominent VCs were writing out checks from their personal bank accounts so that fou

> prominent VCs behaved during the brief period of uncertainty A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. > For some silly reason I had some respect for the startup industry before this, now I see it as a joke Wait seriously? You somehow lost more faith from this than you did from - crypto - Adam Neumann - $100m seed rounds and like 30 other things??? > But it's important to remember that they no longer automatically deserve any credit for taking risks and doing something new. What are you even talking about? Having your bank account randomly disappear isn't one of the risks that anyone should have to take.

unity1001 4y ago
> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. Then you put your funds in less risky banks who did not lobby to get an exemption from the regulations that protect against precisely this kind of thing. Even, spread it around safer banks. Putting all of one's money in a bank because they have better returns or other investment opportunities is business. Not something that someone can be safe at the public's expense. The public, because the public will pay for this one way or the other - if this is paid from the insurance that insures all banks like how the statement says, then it will cause all the banks who pay into this insurance pool to reflect it on their customers with fees. So every single person with a bank account in the US will pay. Its still public money, but it doesnt come directly from the US govt.'s pocked, so its 'okay'.
- deleted 4y ago
  [deleted]
- wpietri 4y ago
  Especially given that an adequate alternative to putting all your money in one bank is to put it into two banks. Unless you're already on thin ice, that solves the short-term cash flow problem. Historically, even in bank failures, depositors get most or all of their money back, it just takes a while. And if that isn't adequate for a given company, it sounds like it's time for them to hire a finance professional who has experience with cash management.
- kam 4y ago
  What large bank is not lobbying against regulations?
  - unity1001 4y ago
    SVB didnt lobby to relax the laws against unpaid overtime, faulty advertising etc. Not any banal evil like that. SVB lobbied against laws that protected both the bank and its depositors from the very thing that happened. And succeeded to get an exemption for itself.
tmpz22 4y ago
> A ton of the prominent VCs were writing out checks from their personal bank accounts Is this true? I've been following this story pretty closely and haven't heard anything about that.
- mikeyouse 4y ago
  Yep. A few dozen said so out loud, Sam Altman included. Mostly “publicized” via Twitter or other lower profile means.
  - Apocryphon 4y ago
    Are these substantiated reports or just tweet promises?
  - tomato_123 4y ago
    [flagged]
threeseed 4y ago
> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. But that is the risk founders chose when they put their money in (a) any bank and (b) specifically SVB. Your money is only insured to $250k. SVB had no CRO, lobbied against regulation, made no efforts to comply with Basel 3 and was engaging in risky bets that many had previously warned about. CEOs have a fudiciary responsibility to understand and mitigate risks. And expecting taxpayers to bail you out (either directly or indirectly) when your incompetence causes harm is simply not fair.
- moose_is_loose 4y ago
  Don't forget the benefits they got from white glove treatment and easy access to loans. This wasn't a one way street, there was a reason they deposited the money there.
  - scatters 4y ago
    What loans? SVB's problem was that its customers didn't need loans, since they had VC money and just needed somewhere to put it.
- brigadier132 4y ago
  > CEOs have a fudiciary responsibility to understand and mitigate risks This is an impossible standard to hold founders of 10-100 person startups to. Might as well say "CEOs should be omniscient"
  - swatcoder 4y ago
    Or perhaps “CEOs should hire a CFO” Founders are often coming into new levels of financial responsibility when they get funded and as their business draws in later rounds of investment and customer revenue. You can’t assume $4M works the same way as $40k or your liable to lose a big chunk of it. Thankfully, there are professionals whose role is to help with that.
    - 4y ago
BoiledCabbage 4y ago
And here it starts.. Lots of prominent people have just been exposed by this whole fiasco. 100% truly exposed and they're not gonna like it. They're gonna want to try to rebuild their reputations. What's coming is a lot of "who are you gonna trust me or your lying eyes?". Starting soon you're gonna hear all the sob stories about how the VCs all this wonderful all did X and Y and Z. And nothing we just saw really mattered. And downplaying how as soon as the going got tough they abandoned all of their SV ethos and immediately went begging to the government to be bailed out. Be prepared because there will be a huge PR push soon like you haven't seen.
- nebula8804 4y ago
  Start collecting all the evidence that shows how bad these people acted before it disappears into the ether and prepare rebuttals that you can copypasta on Reddit, Twitter and wherever else they post their PR garbage...
  - always2slow 4y ago
    Could you post some example? I'm out of the loop. Who did what?
    - Mistletoe 4y ago
      Start at David Sacks and Bill Ackman twitter accounts. Add some Jason Calacanis and baby you’ve got a stew going. Hurry I’m sure they are deleting as we speak. https://twitter.com/BillAckman/status/1634564398919368704 https://twitter.com/BillAckman/status/1634564398919368704 https://twitter.com/DavidSacks/status/1634382260433719298 https://twitter.com/DavidSacks/status/1634382260433719298 https://twitter.com/Jason/status/1634792355294515200 https://twitter.com/Jason/status/1634792355294515200 > @Jason >YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW — THAT IS THE PROPER REACTION TO A BANK RUN & CONTAGION >@POTUS & @SecYellen MUST GET ON TV TOMORROW AND GUARANTEE ALL DEPOSITS UP TO $10M OR THIS WILL SPIRAL INTO CHAOS This is one of the most irresponsible things I’ve ever seen tweeted. It’s the equivalent of screaming fire in a crowded theater.
deleted 4y ago
[deleted]
snotrockets 4y ago
> A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. Because they have duty to do so, as (part) owners of those companies. They could face personal liability for being negligent enough. You'd think any company with non-trivial payroll should've known better than not to hedge on all the things, including their banking partner.
- jjb123 4y ago
  This is inaccurate. In no way did people have to turn to their personal finances to help companies that their company invested in. That is like your banker, seeing your dire situation caused by a third party to you, and writing you a personal check… That is actually what happened across multiple situations I witnessed. Not saying these folks are saints but pretty unexpected to see.
  - bzax 4y ago
    Board members have personal liability for payroll in California.
  - tomato_123 4y ago
    This is incorrect. Payroll pierces the corporate veil.
    - jacquesm 4y ago
      Not necessarily for investors, unless it can be shown that they have incurred liability beyond their investment.
      - snotrockets 4y ago
        Many investors like to have a board seat, which makes them an officer of the company
        jacquesm 4y ago
wpietri 4y ago
> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. I mean, having all your data randomly disappear isn't one of the risks that anyone should have to take. But if a company suffered systems failure without backups, what would we be saying? If a company had a breach and all their data got release or encrypted by ransomware attackers, would people seriously be arguing for a taxpayer-funded government bailout?
mbesto 4y ago
> A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. Source? Who specifically, how much and can you independently verify that they actually did it?
boh 4y ago
"Having your bank account randomly disappear isn't one of the risks that anyone should have to take." Companies actually do. That's why they keep their assets as cash at a minimum and typically don't concentrate that cash in one institution. Risk management is a big part of institutional financial management. This isn't the first bank failure and this isn't going to be the last. This situation will, however, probably make bank bail outs less likely in the future. The political fall out will be huge. 100% this is a big point in the 2024 election. (Having a bank named Silicon Valley Bank collapse couldn't be a better metaphor).
KennyBlanken 4y ago
A lot of prominent VCs were also screaming their heads off that other banks were about to fail. These people played a zero-sum game, purposefully generating as much panic as possible to force the fed to act. > Having your bank account randomly disappear isn't one of the risks that anyone should have to take. The fed has sat on its hands for decades and done nothing to mandate better protection for ACH transactions, done nothing to mandate phasing ou magstripe transactions (Europe has been on chip and pin for decades), our check cashing system is a complete mess in ways scammers take advantage of, and debit cards have a fraction of the protection credit cards do despite "real money" being involved instead of credit. But then a bunch of billionaires force hundreds of companies to do business with just one bank, that bank is outright incompetent in how it manages its funds and employed people who were central in the last financial crisis, and suddenly it's "well, we must act to protect confidence in the banking system"? I have zero confidence in the banking system. My money doesn't feel remotely safe from being stolen. I can't even find a bank that will do hardware 2FA instead of SMS 2FA, which is worse than not having it at all. What is jpow doing about that?
cactusplant7374 4y ago
Startup founders are very sophisticated. Perhaps they were aware of the risks SVB was taking with their money?
bnralt 4y ago
> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. Not only is it a risk many take, but many end up losing a significant amount. The FDIC actually has a list of the numerous failed banks they've helped depositors recover assets from here[1]. You can see that depositors often lose a lot when banks fail. Now I don't think this is a good thing, and I think it would be worthwhile to have a conversation about a systemic way to avoid this. But it was eye-opening to see so many not advocating any systemic approach, and instead just saying "the government should do whatever it can to cover all SVB loses because people like us are special." [1] https://closedbanks.fdic.gov/dividends/ https://closedbanks.fdic.gov/dividends/
tomato_123 4y ago
"Equity is when you take risks, except for the risks you didn't anticipate" Absurd take.
raspberry1337 4y ago
>Having your bank account randomly disappear isn't one of the risks that anyone should have to take. This bank choose to _avoid_ safety regulations from the 2008 financial crisis, which is completely open information. They used this avoidance to pursue greater risk. What is "randomly disappear" about putting your money into such a bank?

unity1001 4y ago

> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. Then you put your funds in less risky banks who did not lobby to get an exemption from the regulations that protect against precisely this kind of thing. Even, spread it around safer banks. Putting all of one's money in a bank because they have better returns or other investment opportunities is business. Not something that someone can be safe at the public's expense. The public, because the public will pay for this one way or the other - if this is paid from the insurance that insures all banks like how the statement says, then it will cause all the banks who pay into this insurance pool to reflect it on their customers with fees. So every single person with a bank account in the US will pay. Its still public money, but it doesnt come directly from the US govt.'s pocked, so its 'okay'.

deleted 4y ago
[deleted]
wpietri 4y ago
Especially given that an adequate alternative to putting all your money in one bank is to put it into two banks. Unless you're already on thin ice, that solves the short-term cash flow problem. Historically, even in bank failures, depositors get most or all of their money back, it just takes a while. And if that isn't adequate for a given company, it sounds like it's time for them to hire a finance professional who has experience with cash management.
kam 4y ago
What large bank is not lobbying against regulations?
- unity1001 4y ago
  SVB didnt lobby to relax the laws against unpaid overtime, faulty advertising etc. Not any banal evil like that. SVB lobbied against laws that protected both the bank and its depositors from the very thing that happened. And succeeded to get an exemption for itself.

tmpz22 4y ago

> A ton of the prominent VCs were writing out checks from their personal bank accounts Is this true? I've been following this story pretty closely and haven't heard anything about that.

mikeyouse 4y ago
Yep. A few dozen said so out loud, Sam Altman included. Mostly “publicized” via Twitter or other lower profile means.
- Apocryphon 4y ago
  Are these substantiated reports or just tweet promises?
- tomato_123 4y ago
  [flagged]

threeseed 4y ago

> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. But that is the risk founders chose when they put their money in (a) any bank and (b) specifically SVB. Your money is only insured to $250k. SVB had no CRO, lobbied against regulation, made no efforts to comply with Basel 3 and was engaging in risky bets that many had previously warned about. CEOs have a fudiciary responsibility to understand and mitigate risks. And expecting taxpayers to bail you out (either directly or indirectly) when your incompetence causes harm is simply not fair.

moose_is_loose 4y ago
Don't forget the benefits they got from white glove treatment and easy access to loans. This wasn't a one way street, there was a reason they deposited the money there.
- scatters 4y ago
  What loans? SVB's problem was that its customers didn't need loans, since they had VC money and just needed somewhere to put it.
brigadier132 4y ago
> CEOs have a fudiciary responsibility to understand and mitigate risks This is an impossible standard to hold founders of 10-100 person startups to. Might as well say "CEOs should be omniscient"
- swatcoder 4y ago
  Or perhaps “CEOs should hire a CFO” Founders are often coming into new levels of financial responsibility when they get funded and as their business draws in later rounds of investment and customer revenue. You can’t assume $4M works the same way as $40k or your liable to lose a big chunk of it. Thankfully, there are professionals whose role is to help with that.
  - 4y ago

BoiledCabbage 4y ago

And here it starts.. Lots of prominent people have just been exposed by this whole fiasco. 100% truly exposed and they're not gonna like it. They're gonna want to try to rebuild their reputations. What's coming is a lot of "who are you gonna trust me or your lying eyes?". Starting soon you're gonna hear all the sob stories about how the VCs all this wonderful all did X and Y and Z. And nothing we just saw really mattered. And downplaying how as soon as the going got tough they abandoned all of their SV ethos and immediately went begging to the government to be bailed out. Be prepared because there will be a huge PR push soon like you haven't seen.

nebula8804 4y ago
Start collecting all the evidence that shows how bad these people acted before it disappears into the ether and prepare rebuttals that you can copypasta on Reddit, Twitter and wherever else they post their PR garbage...
- always2slow 4y ago
  Could you post some example? I'm out of the loop. Who did what?
  - Mistletoe 4y ago
    Start at David Sacks and Bill Ackman twitter accounts. Add some Jason Calacanis and baby you’ve got a stew going. Hurry I’m sure they are deleting as we speak. https://twitter.com/BillAckman/status/1634564398919368704 https://twitter.com/BillAckman/status/1634564398919368704 https://twitter.com/DavidSacks/status/1634382260433719298 https://twitter.com/DavidSacks/status/1634382260433719298 https://twitter.com/Jason/status/1634792355294515200 https://twitter.com/Jason/status/1634792355294515200 > @Jason >YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW — THAT IS THE PROPER REACTION TO A BANK RUN & CONTAGION >@POTUS & @SecYellen MUST GET ON TV TOMORROW AND GUARANTEE ALL DEPOSITS UP TO $10M OR THIS WILL SPIRAL INTO CHAOS This is one of the most irresponsible things I’ve ever seen tweeted. It’s the equivalent of screaming fire in a crowded theater.

deleted 4y ago

[deleted]

snotrockets 4y ago

> A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. Because they have duty to do so, as (part) owners of those companies. They could face personal liability for being negligent enough. You'd think any company with non-trivial payroll should've known better than not to hedge on all the things, including their banking partner.

jjb123 4y ago
This is inaccurate. In no way did people have to turn to their personal finances to help companies that their company invested in. That is like your banker, seeing your dire situation caused by a third party to you, and writing you a personal check… That is actually what happened across multiple situations I witnessed. Not saying these folks are saints but pretty unexpected to see.
- bzax 4y ago
  Board members have personal liability for payroll in California.
- tomato_123 4y ago
  This is incorrect. Payroll pierces the corporate veil.
  - jacquesm 4y ago
    Not necessarily for investors, unless it can be shown that they have incurred liability beyond their investment.
    - snotrockets 4y ago
      Many investors like to have a board seat, which makes them an officer of the company
      - jacquesm 4y ago

wpietri 4y ago

> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. I mean, having all your data randomly disappear isn't one of the risks that anyone should have to take. But if a company suffered systems failure without backups, what would we be saying? If a company had a breach and all their data got release or encrypted by ransomware attackers, would people seriously be arguing for a taxpayer-funded government bailout?

mbesto 4y ago

> A ton of the prominent VCs were writing out checks from their personal bank accounts so that founders could meet payroll. Source? Who specifically, how much and can you independently verify that they actually did it?

boh 4y ago

"Having your bank account randomly disappear isn't one of the risks that anyone should have to take." Companies actually do. That's why they keep their assets as cash at a minimum and typically don't concentrate that cash in one institution. Risk management is a big part of institutional financial management. This isn't the first bank failure and this isn't going to be the last. This situation will, however, probably make bank bail outs less likely in the future. The political fall out will be huge. 100% this is a big point in the 2024 election. (Having a bank named Silicon Valley Bank collapse couldn't be a better metaphor).

KennyBlanken 4y ago

A lot of prominent VCs were also screaming their heads off that other banks were about to fail. These people played a zero-sum game, purposefully generating as much panic as possible to force the fed to act. > Having your bank account randomly disappear isn't one of the risks that anyone should have to take. The fed has sat on its hands for decades and done nothing to mandate better protection for ACH transactions, done nothing to mandate phasing ou magstripe transactions (Europe has been on chip and pin for decades), our check cashing system is a complete mess in ways scammers take advantage of, and debit cards have a fraction of the protection credit cards do despite "real money" being involved instead of credit. But then a bunch of billionaires force hundreds of companies to do business with just one bank, that bank is outright incompetent in how it manages its funds and employed people who were central in the last financial crisis, and suddenly it's "well, we must act to protect confidence in the banking system"? I have zero confidence in the banking system. My money doesn't feel remotely safe from being stolen. I can't even find a bank that will do hardware 2FA instead of SMS 2FA, which is worse than not having it at all. What is jpow doing about that?

cactusplant7374 4y ago

Startup founders are very sophisticated. Perhaps they were aware of the risks SVB was taking with their money?

bnralt 4y ago

> Having your bank account randomly disappear isn't one of the risks that anyone should have to take. Not only is it a risk many take, but many end up losing a significant amount. The FDIC actually has a list of the numerous failed banks they've helped depositors recover assets from here[1]. You can see that depositors often lose a lot when banks fail. Now I don't think this is a good thing, and I think it would be worthwhile to have a conversation about a systemic way to avoid this. But it was eye-opening to see so many not advocating any systemic approach, and instead just saying "the government should do whatever it can to cover all SVB loses because people like us are special." [1] https://closedbanks.fdic.gov/dividends/ https://closedbanks.fdic.gov/dividends/

tomato_123 4y ago

"Equity is when you take risks, except for the risks you didn't anticipate" Absurd take.

raspberry1337 4y ago

>Having your bank account randomly disappear isn't one of the risks that anyone should have to take. This bank choose to _avoid_ safety regulations from the 2008 financial crisis, which is completely open information. They used this avoidance to pursue greater risk. What is "randomly disappear" about putting your money into such a bank?