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Would you take $100k in free AWS credits if it came with a covenant that forced you to run only in us-east-1? That sounds exactly like what is happening here.

Would you take $100k in free AWS credits if it came with a covenant that forced you to run only in us-east-1? That sounds exactly like what is happening here. If you really need the AWS credits, that's fine and good, but you can expect to take a reputation hit if running only in us-east-1 brings down your servers. I'm sure you got a really good deal on that venture debt, though. Probably much better than everyone else who offered you a line of credit, and for a good reason.

bcantrill 4y ago
Well, first, we can't make payroll or pay vendors with AWS credits, so your analogy isn't terribly apt, but it misses the mark in a deeper way: this is more like taking that deal and then AWS deleting some fraction of your S3 objects. That is, unavailability would be in your AWS calculus, but data loss (rightfully) wouldn't be. (I can assure you that total SVB failure would have been viewed as less likely than S3 data loss as recently as a week ago.)
- pclmulqdq 4y ago
  This scenario actually is more like unavailability. SVB has assets that cover your account at par value, but needs time to liquidate them at a decent price (or let them mature). The FDIC has that luxury. Your account would have been open (with most of your money available) on Wednesday without this action. This isn't a Lehman scenario. Those assets are marketable and worth something. They just can't be sold too quickly. This is why the TARP program made money: the sellers needed money now, but the government could hold those assets to sell at a good time. I'm sure you could otherwise call up your creditors and they would say, "that sucks, pay us by Friday," and life would be pretty much normal.
  - bcantrill 4y ago
    That is the way that neither receivership nor payroll actually work. (And we needed to wire by Tuesday -- which is kind of the point?) Now, even in the scenario, we would have made payroll -- but it would have been because heroic investors wired out of personal funds, and I know that not every startup would have been as lucky.
- fidgewidge 4y ago
  Surely the whole point of AWS credits is that you're paying a vendor with them.

bcantrill 4y ago

Well, first, we can't make payroll or pay vendors with AWS credits, so your analogy isn't terribly apt, but it misses the mark in a deeper way: this is more like taking that deal and then AWS deleting some fraction of your S3 objects. That is, unavailability would be in your AWS calculus, but data loss (rightfully) wouldn't be. (I can assure you that total SVB failure would have been viewed as less likely than S3 data loss as recently as a week ago.)

pclmulqdq 4y ago
This scenario actually is more like unavailability. SVB has assets that cover your account at par value, but needs time to liquidate them at a decent price (or let them mature). The FDIC has that luxury. Your account would have been open (with most of your money available) on Wednesday without this action. This isn't a Lehman scenario. Those assets are marketable and worth something. They just can't be sold too quickly. This is why the TARP program made money: the sellers needed money now, but the government could hold those assets to sell at a good time. I'm sure you could otherwise call up your creditors and they would say, "that sucks, pay us by Friday," and life would be pretty much normal.
- bcantrill 4y ago
  That is the way that neither receivership nor payroll actually work. (And we needed to wire by Tuesday -- which is kind of the point?) Now, even in the scenario, we would have made payroll -- but it would have been because heroic investors wired out of personal funds, and I know that not every startup would have been as lucky.
fidgewidge 4y ago
Surely the whole point of AWS credits is that you're paying a vendor with them.