5 ms·

Protecting himself while actively dooming hundreds of startups to failure

43 points by mcguire 4y ago

notbuyingit 4y ago
SV pissed when Thiel's scummery affects them. So sad for them. Funny enough, much as I detest the guy, I think the hate directed at him for this is pure cognitive dissonance and refusal to see the bigger picture+problem.
senttoschool 4y ago
I'm not a fan of Thiel but I don't see what he did was wrong.
- ggm 4y ago
  "wrong" is multifaceted. * Was it illegal? Nope. * Did it only have selfish goals? Yep * Did it necessarily doom others to losses by timeliness and first-come-first-served? Yes * Did he have equity of access with others? Hell no. he's head of the queue. It's not "wrong" in a narrow sense but most people are on point #2, they dislike Thiel (as I do) and so "judge" him to political philosophy, not to legalism. He's not markedly more wrong than other people in his situation. He may well be significantly smarter and asymmetry in the economics space, is held to be counter-productive overall. Of course, you're naieve or a fool or both if you don't exploit it. Maybe you have a different interpretation of "wrong" ? And, I can't fault his logic: This is basic 'win' thinking. Why hang around? What's in it for him, long or short term to wait?
  - ianbutler 4y ago
    What would you have had him do? It doesn't seem like his other options would have been logical knowing the bank was insolvent. I guess silently take his money out and not encourage any one else, is that actually worse?
    - mcguire 4y ago
      Are you aware how close SVB was to being solvent after the bank run? From the numbers I have seen, was in mild trouble but nowhere near insolvent before Thiel and those like him caused the bank run.
      - notbuyingit 4y ago
        That might be true and I don't really care? It's _a bank_. My expectation is that I can pull my money whenever the hell I want. If me taking my point out of my account causes you problems, that sounds like a you problem. I absolutely do not freaking get this.
    - ggm 4y ago
      Yes. As you say it arguably is actually worse to act this selfishly silently. Thiel didn't cause the losses at SVB, he is astute enough to understand how to be informed to the risks and rewards of acting regarding his money. If he speaks to that wisdom, he's being informative and helpful to his listeners. I'm trying to be objective here, since my dislike of his political philosophy is pretty extreme. Wearing the loss would be stupid. His ability to survive the losses isn't really material. If he had custody of other people's money and acted to preserve it, he acted wisely to their needs too. What he did I believe hastened the end for less wise people, with less ability to weather the risk and has downstream consequences which follow a run on a bank, in terms of impact on operating business. Stripe and other payment systems suspending clearing, payroll not happening is going to cause problems at large. He's no more "wrong" than Pelosi or her husband or many other US senators and representatives are, trading against their heightened sense of awareness of the market. If Pelosi trades on inside information she may actually be worse than Thiel in this case (my belief is she has no prior knowledge which would exceed the insider-trading limits, and is technically not in breach of law even when I think what she does is totally reprehensible and inappropriate for an elected leader)
      - mcguire 4y ago
        SVB was not insolvent before the run on it; any bank in the world can be driven out of business by a bank run based on nothing but rumors.
  - JohnFen 4y ago
    Yes. Whether or not something is legal is independent of whether or not something is wrong. Just to be clear, I'm not opining whether or not what Thiel did was right. I'm making a general point here.
- Kranar 4y ago
  What he did was the right thing to do. He realized SVB was having significant issues receiving/sending funds and protected himself and the companies he's involved with by withdrawing all his capital from the bank. He also publicly informed others of the issues and recommended they do the same. I'm not exactly sure what actions people think he should have taken. Thiel is not responsible for the poor risk management on the part of SVB.
- sneak 4y ago
  Also the claim that he was "actively dooming hundreds of startups to failure" is inaccurate. It looks at this time like everyone who was in SVB will be made whole. Nobody is an asshole for withdrawing their money from the bank. There are plenty of valid criticisms of Thiel. This is not one of them, and makes the claimant look like a fool.
fullshark 4y ago
Easy to justify in one’s mind if failure was inevitable. Bank runs are a nash equilibrium especially if you realize you are first in line.
globalreset 4y ago
That's a ridiculous take.
exogeny 4y ago
It's news that Thiel is a villainous, hypocritical sociopath? Since when?
Nevermark 4y ago
If the money Thiel moved was of interest to other partners, as well as himself, he just did his fiduciary duty, right? It is a real duty. It sucks to see powerful people getting a better deal than regular people, but the unfairness in this situation was caused by bank (mis-) management, not Thiel.
benjaminsky2 4y ago
“Person I don’t like acts in rationally self interested manner, legally outperforming less informed parties in zero sum game” Should we feel bad when we sell a stock and it goes down?
- mcguire 4y ago
  Person acting on unfounded rumors causes massive problems for many others. Pretty much defines Sili V. culture.
aaron695 4y ago
[dead]
evolve2k 4y ago
The deeper question is to what extent this community supports and endorses junk individuals to work and thrive among it. Is it a few rotten apples or is the hacker news or Y Combinator community itself thats rotten?
plaguepilled 4y ago
Its extremely easy to criticise Thiel without making weak arguments like this. Criticise his investment choices or his company or his political affiliations, there's actual substance there. Blaming someone for doing the stock market thing correctly is just dumb.
- mcguire 4y ago
  Banking != stock market.
black_13 4y ago
[dead]
Beaver117 4y ago
No consequences for the rich, as usual. Bring out the guillotines already
jacooper 4y ago
> It was the result of hubris, and self-inflicted destruction, by VCs who are rich, white and arrogant Why do they always have to bring race into this?
- webmaven 4y ago
  > Why do they always have to bring race into this? Who is this mysterious "they" you speak of?
- loa_in_ 4y ago
  It's a cheap shot that can be dismissed as just "pointing out facts you can clearly see", most importantly trying to capitalise on already aggravated on racial matters people who might stumble across this in good faith and get misdirected.
- LatteLazy 4y ago
  To clearly define the person as being on the "other side", so readers know they are "bad" purely for that reason, without having to think critically.
- unsupp0rted 4y ago
  All races are off limits to be brought into this or anything else. Apart from one.
- stormfather 4y ago
  > It was the result of hubris, and self-inflicted destruction, by VCs who are rich, jewish and arrogant > It was the result of hubris, and self-inflicted destruction, by VCs who are rich, black and arrogant Geez I feel like I'll be banned from the internet just for posting this for comparative purposes. Why is it open season on me and nobody else?
  - jacooper 4y ago
    The problem is most of the Tims people using White this wag are white themselves! Including OOP
LatteLazy 4y ago
If SVB were insolvent (and I believe that is what the FDIC have said?) then they were going to fail anyway. If they were merely illiquid then we should not have closed them but supplied liquidity. Either way, Theil is not to blame, at least not for this.
- mcguire 4y ago
  From what I have seen, they were not insolvent before the bank run. They were in trouble from a bad bet on interest rates, but were attempting to restructure their holdings to get liquidity. Bank runs are a psychological construct, not an economic one. They are based on rumors, not facts. Deposit insurance is intended (and usually successful) to prevent runs by ensuring that depositors will be made whole even if the institution does become insolvent, because a run will destroy any banking institution. The failure of SVB was caused by those who rushed to get their money out based on fear.
  - notbuyingit 4y ago
    I find it really amusing that everyone seems to just find it normal, okay, chill, that our banking infra is based on semi-blind confidence and people not expressing concerns or warnings, or you know taking their own money out of the bank. Hour by hour I am in horror at the standard of "normal" that people will defend because they can't see it for what it is or imagine an alternative. Capital capital jobs jobs! Hoorah! This is the way.

43 points by mcguire 4y ago

SV pissed when Thiel's scummery affects them. So sad for them. Funny enough, much as I detest the guy, I think the hate directed at him for this is pure cognitive dissonance and refusal to see the bigger picture+problem.

senttoschool 4y ago

I'm not a fan of Thiel but I don't see what he did was wrong.

ggm 4y ago
"wrong" is multifaceted. * Was it illegal? Nope. * Did it only have selfish goals? Yep * Did it necessarily doom others to losses by timeliness and first-come-first-served? Yes * Did he have equity of access with others? Hell no. he's head of the queue. It's not "wrong" in a narrow sense but most people are on point #2, they dislike Thiel (as I do) and so "judge" him to political philosophy, not to legalism. He's not markedly more wrong than other people in his situation. He may well be significantly smarter and asymmetry in the economics space, is held to be counter-productive overall. Of course, you're naieve or a fool or both if you don't exploit it. Maybe you have a different interpretation of "wrong" ? And, I can't fault his logic: This is basic 'win' thinking. Why hang around? What's in it for him, long or short term to wait?
- ianbutler 4y ago
  What would you have had him do? It doesn't seem like his other options would have been logical knowing the bank was insolvent. I guess silently take his money out and not encourage any one else, is that actually worse?
  - mcguire 4y ago
    Are you aware how close SVB was to being solvent after the bank run? From the numbers I have seen, was in mild trouble but nowhere near insolvent before Thiel and those like him caused the bank run.
    - notbuyingit 4y ago
      That might be true and I don't really care? It's _a bank_. My expectation is that I can pull my money whenever the hell I want. If me taking my point out of my account causes you problems, that sounds like a you problem. I absolutely do not freaking get this.
  - ggm 4y ago
    Yes. As you say it arguably is actually worse to act this selfishly silently. Thiel didn't cause the losses at SVB, he is astute enough to understand how to be informed to the risks and rewards of acting regarding his money. If he speaks to that wisdom, he's being informative and helpful to his listeners. I'm trying to be objective here, since my dislike of his political philosophy is pretty extreme. Wearing the loss would be stupid. His ability to survive the losses isn't really material. If he had custody of other people's money and acted to preserve it, he acted wisely to their needs too. What he did I believe hastened the end for less wise people, with less ability to weather the risk and has downstream consequences which follow a run on a bank, in terms of impact on operating business. Stripe and other payment systems suspending clearing, payroll not happening is going to cause problems at large. He's no more "wrong" than Pelosi or her husband or many other US senators and representatives are, trading against their heightened sense of awareness of the market. If Pelosi trades on inside information she may actually be worse than Thiel in this case (my belief is she has no prior knowledge which would exceed the insider-trading limits, and is technically not in breach of law even when I think what she does is totally reprehensible and inappropriate for an elected leader)
    - mcguire 4y ago
      SVB was not insolvent before the run on it; any bank in the world can be driven out of business by a bank run based on nothing but rumors.
- JohnFen 4y ago
  Yes. Whether or not something is legal is independent of whether or not something is wrong. Just to be clear, I'm not opining whether or not what Thiel did was right. I'm making a general point here.
Kranar 4y ago
What he did was the right thing to do. He realized SVB was having significant issues receiving/sending funds and protected himself and the companies he's involved with by withdrawing all his capital from the bank. He also publicly informed others of the issues and recommended they do the same. I'm not exactly sure what actions people think he should have taken. Thiel is not responsible for the poor risk management on the part of SVB.
sneak 4y ago
Also the claim that he was "actively dooming hundreds of startups to failure" is inaccurate. It looks at this time like everyone who was in SVB will be made whole. Nobody is an asshole for withdrawing their money from the bank. There are plenty of valid criticisms of Thiel. This is not one of them, and makes the claimant look like a fool.

fullshark 4y ago

Easy to justify in one’s mind if failure was inevitable. Bank runs are a nash equilibrium especially if you realize you are first in line.

globalreset 4y ago

That's a ridiculous take.

exogeny 4y ago

It's news that Thiel is a villainous, hypocritical sociopath? Since when?

Nevermark 4y ago

If the money Thiel moved was of interest to other partners, as well as himself, he just did his fiduciary duty, right? It is a real duty. It sucks to see powerful people getting a better deal than regular people, but the unfairness in this situation was caused by bank (mis-) management, not Thiel.

benjaminsky2 4y ago

“Person I don’t like acts in rationally self interested manner, legally outperforming less informed parties in zero sum game” Should we feel bad when we sell a stock and it goes down?

mcguire 4y ago
Person acting on unfounded rumors causes massive problems for many others. Pretty much defines Sili V. culture.

aaron695 4y ago

[dead]

evolve2k 4y ago

The deeper question is to what extent this community supports and endorses junk individuals to work and thrive among it. Is it a few rotten apples or is the hacker news or Y Combinator community itself thats rotten?

plaguepilled 4y ago

Its extremely easy to criticise Thiel without making weak arguments like this. Criticise his investment choices or his company or his political affiliations, there's actual substance there. Blaming someone for doing the stock market thing correctly is just dumb.

mcguire 4y ago
Banking != stock market.

black_13 4y ago

[dead]

Beaver117 4y ago

No consequences for the rich, as usual. Bring out the guillotines already

jacooper 4y ago

> It was the result of hubris, and self-inflicted destruction, by VCs who are rich, white and arrogant Why do they always have to bring race into this?

webmaven 4y ago
> Why do they always have to bring race into this? Who is this mysterious "they" you speak of?
loa_in_ 4y ago
It's a cheap shot that can be dismissed as just "pointing out facts you can clearly see", most importantly trying to capitalise on already aggravated on racial matters people who might stumble across this in good faith and get misdirected.
LatteLazy 4y ago
To clearly define the person as being on the "other side", so readers know they are "bad" purely for that reason, without having to think critically.
unsupp0rted 4y ago
All races are off limits to be brought into this or anything else. Apart from one.
stormfather 4y ago
> It was the result of hubris, and self-inflicted destruction, by VCs who are rich, jewish and arrogant > It was the result of hubris, and self-inflicted destruction, by VCs who are rich, black and arrogant Geez I feel like I'll be banned from the internet just for posting this for comparative purposes. Why is it open season on me and nobody else?
- jacooper 4y ago
  The problem is most of the Tims people using White this wag are white themselves! Including OOP

LatteLazy 4y ago

If SVB were insolvent (and I believe that is what the FDIC have said?) then they were going to fail anyway. If they were merely illiquid then we should not have closed them but supplied liquidity. Either way, Theil is not to blame, at least not for this.

mcguire 4y ago
From what I have seen, they were not insolvent before the bank run. They were in trouble from a bad bet on interest rates, but were attempting to restructure their holdings to get liquidity. Bank runs are a psychological construct, not an economic one. They are based on rumors, not facts. Deposit insurance is intended (and usually successful) to prevent runs by ensuring that depositors will be made whole even if the institution does become insolvent, because a run will destroy any banking institution. The failure of SVB was caused by those who rushed to get their money out based on fear.
- notbuyingit 4y ago
  I find it really amusing that everyone seems to just find it normal, okay, chill, that our banking infra is based on semi-blind confidence and people not expressing concerns or warnings, or you know taking their own money out of the bank. Hour by hour I am in horror at the standard of "normal" that people will defend because they can't see it for what it is or imagine an alternative. Capital capital jobs jobs! Hoorah! This is the way.