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What is this post? Someone who can casually raise $300M in a weekend? Gets rescued by a government bailout and then said the whole experience is fun? Talks abou

What is this post? Someone who can casually raise $300M in a weekend? Gets rescued by a government bailout and then said the whole experience is fun? Talks about trading deposits and making loans against them, asking startups to take a haircut while he profits? Is this what the startup universe is now about? Sometimes I feel like I'm in another universe.

gsibble 4y ago
It was incredibly fun and a wild experience. We also weren't going to make much profit. We were offering 90-95c on the dollar compared to 60-70 from banks and hedge funds. This was about saving companies and jobs. Thought I'd share.
- rexreed 4y ago
  How has the startup world devolved to the point that it's primarily about financial movements and shenanigans and not related to technology innovation? I feel we're so far past where technology innovation has come from, and now we simply trade startups as financial products.
  - gsibble 4y ago
    I don't think it has. This was a once in a lifetime kind of thing. My other companies are all innovative technology companies, like you said.
    - capableweb 4y ago
      > Iridium Development - Iridium Development focused on making revolutionary iPhone apps > Distribute- Distribute aimed to be the Alibaba of the US, mostly with wholesale drop shipping. > Materialist - an e-commerce solution, [...] trying to bring wholesale housing products to market. > Dave - personal financial management app > Vizit - Image Analytics > txtsmarter - Communications Surveillance Service We might have different opinions on what counts as "innovative" I guess.
      - gsibble 4y ago
        I really don't think personal attacks are called for. Only Iridium was my company, which built a pretty unique app that was featured in the App Store in its very first year (of the App Store). You conveniently left out Omnivore.io, the only other company I built. Ask anyone in the restaurant industry in the US what it is. All the rest were just employers. edit: Since I can't reply below: Omnivore was the first company that offered API access to over 80% of the installed point of sale systems in the US, including direct injection of web orders into the POS instead of needing a tablet next to the POS with manual order entry. We allowed over 1,000 partner companies to bring unique and innovative solutions to the restaurant space. Thanks for not reading my LinkedIN profile, just what sector my company was in.
        capableweb 4y ago
        Ah, sorry... > Omnivore - PoS + hospitality services Definitely haven't been done before, you got me there :) > I really don't think personal attacks are called for. I don't think it's a personal attack, you brought up "My other companies are all innovative technology companies" so I was curious to see what you consider "innovative", thought others might be curious too, so listed what I found here.
        deleted 4y ago
        [deleted]
        gsibble 4y ago
        Omnivore was the first company that offered API access to over 80% of the installed point of sale systems in the US, including direct injection of web orders into the POS instead of needing a tablet next to the POS with manual order entry. We allowed over 1,000 partner companies to bring unique and innovative solutions to the restaurant space. Thanks for not reading my LinkedIN profile, just what sector my company was in.
        zamnos 4y ago
        You don't think adding > We might have different opinions on what counts as "innovative" I guess. might have made it seem like you were doing more than "simply listing" what you found? We might have differing opinions on what constitutes a personal attack, I guess.
    - rexreed 4y ago
      Just want to say that as a startup founder, running tech companies for the past many decades, this post makes me sad, not grateful or joyous. It makes me feel like there's plenty of money on the sidelines to fund $300M+ at-a-whim larks to bail out Startup founders who are mostly going to go bust anyways (those are just the facts of startup life), but meanwhile startup founders outside of that bubble can't raise a penny and go bust / layoff anyways. Layoffs.fyi tracker hasn't been slowing down. So it's just a feeling, but it's not of happiness - it's of profound sadness and disappointment.
      - chernevik 4y ago
        Then you aren't getting the concept. This isn't equity funding for a business idea. It's basically buying a claim on a bank in receivership. It doesn't matter if that claim is held by nextbigthing.com or Apple. Those claims are backed by SVB's portfolio of T-bonds and MBS so they are very solid. The benefit to users is acceleration of receipt and certainty. It's hardly a lark. The OP was planning to target this offering to startups, which are only fraction of SVB's depositor base. Someone saw their community in distress and thought to use their connections to put together a solution, for a modest profit. Sounds fine to me.
        rexreed 4y ago
        I understand the concept of this particular fund raise / action. I totally get it. You don't understand my sadness. The money is there from wealthy individual investors to rescue SVB depositors who might miss a payroll or otherwise risk solvency, but it's not there to rescue other startups who are already going bust. Amazing that $300M just can appear like that over a weekend to save startups in one case, and yet doesn't exist in the other case. And it makes me sad. It's a feeling, and you might feel joy or even excitement. But I feel sadness, and that's just how I feel.
        chernevik 4y ago
        These seem to me very different cases but of course you have a right to your own take
  - CityOfThrowaway 4y ago
    Startups rely on a lot of infrastructure that society provides. Things like supply chains, energy grids, financial systems, and defense. When the infrastructure we rely on functions well, our community can be ignorant to the fact that we are reliant on this infrastructure. This past week we saw a breakdown in one of our critical inputs. As a result, you are now hearing stories from people that helped work to fix the problem at a layer in the stack we don't usually think about. Think about this more as a glimpse into a technical domain that has always been there, but you are generally able to be gleefully ignorant about. It's interesting!
    - gsibble 4y ago
      Thank you :)
  - ip26 4y ago
    now we simply trade startups as financial products Suddenly it strikes me that "startups" could fill a similar finance niche in this decade as "subprime mortgages" (of mortgage backed securities) once did. Only, the risk of subprime mortgages is knowable if you dig, whereas the risk of a startup is unknowable. This might be very attractive if you're a financier trying to create the illusion of high-grade securities.
  - BaseballPhysics 4y ago
    Bad news: Technology is so deeply embedded in society, now, that it invariably gets tied up in "financial movements and shenanigans", not to mention politics, sociology, ethics, and myriad other seemingly-unrelated topics. This is what success looks like.
  - zamnos 4y ago
    Because our society operates on money. The brilliant startup founder working on the next revolution in computing still needs to pay for breakfast, still needs to pay for drinks, still needs to make rent. Even if they don't pay out of their own pocket, there's money moving around somewhere. So when the money side has problems, thanks to the modern miracle of the Internet, you're gonna hear about the money side's problems. That doesn't mean the startup world's devolved, it just means that theres a big of problem on the money side of things. There was never a world where money wasn't involved in some way, even way back in the day when Apple started. They needed money to buy the parts to build the original Apple I and the money for that came from investors like Mike Markkula who was at Intel before he was at Apple. There is some cognitive dissonance that occurs when you realize your VC has investments in other companies that are very similar to yours, and that the money people are in it for the money, but that's nothing new. The worst thing about this is how many comments I read saying that startups shouldn't have kept their payroll money in a bank in excess of $250k. When your startup is a handful of people, who's really got time to focus on that, unless what you're really focusing on is financial movements and shenanigans, to the detriment of technological innovation.
PaywallBuster 4y ago
I think it's reasonable post > Clearly shows the consequences of missing payments: > personal liabilities to directors/officers > What a private sector solution could look like > What were the alternatives (Hedge funds offering 60/70%) > How quick this solution would be up and running Maybe the author can add more details but it's interesting enough already
- gsibble 4y ago
  What details would you like to hear? The only one I've been adding is that our terms were 90-95 cents on the dollar.
  - zamnos 4y ago
    Since most of us don't know any HNW or UHNW individuals, what's the reality of what it's like to have a relationship with them? Do you call their assistant's assistant to schedule a phone call routed through a satellite phone? How does that conversation go? Do you causally bring up the need? "Hey, umm, can I borrow $3,000,000 for a couple days?" If the FDIC hadn't made depositors whole, would you just drive to the homes of UHNW individuals' living rooms and wait while they moved money via Venmo on their phone, like regular people, just with bigger numbers? And then, what would have been involved with the solution if it had needed to go live? A Excel/Google sheets with a bunch of rows on who's borrowing what, and where, and a room full of people texting around? What's mundane and obvious to you, isn't necessarily for the rest of us.
    - PaywallBuster 4y ago
      if you read the post, this is not a loan for a couple of days > Brian McDanial (fantastic attorney) at Wilson Sonsini figuring out exactly how to structure the fund it's a gamble/bet that the deposits will either be made whole or paid more than they're offering (90-95%) But with such a nice offer, the fund was most likely to make little to no profit so it would be more like "public-benefit corporation" ---- If you're around the right circle - founders/VC doing capital raising you probably know a few people who often invest or may have "exited" already so you can just get in touch " would you like to save SV startups? I'm planning to make a fund that will buy SVB deposits at 90% or more from companies to ensure they have enough liquidity for payroll and other operational costs This is mainly in the public interest by helping startups survive through the whole ordeal until something is sorted out so unlikely you'd make a profit here "

gsibble 4y ago

It was incredibly fun and a wild experience. We also weren't going to make much profit. We were offering 90-95c on the dollar compared to 60-70 from banks and hedge funds. This was about saving companies and jobs. Thought I'd share.

rexreed 4y ago
How has the startup world devolved to the point that it's primarily about financial movements and shenanigans and not related to technology innovation? I feel we're so far past where technology innovation has come from, and now we simply trade startups as financial products.
- gsibble 4y ago
  I don't think it has. This was a once in a lifetime kind of thing. My other companies are all innovative technology companies, like you said.
  - capableweb 4y ago
    > Iridium Development - Iridium Development focused on making revolutionary iPhone apps > Distribute- Distribute aimed to be the Alibaba of the US, mostly with wholesale drop shipping. > Materialist - an e-commerce solution, [...] trying to bring wholesale housing products to market. > Dave - personal financial management app > Vizit - Image Analytics > txtsmarter - Communications Surveillance Service We might have different opinions on what counts as "innovative" I guess.
    - gsibble 4y ago
      I really don't think personal attacks are called for. Only Iridium was my company, which built a pretty unique app that was featured in the App Store in its very first year (of the App Store). You conveniently left out Omnivore.io, the only other company I built. Ask anyone in the restaurant industry in the US what it is. All the rest were just employers. edit: Since I can't reply below: Omnivore was the first company that offered API access to over 80% of the installed point of sale systems in the US, including direct injection of web orders into the POS instead of needing a tablet next to the POS with manual order entry. We allowed over 1,000 partner companies to bring unique and innovative solutions to the restaurant space. Thanks for not reading my LinkedIN profile, just what sector my company was in.
      - capableweb 4y ago
        Ah, sorry... > Omnivore - PoS + hospitality services Definitely haven't been done before, you got me there :) > I really don't think personal attacks are called for. I don't think it's a personal attack, you brought up "My other companies are all innovative technology companies" so I was curious to see what you consider "innovative", thought others might be curious too, so listed what I found here.
        deleted 4y ago
        [deleted]
        gsibble 4y ago
        Omnivore was the first company that offered API access to over 80% of the installed point of sale systems in the US, including direct injection of web orders into the POS instead of needing a tablet next to the POS with manual order entry. We allowed over 1,000 partner companies to bring unique and innovative solutions to the restaurant space. Thanks for not reading my LinkedIN profile, just what sector my company was in.
        zamnos 4y ago
        You don't think adding > We might have different opinions on what counts as "innovative" I guess. might have made it seem like you were doing more than "simply listing" what you found? We might have differing opinions on what constitutes a personal attack, I guess.
  - rexreed 4y ago
    Just want to say that as a startup founder, running tech companies for the past many decades, this post makes me sad, not grateful or joyous. It makes me feel like there's plenty of money on the sidelines to fund $300M+ at-a-whim larks to bail out Startup founders who are mostly going to go bust anyways (those are just the facts of startup life), but meanwhile startup founders outside of that bubble can't raise a penny and go bust / layoff anyways. Layoffs.fyi tracker hasn't been slowing down. So it's just a feeling, but it's not of happiness - it's of profound sadness and disappointment.
    - chernevik 4y ago
      Then you aren't getting the concept. This isn't equity funding for a business idea. It's basically buying a claim on a bank in receivership. It doesn't matter if that claim is held by nextbigthing.com or Apple. Those claims are backed by SVB's portfolio of T-bonds and MBS so they are very solid. The benefit to users is acceleration of receipt and certainty. It's hardly a lark. The OP was planning to target this offering to startups, which are only fraction of SVB's depositor base. Someone saw their community in distress and thought to use their connections to put together a solution, for a modest profit. Sounds fine to me.
      - rexreed 4y ago
        I understand the concept of this particular fund raise / action. I totally get it. You don't understand my sadness. The money is there from wealthy individual investors to rescue SVB depositors who might miss a payroll or otherwise risk solvency, but it's not there to rescue other startups who are already going bust. Amazing that $300M just can appear like that over a weekend to save startups in one case, and yet doesn't exist in the other case. And it makes me sad. It's a feeling, and you might feel joy or even excitement. But I feel sadness, and that's just how I feel.
        chernevik 4y ago
        These seem to me very different cases but of course you have a right to your own take
- CityOfThrowaway 4y ago
  Startups rely on a lot of infrastructure that society provides. Things like supply chains, energy grids, financial systems, and defense. When the infrastructure we rely on functions well, our community can be ignorant to the fact that we are reliant on this infrastructure. This past week we saw a breakdown in one of our critical inputs. As a result, you are now hearing stories from people that helped work to fix the problem at a layer in the stack we don't usually think about. Think about this more as a glimpse into a technical domain that has always been there, but you are generally able to be gleefully ignorant about. It's interesting!
  - gsibble 4y ago
    Thank you :)
- ip26 4y ago
  now we simply trade startups as financial products Suddenly it strikes me that "startups" could fill a similar finance niche in this decade as "subprime mortgages" (of mortgage backed securities) once did. Only, the risk of subprime mortgages is knowable if you dig, whereas the risk of a startup is unknowable. This might be very attractive if you're a financier trying to create the illusion of high-grade securities.
- BaseballPhysics 4y ago
  Bad news: Technology is so deeply embedded in society, now, that it invariably gets tied up in "financial movements and shenanigans", not to mention politics, sociology, ethics, and myriad other seemingly-unrelated topics. This is what success looks like.
- zamnos 4y ago
  Because our society operates on money. The brilliant startup founder working on the next revolution in computing still needs to pay for breakfast, still needs to pay for drinks, still needs to make rent. Even if they don't pay out of their own pocket, there's money moving around somewhere. So when the money side has problems, thanks to the modern miracle of the Internet, you're gonna hear about the money side's problems. That doesn't mean the startup world's devolved, it just means that theres a big of problem on the money side of things. There was never a world where money wasn't involved in some way, even way back in the day when Apple started. They needed money to buy the parts to build the original Apple I and the money for that came from investors like Mike Markkula who was at Intel before he was at Apple. There is some cognitive dissonance that occurs when you realize your VC has investments in other companies that are very similar to yours, and that the money people are in it for the money, but that's nothing new. The worst thing about this is how many comments I read saying that startups shouldn't have kept their payroll money in a bank in excess of $250k. When your startup is a handful of people, who's really got time to focus on that, unless what you're really focusing on is financial movements and shenanigans, to the detriment of technological innovation.

PaywallBuster 4y ago

I think it's reasonable post > Clearly shows the consequences of missing payments: > personal liabilities to directors/officers > What a private sector solution could look like > What were the alternatives (Hedge funds offering 60/70%) > How quick this solution would be up and running Maybe the author can add more details but it's interesting enough already

gsibble 4y ago
What details would you like to hear? The only one I've been adding is that our terms were 90-95 cents on the dollar.
- zamnos 4y ago
  Since most of us don't know any HNW or UHNW individuals, what's the reality of what it's like to have a relationship with them? Do you call their assistant's assistant to schedule a phone call routed through a satellite phone? How does that conversation go? Do you causally bring up the need? "Hey, umm, can I borrow $3,000,000 for a couple days?" If the FDIC hadn't made depositors whole, would you just drive to the homes of UHNW individuals' living rooms and wait while they moved money via Venmo on their phone, like regular people, just with bigger numbers? And then, what would have been involved with the solution if it had needed to go live? A Excel/Google sheets with a bunch of rows on who's borrowing what, and where, and a room full of people texting around? What's mundane and obvious to you, isn't necessarily for the rest of us.
  - PaywallBuster 4y ago
    if you read the post, this is not a loan for a couple of days > Brian McDanial (fantastic attorney) at Wilson Sonsini figuring out exactly how to structure the fund it's a gamble/bet that the deposits will either be made whole or paid more than they're offering (90-95%) But with such a nice offer, the fund was most likely to make little to no profit so it would be more like "public-benefit corporation" ---- If you're around the right circle - founders/VC doing capital raising you probably know a few people who often invest or may have "exited" already so you can just get in touch " would you like to save SV startups? I'm planning to make a fund that will buy SVB deposits at 90% or more from companies to ensure they have enough liquidity for payroll and other operational costs This is mainly in the public interest by helping startups survive through the whole ordeal until something is sorted out so unlikely you'd make a profit here "