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The End of Silicon Valley (Bank)

stratechery.com

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Re: The End of Silicon Valley (Bank)

#121

Post by ghaff »

nine_zeros wrote: post #113
afiori wrote: post #96

Earlier quoted context omitted.

Do people chose banks for interests rates in saving accounts? Like do people make the financial decision to use saving account rather than stock/bonds/hedge funds as investments? As far as I understand no reasonable bank anywhere offers interest higher than inflation.

Yes, people do make such decisions. Why? Because they expect stocks to fall and bonds to expose them to interest rate risk. They'd rather keep the money liquid and ready to sweep in to buy assets. People also use savings accounts for impending expenses. Human stuff such as pregnancy, kids, car repairs. Parking money in liquid savings with 3.5% interest is a very viable hedging strategy for humans. Perhaps not for ins…

At least Bank of America is still effectively 0 interest (excuse me 0.01%) on savings accounts. I'm not sure why anyone would bother to maintain a separate account beyond a checking account buffer. My brokerage sweep account is over 4% right now and transfers can be done online and just take a few days.

I assume the only reason for the savings accounts is to convince some people that they can save at their bank without bothering with another account somewhere else. (And, of course, until recently money market sweep accounts paid very little as well.)

Re: The End of Silicon Valley (Bank)

#122

Post by polygamous_bat »

ericpauley wrote: post #73
trompetenaccoun wrote: post #26

Earlier quoted context omitted.

Limits were not "ignored", the companies simply have no other choice. The problem is systematic and by design. A medium sized startup/business handling only 25 million would need to bank with 100 different banks, obviously that's inconceivable in practice. And now look at some of the more prominent customers. Pinterest, Shopify, CrowdStrike Holdings, Beyond Meat, Andreessen Horowitz, Founder's Fund, Circle. The latte…

There is a straightforward hierarchy of cash management techniques that safely handles large sums of money. If Boglehead retirees can figure it out then why can't startups? Deposit sweep cash management accounts offer FDIC sweeps up to ~3M (note that this is not just abusing some technicality, it reduces systemic risk by diversifying investments. The whole point of the FDIC is to prevent bank runs in the first place)…

> If Boglehead retirees can figure it out then why can't startups?

Because every dollar spent on keeping your investors' dollar safe is a dollar not spent on moving fast and breaking things. /s

Re: The End of Silicon Valley (Bank)

#123

Post by gen220 »

softwaredoug wrote: post #108
javajosh wrote: post #72

Earlier quoted context omitted.

That was true last week . https://www.marketwatch.com/investing/bond/tmubmusd06m?count...

Oof! Still hard to find a savings account that pays > 1%.

Marcus by GS has been paying 3.75% since mid-February! They've been pretty good for a while, now

Re: The End of Silicon Valley (Bank)

#124

Post by gen220 »

the_af wrote: post #50

Out of curiosity, did anyone ever believe the "rainforest" metaphor for Silicon Valley, that entrepreneurs and investors were more interested in global/"community" success than their own individual wins, and that they wouldn't react egotistically when real money was at stake? Stratechery asserts this was "probably true" in 2012 but not longer true, and that Uber was one of the first cases where short term/individual…

As somebody who grew up in SV, I think this mythos was incubated around the period between the Yahoo/Ebay IPOs ('96/'98) and the Google IPO ('08). The concept reached its peak (although it was already rotting from the inside) around the time of FB's IPO ('12).

It didn't exist much before, and it's (IMO) fully gone now.

Re: The End of Silicon Valley (Bank)

#125

Post by javajosh »

gen220 wrote: post #120
javajosh wrote: post #116

Earlier quoted context omitted.

It sounds interesting to me, and worth trying, but I'd be worried that such a villain would be uninteresting to watch on film. No cackle? No monologuing? They would be pure self-interest, executed calmly and without pity (including self-pity), would do crime but never brag about it, never get caught. Such a one would not be terribly interesting to watch because the villain basically has the mind of a spreadsheet.

Sounds like the plot to "There will be blood" to me. :) That was one of the best plots/executions of a plot that I've ever seen!

Love "There Will be Blood" (and PTA), but I don't see how it fits. Plainview as a villain was great because his extraordinary, single-minded ambition motivated him to attempt kill his own humanity. But Plainview failed. His humanity was still in there, in long-abused, long-neglected agony and rage, which had its final, full, disgusting eruption in the final scene of the film with Paul Dano's character. It was evidence that Plainview couldn't kill his own humanity. This made him interesting. My spreadsheet villain succeeds in fully killing his own humanity. I don't know if this is even possible, but given the plasticity and variation in the human mind, it probably is. But I still don't think it would be interesting to watch!

Re: The End of Silicon Valley (Bank)

#126

Post by afiori »

nine_zeros wrote: post #113
afiori wrote: post #96

Earlier quoted context omitted.

Do people chose banks for interests rates in saving accounts? Like do people make the financial decision to use saving account rather than stock/bonds/hedge funds as investments? As far as I understand no reasonable bank anywhere offers interest higher than inflation.

Yes, people do make such decisions. Why? Because they expect stocks to fall and bonds to expose them to interest rate risk. They'd rather keep the money liquid and ready to sweep in to buy assets. People also use savings accounts for impending expenses. Human stuff such as pregnancy, kids, car repairs. Parking money in liquid savings with 3.5% interest is a very viable hedging strategy for humans. Perhaps not for ins…

Is that 3.5% an actual figure or just an example? I admit that it is much higher than I would have expected (which was on the order of 0.1% ~ 0.01%), did SVB offer that kind of interests?

Re: The End of Silicon Valley (Bank)

#127

Post by nine_zeros »

afiori wrote: post #126
nine_zeros wrote: post #113

Earlier quoted context omitted.

Yes, people do make such decisions. Why? Because they expect stocks to fall and bonds to expose them to interest rate risk. They'd rather keep the money liquid and ready to sweep in to buy assets. People also use savings accounts for impending expenses. Human stuff such as pregnancy, kids, car repairs. Parking money in liquid savings with 3.5% interest is a very viable hedging strategy for humans. Perhaps not for ins…

Is that 3.5% an actual figure or just an example? I admit that it is much higher than I would have expected (which was on the order of 0.1% ~ 0.01%), did SVB offer that kind of interests?

https://www.nerdwallet.com/best/banking/savings-accounts

Re: The End of Silicon Valley (Bank)

#128

Post by gen220 »

javajosh wrote: post #125
gen220 wrote: post #120

Earlier quoted context omitted.

Sounds like the plot to "There will be blood" to me. :) That was one of the best plots/executions of a plot that I've ever seen!

Love "There Will be Blood" (and PTA), but I don't see how it fits. Plainview as a villain was great because his extraordinary, single-minded ambition motivated him to attempt kill his own humanity. But Plainview failed. His humanity was still in there, in long-abused, long-neglected agony and rage, which had its final, full, disgusting eruption in the final scene of the film with Paul Dano's character. It was evidenc…

That's a fair point!

I guess the most searing part of the film, in my memory, is the first / middle thirds of the movie. But maybe I only remember the first two thirds because it's balanced so effectively by the ending. :D

I'd watch your movie, but I agree it'd probably be criticized as boring because the anti-hero doesn't "develop". Maybe it'd be better if you focus on their childhood/adolescence, i.e. the experiences that sparked the intent to crush their own humanity. Godfather 2 vibes.

Re: The End of Silicon Valley (Bank)

#129

Post by ghaff »

nine_zeros wrote: post #127
afiori wrote: post #126

Earlier quoted context omitted.

Is that 3.5% an actual figure or just an example? I admit that it is much higher than I would have expected (which was on the order of 0.1% ~ 0.01%), did SVB offer that kind of interests?

https://www.nerdwallet.com/best/banking/savings-accounts

I assume all of those are money market accounts like a brokerage sweep account as opposed to a regular bank savings account which, at my bank at least, are still paying 0.01%. Which may be a reasonable risk/reward tradeoff as 4% on, say, $100K isn't nothing.

Re: The End of Silicon Valley (Bank)

#130

Post by gen220 »

coldtea wrote: post #74
ISL wrote: post #14

Earlier quoted context omitted.

Those free services are the "interest" you receive in return for your deposits.

Don't give me interest then. Just store the money. If I want interest I'd then switch to another type of account, that I explicitly allow to lend them out for this purpose. In fact, they should have seggregated isolated-from-others-in-default accounts, with different fractional reserve percentages...

This is how the banking system works.

As fiduciaries responsible for managing millions of dollars in capital, founders/VC have a responsibility to understand the parameters of the financial game they're playing.

Any competent financial risk manager has a well-worn playbook of solutions to the problem of "how do we put money in short/medium/long-term storage?", that are appropriate in accordance to how big the pile is and how liquid you need it to be.

If we disagree with the rules of the game, the proper solution is to lobby to have them changed and debate the merits in the court of public opinion, not to live in ignorance of the rules and cry "contagion" to be made whole, when we're faced with the consequences of ignoring those rules.

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