Nope. Finance in search for trends and potential trends in search of finance breeds systems of conformity in a race condition based on bad feedback mechanisms.
Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
81–90 of 102 posts
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#82No. Bank insolvency follows irresponsible cadres where trust does not bind, but rather, greed. SV is full of some of the greediest folks masquerading under the hip pretense of tech leadership. If anything, this brings me hope that SV will have to face the music and build real trust, something that involves the class they exploit, the users.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#83Earlier quoted context omitted.
I understand that they needed to put the money to work somewhere, but they really chose a bad way to do it. Hence the 'poorly controlled risk' that I mentioned.
I think it was quite fair to think they could have sold 10 year treasuries at cost at least. An invert yield curve for this long is not normal. But yes maybe they should have laddered better.
>An invert yield curve for this long is not normal.
Risk management at financial institutions isnt meant to be an exercise of expecting or planning for the normal. Any way we slice it, they failed to adequately assess risk.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#84Earlier quoted context omitted.
"Cost the taxpayers nothing" - well not in "taxes", but I'm not sure we can really say nothing. Clearly the banks paying for it won't just eat that cost.
SVB had more assets than depositor liabilities. IIRC the last estimate I saw claimed there was ~$30B in excess assets to depositor liabilities. The problem that SVB faced was falling out of compliance with debt ratios. The modern banking system works on fractional reserves. The US requires IIRC 10%. A run of withdrawals still meant they were asset positive but didn't have enough cash on hand. That's what forced the s…
SVB was not the only bank involved and was at a $25B deficit (from the latest I have heard) due to the fact it was having to sell those bonds at a loss to try and provide liquidity to depositors. Also, that completely ignores the time value of money. Even if those bonds will be worth enough at maturity, holding money for 10 years isn't free. They are getting 1.5%, but the risk free rate is much higher than that atm.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#85Ben Thompson has a great take on this: https://stratechery.com/2023/the-death-of-silicon-valley-ban... He makes the case that one factor of many in the success of SV was people played iterated games with the same people, which effectively built trust. Now the companies and stakes are so huge that it can be worth it to break that trust sometimes because the benefits of a single win (billions of dollars) can dwarf the…
Unless I am missing some important context, that paragraph makes no sense and gives no insight. What are the benefits of breaking a trust? Did someone make billions of dollars from the SVB collapse?
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#86I may not be fully informed (please comment if that's the case), but it seems like there were really only a couple of instigating factors: 1) SVB invested too heavily in long-term bonds, which reduced their ability to maintain liquidity. In particular, with the inverted yield curve, the recent increase in interest rates seems to me to have made it more likely that these long-term bonds were going to be underwater eit…
You summed up my understanding and point of view perfectly.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#87Nah. The days of SV innovation were mostly a meme at this point, and the collapse of SVB simply puts a fine point on it:
Big corporate rules all, sees all, owns all.
Kinda like NYC screw-you-pay-me but with a faux niceness.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#88My friends shared their disappointment over the fact that Silicon Valley Bank (SVB) will no longer be an option for their small startup businesses. They had positive experiences with SVB, finding them supportive when needed, and non-predatory on fees. Additionally, they were impressed with SVB's recent improvements to their online banking and app. One of them is now faced with finding a new bank that can understand small startup cash flows and provide helpful connections. They expressed feeling a bit bummed about the situation.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#89There's a Silicon Valley I see on the news and Twitter that I've still never once seen in real life. I moved to SF in 2008, and it was the most magical place on the planet. I met amazing people everywhere I went... smart, interesting people who just wanted to make cool things. I loved every second of it. And it's still that way to me. And I say this as a person who's been to my share of fancy VC parties. Sure, things…
I do not live or work in SV, but it's kind of interesting to me that this comment has no responses. Is that because what the parent states as being true is not actually the case, or is there some other reason why there are no responses to this comment? From my own experience with startups many moons ago (albeit on the East Coast, first Philadelphia and then New York) the parent comment rings true: it was my experienc…
For starters, there's two SV's: the FAANG and "2nd tier FAANG" companies and the startups. Also, the ethos of SV has changed over the decades. What started off as "let's change the world" in the 60's and 70's has led to the "let's make lots of money" ethos we see today. Things may appear the same from the trenches but they've definitely changed at the top.
Re: Ask HN: Has your view of Silicon Valley changed in the last 72 hours?
#90Ben Thompson has a great take on this: https://stratechery.com/2023/the-death-of-silicon-valley-ban... He makes the case that one factor of many in the success of SV was people played iterated games with the same people, which effectively built trust. Now the companies and stakes are so huge that it can be worth it to break that trust sometimes because the benefits of a single win (billions of dollars) can dwarf the…
Unless I am missing some important context, that paragraph makes no sense and gives no insight. What are the benefits of breaking a trust? Did someone make billions of dollars from the SVB collapse?
The article explains it with game theory.
In game theory, there's a big difference between a so-called "iterated prisoner's dilemma" and a one-shot prisoner's dilemma. Call these IPD and OPD.
Basically under the conditions of the past couple of decades, you could model Silicon Valley as an IPD. Under an IPD it always makes most sense to remain loyal.
But because of macroeconomic and technological changes (what author calls 'The End of the Beginning'), Silicon Valley models more like an OPD these days.
But under an OPD the winning strategy is to be self-interested.
Anyone who has noticed the shift from IPD to OPD ahead of their peers is able to make big bucks -- if only at the cost of their reputations. (But again, we don't care about 'next time', this is a one-shot, so reputations are now next to worthless.)
Specifically, with regard to SVB, depositors could have HODLed (if you will) as investors did for e.g. the run-up in GameStop.
The article insinuates that in the past, under historic/IPD conditions in Silicon Valley, they probably would have.
However, under contemporary conditions, OPD makes most sense, and most VCs, being savvy, sort of intuited this, and everyone tried to be the first out the door.
There's a broader point as well, alluded to near the end of the article -- that even more broadly speaking, our whole civ is edging closer to being best modelled as an OPD, which in turn pushes more systems towards collapse, and in doing so, invites more regulations, which in turn tamp down on growth.
So this article, if correct, comes with a gloomy forecast, and suggests that 'die fatten Jahre sind forbei' (the years of plenty are over) -- and not just for the Valley.
Great article. Prescient and uncomfortable.