Silicon Valley Bank, which was largely backed by VCs, invested in VC funds alongsides pensions, university endowments, and CCP, Saudi, et al shadow money. Then those funds invested in startups, requiring them to deposit to SVB. Another VC comes in and invests in startup at a higher valuation, creating paper gains for the VC. The VC takes paper gains to SVB, which makes a personal loan to them collateralized by their partner interest in the fund.
At the same time, founders would also take out personal loans, all of which is basically a mix of money printing and customer deposits. Presumably these loans were held as deposits on SVB in personal accounts until drawn, giving them more capital from which they could keep making loans. After marking up the startups, they needed someone to dump their bags on, so they went to Wall Street, which was happy to hock their shit because they got large bonuses and fees based on transaction volume.
They would then find money managers that suffer from principal agent problem to buy up assets with other people's money who don't understand the risks being taken, probably including some of the same pension funds and endowments from before that only allocate a tiny percentage to venture capital. Most of these startups then fell 80-90%, especially the SPAC ones. See the trick was they put real physical products in lousy businesses and said "see, it's not Theranos, the widget is real," but real widgets do not make good businesses.
Meanwhile, SVB needs more money to through lavish parties and pay their woke staff so they YOLO into risky plays to chase more yield. Suddenly, the ponzi money printing scheme slows down and the VCs stop deploying capital, meaning no more new depositors to pull loans from. This might have been a small percentage of balance sheet overall, but actually, the bank typically does not need all their cash on hand since it's fractionally reserved. So you can't say the $7b was insignificant.
In the end these depositors getting their bailout are largely also getting loaned money, which is literally money printer dollars being reprinted for them. Everyone on payroll was getting paid no matter what because payroll is a liability that has pretty high seniority if a company is not bankrupt and equity holders simply would have been diluted. It was a total lie. Zero impact on employees, most of whom are highly skilled. The best they could get to push on Twitter was what could come off as a caricature of a fake startup with an ex-McKinsey charlatan. The fake tech industry actually slows down tech, especially if you have to operate in its vicinity, and no one can escape its effects, for instance on an labor pricing. People who don't understand this and fall for the "muh innovation" narratives are tech-illiterate fake bitcoiner Keyensians.
Did I get some things wrong in this? Maybe, but for every thing I got wrong, there's almost certainly something 3 times worse that I missed. You ever heard of quantum tunneling? Well I do that with the truth. I can find the truth even with some amount of error rate, which is what you have to do with Bitcoin too. You can feel it in your bones that Bitcoin is literally true, then you go back and fill in the details of how it works and adjust and subtle misconceptions.
🖕🖕Fuck Silicon Valley🖕🖕
Fuck the VINOs: "venture" "capitalists" in name only that want to sound important when drinking win.
Fuck the fake founders that are affinity scamming real engineers with economically junk products.
Long live real technologists that build the things that actually matter despite Silicon Valley commie liberty LARPers and limousine liberals slowing the world down.
You can break down the real tech, by what makes it onto my list. Most startups don't make the cut.
This is all the stuff that actually matters.
https://civilizationmetrics.org
Dirac Delta
npub1c8…pqsah
2023-03-14 07:36:41
Author Public Key
npub1c8nlcgd5l8qenesgdcy4vw0s794yujyy23z50n52v5ld0ddkcjnsppqsahPublished at
2023-03-14 07:36:41Event JSON
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"pubkey": "c1e7fc21b4f9c199e6086e095639f0f16a4e4884544547ce8a653ed7b5b6c4a7",
"created_at": 1678779401,
"kind": 1,
"tags": [],
"content": "Silicon Valley Bank, which was largely backed by VCs, invested in VC funds alongsides pensions, university endowments, and CCP, Saudi, et al shadow money. Then those funds invested in startups, requiring them to deposit to SVB. Another VC comes in and invests in startup at a higher valuation, creating paper gains for the VC. The VC takes paper gains to SVB, which makes a personal loan to them collateralized by their partner interest in the fund.\n\nAt the same time, founders would also take out personal loans, all of which is basically a mix of money printing and customer deposits. Presumably these loans were held as deposits on SVB in personal accounts until drawn, giving them more capital from which they could keep making loans. After marking up the startups, they needed someone to dump their bags on, so they went to Wall Street, which was happy to hock their shit because they got large bonuses and fees based on transaction volume.\n\nThey would then find money managers that suffer from principal agent problem to buy up assets with other people's money who don't understand the risks being taken, probably including some of the same pension funds and endowments from before that only allocate a tiny percentage to venture capital. Most of these startups then fell 80-90%, especially the SPAC ones. See the trick was they put real physical products in lousy businesses and said \"see, it's not Theranos, the widget is real,\" but real widgets do not make good businesses.\n\nMeanwhile, SVB needs more money to through lavish parties and pay their woke staff so they YOLO into risky plays to chase more yield. Suddenly, the ponzi money printing scheme slows down and the VCs stop deploying capital, meaning no more new depositors to pull loans from. This might have been a small percentage of balance sheet overall, but actually, the bank typically does not need all their cash on hand since it's fractionally reserved. So you can't say the $7b was insignificant.\n\nIn the end these depositors getting their bailout are largely also getting loaned money, which is literally money printer dollars being reprinted for them. Everyone on payroll was getting paid no matter what because payroll is a liability that has pretty high seniority if a company is not bankrupt and equity holders simply would have been diluted. It was a total lie. Zero impact on employees, most of whom are highly skilled. The best they could get to push on Twitter was what could come off as a caricature of a fake startup with an ex-McKinsey charlatan. The fake tech industry actually slows down tech, especially if you have to operate in its vicinity, and no one can escape its effects, for instance on an labor pricing. People who don't understand this and fall for the \"muh innovation\" narratives are tech-illiterate fake bitcoiner Keyensians.\n\nDid I get some things wrong in this? Maybe, but for every thing I got wrong, there's almost certainly something 3 times worse that I missed. You ever heard of quantum tunneling? Well I do that with the truth. I can find the truth even with some amount of error rate, which is what you have to do with Bitcoin too. You can feel it in your bones that Bitcoin is literally true, then you go back and fill in the details of how it works and adjust and subtle misconceptions.\n\n🖕🖕Fuck Silicon Valley🖕🖕\n\nFuck the VINOs: \"venture\" \"capitalists\" in name only that want to sound important when drinking win.\n\nFuck the fake founders that are affinity scamming real engineers with economically junk products.\n\nLong live real technologists that build the things that actually matter despite Silicon Valley commie liberty LARPers and limousine liberals slowing the world down.\n\nYou can break down the real tech, by what makes it onto my list. Most startups don't make the cut.\nThis is all the stuff that actually matters. \nhttps://civilizationmetrics.org",
"sig": "cfb95402a5ac5ca58e140c520f8fbd539a9174304fa32190eeef9582c6d3b6d2274f062e9b022b5eb7373dd8e8b251d4be0ab6a8688f7730f08138cbd2b8e32c"
}