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Fixed in the article now -- started the company in Jan 2022

SVB was forced to sell a lot of assets to create the cash to pay out deposit outflows on Thursday. As that process happens they were left with fewer and fewer assets that could be sold without a lose (their intention was to hold a lot of these assets to maturity, which is allowed). The bulks of their assets themselves are mostly liquid (not the actual venture debt, etc) but as you sell the assets in the order of their value relative to mark-to-market, their book took on more and more loses. By the end of the day they were insolvent to the tune of nearly negative $1B -- with all shareholder equity wiped out. The point being that the FDIC can sell their remaining assets into the market (it wasn't a liquidity crisis in THOSE markets) and eventually that will net out to some haircut for depositors.

The FDIC is a well-oiled machine.

My understanding is that the FDIC does have to orderly liquidate all of SVB's assets unless they find a buyer. That does mean they have to sell all their outstanding treasury and mortgage assets, they don't have the ability to hold them to maturity (HTM).

SVB had billions of dollars in first-lost equity capital that was completely wiped out against those marks, hence them being insolvent. But that means there isn't a 1-to-1 lose for depositors against those underwater assets.

Every bank account is insured up to $250K.

Beyond that, customers have "uninsured deposits"

But the FDIC is in the process of selling all the banks assets, which nearly cover all of their outstanding deposits. No one knows how much that difference will be right now. But companies should expect a lot more than just the minimally insured deposits back.

You underestimate how wide spread SVB's depositor base is and who all these "tech workers" are. SVB has offices in Georgia, North Carolina, three in Texas, etc, etc. A lot of them will have trouble if payroll isn't met (not to mention the company's legal obligations to pay people on time for work already done).

A lot of SVB's assets can be sold immediately in robust markets (e.g. treasuries)

On the first line what do you mean by "The thing is that people didn't lose interest in startups. Startups lost interest in people." Or what, differently, do you want startups to do? (I"m genuinely asking, I'm curious!). I'm all for things like longer exercise windows, insourcing, etc, but I also think that startups, generally, have a much more inclusive brand of capitalism than most normal companies.

As for the rest, I'm not sure I follow the argument. I do not agree with the notion that every company that succeeds but has gone through YC would have succeeded without YC. I also don't agree with the notion that only companies that are going to succeed either way go through YC either. Empirically the latter is more easily falsifiable but I think both are false.

Look, im general I’m quite sympathetic to the argument that wealth inequity is both morally/ethically bad (which I think you’re saying) and bad economically for growth and prosperity (which I don’t read you as saying). I also think that many societies have problems with wealth inequity overall, and few have successfully cultivated innovation in the last decade or two as successfully has the US (partially driven, yes, by YC).

To me the solution to the problem isn’t the front-end, that is attacking YC and startups and entrepreneurship. Rather, I would generally support deep and effective estate taxes, wealth taxes if they could be found to be effective, attacks on tax avoidance behavior, etc. (e.g. I don’t have solutions, but I’m disgusted by the behaviors and advantages reported on by ProPublica recently here https://www.propublica.org/article/the-great-inheritors-how-... but I also think there are great fortunes in the UK, France, Germany, the Nordics, so not sure anyone has quite figured it out).

At the same time, I think that economic growth is the central and defining anti-poverty tool in history. Other countries envy our ability to grow the pie even as we have challenges in fairly distributing that pie. I’d rather find solutions to the problems of distribution without attacking growth.

On OpenSea, I’m not following the argument exactly. I assume you think all art, particularly mass market art is a sort of mass delusional petite bourgeoisie / opioid of the masses pursuit foisted on them by a conspiratorial monied class? Or, more likely, it’s just all a big, experimental community of purists and artists and hucksters and beyond alike that are trying something new and interesting and potentially quite generative and innovative. I have no idea if in five years OpenSea will be huge or dead or somewhere in-between but I’d admire that they have built, created, strove.

On Airbnb, I have quite a bit more ambivalence but overall my vision of the world has a lot more density and urbanism. It’s good for people, it’s good for the environment, etc. If I had a magic wand in, say, San Francisco, the city would have housing for 3-4 times as many people, a much much more robust public transit system, etc, and the problems of gentrification would be addressed primarily through a massive uptick in housing stock and density not by the relatively limited effects of (the practically banned in SF) Airbnb.

This thread is somewhat depressing. Depressing because the very nature of YC and HN at its best is optimism. A belief in the ability to build and not just a respect for those who do but a genuine desire to support those trying. Maybe not succeeding, but trying to create something in a world so set on making that difficult. It that always morally perfect: no. Does that always work: no. But, at its best, YC operates more like a university than a venture fund.

Jessica, PG, Geoff, PB, Michael, Jared, Sama and all the other partners have all done very very well by creating/working on YC, but there is a particular underlying ethos of support. Of just a human connection with founders who build. HN in its earliest days had that too, but I don't see any of that on this thread.

The article has a certain ambivalence about the nature of startups themselves (and perhaps, under that, capitalism itself), but Y Combinator has had a profoundly positive effect on my life personally, the lives of hundreds of people I know, the startup and venture ecosystem, and -- whether or not this is "changing the world" -- the economy more broadly.

There are people here who are shitting on the companies YC has helped, in their earliest stages, push forward. Would some of them have succeeded without YC, absolutely. But that doesn't change the fundamental fact that no other small collection of people in history has been instrumental to creating so much enterprise value from scratch -- and thus economic wellbeing more broadly (with, maybe, the exception of Sequoia) other than a few founders of the very biggest tech companies (which YC companies will eventually join the ranks of).

Maybe, you say, that's all just signaling or selection effects. Perhaps you don't learn anything at Harvard or YC; it's just about getting in. Maybe. But when that list includes Airbnb, Doordash, Coinbase, Gitlab, Dropbox, PagerDuty, Stripe, Instacart, Brex, Cruise, Faire, Reddit, Zapier, Gusto, Rippling, Flexport, Segment, Checkr, Webflow, Lob, Opeansea, Sift, Astranis, Twitch, Ironclad, just to mention the ones I can pull off the top of my head, I think it says something about the method, the process, and the support mattering.

And look I'm a founder who didn't succeed with the company I built during YC but that has more to do with my NOT listening to and focusing on the lessons that the partners were trying to impart than any failure on their part.

Now, I'm not without criticisms and suggestions but damn if I'm not rooting for YC and every company in every batch at Alumni Demo Day.

There is a multi-thousand word article about HN in the New Yorker...so seems like covered territory: https://www.newyorker.com/news/letter-from-silicon-valley/th...

I don't think they compete much at all right now:

Carta primarily sells software to companies to manage their cap table. They're adding financial products, but all company-facing.

Compound is a product-driven financial advisor to startup employees, founders, and others in tech.

Look, I know that the idea of being customer focused might seem trite, but I wanted to focus on one thing: it's the little things.

"What actually differentiates stripe from the rest of the bunch though? It’s the little things.Stripe obsesses over creating a seamless CX. Small annoyances in applications compound. A user might not churn immediately because you have a bunch of unoptimized functionality or crappy UX, but it’s a recipe to create a grumpy user. And grumpy users aren’t loyal users."

This is an idea I've been turning over in my head a bunch recently: the compounding effects of delighting your users. That cumulative innovation that comes from building for your customers....I sometimes get asked "what's the killer idea behind [company X]". But there isn't one big thing. There are many, many small things built on having a relentlessly customer-back attitude. You can't just copy the "idea", you have to copy the way of working and thinking. That's a lot harder.

Let's take Brex as another example. It's the segmentation, UX, marketing, rewards, underwriting, etc. It's each of those things broken up into a hundred subcomponents and iterated on. It's an entire ethos and operating model. That's cumulative innovation...not a single idea.

Most consulting firms (BCG, Bain, McKinsey) and accountancies (KPMG, Deloitte) have incredibly strong incentives for partners to agree to leave in their early 60s.

I checked earlier but you're obviously correct. Thank you.

Apropos nothing really at all, I always found it interesting that Robert Louis Stevenson's father (https://en.wikipedia.org/wiki/Thomas_Stevenson) was a famous engineer that is mostly lost to modern history because his inventions don't really matter to us today.

Which I learned from this obscure quote (not even anywhere on Google) I dug up in the Brown University archives one summer:

The need of our country is not to lift marble to the fortieth story of some new office building, but to lift the level of character; not to whiten the seas with the sails of commerce, but to develop those simple fidelities and homely virtues which are the cheap defense of nations. When Tennyson wrote ``The Crossing of the Bar,'' he did more for civilization than if he built any ocean-liner or man-of-war. Thomas Stevenson did much for England when he built the lighthouses which send their radiance each night over the tossing waters of the Channel. But we owe far more to his son, Robert Louis Stevenson, because he taught us how to kindle a light within, how to keep the soul serene and steadfast in the face of pain and death. When Millet seized his brush and painted the `Angelus' on the bit of canvas that cost him three francs, he did more for labor and the laboring man than if he had seized a spade and worked for fifty years in the fields in France. Not the men who add to out quantity of materials, but the men who deepen the quality of our living, are the real benefactors and educators of the world. In such endeavor our antagonisms vanish, because we become workers together with god. -William H.P. Faunce, President of Brown University

I think this is a more complicated question that it first appears. What do you mean by leadership? Getting things done for some strict definition? Managing a team? Managing a huge enterprise? I think reading books across the spectrum of leadership and management is critical, as each gives you some feeling of the underlying “truth” that you’re trying to find.

I think the best book on the topic as I think you mean it is High Output Management by Andy Grove. It’s a classic. Incredibly well written. Direct.

From there, I’d actually take a pivot and read MCDP 1 Warfighting, which is concise, brilliant, generally applicable, and completely aligned with the thinking of Grove. Along the same lines, I’d consider reading about OODA (I like “Boyd: The Fighter Pilot Who Changed the Art of War” but not strictly necessary to read an entire biography). I think then you start to see that “Management” began to mean something particular in the post-war era for those who could see it, that it’s been lost in most organizations. Agile, lean, blah blah blah is all sort of derived from here.

Then get some conditioning on how it all goes wrong, for which I would suggest the classic “The Mythical Man-Month: Essays on Software Engineering”, which is generally applicable.

Then personally, I era toward thinking about organizations that have accomplished great things, so suggest “Creativity, Inc”, “Doing the Impossible: George E. Mueller & the Management of NASA's Human Spaceflight Program”, and books of those type.

This article fails to live up to its premise of thinking through what the dissolution of the American empire would look like but does end up making an interesting case for local vitality and governance.

Ah yes, the subtle distinctions between escheatment and breakage, my two old friends.

A nice Google search proves why this can be so complicated: it's actually very important and the best blog post about it is this one https://blog.agilenceinc.com/making-sense-of-unused-gift-car... (it's not very good)

Although I haven't spoken to Geoff in a number of years (We did YC S13), I remember him as a tough but effective advisor to us and many others. A lot of his lessons didn't sink in for a long time -- perhaps because I'm a little thickheaded -- but they were always spot on.

(I’m the author and the OP)

Agreed! I want to do a much bigger international scan and am working with some colleagues in Europe and Asia.

I know a decent amount about open banking and have been gathering my thoughts (I.e. I keep writing and rewriting without finding the right angle) about it more generally. PSD2 is being perused primarily from a compliance perspective rather than a revenue generating perspective.

You’re right. It is true that top quality LPs tend to be universities, foundations, and pension funds. And with a funds USV’s size it’s pretty easy to only fill it with those good guys. I was surprised they had any family offices.

Before the global growth fund, Sequoia claimed that all of their LPs were not-for-profits (although excluding pensions funds is usually for transparency reasons).

Having said that, I don’t think that every top quartile fund could make the same claim even if USV, Sequioa, and Benchmark could...

Except, Fred made the decision about his LPs over the last 15 years...

I would love to know what that article is! You have any more info?

I made parts of this argument recently: https://www.americanbanker.com/opinion/regulators-need-to-st...

And feel free to support the campaign financially even if you don't live in SF!

Wholeheartedly concur on this recommendation. A great book that I came to these comments to recommend.

This is chump change, we should have invested $2.58 billion or more. China isn't taking half measures in their state's science and technology investments. They realize we're in a second cold war, just one where the two combatants have more economic interdependence. They are making investments like the ones that helped us win the last war.

but with all that functional immutable efficiency, do you really even need a second person? #yagni

I misinterpreted your first post as being a lot more snarky than this second comment suggests, sorry about that.

This is reductionist and offensive.

(1) On a practical level, although I don't know Greg's personal financial situation, he was the CTO of Stripe for five years. He's rich enough not to work. He works exactly because he's enthusiastic.

(2) Secondly, to say that Greg merely handles logistics for OpenAI is to willfully ignore the post as written, and the reality on the ground.

Also, I'm not sure Sam is a billionaire, although well on his way.