[HN Gopher] OpenAI CEO Sam Altman sent startup six-figure loan a...
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OpenAI CEO Sam Altman sent startup six-figure loan after SVB
collapse
Author : CharlesW
Score : 115 points
Date : 2023-03-12 20:03 UTC (2 hours ago)
(HTM) web link (www.businessinsider.com)
(TXT) w3m dump (www.businessinsider.com)
| milofeynman wrote:
| Shopify is doing something similar for their merchants
|
| https://twitter.com/tobi/status/1635038686466441216
| phatang wrote:
| I need 6 thousands
| ShamelessC wrote:
| Quick someone get this person 6 thousands!!!
| Balgair wrote:
| Related: Unfortunately, this tends to be a common fallback in
| many business when times are tough. My folks had to do this with
| their employees a few times when I was a kid. Other people in
| that industry had to too, from time to time.
|
| As other commenters state, if you know that a boss does this for
| you, then you now know a good boss to have. Though, most bosses
| won't tell you they did it, obviously.
| vagabund wrote:
| Commendable of course but also feels like a no brainer.
| Depositors will almost certainly be made whole. Word will spread
| of the deed and the goodwill generated will more than repay the
| low-risk short term loan.
| exhaze wrote:
| Based on my interactions with Sam, he doesn't seem like the
| kind of guy who would ever do this for PR. I think he just
| somehow became aware of this company and, in classic sama
| fashion, decided it should not fail due to SVB, reached out to
| the founders, promptly wired them money.
| resource0x wrote:
| What is six-figure loan? Is it like $100,000? Is it really a
| heroic act worthy of posting on the front page?
| kfrzcode wrote:
| Anywhere between $100,000 and $999,999, ostensibly.
| ignoramous wrote:
| > _Altman did not confirm the amount he gave to Rad AI, or
| any other startups, but Gurson told Reuters he would guess
| Altman has given at least $1 million to his startup and
| others._
|
| > _Sam has been sending stuck startups money today with no
| docs, just saying 'send me back whatever you can whenever you
| can'_
|
| May or may not be front-page worthy (and regardless of the PR
| potential / optics), this is Sam walking the talk, as it
| were.
| roboy wrote:
| Q from outside the US: why is capital needed for payroll mid
| month? Are there some automatic insolvency processes if it is
| missed by a day? Why do the companies fall apart if there is just
| a few days of payment delay? (I mean it is obviously a shit
| situation, and having to tell the team payment might take a few
| days more than usual is bad, I am just surprised how 2 days of
| no-cash seem to wreak havoc...)
| icelancer wrote:
| Wage payment delays in the state of California are severely
| punishable under law:
|
| https://www.ottingerlaw.com/blog/wages-hours/employer-not-pa...
| phphphphp wrote:
| "If you receive a late paycheck, California Labor Code 210
| requires employers to pay a penalty of $100 for an initial
| violation."
|
| Severely is overselling it.
| icelancer wrote:
| That's for "not willful."
| dragonwriter wrote:
| Its $100 if it is _both_ a first offense _and_ not willful.
| For any willful or intentional delay, _or a second or
| subsequent late paycheck_ regardless of willfulness, the
| penalty is $200 _plus_ 25% of the payment that was due.
|
| (And if any terminal paychecks are late, there are greater
| penalties - waiting time penalties equal to an average days
| pay for each day of delay up to 30 days - though I don't
| recall if there is a wilfullness condition or modification
| to that.)
| icelancer wrote:
| The link I found undersells it, too. In some cases, the
| corporate veil can be pierced and executives can be made
| personally liable.
| choppaface wrote:
| Except Musk has established precedent at Twitter that you can
| just fire employees for cause.
| icelancer wrote:
| This is somewhat disputable, but regardless, it has nothing
| to do with delayed payments.
| forgottenlogin9 wrote:
| 1) California employment is at-will, employees can always
| be fired.
|
| 2) What on earth does this have to do with running payroll
| late?
| rdl wrote:
| On 1), you actually have even higher obligations to pay
| IMMEDIATELY if you fire someone, including for all other
| money owed (accumulated vacation/sick days, etc.)
| dragonwriter wrote:
| > Except Musk has established precedent at Twitter that you
| can just fire employees for cause.
|
| "Established precedent" is...not a fair description of
| action which is being challenged in the courts, where no
| precedential legal decision has been made.
|
| Also, firing employees would just make the California rule
| requiring _immediate_ payment of final paychecks, with
| waiting penalties of 1 days pay for day of delay up to 30
| days, applicable, as well as triggering other time-
| sensitive legal obligations that a company without access
| to cash might not want.
|
| Plus, it means that once you get access to your cash again,
| you don't have the employees (and might have a lot less
| positive image in the community you would want to hire from
| to replace them.)
| rdl wrote:
| Most companies in the US do payroll on either a 2 week cycle
| (which sucks because some months you do 3 and some times you do
| 2), or 1st and 15th (or otherwise twice a month). March 15 is a
| very common payroll date.
|
| They're batch processes, done by dedicated payroll firms, since
| there are lots of tax/other obligations as well.
|
| Missing payroll by even one day causes 1) lots of drama with
| employees 2) starts some legal problems 3) potentially screws
| up people's healthcare/other benefits 4) potentially causes tax
| problems. Some of this is with the state, some federal.
|
| Payroll is basically the second to last thing you want to miss
| (certain government obligations above it, since they have
| liability for the officers directly).
|
| (This is mostly because employers are presumed to have a lot of
| power vs. employees, and generally do, and there have been a
| lot of historical abuses of companies paying people slowly,
| withholding wages, etc., which puts the employees in a position
| of "do I quit and guarantee I don't get paid, or do I work a
| little bit more and maybe collect what I'm owed" and then
| companies continuing to abuse it...)
| ghaff wrote:
| Some people like the "extra" checks of a 2 week cycle. Others
| prefer twice monthly cycles because it better aligns with
| expenses like mortgages and utilities.
| rdl wrote:
| Lots of people like the extra checks, but very few
| companies like paying that way; it makes modeling so much
| harder. If you were doing weekly financials maybe but most
| companies do monthly.
| ghaff wrote:
| I'm not sure. I've been with a company that's switched to
| a bi-weekly. But not sure of the reasoning. But probably
| something to do with payroll predictability.
| physicsguy wrote:
| Quite interesting, here in the U.K. it's generally monthly
| payroll, usually towards the end of the month, something like
| closest working day after the 25th is common
| rdl wrote:
| In Puerto Rico (where I live) there's an even weirder
| system -- people usually get/expect (and certain classes of
| employment obligate) a "13th month" check. Pretty common in
| LaLtAm; exists in some of Southern Europe too.
| manuelmoreale wrote:
| Some contracts are even getting a 14th one. 13th is
| fairly common in Italy and it's usually bundled together
| with your December one.
| roboy wrote:
| Yep, in Germany too, hence my surprise.
| netdur wrote:
| I don't know but... some companies used to pay me biweekly,
| every odd monday, then there is company used to paid me once
| end of month and another paid once per month but in middle of
| month, with limited accounting resources they pay bills twice,
| first of month for outside and middle of month for salaries and
| stuff
| loeg wrote:
| > Q from outside the US: why is capital needed for payroll mid
| month?
|
| The US largely does payroll biweekly (every two weeks).
| Sometimes weekly, although usually not in tech. It isn't like
| Germany or whatever where payroll is only once a month.
| dragonwriter wrote:
| > The US largely does payroll biweekly (every two weeks).
|
| Weekly, biweekly, monthly, and semimonthly are all common; In
| most states, there are rules setting minimum frequency (and
| sometimes regulating on what days as well as frequency), and
| they may vary by industry and job type. E.g., for California:
| https://www.dir.ca.gov/dlse/faq_paydays.htm
| loeg wrote:
| I believe biweekly (or semimonthly, which is very similar)
| are more common than the others, at least in tech.
| dboreham wrote:
| a) most employees are paid every 2 weeks and b) there are laws
| that say an employer is committing a crime if wages are not
| paid on time. So any properly run business takes great care to
| ensure that adequate cash is on hand to cover wage commitments
| (not just the money due to employees but also taxes due to
| state and federal governments). When thar cash goes up in SVB
| smoke, that's a big and immediate problem. You could in theory
| be sued or even go to jail.
| dragonwriter wrote:
| > there are laws that say an employer is committing a crime
| if wages are not paid on time.
|
| Unless it is at least willful, its probably not a crime. It
| is, however, generally _illegal_ and carries a civil cost
| even when not criminal.
| gfsdgsfgfds wrote:
| Just one anecdote of many. I'm a founder of a bootstrapped
| startup. We are/were with SVB. On Thursday I tried to get a Brex
| cash account setup to move some operational cash there but it
| didn't happen in time. I thought of wiring money out of SVB to my
| personal account but decided it felt too dodgy. Payroll for 2
| weeks ending March 15th had to be funded through Gusto by
| tomorrow (March 13th). So I did all I could do without delaying
| payroll, dropped my salary to near zero and wired the payroll
| money to Gusto from my personal checking account. Being
| bootstrapped and low headcount this was possible. I'll have to
| retrospectively do some loan paperwork I guess. It would have
| been a tougher comms to staff if I didn't happen to have enough
| liquidity personally.
| leetrout wrote:
| How much cash do you have available?
|
| Other threads over the past few days scoffed at having 100-200k
| in cash available.
| inconceivable wrote:
| after being here for over 10 years (not on this account),
| i've observed that hn is basically split into two groups:
| people with money, and people who don't have much of it.
|
| the people with less money are much more vocal about it, for
| obvious reasons.
| jll29 wrote:
| What you state is perhaps obvious, I would not even bother
| to open a new account to conceal my identity just to say
| that...
|
| It is a bimodal distribution of (1) the lucky ones and (2)
| the ones either "not yet lucky" ones (1/10) or the "never
| lucky"ones (9/10).
|
| I find it refreshing to hear stories about how things did
| _not_ work out (from the sources). It is much harder to get
| the real stories behind the successes because people tend
| not to ascribe things to luck but create some story after
| the fact in the same way, as they say, "the winner writes
| the history".
| inconceivable wrote:
| if you believe in good luck, do you believe in bad luck?
| you frame it as "not lucky" instead of "bad luck".
|
| in other words, if you ascribe success to nothing in
| particular other than luck, why do you put more stock in
| the negative case? couldn't failure be caused by nothing
| other than bad luck?
|
| reading failure stories to look for what to avoid might
| not be the right strategy if you believe in a world where
| luck dominates.
| inconceivable wrote:
| i had to do this once during a clerical fuckup with our payroll
| provider.
|
| the accountants just classified it as a reimbursed expense. you
| just comp yourself the exact same amount as the payroll and it
| isn't taxed as income.
|
| in general accountants have ways of dealing with all sorts of
| edge cases, but you need to keep REALLY good documentation and
| notes about what/why/how, etc. "i thought the bank was going to
| collapse, and then it did" is a pretty good reason.
|
| wiring yourself the money and moving it to a new business bank
| account would have been perfectly fine too - you're simply
| moving the cash to another location. in fact i'm pretty sure
| that's what most people who got their money out of svb did -
| very few small businesses have multiple checking accounts.
| rdl wrote:
| Not a lawyer, but I would be pretty comfortable with SVB ->
| personal account if you documented why and communicated about
| it in advance with board/counsel. (Obviously the next step
| would be opening a Chase/etc. account and sending the funds on
| to that, not using your personal account for company business
| on an ongoing basis, but a limited number of emergency
| transactions should be fine.)
| kkielhofner wrote:
| Given the disaster and nearly unprecedented nature of these
| events I doubt anyone would bat an eye at a CEO taking the
| decisive action to do what needs to be done to survive (and
| fix it later). For many the past few days have been the
| startup equivalent of "fog of war".
|
| As others have noted it's not embezzlement/commingling and
| given the scenario "Wire out from SVB corp account to
| personal, document exact amount, and wire back to corp
| $NEWBANK a week/days later, document again" would hardly
| cause any heartburn now or down the road. Many would see it
| as responsible, proactive, and heroic.
|
| Depending on the amount the only issue would likely come from
| your personal bank - I know of people with ~$10m at SVB and I
| have to imagine all of sudden wiring those kinds of funds to
| a personal account with an average daily balance that's a
| fraction of that would raise some alarms on the personal
| account - or maybe not as I can imagine the big big banks
| (BoA, etc) probably saw a lot of this on Thursday...
| ttsgeysygd wrote:
| FWIW, on Thursday it wasn't clear to me I had so little
| time to get money out and part of me felt like contributing
| to a bank run, before it was clear there was a bank run,
| was not being a good citizen. Still not sure how I feel
| about it all. SVB staff were great over the 10+ years we
| banked there. Tech was always crap but I liked the people.
| Very sad all around.
| kkielhofner wrote:
| That's where I was.
|
| My startup has about $25k in SVB - but we don't have
| payroll and I have personal access to that without
| impacting me if push came to shove (paying contractors,
| etc). I was aware of the situation and probably could
| have gotten the funds out but I knew we were well below
| the FDIC threshold and just didn't want to bother with it
| (frankly). I would have had more anxiety executing the
| wire and waiting for it to show up on the other side...
|
| Speaking personally I'm actually kind of curious to see
| what the FDIC process looks like - in the grand scheme of
| things it makes you part of a relatively small club!
| While I know people are suffering and the situation is a
| lot worse for many I'm actually looking forward to
| telling the story when appropriate.
|
| The general population is already fascinated by startups
| and I've had more than a few "civilian" friends reach out
| to me asking about the SVB situation. When I tell them
| we're kind of impacted but not really they just kind of
| chalk it up to another "Wow, startup life is so wild even
| THE BANK failed".
|
| Additionally I'd say the same - through various startups
| I've worked with SVB for over 15 years and the people
| have always been great (systems not so much).
| rdl wrote:
| I totally agree re "contributing to a bank run" feeling
| shitty, but you have more obligation to your employees
| (especially), investors, and customers IMO than to your
| vendor (the bank). Congrats for being able to cover the
| payroll regardless, though.
|
| (I am pretty confident there will be at least 250k + 50%
| advance-dividend early this week, and still optimistic
| but far from certain that a buyer will take the whole
| thing and it will be 100%. Last time people actually took
| losses of 50% above the FDIC amount (100k at the time)
| was 2008 (IndyMac).)
| kfrzcode wrote:
| If you're not a lawyer, in this case, it's not really
| relevant what your comfort level is with business dealings.
| If you're a professional with appropriately relevant skills
| and expertise, I'd rescind my comment.
| 0xEFF wrote:
| I'm a business owner with payroll married to a attorney.
|
| I'm comfortable doing exactly as GP described to make
| payroll.
| kfrzcode wrote:
| Thank you; contextually I must rescind my previous
| comment.
| Waterluvian wrote:
| Isn't it generally a cardinal sin of business finance though?
| danielfoster wrote:
| Not if it's documented, short-term and for a very
| extraordinary reason.
| davidkuennen wrote:
| Interesting that its viewed so critically in the US.
|
| If documented its no problem and not uncommon at all in
| Germany.
|
| In fact many business owners pay something like credit card
| bills personally and reimburse through the company later.
| Ekaros wrote:
| Wouldn't this be other way around. First pay yourself and
| then spend that money on company bills? Which sounds very
| iffy to me as European.
| [deleted]
| rdl wrote:
| _That_ is far more common in the US (basically paying
| expenses on your personal cards, expensing to the company
| after the fact). You can also advance on some expenses
| sometimes (this can be abused so there are some
| accounting restrictions on how you 'd do it, etc.).
|
| What is weird/scary (especially when not documented
| clearly and in advance) is moving your entire bank
| balance into a personal account. Aside from
| government/tax/legal, you'd have your investors (in a
| venture/angel backed company) to justify it to. It's
| justifiable in this truly exceptional case of SVB
| imploding and no other bank account being available. (It
| gets harder to justify in a larger company with lots of
| investors and more money involved; moving a $100mm
| balance in a company where you were down to 10% ownership
| to a personal account even in this situation would be
| weird AF and depending on the banks involved might cause
| you problems. I probably still would have emailed counsel
| and investors/etc. on thursday morning to ask what to do;
| likely would have sent it to lawyers to handle actually
| in the huge-account situation.)
| davidkuennen wrote:
| I see. That makes sense. Thank you for clarifying.
| xyzzy123 wrote:
| It's an "antipattern" (and usually a strong sign that
| something is badly wrong) but it's not illegal... "sinful"
| is a useful hint that something is "norm" related.
| [deleted]
| Waterluvian wrote:
| Yeah, I didn't say illegal. Often "cardinal sin" is just
| a playful way of saying "something thou shalt never do."
| dboreham wrote:
| Also nal and naa but no: it's "comingling" that's bad. If
| you explicitly document the transactions, don't do it all
| the time, and ideally use matching amounts in and out, it's
| not comingling.
| rdl wrote:
| Comingling is. In this case there is a clearly articulable
| reason why ("our bank is going out of business"), and it's
| temporary, documented, etc. The twin risks to avoid are
| appearance of embezzlement, and appearance that you're
| treating the business account and personal account as one
| (which potentially allows piercing corporate veil/attaching
| personal assets), but if your building is on fire, you're
| allowed to break the window to rescue the kitten.
| breck wrote:
| Your 2 week payroll is more than $250,000 and you are
| bootstrapped?
|
| I call B.S.
|
| Something doesn't add up. Coming from an anon account no less.
| powera wrote:
| Hacker News is full of people who believe anything they read
| on this site if it fits the narrative, even if it is from a
| throw-away account that clearly doesn't understand the
| banking system.
| gfsdgsfgfds wrote:
| It is not. SVB account is frozen. Nothing in or out. Wire had
| to land March 13th so had to be sent Friday.
| breck wrote:
| A wire on the 13th lands on the 13th.
| dboreham wrote:
| An actual "wire" transfer yes, but op may have meant ACH.
| gfsdgsfgfds wrote:
| My personal bank is Bank of America. I paid the $30 to do
| "1 business day" I read that as if I did it on Monday it
| would land Tuesday. Gusto was saying it had to be funded
| by Monday. Perhaps it would have worked out fine that
| funds would be unlocked on Monday and Gusto would have
| been fine with wire initiated on Monday, but this was
| Friday and everything seemed on fire.
|
| FWIW, Just looked at the screenshot of the wire
| completion and it does say "Same day". But I did it at
| after 8pm. Anyway, I felt I did the safest thing to keep
| the staff from freaking out and for me not to be too
| stressed through the weekend. I'll have enough headaches
| moving banks the next two weeks to also be worried about
| payroll.
| kfrzcode wrote:
| A wire can commonly take up to two days; just FYSA.
|
| https://www.investopedia.com/terms/w/wiretransfer.asp
| breck wrote:
| Got it. So you are unfamiliar with the wire system. Most
| people are. I actually don't have anything good to say
| about it. (Sidenote: 24/7 crypto is far better, but
| crypto is still a bit of a wild west so I don't recommend
| for people who aren't comfortable being early adopters)
|
| You are learning a lot and sounds like you figured out a
| way to not have your employees see any hiccup. Well done.
|
| Thank you for replying and providing more info.
|
| Nowadays one must assume ChatGPT bot/shill when talking
| to a new account.
| xiphias2 wrote:
| People don't have access to that $250k right now, it takes
| time.
| breck wrote:
| Everyone will have $250K tomorrow.
| swatcoder wrote:
| As an owner who feels responsible to your staff, and who
| feels bewildered by the sudden closure of your bank, you
| may not trust what you think you know.
|
| Securing alternative funding for your payroll makes sense
| and is commendable.
| fisherjeff wrote:
| Uh yeah, in the very unlikely event that you find
| yourself explaining to your staff why payroll hasn't been
| run, about the last thing you want to lead with is "Well,
| see, after our our bank failed, I _assumed_ ..."
| nostrebored wrote:
| FDIC insured funds haven't been disbursed yet right?
| dragonwriter wrote:
| > FDIC insured funds haven't been disbursed yet right?
|
| The bank was closed on Friday, and at the time an
| announcement was made that the Deposit Insurance National
| Bank of Santa Clara would open with all insured deposits on
| Monday (this will not happen if between now and Monday a
| buyer is found and that bank _instead_ takes over
| operations on Monday.) There's not really a "disbursement"
| of insured funds, just a transfer to a new bank, which may
| or may not be run by the Federal government.
|
| For _uninsured_ funds, the announced plan (which also might
| be cancelled if a bank takeover provides better terms for
| them) is to provide an initial _dividend_ during the week,
| and a "receivership certificate" for any remaining
| uninsured balances. Most likely (given history) a bank
| takeover would _also_ preserve uninsured balances as normal
| deposits at the new bank; but that's not guaranteed.
| dgacmu wrote:
| For others who might be in the same position, it might be worth
| contacting your payroll processor. Ours, justworks, indicated
| that we could wire them the money on the invoice processing day
| and still make payroll. (That will be either Monday or Tuesday,
| I forget which - we somehow got really lucky; our payroll ACH
| got pulled right before the shutdown)
| [deleted]
| tiffanyh wrote:
| It seems weird to hear about this generosity from Altman's
| family, as opposed to from one of those companies helped.
|
| Not trying to knock the good deed. Clearly many companies need
| help, since VCs caused a run on the bank.
| alexashka wrote:
| Just so we're clear - this is the equivalent of me giving a co-
| worker I like who lost his wallet and his phone 100$ so that he
| can have lunch, dinner, get home safely, etc.
| brunooo wrote:
| One of those rare opportunities to clearly assess VCs from the
| outside, and surprisingly good steady reaction by him and Khosla.
|
| Who else?
| phphphphp wrote:
| Maybe it's not fair to compare Garry Tan to sama in this
| situation because Garry is the current president and sama is
| the former, but, it's nice to see sama's measured response
| compared to Garry's.
|
| Garry is shouting from the rooftops that more than a million
| jobs are going to be lost if the fed doesn't immediately do
| something (that we all know it isn't going to do). I wouldn't
| want to be a YC startup right now, listening to Garry stoke
| panic.
|
| Kudos to sama for being pragmatic and calm.
| brunooo wrote:
| Being in an active leadership position makes his decision to
| spend time on live-streaming panicky half-baked takes ...
| worse?
| grey-area wrote:
| The fdic and fed probably will do exactly what Gary Tan and
| many others recommended - no bailout of the company or
| shareholders but organise a facility so that the depositors
| get 100%.
|
| They're trying to sell it first but if that doesn't work they
| don't really have other options if they don't want to be
| dealing with massive job losses and multiple bank runs next
| week.
| baq wrote:
| Getting 90 cents on the dollar is not 'massive job losses'
| and most people outside of tech (SV VC tech precisely)
| think that the bank run risk is massively overblown.
|
| Anyway we'll see what FDIC does. They're good at what they
| do.
| grey-area wrote:
| Isn't this quite unusual (a bank run at a large US bank)?
|
| I agree the fdic has done this before and if they can
| find a buyer or communicate well it should turn out fine
| next week.
|
| There is a risk of contagion though and a risk of job
| losses if money is delayed for say 6-12 months. I don't
| think it's unreasonable to be worried about it if you're
| impacted.
| phphphphp wrote:
| That's not necessary though unless we are to believe that a
| meaningful amount of money has disappeared. The FDIC offers
| insurance with a limit for a reason, it's a fantasy to
| believe that the FDIC are going to invent a brand new
| standard of deposit protection because some companies might
| be forced to take a small haircut on their money.
|
| The bank will re-open, companies will get most of their
| money, and life will carry on. The FDIC aren't going to
| guarantee 100% of deposits, and shouting from the rooftops
| that a million jobs will be lost if the FDIC don't do it
| (which they won't) is panic-inducing for no discernible
| reason.
|
| Edit: I intentionally took one for the team by embarrassing
| myself with a claim disproven less than an hour later.
| You're welcome.
| grey-area wrote:
| I'm not sure it's as simple as that if the fed don't
| guarantee deposits, but we'll see tomorrow I guess. The
| impression I had was these assets can't just be sold
| right now, today, without booking substantial losses.
| ralph84 wrote:
| Khosla's legacy is trying to privatize public beaches. Nothing
| he does will make people forget that.
| brunooo wrote:
| Not necessarily disagreeing but still worth pointing out that
| he did the right thing here.
| benatkin wrote:
| Also don't forget about openwashing and potentially helping
| Microsoft dominate again* on sama's side.
| https://en.wikipedia.org/wiki/Openwashing
|
| * one of the last things I want
| paxys wrote:
| Is there the opposite list? VCs like Ackman, Sacks, Calcanis,
| Cuban all firmly belong on it. Nothing from them but blame
| directed at others (biden, yellen, zelinsky, the fed, fdic,
| regulations - everyone but themselves), dangerous
| misinformation (including fake photos and videos of bank runs),
| and _demands_ for an immediate government bailout. I wish
| someone would compile a video of how quickly these "rugged
| libertarians" have done a 180 on their views on regulation and
| "socialism" now that their own money is on the line.
| brunooo wrote:
| There ... is?
|
| Right below that there's another bracket of "trying to tweet
| through it", a lot of the folks behind the We Support An SVB
| Successor thing, which then, as Paul Graham did, lectured
| people that they can't really do anything because their LP
| agreements forbid it.
|
| Didn't know YC was a non-profit and Paul's involvement was a
| $85k salary and no carry/returns...
|
| Push came to shove, some people stepped or are stepping up,
| some didn't.
| samgtx wrote:
| If someone created a twitter bot right now that was able to
| pull old hard libertarian tweets from these people and post
| them as replies that would be...entertaining. Hypocrite-bot?
| sethbannon wrote:
| All VCs should be doing this. Sadly, many aren't.
|
| https://twitter.com/sethbannon/status/1634934773377294336
| sql-spy wrote:
| Startups that are worth saving will be saved.
|
| Cashflow won't be what kills some of these startups.
| swatcoder wrote:
| By design, venture-backed startups are about sticking a plate
| of spaghetti to a wall to look for the sticky bits. There are
| few sure tells of what startups are "worth saving" until
| they're already quite successful.
|
| Assuming that the SVB unwinding is more than a hiccup in cash
| _availability_ , what will determine who gets saved will mostly
| come down to affinity and luck. Promise and value are a sort of
| first pass filter, but startups are just plain noisy and
| chaotic field.
| rat9988 wrote:
| Does someone have a name for this fallacy?
| mhb wrote:
| Tautology
| wongarsu wrote:
| "Startups that are worth saving will be saved" feels like
| the same category of statement as "It's always in the last
| place I look". They both describe common sense behavior
| (save things worth saving, or stop searching once you found
| what you're looking for). But they are not tautologies in
| the strict sense, you can make them false; and quite
| frequently they are false in practice, mostly due to
| imperfect information.
| the-dude wrote:
| https://en.wikipedia.org/wiki/Just-world_hypothesis
| warent wrote:
| I don't really know much about venture capital but this sounds
| like a gross oversimplification.
|
| More like, the startups that are saved will be a mixed bag of
| worthwhile startups and dead-end startups. Meanwhile some
| worthwhile ones will sadly be left behind with the dead-end
| ones.
| wpietri wrote:
| Depends on your perspective. One of the articles of faith in
| this industry is that good startups get investment and
| succeed, while bad ones fail. To whatever extent that's true,
| it won't be particularly worse here. Startups who made
| treasury management errors and are experiencing cash crunches
| can make very good cases for bridge loans and extra
| investment from their existing investors. If their investors
| are like, "nah, pass" then that's a pretty good reason to
| question their potential generally.
| giraffe_lady wrote:
| I'm normally very against the HN norm of just naming a
| fallacy and considering an entire argument dismissed but in
| this case I think it does apply. This is not a Just World,
| some unworkable companies will get bridge funding because
| of their connections and no other reason.
|
| Aside from that timing is always a thing. There's certainly
| a company out there that is 8 months away from proving the
| soundness of their idea that now only has six months of
| funding, or whatever.
|
| The idea that in _every_ case, "the market" or whatever
| will arrive at the most perfectly correct conclusion is
| silly at any time, but particularly in one of uncertainty
| and upheaval.
| wpietri wrote:
| Yeah, I'm not arguing that "whatever will arrive at the
| most perfectly correct conclusion". (And I don't think
| that sql-spy was arguing that either.) What I'm saying is
| that I don't think this particular circumstance is going
| to be any less just than usual.
|
| Indeed, I think there's good reason to expect it to be
| more just given that what we're talking about is mostly a
| short-term cash crunch that's easily explained. E.g., one
| company is raising $1 bn for bridge loans:
| https://techcrunch.com/2023/03/11/brex-ceo-is-trying-to-
| rais...
|
| That kind of support is not something marginal startups
| have access to in normal times.
| sql-spy wrote:
| Circumstances changed.
|
| Running a startup means time is never on your side. If
| you are still 8 months away from proving "soundness" of
| your idea then you are already too late.
| giraffe_lady wrote:
| ok but I mean that means that whatever outcome arrived at
| is necessarily the correct outcome. you're establishing
| correctness post hoc and so you will always find it. have
| fun tho.
| swatcoder wrote:
| > One of the articles of faith in this industry is that
| good startups get investment and succeed, while bad ones
| fail.
|
| Is it? I thought it was that startups with exciting books
| and good networks get a chance to ratchet into the next
| round of funding.
|
| Great startups drown all the time for not being a VC
| rocketship, when they they could have grow into a perfectly
| successful cruiseliner under traditional fundraising or
| bootstrapping.
|
| If investors are "nah pass", it's more about making a quick
| decision about near-term finance opportunities than the
| mid-term or long-term strength of the underlying business.
| VC investors inherently care more about 10x exits than
| sound business practices.
| wpietri wrote:
| I'm not saying it's true. I'm saying it's an article of
| faith.
| sql-spy wrote:
| Ofcourse it is an oversimplification but it really is that
| simple.
|
| If the business is profitable, it will survive.
|
| If its still relying on free money to pay the bills, its time
| to make it profitable.
| PeterisP wrote:
| The fact whether a startup has positive cashflow or not
| isn't really reflective of whether that is a worthwhile
| startup or a bad one, but rather whether it's at an early
| stage or a relatively mature one.
|
| The most bestest startup in the world would still be
| relying on investor's money to pay the bills if it's just
| starting to build its product and the time to make it
| profitable will come in a year or two or more (e.g. a
| biotech startup can take many, many years until the product
| gets approved for patients and earns its first cent).
|
| Yes, if a business has "grown up" from being a startup and
| is fully self-funding not only its operations but also its
| growth, then it will survive, but the definition of a
| startup is something that's still trying to reach that
| stage and isn't there yet.
| illiarian wrote:
| > The fact whether a startup has positive cashflow or not
| isn't really reflective of whether that is a worthwhile
| startup or a bad one, but rather whether it's at an early
| stage or a relatively mature one.
|
| For the past 10 years or so none of the "successful
| wrothwhile startups" have positive cash flows, and those
| that seemingly do still manage to post hundreds of
| millions of dollars in losses yera after year after year.
|
| The whole modern startup business is either "work at a
| loss until a successful exit for the founders" or "work
| at a loss forever with no expectation of profitability
| for some reason".
|
| None of them are worthy.
| JumpCrisscross wrote:
| > _whether a startup has positive cashflow or not isn 't
| really reflective of whether that is a worthwhile startup
| or a bad one_
|
| A start-up that fails because of this mismanaged their
| treasury, didn't pull money in time, couldn't borrow
| against their claims and couldn't convince anyone to
| advance payroll. That's reflective on leadership. It's a
| teachable moment. But it points to deeper naivety.
| [deleted]
| youngtaff wrote:
| Startups that can be sold will be saved...
|
| From a pure financial point of view Uber would never be viewed
| as a startup that was worth saving... for it's investors the
| whole point of the IPO was to cash out and leave someone else
| holding the loss making baby
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