Happy Monday!
A bit of inspiration:
“Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so.“
—Adam Smith, The Theory of Moral Sentiments
A few thoughts:
Matt Levine said this on banking as a confidence trick:
What makes a bank good is not just its capital ratios and liquidity position but also confidence, and however good the ratios it is hard for a bank to survive a loss of confidence.[4] [Bankers and bank regulators] know that they are all interconnected, that they are players in an essentially social game, and that the goal of the game is not to win but to keep playing.[5]
Banking is a necessarily social business, banks are interconnected, and the best and biggest bank is only as good as confidence in the broad banking system. You can’t “go big or go home”; even Jamie Dimon has to care about the health of his less competent competitors. If you blitzscale the best food-delivery startup and drive all the other food-delivery startups out of business, you win; if you build the best bank and other banks start going out of business, that is a mixed bag, at best, for you.
On SBF’s rescue mission in 2022:
Bankman-Fried’s own wealth was very highly leveraged to overall confidence in the crypto ecosystem, so it was better for him to support failing competitors — and prop up that confidence — than it would be to let them fail. He was in a cooperative confidence game, and he acted like it.
And lols:
Of course “confidence game” is also a bad thing, and FTX and Alameda went bust themselves in November, which puts Bankman-Fried’s rescues in a worse light: It is good to prop up confidence in a socially beneficial system that runs on confidence, but bad to prop up confidence in a fraud.
I guess there are levels you need to clear first… :/
But if you are a crypto bank and there is a run on the bank, you will have to sell some magic beans you made up, and you will sell them for zero dollars, and you will become extremely insolvent and your customers might get pennies on the dollar, and the FDIC and the Fed will absolutely not step in because they are not in the crypto business, but federal prosecutors will be very interested.
Ahaha I just watched the Netflix documentary on PornHub over the weekend, and Matt Levine said this about Ethical Capital Partners’ acquisition of the company:
Your public-pension-fund limited partners, at their board meetings devoted to environmental, social and governance issues, can be like “and this quarter we allocated some funds to Ethical Capital Partners,” and the directors will be like “ah yes that sounds very ethical, what exactly do they do again,” and then there’s an awkward silence and the investment team is like “well they do porn.” But if they don’t ask then it’s great.
YC is cutting funding for late stage companies.
Not many startup employees will see an exit, whether at $95B, $50B, or even $1B. Stripe employees should celebrate the upcoming tender, especially in this tough environment.
Could they IPO at a better valuation? Sure, they’re a great company and they could grow back into their previous valuation. It’s also possible, especially in this environment, that their valuation could decrease again.
Those are all the tidbits for today, I’m off for a run and a lecture.
With love,
Angeline