My SVB Thoughts from Over the Weekend Now That the Existential Threat Has Passed for Depositors

First, how would you tell depositors that your $1 is potentially not worth $1? The banking system could never survive on that idea, or everyone would be banking only with the government essentially shortly thereafter: the lender of last resort.

When it became fully clear it was simply SVB risk mismanagement and not fraud, most of the funds were in fact available on a longer time horizon -- just not in the short time period needed... it seemed clear something would happen to help depositors stay whole. Nothing else makes sense.

Second, while I've talked here about the bullwhip effect, I'm going to keep doing that because in the next two years we are going to be in that mode. With everything from consumer behavior, inventory levels, supply chain, prices, corporate behavior, interest rates, etc.

Whether you think the next interest rate hike will be 25bps or 50bps, everyone agrees we are not done hiking. Then rates will stay higher for some time - how long no one knows.

Then at some point we will come down at least slightly. However you slice it, that means the next couple of years where we will be dealing with some kind of bullwhip effect due to these changes in the system.

Cautious planning is going to continue to be the watchword until the war in Ukraine is over (because this impacts inflation) and rates stabilize for longer than 6-12 months.

You can't fix the banks, so don't try and overcorrect there. The government will keep regular banks safe. As long as valuation multiples are down and interest rates are elevated, you have to keep expecting every few months some new and unexpected part of the world will break because we are still working our way through the pandemic, easy money, compounded by a war in Eastern Europe.

I do have a somewhat long view on the failure of startups having been through the 2001 DotCom bust just in the first few years of my corporate career. This is going to pass, don't make wild bets and keep your company cash flow positive until the good times return.

If you do that, things will stay on the rails.

I still feel it's always a good time to start a company, but - relatively speaking - it is not a great time to start a company that needs a ton of capital without proof of results. If you are bootstrap or not overfunded and are building something with integrity and quality, you will be OK.

One last thing, if anyone needs help or advice let me know. My DMs are open. Relationships are what matter in this business, not the bits and bytes, and not the dollars in your bank account.