[48.0] Silicon Valley goes running
turning group chats into bank insolvency
Hot take for this overcast Seattle Sunday—I think Daylight Savings kinda rocks. As long as Congress dilly dallies on the issue, at least, we collectively treat time as a thing to be tinkered with twice a year. Even if you hate it and feel fatigued you have to admit it’s cool. The sun set at 6:10 last Saturday, and now it sets a full hour later. Just vibes and sheer determination to thank for that.
Daylight Savings is also a vestige, in my tender mind’s eye, of a largely bygone (but super recent) era wherein our control over time required human intervention rather than automation. I woke up the morning after “springing forward” at 8:40AM, according to my automatically updated phone; I then glanced at my analog alarm clock to see 7:40AM, my groggy brain cells then registering what had just transpired. That technologized discrepancy didn’t really exist on a widespread scale until a little over a decade ago.
This tradition might die in the US very soon. Dickwad Marco Rubio has reintroduced the “Sunshine Protection Act” in the Senate to make Daylight Saving Time permanent. It may very well pass.
“This ritual of changing time twice a year is stupid. Locking the clock has overwhelming bipartisan and popular support. This Congress, I hope that we can finally get this done,” his press release from earlier this month reads.
Because fuck your feelings and the economy is more important (Covid discourse redux/predux), critics often frame the perceived costs of Daylight Savings in financial terms. A Quartz article from 2021, for instance, suggested that letting clocks “fall back” for the winter leads to $434 million in lost productivity, because workers get to sleep for an extra 40 minutes. And then, more ghoulishly:
That gained hour of sleep in the fall comes with consequences, too: Some evidence suggests that, following the autumn time change, less daylight later in the day results in an 11% increase in depressive episodes, which also decreases productivity.
Which, cool, but a liveable wage might help too? As would swapping out my quarter-operated washing machines for a little tap-to-pay moment—chasing literal coin at Banks of America across Puget Sound is causing a little menty b! I just want fresh linens; let’s automize that!
But banks are people too, Mitt Romney probably says, and they’re not thriving either. If you hold your savings in a normal bank and are generally well, you may have missed the news that Silicon Valley Bank–which used to hold money for like 65% of all US-based startups–suffered a run on the bank catalyzed by venture capitalists like Peter Thiel.
Here’s a wild summary from one tech founder who seems super chill and cool:
If you were the Bank of Startups, just like if you were the Bank of Crypto, it turned out that you had made a huge concentrated bet on interest rates. Your customers were flush with cash, so they gave you all that cash, but they didn’t need loans so you invested all that cash in longer-dated fixed-income securities, which lost value when rates went up. But also, when rates went up, your customers all got smoked, because it turned out that they were creatures of low interest rates, and in a higher-interest-rate environment they didn’t have money anymore. So they withdrew their deposits, so you had to sell those securities at a loss to pay them back. Now you have lost money and look financially shaky, so customers get spooked and withdraw more money, so you sell more securities, so you book more losses, oops oops oops…
If all of your depositors are startups with the same handful of venture capitalists on their boards, and all those venture capitalists are competing with each other to Add Value and Be Influencers and Do The Current Thing by calling all their portfolio companies to say “hey, did you hear, everyone’s taking money out of Silicon Valley Bank, you should too,” then all of your depositors will take their money out at the same time.
In other words, a group chat of VCs all thought things might be going awry at SVB, and then pulled the trigger INCREDIBLY quickly—almost automatically—in ways previous technological capacities would not have allowed. You can’t have thousands of people run on a bank in person the same way they can after going through a CAPTCHA test. An inadvertent result of Daylight Savings is that Silicon Valley’s top bank had one less hour last weekend to secure funds to make depositors whole and rescue itself.
In other words, banking bailout safeguards are facing the same temporal and technological wrinkles that Daylight Savings is. What comes next?
Divine Innovation is a somewhat cheeky newsletter on spirituality and technology. Published once every three weeks, it’s written by Adam Willems and edited by Vanessa Rae Haughton. Find the full archive here.