This is intersting.
Occasionally in YC founder circles a new founder will raise a bunch of money and then ask something like "What's the best way to invest all the money our company just raised?"
The responses are always along the lines of "Your startup is already risky. Don't innovate in areas of your business where the status quo is known to work. Innovate your product + technology, don't be innovative with your company's finances, HR, etc"
That advice always stuck with me. It just makes a lot of sense to do things in the most boring way possible, except where it matters (your competitive advantage <-- that's where you innovate, that's where you set yourself apart)
Running a startup is distracting enough. Doing things non-standard just adds to the list of distractions that you don't need as a founder.
Yeah but after a series of Big Prints we finally managed to make an inflation spike, a run on Silicon Valley Bank, the US President openly contemplating dollar devaluation, "Sell America trade" working for the first time in 50 years, the marginal buyer of treasuries eliminating the last dove on the path to war, and precious metals whipping around like meme stocks. "Park the money in a USD money market at SVB" used to be not just OK, but universally agreed to be obviously OK, which had value of its own. Now it's just OK. Probably. I hope.
Will we see some pivots into bullshit crypto holding companies? Sure, but VC returns are notoriously lottery-ticket distributed and 0 is 0 however you get there. I'd hazard a bet that the number of otherwise-successful companies who die due to this policy rounds to 0, while the probability of an inflationary wrecking ball that wipes out an entire batch of otherwise promising startups in the absence of such a policy is... north of zero.
To be clear, I don't think this is due to a special property of crypto, just the flexibility to get away from USD in case of emergency.
EDIT: maybe 24/7 trading could be an argument. It would be a meme for the ages if a raft of startups survived because they were up hustling and grinding at 2AM when the boats hit the Taiwan Strait.
You’re describing an event that would wipe out the US economy and trying to protect against that with stable coins, or at least that’s the impression I’m getting.
If the US falls apart, your startup will too. No matter how well preserved your cash reserves are.
The US going to war or entering hyperinflation is probably at the bottom of most founders lists of existential worries. Not a risk to mitigate (it’s a risk you need to accept since there’s nothing you can do - worrying about it won’t help)
Also, worth mentioning that no one lost money with SVB’s collapse. One might argue it was an incredibly smart decision for YC to recommend people bank at SVB since if SVB goes under, virtually all LP’s and everyone in the VC community will go under too (too big to fail, so they won’t, or if they do, everyone else fails too — kind of like AWS us-east-1)
No one might have lost their money with the collapse of the banks but with the large amount of new money printed, the value of each dollar will continue to erode.
Inflation and hyper-inflation can wipe out debts with future money that's cheaper more easily in some ways. I forget where I had read or learned more about this in other countries that had experienced it.
> the US President openly contemplating dollar devaluation
Why won’t the fed raise rates?
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Then again, to play devils advocate, doing all the other stuff in a new way might also help your company break out of the cycle that typically impacts startups. It may be that the other things you do apart from your product are what make it successful.
Figuring out a better way to ~~invest~~ speculate with your company's balance sheet is seriously unlikely to improve the trajectory of your company.
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I mean if you have a significant chunk of free cash sitting around there's almost no reason not to put a portion of it in 3-6 month Treasuries or something.
The return won't be much but it's better than letting the cash sit idle and evaporate due to inflation
This comment really shows how far the SV VC culture still is from running profitable businesses with solid fundamentals. No surprise that I am hearing this on the same website where people come to act like hard-done-by factory workers whenever [incredibly bloated and dysfunctional FAANG] lays people off after facing the real-world financial realities.
For the love of God, no. Do not do that. The cycle begins when you take the money. How there are still people here that don’t get this, I don’t understand.
The purpose of VC’s were never to fund companies until they become profitable, it’s the find the “bigger fool”.
Occasionally it’s the public market…
https://medium.com/@Arakunrin/the-post-ipo-performance-of-y-...
Most often for successful exits, it’s to get acquired and shut down the original product with a “Our Amazing Journey” blog post.
Not once in mankind's history has any great product or feat been enhanced or achieved through the use of timesheets.
Don't get bogged down with that stuff.
You've taken VC money at that point. Hate to say it, but doing that means you're voluntarily going into the cycle with no intent to break it.