Surely that can’t be true. Even semi professional chefs need to figure out what flavour combinations need to go together, amounts of each item, etc. Plus every modern recipe has pictures to show what the result should look like. I just don’t believe she would get anything approximating a good result from this.
I hate that we do this in so many domains of our lives.. create unrealistic expectations via fake representation and then wonder why so many people are unhappy.
> Plus every modern recipe has pictures to show what the result should look like.
Food photography very often is staged for visual appeal, not prepared as directed (for a recipe illustration) or as actually prepared (for a restaurant illustration.)
> Even semi professional chefs need to figure out what flavour combinations need to go together, amounts of each item, etc.
No they do not. Haven't you ever tasted something and said "this needs salt?"
Once you know what x+y tastes like and y+z tastes like, you can sometimes imagine what x+z would truly taste like; Any two things you think might taste good together probably do, for just as surely as you can imagine what something looks like, or sounds like, you can imagine what something tastes like.
The amounts generally remain the same orders of magnitude so even if they're not to your taste, the dish will probably "work", and if it doesn't, home cooks have priors:
Everyone has a crap oven, or high/low humidity or altitude or whatever, so there isn't a single recipe that would work for everyone, and I think most home-cooks know this! Hasn't a recipe ever turned out badly for you?
So if there are any issues they might have with a recipe, I could believe they would blame their skill and/or their kit, and/or adjust a few times before they ever blamed the recipe, because surely that can't be true!
> Plus every modern recipe has pictures to show what the result should look like. I
We have hi-resolution AI pictures all the time on this very site that people can't tell from fiction, and food surprises you?
C'mon! You can get pictures of just about anything from stock photography services. At newspaper-dpi nobody is going to notice!
> I just don’t believe she would get anything approximating a good result from this.
Well I guess it depends what exactly you mean by a "a good result..."
The NHS doesn’t run as a separate entity to the government of the day. The health crisis is caused by their policies, not its underpinning political thesis?
I think there are many factors at play here. I’m going to approach it from a people perspective (why do smart people not see things like this coming?) rather than a business or financial perspective given that’s where you started, and I’ll focus on founders, because that’s the world I know.
I suppose my starting point would be - anything in startups is inherently a risky play, so while you know that putting your money in a “bank for startups” is higher risk than putting it in something more traditional, you’re probably making a trade off against the benefits of banking with a specialised bank (venture debt available without traditional levels of collateral, they understand your biz model, they will give you a bank manager who you can call even with relatively small amounts deposited, etc etc etc).
Secondly, systemic risk can be really really hard to see in the abstract. VCs will have been recommending SVB for the entire modern history of Sillicon Valley, and the actual risk in this case seems to have been created mostly in 2021. “Too big to fail” probably doesn’t apply here from a whole economy POV, but I suppose if you’re a founder without the time to think too deeply about whether SVBs balance sheet has changed from being relatively safe to incredibly risky and exposed to interest rate risk, it’s easy to think “I will bank with the startup default choice that has been doing this for 40 years.” What could go wrong now, given the startup industry is so much more established than then? I’d call this an example of outsourced thinking, and we do it every day in so many places. When we get on the bus, we don’t check whether the bus driver knows the route and will drive to X. It’s the bus! It just goes to X, every day!
Then I guess there’s actual unavoidable commitment. I know there are terms sheets that require SVB, and certainly I know from personal experience the venture debt (one form of the loans they provide) has lock in to their platform. Basically if you bank with them, you can access potentially huge personal and business benefits that can’t be accessed elsewhere, and then you are locked in to banking with them lest you lose these.
Lastly I think there’s just an interesting point around time since economies have been in high-interest states. In 2008 VC existed, but that was 15 years ago! If you are a 35 year old founder now, you were just 20 then. Your adult life has never seen a high-interest economy. People can be smart, but it takes exposure to a set of problems to form principles about what the risks are, and not everyone has an economics background. Plus, they would have needed to know:
- interest rates going up means bonds that were bought at previous rates are underwater and can’t be sold at HTM prices (I’m sure they could intuit this, but is it something they need to think about day-to-day to run a small healthtech firm???)
- SVB has a shit ton of these in its portfolio because they wanted to make returns and couldn’t find them elsewhere
- That SVB was unstable enough otherwise in terms of capital requirements to be at risk even with minor market movement
- How bank runs work, and that VCs would fuel a bank run rather than stick by the bank they’d been working with so closely for 40 years
That’s a lot of things to know! And a lot of things to tie together! I just don’t think your typical person in the startup industry has exposure to all of them, or the time to think about them.
One more thought - I do know someone who is not based in SV who asked questions about liquidity to his SVB account manager / salesperson and found the answers troubling enough that they refused the terms and therefore now don’t have any money caught up in this. Plus there are short sellers etc who made a lot of money on it, as well as plenty that pulled out earlier and now have their money safe somewhere else.
I guess it’s kind of funny that an industry that describes itself as trying to empower contrarians missed this, but being a contrarian often means taking short term beatings for long term gains, and there are so many of those to do in a startup who you bank with might not feel like the most important one to expend energy on. But it’s not that funny for people who won’t get paid this month.
