If you take it at face value - it's different. Later stage investing is much more driven by figuring exactly how big something can be and exactly the cost structure etc. Excel with details and expectations of numbers being approximately right.

Investing in different industries, different stages etc - despite the fact they are "investors", they think about things quite differently. More than one might expect from the outside. People from the different worlds end up talking past each other.

Oh, come on. This is three days after their favorite bank got shut down. We all know what the proximate cause is.

I think it's clear that the venture world (at least the top of it) had turned itself into an industry on its own. They didn't make money on startup exits anymore, they made it on services. They'd fund startups, get those startups into later rounds by milking less sophisicated VCs[1], push them at their favorite bank, collect fees at each stage, and then take the profits and roll them up into more startus.

Now that the favorite bank is dead, this gravy train is over immediately. And the smart VCs at the top of the heap are the ones to exit the wagon first.

Honestly, the industry has had a toxic feel for a while. But the last 72 hours have made it clear that there was just no soul left.

[1] Yes, this sounds like a pyramid scheme to me too.

> They didn't make money on startup exits anymore

You do realize YC's equity returns from Airbnb & Doordash probably cover their entire history of funding startups?

The discussion is about late-stage investing, though. Obviously yes, the occasional unicorn funds a lot of slop and failed choices in series B rounds. But if that were true, then they wouldn't be laying off a paltry 17 people because of a minor market downturn, would they?

Again, the timing of this makes it abundantly clear that something YC was doing in the years before SVBs failure is instantly impossible now that it's dead.

If you’re going to hint at elaborate kick-back schemes, at least spend the effort to think through how that would work and spell it out.

It doesn't need to be that elaborate. Funding a startup and strongly suggesting they bank at SVB and then YC invests in SVB, telling other VC's to invest in SVB is all the kick back you need. Stock goes up you sell off some or leverage that for loans to invest in more startups. Stock goes down, your loan leverage/assets are down and can't invest any more. I don't know if that's the case here, just saying this example isn't very complicated.

Also its not a coincidence that investors in SVB aren't getting money back from FDIC, only depositors, YC was an investor (and prob a depositor), they lost money and now have to lay people off. I would imagine other VC firms might be in the same scenario.

Later on, will this period of time be thought of as dot com bust 2.0?

That’s about the worst possible kickback scheme I can think of. Deposits drive so little of a bank’s profit that you would have to be the dumbest grifter in the world to setup such an expensive referral program with only the hope of stock appreciation.

*citation needed

Per SVB’s recent K, Net Interest Income: 4.065bn (after provisions) Non interest income: 1.728bn

Deposits fund the net interest income

That works by internet logic but it's not true. At least, it's not what I've been told inside YC and I don't believe anyone was lying. What it's actually related to is Garry taking over YC and deciding to focus YC on its original roots. (I specifically asked about that today btw.)

At a minimum, it takes longer than 3 days to make a big change like this. I realize that's not a persuasive argument though, since there is endless supply of explanations one can come up with (what if they knew about SVB beforehand!)

they knew about SVB beforehand.

You can't know about a bank run beforehand. It dies when it dies, it's kind of a surprise that way.

(Being insolvent isn't actually enough to kill a bank as long as the run doesn't start. Of course, here the bank dies when the regulator decides it dies anyway.)

> You can't know about a bank run beforehand.

Explain the selling of stock by the executives then.

They didn't know there would be a bank run either. They weren't working off private information, you could read their financial statements too.

…but that's not enough to make a bank fail, it's just bad news for shareholders.

See what I mean?

With all respect, those interpretations differ only in spin. "Let's refocus on our roots" and "Oh shit, the gravy train dried up so we can't run our late stage cyclic money printer anymore; at least we still dominate the seed landscape" describe the same actions.

And as for assuming good faith that this was a fait accompli already in progress... I'm sorry, but I can't get past "We're doing this on the first business day following the biggest upset to our industry in a decade and a half. But that's just a coincidence!"

I see both of your points and I get how compelling the second one is, but what can I tell you? It was definitely already in progress and it has to do with long-term leadership changes inside the organization and thinking about what YC is really supposed to be. Keep in mind that Garry's previous years at YC were before the late-stage business got started. Why they made the announcement yesterday, I have no idea—perhaps someone enjoys Hacker News drama!

Btw I don't think the difference is spin, I think it's the opposite actually—from my perspective (and just to be clear, I'm not privy to the inside discussions) this change is not a reaction to short-term business climate, it's a vision thing. Most people underestimate the power of having just one thing to focus on and knowing exactly what it is. It's a cliché everyone pays lip service to but almost no one really does. It was a huge insight for me that running HN is all about focusing on one thing*—it's a kind of superpower that turns a surprising number of hard calls into easy calls.

* https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

strange this is downvoted. Serious denial among the wannabes here. Everyone in the know, knows this is true.

Out of curiosity, what services do YC provide for additional fees?