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The Silicon Valley Bank collapse should be a radicalizing moment
It’s time to take down the venture capitalists who fuel the tech that makes our lives worse
Over the weekend, Silicon Valley Bank (SVB) imploded in part because of bad management that pushed for deregulation and failed to guard against the risks to its very concentrated business, but also because the wealthy people it serviced had absolutely no loyalty toward it. Instead of trying to support a bank that was central to their entire industry, they were compelled by their own greed to get as much out of it as quickly as possible, using Slack and social networks to get the word out in record time and leaving SVB with no chance to salvage the situation.
Peter Thiel’s Founders Fund pulled everything it had out of SVB and told its portfolio companies to withdraw as much as possible, and it wasn’t the only one. In one day, the Valley tried to pull $42 billion out of SVB. But it didn’t end there. After tanking their own bank, some of the most powerful people in the industry took to Twitter to whine about what they’d done and send a warning that if they weren’t made whole, there would be hell to pay.
Greed Masked As Concern
Jason Calacanis, one of the most mediocre people in the Valley, sent out a series of all-caps tweets demanding federal banking insurance be increased from $250,000 to $10 million and warning that the crisis was about to spread from “Silicon Valley insiders” to Main Street by Monday if regulators didn’t step in (to save the insiders). The subtext of this kind of tweet — one that many of the big shots were running with over the weekend — was that they were really concerned about the tech workforce. Yet, in the case of Calacanis, we know that isn’t the case.
Last year, text messages between him and Elon Musk were released as part of the lawsuit over the latter’s attempt to get out of his Twitter deal. In the correspondence, Calacanis told Musk how little he actually gives a damn about workers: “Day zero,” he wrote in one message. “Sharpen your blades boys. 2 day a week Office requirement = 20% voluntary departures.” Imagine being so giddy about developing policies to force people out of their jobs. But then again, Calacanis got in on Uber early, and profited immensely off its business model of grinding down the pay and protections of its drivers and couriers for shareholders’ benefit.
Meanwhile, Calacanis’ All-In co-host and fellow member of Musk’s Twitter war room David Sacks was going even harder, demanding that regulators immediately guarantee all deposits at SVB — about 90% were not insured — and force a merger of SVB with a larger bank. (It was later revealed that none wanted to buy it.) Sacks seemed to be learning how the banking system works in real time, while continuing to attack the government’s monetary policy decisions and downplaying the culpability of founders and venture capitalists in setting off a bank run. The Valley was doing what it does best: hyping up self-serving propaganda to protect its fortunes, while pretending they were fighting for the greater good.
Gokul Rajaram, an executive at DoorDash, called out hedge funds for their “predatory tactics” toward “desperate companies” affected by the SVB collapse, telling them “karma is real.” He never seemed to make the connection that DoorDash itself is built on predatory tactics toward its workers. We can only hope karma comes for him next. Mark Cuban tweeted the tragedy was not that the wealthy were getting hit, but the collapse was affecting companies — as if it isn’t the wealthy who ultimately make money off those companies. Alexander Torrenegra, the CEO of an AI-powered job board, even admitted he helped fuel the bank run and bought shares in SVB at the same time hoping he could profit off it. These are not the kind of people looking out for anyone’s interests but their own.
Venture Capitalist Backlash
The collapse of Silicon Valley Bank adds to the growing list of evidence we have that the model at the core of the tech industry is deeply flawed, while showing how wrong we ever were to place any faith in the depraved billionaires who lord over it. They spent the past fifteen years eroding the position of workers, extending surveillance practices, funding monopolistic endeavors to destroy traditional industries, and ultimately creating bubbles they knew would burst, but which they hoped to profit off. They pushed a form of rugged individualism where everyone was expected be constantly in competition with one another, and the government would be scaled back as much as possible to get out of the way of their unethical profiteering — at least until they needed the government to step in and save them from themselves.
Already, we’re seeing this whole debacle being used to feed into the more pernicious narratives tech’s most powerful people are pushing to maintain their positions. We know that Peter Thiel is funding far-right political campaigns and Elon Musk is outwardly aligning himself with right-wing culture warriors, but those perspectives are much more entrenched in the Valley than has long been admitted, particularly among the venture capitalists and executive class. For years, the narrative of the tech industry was that it was run by conscientious liberals, but no one can reasonably argue that any longer — if it was ever truly anything more than a marketing pitch for a particular moment in US politics.
Sacks, who is among the Valley’s most committed right-wing agitators, took a break from attacking regulators to instead call out those who would “root for members of another tribe losing their bank deposits,” as many people opposed any effort to get regulators to make tech billionaires and their investments whole — or, as others put it, to socialize the industry’s losses after privatizing its gains for so long. But that statement laid the groundwork for his pals to go even further. Teamflow founder Flo Crivello opined that the reaction to the collapse was a much bigger story than the fact his colleagues had kicked off a bank run because of the “honest to god, hammer and sickle communists hating tech and actually wanting our heads on a spike.”
On Monday, that sentiment exploded when tech journalist Edward Ongweso Jr. shared a story he wrote about the SVB collapse for Slate, saying venture capitalists needed to be “euthanized” if we ever have any hope of a better world. The comment was a nod to John Maynard Keynes’ writing on the “euthanasia of the rentier,” referring the need to get rid of the economic parasites taking advantage of us all. But that didn’t stop the venture capitalists from jumping on it. Founders Fund VP Mike Solana called out the suggestion of “mass murder,” Marc Andreessen compared it to an article in a Nazi newspaper, investor Nate Fischer said such statements were how the Rwandan geocide got started, and even Calacanis chimed in with yet another warning. It was fuel for a fire they’d already been fanning.
Silicon Valley Needs to be Dismantled
These responses don’t exist in a vaccuum, but are part of a longer radicalization happening among the executive and venture capitalist class. After years of being treated as our saviors, they haven’t responded well to the increased criticism leveled at their industry and the role they’ve played in all the ways tech has made the world a far worse place. People are getting fed up with rampaging Goliaths who want to be treated as heroic Davids until the end of their days. As a result, they’re more openly turning to the extreme right, forging new political alliances, and making open declarations about how they want to continue shaping the world to suit their desires.
Hedge fund manager Bill Ackman said that without government action, the SVB collapse would “destroy an important long-term driver of the economy.” Y Combinator CEO Garry Tan said “a whole generation of startups will be wiped off the planet” if regulators didn’t act. Even Larry Summers waded into the discussion to echo the comments of tech’s moneymen to warn that the United States’s innovation system would face “substantial consequences” if they weren’t saved. But that’s exactly what we need to happen.
The system devised by the people at the top of Silicon Valley has made them fabulously wealthy, but it hasn’t worked out for the rest of us. They promise us innovations that will improve our lives, but the reality is they gave up on true innovation long ago. Instead, they’re just tinkering with new systems to exploit, exclude, and oppress for profit — consequences be damned. Calacanis thinks this whole debacle will result in “creative startups” launching “a LOT of FDIC $250k limit products I predict!” now that founders see how vulnerable their fortunes are. I guess their new mantra must be “move fast and crater the economy.” We know how good they are at breaking things (and how bad they are at putting them back together).
At a deeper level, it’s clear that the kings of the tech world are scared — and they should be. The collapse of Silicon Valley Bank must be the final wake-up call we need to rid ourselves of these leeches once and for all, dismantle the Silicon Valley model that put them at the top, and rebuild it from its foundations. That’s the only chance we have of building a better world, and developing technology that helps us achieve that goal instead of doing the opposite.
The Luddites are back.
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