Welcome to Rami’s Readings #11 - a weekly digest of interesting articles, videos, Twitter threads from my various sources across the Internet. Expect a list of reads covering technology, business, culture, fashion, travel and more. Learn about what I do at ramisayar.com/about.
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First, I would like to welcome all the new subscribers to the newsletter. It is great to have you here, and please don’t hesitate to reply with comments or reads you would love to see added to the next newsletter.
💼 Business Reads - Focusing on Silicon Valley Bank & Angels
Second, it is hard to focus on anything but the dramatic turn of events with Silicon Valley Bank (SVB) this week. This newsletter promises to share things that were missed among all the noise.
Most importantly, we have to recognize the people who the collapse of SVB will hit hardest are the individual workers employed by the companies who bank at SVB. There is no way around this; employees will be laid off, and companies will cease to exist if they cannot access their cash. This is an extinction-level event for many companies.
There is FUD and rampant speculation on social media (some hysteria too). We will know what the Federal Deposit Insurance Corporation (FDIC) will do on Monday morning. The delay is intentional and part of their published operating procedures. I will not add more speculation to the air. For that reason, I will write about the impact of the closure of SVB from the perspective of angel investors, which is underreported compared to venture capitalists (VCs). Here are the signals I am getting as an active Angel Investor.
Angels are not VCs. Angels invest typically through a special purpose vehicle after forming a fund with multiple angels to invest in a particular company (if they are not cutting checks directly). The impact of the SVB collapse will be felt mainly through their portfolio companies and less by the individual angels. Some angels bank with SVB. As a group, though, I would suspect angels mostly bank with retail, larger banks, where they are treated as High-Net-Worth Individuals. As far as I know, SVB did not have any particularly compelling programs for HNWI. The dust is not settled yet; for example; I still don’t know if any of the investments or syndicates flighting or in progress on AngelList or Republic1 (Update in footnotes) are impacted.
The signals I am getting: angels are not impacted much by SVB and are gearing up cash to invest. Most angels will be active in the coming days offering bridge loans, just like Brex. It is an excellent time to tap into your network and contact angels if you are a startup founder. If you are an angel in the PNW, please reply to this email. I would like to hear from you.
What about me?
All the companies I invested in told me they did not bank with SVB or had balances under the FDIC-insured limit. I guess I’m lucky?
The contagion risk of SVB is, unfortunately, not zero.
Having grown up with knowledge of the currency failures and bank runs that my parents experienced, I have always maintained multiple accounts at multiple banks in two countries to benefit from insurance in the case of bank or economic collapse. It is a pain during tax season due to the FBAR filing, but I guess it is worth it in today’s risk environment. What can you do today? Open an account in a Global Systemically Important Bank and spread your cash. You don’t need more than 3 accounts.
Immigrants are very familiar with bank failures.
Startup Bank Had a Startup Bank Run (Matt Levine)
Notes: If you had to read one article about SVB, read this one.
🤖 AI Reads
The Forward-Forward Algorithm: Some Preliminary Investigations (Geoffrey Hinton)
Notes: From 2022 but deserves reading. Prof. Hinton is a legend.
Experimental Evidence on the Productivity Effects of Generative Artificial Intelligence
Notes: Working paper from MIT showing the productivity gains of white collar workers from Generative AI.
[Generative AI] A list of upcoming paid Residency, Internship training programs and Bootcamps in the industry for 2023
I wrote a disclosure for this newsletter in #7. Please consider reading it.
Update from Republic: Republic had limited exposure to SVB and there are no operational consequences for us from this event. Republic does not use Silicon Valley Bank as its escrow provider, meaning funds being raised on Republic and held in escrow, or funds that are ready to be disbursed to issuers, should not be affected.