So GPT-4 came out last week and for about four days that was ALL anyone in my feeds wanted to talk about. Multimodal this, reasoning benchmarks that. And then Silicon Valley Bank imploded and it was like someone hit a mute button on the AI hype for a minute. Funny how that works.
I want to write about the bank stuff, not because I think I have some genius financial take (I don't, I'm a guy with a blog and a Roth IRA), but because watching it happen from inside the tech bubble was genuinely one of the weirder weeks I can remember, and I don't think I've seen anyone write about the actual texture of it yet.
My friend Dave runs a five-person startup, the kind of outfit that does a demo, raises a small seed round, and tries not to die before Series A. Their operating account was at SVB. On that Friday when the FDIC took the bank into receivership, Dave texted me something like "so do I still have a company on Monday" and I genuinely did not know what to tell him. Nobody did. That's the part that's hard to convey after the fact once it's all resolved and everyone's made whole and the headlines have moved on: for about 48 hours a decent chunk of the startup world had no idea if payroll was going to clear. Dave's fine, for the record. The Sunday night announcement that depositors would be covered came through and by Monday he was back to complaining about his AWS bill instead.
The part that actually kept me up (literally, I was checking my phone at 2am like an idiot) was USDC. If you don't follow crypto closely, Circle had a few billion dollars of its reserves sitting at SVB, and when the bank froze up, USDC — a coin whose entire pitch is that it's always worth exactly one dollar — dropped to something like 87 cents. Watching a "stablecoin" lose 13% of its value in real time was a strange kind of comedy. It snapped back once the backstop was announced, and now it's sitting right at a dollar again like nothing happened, but for a weekend the whole premise of the thing was just visibly, publicly not true. I've never been a big crypto guy (I own basically none, I think the space attracts a specific kind of person I don't love being around), but even I found that genuinely fascinating to watch unfold.
And then this morning, on top of all that, UBS agreed to buy Credit Suisse for something like 3 billion dollars, a deal the Swiss government basically forced together over the weekend so markets wouldn't panic when they opened. Credit Suisse is not some scrappy startup's bank, it's a 167 year old institution, and its stock got sold for pennies on the dollar to its biggest domestic rival in the space of two days. That's not a normal Monday.
I keep thinking about how none of this is really an AI story or a startup story in the way my feed usually frames things, it's just a plain old bank run, the kind of thing I read about in history class, except it happened to companies I actually know people at. There's something clarifying about that. All the GPT-4 chatter last week was about whether it could pass the bar exam or write passable Python, and then a week later the actual news was whether a five person company could make rent. Priorities have a way of sorting themselves out fast when money's involved.
I don't have a neat lesson here. I'm not going to tell you to diversify your bank accounts even though apparently that's the takeaway everyone's landing on (Dave's already opened a second account at a different bank, so I guess he's ahead of me on that one). Mostly I just wanted to write down what this week actually felt like before it calcifies into a tidy paragraph in some retrospective article a year from now. It was chaotic and a little scary and honestly kind of boring in the way that real financial crises apparently are, mostly just a lot of refreshing Twitter and waiting for statements from people in suits.
Anyway. Back to normal posting soon, probably something about RSS readers because apparently I can't go more than a month without complaining about those.