Mar 17, 2023 · 1h 30m · allin
E120: Banking crisis and the great VC reset
David Friedberg · 23m spoken Jason Calacanis · 20m spoken Chamath Palihapitiya · 19m spoken David Sacks · 16m spoken
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In Episode 120 of the All-In Podcast, hosts Jason Calacanis, Chamath Palihapitiya, David Sacks, and David Friedberg dissect the Silicon Valley Bank collapse and broader banking panic, analyze the massive venture capital valuation reset, evaluate scientific claims around room-temperature superconductors, and share political commentary on national fiscal policy.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 99.8% of the talking time here. How this is scored →
The hosts as informed peer 7.4 Guest teaching 2.4 Guest disagreement 2.6 The hosts pushing back 3.0
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 22:08 Chamath accuses VCs of conflicts of interest in SVB relationship
Chamath forcefully directly challenges fellow VCs, arguing that pointing fingers at venture capitalists is warranted due to tied LP commitments, GP lines of credit, and directing young founders to bank exclusively at SVB.
Hardest push from the hosts ▶ 39:41 Sacks refuses framing that depositors are to blame for bank runsSacks strongly rejects the framing that depositors made irresponsible decisions, arguing that checking account holders cannot reasonably be expected to perform regulatory auditing on FDIC-approved, A-rated banks.
Biggest teaching moment ▶ 1:09:12 Friedberg educates the group on superconductor physics and efficiencyFriedberg systematically explains how electrical resistance causes power loss and heat, educating the hosts on Cooper pairing and how room-temperature superconductors could reduce compute energy needs by 99%.
The host holds their own ▶ 27:50 Chamath breaks down the Fed's BTFP bailout arbitrageChamath demonstrates deep financial mastery by quantifying the $2 trillion underwater asset gap across non-top-four US banks and showing how the Fed's par-value loan facility incentivizes risk-free yield arbitrage.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| All-In Podcast Title Sequence | 3 | 1 | 2 | 2 | Calacanis addresses his viral, all-caps tweets during the SVB collapse, explaining his intention to sound alarms while clarifying his platform size. The co-hosts banter lightheartedly about his tweeting style and lack of formal apology. | |
| Media Scapegoating and Timeline of Regional Bank Failures | 7 | 2 | 3 | 4 | Sacks outlines the chronological collapse of five banking entities (Silvergate, SVB, Signature, First Republic, Credit Suisse) to demonstrate a systemic rate-driven issue. He refutes Wall Street Journal commentary blaming venture capitalists for spreading panic. | |
| Bank Vulnerabilities and Federal Regulatory Supervision Failure | 8 | 3 | 2 | 3 | Chamath breaks down structural differences between liquidity issues at SVB and Credit Suisse while critiquing the San Francisco Fed's regulatory oversight. He argues regulators failed to monitor duration mismatches visible on bank balance sheets since late 2022. | |
| Macroeconomic Roots: COVID Economy Shutdown and Federal Reserve Policy | 8 | 2 | 2 | 3 | Friedberg contextualizes the crisis within macro decisions made during the COVID-19 pandemic shutdown, zero interest rates, and subsequent rapid tightening. He asserts the current turmoil represents delayed economic fallout from blowing a hole in the global economy. | |
| The Six Parties Blamed for the Banking Crisis | 8 | 1 | 3 | 3 | Sacks categorizes the six blamed entities in the crisis: bank management, Fed rate hikes, government spending, 2018 deregulation, ESG focus, and VCs. He argues that bank management and rapid rate hikes bear primary responsibility, dismissing claims against depositors. | |
| Venture Capital Dynamics and Conflict of Interest with SVB | 7 | 5 | 6 | 5 | Chamath argues that VCs warrant criticism due to undisclosed conflicts of interest, including personal loans, LP commitments, and directing startup deposits to SVB. Sacks and Calacanis defend their own firm practices and argue VCs did not direct single-bank dependency. | |
| The Fed's BTFP Facility and Kicking the Can to 2024 | 8 | 2 | 2 | 2 | Chamath analyzes the Fed's Bank Term Funding Program (BTFP), explaining how valuing underwater bonds at par creates a short-term arbitrage for regional banks. He warns this facility merely delays a $2 trillion balance sheet reckoning to March 2024. | |
| Real-Time Oversight Dashboards and Macro Debt Pressures | 8 | 2 | 2 | 3 | Friedberg connects banking liquidity to broader sovereign debt pressures, unfunded pension liabilities, and global labor strikes in Europe. He predicts that either massive tax hikes or massive productivity gains via AI/energy will be required to bridge the debt gap. | |
| Reimagining Banking: The 'Bank Vault' vs. Fractional Reserve Lending | 6 | 5 | 5 | 6 | Calacanis proposes separating banks into fee-based 'bank vaults' without fractional reserve lending. Sacks and Friedberg counter that consumers unknowingly make risky unsecured loans to banks under current law and that eliminating fractional lending removes necessary market liquidity. | |
| Real-Time Software Regulation and Startup Treasury Management | 7 | 3 | 3 | 4 | Chamath proposes embedding real-time banking supervisory metrics into automated regulatory software dashboards. Sacks advises startup founders to utilize Treasury-backed money market funds rather than trying to construct in-house bond ladders. | |
| The Great VC Reset & Portfolio Markdowns | 8 | 2 | 2 | 2 | Chamath lists four indicators of the VC market reset: Founders Fund halving its fund size, Stripe accepting a 50% valuation cut, UC Berkeley reporting low returns on Sequoia investments, and Tiger Global marking down private holdings 33%. | |
| VC Vintage Quality and the AI Technology Wave | 7 | 2 | 3 | 3 | Sacks contends that 2023 VC vintages will perform significantly better than 2021 because entry valuations have corrected and the AI product wave is driving genuine technological innovation. | |
| Debating the Venture Capital J-Curve & LP Distributions | 7 | 4 | 5 | 5 | Calacanis defends recent venture performance figures by citing the standard multi-year J-curve trajectory. Chamath pushes back, citing five-to-seven-year DPI benchmarks and stating that several recent VC vintages are fundamentally impaired rather than resting in a J-curve. | |
| Asset Prices vs. Fundamental Value Creation | 8 | 2 | 2 | 2 | Friedberg separates falling private asset market prices from fundamental business value creation. He argues that discounted market entry prices make the current period an advantageous time for long-term venture investing. | |
| Returning to Product-Driven Founder Fundamentals | 7 | 2 | 1 | 2 | Calacanis describes a cultural return to frugal, product-driven founders focused on executing MVPs instead of chasing inflated valuations and pre-product hype. | |
| Science Corner: Room-Temperature Superconductors Explained | 9 | 2 | 1 | 1 | Friedberg delivers a comprehensive scientific overview of superconductors, explaining electrical resistance, Cooper pairing in cold temperatures, and potential applications such as zero-loss energy transmission, maglev trains, and highly efficient microprocessors. | |
| The Lutetium Hydride Breakthrough & Scientific Controversy | 9 | 2 | 2 | 2 | Friedberg details Ranga Diaz's Nature paper claiming room-temperature lutetium hydride superconductivity while noting past retractions, data noise controversies, and skepticism within the scientific community. | |
| University Tech Transfer Mechanics & Spin-Out Challenges | 8 | 3 | 2 | 2 | Chamath and Friedberg break down university technology transfer mechanics, outlining typical equity and royalty percentages, institutional friction, and how top universities like Stanford handle commercial spin-outs. | |
| Quantum Computing and Material Discovery | 8 | 1 | 2 | 2 | Friedberg explains how quantum computing simulations could discover room-temperature superconductor candidates without physical trial-and-error, concluding the episode alongside light macroeconomic and political closing thoughts. |
Statements from this episode (29)
Sacks: I did not tweet about SVB until after FDIC receivership
“I personally never tweeted anything about SVB until Friday afternoon when SVB was already in receivership, and the run on the bank had already started with Signature and First Republic, and we could see it with our own eyes.”
Chamath: SVB, Signature, and Silvergate suffered traditional liquidity crises
“Signature, Silicon Valley Bank, and Silbergate all had very traditional liquidity crises, right?”
Chamath: Credit Suisse had strong liquidity and solvency despite panic
“At Credit Suisse, they have an enormous amount of liquidity. What that was I think a lot of speculation around whether they would default on their bonds or whether they would theoretically need more liquidity. But the balance sheet itself was not only liquid, …”
Sacks: 2018 deregulation was a 'poison chalice' for regional banks
“Creating a two tier system of banks where one tier are the systemically important banks who are completely guaranteed and backstopped by the federal government. And then a sort of lower tier, a second tier of regional banks was a poison chalice for the Regiona…”
Sacks: 2023 banking crisis wouldn't happen if banks prioritized risk over ESG
“What I would say for sure is that if these banks have spent as much time on risk management as they did on ESG or on woke, then this crisis wouldn't happen.”
Sacks: Craft Ventures never had SVB as LP or directed startups there
“We never had SVB as a limited partner, and we also never directed our startups to bank at SVB.”
Sacks: I always advise startup founders against taking venture debt
“Moreover, I always try to talk founders out of taking venture debt, whether from SVB or elsewhere.”
Calacanis: I never directed startups to a specific bank
“And to be clear, I never directed anybody to a specific bank. I always told people to get two or three banks and have redundancy.”
Palihapitiya: Non-top four U.S. banks have $2T in unrealized losses
“The other end banks, if you look at all of the assets that are underwater, because of all the rate hikes that Saks talked about, and you add up all those losses, that is about two trillion dollars.”
Palihapitiya: Top four U.S. banks hold up to $2T in unrealized losses
“That looks like it's somewhere between a trillion and two trillion. So that's another amount of money we're going to have to, or the fed will have to backstop.”
Palihapitiya predicts a renewed U.S. banking crisis by March 15, 2024
“All we've done is we've kicked the can down the road for a year, but I do think it's important for people to realize this doesn't solve the problem. It just means that mark your calendar for a year from now, we have a problem on March 15th, 2024, because all t…”
Friedberg: US tax rates will rise significantly over the next decade
“I think the only stopgap, I'll just say one thing, the only stopgap in the next decade is going to be significantly higher tax rates in the United States.”
Calacanis: There is a distinct possibility Jeff Bezos becomes US president
“I still think it's a distinct possibility.”
Friedberg: First Republic holds a $90 billion unpackaged loan portfolio
“If you look at First Republic, they have a ninety billion dollar loan portfolio on their balance sheet, That they've not packaged up and sold.”
Sacks: Startups should use US Treasury money market funds over bond ladders
“Whenever they try to, let me just say when starts trying to create laddered bond portfolios, They end up needing the money sooner than they thought. What I'd much rather see a startup do is buy a hundred percent UST bill backed money market fund run by the abs…”
Chamath: Board VCs must oversee startup treasury without bank conflicts of interest
“In the absence of regular regulatory changes that protect this money. You need to have a financially sophisticated actor on the board. And again, I go back to that should be your venture capitalist. And that person should not have conflicts of interest with th…”
Calacanis: Founders Fund halved its $1.8B eighth fund into two $900M funds
“It's a 1.8 billion dollar fund. They're going to break it into two, nine hundred million dollar funds. It's their eighth fund. It's being cut in half and it'll become eight and nine.”
Palihapitiya: Tiger Global cut private book 33%, AUM halved to $50B
“And then the fourth, which just came out today is that Tiger wrote down the value of their private book by 33%. For 2022. And so, you know, I think Tigers AUM basically has gone from a hundred billion to fifty billion in a year.”
Chamath: Y Combinator's unicorn hit rate is 6%
“I think the Y Combinator unicorn hit rate is six percent, right? So every hundred companies that come out of YC, which costs only about ten million dollars to seed. Right? Six of them become worth a billion dollars or more, and obviously some become worth much…”
Chamath: Resetting tech startup valuations will take years
“And D we're going to have to start doing the cleanup work now of resetting all of it, which just takes years as you guys remember in. It took us five years to fix this.”
Palihapitiya: LPs like UC Berkeley are sidelined for the foreseeable future
“UC Berkeley is effectively out of business in being a limited partner for the foreseeable future.”
Sacks: Craft Ventures 2017-2018 fund has fully returned capital
“Yeah, we have a vintage, 2017, 2018 fund that's actually fully returned at this point.”
Friedberg: Ranga Dias falsely claimed raising $20M from Sam Altman and Daniel Ek
“And he actually had a talk that he did that was published on YouTube, a year later, where he said he raised twenty million dollars from Sam Altman and Daniel Ek and a bunch of other investors. And it turns out that also wasn't true.”
Palihapitiya nearly spun out Ranga Dias's superconductor tech before university blocked it
“Venkat Viswanathan, who runs the battery group at Carnegie Mellon, introduced me to Ranga two years ago. Me and my partner, Jay, we were like, holy shit, this is outrageous. And we tried to spin it out into an actual company, but the University of Rochester bl…”
Friedberg: Many university tech transfer offices operate on cronyism with preferred VCs
“Some of them are terrible, like, and some of them are cronyism. So like you go to some of the universities and the tech transfer offices have deep relationships with certain VCs and investors. That they'll only work. And they always get first picks and first d…”
Friedberg: Room-temperature superconductivity remains a perpetually distant promise like fusion
“I don't think that this stuff Has really, it's been like fusion. It's always been a promise around the corner. Physicists have always had hope we've taken incremental steps towards it. But it's always felt like one of those things where you're always getting 5…”
Calacanis predicts U.S. recession and complete withdrawal of Ukraine war funding
“I think we all agree the soft landing concept is over. We're going to be in a recession. The war is going to end there because we're not funding this and American, the American public is not going to want to see tens of billions of dollars going to Ukraine and…”