E120: Banking crisis and the great VC reset
Jason Calacanis (host), Chamath Palihapitiya (host), David Sacks (host), David Friedberg (host), David Friedberg (host), David Sacks (host)
In this episode of All-In Podcast, featuring Jason Calacanis and Chamath Palihapitiya, E120: Banking crisis and the great VC reset explores banking Turmoil, Fed Blunders, And The Great Venture Capital Reset The episode dissects the unfolding regional and global banking crisis following the Silicon Valley Bank (SVB) collapse, arguing it stems primarily from rapid Fed rate hikes exposing duration mismatches and supervisory failures—not from panicky venture capitalists. The besties walk through a detailed timeline of bank failures, critique regulators, the Fed, and political spending, and explore how new Fed backstops effectively kick systemic risk one year down the road. They then pivot to the “great VC reset,” covering fund write-downs, fund-size cuts, and late‑stage pullbacks, while noting that lower valuations plus powerful AI and hard-tech waves may make current vintages more attractive than 2021. The show closes with a deep “science corner” on room‑temperature superconductors, their massive potential impact on energy, computing, and infrastructure, and the controversy around the latest high‑profile research claim.
Banking Turmoil, Fed Blunders, And The Great Venture Capital Reset
The episode dissects the unfolding regional and global banking crisis following the Silicon Valley Bank (SVB) collapse, arguing it stems primarily from rapid Fed rate hikes exposing duration mismatches and supervisory failures—not from panicky venture capitalists. The besties walk through a detailed timeline of bank failures, critique regulators, the Fed, and political spending, and explore how new Fed backstops effectively kick systemic risk one year down the road. They then pivot to the “great VC reset,” covering fund write-downs, fund-size cuts, and late‑stage pullbacks, while noting that lower valuations plus powerful AI and hard-tech waves may make current vintages more attractive than 2021. The show closes with a deep “science corner” on room‑temperature superconductors, their massive potential impact on energy, computing, and infrastructure, and the controversy around the latest high‑profile research claim.
Key Takeaways
The banking crisis is systemic, not a ‘panicky VCs at SVB’ one-off.
Multiple sizable banks—Silvergate, SVB, Signature, First Republic, and Credit Suisse—have failed or needed backstops within roughly a week, driven by massive unrealized losses from rapid Fed rate hikes, not the behavior of any single depositor class.
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Regulatory supervision and Fed signaling badly lagged balance‑sheet reality.
Hosts argue regulators had data to see duration mismatches (e. ...
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VCs do bear some responsibility via conflicts and poor treasury guidance.
While rejecting VCs as the main systemic culprit, the discussion highlights conflicts where SVB invested in VC funds, extended cheap credit to GPs, and then received concentrated startup deposits without adequate disclosure or diversified cash‑management advice to founders.
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The new Fed backstop buys time but doesn’t solve the core problem.
By letting banks borrow at par against underwater securities, the Fed effectively socializes up to trillions in duration losses and creates arbitrage incentives, but leaves a reckoning in about a year that likely requires sharp rate cuts or other structural changes.
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Future banking reform should emphasize transparency and depositor protection over financial engineering.
Ideas include real‑time mark‑to‑market dashboards for regulators, rethinking two‑tier regulation post‑2018 deregulation, expanding or restructuring deposit insurance, and potentially offering ‘vault‑style’ accounts where customers pay explicit fees instead of unknowingly taking bank credit risk.
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Venture capital is undergoing a hard reset that will hurt LPs but may improve new vintages.
Examples like Founders Fund halving a growth fund, Stripe’s ~50% valuation cut, Sequoia’s modest realized returns on recent UC capital, Tiger’s 33% markdown, and YC shuttering its growth fund all signal the 2020‑2021 supercycle is over—yet also set the stage for better‑priced, fundamentals‑driven investing.
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Room‑temperature superconductors could be a ‘black swan’ technology, but current claims are unproven.
Friedberg explains that true room‑temperature, practical‑pressure superconductors would slash transmission losses, enable maglev transport, ultra‑efficient chips, and new energy storage—yet the latest high‑profile claim comes from a controversial researcher whose prior paper was retracted, underscoring the need for replication.
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Notable Quotes
“Depositors are not in a position to evaluate the balance sheet of these banks. That’s what the feds and the rating agencies are supposed to do.”
— David Sacks
“If these banks had spent as much time on risk management as they did on ESG or woke programs, this crisis wouldn’t have happened.”
— David Sacks
“This is the great venture reset. A bunch of valuations are totally wrong and we’re going to have to start doing the cleanup work now—it just takes years.”
— Chamath Palihapitiya
“Just because the asset prices of the shares in companies has gone down does not mean that the quality of the businesses has changed.”
— David Friedberg
“If room‑temperature superconductivity is really realized in the next decade, it’s another one of these black swan technology discoveries that could totally transform multiple industries.”
— David Friedberg
Questions Answered in This Episode
To what extent should depositors be fully protected in a modern banking system, and how would that change bank behavior and risk-taking?
The episode dissects the unfolding regional and global banking crisis following the Silicon Valley Bank (SVB) collapse, arguing it stems primarily from rapid Fed rate hikes exposing duration mismatches and supervisory failures—not from panicky venture capitalists. ...
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How can regulators practically implement real‑time mark‑to‑market dashboards without inadvertently triggering panic every time risk metrics move?
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What disclosure standards should apply to VCs and banks to prevent conflicts like LP relationships and cheap credit from distorting treasury advice to startups?
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Given the fiscal pressures from debt, pensions, and demographics, is higher taxation on wealth and corporations inevitable, or can productivity gains alone realistically close the gap?
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If room‑temperature superconductors are eventually validated, which industries—energy, transportation, computing, or finance—will be disrupted first and most profoundly?
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Transcript Preview
All right, everybody. Welcome to the All-In Podcast. And with me again this week, the Sultan of Science, the Prince of Panic Attacks, the Queen of Quinoa, David Friedberg, the Dictator, Chamath Palihapitiya, wearing a beautiful Mr. B sweater, and David Sacks, the Reign Man himself.
Thanks for coming to my Loro Piana dinner on Tuesday, J Cal. Love you for that.
That was wonderful, thanks. Uh, at least one bestie showed up for you. Wonderful, wonderful dinner. I sat as far away from the Loro Piana people as possible in the arranged seating. Thank you for that. I guess, maybe (laughs) you were like, "I'm gonna contain the damage." (laughs)
Bernard Arnault said, "Put, put the all caps guy at the end," and I said, "Okay." (laughs)
Yeah. He still heard me.
(laughs)
I was like, "Chamath!"
It was so loud. (laughs)
"What's the amuse-bouche?"
David Friedberg: J Cal's joke at, at dinner, every time he said something, he yelled like he was in all caps. (laughs) It was so funny.
(laughs) Chamath!
He's like, "I want another butterscotch pudding!" (laughs)
The butterscotch pudding is delightful, Sean!
Oh, my god.
Sean's like, "I'm, I'm four feet away from you, but J Cal, y- you can take the caps lock."
Sean was so embarrassed. Chef Sean Crushed it. Chef Sean Crushed it. It was great.
Sean Crushed it once again.
Were you sounding alarms when the restaurant, like, almost ran out of something? Alert, alert, alert!
(laughs)
Restaurant is running low on coffee.
We're dangerously low on caviar on this white asparagus.
What's going on here? Let your winners ride.
Rain Man David Sacks.
What's, what's going on here? And I said- We open source it to the fans and they've just gone crazy with it.
Love you, bestie.
What's going- Queen of Quinoa. What's going on here?
All right, everybody. Welcome to the pod, where we, uh, you know, try to inform you. We try to make some jokes here. I just wanna make what is, uh, a little bit of an opening statement here. It's not an apology and it's not a victory lap in any way, but there has been a lot of attention, I think, on the last episode of the pod and perhaps some tweeting from two of the four besties this past weekend. I saw, and I, you know, I'll let you speak for yourself here, Sacks, and we're gonna get into the timeline of what's occurred and then what are potential outcomes here and solutions to the banking issues that we've witnessed in what is a week since the bank run on Silicon Valley Bank and the shutdown on Friday. But what I saw and again, speaking only for myself here, was absolutely terrifying up close and personally, watching people pulling money out of banks and watching people have to set up loans to hit their payroll. And this was like one of those surreal moments in a, in a movie, where like a meteor is coming towards earth and you see it in the telescope and nobody else sees it, or only a small number of people in the observatory see it. And I think part of the reason people listen to this podcast is because we are insiders and, speaking again just for myself, I'm always trying to be exceptionally candid and transparent with the audience. Additionally, I make jokes. (laughs) So sometimes you might laugh during this podcast, or you might laugh when you're reading my tweets. And, uh, that's part of what I do. Now, I also realize that we have an audience now that is larger than I think any of us expected for this podcast. Uh, certainly magnitude larger than I expected. And frankly, I didn't know if this podcast was gonna make it past 50 or 100 episodes. And my Twitter following count doubled since we started this podcast, and I think it's 80% due to this.
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