Certain loud voices in the tech industry rail against big government and regulations. But when the government stepped in to help Silicon Valley Bank depositors, they welcomes it with open arms.
Many tech execs and VCs fight against government intervention in the industry.
This libertarian streak was broken as many realized the government had to step in as SVB collapsed.
The Silicon Valley Bank meltdown is teaching the tech industry that regulators are sometimes needed.
The elites of the tech world, especially some high-profile venture capitalists, traditionally decry the notion of governmental influence on Silicon Valley.
But as the fallout from Silicon Valley Bank’s sudden collapse last week continued on into the weekend, those same tech elites found themselves calling for the Federal Deposit Insurance Corporation (FDIC) or the Federal Reserve to step in and bail out the bank. Or, at least, for them to guarantee that depositors would get access to their cash.
Prominent angel investor and Elon Musk ally Jason Calacanis made waves on Twitter with his all-caps calls for federal intervention over the weekend, as did “All In” podcast host and well-known tech exec David Sacks — both of whom have in the past railed against regulation and the idea of big government in general.
—@jason (@Jason) March 12, 2023
It wasn’t just VCs — the investors that write checks to startups and help them get off the ground — that called for the government to step in.
Billionaire investors Bill Ackman and Mark Cuban both urged the Biden administration to take swift action. Cuban has in the past supported regulation for some areas of Big Tech but has firmly come out against the idea of breaking up companies like Amazon, while Ackman has fought with financial regulators over the years.
On Sunday, SVB’s customers got the best possible news under the circumstances when the government announced that it would make sure that everyone was made whole, even above the normal $250,000 guaranteed by the FDIC. The news was met by cheers from VCs, startup founders, and anyone else who does business with SVB.
In other words, many of those tech investors who normally balk at the idea of the government giving a helping hand found that the salvation of the VC ecosystem will be found in Washington, DC after all. With access to their money now guaranteed, startups and anyone else who does business with SVB can now be much more confident that they’ll be able to make payroll and pay their vendors.
Tech’s relationship with regulation has long been contentious
Government regulations, some of tech’s most vocal figures contend, can stifle innovation and creativity.
Startups and big tech companies will happily sell technology to the government, but some vociferous critics will fight tooth and nail against the idea of the government having any say in how those products are built. This perspective can often inform how tech insiders view the idea of banking and financial regulations, privacy policies like California’s CCPA, support for politicians, and approach to healthcare.
In a …read more
Source:: Business Insider