Linked List: March 10, 2023

Friday, 10 March 2023

Roku Had $487 Million in Silicon Valley Bank ★

Ross A. Lincoln, reporting for The Wrap:

In financial documents filed Friday, Roku disclosed that it had approximately $487 million held by Silicon Valley Bank, the Northern California financial powerhouse that failed this week, sending shockwaves throughout the region’s economy.

That number, Roku says, represents approximately 26% of its cash and cash equivalents, and the company will be able meet its pending financial obligations for at least “the next 12 months and beyond.”

From Roku’s filing, linked above:

The Company’s deposits with SVB are largely uninsured. At this time, the Company does not know to what extent the Company will be able to recover its cash on deposit at SVB.

The Best Yellow Computer Ever ★

Perhaps the new yellow iPhone 14 will someday take the crown, but I doubt it. The Banana Jr. 6000 was just too good.

Silicon Valley Bank Is Shut Down by Regulators in Biggest Bank Failure Since Global Financial Crisis ★

CNBC:

Financial regulators have closed Silicon Valley Bank and taken control of its deposits, the Federal Deposit Insurance Corp. announced Friday, in what is the largest U.S. bank failure since the global financial crisis more than a decade ago.

The collapse of SVB, a key player in the tech and venture capital community, leaves companies and wealthy individuals largely unsure of what will happen to their money. [...]

The FDIC’s standard insurance covers up to $250,000 per depositor, per bank, for each account ownership category. The FDIC said uninsured depositors will get receivership certificates for their balances. The regulator said it will pay uninsured depositors an advanced dividend within the next week, with potential additional dividend payments as the regulator sells SVB’s assets.

Whether depositors with more than $250,000 ultimately get all their money back will be determined by the amount of money the regulator gets as it sells Silicon Valley assets or if another bank takes ownership of the remaining assets. There were concerns in the tech community that until that process unfolds, some companies may have issues making payroll.

To say this is shocking is an understatement. This just shouldn’t happen to a bank. To make a long story short (and to be honest I’m cribbing this from a summary my pal Ben Thompson wrote in a private group chat), SVB took in a ton of cash during the COVID bubble, and because they couldn’t make money loaning that money at the time, they bought a bunch of corporate bonds and mortgage-backed securities. The problem is they bought those securities when interest rates were still at historical lows. Today, with higher interest rates, those securities are underwater — they’d lose a fortune selling them now before maturity. SVB would’ve been fine if they’d been able to let those securities mature for their full 10 years (or whatever the terms were). But withdrawals are up because startups are having trouble raising money, so SVB did an equity raise to fill the gap, but screwed up — to say the least — by announcing the equity raise before it was officially completed. At this point their stock tanked, the equity partner pulled out, and their customers started a run on the bank — and a bank run was the one thing SVB couldn’t withstand. Within 24 hours they went from “having a bad quarter” to “failed bank”.

Some of SVB’s customers might be in trouble, at least momentarily: even a 100-employee company needs millions in the bank to make payroll, pay rent and utilities, etc. Larger companies, much more. $250K in deposit insurance is a drop in the bucket for most of SVB’s business customers. Everyone is assuming that some big bank will buy SVB and make all depositors whole, but until that happens, it’s an open question. If there is no buyer and SVB is liquidated, there’s no way uninsured deposits will be made whole.

Facebook Is Working on a Twitter Competitor Codenamed ‘P92’ That Will Be Interoperable With Mastodon ★

Deepsekhar Choudhury and Vikas Sn, reporting for Moneycontrol:

Meta, the parent firm of Facebook and Instagram, is hashing out a plan to build a standalone text-based content app that will support ActivityPub, the decentralised social networking protocol powering Twitter rival Mastodon and other federated apps, people familiar with the matter told Moneycontrol.

The app will be Instagram-branded and will allow users to register/login to the app through their Instagram credentials, they said. Moneycontrol has seen a copy of an internal product brief that elaborates on the functioning and various product features of the app.

To be sure, it’s not clear whether this app, codenamed P92, is still at an idea-stage or the development has begun on the app. A source close to the development said that it is still a work-in-progress.

Hours after Moneycontrol broke the story, Meta has confirmed the development in a statement: “We’re exploring a standalone decentralized social network for sharing text updates. We believe there’s an opportunity for a separate space where creators and public figures can share timely updates about their interests” a Meta spokesperson said.

Casey Newton at Platformer:

Details about the project are scant. The product is still in its earliest stages, sources said, and there is no time frame for it being released. But legal and regulatory teams have already started to investigate potential privacy concerns around the app so they can be addressed before launch, we’re told.

Adam Mosseri, who runs Instagram, is taking the lead on the project, sources said.

No sarcasm intended: I love this idea. Federate with Mastodon via ActivityPub and let people do it using their existing Instagram IDs. Keep it clean and simple and destroy what’s left of Twitter.