Erebor is designed to avoid the risks that sank SVB

Transcript

From the transcript TBPN publishes with the episode.

1. 1:41:07

   I but what you're getting into. Yeah. No. I I get it. Like, the I think there's this natural inclination for people to look at this and say, oh, it's like what SVB was. It's catering to the same customers. Mhmm. That must mean that they're gonna be this really high risk bank that does all these high risk things. In reality, it's literally reaction to that. It is an opposite. The reason that we got this approval is because we went in saying we're gonna have the most conservative loan to deposit ratios of any bank in history. We are going to do this extremely novel service of taking money from people, holding it for them, and then allowing them to have it back. Like, we're gonna be offering these services that banks used to offer. You can't get the service I just described in any bank. If you go and you say, I want you to just, like, hold on to my assets, but I don't want you to loan against them.

2. 1:41:52

   Like, that's that's not what a bank is. Yeah. That's What are you talking about? And, of course, like, I'm not saying that all assets should be held that way, But when you're a business in the business of making your business grow, you don't care nearly as much about getting an extra half a percent on your deposits as you might about truly minimizing the risk that you're not gonna have access to any of your capital. I mean, if if SVB would not have been bailed out by the government in in in in a like, it wasn't just, like, the government's obligations. They were bailing out they were bailing out well beyond FDIC limits. If they wouldn't have done that, it probably would have wiped out half the tech industry in one fell swoop.

3. 1:42:29

   That's crazy. How can the tech industry have become so serving subservient to the banking industry, to the finance bros that not only can we not survive without them, but in working with them, we sign our own death warrants. Right? Like like, we can't see what the risk is. We can't control what it is, and there's literally no other option. So that it is I agree. It's it's annoying to see everyone talking about how Erebor is this new bank in the vein of SVB that's gonna be taking on higher risk, you know, higher risk bets. It's literally the opposite. It's it's do what SVB didn't for the people that SVB was otherwise successful in working with. So think like national security companies, hard tech, deep tech, biotech, these companies that just need to make sure they have someone who understands how their business works.

4. 1:43:15

   And SVB did do a good job at that, but then also is gonna make sure their money is actually there when they go to get it. That was the part that SVB screwed up. Yeah. How how I guess I'll I'll end it with one bit here, which is maybe worth noting. You know, I'm not I'm not even I'm not working on Erebor in an operational day to day capacity. Sure. I'm I'm a board member. Yeah. I I founded it because I wanted this to exist. You gotta remember that the tech sorry. The finance industry is full of people who love finance for the sake of finance. Right? They're they're truly they're truly in love with with all the levers and and and the machines and They're in love with leverage.

5. 1:43:52

   And what that's right. And in addition, they probably like what it enables. They like free flow of capital. They love the ability to to leverage things. Like, I I I get that. Similarly, I'm a VR guy. I love VR for the sake of VR. I love what VR can do. I love that it can be a home theater. I love that it can be a classroom. I love that it can be a time machine. But I also strictly love it for the sake of the technology itself that you're that you're presenting an artificial view to your peripheral nervous system that is sufficiently advanced as to convince a body that has developed for millions of years to discern what is and isn't real. Like, that's that's incredible. I love it. I would love it from a tech perspective even if it were useless from an everyday perspective.

6. 1:44:34

   And I would say that is not how I am with finance. I don't love finance for the sake of finance. I'm not a finance bro. I want something like Airborne to exist because of and for the sake of my love for all of these other technologies. If something doesn't exist, a safe, reliable banking partner for people like me who care about tech for the sake of tech and what tech can do, if something like that doesn't exist, people are gonna have a hard time.

7. 1:45:01

   So it's a little weird. It's one of the few finance companies that started by somebody who wants it to be in service of all the other true interests they have rather than the culmination of their own personal interests. Like, I guarantee JPMorgan, Goldman Sachs, these firms were not started by people who said, you know, I don't really care about baking, but but but I I do I do wanna make this technology work.