Reverb was a Big Investor with Silicon Valley Banks

[omphalopsychos]

I was unable to find an actual percentage of operational dollars for Etsy and SVB. Roku was an insane 24%. Several others were in the 10% range. A business does not shrug off that kind of impact. So while Etsy would have us believe this is as simple as reaching for a different checkbook, I find this story works best for the less cynical. Or those not experienced with how money moves in large organizations.

Hopefully everyone would have, eventually, been made whole. No timeline was provided other than 'next several business days' and 'be patient'. Of course that delay depended on the how much in the way of operational funds were in SVB. A number that doesn't immediately come to hand and Etsy wasn't advertising. If it were a large number, both policy and structural impacts would have to have been addressed in the response. Payroll, lease payments, debt servicing.. all would be on solid ground first. Seller payout, no doubt key to their business model, would likely follow. How long would it have taken in a major loss scenario? We'll never know.

I can see that you're conflating cash reserves with payment processing. These are totally unrelated concepts. I'm not here to try to beat everyone to death with an education with how the financial sector works, but I'm just trying to help provide some facts and clarifications to prevent misinformation and false conclusions like the one above. I shouldn't be surprised but it's interesting to see firsthand and in real time how quickly people develop crystallized political views over events, topics, situations that they don't fully understand.

[Spook410]

I can see that you're conflating cash reserves with payment processing...

I'll spare you my CV but I have managed some very large programs and have had more than a passing exposure to financials. Payment processing and cash reserves are, in fact, quite tightly coupled. Payments are structured in a way that includes consideration of reserves. If the latter goes below limits, the former is delayed until solutions are found. Simplistic view. Even worse, if you suddenly lose a big chunk of your operational cash, it's a very serious matter reaching across the entirety of the business.

As for Etsy and payments to their suppliers (sellers), not sure what the impacts were going to be other than payment delays of uncertain duration. Their stock dropped 5% on Monday before the bailout news sunk in so not likely an existential threat. I'm willing to believe the sellers were only going to be delayed though I don't find the suggestion of harsher impacts to be hyperbolic. If you look at Roku, with a 25% total cash exposure to SVB, their stock only dropped 8% though impacts were likely to be severe. Hard to imagine. If we knew the amount and nature of Etsy exposure we would be better informed for this discussion.

And while we're off in the bushes, remember that the impact to tech went beyond direct exposure. The availability of operating lines of credit tailored to tech, tech investment capital, and even access to international banking, could have been temporarily vaporized as the system picked up the slack. A problem even to those without direct SVB exposure. There will still be impacts but these are now spread over months rather than hours and days so it's less likely to break. Some say that if it had broken we would have seen very broad and deep impacts.

I don't know what, exactly, was going to happen or what will happen. I would not advise anyone to be in a hurry to invest in Etsy equities. Nor do I feel those who took down their Etsy stores and deferred Reverb sales until the all clear sounds are overreacting.

[omphalopsychos]

Payments are structured in a way that includes consideration of reserves. If the latter goes below limits, the former is delayed until solutions are found.

You're referring to cash reserves imposed imposed on merchants that carry high credit & presale risk. These risks and reserves are applied to determine if that seller should be allowed to accept transactions (given high risk of chargeback). This is completely a separate topic from where a marketplace company like etsy puts cash from its balance sheet, which is the type of cash reserve we're talking about.

The comparison to Roku is interesting but only tangentially related. Roku's business impact was because a large chunk of its balance sheet was deposited at SVB. The risk here obviously is that they can't invest that capital if it goes away, and this would dramatically affect its growth prospects. This is totally different from what's going on at Etsy. The etsy situation is caused by a service disruption of one of their payment partners. Yes they both have "exposure" to SVB. For Roku it's directly existential. For Etsy it is more like a service outage.

I agree with the other concerns you listed in your post, but again they have nothing to do with payment processing delays. You're talking about a liquidity crunch in investment capital. All very interesting to analyze, but, again, a totally separate topic.

[Hammertone]

Is there something for sale in this thread? I didn’t think so.

A bridge. I have a bridge for sale. It connects Manhattan and Brooklyn. For you, very special deal.

[Guy In Lyon]

...t's just numbers.

Every economy is "just numbers".

Yes, even barter, as in "I'll give you one of my goats for five of your chickens."

[jzucker]

today the entire site seems to be broken. I cannot see my listings or messages.

[Fear the Reaper]

https://twitter.com/reverb/status/16...730092033?s=20

today the entire site seems to be broken. I cannot see my listings or messages.

[omphalopsychos]

Jack don't worry. SVB didn't invest your listings in bonds and then sell them to Goldman. Although you might want to double check your gear closet to make sure they're still there.

[ruger9]

Every economy is "just numbers".

Yes, even barter, as in "I'll give you one of my goats for five of your chickens."

Unless someone decides to print a bunch more goats, thereby lowering the value of yours and everyones.

But to be more specific about my comment, I was speaking of the stock market: People buy $1 million dollars in shares of a company. Those shares increase in value to $2 million. If the stock was ACTUALLY worth every dollar it represented, every single person who owned stock would be able to cash out on the same day, for a total of $2 million. But they can't. Because the $2 million doesn't actually exist. The $1 million still might, but the $2 million does not: it's basically an "IOU". It's not too far away from gambling in hopes of "winning" money you do not have. And it works alot of the time. Most of the time. But not all the time. Seems like a very unstable game to me. Which is why 1929 happened. And yes, I know there is legislation now to prevent another 1929... but that didn't save the housing crisis, did it? Huge bailouts with taxpayer money to prop up and save something that was broken by design.

It's all the big short. Just different levels.

[jazzshrink]

A bridge. I have a bridge for sale.

I'm interested. Rosewood, ebony, tune-o-matic?

[Woody Sound]

On the flip side, I just withdrew all $5k+ from my PP acct, and it transferred to my bank right away, no problem.