Dana Blankenhorn

SBF 30 (or higher)

“White collar crime” is crime.

Robbing someone at pen point is worse than doing it at gunpoint. You’re in a position of trust. You have a fiduciary responsibility. You are supposed to have ethics, before you have the law, to guide your actions.

Break all of that and it can be murder. People die when their wealth and future is stolen. White collar thieves steal college educations, they steal retirements, they steal food from the mouths of grandbabies. They make every honest businessperson suspect.

I thought everyone felt that way until I heard Michael Lewis, author of The Big Short and other light classics, interview Harvard Business School professor Eugene Soltes on his podcast Against the Rules.” 

Everything is Liquid

What happened to Silicon Valley Bank is known as a liquidity crisis.

They had plenty of assets. But the assets were in instruments whose value had fallen, that weren’t worth as much as the bank claimed. When Peter Thiel and his bros learned this, they all pulled out their money at once and the bank collapsed.

The main lesson is that everything is now liquid.

Financial assets are liquid. Political assets are liquid. Your reputation and marriage are liquid.

Before the Web was spun this wasn’t the case. It would take time for depositors to pull their money out of a bank, time the bank could use to sell assets in an orderly way. There were still runs but these could be managed through regulation.

This time the fall was sudden, and the punishment had to be severe. The executives all lost their jobs. They deserve to face criminal charges, for cashing out while the walls were falling around them. Everyone who invested in SVB or its debt lost all their money. That’s a hit of nearly $100 billion, mainly to very rich people. Hopefully it teaches other banks to manage their assets better, to sell out money-losing securities quickly so they’re not caught out, in other words to be more transparent.

The 1983 Game

By my calculations, oil took over political dominance from manufacturing in 1968. Tech took over from oil in 2008.

That means we’re now playing the 1983 game. (This will be my 40th Peachtree Road Race. That's me at my second, in 1984.)

That was the year I bought my house. Interest rates were still high making the $49,500 price hard to afford. While oilman George H.W. Bush was VP, it was the defense and media industries who had Ronald Reagan’s ear. The oil shortage of the 1970s had turned into an oil glut, fueled by the Administration pushing the Saudis to keep pumping even while prices paid to Texas oilmen were falling.

This should sound familiar to today’s tech tycoons. Even while Californian Kamala Harris sits as VP, the industry is being battered in Washington. There are calls to break up the company, to tightly regulate the Internet. The collapse of Silicon Valley Bank was a bad look.

The industry thus faces a political choice.

A lot of the big swinging dicks of the last decade have made their choice. Led by Peter Thiel, a lot of them are putting all the cash they can into Republican campaigns. They see control of the government, under the leadership of a Republican party dedicated to their specific interests, as the best route forward.

Run on the Bank

The collapse of Silicon Valley Bank may prove to be a bigger story than it appears.

The reason goes back to a story I ran away from, the 1981 collapse of the Houston oil industry.

I didn’t intend to run away. I finally got a job at a daily in Birmingham, Alabama. It was a job I’d hold only 4 months before being fired. But I left Houston June 1, 1981. The collapse began soon after.

As in this case, the Fed had telegraphed what it was going to do. Paul Volcker was going to raise interest rates until inflation gave up, just as Jerome Powell is doing now. Inflation was much higher than, double digits in fact. Add to that the Reagan Administration jawboning the Saudis for lower oil prices and it was a perfect storm.

20th Century Blues

The 20^th Century was the bloodiest in history.

World War I. World War II. Vietnam. Afghanistan. The Gulf War.

And those are just the wars the U.S. was a direct party to.

There were lots of others. In all cases they were caused by fear. Fear of the other, or the other side. Nations battling nations for dominance like rutting goats.

There was some hope, after the Cold War, that those days were ending.

They didn’t. Russia just regrouped, and China decided they wanted to play, too.

Humanity can’t afford this. Never mind who’s right and who’s wrong. (We’re right. They’re wrong.) The waste of natural wealth, the continued abuse of fossil fuels, the climate can’t handle it.

Unless we can find a way out of the current conflict with China, our grandchildren won’t have a livable planet. There’s no Planet B.

Publishing is Community

I call March 3 Firing Day.

I lost both my career’s jobs on March 3. In 1983 I was dumped by the Atlanta Business Chronicle. In 1997 I was dumped by CMP Media. Other than those brief periods, I’ve been a freelance all my life.

Had I stayed at ZDNet, a full-time gig I left in 2010, I would have lost my job this Firing Day, as Red Ventures dropped tech journalists from ZDNet and CNet.  

I’m told the culprit is ChatGPT, which can deliver conversational text from descriptive inputs. But it’s really Search Engine Optimization (SEO). SEO is designed to attract Google to content, to maximize its audience. If your content is listed first in Google, people will click on it. If it’s on the 5^th page of a Google search, they’ll never find it.

This is a fine strategy for mass media. But it sucks for journalism. I know because I still work for people who traffic in SEO.

That 2002 Feeling

The last tech crash began in 2000 and I was in the center of it, a mid-career writer with a specialty called Internet Commerce.

That year saw denial and bargaining.

The next year saw anger and depression.

It was only in 2002 that acceptance came.

We know what followed. Talented programmers worked on open source projects and standards bodies created what became the Cloud. When proprietary advantage became worthless, and there seemed there was nothing to do, people worked together with technical goals in mind rather than just financial ones.

It was a slow build. In 2002 my gross income was zero dollars. In 2003 it was zero dollars. I got interested in what’s now the Machine Internet, which I christened the World of Always On, and in 2004 I finally made a few dollars. The next year I was asked to cover Open Source, and my career took off. For a time.

I’ve mentioned before how, in every photo of a stock market crash the people in it look similar. Similar age, similar backgrounds. They’re different people. Those who watched the 1987 crash were different from those who saw the 2000 crash, different from those who saw 2008, different from those who saw 2022.

Rope a Dope

You may be too young to recall, but the greatest fight in history occurred in 1974.

“The Rumble in the Jungle” was more noteworthy for the tactic of challenger Muhammad Ali than the result. Ali called it the “rope a dope.” He held his forearms against his body and let George Foreman punch himself out. Ali won in the 8^th round.

In the war against Trumpism, Joe Biden is using the same tactic. It requires patience, discipline, and getting hit a lot. But a politics based on always attacking exhausts the attacker. It leaves them open to a counterpunch.

To make the rope a dope work, you must take some hits. Gandhi knew that. Dr. King knew that. People must see the cliff they’re falling into. Not just what the monkeys on Fox News claim, the world organ grinders like Rupert Murdoch are shaping.

Soccer’s America Problem

I’m an American soccer fan. But soccer has growing America problem.

European soccer is being knocked on its ass by American money. The English Premier League, powered by big TV contracts and American interest, now dominates all European leagues. The competitive balance that was the hallmark of European soccer is gone.

American owners are increasingly dominating the English game. Todd Boehly, who also controls the LA Dodgers, recently bought Chelsea, and is maintaining the free-spending ways of Roman Abramovich. Americans now own nearly half the league.

Then there’s MLS. The league has yet to realize its potential, but that potential is huge. Most clubs still play in 20,000 seat bandboxes. The ratings are garbage. But nearly all the clubs make a profit, thanks to strict revenue-sharing and salary caps. Apple is going to send a flood of money into the league starting this month. Sellouts are now common. My Atlanta United drew 47,000 fans per match last season, better than the average Premier League team.

We can afford soccer. Other countries can’t. Soccer is now America’s 4^th leading sport, ahead of hockey and right behind baseball. Soccer is growing, baseball is not.

Fire Sundar Pichai

Recessions are good for markets.

They show us where the rot is, where the poor performers are.

This current one is no exception. It revealed that some of our Cloud Czars, the companies dominating the global economy with hyperscale datacenters paid for with cash flow, aren’t as clothed in gold as they seem. Some are downright naked.

Early this month, I identified one source of rot and urged Jeff Bezos to fire Amazon.Com CEO Andy Jassy. But it’s also time for two other founders to get back in the game. Larry Page and Sergey Brin need to push out Sundar Pichai.

Pichai is the kind of numbers-oriented manager Wall Street loves, but Silicon Valley should despise. He’s the kind of go along, get along guy who can make the trains run on time, but completely lacks vision. In technology this is a fatal flaw.

It’s obvious in how he dealt with artificial intelligence, the new hotness of 2023.

This is not about firing an ethicist. It’s a more basic failure to see where things were going, and deploy the necessary resources to get there.