EQ Saturday Sapience #6
Equity Intelligence 18th March 2023
This week we curate… what happened to Silicon Valley Bank and what it means to Silicon Valley in general, why are Indians ordering less pizzas, burgers and fried chicken and how lapses in governance at several public and private companies is about hubris of founders and promoters.
The End of Silicon Valley (Bank)… This is an environment that is fatal to quixotic paeans about “rainforests” and treating “community as more important than the ‘winning’ of any individual transaction.” When the stakes are so high, and the perceived opportunity space increasingly narrowed, every decision becomes a Prisoner’s Dilemma — and, in retrospect, what happened to Silicon Valley Bank becomes inevitable.
The slowdown in discretionary consumption, especially in the post-festive season, has dampened the strong demand sentiment that QSR players have witnessed in the past few quarters. This is attributed to rising inflationary pressures, a cut in household expenses and consumers’ down-trading behaviour.
Good Governance lies between Founder’s hubris and overvaluation says Mohandas Pai. The recent blow-ups in many start-ups are a result of the founder’s vanity and their failure to understand the basic obligations of public shareholding.
Quote of the Week
“The constant lesson of history is the dominant role played by surprise. Just when we are most comfortable with an environment and come to believe we finally understand it, the ground shifts under our feet.” - Peter Bernstein