Inorganik Produce

Optimizing systems for the whole rather than the individual

March 13, 2023

Yesterday I sat in weekend I-70 traffic to go snowboarding with a friend. The traffic was predictably bad. Effectively parked, I grabbed my phone and had Google route me to get an ETA - parking lots at ski resorts close when they fill up, and if you don't make it in time, you may as well turn around. Google told me to take an exit, way before our planned exit. So I put on my blinker.

My friend riding shotgun said, "That's the frontage road, don't exit!"

"It's Google", I replied, "it's the fastest way."

My friend who battles weekend I-70 traffic way more than I do explained that the frontage road shortcut was slowing down traffic ahead because of people merging back onto the highway further west. So I didn't exit. As we sat on the highway moving at walking speed, I watched as other drivers sped by on the frontage road. I was envious.

Last week we saw a bank run on Silicon Valley Bank, in part because several large venture investors advised companies to pull their money. Before Sunday, the FDIC insured only up to $250,000 per depositor, but startups using the bank had deposited far more than that. Ben Thompson observes,

...the bank run that resulted made it clear that everyone, from venture capitalists to the startups they advised, were solely concerned about their own welfare, not about the ecosystem as a whole.

And the result was that SVB failed. Yesterday the US dept of the Treasury released a statement that they would back 100% of depositors funds, which stopped a contagion of bank runs on regional banks. Shareholders of SVB and its senior management would not be protected.

Amazingly, my friend and I made it into the "last chance" parking lot at Arapahoe Basin, and we were the last vehicle in. Arguably, more people would have reached their destinations sooner if Google didn't route people on the frontage road, and SVB would not have failed if companies didn't pull their money out. But how many people had to turn around and miss a day of skiing, and how many rules and regulations will replace the trust lost in regional banks.


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