Silicon Valley Bank’s collapse in 2023 left a hole in the tech industry. For years, the bank poured money into the Bay Area’s riskier startups, allowing those companies to pursue their various “disruptive” aims. Eventually, mismanagement led that business model to collapse. Now, billionaire Palantir founder Peter Thiel and several of his pals want to fill the void left by SVB by launching their own bank dedicated to backing the industry’s riskier bets.
Multiple outlets have reported that the new bank will be called Erebor, named so after the “Lonely Mountain” from J.R.R. Tolkien’s The Hobbit. If you’ll recall, the Lonely Mountain is where Smaug, the great and terrible dragon, lives. Basic literary analysis tells us that Smaug (like most dragons) is a symbolic embodiment of avarice and greed.
Anyway, Erebor—like SVB before it—will funnel money to the tech industry’s startup economy, the Financial Times reports. A filing associated with the bank states that it will “differentiate itself” by assisting businesses that “are not well served by traditional or disruptive financial institutions, in particular with respect to insufficient access to credit.” That will reportedly include cryptocurrency companies. Though it will likely serve many California companies, the bank itself will be based in Columbus, Ohio, FT writes.
Thiel is just one backer. The leader of the pack is reported to be Palmer Luckey, the founder of Anduril (another company that stole its name from the Tolkien mythos), and VR firm Oculus (which Facebook bought in 2014). Other backers include Joe Lonsdale, the co-founder of Palantir and Founder’s Fund, which is Thiel’s venture capital firm.
One clear takeaway is that this is yet another substantial power play by Thiel, Luckey, and the gang of well-heeled luminaries that increasingly seem to dominate the tech industry. Their position as a financial conduit into the next generation of startups could give them influence over companies that, in ten years time, may turn into the next Facebook or Google. That said, there is also the opportunity for this venture to—like SVB—be hugely mismanaged and collapse in a heap of withdrawn deposits.
The real takeaway is that Thiel desperately needs to stop besmirching Tolkien’s legacy by naming all of his nefarious projects after stuff from The Lord of the Rings. Seriously, how much can one dead author take? At this point, it’s almost like Thiel and his cronies are making fun of Tolkien. What’s next? A drone company named after the Nazgûl? Honestly, I wouldn’t put it past them.
Read the full article here
