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Y Combinator Cast

06/21/24

@ Y Combinator

ZIRP, or Zero Interest Rate Policy, refers to the period when the Federal Reserve set interest rates around 0%, allowing banks to borrow money at almost no cost.

Video

What Is ZIRP And How Did It Poison Startups?

@ Y Combinator

What Is ZIRP And How Did It Poison Startups?

06/21/24

Related Takeaways

Y Combinator Cast

06/21/24

@ Y Combinator

During the ZIRP period, banks had to find places to invest their money, leading to a surge in venture capital investments as they sought higher yields.

Sequoia Capital Cast

12/19/24

@ Sequoia Capital

The Federal Reserve shifted from cutting interest rates to zero and injecting significant stimulus into the economy, which created challenges for investment behavior.

Y Combinator Cast

06/21/24

@ Y Combinator

The influx of capital during ZIRP caused many venture capital funds and family offices to dramatically increase their investment rates, as they had more money to manage and distribute.

Y Combinator Cast

09/18/24

@ Y Combinator

If your company is asking you to work more, it signifies that it's recovering from the Zero Interest Rate Policy (ZIRP) era, where many employees enjoyed a more relaxed work environment.

Y Combinator Cast

06/21/24

@ Y Combinator

The zero interest rate phenomenon led to unsustainable business practices, where companies that relied on cheap capital struggled when interest rates rose.

Y Combinator Cast

06/21/24

@ Y Combinator

When startups received large amounts of funding during ZIRP, it often led to a lack of innovation, as companies began to rely on spending more money rather than improving their products or services.

Y Combinator Cast

09/18/24

@ Y Combinator

If you find yourself in a company that shows signs of ZIRP, such as a lack of productivity or engagement, it might be time to consider finding a new job or starting your own venture.

Y Combinator Cast

06/21/24

@ Y Combinator

Once interest rates began to rise again, many investors who had entered the startup space during ZIRP exited quickly, leaving behind a volatile market.

Y Combinator Cast

06/21/24

@ Y Combinator

The analogy of subsidized corn illustrates how easy access to money during ZIRP led to a proliferation of ideas and projects that may not have been viable without such funding.