# What Is ZIRP And How Did It Poison Startups?

**Author:** Dalton Caldwell, Michael Seibel
**Type:** Video
**URL:** https://www.ycombinator.com/library/LC-what-is-zirp-and-how-did-it-poison-startups
**YouTube ID:** iMo5-4h_XwE

---

*If you’ve spent any time on the startup side of Twitter, you’ve probably seen the word “ZIRP” thrown around. Usually
not in a positive way; often as a jab. But what is ZIRP?*

*ZIRP stands for “**Z**ero **I**nterest **R**ate **P**henomenon,” and it refers to a stretch of time — most recently
throughout the pandemic — in which the Federal Reserve sets interest rates around 0% and commercial banks are able to
borrow money for next-to-nothing.  These banks want to find somewhere for this money to go — so it can, in turn, make
them more money. For a few recent years, that meant a lot of new cash rushing into VC and startups.*

*A rush of money for startups might sound like a good thing, but it’s never that simple. Handled incorrectly, too much
money can be poison.*

*In this episode of Dalton & Michael, we’ll talk about some of the downstream side effects we saw during this stretch:
an explosion of unicorns, a surge of new investors, and the impact it had on the way founders think. We’ll share the
advice we gave YC founders to brace them for the future, and how some companies made the right move in the middle of an
unusual/unsustainable moment. Michael and I aren’t economists, but we’ve seen some stuff; join us as we look back at how
it all played out.* 

*- Dalton*

