When Silicon Valley Bank collapsed before our eyes on Thursday, one founder told me the world felt like when COVID-19 first showed its teeth. I scoffed at his analogy at first: are we really using a devastating and still ongoing pandemic to describe the collapse of a prominent bank? But then I realized, we are actually witnessing the crumbling of something sacred.
Now, I see the similarity between those gloomy COVID days and the surreality of last weekend, even between the collective relief that resonated in Silicon Valley when regulators told depositors that the funds would be fully available starting Monday. In the last four days, wWe’ve reported on a Twitter-induced bank run, SVB taken over by regulators, the resulting fight by company to help startups, and the resulting fight by entrepreneurs to survive. All while Tech Twitter wShe went from panic to anger to fear to relief, all with fear sitting heavily on both shoulders.
Some investors spoke, others pointed the finger, and while Twitter was full of hot comments and ill-timed jokes, my DMs have never been more active with gritty, true stories of how the collapse of SVB is impacting people on the border of the innovation. Now my DMS is full of people celebrating, serving one up, and appreciating a moment of direct relief that felt like the end of lockdown.
But while it may seem like the happy ending to a nightmare, this is what has irreversibly changed: the interconnectedness of technology and the over-reliance on certain institutions and voices have slapped people in the face. I think we were all reminded that a financial story is innately a human story; and that a failure of this magnitude impacts well beyond the “tech elite” and whatever their definition of Silicon Valley may be. And, I will add, I hope you have realized that we all need to stop trying to be banking experts (just like we all need to stop trying to be epidemiologists).
I don’t see the technology working the same after what has been said, seen and made public in recent weeks. Founders are more aware than ever of which of their investors really add value. Venture capitalists, often publicly cordial, drew lines and picked teams that I’m sure we’ll see get their act together in the future. And regular folks have just opened their eyes to how the often insular world of venture firms and startups (messy as it may be) works.
Silicon Valley let out a collective sigh at the news that regulators will cover depositors. There are still more questions to be answered before the rebuild begins. But the big story ahead is still being written, both to better understand what broke and what is breaking in the broader Silicon Valley tank.
