Silicon Valley’s surreal weekend
As Silicon Valley Bank collapsed before our eyes on Thursday, a founder told me that the world felt like it did when COVID-19 first bared its teeth. I scoffed at his analogy at first: are we really using a still on-going and devastating pandemic to describe the fall of a prominent bank? But then I realized, we are indeed witnessing the crumbling of something sacred.
Now, I see the similarity between those dreary COVID days and the surreality of the past weekend — even among the collective relief that echoed through Silicon Valley as regulators told depositors funds would be accessible in full starting Monday. Over the past four days, we’ve reported on a Twitter-induced bank run, SVB taken over by regulators, venture’s resulting scramble to help startups and entrepreneurs’ resulting scramble to survive. All while Tech Twitter went from panic to anger to dread to relief, all with fear sitting heavily on both shoulders.
Some investors spoke up, others pointed fingers, and even though Twitter was full of hot takes and ill-timed jokes, my DMs have never been more active with raw, real stories of how SVB’s collapse is impacting the people on the frontier of innovation. Now my DMS are full of people celebrating, pouring one out, and appreciating a moment of straight up relief that felt like the end of lockdown.
But while it may feel like the cheery ending to a nightmare, here’s what has irreversibly changed: people were slapped in the face by the interconnectedness of tech and over-dependency on certain institutions and voices. I think we all were reminded that a finance story is innately a human story; and that a failure of this magnitude impacts well beyond “tech elite” and whatever your definition of Silicon Valley is. And, I’ll add, I hope there was the realization that we should all stop trying to be banking experts (just like we should all stop trying to be epidemiologists).
I don’t see tech functioning the same after what was said, seen and pushed out loud over the past few weeks. Founders are more aware than ever on which of their investors truly add value. VCs, often ever publicly cordial, have drawn lines and picked teams I’m sure we’ll see act together in the future. And normal people just had their eyes opened on how the often insular world of venture and startups works (messy as it is).
Silicon Valley let out a collective exhale with the news that depositors will be covered by regulators. There’s still more questions to iron out before the rebuilding starts. But the big story ahead is still being written, both in better understanding what broke and what is breaking in Silicon Valley’s broader tank.