When Silicon Valley Bank collapsed before our very eyes on Thursday, a founder told me the world felt like when COVID-19 first bared its teeth. I scoffed at his analogy at first: Are we really using a still-ongoing and devastating pandemic to describe the fall of a leading bank? But then I realized that we are indeed witnessing the crumbling of something sacred.
Now I see the resemblance between those gloomy COVID days and the surreality of this past weekend — even in the collective relief that echoed through Silicon Valley as regulators told depositors’ funds would be fully accessible starting Monday. For the past four days, WWe’ve reported on a Twitter-induced bank run, the regulators’ takeover of the SVB, the ensuing struggles of companies to help startups, and ensuing entrepreneurs’ struggles to survive. While Tech Twitter wfrom panic to anger to fear to relief, all with fear heavy on both shoulders.
Some investors spoke out, others pointed the finger, and while Twitter was full of hot takes and ill-timed jokes, my DMs have never been more active with raw, real stories about how SVB’s collapse has left people on the brink of influences innovation. Now my DMS is full of people celebrating, pouring one and enjoying a moment of outright relief that felt like the end of lockdown.
But while it may feel like the happy end of a nightmare, this is what has irreversibly changed: People have been punched in the face by the interconnectedness of technology and over-reliance on certain institutions and voices. I think we were all reminded that a financial story is a human story by nature; and that a failure of this magnitude goes far beyond the “tech elite” and whatever your definition of Silicon Valley is. And, I add, I hope people realized that we should all stop trying to be banking experts (just as we should all stop trying to be epidemiologists).
I don’t see technology functioning the same after what has been said, seen and pushed out loud in recent weeks. Founders are more aware than ever of which of their investors really adds value. VCs, often publicly cordial, have drawn lines and picked teams that I’m sure we’ll see performing together in the future. And normal people had just opened their eyes to how the often insular world of ventures and startups works (messy as it is).
Silicon Valley heaved a collective sigh with the news that depositors will be covered by regulators. There are still more questions that need to be resolved before rebuilding begins. But the big story ahead is still being written, both to better understand what broke and what breaks in the broader tank of Silicon Valley.