On Thursday, when a Silicon Valley bank collapsed before our eyes, one founder told me he felt the same way the world felt when COVID-19 first kicked its teeth. At first I scoffed at his analogy: Are we using an ongoing and devastating pandemic to explain the collapse of a famous bank? But then I realized, we are actually witnessing the destruction of something sacred.
Now, I see parallels between those dire Covid days and the reality of last weekend — even amid the collective relief across Silicon Valley that regulators will be fully accessible for deposits starting Monday. In the last four days, wIn a Twitter-induced bank run, SVB has reported on the chaos it has caused, with regulators taking over, startups and entrepreneurs scrambling to survive. All while Tech Twitter wFrom shock to anger to fear to relief, they all sat on both shoulders in awe.
Some investors spoke up, others pointed fingers, and even though Twitter is full of hot jokes and timeless jokes, my DMs have literally never been more active, with true stories about how SVB’s failure is hurting people at the creative frontier. Now my DMs are filled with people celebrating, pouring one, and appreciating a moment of pure relief that seems like a locked end.
But while the euphoria seems to be ending in a nightmare, here’s what’s irreversibly changed: people have been slapped in the face by technological entanglement and over-reliance on certain institutions and voices. I think we have all been reminded that financial history is inherently human history. And that a failure of this magnitude will affect whatever your definition of “tech elite” and Silicon Valley is. And, I would add, I hope there was a realization that we should all stop trying to be bankers (just as we should all stop trying to be epidemiologists).
After all that has been said, seen and pushed over the past few weeks, I don’t see the technology working the same way. Founders know more than ever which of their investors will add value. VCs, often publicly honest, have drawn lines and chosen teams, I’m sure we’ll act together in the future. And ordinary people had their eyes opened to how the often unknown world of ventures and startups works (as chaotic as it is).
Silicon Valley let out a collective sigh of relief at the news that depositors would be covered by regulators. There are still more questions before the rebuilding begins. But the big story ahead is still being written, with a better understanding of what’s broken and what’s broken in Silicon Valley’s vast tank.