What Silicon Valley Bank Did Right (and Mussolini made the trains run on time, and Stalin built up the grave-digger economy, and...)

Harvard Business Review ^ | March 24, 2023 | Lou Shipley

[DoodleBob]

In the wake of the current wave of bank failures, one of the startups I currently work with — a Silicon Valley Bank (SVB) customer — recently applied to open an account with a major money center bank. The bank came back with a long list of objections and ultimately declined to open even a basic banking account. Reasons given were: the startup was not 100% U.S. owned, had a foreign-born CEO, and had a senior manager residing outside the U.S. The startup was denied even though it is very well capitalized with a CEO residing in the U.S., has many large U.S. customers, and has a very promising future.

This headache speaks to the great value SVB delivered over the last 40 years for startups, venture capitalists, private equity firms, publicly listed tech companies and the overall economy.

I first learned about SVB while at my first startup, Avid Technology (AVID), in 1990. I collected a very large check from a customer and volunteered to deliver the check to the bank to get the cash on the books — always a priority in a startup. I learned from our CFO that SVB had no local offices, so we mailed the check to the bank. I thought it was interesting that a bank would have no branches and yet could provide the services we needed as a fast-growing company. We banked with SVB because it understood a company like ours better than any other bank could.

Over the next 30-plus years, SVB evolved along with the startup and venture capital industries.

[DoodleBob]

I don't recall HBR lamenting the collapse of Drexel Burnham Lambert, Lehman Brothers, or Afghanistan.

SVB had one job: stay in business. That means balancing ALL risks, with asset-liability management amongst those at the top.

[bobbo666]

Supporters of losers always list the good things. Try and tell you not to be so negative by ignoring the good things.

OK, You are in good health except for:

cancer, impending heart attack, fentanyl addiction, yada, yada.

It only takes one really bad BAd thing to make everything else a waste of time and money. If you cannot consider all of the things and at least navigate around the worst, you are a child.

[ConservativeInPA]

We banked with SVB because it understood a company like ours better than any other bank could.

Bull chit.

[No name given]

Claiming SVB is a good company is like saying Hunter Biden is innocent.

[scrabblehack]

SVB mismanaged its investments, which led to a run on the bank and ultimately it’s closure and Chapter 11 filing.

Does “mismanaging its investments” mean “make it too easy to loan to startups?”

For every Roku, Etsy, and Cisco they had, how many unsuccessful startups did they back?