Ex-SVB COO Explains the True Story No One Reported - Phil Cox

$42 billion. That's how much money was pulled out of one bank in a single day. In fact, literally in one afternoon, not over a month, not over a week, in one day. This was March 9th of 2023. By the next morning, Silicon Valley Bank was gone. My wife came in, how's it going? It's gone. It's the 16th largest bank in America. $209 billion in assets, 40 years of history wiped out in 48 hours. But how did this even happen? The company is banking there. They weren't reckless. They just kept their money in one place. And on that Friday morning, they couldn't get a dollar out of it. Payroll, frozen, rent, frozen. Everything, frozen. Overnight, through no fault of their own. The person running operations, while all of that happened, the COO sitting in the building, watching numbers fall in real time, is my guest today. Bill Cox didn't get fired. He didn't disappear. He was one of a very small number of C-suite who stayed through the entire collapse and helped transition the bank over to first-citizens. I think you're either someone who runs towards a burning building or runs away. I can't help myself sometimes. Okay, what do we need to do? Most people heard the headline, but Bill lived for 40 hours. And he's never really talked about what it was like from the insides until now. Just last week, as we're recording this, a trial opened in federal court. SVB Financial Trust versus the FDIC, fighting over roughly $1.7 billion in deposits that were still sitting in the bank when regulators seized it three years ago. Three years later, they are still in court over who gets the money. And it is already producing extraordinary moments. In the opening days of testimony, SVB's own former chief financial officer admitted under oath that the bank had taken on what it internally defined as excessive risks months before it fell. The FDIC's argument is blunt. They say that leadership gambled with depositors money. SVB's side says that the regulators are using hindsight to punish decisions that looked reasonable at the time and were signed off by those same regulators along the way. Which tells you everything about how messy this collapse actually was. And if you heard the SVB headline in 2023, but never really understood what happened, here's the version that actually makes sense. Silicon Valley Bank was the bank for startups. If you were tech company, you raised venture capital and your money was probably at SVB. They'd been doing this for over 40 years. And the problem was simple. During COVID, tech companies were flush with cash and deposited billions. SVB took that money and bought long-term government bonds. This seems safe, right? Except when the Fed started raising interest rates. Those bonds lost a ton of value on paper. And at the same time, the startups started pulling their deposits because the market had dried up and they needed their cash to survive. So SVB announced that they needed to raise $2 billion to cover this gap. And that's when it went sideways. VCs started texting at portfolio companies, group chats lit up, Twitter was on fire. Everyone panicked at the exact same time. And $42 billion was pulled out in a single day. It was the first social media bank run in history. And by the next morning, the bank was gone. Here's the detail that makes the story hit different for anyone running a business. 93% of SVB's deposits were uninsured. Meaning almost every dollar in that bank was above the FDIC insurance limits. These were people with savings accounts. These were companies with their entire payroll sitting in one place. And on that Friday morning, they couldn't access any of it. My guest today, Phil Cox, was SVB's chief operating officer when all of this happened. He spent 14 years at the bank. He built their entire European operation from nothing and then moved to the US to run technology, cybersecurity, operations and client service. And when the bank collapsed, the CEO and CFO were immediately removed by the FDIC. Phil stayed. He was in the room with the regulators and the new owners figuring out how to reopen the doors and help keep thousands of companies alive. And I'll say this plainly because you'd figured out anyway. Phil is on my team now. He is our chief business officer here at Cardo Ventures, which is the whole reason I can sit down and ask him what I'm about to ask him. He's never done an interview like this. He's not analyzing SVB from the outside like everyone else who's talked about it. He was the operator. He was inside the building when it fell. So let's start with asking the one thing that everyone thinks they know, but probably doesn't. The popular narrative is that SVB failed because of bad risk management. They bought long dated bonds, rates went up, and then they lost money. But you were running the operations when this happened. Is that actually the full story? And what are people getting wrong? I think for the right context you have to go back a little bit and understand that Silicon Valley Bank was a kind of almost an upside down typical banking organization because we had far more deposits than we actually made in loans. So we had this huge surplus of money. Typically banks are quite, you know, they have deposits and they have loans and they're often a relatively similar number on either side of their balance sheet. But we had this huge surplus. And so we had for many, many years invested that surplus in, you know, trajories and other AAA rated instruments. And so, which are people who aren't familiar with that? Those are effectively the safest. I mean, it's the government backing the investment. Absolutely. Yeah. There are known to be the safest securities that you can put your money into. Yeah. And obviously there are very clear regulations on what you can do with those types of surpluses. Because you're investing your depositors' money. And so from a safety and sound as perspective, big tick, you know, the money is safe. But obviously it also does represent because these are typically fixed rate bonds, interest rate risks depending on the nature of the other side of your balance sheet and how interest rate fluctuations up or down then affects that portfolio. And fast forward, I think, over the previous maybe three to five years, we had pushed out the duration of those investments. So, you know, roughly speaking, we were investing on a two or three-year horizon, which meant that, you know, every quarter there was a strong cash flow of those investments that were maturing. And then you can decide, do I need any of that cash? If not, I'll reinvest and so you've got this rolling cash flow of those investments. And for a bank with such massive surpluses, we, you know, if you invested on the two or three-year time horizon, you might get 75 basis points return. What is it? It's a basis point. So, three quarters of one percent. I mean, this is a time when rates were effectively zero, you know, around the world. But if you went out to a longer duration, you know, maybe five or six years, you might get 150 basis points or one and a half percent. And so, the difference, you know, from three quarters of a percent to twice that at one and a half percent, when there's a hundred billion dollars of money, is, you know, it's 750 million dollars of profit per annum that you're making by pushing the duration out. And we gradually did push the duration out. Now, it's still invested in a way where there's quarterly cash flows and renewals and so on. So, in the normal course of business, if you need, you know, cash in any one particular quarter, then you have investments available. You're not selling early and doing things like that, which can be funky. In the normal course of business, but of course, what happened leading up to March 2023 wasn't really the normal course of business based on what had happened. So, again, going slightly back in 2021, the bank basically doubled in size in one year. So, it pretty much went from a one hundred billion dollar bank to a two hundred billion dollar bank in one year. And what drove that growth in 2021? It was the incredible levels of funding coming into technology companies. Around post-COVID time. Post-COVID or, you know, still in the tail end of COVID, but companies would, you know, there will be so many stories of a company that said, you know, we went out for our series B and we were looking to raise 25, maybe even 50, but actually there was such a strong demand and we're so happy with the price that we raised a hundred or we raised 150. And money was pouring into SVB because we had such a huge market share of those types of companies. And obviously we were, you know, trusted by the investors as well as the C-suite of the tech companies and so on. And so, the credentials that we'd built up over that 40 years and the relationships that we'd built, we were gathering so much of that money, which obviously from a, the growth of the organization was, was fantastic. And, you know, as I said, that surplus money then finds its way into those securities. So there have been a ballooning of the bank's balance sheet based on that success, but of course what then happened through 2022 and into 23 was that that kind of completely reversed. And so we're, where the funding stopped. Companies were carrying on burning cash. Not many of those companies are yet making profits and generating cash flows. So they are eating into those funds, and of course, therefore, our deposits. And so from this huge inflow, one month after the next, suddenly you're getting outflows. And small outflows at first net, you know? But increasing and increasing, which meant that, you know, obviously as our investment portfolio was providing our quarterly cash flows at a certain point that isn't enough, and you have to start looking at whether you need to start selling some of your investments. And of course, during that period of time, interest rates not only rose, but they rose very, very quickly. And that meant that the face value of the bonds that we'd invested in were less than face value. So for every $100 we'd invested, maybe those bonds are now worth $95. And that's fine if you don't need to sell them. But if you need to sell them to get the cash loads to pay your depositors the money that they want to take out of their accounts, then that is where you start to see losses on the sale of those securities. So you started to see this coming, and you made an announcement at close on March 8. Was this announcement yours as a stop process? Just this is us getting this update. We know that we have to get this update. And it was consequential, but seemingly just a routine update at market close. Yeah, I think that we were well intentioned. And I would say that because I think we were plenty of banks who had this dynamic. But given the nature and the difference between our loans and deposits in this huge surplus as a percentage of our balance sheet, so over 100 billion of investments on a just over $200 billion balance sheet, so like 50% of our balance sheet, or maybe a little bit more, actually made up of this type of investment, we were probably the most exposed organization relative to its size with this issue. And I think the well intention piece was we wanted to get ahead of it. It was kind of looming. And so we wanted to make sure that the bank remained kind of in good shape to continue its operations. The bank was really profitable at that time. It was making great returns. This obviously the stock had done extremely well over the preceding years. So announcing that we are going to sell some of the securities, it is going to create a loss that is not recognized in the way these things have to be booked on the balance sheet if you don't have to sell. But when you sell obviously you crystallize that loss. But we're going to get ahead of it, and we're going to replace the loss with new equity, new investors that understand this is still a fantastic franchise with all of this technology, innovation, ecosystem, position, and we're getting ahead of it, if you like. And I think that massively backfired in what then played out over the following day. So you issued this announcement that you're getting ahead of it. You didn't have to. I'm not as familiar with how these operations work. But my understanding is you had to make the announcement that was a requirement for you to do. Was that correct? Yeah. What was not necessarily a requirement was when we made that move. We could have waited a bit. You could have waited a quarter. We could have also-- and I think this is where the CEO and the CFO and some of the board members, as they were looking at this particular issue in detail, were obviously taking advice. We had our advisors and so on. And they were taking advice. And I think if you look back now, it's easy to say you shouldn't-- rather than say you're going to raise money, and that some of that money is already underwritten. But to say you have raised it. And it's done, as opposed to there's any open-endedness to that story, if you like. And so I think that those little nuances make all the difference when the analysts are then writing their papers in the evening after that announcements made. And as the doors open to stop market the next morning, there's huge pressure on the share price because there's uncertainty. And the uncertainty included, what about the rest of the portfolio? How much of the rest of the portfolio are they going to have to sell and realize the losses? And there will-- there continue to be people ready to provide the equity to fill that hole that would then appear. So you kind of open the whole issue up by, in some ways, trying to be proactive, but obviously not necessarily completely fully thinking through all of the reaction and then the consequences of that action. And then it comes Twitter. Yeah. Well, I think there are some things about the innovation ecosystem that really played against us. Because if you imagine there are a typical growth stage tech company, it probably has three VCs investing in that company. And the VCs are going to be very tight with those companies. There are going to be WhatsApp groups of all their CEOs. There are going to be-- the communication is extremely tight. And so when they see the news and they see what's happening in the share price and they see what the analysts are saying and so on, they're thinking many of our companies, probably most of our portfolio companies have their money with SVB. And many of them may not even have another bank account. Some of them may have another account with another bank. But 90% of the cash is a SVB. But we've got another account just for some other stuff. And as soon as a VC says to 100 CEOs on a WhatsApp message, you need to move your money. Or maybe, first of all, it was you need to move some of your money or where is the money and so on. Then that's kind of a wildfire. And I think the whole Twitter thing was just fueling that frenzy. And if VCs hadn't got to the stage of messaging their portfolio companies at that point, as soon as they started seeing those messages on Twitter as well, then they would be doing exactly that. For people who aren't familiar with what happened on Twitter? There are influencers in the tech ecosystem. People who've been incredibly successful at investing in companies and with millions of followers. And so when they, in this world that we live in today, when they say, I hear there's a problem at SVB, I would suggest that everybody gets their money out. Then again, it's kind of like this contagion that spreads so fast. And it's not something you can control from inside the company at that point because it's long past your ability to control the narrative at that point. So you're with your leadership team in the middle of a bank run on March 9, issuing orders to ensure that fraud doesn't happen because there's this Twitter commentary. There's analyst commentary. So you have to protect them. What other operational controls are you trying to navigate while you're in front of your team and also dealing with something that doesn't seem to be looking like it's getting any better if it's getting worse? Yeah, well, I think at the end of the day, you feel pretty helpless at this time because as the afternoon, first of all, shortly after lunch on that day, we kind of dismissed the offsite all hat, team meeting because there were other things to focus on, let's say. And you kind of sat there almost counting the money as it's going out. We were obviously having emergency executive committee discussions around things that we could do, discussions with other parties in terms of media or the markets, analysts. But there's a part of this which can't be anything other than-- you've got one eye closed because you're just thinking, I hope this is a storm that passes. And so by the time we got through to the close of the wireroom and the cutoff for the end of the day, where payments between banks are kind of stopped for the day. And at least you're going to-- get a time just to draw breath and think, so exactly how much did go out and it's in the $40 billion range. So around about, that'd be 25%, 20% to 25% of our deposits. And what had been more from a late morning to the 5 PM cutoff in that timeframe? And so what I now know, from many discussions with the likes of JP Morgan and so on is that they were, they were also in a frenzy, but they were in a frenzy opening up bank accounts with VCs and technology companies on the phone to them saying, you know, I can get you the paper the next few days, but I need an account or I need some bank details. I'm sending you money. - Wow. - So they either had an account set up or they were just given a kind of a JP Morgan or a city bank kind of account number just to send the money to and then when they get this account set up, they could get it moved into their account. So there was obviously a flight to the very biggest banks in the United States for that money. But as the, as the even went on, you know, it was clear that what we could see behind the scenes was the amount of money that our clients went on to their online banking and their mobile banking and teed up payments that the next morning, they, you know, as soon as we, as they, as the payment window opened back up for the Friday morning, that money was going to leave because, you know, they had instructed us to send it, but it, it's kind of held until the mark until that window reopens. So obviously, you know, I managed to get back to my house and get back on calls and obviously none of us went to sleep that night, but we got to, I think it was about 4 a.m. Where, you know, as the COO, you kind of have to, you know, the one who brings the bad news because your team can see behind the scenes how much money is then, you know, ready to leave. And it was, you know, it was in the kind of, I think it was in the, in the realm of about $60 billion on top of the $40 billion. That was ready to go. First thing, first thing on the Friday morning. And so in the discussions with the regulators, you start to get to the point where we, we can beg Stephen Borough and with the money we've got, you know, we could accommodate that on, in terms of the opening of the, of the funnel on the Friday morning. But what about what happens between 4 a.m. and 9 a.m. and what happens in up to mid day on Friday and like at some point where we're kind of going to run out of money and that's the point at which it's probably 4 to 5 a.m. on the Friday morning where they kind of said, you're not going to be able to open on Friday morning because you're, you're just not going to be able to fund all of your customer requests in the trading day that will cause extreme market disruption, et cetera. So, you know, we kind of knew at about 5 a.m. that the bank was going to be put into receivership and won't, and wouldn't open on the Friday and we, and we didn't open the doors on the Friday. And it took until about, you know, 9 or 10 o'clock in the morning for us to officially be in receivership 'cause obviously there's various legal steps I have to go on, but my wife came into the, to the study at about 6 a.m. and she said, how's it going? And I said, it's gone. - And how long were you there? - I was there, 15, yeah, 14 years, 14 years. - So 14 years and building and expanding and it's just in like sheer hours, just no longer exists. - I don't really think you, you think about that at the time at all, I mean, obviously it takes, it was months before you look back on some of these things and kind of think, how's I feeling then, what, what kind of happened then? And you forget little bits and then you see a next colleague and you remind it, oh, you remember when that happened or you remember when this happened? And but that was the point of where it's kind of gone and you're immediately thinking about, so what happens now? Because you have regulators now taking control of the whole thing and you don't really know what's gonna come next. - So what did come next? - So we were closed on the Friday and I think very hurriedly the regulator was looking at how things could best be rescued in terms of a sales process and looking at what did it mean for the depositors of the organization? Because as we know under the FDIC banking rules, your first 250,000 of deposits are insured for which the bank pays fees on an annual basis for that kind of insurance. But if you have more than 250,000 of cash deposited within an institution, it's not insured. So you're taking risk on the institution. And so for that tech company with 50 million on its checking account that didn't move its money on the Thursday, they were, you know, it's no benefit to them to celebrate the fact that 250,000 is insured when you've got 50 million on deposit. It's knowing that 99% of that deposit is kind of uninsured. So lots of panic, lots of client outreach and communications and but as soon as you go into that process and you become effectively controlled by the FDIC, then you're not in control of the narrative. You can't make any statements, you know, it's for the regulators to make those announcements and to give kind communications and things like that. So you are, you are, the situation changes really fast. - And most of the C-suite left within the first month, C-E-O and C-F-O within the first hand of days. - So I jumped on a plane and went over to San Francisco and then I think one of the biggest discussions over that first weekend was would the government step in and guarantee the depositors to bring calm and kind of some kind of stability in order to what was happening. And I think because of the concentration in the technology industry, that it was gonna be a really bad day for, you know, the technology market and, you know, something that's extremely important to the United States economy and it was on the Friday kind of mid afternoon, I think, that, I'm sorry, on the Sunday, mid afternoon, that it was announced that, you know, the government was going to step in and guarantee all their deposits. And then the C-E-O and the C-F-O were kind of marched out at that point. So literally as soon as that announcement had been made essentially, then the FDIC employees who were on site and there were at least 100, maybe even closer to 200 had kind of come to our head office over that weekend. Yeah, they kind of took the C-N-C-F-O to their laptop and badge and walked into their car and, you know, obviously it was made clear to the rest of us that we weren't to have any contact with them. And, you know, we would be working with the regulator to kind of figure things out from now. Why did you stay? I think a lot about this because, and it's hard to describe why, but I think you're either someone who runs towards a burning building or runs away. I can't help myself sometimes to figure out, okay, what do we need to do? And who do we need to get on the next call? And what's something we should be thinking about right now to do? And I know it was, you know, obviously for the C-O and C-F-O, things were taking out of their hands, but for one or two of the other executives, it was kind of, it was a bit much for them. I think the whole what had happened and the shock of it and the implications for them is, you know, individually and for their wealth or whatever it might have been, you know, they were really, they were really reeling from it. And I think that I clicked into gear more than anything because the regulator said, you know, the most important thing here on Sunday, late afternoon, Sunday evening is we want to open the bank tomorrow. We want to open the bank on Monday. And of course, notwithstanding the fact that the positives were now fully guaranteed for the positives, they were still moving their money. And I think some of the announcements made by the the regulators were almost like the bank's going to be reopening on Monday in order for you to come get your money. And that, you know, I was expecting more calm at that stage because they weren't going to lose any money. But people, you know, companies still move their money and it's still carried on kind of going out in big numbers through all of the following week. On the morning of March 10th before they came in and seized the bank, there were some executives that had bonuses paid out when you think back to the leadership and value standpoint. Do you think that that was the right decision at that point? Yeah, of course the timing ended up being, you know, horrific from that point of view. That's clear and I understand why many people wrote about that and focused on that. It was a subject of discussion between the executives and the regulators over the following weeks. Those bonuses were, you know, in relation to the year before from 2022. I think because things had tightened for the bank, you know, because of what was happening in the technology ecosystem. Those bonuses were, you know, in the main significantly less than they'd been in prior years. But yeah, the timing was really funky. But I think as soon as those payments had been set up, you know, a few days before to be paid on that, on that Wednesday of the week, of that week, then the money was on its way. So I think the fact that it's still a matter of discussion and debate between regulators and executives, you know, it's kind of a tough one because the timing was pretty bad. And if those bonuses have been paid out at the end of January, then I don't think there would have been the same focus. It was just literally was exactly the same time. And, you know, if they'd been due to be paid out of the week after they would have never got paid. So it's kind of more of a timing thing. And, you know, I'm sure it's all factored into, you know, the unwinding of all the legal aspects that continue to go on today. There still is accountability that's being played out as of now there's been 17 former SVP executives who have been sued from directors, including the CEO, alleging gross negligence. And one of the contested points is a $294 million dividend, the holding bank company took months before the collapse. And so when you watch that from where you sit now, where do you land on the topic of accountability? There's a direct correlation between the lawsuit and the board oversight of the organization and something called the asset and liability committee, which was the specific committee that would have looked at, you know, our investment strategy for all of this surplus deposit money and the interest rate strategy that related to those investments. And so it wasn't a committee that I sat on and had I been a member of that committee, then I'm sure that we wouldn't be doing this interview because I would have be wrapped up in that the same litigation. And so in many respects, you know, that's formally where some of those decisions would have been made. And again, I think those decisions are always made at the time in good faith and so on and there may be some, you know, things that end up being really bad decisions or poor judgment or whatever, but, you know, you make those decisions in the moment based on the information you have in front of you. And, and of course, you know, I've had to sit through two or three years of everyone telling me about their view of what happened. People that were not involved and kind of looking things from the outside with the benefit of hindsight. So saying, you know, that thing that happened, you know, that sounded odd or, you know, why did this happen or that happened and it's kind of, it's just so easy to look back with the benefit of hindsight, but at the time, I think the set of information we had in front of us probably led to those decisions being made in the normal course of business. I would also say that, you know, the dividend to the parent company that you mentioned, I mean, it's, it's absolutely the structure that you have a bank holding company that's the listed kind of public entity. And underneath it, you have the bank and you have non-banking activities and it was the bank that got seized by, you know, the regulator because that the regulations have jurisdiction over the bank. So the holding company is kind of a separate thing and the holding company would have raised money to inject in the bank and at times there are dividends going back in the other direction. And bank holding companies activities are also regulated, but the control and the seizure was of the bank, which was, you know, the main subsidiary, but not the whole thing. So there were other things that SVB Financial Group, which was the public company, was doing outside of banking and those companies were kind of, were to some extent not affected by what was going on, you know, with the receivership of the bank. A lot of people pointed the finger at Peer Teal and the Founders Fund for pulling their money and then telling others to do the same, which happened kind of in this network effect. And this VC community, community really had benefited from SVB for decades. What do you make of the fiduciary duty argument the VCs used to justify polling funds versus the systemic responsibility that they had to an institution that they actually helped build? Yeah, I don't blame them at all. I actually don't have any feeling of anger or a portion blame to them at all because I think in, in the circumstances, it was literally the only thing that they could do. Because there's only a limited amount of information that they have and none of that's good. So you kind of have to protect your failure companies and the livelihoods of all the employees across all those companies and so on. So I think that that would be my response to that. I do believe that intrinsically the venture capital firms would have wanted SVB to kind of continue to flourish. And there could well have been proposals pulled together with VCs getting together with prior equity firms and trying to buy the bank. But everything was happening very, very quickly. And you know, some of those things take, you can't put together necessarily in one or two days. But I think moving that money was the only logical thing that you could do. I have met many venture capitalists and the partners of those firms are so on over the time since. And usually the first 20 minutes of those meetings are pretty uncomfortable because they, you know, smashed into me about how the bank had caused them the worst weekend they'd ever had in their lives and, you know, caused such panic and frenzy and very difficult conversations with portfolio companies were the saying, what do you mean you have 100 million on deposit and you have it all with SVB all on your check in account. None of it insured like so very stressful kind of conversations going on in the background. So there's only one. There's only one approach they could really take at that point. Do you think that they could have done it a little less casually in this role of social media and just, you know, texting. I mean, this is the first time in history that there is effectively a bank run due to comments made in text threads and on Twitter and the haphazard and casual nature of something that is not by any means casual. Yeah, I think it was just a reflection that this was the first big banking casualty, you know, in this social media kind of era, I would say. And therefore, the what was completely underestimated was the rate of which these things can kind of escalate extremely quickly in the this network effect of, you know, the connections between influencers in a specific industry sector. And probably there's no one no other sector where this would have happened at the same rate as the would have been in the technology system. So we had never done a stress test around negative news, you know, harming the organization at that kind of velocity. I remember that in the first week, when we were had reopened and we're still under the regulatory control that someone came to see me from the Federal Reserve and said, it's my job to do a post mortem. And first of all, I said, you know, I think this maybe some more premature to do a post mortem were still kind of working three things. And he said to me, you know, just how do you think the money moved so fast? And I said, you know, I have a lot of things on my plate to do right now. It might not be a very good time to have this conversation, but you know, that's because our clients literally go on to go on to their online banking and they can move the money in an instant and it's gone. Just like that's gone. And it goes through, you know, our checks, but it's it's a few minutes and it's gone. And that's how it works. It's not, it's not the old days where a bank run was queuing up, going to the bank, queuing, standing around the corner of the building, queuing up, waiting in turn to, you know, get a cashier as check to take your money out of your account. I mean, you know, this was completely different obviously. When you think back to what you had to experience during that transition, but also the commentary, the opinions, the criticisms from other people, do you look back and think I was built for handling something like this or is your perspective that this happened to you and now you're able to handle disaster and really tragedy in a totally different way? I think it definitely made me, you know, a more effective leader overall because I think you can get approached by colleagues who say, you know, there, we've got a bit of a crisis we need to talk to you and you kind of sit down and you say, first of all, it's not a crisis because I know what a crisis is and this isn't one of those. So it does kind of bring a calmness to dealing with more difficult situations. One thing that really shone through for me in the days afterwards was the culture of the firm because I think under the leadership of our CEO and the rest of the executives, you know, over many years that that culture had been about, we were a team, it was about collaboration, it was about, you know, accountability and transparency and those types of things and it really shone through with the way that everybody showed up because, you know, we, I basically organized for us to have what started off being a call every couple of hours with that senior 120 employees in the organization and kind of getting on calls and took, you know, having the Zoom room with all those faces on it just kind of escalating the major points, the major client discussions that were going on or, you know, we're trying to send money to a bank that's shut us down because of what's happened and we need someone to get on a call with, you know, get the regulator to speak to the other bank to tell them, you know, you can do business with SVB, it's now under our control but it's still operating and the togetherness of that group was, you know, it was pretty special. One of my favorite things in working with you is how calm you are at just about everything. If I would have met you or anybody would have met you five years ago, were you always this calm or has this been an effect of the experience that this was? I still, I think, where my heart almost leave and being calm doesn't mean that you can't be really pushing on many different fronts and many different business issues. It's just, you know, everybody could do without the drama and sometimes in those moments, you know, we would get everybody on a call and we wouldn't really have anything to say. And but I felt that, you know, but I think the team wants to see us, you know, and it was really powerful. What other leadership lessons did you pull out of that time? That seems like a very interesting leadership lesson to me, just the actual togetherness and presence of leaders, anything else that sticks out to you from having to show up on calls, talk to people, whether it was clients or internal facing? Yeah, I think I know how I run on adrenaline now because when I flew to over to San Francisco, they organized a hotel for me and I got to my hotel on the seventh day. So it was an interesting six and a half days to get to that point because obviously we just worked 24/7 for a six and a half days. I'm not quite sure how we really did it, but I got to the hotel on the seventh day and they've been holding the hotel room and I checked in and the receptionist said, we've been holding your room for you and she saw the logo on my rucksack and said, are you okay? And I said, yeah, I'm fine. And I think as you look back on on times like that, you learn that you can be pretty resilient when you're kind of, you know, you're trying to do the right thing and if that matters to you, then it kind of keeps you going, right? It keeps you going because you you have all these stakeholders that matter a lot. You know, we had employees who they basically had been in the bank for 20 years and every year when they did their share save, they had never sold any of their shares. And then the shares in the company? They have the shares in the company that they could do monthly savings at the end of the six month period. It would buy shares at a discount to the price and they'd been in the bank since it was a, you know, $10 or $15 a share and it got to $600 and you know, it was their retirement fund. And they, in the following week, knew that their nest egg for their retirement had gone to a big fat zero. And they were there working for the organization, for the clients, for each other. And that's powerful. How would you rebuild that culture to have that same level of ethics presence and belief in what a company is doing not within necessarily just the banking, but for anybody who's listening, who's trying to build a business around culture and great people and give them something to really sink into that would create something like that. First of all, I think you have to be really authentic about it, right? I think there are many people who talk about that, but it's how you you lead by the way that you do things and the way that you treat people. And so I think I think building a company based on, you know, we want you to be successful, we want you to build a career. It's a high performance place. It's not supposed to be easy. We have high expectations, but we're here to help you be successful in that environment. And it's I'm not going to ask you to do something that I'm not prepared to do myself. So we have a, if you're having a really difficult time with the client, you know, I'll come on a call with you or let's go and see them or, you know, we'll figure it out together. And I think in those little moments, you just help them to build confidence to be able to deal with them, those things themselves. But then you attract and retain the people that want to be in that type of environment. And you probably naturally shed the people that maybe they're not that bothered about it and they don't see the value of that because so many people that even are still at Silicon Valley Bank today, you know, kind of stayed through the stormy times because they had that connection with the organization that was just was way beyond just a job and I get paid X, Y, or Z, you know, that they had a true inclusive relationship with the organization. If you could go back and change one thing, not necessarily at the bank level, but at the system level, hindsight being 2020, what would you go back and change? Well, I think we would have wanted to do some deeper sensitivity analysis on some of the points that obviously led to the bank's failure. I think we we were super focused on because the growth and size of the organization, when we had gone over a hundred billion of assets, you go into what's called large financial institution territory. And that brings a whole, you know, far greater level of scrutiny from regulators on the activities of the bank because you're now one of the large banks. We were really focused on operational risk because the standard set by the banks, you know, the large banks in the, you know, states, you know, were much more robust than the regional banks and the kind of smaller banks that you have out there and there obviously there are many, many banks, but only a small select few over a hundred billion in assets. So we were really focused on our cyber controls, our operational processes, things like the fraud controls in our wire room that we talked about earlier. So we were really focused on getting up to true standards and controls, if you like, around those things. And ironically, it was on the financial side that obviously tripped the organization over, but we were really focused on. So all the comments made about risk management clearly failed at SBB. I think that obviously there were gaps in relation to the interest rate risk management that actually led to the downfall, but there was a huge focus on risk management at the firm because of the growth of the size of the balance sheet and everything that brings. Just no one wants to focus on that part. People just want to rip it apart in the commentary. Yeah, of course. Do you feel like when you meet people that you want to talk about it or that you're at a new phase of life and you don't necessarily even want to mention your past work there? I have to admit that I was so proud to say that I worked there. And then I didn't tell anyone I worked there because it was the same conversation every time and it was like an awkwardness of like, oh, I was at SBB or even, you know, I was the COO at SBB. And there was then like an awkwardness in, especially when we meet someone for the first time. So I've always been relatively humble about this thing anyway. And I would only ever say to people that I was in banking and then when they pushed, you say actually I work at SBB and then, you know, on the 14th question you might say, you know, that you have a senior position. But, you know, I think I probably don't really tell people that I used to work there because, you know, I've had the conversation so many times and there's a lot of ignorance about what really happened. I think one of the things that I regret more than anything is that the FDIC, when they took control, we worked quite an anomaly to them because they're, you know, a really large bank hadn't failed for 20 years. And so they were, they were used to dealing with a really small bank failures. So, you know, there's three branches and it's a community bank and it's failed because it had a couple of bad loans and over a weekend it gets taken over by a slightly bigger organization and they change the name on the branch, you know, literally over that weekend and it's kind of no big deal the following Monday. This was a bank with a lot of international offices, you know, global presence, a lot of complexity around the different businesses and it was, it was complicated. And I think that there, but it was still, it was profitable and it had a great franchise and I think if the message had come out to say that the government was guaranteeing their positives and that the communications clients was we're going to run this organization for, you know, maybe even if few months and we, because it's, you know, other than the structural balance sheet kind of interest rate issue, you know, everything else about this organization is, is sound and we're going to take care of time and we're going to find the right partner to pick this business up. Then I think it would have been a calmer kind of next couple of weeks, but also I think that you know, far less of a discount would need to have been given to any purchaser to actually pick it up because there would have been time to have a proper process. We could have, because of, of course, in that in the two weeks of control by the regulator, not only are you trying to reopen the bank and deal with all the operational things that were going on, the client panic still and so on, but the bank was for sale and so we were then being asked to produce materials to to give information about the bank and start to go on calls with potential acquirer banks who wanted to then, you know, kick the tires and ask a load of questions of management teams. So even if, you know, if you wanted, even if you wanted to get to that hotel before the seventh day, then, you know, you were on calls through the night with banks from all over the world that were obviously expressing an interest and I really wish that three to six months, you know, we would have put together an amazing process and I think there would have been competition at that point for the organizations of the whole or its main parts and potentially a bit of a different outcome for the stakeholders. What I love about your experience is that you've worked with entrepreneurs for essentially your entire career and now that's exactly what you get to do on a different level with the small businesses that we work with every day. When you think through the types of criteria of the client you are working with at SVB versus a HVAC business owner, a roofing business owner, a chiropractor, a med spot owner, what are things that you are helping us put in place to help those business owners get to a place where their business is investible and is more valuable for different types of liquidity options and exiting potentially. Yeah, it's interesting in technology because of course there are breakout companies but that's not the core of what happens in technology. Typical B2B software and so on, they can be slower builds, it takes time, they're looking for a recurring revenue, they're like gradually building up the businesses and so on. There are these things that just really grow very, very quickly and they really have something so different and so special. But there's a lot of similarities between what I would call the core technology companies and what happens in the types of companies that we work with because you're all focused on growth and market development, market opportunities if you like and build sustainability in your business. That sustainability based on we're going to be better than our competition. We're going to be on the front foot, we're going to hire really great people, we're going to value the right level of kind of process and discipline for the stage at which we're at in our growth. We don't need to put large corporate stuff in place when we're small but we need to start thinking about it as we go through the break points that we know are always challenging at certain points of building a business. So there's a lot of similarities and what I, you know, one thing I've tried to do here is make sure you don't just bring a massive company's thinking down into a smaller company and to our clients even smaller than us. But to kind of think about the principles because they're the same. Right? And the way that we think about the materials that we work with clients on, these are the things that you know you have used to have to think about and prioritize as you continue to grow because if you don't pay attention to something later on it's going to be a big issue. And so, you know, just kind of thinking that through, I think helps, helps our business owner to kind of open their minds to some of the thinking that the day to day of running a company out there, you know, they're just, they just don't have head space to think about these things unless we're helping them to kind of just stop for a minute and think about it. If you could give one piece of advice to a business owner who is navigating a crisis in their business, an emergency, what would you tell them to do? Oh, I think that communication is key. I would, I would, you know, if I think back to what we did, you know, we just gathered people and we talked things through. I mean, you made everyone feel like they weren't on their own dealing with something that, you know, we're necessary we could help and get involved and so on and it's, there's no substitute for doing that. I think that the easy thing to do sometimes is almost to bury your head in the sand and pretend that the issue isn't isn't there. You know, so the first thing you have to do is acknowledge, you know, we have to do something about this and until we do something about it, it's not going to go away and in fact it probably is going to grow into something worse. So, you know, we've all got stuff on our to-do list personally and professionally that we kind of know, isn't in the back of my mind that, you know, we need to do it and there's no, there's no substitute for actually just doing it and addressing it and, you know, that conversation you need to have with your spouse or, you know, one of your kids needs a one-on-one or something like that where, you know, it's, it's, you just can't put it off, you know, you need to, you need to focus on it and address it. One of the things that we help business owners do is navigate emergencies and if your business is going through an emergency, you can go do my Instagram and DM me the word emergency and we will send you our emergency business response playbook which has helped tens of thousands of business owners now. navigate emergencies inside their organization knowing who to hire, who to fire, how to make sure that you can keep your expenses below your costs. And what is the decision making triage process that should be taking place? So if you want access to that guide, go to my Instagram @natalydossin and DM me emergency. With that, Bill, thank you for being on Cuiapri. Pleasure. If you're enjoying the show, do me a quick favor and hit follow on Spotify. It is the single best way to support us and it ensures you will never miss an episode.