Banking on Trust • Finding the Words

About This Episode

On Monday, March 6, Silicon Valley Bank (SVB) tweeted that it was “proud to be on Forbes’ annual ranking of America’s Best Banks.” Three days later, that very same bank was at the center of the largest U.S. bank failure since the global financial crisis. This week, Carrie Fox dissects the communications troubles at the center.

This post is part of the Finding The Words column, a series published every Wednesday that delivers a dose of communication insights direct to your inbox. If you like what you read, we hope you’ll subscribe to ensure you receive this each week.

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• Episode Transcript

  On Monday, March 6, Silicon Valley Bank (SVB) tweeted that it was “proud to be on Forbes’ annual ranking of America’s Best Banks.” Three days later, that very same bank was at the center of the largest U.S. bank failure since the global financial crisis.

  So, what happened, exactly?

  In brief, last Wednesday, March 8, Silicon Valley Bank made a surprise announcement that it planned to raise $2.25 billion of capital after a significant loss on its investment portfolio. As Axios reported, “that plan should have put worries about its solvency to rest. Instead, it precipitated a run on the bank.” Regulators stepped in on Friday to close the bank, and news spread quickly, sending depositors scrambling to withdraw a total of $42 billion in cash in just two days. To put that dollar figure into perspective, the previous largest bank run in modern U.S. history was Washington Mutual bank in 2008, which totaled $16.7 billion over ten days.

  The effects of Silicon Valley Bank’s rapid demise reverberated across global financial markets and sectors as startups in nearly every industry began questioning the solvency of their own financial institutions. The effects are far-reaching and will be long-lasting.

  While we haven’t seen the end of this situation, this is what’s sticking with me at the present moment: Reputations take years to build and minutes to ruin. Silicon Valley Bank was the venture capital industry’s leading bank. And then, it wasn’t. While there is great complexity behind why this bank failed, there is also a simple lesson to be learned—how we communicate through crisis matters.

  Here are a few more communications takeaways that we can learn from this current event:

  Communicate With Context.

  On Wednesday, March 8, Silicon Valley Bank issued a press releaseheadlined “SVB Financial Group Announces Proposed Offerings of Common Stock and Mandatory Convertible Preferred Stock.” The release was dense with details but it left out an essential element: context. Besides a passing reference that the offering would be used for “general corporate purposes,” there was very little detail behind the vague securities offering. SVB raised the opposite of what they intended. Instead of money, they raised worries.

  Choose Your Call to Action Carefully.

  As the situation unfolded, CEO Greg Becker gathered key venture capitalists and founders on Thursday, March 9, for a Zoom call to deliver a promise that the bank was in a strong position with lots of liquidity. The truth is, it wasn’t, and people were worried. SVB CEO Greg Becker did his bank no favors when he told customers to stay calm. He said, “My ask is to stay calm because that’s what is important…we have been long-term supporters of you—the last thing we need you to do is panic.” Stay calm? Don’t panic? Hardly words to soothe market fears.

  Social Media Can Amplify The Good. It Can Also Amplify Worry.

  By Friday morning, March 10, the bank had issued a statement on its website acknowledging the problem and assuring clients it was working to resolve it. While the bank’s website was updated regularly with status updates, its social media accounts remained dormant. Contextually, there was little else SVB could share on social media, given their likely need to stay in a “quiet period” tied to the securities offering. That said, most on social media seemed unaware of the securities offering press release, which raised further concern about the bank’s silence. The silence led to rumors and speculation as frustrated customers took to Twitter to express their anger and anxiety. And by then, the damage had been done.

  Bottom line: In this age of real-time information and digital connections, the sudden collapse of Silicon Valley Bank shows how an evolving situation can move into an all-out crisis at supersonic speed. How we communicate through those critical moments of a crisis—and with our audience in mind—matters.

  This post is part of the Finding The Words column, a series published every Wednesday that delivers a dose of communication insights direct to your inbox. If you like what you read, we hope you’ll subscribe to ensure you receive this each week.