Thread by @juliettekayyem

Follow @SRuhle on the #SVBCollapse. I have a confession; I was once a client of Silicon Valley Bank and everything she says rings true. How did this happen? It takes some understanding of the culture of startups and the pressure of conformity by the boys with billions. 1/

https://twitter.com/SRuhle/status/1634712966896443392

I had never heard of SVB when I started to raise for a tech company I co-founded. In the end, we never had to raise from VCs so had little interaction with the bank, but we did think when we started that we would. We'd raise a few bucks from angel investors then go big. 2/

"Everybody uses SVB" I was told, though we were based in Boston. Raising money is horrible. For a woman, even one with a track record, it is an uncomfortable power dynamic and my age and experience helped level it some. The data is clear it is not easy for women. 3/

I have written before about the how terrific hair (Wework CEO Neumann) or a "take it or leave it" messiness (FTX CEO Bankman-Fried) became a calling card for those CEOs. I doubt Theranos' Elizabeth Holmes would have been so successful had she looked humdrum. 4/

These are all to say that the culture gets fixated on something despite all evidence that that something isn't reliable. Everybody wants in, and SVB had a similar vibe. The past experience with them was like entering a cool world of cool people with private planes. 5/

The people who fund startups were pro-SVB. It was a herd mentality and a young CEO or someone with little experience would have to be pretty confident to think the entire ecosystem was wrong and simply buck it. 6/

I say all this because the panic you are hearing from folks about SVB and the future of our economy is an echo chamber. From the perspective of crisis management, something I do know about, the FDIC has bought everybody some time and so everybody should chill. 7/

Is this a Lehman moment? I find it hard to believe. As many have pointed out, to make SVB's companies and payrolls whole isn't a heavy lift. I'd take with some skepticism folks who were libertarians last week invoking the "little people" to get relief. 8/

https://twitter.com/SRuhle/status/1634703830032998400

But mostly, like Teslas, private planes, visits to the Maldives and, sometimes, trophy wives, SVB had become the marker for a certain class of money person (guy) living in a world of similar money people (guys) and now panicked because every person (guy) around them is too. 9/

The FDIC exists to relieve that panic, and has extended payroll for the bank employees for 45 days. Panic is coming from a narrow sector of our economy. We tend to think Silicon Valley is disruptive. It is, but it also has a strong herd mentality. SVB was the herd's bank. 10/

No doubt, this will hurt VCs and those companies that were seeking to raise this year (I am on the board of one or two of them and they are assessing their own strategy, for example). But as a long term issue, I think @paulkrugman has it right. 11/11

https://twitter.com/paulkrugman/status/1634506265387778051

We have time now to assess the damage, protect those who are really hurt (SVB has very few personal accounts so gov should focus on payroll for its client's employees), and not let speculation about what this means drive policy. New takes, not the herd's take, are necessary.12/12