Mar 13, 2023 · 39m · founders-journal
Silicon Valley Bank: What Happened and Why
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this emergency episode of The Crazy Ones, Alex Lieberman and Jesse Pujji break down the sudden collapse of Silicon Valley Bank, dissecting the macroeconomic factors and balance sheet mechanics behind the failure while providing practical crisis management advice for founders.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Alex holds 35.2% of the talking time here. How this is scored →
Alex as informed peer 5.4 Guest teaching 5.0 Guest disagreement 0.0 Alex pushing back 0.4
speaking balance: gold is Alex, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 34:58 Jesse playfully challenges Alex's self-awareness on avoidance
In an otherwise completely collaborative episode, Jesse jokingly remarks that he will teach Alex about himself regarding Enneagram type seven tendencies to avoid negative realities.
Hardest push from Alex ▶ 25:45 Alex pushes back on keeping all founder funds in treasuriesAlex challenges the prevailing Twitter advice that founders should only hold treasuries, pointing out the practical operational necessity of having accessible cash for ongoing payroll.
Biggest teaching moment ▶ 4:51 Jesse breaks down commercial banking balance sheetsJesse clearly educates Alex and the audience on why customer deposits represent a bank's liabilities and how banks generate net interest margin through lending spreads.
Alex holds their own ▶ 12:13 Alex synthesizes MBS losses and balance sheet dynamicsAlex demonstrates financial literacy by concisely summarizing SVB's 3x deposit explosion, mortgage-backed securities rate repricing, and portfolio sale losses.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Alex as informed peer | Guest teaching | Guest disagreement | Alex pushing back | Why |
|---|---|---|---|---|---|---|
| Post-Recording Context and Banking Crisis Updates | 5 | 1 | 0 | 0 | Alex opens with an articulate post-recording overview detailing the FDIC receivership and Signature Bank updates before welcoming Jesse. The tone is highly collaborative and sympathetic towards founders affected by the collapse. | |
| Banking 101: Balance Sheets, Reserves, and Net Interest Margins | 2 | 8 | 0 | 0 | Alex invites Jesse to teach the core mechanics of commercial banking. Jesse delivers a comprehensive masterclass on inverted balance sheets, fractional reserve requirements, and net interest margins. | |
| The Macro Trap: Deposit Explosions, Long-Dated Bonds, and Rate Hikes | 7 | 6 | 0 | 1 | Jesse outlines how SVB invested excess deposits in long-dated bonds, while Alex actively contributes precise deposit statistics and details interest rate duration risk from his trading background. | |
| The Catalyst and Panic: How Group Chats Sparked a Modern Bank Run | 6 | 5 | 0 | 0 | Alex and Jesse analyze how PR blunders and VC group chats triggered the modern bank run. Alex adds first-hand data from a 300-founder group chat that rapidly pulled two billion dollars. | |
| Uninsured Deposits, FDIC Receivership, and Liquidation Timelines | 5 | 6 | 0 | 1 | Alex raises the issue of uninsured deposits above the 250k limit, questioning valuation in receivership. Jesse details his own stranded escrow funds and potential multi-year recovery timelines. | |
| Contagion Concerns and Hidden Operational Vulnerabilities | 6 | 5 | 0 | 0 | Jesse shares operational contagion examples with payroll processors and credit providers. Alex synthesizes the systemic vulnerability caused by SVB's lack of client diversification relative to major commercial banks. | |
| Founder Risk Management, Redundancies, and Balance Sheet Ownership | 5 | 5 | 0 | 1 | Alex pushes on the operational friction of holding cash entirely in treasuries versus operational accounts. Jesse agrees on the trade-offs and outlines founder balance sheet ownership and check runs. | |
| Startup AMA: Communicating Bad News and Navigating Team Fear | 7 | 4 | 0 | 0 | In response to an AMA listener question on crisis communication, Alex and Jesse share tactical playbooks on proactive question answering, managing emotional transparency, and avoiding blind optimism. |
Statements from this episode (11)
Pujji: Ampush Would Have Failed Without SVB's Grace
“Where if Silicon Valley Bank had thrown the book at us, we, Ampush would have never made it, would be out of business, and they gave us grace, and they were, like, helpful to us”
Pujji: SVB Deposits Surged From $60B to ~$200B in Under Two Years
“And Silicon Valley Bank's deposits went from something like sixty billion dollars to like two hundred billion dollars in less than two years.”
Pujji: SVB's headwinds justified shorting the bank, not FDIC receivership
“Now, all of that is a good reason to short a bank and make money off the equity being worth less. None of that is a good reason for Silicon Valley Bank to now be in receivership.”
Lieberman: Founders in a single group chat pulled $2B from SVB
“There was one group chat I'm in. There's a post exit founder group chat I'm in. Just in that group, there was like a tally taken of how much money was taken out by just those founders, and it was two billion dollars of deposits.”
Lieberman: Roughly $176B of SVB's $180B in Deposits Were Uninsured
“A hundred and eighty billion of deposits, something like a hundred and seventy six billion were uninsured because all, you know, the only thing that's insured is the 250 K.”
Pujji left $1M in SVB and was unable to wire it out
“Yeah, so, you know, we left a million bucks there. We tried to wire it today after that announcement, and it's not getting wired, obviously.”
Pujji predicts SVB uninsured depositors won't see funds for 3-6 years
“People have told me three to six years, like, we're not going to see that money for three to six years.”
Lieberman: SVB's founder and VC focus created systemic trust risk
“An inherent embedded risk to Silicon Valley bank is it's implied in the name. Like they've always been considered the bank of founders, startups, and VCs. And so like, there's actually a ton of inherent trust risk baked into that because it doesn't take long f…”
Pujji: SVB collapse will be a boon for treasury service startups
“I mean, it's definitely going to be a boon for all these startups who are doing treasury services because now all of a sudden, a hundred percent”
Pujji: Founders should maintain multiple connected business bank accounts
“I mean, look, I think you know, like anything, it's funny, you just don't think about it, but, like, you should have diverse banking partners.
Yep.
You know, have, like, even we were in the middle, like, of trying to figure out how to do this with the private …”
Pujji: Frame Crisis Communication Around the 'I, We, It' Model
“One of my frameworks I like is the I, the we, the it, like, what does this mean for me? What does this mean for my team? And what does it mean for the company? Like the group, like the whole thing. And so like being able to very clearly dispel what that means.”