Silicon Valley Bank depositors are saved at the last minute
What a weekend that was, reader.
By now, you've probably heard a lot about the sudden, bank run-driven collapse of Silicon Valley Bank, one of the tech industry's most stalwart and trusted institutions. There's a lot to catch up on, so buckle up.
The weekend was a period of intense stress in the tech industry, as the bank's customers wondered what they would do if Monday rolled around and they couldn't get access to the cash they needed to make payroll or pay their office rent.
Well, late on Sunday afternoon, the federal government stepped in: While the bank itself will no longer be a going concern — its assets are already being auctioned off — the FDIC is guaranteeing that anyone who had their money in Silicon Valley Bank will be made whole.
Then, news broke early this morning that HSBC has bought the UK arm of collapsed SVB in a last-minute deal. The UK government and the Bank of England facilitated the private sale, UK Chancellor Jeremy Hunt said on Twitter: "Deposits will be protected, with no taxpayer support".
You can follow our live coverage here.
As the tech industry breathes a massive sigh of relief, here's what you need to know going into your week.
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Tom Stoddart/Getty Images
1. "Our money is gone." Before the FDIC stepped in to save the day (for depositors, anyway), the collapse of Silicon Valley Bank sparked fear, uncertainty, and panic as startups suddenly lost access to whatever cash they had stashed there.
Here's the latest from Insider on the Silicon Valley Bank meltdown:
- Insider took a deep dive into the recent history of Silicon Valley Bank, giving insight on the financial and strategic decisions it made to get to this point, from the perspective of the startups and VCs involved.
- Insider's Dan DeFrancesco writes that the panic-driven bank run reflected poorly on SVB's customers, who only took a few days to turn their back on a bank that had served them well for decades.
- SVB staffers spent Friday polishing their resumes or hitting the bar after being told to leave the office.
- It turns out that Roku had a full 26% of its cash tied up in Silicon Valley Bank, making it one of several larger tech companies that must be thrilled to be getting their cash back.
- My colleague Alistair Barr writes about what made the SVB bank run so scary: If the FDIC hadn't stepped in to make a special exception, almost 90% of its deposits would have been uninsured. Insider also analyzed the regulatory filings of 15 major US banks and found at the end of 2022, there was well over $1 trillion in uninsured deposits.
Read more about the financial panic that swept Silicon Valley over the weekend here.
In other news:
Robyn Phelps/Insider
2. Can Silicon Valley succeed where the CDC failed? Insider's Adam Rogers writes that the CDC fumbled its response to COVID-19 so badly that the private sector may be our best hope in the next pandemic. As VCs invest in pandemic-related startups, it's tech versus the virus.
3. Microsoft's AI plan to take on Google. Insider reports on Microsoft's plan to woo advertisers to its new ChatGPT-powered Bing search engine. Ads could appear as annotations to the Bing chatbot's answers, helping Microsoft steal some search ad market share from its larger rival. Go inside the plan here.
4. The great "fake work" debate. Last week, investor Keith Rabois made the incendiary claim that most Big Tech workers do "fake work," drawing a paycheck for very little actual result. It's started a huge debate among tech elites, centered around a simple question: What is "real work?"
5. Goodbye to Smarty Pants. Alphabet is spinning off Skip (formerly known as Smarty Pants), its robotic exoskeleton subsidiary, as the Google parent company cracks down on its expensive science-fictional "moonshot" projects.
6. "Code Yellow" at Shopify. Insider reports on leaked documents, showing that Shopify's own data sees its customer support experience has deteriorated. It's now trying to right the ship, at the risk of losing more of its e-commerce vendor customers. Read more about the "Code Yellow" here.
7. Meta is working on a Twitter clone. Facebook's parent company has confirmed that it's building a new social media productthat takes a page (and uses the same key technology) from Mastodon, the decentralized Twitter competitor. What will they call it? Mastobook? Metadon?
8. Amazon employees want to work from home. Insider reports on a petition signed by at least 30,000 employees to fight against Amazon's return-to-office plans. The retail giant wants most employees back in the office at least three days a week, starting in May.
Odds and ends:
Tim Levin/Insider
9. How a startup beat Mercedes at its own luxury-car game. Tim Levin, Insider's auto expert extraordinaire, test-drove luxury SUVs from Mercedes and electric vehicle startup Rivian. Surprisingly, he said that Rivian's focus on high-tech features really set it apart from the more traditional Mercedes model.
10. Netflix lets you change subtitle sizes. If, like me, your eyes are shot after spending the week glued to your screen for updates on all the breaking news, a little bit of good news: Netflix will finally let subscribers make its subtitles larger on the screen.
What we're watching today:
- The South by Southwest (SXSW) tech, music, and culture festival rages on in Austin, Texas all week.
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