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Greg Becker on the Innovation Business (Podcast) · Masters in Business

0:02
Speaker 1: This is Mesters in Business with Very Results on Bloomberg Radio.
0:07
Speaker 1: Here this week on the podcast, I have an extra
0:11
Speaker 1: special guest. If you are at all interested in startups, entrepreneurism, lending,
0:18
Speaker 1: risk managements, venture capital, strap yourself in. This is a
0:22
Speaker 1: great one. Greg Becker. He's the CEO of Silicon Valley Bank,
0:27
Speaker 1: where he's worked since and where he served as president
0:30
Speaker 1: and CEO of SVB Financial Group and Silicon Valley Bank
0:35
Speaker 1: since two thousand and eleven. This is really a wide
0:38
Speaker 1: ranging and fascinating conversation for somebody who is right at
0:42
Speaker 1: the nexus of everything from venture capital to life sciences,
0:48
Speaker 1: to fintech, to you name it, but from the perspective
0:53
Speaker 1: of a commercial banker, really located at the bull's eye
0:58
Speaker 1: of the innovation economy, not just in the United States,
1:01
Speaker 1: but for the entire world. I found this conversation to
1:04
Speaker 1: be absolutely fascinating, and I think you will also, with
1:08
Speaker 1: no further ado, my discussion with Silicon Valley Banks CEO
1:12
Speaker 1: Greg Becker. This is Mesters in Business with Very Redholts
1:19
Speaker 1: on Bloombird Radio. My extra special guest this week is
1:26
Speaker 1: Greg Becker. He is the president and CEO of Silicon
1:30
Speaker 1: Valley Bank, where he has worked since. Since two thousand
1:35
Speaker 1: and eleven, he has been running the place both as
1:38
Speaker 1: CEO of SVB Financial Group and Silicon Valley Bank. Greg
1:43
Speaker 1: was named to Worth Magazine's Power one hundred most Influential
1:47
Speaker 1: People in Global Finance. Greg Becker, Welcome to Bloomberg. Thanks
1:52
Speaker 1: very great to be here. It's really great to have
1:55
Speaker 1: you here in doing this live in person. So when
1:58
Speaker 1: I look at Silicon Valley Bank, the question that comes
2:01
Speaker 1: into my head is is this a bank that does
2:04
Speaker 1: some venture capital or is this a VC that offers
2:07
Speaker 1: some banking services. Well, we are banking, so let's be
2:11
Speaker 1: clear about that. We're a bank that caters to a
2:14
Speaker 1: very specific industry and then does a lot of things
2:18
Speaker 1: to support those companies in those industries. So it's about
2:22
Speaker 1: innovation companies all around the world. You start with him
2:25
Speaker 1: very early. We support them with commercial banking, private banking,
2:29
Speaker 1: and investment banking and asset management, so all those things
2:32
Speaker 1: fit together to help these innovation clients. So you've been
2:36
Speaker 1: with the bank since ninety three. What was your first
2:39
Speaker 1: role there? How did you arrive at Silicon Valley Bank. Yeah,
2:42
Speaker 1: so I started out as a loan officer, so lending
2:45
Speaker 1: money to companies, and I came from another bank that
2:48
Speaker 1: worked with more traditional companies. My manager at the time
2:52
Speaker 1: was leaving to join Silicon Valley Bank and he encouraged
2:56
Speaker 1: me to join him, and I did, and it was
2:59
Speaker 1: phenomenon to an incredible, incredible career. But I started out
3:02
Speaker 1: lending money to early stage technology companies at Silicon Valley Bank.
3:08
Speaker 1: Now that sounds like a very high risk sort of
3:11
Speaker 1: loan that typical banks don't make. How do you go
3:14
Speaker 1: about vetting a loan to a company that is brand
3:18
Speaker 1: new as a startup, doesn't have a long financial history.
3:21
Speaker 1: How does that process differ than traditional bank lending. Yeah,
3:25
Speaker 1: well it's changed a lot in twenty eight years. So
3:28
Speaker 1: when you think about it, um, way back when when
3:30
Speaker 1: I first started, the loans were much smaller. There were
3:33
Speaker 1: you know, does not have many these choices for these companies.
3:36
Speaker 1: It was really lending money in a very i'll call
3:39
Speaker 1: it more conservative way than we do today. And venture capital.
3:42
Speaker 1: Those are the two ways that companies were financed. And
3:45
Speaker 1: then today, when you think about it, it's all about
3:48
Speaker 1: capital debt, lending money. It's about venture capital from all
3:53
Speaker 1: different sources and so how you go about lending money
3:56
Speaker 1: to these companies is it's really about pattern recognition. It's
3:59
Speaker 1: about understanding who the investors are, it's understanding what market
4:02
Speaker 1: they're in. There's a whole series of things that we do,
4:05
Speaker 1: but we've been doing it for so long and adapting
4:07
Speaker 1: this lending capability that we've learned to do it really
4:11
Speaker 1: well and both safely but also in a way that
4:15
Speaker 1: it's hard for other people who do it. So you're
4:17
Speaker 1: there in the nineties, that was quite an exciting period
4:19
Speaker 1: when everything was just going up, up up. How did
4:23
Speaker 1: you handle the other side of that when when the
4:25
Speaker 1: dot COM's imploded? What was the bank doing? How bad
4:29
Speaker 1: were losses and how did you manage them? Yes, so
4:31
Speaker 1: when I think back at that two thousand two thousand
4:35
Speaker 1: one time period, it was such an interesting time, and
4:39
Speaker 1: I described it as the highest of highs and the
4:41
Speaker 1: lowest of lows. And the beginning of two thousand, everything
4:45
Speaker 1: was going well. Everything was going well with our companies.
4:48
Speaker 1: They were growing so fast, they were getting started and
4:50
Speaker 1: going public within a few years. There was just such
4:53
Speaker 1: a euphoria at that time period. And then very quickly,
4:56
Speaker 1: kind of March of that year, there was the Baron's
4:59
Speaker 1: article that came out, and all of a sudden everything
5:01
Speaker 1: changed and it went from everything was going well to
5:05
Speaker 1: everything was going poorly. And what was fascinating about that time?
5:10
Speaker 1: You know, it's actually my view it's the time when
5:12
Speaker 1: you built the best relationships. Going through difficult times with
5:15
Speaker 1: venture capitalists and companies. You found out who you were
5:18
Speaker 1: as an institution. And so as much as I don't
5:21
Speaker 1: want to ever go back to that time period, there
5:23
Speaker 1: were a lot of good lessons learned that at that
5:25
Speaker 1: time period. But yeah, we took losses. It was challenging
5:28
Speaker 1: time for us. It took us a few years to
5:30
Speaker 1: get back into what i'll call a nice growth mode
5:33
Speaker 1: back in that kind of two thousand three, two thousand four.
5:35
Speaker 1: But I look back at it, finally I learned I
5:38
Speaker 1: learned a lot about the institution. I learned a lot
5:40
Speaker 1: about how to lend money, and I learned learned a
5:43
Speaker 1: lot about how to build relationships at that time. And
5:45
Speaker 1: if I remember correctly, the the Barons article featured Howard
5:50
Speaker 1: Marks and was titled Amazon dot Bomb, is that the
5:55
Speaker 1: uh like January two thousand At that way, I couldn't
5:58
Speaker 1: remember what month it was. I was either I thought
5:59
Speaker 1: it was March, but well Mars was when the pre
6:02
Speaker 1: announcements began. I don't remember if it was Intel or
6:05
Speaker 1: Dell y t K pulled a lot of tech purchases forward.
6:09
Speaker 1: So the first quarter was not surprisingly very light and
6:13
Speaker 1: at those high levels didn't take a lot to send
6:16
Speaker 1: that boulder down the hill. So so that turned out
6:19
Speaker 1: as difficult a period as it was, that turned out
6:24
Speaker 1: to be very formative, I don't know if that's the
6:26
Speaker 1: right word, but certainly valuable for the bank in its
6:29
Speaker 1: relationships with all the various players in Silicon Valley. It's
6:33
Speaker 1: the entrepreneurs, it's the vcs. Who else is in that
6:37
Speaker 1: ecology that that you had to deal with, Yeah, it's
6:40
Speaker 1: all the professional service providers in the innovation business. So
6:43
Speaker 1: it's the lawyers, it's the accountants, and it's it's really
6:45
Speaker 1: during the difficult times is when you build your reputation,
6:49
Speaker 1: and that reputation then is what's going to carry you
6:51
Speaker 1: through that next leg of growth. I don't want to
6:53
Speaker 1: go back to it. I can't say during the middle
6:56
Speaker 1: of it it was enjoyable, but again I do look
6:59
Speaker 1: back and say we learned so much and the relationships
7:02
Speaker 1: still to this day, are still I look back in
7:05
Speaker 1: some of my best relationships in the venture capital community
7:08
Speaker 1: were formed back in that time period working through difficult
7:11
Speaker 1: situations because you had to you had to work together
7:13
Speaker 1: to solve these problems, and it ended up being great
7:17
Speaker 1: from my career, ended up being great for the institution.
7:20
Speaker 1: When did you see optimism start to return to early
7:24
Speaker 1: stage investment post dot com crash? It took a while.
7:30
Speaker 1: I took a while. I would say in two thousand
7:33
Speaker 1: and three, two thousand four, two thousand and five. It
7:36
Speaker 1: was not one thing was really a gradual. Year by
7:40
Speaker 1: year it kind of picked up, and I I can
7:42
Speaker 1: trust that Versus the financial crisis in oh eight oh nine,
7:47
Speaker 1: in the innovation space, there was really only a couple
7:51
Speaker 1: of quarters where it took a pretty steep drop and
7:56
Speaker 1: then it basically rapidly increased. So two thousand and ten,
8:00
Speaker 1: two thousand and eleven, it was a much more steeper
8:03
Speaker 1: acceleration than it was back in two thousand two and
8:06
Speaker 1: two thousand and three. So I don't think people realized
8:09
Speaker 1: that they looked back at that time period that it
8:12
Speaker 1: was actually a better time to be investing in. So
8:16
Speaker 1: people invested more aggressively in the innovation space back in
8:19
Speaker 1: again two thousand and ten and two thousand eleven, and
8:21
Speaker 1: I think that was a good lesson. So you mentioned
8:24
Speaker 1: the financial crisis of O eight oh nine. Obviously, from
8:29
Speaker 1: let's call it March two thousand to either October oh
8:33
Speaker 1: two or March oh three, that was very focused on
8:36
Speaker 1: technology and telecom. The financial crisis obviously was financially focused,
8:42
Speaker 1: but everything froze, credit markets froze, capital flows frozen. How
8:46
Speaker 1: did you guys manage through that? What was the impact
8:49
Speaker 1: of the financial crisis on the environment in Silicon Valley
8:54
Speaker 1: relatively soon after the dot com crashed seven years later. Yeah,
8:59
Speaker 1: in the financial crisis, when I think about what happened,
9:02
Speaker 1: you know, we were impacted by it, and so we
9:05
Speaker 1: really were worried about how deep this was going to
9:08
Speaker 1: be and how long it was going to last. And
9:10
Speaker 1: so we started, we raised capital, we did a lot
9:13
Speaker 1: of things to be as protected as we could if
9:16
Speaker 1: this was going to last quite a long period of time.
9:19
Speaker 1: But again, what we were surprised by. I was surprised
9:22
Speaker 1: by how fast investing in the innovation market picked up,
9:27
Speaker 1: how fast venture capital came back, And so we were
9:30
Speaker 1: bottoming out venture capital and annual basis was down in
9:33
Speaker 1: that kind of twenty billion billion dollars per year. Dropped
9:37
Speaker 1: pretty significantly to that level from from what how high
9:40
Speaker 1: was it before? The highest amount historically up until the
9:45
Speaker 1: last couple of years was a hundred billion dollars invested
9:48
Speaker 1: in two thousand. It dropped off dramatically, and then it
9:52
Speaker 1: kind of worked its way back up and then dropped
9:55
Speaker 1: again in the financial crisis. And since the financial crisis
9:58
Speaker 1: it's gone, you know when from the billion dollars in
10:01
Speaker 1: the US, and it has been on this steady increase
10:04
Speaker 1: in the last few years. Has been truly incredible in comparison,
10:09
Speaker 1: last year was a hundred seventy billion dollars and this
10:14
Speaker 1: year already the first half the year has been a
10:16
Speaker 1: hundred eighty billion dollars in the first half. So this
10:19
Speaker 1: year first half, first half, so it's been an incredible
10:25
Speaker 1: first half the year. So I've seen people make the
10:29
Speaker 1: claim that there's too much money floating around, that oldest
10:32
Speaker 1: capital sloshing around, finds its way to companies and ends
10:37
Speaker 1: up over paying, and you end up with things like
10:40
Speaker 1: we work last year and all the craziness with soft
10:42
Speaker 1: bank how do you look at the vast amount of
10:47
Speaker 1: investable capital in the system. Have people become too focused
10:52
Speaker 1: on on early stage startups or or even pre I
10:55
Speaker 1: p O companies. I'm not one of those people, Berry,
10:58
Speaker 1: And it says that there's too much, too much liquidity
11:01
Speaker 1: out there, And and let me explain why. There's a
11:05
Speaker 1: few reasons. One is people look back to two thousand.
11:08
Speaker 1: I get that question a fair amount. Why it helped
11:11
Speaker 1: me understand why this isn't just a repeat of two thousand. Well,
11:14
Speaker 1: when you go back and think about two thousand, I
11:17
Speaker 1: would first argue, the size of the market that companies
11:21
Speaker 1: are going after is probably I would historically say ten
11:25
Speaker 1: times bigger. I would actually say it's more like fifty sixty,
11:29
Speaker 1: seventy times bigger than the market was back then. And
11:33
Speaker 1: technology is in every part of what our daily lives
11:37
Speaker 1: are all about. I would argue, when you think about
11:39
Speaker 1: the pandemic and our ability to get through this pandemic
11:43
Speaker 1: is a function of technology. So the zoom of the
11:46
Speaker 1: world and our ability to work remotely and all the
11:49
Speaker 1: different technologies that supported that. But let's also think about
11:52
Speaker 1: the healthcare, the vaccines and how rapidly they came to
11:55
Speaker 1: market with Madernay and others is because money was put
11:58
Speaker 1: into these companies in prior years. So the size of
12:01
Speaker 1: the market is much much, much bigger. That's number number one.
12:05
Speaker 1: Number two, the markets these companies are going after is
12:10
Speaker 1: are so much larger in scale, right it would be
12:14
Speaker 1: companies would be building software for industries or for companies
12:18
Speaker 1: to sell to industries, and now they're building software to
12:22
Speaker 1: attack and completely disrupt entire industries. And you can see
12:27
Speaker 1: that in hotels and taxis and all the different industries.
12:30
Speaker 1: So the size of the markets much bigger. So I
12:32
Speaker 1: look at this and say, billion dollars in the first
12:34
Speaker 1: half the year is a big number. I don't want
12:36
Speaker 1: to mistake that. But in the whole scheme of global money,
12:41
Speaker 1: it's still pretty small. So my view is, um, there's
12:44
Speaker 1: the liquidity is is actually okay given the size of
12:47
Speaker 1: the market. Let's start right with those two. What is
12:50
Speaker 1: the difference between s VB Financial Group and Silicon Valley Bank.
12:56
Speaker 1: Not much of a difference. Overall this we have a
12:58
Speaker 1: holding company and that's the financial group, and underside the
13:01
Speaker 1: holding company we have activities such as investment banking and
13:04
Speaker 1: some of the investing that we do in venture capital
13:08
Speaker 1: firms and in technology and life science companies. That's done
13:11
Speaker 1: at our holding company. And then the bank itself, Silicon
13:14
Speaker 1: Valley Bank is nine percent of what we do as
13:18
Speaker 1: far as the publicly traded company. So they're very similar.
13:21
Speaker 1: It's just what activities fit in which business. And you
13:24
Speaker 1: say Silicon Valley Bank, but you're not like a traditional bank.
13:29
Speaker 1: We were just talking about branches and tellers and things
13:33
Speaker 1: like that. That's not the sort of storefront you operate,
13:36
Speaker 1: is it. Now. We are a commercial bank predominantly, and
13:39
Speaker 1: that means that we work with companies. So companies again,
13:43
Speaker 1: you know, it's the startups that are being funded by
13:47
Speaker 1: families and friends. You know, people have ideas and they're
13:49
Speaker 1: raising fifty a hundred thousand dollars and they're starting in business.
13:53
Speaker 1: But they're starting a business that is in software or
13:56
Speaker 1: the internet or in e commerce. It's in those industries
14:00
Speaker 1: we we support, and that's the business side of it,
14:03
Speaker 1: and we grow with them as they get larger and larger,
14:05
Speaker 1: and hopefully they go public they get larger lists on
14:07
Speaker 1: a NASADAC or they get listed on the New York
14:09
Speaker 1: Stock Exchange. That's our models. So we don't have tellers,
14:13
Speaker 1: we don't have branches, because so much of this can
14:15
Speaker 1: be done virtually. And so when again, it helps when
14:19
Speaker 1: you know, when you have a tragedy like the pandemic occurring,
14:22
Speaker 1: you know we can still operate exactly as we had
14:24
Speaker 1: operated historically. So I noticed you sort of funds companies
14:29
Speaker 1: and bank with companies at different phases of their lifespan
14:34
Speaker 1: startup banking, venture funded, late stage. Let's let's start up
14:38
Speaker 1: with what is SVB startup banking. Yeah, So weave it
14:43
Speaker 1: into our strategy overall because I think it's helpful in context.
14:46
Speaker 1: Our strategy is we want to bring companies in that
14:50
Speaker 1: are just getting started. So think about it like the
14:52
Speaker 1: top of the funnel. You want to bring in thousands
14:55
Speaker 1: of new companies each year, new companies that are being formed,
14:58
Speaker 1: and we're talking about six, seven, eight nine thousand new
15:02
Speaker 1: companies per year. We support them with banking services, getting
15:05
Speaker 1: them off the ground, give them an advice, making connections
15:08
Speaker 1: to investors, making connections to their service providers, and then
15:11
Speaker 1: we tailor our products to them. As they raise their
15:14
Speaker 1: first round of venture capital financing, their second round of
15:17
Speaker 1: venture capital financing. We're lending them money in unique ways.
15:20
Speaker 1: Ventured debt could be acquisition financing all different products and services,
15:25
Speaker 1: giving them FX capabilities as they go international. And then
15:29
Speaker 1: we support them with even greater capabilities as they go
15:32
Speaker 1: international and they go public and they're doing hundreds of
15:35
Speaker 1: millions of dollars of revenue. And so our our strategy
15:38
Speaker 1: is bring them in early and support them all throughout
15:42
Speaker 1: their life cycle as they get larger and larger. That's,
15:45
Speaker 1: in a in a nutshell, that's what our our strategy is.
15:48
Speaker 1: And to do it not just in the US, but
15:50
Speaker 1: to do it globally, to do it in the UK,
15:53
Speaker 1: to do in Europe, to do it in China, to
15:54
Speaker 1: do it in Canada. And that's what we got to do.
15:57
Speaker 1: Work with the most innovative, the coolest companies in the
16:00
Speaker 1: entire world. So let's let's put some numbers on that
16:05
Speaker 1: of venture backed tech and life sciences company in the
16:08
Speaker 1: US Bank with you. That's a tremendous number. And then
16:11
Speaker 1: if we talk about those same sort of companies that
16:15
Speaker 1: have gone I p O of them in bank with you. So,
16:21
Speaker 1: so you guys really seem to have cornered this market.
16:25
Speaker 1: What are you doing to protect that giant lead? Yeah,
16:30
Speaker 1: I definitely don't like the description cornered because that implies
16:33
Speaker 1: in some ways that there isn't competition and you don't
16:35
Speaker 1: have to wake up every day and kind of Andrew
16:37
Speaker 1: Groves quote only the paranoid survive, which is something we
16:40
Speaker 1: certainly adhere to. You know, it starts with really being
16:45
Speaker 1: relentlessly focused on helping these companies at all stages figuring
16:51
Speaker 1: out what are the keys to their success. What I
16:54
Speaker 1: was talked to our team about, it's that one piece
16:56
Speaker 1: of advice, It's that one connection, It's that one piece
17:00
Speaker 1: of help that can make the difference between a company
17:04
Speaker 1: being successful and not being successful. And you have to
17:08
Speaker 1: think about that every single day. Is you engage with
17:11
Speaker 1: and you work with our clients. And it makes sense
17:15
Speaker 1: that when you have teams of people at SVB, that
17:18
Speaker 1: this is all they do, work with companies that are
17:20
Speaker 1: in the healthcare industry, biotech companies or medical devices, or
17:25
Speaker 1: software or cyber software. That if they do that all
17:29
Speaker 1: day long and the next cybersecurity software walks in the door,
17:32
Speaker 1: their ability to point them in the right direction to
17:34
Speaker 1: make interactions or engagements or connections that makes such a
17:38
Speaker 1: huge difference. And so we just have to keep thinking
17:40
Speaker 1: about that every single day, and that's you know, differentiating
17:45
Speaker 1: and it's also what's really a lot of fun. If
17:47
Speaker 1: you believe you have helped a company, you go home
17:50
Speaker 1: at night you feel pretty darn good that you've made
17:53
Speaker 1: a difference in a company that's changing something significant in
17:57
Speaker 1: the world, very impressive. Let's talk about later stage companies
18:01
Speaker 1: and public companies. Do you offer a similar suite of
18:05
Speaker 1: services and and how different is that from the very
18:09
Speaker 1: early stage compan Yeah, it is, it is very different, um,
18:12
Speaker 1: but it is still again in that same commentary about
18:15
Speaker 1: helping them be successful, that's what the product said, is
18:19
Speaker 1: that's what the solutions are. That's where all the advice
18:21
Speaker 1: and connections. So we may bring, um, some CFOs together
18:25
Speaker 1: or ceo s together. If a company is thinking about
18:27
Speaker 1: going public, well let's connect them with other c e
18:30
Speaker 1: o s who have gone through that process so they
18:32
Speaker 1: can get the advice about how to do that. Do
18:35
Speaker 1: you raise money before you go public or do you
18:37
Speaker 1: raise kind of all the money you need when you
18:39
Speaker 1: go public or after you go public? Giving that feedback
18:42
Speaker 1: and that experience to other people going through that same thing,
18:46
Speaker 1: those connections are really, really, really valuable. But other things
18:49
Speaker 1: that are different, how much money you lend to them,
18:51
Speaker 1: the type of money it's acquisition financing. It could be
18:54
Speaker 1: large acquisition financing, it could be making introductions to pe
18:58
Speaker 1: firms who may want to take them private if they're
19:02
Speaker 1: public already. So it's a whole suite of solutions that
19:05
Speaker 1: we give to these companies. And again I'll go back
19:07
Speaker 1: to what I said, that's the most important, that's the
19:09
Speaker 1: most fun part when you really do believe that you've
19:12
Speaker 1: made a difference in that company. Very interesting. Tell us
19:15
Speaker 1: a little bit about open Door. I love the story
19:18
Speaker 1: that everybody passed on them. What did you guys see
19:22
Speaker 1: in them? That was so unique? Part of companies like
19:25
Speaker 1: an open door. And there's such a long list of
19:27
Speaker 1: companies that you put it, you know, put in that
19:29
Speaker 1: list that I think the biggest challenge for individuals to
19:33
Speaker 1: look at these companies and to really believe in them
19:37
Speaker 1: is to understand what they're going after. And it's very
19:41
Speaker 1: easy to say no, It's very easy to list all
19:44
Speaker 1: the challenges and the reasons that something may not work.
19:47
Speaker 1: It is much more difficult to be that optimistic point
19:50
Speaker 1: of view and to say what if, what if they're successful?
19:53
Speaker 1: What if they're right, What if they actually go after
19:55
Speaker 1: this market? How big could this be? And then understanding
19:59
Speaker 1: again who investors are, understanding the management team and there
20:03
Speaker 1: and their dry for success. All those things are ingredients
20:06
Speaker 1: that really gives you that view of the potential for
20:09
Speaker 1: that business. And that that's what I mean, Honestly, that's
20:12
Speaker 1: the most inspiring part of what I get to do
20:15
Speaker 1: as a CEO to see these companies, to understand where
20:19
Speaker 1: they're going, to listen to the CEOs and the c
20:22
Speaker 1: suites in these companies, to see where they want to go,
20:24
Speaker 1: where they want to go and what they want to build.
20:26
Speaker 1: UM is truly incredible And that's that's incredibly motivating to me,
20:30
Speaker 1: and I know it's incredibly motivating to our team. So
20:32
Speaker 1: so let's stick with that. And before we describe how
20:36
Speaker 1: the open door investment worked out, people should be aware
20:41
Speaker 1: that the vast majority of venture investments don't pan out.
20:45
Speaker 1: This is a space where somewhere between sixty the companies
20:49
Speaker 1: UM never really get off the ground in in an
20:52
Speaker 1: appreciable way. How do you manage that risk and how
20:55
Speaker 1: do you make sure that whatever that relationship is, you're
20:58
Speaker 1: not just burning through She at a horrifying rate. So
21:02
Speaker 1: there's the investment piece of these companies, and then there's
21:06
Speaker 1: the lending money to these companies. So the investing piece
21:10
Speaker 1: is you you have to have a few winners to
21:15
Speaker 1: make up for all the companies where they don't. They
21:19
Speaker 1: don't either realize their full potential or they outright fail.
21:24
Speaker 1: So equity is very different than lending money. Lending money,
21:28
Speaker 1: you don't have to have as many winners to make
21:31
Speaker 1: up for the for the ones you lose money on,
21:33
Speaker 1: you do have a higher loss rate um, but because
21:37
Speaker 1: we as a senior lender in these loans, we get
21:40
Speaker 1: repaid first when you when a company goes out of business,
21:43
Speaker 1: we get repaid as the company's winding down. That has
21:46
Speaker 1: certain protections to us. So loss rates are still higher,
21:50
Speaker 1: but you can still underwrite them in a way that
21:52
Speaker 1: is different than the equity investors do. We don't have
21:56
Speaker 1: the same upside and we don't have the same downside.
21:58
Speaker 1: On the lending side, if something doesn't work out and
22:02
Speaker 1: you're recapturing eight of the loan, that's a loss, but
22:06
Speaker 1: it's not a total right. You're not writing everything off
22:09
Speaker 1: right on the equity side, if it doesn't work out,
22:11
Speaker 1: that's take it down to zero. It usually means that
22:14
Speaker 1: you're gonna take it down to zero, you're gonna take
22:15
Speaker 1: a complete loss. Yes, And at the end of the
22:17
Speaker 1: open Door investment, you guys were the only ones who
22:21
Speaker 1: were willing to make that equity investment in open door,
22:25
Speaker 1: and ultimately they end up going public with a spack.
22:28
Speaker 1: It's a giant winner for everybody involved. That has to
22:32
Speaker 1: give you a lot of confidence that, Hey, our due
22:35
Speaker 1: diligence process and our ability to both lend and make
22:39
Speaker 1: equity investments seems to be finding the right companies. So
22:43
Speaker 1: the equity investors in that deal, we weren't the only
22:44
Speaker 1: equity were the only investor. In fact, we were lending
22:47
Speaker 1: money to them. But the equity investors did very well.
22:50
Speaker 1: Don't you get warrants on a lot of these small
22:53
Speaker 1: companies when you're one of the early investors as well. Yeah,
22:56
Speaker 1: but it's it uries a really interesting distinction between equity
23:00
Speaker 1: investing where you get, um, you're putting in tens of
23:03
Speaker 1: millions of dollars and you're getting right when you're lending money.
23:09
Speaker 1: Think about it almost like getting a few stock options.
23:13
Speaker 1: So for the upside, it offsets some of the losses
23:15
Speaker 1: that you will take over time in the portfolio. But
23:18
Speaker 1: it's it's mainly it's a small amount of stock. When
23:23
Speaker 1: a company is really successful, though it can still add
23:25
Speaker 1: up to a lot of a lot of money, and
23:27
Speaker 1: so we've seen that especially last year and this year.
23:30
Speaker 1: The warrant gains that we've had have been substantial. But
23:33
Speaker 1: the reason it's more challenging is that when things are
23:36
Speaker 1: going really well, you have really low credit losses and
23:39
Speaker 1: your warrant gains are also doing really well, it looks
23:43
Speaker 1: really easy. When the markets more challenging, your warrant gains
23:47
Speaker 1: are non existent. You could be even losing money on
23:50
Speaker 1: your warrants right and you could be having a higher
23:52
Speaker 1: rite off rate. So it is it is more cyclical
23:56
Speaker 1: up and down than people would believe. So you you
23:59
Speaker 1: really have to think about this under a long term strategy.
24:02
Speaker 1: Companies these days are staying private for much longer. Tell
24:06
Speaker 1: us a little bit about your partnership with NASDAK to
24:09
Speaker 1: help bring some liquidity to pre I p O startups.
24:13
Speaker 1: Let me give a little more context to be able
24:15
Speaker 1: to answer the question better. Um, So, the big difference
24:19
Speaker 1: between private companies and public companies is access to information.
24:24
Speaker 1: They are. They're very very very very different as far
24:27
Speaker 1: as what is known about a private company and what's
24:30
Speaker 1: not about a public company. Public companies you know all
24:32
Speaker 1: the information, it's all you know. We all have access
24:34
Speaker 1: to the same information and knowledge. Um it's you know,
24:38
Speaker 1: very small margins on trading and all those things. Private companies,
24:43
Speaker 1: by definition, it's more opaque. It's more unknown about their
24:48
Speaker 1: financials and what's going on. So buying and selling private stock,
24:52
Speaker 1: if you could even find some, has been a historical challenge.
24:56
Speaker 1: What happens is the companies stay private longer. Right, The
25:00
Speaker 1: issue for investors, the issues for the employees that are
25:03
Speaker 1: part of that company. You may have made on paper
25:06
Speaker 1: a lot of money, but you may not be able
25:09
Speaker 1: to get any liquidity, and so you have to figure
25:11
Speaker 1: out a way how can you keep these companies private
25:14
Speaker 1: longer to build additional wealth and still provide liquidity to
25:18
Speaker 1: the investors and still probably liquidity to the employees. One
25:21
Speaker 1: way to do it is to create an exchange in
25:24
Speaker 1: exchange for private company shares, and that's what Nastick Private
25:28
Speaker 1: Market has been doing. Historically, they've done more than thirty
25:31
Speaker 1: billion dollars of trading in private shares and what we
25:36
Speaker 1: wanted to do pulling together this group. So it's Nasdeck,
25:39
Speaker 1: it's ourselves, it's Goldman, Morgan, Stanley, and City is basically
25:44
Speaker 1: a consortium that comes together that all brings something valuable
25:48
Speaker 1: to create a private exchange that is bigger, bolder, is
25:54
Speaker 1: more accessible to investors on the issuer side and on
25:58
Speaker 1: the investors side. And that's really what this is about,
26:00
Speaker 1: and that's why we're excited to be working together. So
26:03
Speaker 1: obviously it's a private exchange. It's not open to the public.
26:07
Speaker 1: How big of a market is this? How big can
26:09
Speaker 1: it get? And who are the buyers and sellers in
26:13
Speaker 1: this private market? These sellers are the issuers are really
26:18
Speaker 1: the vast majority of private companies that have raised maybe
26:22
Speaker 1: it's a series C round D round, so they're they're
26:27
Speaker 1: more mature. They may be doing fifty million, two hundred
26:30
Speaker 1: million dollars in revenue right um, and so they may
26:33
Speaker 1: be two, three, four years away from going public. And
26:39
Speaker 1: those companies wanted, you know, maybe they've been around for
26:41
Speaker 1: eight years, nine years, ten years, so they want to
26:43
Speaker 1: provide liquidity for early investors or for employees. So there's
26:48
Speaker 1: the issue where side of it. So it's a big market.
26:51
Speaker 1: The issue where a side is a big market. On
26:54
Speaker 1: the other side is the buyers, right, So the investors,
26:57
Speaker 1: it will mostly be the institutional and mostly be the
27:00
Speaker 1: ones who are maybe coming into invest in these businesses
27:03
Speaker 1: once they become public and they want to participate two
27:07
Speaker 1: or three years earlier while they're still private. So a
27:11
Speaker 1: lot of the investors will be the same investors. But
27:13
Speaker 1: you can see family offices, you could see some accredited
27:17
Speaker 1: investors participating in that. And so it is a big
27:20
Speaker 1: market on both sides, and that's why we were excited
27:22
Speaker 1: to participate um in this new joint venture with Nasdak
27:26
Speaker 1: and the other investment banks. And the assumption is when
27:29
Speaker 1: you're buying pre i p O shares, you're getting a
27:32
Speaker 1: discount from not only a couple of years of growth,
27:36
Speaker 1: but what the I p O valuation might be. It depends.
27:39
Speaker 1: Sometimes you'll be getting a discount and sometimes the valuation
27:42
Speaker 1: may go the other way. Right. It's just when people
27:44
Speaker 1: ask me the question about it almost makes it seem
27:47
Speaker 1: like you're guaranteed to make money because you're investing before
27:51
Speaker 1: a company goes public, and obviously or guarantee is always
27:55
Speaker 1: so loaded. Yeah, it's so it just doesn't work that way, right,
27:58
Speaker 1: It's but it's like when you buy a public stock.
28:00
Speaker 1: When you buy a public stock, you make an assumption
28:02
Speaker 1: about that stock. You believe it has upside and it
28:05
Speaker 1: will go up. Every stock that you invest in Bury
28:08
Speaker 1: does it always go up? Is every single but not
28:10
Speaker 1: for the average actually actually for everybody for the past
28:14
Speaker 1: couple of years, it's gone up. But that's not what
28:18
Speaker 1: happens in the real world over longer periods of time.
28:21
Speaker 1: And look, it was only a year ago we watched
28:24
Speaker 1: we Work implode after a pretty rich uprounds. So maybe
28:31
Speaker 1: it's not that extreme of an example, but there's no
28:34
Speaker 1: reason to think that a successful C round or D
28:38
Speaker 1: round company can have things go off the rails and
28:41
Speaker 1: the next round is appreciably lower. You asked me a
28:44
Speaker 1: question earlier in the discussion about you know, how do
28:47
Speaker 1: we deal with this high loss rate? Remember, I mean,
28:50
Speaker 1: even if they get to a later stage, a series
28:52
Speaker 1: C or D round, and they are doing fifty million
28:55
Speaker 1: dollars in revenue, it doesn't mean they may not struggle.
28:59
Speaker 1: It doesn't mean that there they may not go out
29:01
Speaker 1: of business. They still may go out of business. So
29:03
Speaker 1: it's still it's a higher risk. You're just trying to
29:06
Speaker 1: give information and accessibility to these private companies so people
29:11
Speaker 1: can participate in it, institutions and individuals, and that's what's
29:15
Speaker 1: unique about it and that's what we're excited about. So,
29:18
Speaker 1: so you mentioned how much information is available for public companies.
29:23
Speaker 1: How do you go about doing your due diligence on
29:26
Speaker 1: private companies where you can't just sit at a Bloomberg
29:31
Speaker 1: terminal or punch something into Google and find everything there
29:34
Speaker 1: is to find out about a company. What is that
29:36
Speaker 1: process like and how much energy and time and capital
29:41
Speaker 1: do you invest in it? Yeah, well, it is a
29:43
Speaker 1: function of a couple things, right. One is has to
29:45
Speaker 1: be the private company and what they're willing to share,
29:49
Speaker 1: and then the buyer takes that information and they marry
29:52
Speaker 1: it with any comparables that you can make in the
29:55
Speaker 1: public market, and then you make assumptions. Right, That's why
29:58
Speaker 1: it's it is more difficult. Right, it will not be
30:00
Speaker 1: ever be as transparent, as clear and with information accessible
30:08
Speaker 1: the way a public market is. That's why that is
30:09
Speaker 1: still a private market. But you should be able to
30:12
Speaker 1: make certain assumptions. So let's say if it's as sassed
30:15
Speaker 1: assass enterprise software company. Well, even if it's private, you
30:19
Speaker 1: have public comps that you then can apply based on
30:23
Speaker 1: the industry, the market where it's going, growth rates, all
30:26
Speaker 1: those things. So you know, yeah, you have to do
30:27
Speaker 1: work as an investor. But it's not you know, it's
30:31
Speaker 1: not as if there won't be comparisons out there that
30:33
Speaker 1: you can make in judgment that you can make in
30:36
Speaker 1: order to make your assessment whether it's a good investment
30:38
Speaker 1: or not. So I'm doing my research preparing for this conversation,
30:43
Speaker 1: and I start working my way back through some of
30:47
Speaker 1: Silicon Valley banks early relationships. They were Cisco's first bank,
30:53
Speaker 1: I know the relationships with Apple, Intel. Tell us about
30:57
Speaker 1: some of the history and some of the companies s
31:00
Speaker 1: VB has worked with. Yeah, well, i'll give you some
31:03
Speaker 1: of the history. I was not here at the time,
31:05
Speaker 1: but I'll tell you the story that goes along with it.
31:08
Speaker 1: One of our co founders, a gentleman named Bill bigger Staff.
31:12
Speaker 1: The story goes that when the two individuals that formed
31:16
Speaker 1: Cisco started the company, that he had um given them alone,
31:20
Speaker 1: and he actually went to their house to actually give
31:23
Speaker 1: them a very very small a loan to help them,
31:27
Speaker 1: um so the capital plus that loan got them started.
31:29
Speaker 1: So that's that's one of of many stories and kind
31:33
Speaker 1: of our in our history books that we like to
31:35
Speaker 1: certainly um reference and and given another story is that
31:39
Speaker 1: one of the first acquisitions, if not the first acquisitions
31:42
Speaker 1: that Cisco did, was one of my first clients when
31:45
Speaker 1: I was a junior banker at at SVB called Crescendo,
31:50
Speaker 1: and John Chambers and I, who know each other, we
31:53
Speaker 1: were talking about that that story, and it was a
31:55
Speaker 1: great acquisition for them, it was a great client of mine,
31:59
Speaker 1: and it just it's again it's one of the great
32:01
Speaker 1: things about the institution where you can go back and
32:04
Speaker 1: look in history about these amazing, iconic companies that we
32:07
Speaker 1: were part of at the beginning, and that's it's just
32:10
Speaker 1: a it's a great thrill to look back at that.
32:12
Speaker 1: So so given that amazing history and and all these
32:15
Speaker 1: now giant names, SVB has been kind of low key.
32:19
Speaker 1: And I don't know if media shy is the right
32:22
Speaker 1: word because you're here doing this, but certainly you guys
32:25
Speaker 1: don't advertise, you're not in the paper all the time.
32:29
Speaker 1: You tend to be pretty low key. What's the thinking
32:31
Speaker 1: behind that? Yeah, Well, from an advertising perspective, I mean
32:35
Speaker 1: when I think of advertising, that's mostly for consumers, consumers,
32:39
Speaker 1: consumer brands, and and that's not who we are. Um
32:43
Speaker 1: we are. We work with companies, we work with venture capitalists,
32:47
Speaker 1: we work it with you know, the healthcare space to
32:49
Speaker 1: life science and where we spend time, and it's really
32:52
Speaker 1: it's about relationships and making sure we're top of mind
32:55
Speaker 1: with them. We're spending time with those individuals, spending time
32:58
Speaker 1: with the venture capitalists, We're spending time with the entrepreneurs.
33:01
Speaker 1: That's where our teams of people are and will sponsor things,
33:05
Speaker 1: will host events, will create events around that. But it's
33:09
Speaker 1: not it's not in mainstream. It's becoming more popular, it's
33:12
Speaker 1: becoming more top of mind for individuals, but historically it
33:17
Speaker 1: has been more low key. To use your your word.
33:19
Speaker 1: So so let's let's stay with the organization. Guys are
33:23
Speaker 1: publicly traded. You're the CEO. How did you manage the organization?
33:27
Speaker 1: How did you run things during the pandemic when everyone
33:31
Speaker 1: was forced to work from home. Well, the simple way
33:34
Speaker 1: to describe it is make sure if you're going to
33:36
Speaker 1: go through something like that, you've got a really good
33:38
Speaker 1: team of people, and it starts with that, and no
33:42
Speaker 1: CEO is making all the calls. No CEO is you know,
33:47
Speaker 1: using just their own thinking, their own decision making process.
33:50
Speaker 1: And so number one start with a great team, which
33:53
Speaker 1: we we had. And so as we started to assess
33:55
Speaker 1: the situation, it was thinking about our employees first and
34:00
Speaker 1: thinking about our clients and shareholders. While important, always important.
34:05
Speaker 1: When to make that note, UM, you got to focus
34:07
Speaker 1: on the first two things. And so when we thought
34:09
Speaker 1: about employees, it was how fast we can make sure
34:13
Speaker 1: that we're taking care of them and protecting them. So
34:15
Speaker 1: we went very quickly from a remote perspective, making sure
34:18
Speaker 1: we were supporting them with home office, home technology capabilities
34:22
Speaker 1: so they could do what they needed to do UM
34:24
Speaker 1: and also take care of their families. That was first
34:27
Speaker 1: and foremost. The second thing was taking care of our clients.
34:31
Speaker 1: So when you see a shock like that, they're worried about.
34:35
Speaker 1: I don't know what's going to happen next. My crystal
34:37
Speaker 1: ball becomes very cloudy. I what I don't want to
34:40
Speaker 1: have to deal with is my banking partner kind of
34:44
Speaker 1: ringing up the phone or call him or emailing me saying, hey,
34:47
Speaker 1: your loan payback your loan or we're worried about this.
34:51
Speaker 1: So we give our clients a lot of flexibility and
34:54
Speaker 1: we're paying our loans, holding off on making payments because
34:58
Speaker 1: we said, we're in this together. This isn't your fault.
35:01
Speaker 1: You didn't do this, and so we should be working
35:03
Speaker 1: together to solve this problem, to get through this. And
35:06
Speaker 1: I look back at that and A it was absolutely
35:10
Speaker 1: the right call and be we got a lot of
35:13
Speaker 1: great feedback from our clients and how supportive we were
35:17
Speaker 1: for them and how important that was to them. And
35:19
Speaker 1: as a CEO, you know, there's no better feeling than
35:23
Speaker 1: getting those positive comments from your clients that you really
35:27
Speaker 1: took care of them. And the same thing is true
35:29
Speaker 1: with employees. So UM, I think we weathered the storm
35:32
Speaker 1: really well. And and again our target market, this innovation economy,
35:36
Speaker 1: bounced back so quickly, UM that we were fortunate to
35:40
Speaker 1: be in the right space as well. So here in
35:43
Speaker 1: New York there's drumbeat from a lot of big companies
35:46
Speaker 1: want to see their staffers back in the office, but
35:50
Speaker 1: there's a little resistance. Some of it is bi sector,
35:53
Speaker 1: some of it is generational. What are your plans for
35:56
Speaker 1: let's talk in the fall. Does everybody come back to office?
36:00
Speaker 1: Is it a little more of a hybrid situation? What
36:03
Speaker 1: what are the plans for a Silicon Valley bank post pandemic?
36:07
Speaker 1: If I can dare use that phrase, Yeah, I think
36:09
Speaker 1: first it goes back to what I just said, which
36:11
Speaker 1: is you gotta take care of your employees first, right,
36:14
Speaker 1: safety is the most important thing. And as much as
36:17
Speaker 1: we want to get back together, we want to socialize,
36:20
Speaker 1: we want to connect um, we want to make sure
36:22
Speaker 1: that people are safe and there isn't you know, in
36:26
Speaker 1: an impact on their on their families as well, and
36:28
Speaker 1: so we we need to be first sensitive to that.
36:30
Speaker 1: So what we're doing right now is we're doing some trials,
36:33
Speaker 1: um testing things out, bringing some people back, seeing how
36:36
Speaker 1: it operates, seeing what technology we need to adapt to
36:39
Speaker 1: in this new flexible environment which we're going to. So
36:42
Speaker 1: we want to make sure that first and foremost are
36:44
Speaker 1: employees are safe. Second part is that they're taking care
36:48
Speaker 1: of our clients and they've done a great job during
36:49
Speaker 1: the pandemic. No reason to think that it's going to
36:52
Speaker 1: slow down and they won't continue to do a great
36:54
Speaker 1: job for our clients. But it's really the combination of
36:56
Speaker 1: those two things, and so we're doing a lot of
36:58
Speaker 1: surveys listening to our luis, and what our employees want
37:02
Speaker 1: is they want flexibility. And so the future of work
37:05
Speaker 1: at s VB will be to provide a more flexible
37:08
Speaker 1: work environment. We're redoing a lot of our offices to
37:12
Speaker 1: create more flexibility. We're allowing more UM support to have
37:17
Speaker 1: them build their home offices so they can work from home.
37:21
Speaker 1: So I think we're gonna have a lot of people
37:22
Speaker 1: that are gonna be UM coming in a few days
37:25
Speaker 1: a week, but the vast majority will not be coming
37:28
Speaker 1: in UM five days a week. We think it's better
37:30
Speaker 1: for our employees and we think it's better for our clients.
37:33
Speaker 1: That's interesting. I'm I'm kind of fascinated by let's talk
37:39
Speaker 1: sector by sector. A lot of finance was able to
37:42
Speaker 1: work remotely. A lot of technology was able to work remotely.
37:46
Speaker 1: There are certain businesses travel, entertainment, hospitality that physically have
37:52
Speaker 1: to be be there. You're doing a little bit of
37:55
Speaker 1: business travel. You're here in New York from California. What
37:58
Speaker 1: do you see as you travel around the country. Is California,
38:02
Speaker 1: because of the tech heaviness, more open to a hybrid model.
38:06
Speaker 1: What what are you seeing from your perspective. Yeah, I
38:09
Speaker 1: think technology companies are definitely more open to hybrid They're
38:14
Speaker 1: much more open to working remotely, They're more open to
38:18
Speaker 1: being flexible. Part of it is is that you know
38:22
Speaker 1: you have a skill, a contribution that can be made,
38:25
Speaker 1: and if it's computer programmers or UM sales support or
38:28
Speaker 1: whatever you want to call it, that you can be
38:31
Speaker 1: more more remote. The more business or industry has an
38:36
Speaker 1: apprentice model, the more being in person like that's going
38:41
Speaker 1: to be even more important. So it it depends upon
38:43
Speaker 1: what the needs are of the of the business. So
38:45
Speaker 1: technology companies, by definition, are going to be more more flexible.
38:49
Speaker 1: We're we're somewhere in in between. We're not we're somewhat
38:52
Speaker 1: of an apprentice model, We're not a full apprentice model.
38:55
Speaker 1: So we can be in that middle ground of not
38:57
Speaker 1: requiring everyone to be back, but also now having everybody
39:01
Speaker 1: be flexible wherever they want to work. And I think
39:03
Speaker 1: that's going to be the right balance. So I think
39:06
Speaker 1: of Silicon Valley as a place, but if you have
39:10
Speaker 1: a lot of people working remote, well, there's really no
39:14
Speaker 1: latency difference between Colorado and Palo Alto. Do you run
39:19
Speaker 1: the risk of losing that nexus of intellectual capital all
39:24
Speaker 1: in in one place, if people are scattered to the
39:28
Speaker 1: four winds and don't have to be in on a
39:29
Speaker 1: regular basis. So I'll break that apart to two answers.
39:34
Speaker 1: One is the technology in the life science industry, and
39:37
Speaker 1: then I'll just speak for for our business on the
39:39
Speaker 1: technical life science area. Silicon Valley has been for years
39:43
Speaker 1: of people have said, oh, his Silicon Valley going to
39:46
Speaker 1: fall apart. It's expensive, it's all these things are going
39:49
Speaker 1: to be more of a challenge, and other markets are
39:52
Speaker 1: going to pick up the pace and be more competitive.
39:55
Speaker 1: And my view is while other markets are going to
39:59
Speaker 1: do better than they have historically, right New York and
40:03
Speaker 1: Atlanta and Chicago and Denver and Austin and Seattle are
40:08
Speaker 1: going to continue to do better, it's not going to
40:11
Speaker 1: be at the expense of Silicon Valley. Silicon Valley, from
40:15
Speaker 1: my standpoint, will continue to thrive. It will still be,
40:18
Speaker 1: at least for my lifetime, I believe, the innovation capital
40:22
Speaker 1: of the world. But innovation is everywhere, and so it
40:26
Speaker 1: makes sense that these other markets are going to still
40:29
Speaker 1: do really well. They're still gonna get more innovation jobs
40:33
Speaker 1: innovation companies in those markets, and so I believe kind
40:37
Speaker 1: of all boats will rise, not It's not going to
40:40
Speaker 1: be a zero sum game the way I think too
40:42
Speaker 1: many people think about. For our business, we do have
40:45
Speaker 1: a lot of interaction. We do have offices all over
40:48
Speaker 1: the country, and so we want to make sure our
40:50
Speaker 1: people are close to those hubs so when they do
40:53
Speaker 1: come in that they have access to engaging with our
40:56
Speaker 1: other teammates that allow them to learn and develop and
41:00
Speaker 1: build relationships and all those things. So that's one thing.
41:03
Speaker 1: The second thing is if you're a client facing individual,
41:06
Speaker 1: you obviously have to be in the market where your
41:09
Speaker 1: clients are, and so that that isn't going to change
41:11
Speaker 1: if your if your clients are in northern California, you
41:14
Speaker 1: can't live in Nashville, you can't live in you know, Austin, Texas,
41:18
Speaker 1: if your clients are in the Bay Area. So that
41:21
Speaker 1: obviously is one important important function, but we believe it's
41:25
Speaker 1: a it's a balance of apprenticeship as well as um
41:28
Speaker 1: you can do things remote as well. Let's talk a
41:30
Speaker 1: little bit about fintech since that covers a little bit
41:33
Speaker 1: of both the areas that you guys play in it's
41:36
Speaker 1: obviously been a huge area of growth over the past decade.
41:39
Speaker 1: What are you doing to stay ahead of the curve?
41:41
Speaker 1: How do you make sure after helping all these disruptive
41:44
Speaker 1: companies that you yourself don't get disrupted. Yeah, I'd say
41:49
Speaker 1: it's it's both a blessing and I wouldn't call it
41:51
Speaker 1: a curse, But I would say a blessing and a
41:53
Speaker 1: challenge to be so close to the innovation UH market
41:57
Speaker 1: and these fintech companies, because you see how fast grow,
42:00
Speaker 1: you see how fast they adapt, and so there's a
42:02
Speaker 1: there's a paranoid part about that, But I think that
42:05
Speaker 1: helps us as an institution realize that we have to
42:10
Speaker 1: keep pressing ahead, that we have to be bold, that
42:12
Speaker 1: we can't wait for things to happen, that we need
42:15
Speaker 1: to try new things. We have an innovation team, We're
42:18
Speaker 1: investing in new businesses. Maybe it can't be part of
42:21
Speaker 1: our core competency inside SVB, but we can invest in
42:24
Speaker 1: those businesses and provide those solutions to our clients. So
42:27
Speaker 1: I believe it's actually we can benefit from it, and
42:31
Speaker 1: we can benefit from it in a business, but we
42:33
Speaker 1: can also benefit it in supporting our clients because we know,
42:35
Speaker 1: we have to innovate, So yeah, we spent a lot
42:38
Speaker 1: of time. We have a national fintech practice and so
42:40
Speaker 1: we work with many, many, many fintech companies and support
42:44
Speaker 1: them in payments, We support them in warehouse lending when
42:47
Speaker 1: they're trying to do loans themselves to consumers or loans
42:51
Speaker 1: to small business. Um. So we support them in a
42:53
Speaker 1: variety of different ways, and kind of every day that
42:55
Speaker 1: goes by, we're figuring about what's the next thing we
42:58
Speaker 1: can do to support them. Let me real curve ble
43:00
Speaker 1: at you a little bit. WINEMI and wine business. Why
43:05
Speaker 1: is Silicon Valley Bank. I know you work with life
43:08
Speaker 1: science and clean tech and venture capital. How does wine
43:11
Speaker 1: fit into that business other than the proximity of NAPA
43:15
Speaker 1: and Sonoma so to where you guys are. Yeah, maybe
43:17
Speaker 1: I could claim it's a life science connection because it's
43:20
Speaker 1: all the health benefits, but it's actually a historical in
43:25
Speaker 1: the sense when the bank was first formed back in
43:27
Speaker 1: the early eighties, we did some innovation, so whatever technology
43:32
Speaker 1: was back then in the in the eighties, semi connector
43:34
Speaker 1: companies and some networking companies, and then we did general
43:38
Speaker 1: commercial industries and real estate, and then we also did
43:42
Speaker 1: some you know, private banking back at that time as well,
43:46
Speaker 1: and so over time, when we were doing commercial industries,
43:49
Speaker 1: we're doing commercial real estate. What we realized is that
43:53
Speaker 1: maybe we weren't as good as we thought we were
43:54
Speaker 1: at it, and so the real estate crisis in the
43:56
Speaker 1: late eighties and the early nineties, we said, maybe that's
44:00
Speaker 1: not something we should be doing. But we're pretty good
44:01
Speaker 1: at this technology stuff. So what happened is we kept
44:04
Speaker 1: whittling down what we are really good at until we
44:08
Speaker 1: ended up in the late nineties of technology and life sciences,
44:12
Speaker 1: and we had this one business, Premium Wines and NAPA
44:16
Speaker 1: and Sonoma, and it was a really good business. But
44:19
Speaker 1: with the other benefit to it is actually it's great
44:22
Speaker 1: marketing and it's great connectivity. And if relationship building is
44:25
Speaker 1: so important as it is, you can leverage those clients,
44:30
Speaker 1: those winemakers, and those relationships and you can create connectivity
44:34
Speaker 1: across your client base in a really unique way. So
44:37
Speaker 1: we said, it's a great business that makes the rest
44:40
Speaker 1: of the business better, so let's keep it. And it's
44:42
Speaker 1: been it's been really nice to have and we host
44:44
Speaker 1: events up a NAP and Sonoma and we help those
44:47
Speaker 1: winery clients um sell more of their product to our
44:51
Speaker 1: technology and innovation clients. And so there's a really good
44:54
Speaker 1: match between the two. That makes a whole lot of sense.
44:56
Speaker 1: And I am a giant fan of Napa Valley cabs
45:00
Speaker 1: that they come visit, come out um. Now that traveling
45:03
Speaker 1: is reopening, it's absolutely on my uh A list of
45:07
Speaker 1: things to do. As much as everybody claims to hate
45:10
Speaker 1: business travel, you miss occasionally getting out on a on
45:15
Speaker 1: a trip like that. The last conference I was in
45:19
Speaker 1: in San Francisco ended with a bunch of us heading
45:22
Speaker 1: up to Napa for a couple of days. And you know,
45:25
Speaker 1: after three days of panels and that sort of stuff,
45:27
Speaker 1: it was a great break. It's a little bit too
45:30
Speaker 1: long of a flight to just go for a conference
45:32
Speaker 1: for a couple of days, so it became something fun.
45:37
Speaker 1: I could see how having Sonoma, Napa Valley in your
45:41
Speaker 1: backyard is a great multiplier for all the other businesses.
45:46
Speaker 1: How that connection and and much like we have in
45:50
Speaker 1: healthcare and technology and software and all those industries, we
45:53
Speaker 1: have experts that this is what they do kind of
45:55
Speaker 1: twenty four by seven our wine group, they're experts in
45:59
Speaker 1: this industry. They really are are viewed as being the
46:02
Speaker 1: smartest people in understanding these industries, and and that's the
46:06
Speaker 1: way are we approached investment banking. That's where we approach
46:09
Speaker 1: private banking. We want to be the best, the best people,
46:11
Speaker 1: the most knowledgeable people in giving advice in the industries
46:15
Speaker 1: that we serve. And I think the Wine Group is
46:17
Speaker 1: just another example of that. SVBS reputation is that it
46:20
Speaker 1: understands startups like very few banking institutions. Those relationships are
46:26
Speaker 1: a giant advantage that that you've had for a while.
46:29
Speaker 1: How long can you maintain this lead? Is this something
46:33
Speaker 1: that's specific to you? What are you doing to stay competitive?
46:38
Speaker 1: As more and more financial institutions look at Silicon Vali
46:42
Speaker 1: and say we want to muscle our ways into that space.
46:46
Speaker 1: I look at it this way, Barry. You can take
46:49
Speaker 1: a defensive posture, or you can take an offensive posture.
46:56
Speaker 1: We are taking an offensive posture, meaning the way east
47:00
Speaker 1: keep our relationships, the way we continue to do what
47:04
Speaker 1: we're doing is you don't look back and say, what
47:07
Speaker 1: can we hold back from our clients? What can we
47:09
Speaker 1: how do we create more of a moat around them?
47:11
Speaker 1: It is actually you end up doing a better job
47:14
Speaker 1: of providing one stop shopping all the products and services,
47:17
Speaker 1: so you go. It's like, the reason we did the
47:19
Speaker 1: acquisition of of Living Partners and we're building out our
47:22
Speaker 1: investment bank is to add more value to our clients.
47:25
Speaker 1: The reason we acquired Boston Private was to add more
47:29
Speaker 1: private banking and wealth management capabilities. The reason we acquired
47:33
Speaker 1: West River Group is to make sure we can lend
47:36
Speaker 1: even greater sums of money and higher risk type of
47:40
Speaker 1: lending to them. All those things are My view is
47:44
Speaker 1: you could say it's being defensive. I don't view it
47:47
Speaker 1: as being defensive. VIEWS view it as being on the
47:50
Speaker 1: offense to take care of our clients, no matter how
47:53
Speaker 1: big they get, no matter whatever they need. From a
47:56
Speaker 1: financial solutions perspective, we want to be there for them,
48:00
Speaker 1: and I think we have to think about that every
48:02
Speaker 1: single day. We can't take our relationships for granted. We
48:06
Speaker 1: have to win those relationships back every single day. And
48:09
Speaker 1: if every employee thinks that way, that's where I think
48:12
Speaker 1: we're gonna continue to be um the winning solution for
48:15
Speaker 1: these companies. That sounds really like like the right strategy.
48:20
Speaker 1: I know I only have you for a few more moments,
48:22
Speaker 1: so Let's jump to our favorite questions that we asked
48:26
Speaker 1: all of our guests, starting with tell us what you're
48:28
Speaker 1: streaming these days? Give us your favorite Netflix or Amazon Prime,
48:32
Speaker 1: whatever is keeping you entertained. Two things. One, Ted Lasso
48:36
Speaker 1: love that show. I'm glad it came back for a
48:39
Speaker 1: season two. It's just it's such a great storyline and
48:42
Speaker 1: it's so funny. It's that's awesome. The second one, during COVID,
48:47
Speaker 1: my wife and I and family, we watch a ton
48:51
Speaker 1: of anything David Adenborough, Anything David Adenburgh about you know,
48:56
Speaker 1: the Earth and climate and you know it's the ocean.
49:00
Speaker 1: I mean, it's the visual part and the just how
49:04
Speaker 1: fortunate we are to have the earth that we have
49:06
Speaker 1: and how we all need to do a better job
49:08
Speaker 1: of protecting it. Those are the two biggest things that
49:11
Speaker 1: we we stream. I'm trying to I'm googling while we speak,
49:14
Speaker 1: trying to look up the name of the newest show
49:18
Speaker 1: that he just came out with, and I'm drawing a
49:22
Speaker 1: blank on it. It was it Life on Earth Again,
49:26
Speaker 1: Life on Our Planet phenomenal. He has like the perfect
49:30
Speaker 1: voice for narrating that sort of stuff. I'm a big
49:33
Speaker 1: fan as well, So tell us about your early mentors
49:37
Speaker 1: who helped to shape your career. Yeah, it's you know,
49:42
Speaker 1: being in in financial services as long as I have
49:45
Speaker 1: been UM and being at SVB for twenty eight years,
49:48
Speaker 1: a lot of my mentors have been here at at SVB.
49:54
Speaker 1: And actually one that was even before that. So Mark
49:57
Speaker 1: Arrissimo was an individual that I managed. I were with
50:00
Speaker 1: UM at another bank before I joined Silicon Valley Bank,
50:02
Speaker 1: and he's the individual that brought me over. You know.
50:04
Speaker 1: Mark was great about you know, basically inspiring you to
50:10
Speaker 1: think differently, inspiring you to to just kind of try
50:15
Speaker 1: new things, and giving you the autonomy, giving the responsibility
50:19
Speaker 1: to fail. It's okay if you fail, what did you
50:22
Speaker 1: learn from your failure? And so Mark was one, Uh
50:25
Speaker 1: my predecessor, um Ken Wilcox. Um would definitely be a
50:30
Speaker 1: second mentor in addition to giving me incredible opportunities which
50:35
Speaker 1: I greatly appreciate. Uh, he was so um. What was
50:41
Speaker 1: so important to him was leadership principles, and he taught
50:45
Speaker 1: leadership principles to me, taught leadership principles to the rest
50:49
Speaker 1: of the executive team about casting your shadow and how
50:52
Speaker 1: important that is about decision making process. All these things
50:57
Speaker 1: that even to this day, UM, I think of out
51:00
Speaker 1: maybe not on a daily basis, but I think about
51:02
Speaker 1: on a regular basis. And so UM clearly he was inspirational.
51:06
Speaker 1: And the last person UM was a gentleman named Bob
51:09
Speaker 1: Samuels who was an executive coach of mine for a
51:11
Speaker 1: number of years. I learned a lot from Bob, but
51:13
Speaker 1: the one thing in particular was how important empathy is,
51:19
Speaker 1: how important empathy is to understand clients, how important empathy
51:25
Speaker 1: is to understand the people you work with, understand kind
51:29
Speaker 1: of everyone else, and you know, not faulting people when
51:33
Speaker 1: they have when of a certain point of view, because
51:36
Speaker 1: that's how they feel. And you can't take away how
51:39
Speaker 1: people feel about something that's what they own. And understanding
51:42
Speaker 1: that and being empathetic to that really allows you to
51:45
Speaker 1: connect with people. And my view is in a very
51:48
Speaker 1: different way. So those are a few of the many
51:50
Speaker 1: mentors that I have had over the years that have
51:52
Speaker 1: really helped shape my career. Let's talk about everybody's favorite
51:56
Speaker 1: question books. Tell us some of your favorites and what
51:58
Speaker 1: are you reading right now? Yeah? The one I described
52:01
Speaker 1: to our team at the bank UH for many many years,
52:04
Speaker 1: is this a book called The Boys in the Boat
52:06
Speaker 1: and it's actually timely because of the Olympics being around,
52:09
Speaker 1: and it's a set back on the I want to
52:11
Speaker 1: say the thirties and the forties, and it was a
52:13
Speaker 1: team up in Seattle and it was this individual who
52:17
Speaker 1: came from nowhere and working together as a team in
52:21
Speaker 1: the eight person's Skull to winning the Olympics in Germany.
52:26
Speaker 1: And it's about teamwork. It is about um, the feeling
52:30
Speaker 1: when you're part of a great team, how important that
52:33
Speaker 1: is and how impactful it can be. So that that's
52:36
Speaker 1: a great That's a great book. Other books that I've
52:38
Speaker 1: I've read recently the Pacific War nineteen forty one to
52:42
Speaker 1: ninety five. And the most recent one which kind of
52:44
Speaker 1: fits into that same genre, is a book called two
52:47
Speaker 1: thousand thirty four and it's about a future war between
52:52
Speaker 1: the US and China and how bad decisions, small bad
52:57
Speaker 1: decisions can create some thing very significant. You know to
53:02
Speaker 1: me that the war books are about strategy, it's about tactics,
53:07
Speaker 1: it's about human nature, um and in lessons that we
53:11
Speaker 1: can all learn from them. So those are a few
53:12
Speaker 1: of the things that I've been I have read UM
53:14
Speaker 1: that I like and I've been read read recently quite interesting.
53:18
Speaker 1: What sort of advice would you give to a recent
53:20
Speaker 1: college grad who was interested in a career in either
53:24
Speaker 1: banking or lending or venture investor. Yeah, I would just
53:29
Speaker 1: say advice in general, and I'll talk about advice and
53:33
Speaker 1: banking and finance. And first of all, I gets an
53:36
Speaker 1: incredible career. I think anytime you can really understand how
53:41
Speaker 1: businesses operate and get exposed to a variety of different
53:44
Speaker 1: businesses the way, um you know, commercial bankers do, the
53:48
Speaker 1: way investment bankers do, I think that's an incredible skill.
53:52
Speaker 1: It's incredible knowledge to be gained, and it will allow
53:55
Speaker 1: you to be successful in my view, no matter what
53:57
Speaker 1: you're doing. If you want to stay is at it
53:58
Speaker 1: as a career, or if you want to leave that
54:01
Speaker 1: as a career and then go into a business where
54:03
Speaker 1: maybe you're a CFO or you're a finance person. I
54:06
Speaker 1: think all those things are are great to learn, So
54:09
Speaker 1: I would I wouldn't say less about lessons on that part.
54:12
Speaker 1: I would say it is a great career. So if
54:14
Speaker 1: you get a chance, you know, go for it, do it.
54:16
Speaker 1: I don't think you'll be disappointed. Advice in general, that
54:19
Speaker 1: I give to college grads, and I've got I've got
54:22
Speaker 1: two kids that have just graduated from college of the
54:24
Speaker 1: last couple of years, and I have three kids in college.
54:27
Speaker 1: And so UM, I do spend a lot of time
54:29
Speaker 1: thinking about about this and and talking about it. Whether
54:32
Speaker 1: they take my advice or not, I don't know, but
54:34
Speaker 1: I certainly am happy to share it. So one is
54:37
Speaker 1: I think too many college kids when they graduate. I
54:41
Speaker 1: think that they're going from this place of happiness and
54:44
Speaker 1: joy in college too. I'm going to work for the
54:47
Speaker 1: rest of my life and it's going to be miserable.
54:51
Speaker 1: And my biggest piece of advice is if you don't
54:54
Speaker 1: find joy in what you do in your career, right,
54:57
Speaker 1: you got to change your mind around there. I know
55:01
Speaker 1: when I first got out, I loved doing what I
55:05
Speaker 1: did because the people I got to meet and the
55:08
Speaker 1: lessons that I learned and understanding how different businesses work,
55:12
Speaker 1: and to me, that was incredibly exciting and stimulating. So
55:15
Speaker 1: the first thing is find joy in what you do.
55:19
Speaker 1: You may do it for a long period of time,
55:21
Speaker 1: but it's not forever, and you're gonna learn things are
55:24
Speaker 1: gonna be great, stimulating, motivating, UM. And so that's number
55:28
Speaker 1: that's number one. The second thing is to um realize
55:32
Speaker 1: that it's not supposed to be easy. If you got
55:35
Speaker 1: took a job and it's easy, you're probably a not
55:38
Speaker 1: working hard enough or B. Well that's probably the main
55:42
Speaker 1: the main, the main thing, or you're setting your bar
55:45
Speaker 1: too low. Right. You should be thinking about something that's
55:47
Speaker 1: going to stimulate you and challenge you, challenge you more. So,
55:51
Speaker 1: It's not supposed to be easy, So get over it
55:53
Speaker 1: and go back to point number one. Still find joy
55:56
Speaker 1: in what you do. The third one fits into that
55:58
Speaker 1: same vein as well, which is b curious. Um Again,
56:02
Speaker 1: the most frustrating thing that I see with with with
56:05
Speaker 1: people when they don't want to understand, when they don't
56:09
Speaker 1: ask questions, but they don't want to find out kind
56:11
Speaker 1: of things of like how things operate and how things work.
56:15
Speaker 1: And the last part I would say is advice I
56:17
Speaker 1: would give is be part of a great team. I
56:20
Speaker 1: know when I look back in the best parts of
56:23
Speaker 1: my career, it has always been being part of a
56:27
Speaker 1: team of people that are not competing with each other,
56:30
Speaker 1: but that are working together to compete externally to drive
56:35
Speaker 1: a business forward. That has always been incredibly motivating, stimulating
56:40
Speaker 1: and inspiring to me. And so I encourage college grads
56:43
Speaker 1: to find that team where they're going to be inspired.
56:47
Speaker 1: Quite quite interesting. And our final question, what do you
56:50
Speaker 1: know about the world of banking and startups and investing
56:54
Speaker 1: today that you wish you knew back in nine when
56:57
Speaker 1: you first joined Silicon Valley Bank. Yeah. Probably probably the
57:01
Speaker 1: biggest thing, and I think it's hard until you've gone
57:04
Speaker 1: through cycles is to realize that, um, the challenges, they
57:08
Speaker 1: will come up. You'll learn from those challenges, but they're
57:12
Speaker 1: gonna be over a lot faster than you think. You
57:14
Speaker 1: get so caught up in how challenging or how big
57:17
Speaker 1: of an issue it is, you'll get past it. So
57:19
Speaker 1: don't stress out as much as you do when those
57:23
Speaker 1: challenges occur. You will get you will get through it,
57:26
Speaker 1: You'll be better off and things will be okay. That's
57:29
Speaker 1: terrific stuff. Thank you, Greg for being so generous with
57:33
Speaker 1: your time. We have been speaking with Greg Becker. He
57:36
Speaker 1: is the CEO of Silicon Valley Bank. If you enjoy
57:40
Speaker 1: this conversation, well be sure and check out our podcast extras.
57:44
Speaker 1: Will we keep the tape rolling and continue discussing all
57:47
Speaker 1: things venture and banking related. You can find those at iTunes, Spotify,
57:53
Speaker 1: wherever you find your favorite podcasts. We love your comments,
57:57
Speaker 1: feedback and suggestions right to us at M I B
58:01
Speaker 1: Podcast at Bloomberg dot net. Sign up for my daily
58:04
Speaker 1: reads at Ridholtz dot com. Check out my weekly column
58:07
Speaker 1: on Bloomberg at Bloomberg dot com slash Opinion. Follow me
58:12
Speaker 1: on Twitter at Ritholtz. I would be rumiss if I
58:15
Speaker 1: did not thank the crack team that helps put these
58:17
Speaker 1: conversations together each week. My audio engineer is maroufal Paris
58:22
Speaker 1: Wald is my producer. Michael Batnick is my researcher. I'm
58:27
Speaker 1: Barry Riholtz. You've been listening to Masters in Business on
58:30
Speaker 1: Bloomberg Radio.