It’s a Silicon Life
As Silicon Valley Bank collapsed last week, I was fascinated by the number of references to that pivotal scene in It’s a Wonderful Life, in which George Bailey saves the Bailey Building & Loan by stopping a bank run. It is a rhetorically impressive moment, a testament to Jimmy Stewart’s raw charisma, Frank Capra’s script and American stick-togetherness of the time. The bank run is not the most important scene in the film, and recent references are not entirely spot on — the Bailey Building and Loan did not collapse, Silicon Valley Bank did; Mr. Potter did not have a full head of hair, Peter Thiel does — but it is probably the most famous (fictional) run on a bank.
It in fact became clear last week that the most common learning from the 1946 film was how to explain bank runs, and I guess that’s a start. The film needs re-introduced to the Bay: it is an antidote in the American medicine cabinet, counteracting some of our more venomous creations. When I applied to colleges centuries ago, I referenced two cultural cornerstones in my application essays: It’s a Wonderful Life and Atlas Shrugged, and I think it was the former that saved me from the latter, though they duked it out in my head for a few years. Maybe the same thing could happen again on Bay-wide scale, although that requires more optimism than even Frank Capra could muster.
I do keep returning to a vision I have of a modern George Bailey, a mid-level and overdevoted employee at Silicon Valley Bank, who jumps the digital counter on Twitter and tries to turn the bank run as it occurs. He would be diminished from the original — no such man could exist in the Bay, it would eat him like software eats the world — but he would try his best to defend his employer’s glaring mistakes in the name of public good. What would he say, earnestly plugging away in that shabby old office in Santa Clara? It plays out in my head like this:
George Bailey @mossbackgeorge • Mar 9
I want everyone banking at @SVB_Financial to just remember that this thing isn’t as black as it appears.
Pete Dross (Cereal Entrepreneur) @liquidpete • Mar 9
@mossbackgeorge I got a “strong recommendation” from @WeCrypt investors to withdraw. Your site is not working. I had ChatGPT create a macro to spam transfers until I get my cash out and into someplace safe. There is no reason we shouldn’t get our money now
George Bailey @mossbackgeorge • Mar 9
(1/2) @liquidpete, you’re thinking of a bank all wrong. As if we had the money back in a blockchain. The money’s in bonds where we placed it when you all gave it to us. Maybe we shouldn’t have put it all in long-term bonds but the money’s there. They’re bonds.
(2/2) We’re pulling it as quick as we can and there’s always been enough to keep you in good standing unless you do something like this. Now what are you going to do? Withdraw your money in a panic so we’re forced to lose other folk’s value just to give it to you? Cause your YC cohort to panic?
Pete Dross (Cereal Entrepreneur) @liquidpete • Mar 9
@mossbackgeoege We’ve got 12M in here and 12M isn’t going to break anybody.
Mark Andrewson (AIBrother) @softwarebeatstheworld • Mar 9
@liquidpete, you get your money yet? Word on the street is @mossbackgeorge is full of it
Pete Dross (Cereal Entrepreneur) @liquidpete • Mar 9
@softwarebeatstheworld No 😤
Mark Andrewson (AIBrother) @softwarebeatstheworld • Mar 9
@liquidpete, well, I did! Old man @peterthiel emailed us yesterday, he said we’d be lucky if we got fifty cents on the dollar next week
Pete Dross (Cereal Entrepreneur) @liquidpete • Mar 9
@softwarebeatstheworld Going to retweet the s*** out of that. Founders stick together!
George Bailey @mossbackgeorge • Mar 9
(1/4) @liquidpete, @softwarebeatstheworld, hold up. I beg you not do this thing. If SVB closes down this industry’ll never see another bank just for it again. The funds already have the capital, they’ve already got the network. They’ve already got the connections with the big East Coast banks. And now they’re after us.
(2/4) Why? Well, it’s very simple. An easy buck and one less competitor. These are the people who created a software program because they got tired of paying you all to program software and write copy and think it’s the same difference. To them, it doesn’t matter if your funds get held here or in New York. Well maybe it doesn’t, but it does to us.
(3/5) When you all wanted to build a home, who turned you down because you’re a risky founder? It wasn’t @SVB_Financial, it was those safe big banks.
(4/5) Can’t you see what’s happening? Thiel isn’t withdrawing, he’s cashing in! And why? Because you’re panicking and he’s not. He’s picking up some bargains and shorting some stock. Now we can get through this thing together.
(4/5) But we’ve got to stick together, we’ve got to have faith in one other…
This is a fictional scene and not intended to be a direct analogy. In fact, SVB’s leadership made poor decisions which were not mere innocent mistakes. Additionally, it is unkind to Mr. Potter to compare him to Peter Thiel.
Something tells me even after his plaintive post, old Mossback George would have been drowned in the all-caps deluge of the following days (“YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW”). One thing startup-types love more than referencing the prisoner’s dilemma is being the winner of the prisoner’s dilemma. As a result, cooler heads did not prevail last week and a localized exercise in shortsightedness (by SVB) became a generalized one (by the Bay Area), whipped into a frenzy by the now well-remarked-upon hive mind of the startup scene, which relies upon about twelve Tweeters to do its collective thinking. SVB was no humble, small-town Building & Loan, but it’s about as close as you can get in the overcapitalized badlands, and its loss was unnecessary at many stages of the decline. I am sure someone stands to gain from all this, but it isn’t the @mossbackgeorges of the world.
