SVB Fail: What is Being Missed Entirely in the Conversation about First Republic Bank
In the wake of the failure of Silicon Valley Bank, regional banks in the United States have, as a category, been identified as having heretofore unidentified structural and financial risks. At a macro-economic level, these risks are a result of changes to monetary policy made by the Fed in order to rein in inflation, which has lowered the value of long-term assets held on the bank’s balance sheets. What happened at Silicon Valley Bank, however, was not simply a unique result of a financial miscalculation based on rising interest rates, or poor risk management, but these factors combined with their own hubris, extremely poor communication, and the targeted actions of an incredibly small number (a couple dozen) of venture-capital clients, who directed their portfolio companies to withdraw their funds in a sudden coordinated manner. In this situation, the actions of a few dozen extraordinarily affluent VCs set in motion the aggressive withdrawals that preceded the bank failing, and being taken over by the FDIC.
As this story unfolded, between Wednesday March 8 and Friday March 10, and continuing this week of March 13, a number of regional banks with depositor profiles (customer bases) with statistical resemblance to Silicon Valley Bank were identified as high-risk, and entered the news cycle.
I have banked with First Republic Bank for nearly twenty years. I had almost never seen them in the national news. They are our personal bankers, and they bank my start-up. About a year ago, when we were in process on a Series A funding round, I was advised to move our accounts to Silicon Valley Bank, and I took a discovery call with SVB.
What has always surprised and delighted me about First Republic Bank–and if you are familiar with our work you will understand I am not generally delighted by capitalism, because our work is focused on connection, and capitalism generally disconnects– is the degree to which I feel valued by them as a human being. In my forty-seven years, prior to banking with First Republic, I had never had a bank express any interest in me as a person whatsoever. The bankers didn’t know my name, they didn’t know about my family, and they didn’t care. There was no relationship. As a customer of every other bank I’ve ever dealt with, my experience has been entirely transactional. With First Republic, from the start, I was treated as a person in whom they were genuinely interested. This interest and regard clearly had nothing to do with how much of our money the bank was holding, because at the time we formed the relationship I was not the Founder and CEO of a growing global business, but a waiter finishing my undergraduate degree. Yet First Republic did things like phoning me if I was about to bounce a check. Or giving me an umbrella when I was caught in a downpour. And I began to notice that their employees didn’t leave. They stayed with the bank for years and years. I would walk into the bank, sit down with someone I had built a relationship with over time, have a conversation, and they would take care of our banking needs. They had created a human-centered culture in a sector that is generally transactional.
When I had a discovery call with Silicon Valley Bank I remembered why I don’t generally like banks. I was made to feel small, insignificant. I was condescended to. I got the feeling that I often get when interfacing with transactional systems: that I was being scouted for extraction; that SVB’s primary analysis was what could they suck out of me and my company. Having spent a number of years as a start-up, having gone through several funding rounds seeking mission-aligned investors, partners, and stakeholders, this interaction with the extractive mind was familiar to me, and chilling. I wouldn’t have banked with Silicon Valley Bank if they had been the only bank in town, because I didn’t like the way they made me feel.
And this brings me back to First Republic, and the surreal experience of watching the company being thrashed about and trash-talked on Twitter, and by daytraders and investors seeking to make a buck. It’s like watching someone you grew up with being dissected by talk show hosts. I keep thinking– But you don’t know them. You don’t know anything about them. Whatever statistical profiles may tell you about a bank’s customers, there is something crucial that is missing from this analysis, which leads me to a different conclusion about the bank’s vitality and importance. First Republic’s business is not built around offering the highest depositor rates, although they might do that. It is built around relationships. I personally admire, appreciate, and work to emulate, in our own business, the degree of consistency and reciprocity I have been shown by First Republic Bank. I admire its culture. And I believe that what it represents is important. They are a self-described client services firm that happens to be a bank.
I want to live in a world where relationships matter. At the heart of things, relationships may be all that matter. I want to live in a world where companies of all kinds have hearts. I want to live in a world where what gets seen first is our humanity, not the size of our bank accounts. And so it is important to me that First Republic thrives, because they have been part of our thriving.
I don’t generally spend my time writing a love letter to my bank. But I would be remiss, in a world where our attention is being siphoned off in the direction of chaos, spectacle, and scandal, if I didn’t express my appreciation to a company that has been a partner to my family and my business for twenty years, doing exactly what a bank ideally would: treating us as people with intrinsic value, and being a steadfast partner in helping us use money to build the kind of world we want to live in.
Don’t listen to the haters, First Republic. They don’t know you. We are customers for life.
With warmth,
Natureza Gabriel Kram
Founder and CEO, Hearth Science
Convener, Restorative Practices Alliance
Co-Founder, Academy of Applied Social Medicine
