At SXSW, an unexpected banking crisis interrupts a tradition in the tech world
Walking through Roku town on Sunday afternoon, you’d hardly realize that the namesake company was having an unusually stressful weekend.
Sure, the fake metropolis: a multi-story recreation of Roku beloved screensaver, set in the heart of downtown Austin for the city’s big tech and cultural extravaganza South by Southwest, had its share of problems. A huge robot razed a part of the facility; the tentacles of one kraken rose menacingly out of the sea on another.
But nothing served to suggest that Roku, a San Jose-based company streaming and hardware giant, he had just watched millions of dollars seemingly disappear into thin air. According to a regulatory filing, the company had $487 million, or about a quarter of its cash, stashed away at Silicon Valley Bank, the lending mainstay of the tech world that failedspectacularly and unexpectedly, late last week.
Amid fears that a bank run could spread to other financial institutions, federal agencies, including the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation, now say all bank customers will be able to get your money back. Still, since Silicon Valley Bank did a lot of business in the tech and media ecosystem, the lifeblood of South by Southwest, or SXSW, a combination film festival, tech expo, and cultural summit, the crisis marred the early days of the Conference.
Attendees shared rumors of startup founders crying on the street after news of the bank’s collapse broke. Even among the most organized attendees, the private Slack channels were awash with commiseration.
Roku did not immediately respond to a request for comment.
At a small gathering Sunday afternoon for people who work in the field of “conversational AI,” that is, artificial intelligence programs that mimic human speech, including chatbots and synthetic voices, some said the bank’s collapse has discouraged tempers at the annual conference.
The news has been “shocking” to attendees, said Ciro Sobral, 32, a product manager at Singapore-based e-commerce company Shopee. Since Silicon Valley Bank had been a fixture of the tech world for decades, he added, people have been drawing parallels between its collapse and the financial crash of 2008.
“Everyone was taken by surprise,” he said.
Although his employer was not directly affected, he added, the resulting chaos could lead to more centralization in the field of AI.
“When something like this happens, it’s a great opportunity for Big Tech mainstays” like Microsoft and Google, Sobral said. “I don’t know what will happen next, because a lot of small businesses were using” the bank.
Shannon Brownlee, another attendee at the IA meeting, said that although her communication technology company Valence Vibrations did not keep its own money in Silicon Valley Bank, outside investors who had previously expressed interest in her startup now said they need more. time to calculate. your finances.
“Our lead investor in the last round (of funding) had $30 million in Silicon Valley Bank,” he said. “He’s just struggling right now trying to figure it out.”
Upon arrival at the conference Friday morning, he lives in Los Angeles, Brownlee, 22, learned almost immediately of the accident.
“We got there, we went to sit in a coffee shop, do some work,” Brownlee said. “And as soon as we sat down, it was like, ‘Oh my gosh, everyone’s freaking out.'”
However, he has heard of other conference attendees having a much worse time. Some tech workers came to Austin only to find they no longer had access to company assets, he said; now they are “just stuck here.”
“People are definitely nervous,” the startup co-founder added, and while the panel lineup appears to have been relatively unaffected, the overall tone is decidedly bleaker.
Other media interests that have been affected by the bankruptcy include the video platform Vimeo and the video game platform Roblox. Wrapbook, an entertainment industry payroll platform, said Friday that the bank’s collapse meant its payroll processing would be delayed.
“Bank failure is an extreme external event”, Wrapbook tweeted. “We apologize, on behalf of all of us at Wrapbook, for any challenges this presents to you.”
Reign Ventures, an early-stage investment fund, tweeted Saturday that they had to shut down events they had planned to host at SXSW due to the bank’s collapse.
“We are so sorry to miss you and are sending our support to all startups and VCs who are impacted during this difficult time,” the firm said. wrote.
Dan Solomon, senior editor of Texas Monthly, saying in his own tweet on Friday that at a panel he attended, a startup founder spent the entire time “trying to get a bank transfer before 5pm so he can pay payroll.”
In fact, there were some oblique references to the news of the week during the convention’s education-oriented panels. During a talk about the future of AI, BuzzFeed CEO Jonah Peretti joked that everything these days is driven by virality, even bank runs.
And during a Monday morning talk titled “How DC wants to mess with your startup,” US Chamber of Commerce President Suzanne Clark framed the latest actions by federal regulators to protect depositors. as an example of when the government can be helpful to tech companies, even as she backtracked in the rest of her talk about what she characterized as federal overreach in the economy.
“It’s an important morning for a lot of us to be quiet,” Clark said. “It’s an important morning to get smarter and do your homework to really understand what happened.”
But for the most part, many tech-themed panels at SXSW failed to acknowledge the crisis that was surely affecting many in the audience, if not the very ones on stage.
Ironically, it was the cultural side of the festival that seemed most eager to deal with the crisis.
On a live Sunday night episode of comedian Matt Besser’s popular improv4humans comedy podcast, Silicon Valley Bank received several mentions. At one point, during a scene about Jesus struggling with money problems, someone in the audience yelled “SVB!” spontaneous
At another point, guest star James Adomian played an SXSW panelist who had a horrible mushroom trip: “I just lost all my seed money in the SVB explosion!”