* Silicon Valley Bank (SVB) Lied To Me, Too

On 2023-03-10, Silicon Valley Bank (SVB) failed after a bank run on its deposits. Were there warning signs?

Why I Fired SVB

On the first day of spring in 2001, I founded Clocktower with the mission of helping startups use intellectual property (IP) strategically to get acquired.

I graduated from the Massachusetts Institute of Technology (MIT) in 1988. When I launched Clocktower, I leaned heavily on my MIT network for advice – about everything from insurance to office space to banking.

My MIT (and non-MIT) startup friends universally recommended Silicon Valley Bank (SVB), both because SVB represented startups and because SVB could help me become (more) connected to the Boston startup community. I talked to several SVB employees and asked them about their presence in Boston and their experience with helping law firms. The SVB employees assured me that they had a strong presence in Boston and with law firms, so I opened a checking account.

When I started receiving retainer payments from clients, I had to open an IOLTA (law firm client trust) account. So I asked my SVB contact to help me open an IOLTA account, but they said that they were not qualified to do that. How do you claim to have expertise helping law firms while not supporting IOLTA accounts? Now I had to open my IOLTA account with another bank, and it didn’t make sense to have two banks, so I closed my SVB account.

So SVB lied to me about their experience with helping law firms.

I went to law school in the first place because I was determined to single-handedly fix the Department of Defense (DOD) fraud, waste, and abuse that I had witnessed while on active duty in the United States Air Force (USAF). Here’s another way to refer to fraud, waste, and abuse:

  • lying
  • cheating
  • stealing

I’m not a big fan of lying, cheating, or stealing. Or of folks who lie, cheat, or steal. So as we’re all looking to understand the debacle of last week’s collapse of Silicon Valley Bank, I suggest looking for the following:

  • lying
  • cheating
  • stealing

I suspect that greed and hubris played a part in the collapse as well. And I expect that there will be hearings in Congress, civil lawsuits filed, and criminal charges brought. This is only the beginning of the SVB saga.

Transparency Matters

If you’re not reading Doug Levin’s blog, then you should be. In an era where most investors, VCs, and startup accelerators have given up on transparent blogging, Doug’s blog is a breath of (BS-free) fresh air.

Here’s a snippet of what Doug wrote in one of his blogs about SVB:

The SVB case [was] a perfect storm … born from a confluence of several ‘weather systems’:

  • Accounting practices by SVB and other regional banks in the post-Trump era
  • SVB’s delirious pursuits of VC-related profits
  • Exorbitant spending by startups and VCs in late 2022 and into 2023

Which sounds more than a little bit like:

  • lying
  • cheating
  • stealing

The Bigger They Are, The Harder They Fall

And, FWIW, a lot of the “experts” who recommended that startup founders choose Silicon Valley Bank for banking also recommended big law firms for lawyering. Big banks collapse, and big law firms have a history of collapsing too. (Somebody really should revive the BigLaw Dead Pool (last updated in 2014).)

The bank I chose after leaving SVB was (and is) Middlesex Savings Bank (MSB), a small regional bank with great customer service. My 20+ contacts at MSB (including, but not limited to, Johanna Considine, Patty Chambers, Paula Copley, Sue Johnson, and Linda Cetrone) over the last 20+ years have helped me grow Clocktower from a sole proprietorship to a 5-FTE partnership. All without lying, cheating, or stealing.

And if you are one of the lucky SVB employees who managed to quit or retire before the collapse, then congrats, you got lucky.

And if you are one of the takers who ran on the bank, then I hope you can sleep well at night. But you should probably watch this clip to learn how a (startup) community is supposed to act:

Were You Screwed By SVB?

If your startup got screwed by SVB and you are currently using biglaw for IP, then please contact Clocktower. We can’t help with the banking thing, but we’ll come up with a way for you to save money on the lawyering thing.

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Erik J. Heels claims to publish the #1 blog about technology, law, baseball, and rock ‘n’ roll.