Who’s To Blame for the Silicon Valley Bank Mess? The Internet Investigates

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
Who’s To Blame for the Silicon Valley Bank Mess? The Internet Investigates
Evan Xie

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Since the collapse of SVB, federal regulators have guaranteed that SVB depositors won’t suffer any losses. For now, it seems the immediate threat of contagion has passed, as regional bank stocks started to rebound following a Monday sell-off. As Silicon Valley Bank announced its new name, Silicon Valley Bridge Bank, and FDIC-appointed president Tim Mayopoulos urged former customers to consider returning with at least some of their funds, the media and technology pundits have started to refocus their attention elsewhere.

There’s naturally a whole active debate about whether or not the federal government’s intervention in SVB technically meets the definition of a “bailout.” But the real post-SVB fallout discussion, at least so far, has pivoted to, who specifically is to blame for SVB’s downfall? A number of potential suspects have been identified and held up for scorn and ridicule.

Suspect #1: The Bank Itself

Many fingers are pointing back to SVB itself and the bank’s core business model. By design, the bank served corporate deposits as opposed to retail customers. With more of its total deposits in the hands of fewer customers – and with many of those customers listening to the same venture capitalists, thought-leaders and prominent investors – it’s easier to trigger a run than at a more conventional bank. One former SVB employee, speaking anonymously with CNN, theorized that the bank’s public acknowledgment of its dire financial situation, prior to having a solid strategy to save deposits, was the killing blow.

The bank’s strategy proved particularly risky in the current economic landscape. A post-pandemic startup boom left SVB flush with cash; with deposits up 86% in 2021, it was bringing in money faster than it could lend it out. Their solution was to put the bulk of the funds into Treasuries and 30-year mortgages. Now in 2023, with interest rates at a 15-year high in an effort to tamp down inflation, and venture capital drying up amid recession fears, deposits fell just as SVB’s assets also tumbled in value. This dire combination then led to panic among investors.

Famed investor Michael Burry – he’s the guy played by Christian Bale in “The Big Short” – blasted SVB on Sunday for taking “stupid risks” based on “hubris and greed.” The bank has already been hit by a shareholder securities-fraud lawsuit, accusing management of failing to warn customers about its risky business model.

Suspect #2: The Government

And though President Biden noted in his remarks that the bank’s management will lose their jobs, Democrats have perhaps unsurprisingly singled out former President Trump as the chief culprit. Many on the left are pointing to Trump’s deregulation of the banking industry that was lobbied for, in large part, by former SVB CEO Becker. The former president, backed by Republican majorities in Congress (along with several aisle-jumping Dems), passed a new law in 2018 allowing mid-sized banks like SVB to avoid some of the regulations that were put in place following the ‘08 financial crisis. Had this law not passed, SVB would have been subjected to stricter oversight and more regulations that might have slowed or prevented its implosion. Biden called on Congress to strengthen the banking regulations and roll back some of the 2018 changes to the law.

Despite the regulatory rollback, other pundits and officials are nonetheless still blaming federal regulators and noting that there was ample time to alert the public to the dangers of SVB’s investment plans. Former Treasury official and economist Aaron Klein explained on “Meet the Press” on Sunday that the Fed had given SVB “a clean bill of health,” failing to protect their customers.

Suspect #3: Crypto

But these accusations are really just the beginning of the finger-pointing, as just about every stakeholder in tech, the media, and the economy sound off this week about who they think is to blame. Crypto advocates blamed inherent flaws in centralized banking and fiat currency more generally, while others pointed to the collapse of the crypto market and the FTX exchange as setting the stage for the SVB crisis.

Suspect #4: The Media

Reporters were accused of overhyping the story, or getting caught up in predictions about what might happen rather than “sticking to the facts.” Social media also took some abuse in the aftermath of SVB’s fall. Twitter wasn’t yet a concern during the last financial crisis; the argument goes that panicky all-caps tweets helped to set the stage for a physical bank run in the real world.

Suspect #5: Wokeness

Meanwhile, right-wing firebrands and Wall Street Journal columnists went after their favorite scapegoats: Obama and the abstract concept of “wokeness.” In WSJ, Andy Kessler cited a 2022 proxy statement from SVB noting that its board was made up of 45% women, along with two veterans and members of the Black and LGBTQ+ communities, arguing that the bank was apparently “distracted by diversity demands.” On his Fox News show, Carlson blamed the Obama administration, which made bank management “increasingly incompetent” by imposing “diversity, equity and inclusion standards” on the financial industry.

Suspect #6: Venture Capital

According to Business Insider, some venture capitalists are even blaming one another for stoking the fears that ultimately led to SVB’s collapse. Upfront Ventures managing partner Mark Suster compared feverish VC and investor tweets warning about trouble last week to the classic example of patrons shouting “fire” in a movie theater. Others disagreed; as one VC firm leader told Forbes, “you don’t blame the customer for taking money out of the bank.”

Obviously, identifying the key issues that led to the SVB collapse matters, as it helps everyone to avoid the same pitfalls next time with the next bank. Still, the next few steps seem relatively clear: protect SVB depositors in the short-term, restore some of the post-2008 crisis regulations that might’ve helped prevent a full-blown crisis, and maybe exercise a bit more caution before tweeting that the levees have broken and it’s time to head for high ground. With that in mind, it’s hard not to see at least some of the finger-pointing not as constructive criticism but everyone’s favorite form of emergency PR: crisis management. What we potentially have here is a large group of people who feel implicated, and thus want to suggest that the problems all started with someone, anyone, else.

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Taylor Swift Concert in the Metaverse? Ticketing Platform Token Is Using NFTs To Optimize Experiences
Evan Xie

When Taylor Swift announced her ‘Eras’ tour back in November, all hell broke loose.

Hundreds of thousands of dedicated Swifties — many of whom were verified for the presale — were disappointed when Ticketmaster failed to secure them tickets, or even allow them to peruse ticketing options.

But the Taylor Swift fiasco is just one of the latest in a long line of complaints against the ticketing behemoth. Ticketmaster has dominated the event and concert space since its merger with Live Nation in 2010 with very few challengers — until now.

Adam Jones, founder and CEO of Token, a fan-first commerce platform for events, said he has the platform and the tech ready to take it on. With Token, Jones is creating a system where there are no queues. In other words, fans know immediately which events are sold out and where.

“We come in very fortunate to have a modern, scalable tech stack that's not going to have all these outages or things being down,” Jones said. “That's step one. The other thing is we’re being aggressively transparent about what we’re doing and how we’re doing it. So with the Taylor Swift thing…you would know in real time if you actually have a chance of getting the tickets.”

Here’s how it works: Users register for Token’s app and then purchase tickets to either an in-person event, or an event in the metaverse through Animal Concerts. The purchased ticket automatically shows up in the form of a mintable NFT, which can then be used toward merchandise purchases, other ticketed events or, Adams’s hope for the future — external rewards like airline travel. The more active a user is on the site, the more valuable their NFT becomes.

Ticketmaster has dominated the music industry for so long because of its association with big name artists. To compete, Token is working on gaining access to their own slew of popular artists. They recently entered into a partnership with Animal Concerts, a live and non-live event experiences platform that houses artists like Alicia Keys, Snoop Dogg and Robin Thicke.

“You'll see they do all the metaverse side of the house,” Jones said. “And we're going to be the [real-life] web3 sides of the house.”

In addition, Token prides itself on working with the artists selling on their platform to set up the best system for their fanbase, devoid of hefty prices and additional fees — something Ticketmaster users have often complained about. Jones believes where Ticketmaster fails, Token thrives. The app incentivizes users to share more data about their interests, venues and artists by operating on a kind of points system in the form of mintable NFTs.

“We can actually take the dataset and say there’s 100 million people in the globe that love Taylor Swift, so imagine she’s going on tour and we ask [the user], ‘Would you go to see her in Detroit?’ And imagine this place has 30,000 seats, but 100,000 people clicked ‘yes,’” he explained. “So you can actually inform the user before anything even happens, right? About what their options are and where to get it.”

Tixr, a Santa-Monica based ticketing app, was founded on the idea that modern ticketing platforms were “living in the legacy of the past.” They plan to attract users by offering them exclusive access to ticketed events that aren’t in Ticketmaster’s registry.

“It melts commerce that's beyond ticketing…to allow fans to experience and purchase things that don't necessarily have to do with tickets,” said Tixr CEO and Founder Robert Davari. “So merchandise, and experiences, and hospitality and stuff like that are all elegantly melded into this one, content driven interface.”

Tixr sells tickets to exclusive concerts like a Tyga performance at a night club in Arizona, general in-person festivals like ComplexCon, and partners with local vendors like The Acura Grand Prix of Long Beach to sell tickets to the races. Plus, Davari said it’s equipped to handle high-demand, so customers aren’t spending hours waiting in digital queues.

Like Token, Tixr has also found success with a rewards program — in the form of fan marketing.

“There's nothing more powerful in the core of any event, brand, any live entertainment, [than] the community behind it,” Davari said. “So we build technology to empower those fans and to reward them for bringing their friends and spreading the word.”

Basically, if a user gets a friend to purchase tickets to an event, then the original user gets rewarded in the form of discounts or upgrades.

Coupled with their platforms’ ability to handle high-demand events, both Jones and Davari believe their platforms have what it takes to take on Ticketmaster. Expansion into the metaverse, they think, will also help even the playing field.

“So imagine you can't go to Taylor Swift,” Jones said. “What if you could purchase an exclusive to actually go to that exact same show over the metaverse? An artist’s whole world can expand past the stage itself.”

With the way ticketing for events works now, obviously not everyone always gets the exact price, venue or date they want. There are “winners and losers.” Jones’s hope is that by expanding beyond in-person events, there can be more winners.

“If there’s 100,000 people who want to go to one show and there's 37,000 seats, 70,000 are out,” he said. “You can't fight that. But what we can do is start to give them other opportunities to do things in a different way and actually still participate.”

Jones and Davari both teased that their platforms have some exciting developments in the works, but for now both Token and Tixr are set on making their own space within the industry.

“We simply want to advance this industry and make it more efficient and more pleasurable for fans to buy,” Davari said. “That's it.”