How a poker game launched Silicon Valley Bank's four-decade ride of the tech wave -- and a bad gamble 42 years later ended it all
Published in Business News
In the early Eighties, when “High Tech” was still written with quotation marks and the region was starting to become known as The Silicon Valley, tennis buddies Bob Medearis and Bill Biggerstaff took their idea for a new bank to a poker game in Pajaro Dunes.
Their wives and children would be joining them at their Monterey Bay beachfront rentals the next day, but Friday night the two men gathered their close friends, made a big dinner and explained the plan to open a bank specifically for tech companies. They would call their customers “clients” and name their business after the region’s trendy new moniker: Silicon Valley Bank.
Everyone around the table – including a Lockheed engineer in charge of pilotless drones in the 1970s and a Memorex executive – ponied up $10,000 each. They turned for support to a cast of luminaries, including a legendary NFL quarterback, a maverick congressman and the founder of one of the Valley’s signature law firms.
And the bank that collapsed this month in spectacular fashion was born.
From white glove to black swan
After 40 years of riding waves of tech booms and busts, Silicon Valley Bank disappeared faster than an errant tweet from Elon Musk, spooking customers into a run on deposits, which in turn jolted the banking industry and roiled the U.S. economy and global markets. The fallout has raised major questions about how the blunders of a single medium-sized bank could unleash a torrent of panic in a region so accustomed to risk.
But Silicon Valley Bank’s origin story — and its seemingly prosperous four-decade ride – in many ways mirrors the generations of startups and gambles that turned fields of orchards into the capital of innovation.
“Silicon Valley wouldn’t be Silicon Valley without Silicon Valley Bank,” said Varun Badhwar, a serial entrepreneur who had millions of dollars at stake in the crisis.
Tech companies across the region and around the globe had come to expect white-glove treatment from Silicon Valley Bank, not a black-swan event.
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