In many ways, Silicon Valley Bank’s implosion was a classic bank run. Economic conditions shift (skyrocketing interest rates to try to manage inflation in this case). Said bank’s assets decline in value. The bank takes significant losses. It worries about having sufficient liquidity and tries to raise capital. Word leaks out. Depositors panic. Everyone tries to withdraw their money at once. Chaos ensues.
Except this time, one aspect was very, very different. The SVB panic is one of the first examples of a bank run in the era of social media. Did SVB make some bad decisions and investments? Yes. Was their communications strategy among the worst seen in decades? Very much so. But before the days of Twitter, would the floor have collapsed so quickly? Probably not.
