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.
A security guard looks out a door as customers line up at Silicon Valley Bank headquarters in Santa Clara on March 13 When Silicon Valley Bank opened its doors in 1983, Ronald Reagan was president and Congress was deregulating the banking industry. Tom McEnery was mayor of San Jose, redeveloping the downtown core and trying, unsuccessfully, to entice Steve Jobs to build a new Apple headquarters within the city limits.
The trio put together a list of 100 founders – from their poker buddy Starr Colby from Lockheed to quarterback Jim Plunkett, a former Stanford star who led the Raiders to the Super Bowl just months after the bank opened. He was a lawyer, not a banker, said McCloskey, who is 95 now and recovering from a stroke in the home he shares in the high-desert town of Madrid, N.M., with his wife, Helen. “But I think people who organized the bank felt my name and reputation would add dignity to the board because I have so many friends in the venture capital business.”
“Every Monday, I read the San Jose Mercury News classified from front to back,” he said. He would search employment ads for companies that mentioned start-ups, pre-IPOs or entrepreneurs, then drive to their offices and introduce himself.As the Valley evolved, those classified ads that once filled the newspaper would be usurped by online sites like Craigslist and Monster.com.
Over the next few years, the bank would open a Pacific Rim group to attract foreign investors and continue to grow through the dot-com boom into a new century. “Being in a startup culture in the valley, I’ve flown close to the sun on many occasions, with my companies teetering on the brink of success or failure, but I’ve never felt the stress that was involved with trying to make payroll when you had zero access to your cash,” said Mike Morgan, CFO at San Mateo data storage management start-up Cloudian.
Varun Badhwar, center, founder and CEO of Endor Labs, meets with employees in their office in downtown Palo Alto, Calif., on Monday, March 13, 2023. Badhwar managed to get his money out of Silicon Valley Bank before it failed.
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