Silicon Valley And Our Wicked Walls of Resistance

The lightning-fast demise of Silicon Valley Bank (SVB) is a modern-day whodunnit because it’s not so much about information – the classic ‘who knew what when’ – but about the movement of information and its accompanying effects.

Who did what when, and why? Those are the questions to ask about how the 16^th largest bank in the United States could go from stable to shuttered in 48 hours.

It’s not the first, nor will it be the last organization caught off guard by the speed and mobility of opposition forces.

That’s the reality of a world of networks; we often don’t see our Wicked Walls of Resistance until it’s too late.

SVB executives certainly didn’t.

Most of the commentary I’ve read tells a similar story: investing depositors’ capital in long-held Treasury bonds rather than a diversified short-term portfolio was a horrible business decision, and SVB executives waited too long to fix the problem.

However, they did have a plan to fix it and keep chugging – but only if depositors kept faith with SVB and agreed to give executives time to implement the plan.

It wasn’t an unreasonable request. For over 40 years, SVB was the bank of choice for Silicon Valley, counting as its customers close to half of all US venture-backed companies. So Bank executives might have reasonably thought they’d built up enough trust and goodwill over the years to get buy-in for their corrective action.

On the evening of Friday, March 10^th, after the bank was placed in receivership by the Federal Deposit Insurance Corporation, 110 venture capital investors – no small number – issued a shared letter of support for SVB.

“In the event that SVB were to be purchased and appropriately capitalized,” they wrote, “we would be strongly supportive and encourage our portfolio companies to resume their banking relationship.”

Today the number of signatories sits at 687 and might have more, but the originators of the letter stopped accepting new signatories on March 21^st “due to volume of emails.”

Some of those signatories have publicly chastised their VC peers, such as Peter Thiel’s Founders Fund and Y Combinator, for advising portfolio companies to pull their funds from the bank, causing the run.

Split opinions, a weaker-than-expected institution, and an assumption of trust and fidelity that wasn’t actually there: these are the hallmarks of the Wicked Wall of Resistance, a common and pernicious barrier on the path to deep, systemic change.

Like so much in our current reality, it is a byproduct of living and working in a world constructed of networks which follow these three rules.

1. Power is dispersed. There is no central authority entirely in control.
2. There are multiple pathways for the exchange of resources, most notably money, people, information and ideas. This is the everything, everywhere, all at once effect; no one centralizing force commands our attention or loyalty.
3. Those resources can travel in small packets, or groups, and come together to form a larger force, or movement, in one part of the network without the permission or knowledge of others in the network. That’s how Wicked Walls of Resistance can appear fully formed, seemingly out of nowhere; they were created in a part of the network that others in the network either ignore, don’t have access to, or simply don’t know exists. 

While a Wicked Wall of Resistance can appear quickly, its construction happens over time, built brick by brick by Wicked Gaps of Awareness.

There are four types of Gaps of Awareness, and the further you build your movement, the wider these gaps grow. 

1. People don’t know, see, or trust the problem. If that’s the case, you have a lot of work to do because it means you’re alone in thinking there’s a big problem to solve.  
2. People don’t know, see, or trust possible solutions. This is where cultural apathy lives. When you try to convince people that a solution exists, they don’t believe it is possible. “We’ve tried it before,” they might say, or “that’s a problem we will never solve.”  
3. People don’t know, see, or trust the talent and expertise available to solve the problem. People doubt you have the talent and expertise or don’t believe you can assemble the right people. This gap of awareness can be very frustrating and hurtful because it means you don’t have the trust you thought you had.
4. People don’t know, see, or trust the path forward. In this case, something’s lost in translation. Your solution might be too complicated, too self-interested or too vague to win the support of others. My Talking to Humans exercise can help alleviate this Wicked Gap because these conversations will give you the language to present your solutions through a shared benefits lens. 

Wicked Walls of Resistance are created when these four Wicked Gaps of Awareness are left untended. 

The key is to identify the Wicked Gaps of Awareness and address them before they have a chance to scale.

That means actively scanning your network for split opinions, strengthening your organization’s weak spots vulnerable to criticism, and investing in relationships that secure trust and fidelity.

So when the going gets tough, your network runs towards you rather than away.