As the dust settles on the failure of Silicon Valley Bank (SVB), ground zero might turn out to be a one-two punch of mishandled communications. First, there was a newsletter circulated by venture capitalists that may have begun an erosion of confidence. Second, TechCrunch reporter Connie Loizos called out its "convoluted press release that was received so badly that it was almost comical."
When reviewing the SVB failure from a public relations lens, several missed opportunities are readily apparent.
Dig Into Your Mentions
A developing theory suggests that the panic can be traced back to the aforementioned email newsletter, The Diff, by Byrne Hobart, and an accompanying tweet.
The Twitter storm that ensued secured 3.5 million views and 380 retweets. Nearly every VC in Silicon Valley reads this newsletter. Had SVB been monitoring mentions like this more closely, they might have taken extra steps to release its March 8 press release more strategically.
Keep the Layman in Mind
The press release is truly awful. It assumes the reader is well-versed in the financial markets and offers no context for why the company is taking the actions it outlines. With some thought, this release could have laid the foundation for a message that would have demonstrated stability and evoked confidence.
It's common for investor relations announcements to be dry and full of regulatory language. However, for something as critical as the March 8 announcement, SVB should have considered what implications the press release might have on depositors. This was their chance to set the context of the news and assuage of concerns surrounding public confidence in the firm.
Press releases are the first opportunity for companies to ensure people think what they want them to think. This is known as "messaging pull-through." The release sets the information's tone and foundation and how to frame it. Of course, people will think whatever they want to, but at least the release should have set a foundation that is beneficial to the company.
The Right Timing
The timing of the announcement was as unlucky as it was unfortunate. There may have been a material reason SVB chose to post its news announcement on a Wednesday afternoon, minutes before the Silvergate Bank liquidation announcement, that probably accelerated speculation on the health of SVB. Maybe they had no choice in the timing.
That said, suppose that the plans for the new stock offerings were in the works for a few days, at least. In that case, SVB could have planned to strategically release the news to give the bank the best chances of controlling the narrative and preventing panic. This could have been done by offering an exclusive interview to a friendly reporter. The resulting news article might have conveyed the information in a way that offered neutral reporting, with the implied message that SVB was doing this to be conservative and ensure the company's health.
The company could have posted its press release at the same time as the news article went out. In addition, SVB could have held a press conference on Zoom immediately after the news was live to convey these messages calmly and orderly to their stakeholders.
The strategy around the March 9 Zoom call was likely rushed, yet it's hard to believe there wasn’t time for at least a short FAQ of messaging for SVB’s former CEO Greg Becker to follow.
No one wants to hear your banker tell you not to panic. Most PR professionals would have stressed to Becker that under no circumstances should he use that word, because uttering it affirms what people are already feeling. At the very least, he should have gone into that call armed with a list of other ways to encourage people on the call to remain confident in the firm.
Additionally, there was no opportunity for people to ask questions. CEOs frequently want to hold press conferences and control what's said by not taking questions, even from friendly reporters. However, through careful backend moderation of the Q&A portion of a press conference, companies can show they have confidence in their news and make the CEO instantly relatable and trustable.
Obviously, being willing to take the questions does not guarantee that things would have gone differently for SVB. Still, it could have allowed them to present the firm more humanely and more connected to its community of stakeholders.
The First Social Media Bank Run
When it comes to public perception, there's only so much a company can do to control it. In the case of SVB, panic rose swiftly. As of this writing, it remains to be seen how much contagion the banking sector will experience.
Maintaining a positive perception of a brand is paramount for any company, especially when the firm’s health relies on its customers feeling safe. It’s clear SVB’s leadership neglected to consider the emotional implications of their press activities. Had they led with more emotional intelligence, perhaps they could have slowed down events enough to give regulators an opportunity to find the firm a buyer. Perhaps the bank run could have been decelerated. Perhaps the news of SVB’s troubles would have remained a nascent topic of discussion in startup circles, and not a glaring red flag warning people worldwide that more banking troubles might follow.