Greg Becker on the Innovation Business (Podcast)

since two thousand and eleven. This is really a wide ranging and fascinating conversation for somebody who is right at the nexus of everything from venture capital to life sciences, to fintech, to you name it, but from the perspective of a commercial banker, really located at the bull's eye of the innovation economy, not just in the United States,

but for the entire world. I found this conversation to be absolutely fascinating, and I think you will also, with no further ado, my discussion with Silicon Valley Banks CEO Greg Becker. This is Mesters in Business with Very Redholts on Bloombird Radio. My extra special guest this week is Greg Becker. He is the president and CEO of Silicon Valley Bank, where he has worked since. Since two thousand and eleven, he has been running the place both as

CEO of SVB Financial Group and Silicon Valley Bank. Greg was named to Worth Magazine's Power one hundred most Influential People in Global Finance. Greg Becker, Welcome to Bloomberg. Thanks very great to be here. It's really great to have you here in doing this live in person. So when I look at Silicon Valley Bank, the question that comes into my head is is this a bank that does some venture capital or is this a VC that offers some banking services. Well, we are banking, so let's be

clear about that. We're a bank that caters to a very specific industry and then does a lot of things to support those companies in those industries. So it's about innovation companies all around the world. You start with him very early. We support them with commercial banking, private banking, and investment banking and asset management, so all those things fit together to help these innovation clients. So you've been with the bank since ninety three. What was your first

role there? How did you arrive at Silicon Valley Bank. Yeah, so I started out as a loan officer, so lending money to companies, and I came from another bank that worked with more traditional companies. My manager at the time was leaving to join Silicon Valley Bank and he encouraged me to join him, and I did, and it was phenomenon to an incredible, incredible career. But I started out lending money to early stage technology companies at Silicon Valley Bank.

Now that sounds like a very high risk sort of loan that typical banks don't make. How do you go about vetting a loan to a company that is brand new as a startup, doesn't have a long financial history. How does that process differ than traditional bank lending. Yeah, well it's changed a lot in twenty eight years. So when you think about it, um, way back when when I first started, the loans were much smaller. There were you know, does not have many these choices for these companies.

It was really lending money in a very i'll call it more conservative way than we do today. And venture capital. Those are the two ways that companies were financed. And then today, when you think about it, it's all about capital debt, lending money. It's about venture capital from all different sources and so how you go about lending money to these companies is it's really about pattern recognition. It's about understanding who the investors are, it's understanding what market

they're in. There's a whole series of things that we do, but we've been doing it for so long and adapting this lending capability that we've learned to do it really well and both safely but also in a way that it's hard for other people who do it. So you're there in the nineties, that was quite an exciting period when everything was just going up, up up. How did you handle the other side of that when when the dot COM's imploded? What was the bank doing? How bad

were losses and how did you manage them? Yes, so when I think back at that two thousand two thousand one time period, it was such an interesting time, and I described it as the highest of highs and the lowest of lows. And the beginning of two thousand, everything was going well. Everything was going well with our companies. They were growing so fast, they were getting started and going public within a few years. There was just such

a euphoria at that time period. And then very quickly, kind of March of that year, there was the Baron's article that came out, and all of a sudden everything changed and it went from everything was going well to everything was going poorly. And what was fascinating about that time? You know, it's actually my view it's the time when you built the best relationships. Going through difficult times with venture capitalists and companies. You found out who you were

as an institution. And so as much as I don't want to ever go back to that time period, there were a lot of good lessons learned that at that time period. But yeah, we took losses. It was challenging time for us. It took us a few years to get back into what i'll call a nice growth mode back in that kind of two thousand three, two thousand four. But I look back at it, finally I learned I learned a lot about the institution. I learned a lot about how to lend money, and I learned learned a

lot about how to build relationships at that time. And if I remember correctly, the the Barons article featured Howard Marks and was titled Amazon dot Bomb, is that the uh like January two thousand At that way, I couldn't remember what month it was. I was either I thought it was March, but well Mars was when the pre announcements began. I don't remember if it was Intel or Dell y t K pulled a lot of tech purchases forward.

So the first quarter was not surprisingly very light and at those high levels didn't take a lot to send that boulder down the hill. So so that turned out as difficult a period as it was, that turned out to be very formative, I don't know if that's the right word, but certainly valuable for the bank in its relationships with all the various players in Silicon Valley. It's the entrepreneurs, it's the vcs. Who else is in that ecology that that you had to deal with, Yeah, it's

all the professional service providers in the innovation business. So it's the lawyers, it's the accountants, and it's it's really during the difficult times is when you build your reputation, and that reputation then is what's going to carry you through that next leg of growth. I don't want to

go back to it. I can't say during the middle of it it was enjoyable, but again I do look back and say we learned so much and the relationships still to this day, are still I look back in some of my best relationships in the venture capital community were formed back in that time period working through difficult situations because you had to you had to work together to solve these problems, and it ended up being great from my career, ended up being great for the institution.

When did you see optimism start to return to early stage investment post dot com crash? It took a while. I took a while. I would say in two thousand and three, two thousand four, two thousand and five. It was not one thing was really a gradual. Year by year it kind of picked up, and I I can trust that Versus the financial crisis in oh eight oh nine, in the innovation space, there was really only a couple of quarters where it took a pretty steep drop and

then it basically rapidly increased. So two thousand and ten, two thousand and eleven, it was a much more steeper acceleration than it was back in two thousand two and two thousand and three. So I don't think people realized that they looked back at that time period that it was actually a better time to be investing in. So people invested more aggressively in the innovation space back in again two thousand and ten and two thousand eleven, and I think that was a good lesson. So you mentioned

the financial crisis of O eight oh nine. Obviously, from let's call it March two thousand to either October oh two or March oh three, that was very focused on technology and telecom. The financial crisis obviously was financially focused, but everything froze, credit markets froze, capital flows frozen. How did you guys manage through that? What was the impact of the financial crisis on the environment in Silicon Valley

relatively soon after the dot com crashed seven years later. Yeah, in the financial crisis, when I think about what happened, you know, we were impacted by it, and so we really were worried about how deep this was going to be and how long it was going to last. And so we started, we raised capital, we did a lot of things to be as protected as we could if this was going to last quite a long period of time.

But again, what we were surprised by. I was surprised by how fast investing in the innovation market picked up, how fast venture capital came back, And so we were bottoming out venture capital and annual basis was down in that kind of twenty billion billion dollars per year. Dropped pretty significantly to that level from from what how high was it before? The highest amount historically up until the last couple of years was a hundred billion dollars invested

in two thousand. It dropped off dramatically, and then it kind of worked its way back up and then dropped again in the financial crisis. And since the financial crisis it's gone, you know when from the billion dollars in the US, and it has been on this steady increase in the last few years. Has been truly incredible in comparison, last year was a hundred seventy billion dollars and this year already the first half the year has been a

hundred eighty billion dollars in the first half. So this year first half, first half, so it's been an incredible first half the year. So I've seen people make the claim that there's too much money floating around, that oldest capital sloshing around, finds its way to companies and ends up over paying, and you end up with things like we work last year and all the craziness with soft bank how do you look at the vast amount of

investable capital in the system. Have people become too focused on on early stage startups or or even pre I p O companies. I'm not one of those people, Berry, And it says that there's too much, too much liquidity out there, And and let me explain why. There's a few reasons. One is people look back to two thousand. I get that question a fair amount. Why it helped

me understand why this isn't just a repeat of two thousand. Well, when you go back and think about two thousand, I would first argue, the size of the market that companies are going after is probably I would historically say ten times bigger. I would actually say it's more like fifty sixty, seventy times bigger than the market was back then. And technology is in every part of what our daily lives

are all about. I would argue, when you think about the pandemic and our ability to get through this pandemic is a function of technology. So the zoom of the world and our ability to work remotely and all the different technologies that supported that. But let's also think about the healthcare, the vaccines and how rapidly they came to market with Madernay and others is because money was put into these companies in prior years. So the size of

the market is much much, much bigger. That's number number one. Number two, the markets these companies are going after is are so much larger in scale, right it would be companies would be building software for industries or for companies to sell to industries, and now they're building software to attack and completely disrupt entire industries. And you can see that in hotels and taxis and all the different industries.

So the size of the markets much bigger. So I look at this and say, billion dollars in the first half the year is a big number. I don't want to mistake that. But in the whole scheme of global money, it's still pretty small. So my view is, um, there's the liquidity is is actually okay given the size of the market. Let's start right with those two. What is the difference between s VB Financial Group and Silicon Valley Bank.

Not much of a difference. Overall this we have a holding company and that's the financial group, and underside the holding company we have activities such as investment banking and some of the investing that we do in venture capital firms and in technology and life science companies. That's done at our holding company. And then the bank itself, Silicon Valley Bank is nine percent of what we do as far as the publicly traded company. So they're very similar.

It's just what activities fit in which business. And you say Silicon Valley Bank, but you're not like a traditional bank. We were just talking about branches and tellers and things like that. That's not the sort of storefront you operate, is it. Now. We are a commercial bank predominantly, and that means that we work with companies. So companies again, you know, it's the startups that are being funded by

families and friends. You know, people have ideas and they're raising fifty a hundred thousand dollars and they're starting in business. But they're starting a business that is in software or the internet or in e commerce. It's in those industries we we support, and that's the business side of it, and we grow with them as they get larger and larger, and hopefully they go public they get larger lists on a NASADAC or they get listed on the New York

Stock Exchange. That's our models. So we don't have tellers, we don't have branches, because so much of this can be done virtually. And so when again, it helps when you know, when you have a tragedy like the pandemic occurring, you know we can still operate exactly as we had operated historically. So I noticed you sort of funds companies and bank with companies at different phases of their lifespan startup banking, venture funded, late stage. Let's let's start up

with what is SVB startup banking. Yeah, So weave it into our strategy overall because I think it's helpful in context. Our strategy is we want to bring companies in that are just getting started. So think about it like the top of the funnel. You want to bring in thousands of new companies each year, new companies that are being formed, and we're talking about six, seven, eight nine thousand new

companies per year. We support them with banking services, getting them off the ground, give them an advice, making connections to investors, making connections to their service providers, and then we tailor our products to them. As they raise their first round of venture capital financing, their second round of venture capital financing. We're lending them money in unique ways. Ventured debt could be acquisition financing all different products and services,

giving them FX capabilities as they go international. And then we support them with even greater capabilities as they go international and they go public and they're doing hundreds of millions of dollars of revenue. And so our our strategy is bring them in early and support them all throughout their life cycle as they get larger and larger. That's, in a in a nutshell, that's what our our strategy is.

And to do it not just in the US, but to do it globally, to do it in the UK, to do in Europe, to do it in China, to do it in Canada. And that's what we got to do. Work with the most innovative, the coolest companies in the entire world. So let's let's put some numbers on that of venture backed tech and life sciences company in the US Bank with you. That's a tremendous number. And then if we talk about those same sort of companies that

have gone I p O of them in bank with you. So, so you guys really seem to have cornered this market. What are you doing to protect that giant lead? Yeah, I definitely don't like the description cornered because that implies in some ways that there isn't competition and you don't have to wake up every day and kind of Andrew Groves quote only the paranoid survive, which is something we

certainly adhere to. You know, it starts with really being relentlessly focused on helping these companies at all stages figuring out what are the keys to their success. What I was talked to our team about, it's that one piece of advice, It's that one connection, It's that one piece of help that can make the difference between a company being successful and not being successful. And you have to think about that every single day. Is you engage with

and you work with our clients. And it makes sense that when you have teams of people at SVB, that this is all they do, work with companies that are in the healthcare industry, biotech companies or medical devices, or software or cyber software. That if they do that all day long and the next cybersecurity software walks in the door, their ability to point them in the right direction to make interactions or engagements or connections that makes such a

huge difference. And so we just have to keep thinking about that every single day, and that's you know, differentiating and it's also what's really a lot of fun. If you believe you have helped a company, you go home at night you feel pretty darn good that you've made a difference in a company that's changing something significant in the world, very impressive. Let's talk about later stage companies

and public companies. Do you offer a similar suite of services and and how different is that from the very early stage compan Yeah, it is, it is very different, um, but it is still again in that same commentary about helping them be successful, that's what the product said, is that's what the solutions are. That's where all the advice and connections. So we may bring, um, some CFOs together

or ceo s together. If a company is thinking about going public, well let's connect them with other c e o s who have gone through that process so they can get the advice about how to do that. Do you raise money before you go public or do you raise kind of all the money you need when you go public or after you go public? Giving that feedback and that experience to other people going through that same thing,

those connections are really, really, really valuable. But other things that are different, how much money you lend to them, the type of money it's acquisition financing. It could be large acquisition financing, it could be making introductions to pe firms who may want to take them private if they're public already. So it's a whole suite of solutions that

we give to these companies. And again I'll go back to what I said, that's the most important, that's the most fun part when you really do believe that you've made a difference in that company. Very interesting. Tell us a little bit about open Door. I love the story that everybody passed on them. What did you guys see in them? That was so unique? Part of companies like

an open door. And there's such a long list of companies that you put it, you know, put in that list that I think the biggest challenge for individuals to look at these companies and to really believe in them is to understand what they're going after. And it's very easy to say no, It's very easy to list all the challenges and the reasons that something may not work. It is much more difficult to be that optimistic point of view and to say what if, what if they're successful?

What if they're right, What if they actually go after this market? How big could this be? And then understanding again who investors are, understanding the management team and there and their dry for success. All those things are ingredients that really gives you that view of the potential for

that business. And that that's what I mean, Honestly, that's the most inspiring part of what I get to do as a CEO to see these companies, to understand where they're going, to listen to the CEOs and the c suites in these companies, to see where they want to go, where they want to go and what they want to build. UM is truly incredible And that's that's incredibly motivating to me, and I know it's incredibly motivating to our team. So

so let's stick with that. And before we describe how the open door investment worked out, people should be aware that the vast majority of venture investments don't pan out. This is a space where somewhere between sixty the companies UM never really get off the ground in in an appreciable way. How do you manage that risk and how do you make sure that whatever that relationship is, you're

not just burning through She at a horrifying rate. So there's the investment piece of these companies, and then there's the lending money to these companies. So the investing piece is you you have to have a few winners to make up for all the companies where they don't. They don't either realize their full potential or they outright fail.

So equity is very different than lending money. Lending money, you don't have to have as many winners to make up for the for the ones you lose money on, you do have a higher loss rate um, but because we as a senior lender in these loans, we get repaid first when you when a company goes out of business, we get repaid as the company's winding down. That has certain protections to us. So loss rates are still higher, but you can still underwrite them in a way that

is different than the equity investors do. We don't have the same upside and we don't have the same downside. On the lending side, if something doesn't work out and you're recapturing eight of the loan, that's a loss, but it's not a total right. You're not writing everything off right on the equity side, if it doesn't work out, that's take it down to zero. It usually means that you're gonna take it down to zero, you're gonna take

a complete loss. Yes, And at the end of the open Door investment, you guys were the only ones who were willing to make that equity investment in open door, and ultimately they end up going public with a spack. It's a giant winner for everybody involved. That has to give you a lot of confidence that, Hey, our due diligence process and our ability to both lend and make equity investments seems to be finding the right companies. So the equity investors in that deal, we weren't the only

equity were the only investor. In fact, we were lending money to them. But the equity investors did very well. Don't you get warrants on a lot of these small companies when you're one of the early investors as well. Yeah, but it's it uries a really interesting distinction between equity investing where you get, um, you're putting in tens of millions of dollars and you're getting right when you're lending money. Think about it almost like getting a few stock options.

So for the upside, it offsets some of the losses that you will take over time in the portfolio. But it's it's mainly it's a small amount of stock. When a company is really successful, though it can still add up to a lot of a lot of money, and so we've seen that especially last year and this year.

The warrant gains that we've had have been substantial. But the reason it's more challenging is that when things are going really well, you have really low credit losses and your warrant gains are also doing really well, it looks really easy. When the markets more challenging, your warrant gains are non existent. You could be even losing money on your warrants right and you could be having a higher rite off rate. So it is it is more cyclical

up and down than people would believe. So you you really have to think about this under a long term strategy. Companies these days are staying private for much longer. Tell us a little bit about your partnership with NASDAK to help bring some liquidity to pre I p O startups. Let me give a little more context to be able to answer the question better. Um, So, the big difference between private companies and public companies is access to information.

They are. They're very very very very different as far as what is known about a private company and what's not about a public company. Public companies you know all the information, it's all you know. We all have access to the same information and knowledge. Um it's you know, very small margins on trading and all those things. Private companies, by definition, it's more opaque. It's more unknown about their

financials and what's going on. So buying and selling private stock, if you could even find some, has been a historical challenge. What happens is the companies stay private longer. Right, The issue for investors, the issues for the employees that are

part of that company. You may have made on paper a lot of money, but you may not be able to get any liquidity, and so you have to figure out a way how can you keep these companies private longer to build additional wealth and still provide liquidity to the investors and still probably liquidity to the employees. One way to do it is to create an exchange in exchange for private company shares, and that's what Nastick Private

Market has been doing. Historically, they've done more than thirty billion dollars of trading in private shares and what we wanted to do pulling together this group. So it's Nasdeck, it's ourselves, it's Goldman, Morgan, Stanley, and City is basically a consortium that comes together that all brings something valuable to create a private exchange that is bigger, bolder, is more accessible to investors on the issuer side and on the investors side. And that's really what this is about,

and that's why we're excited to be working together. So obviously it's a private exchange. It's not open to the public. How big of a market is this? How big can it get? And who are the buyers and sellers in this private market? These sellers are the issuers are really the vast majority of private companies that have raised maybe it's a series C round D round, so they're they're more mature. They may be doing fifty million, two hundred million dollars in revenue right um, and so they may

be two, three, four years away from going public. And those companies wanted, you know, maybe they've been around for eight years, nine years, ten years, so they want to provide liquidity for early investors or for employees. So there's the issue where side of it. So it's a big market.

The issue where a side is a big market. On the other side is the buyers, right, So the investors, it will mostly be the institutional and mostly be the ones who are maybe coming into invest in these businesses once they become public and they want to participate two or three years earlier while they're still private. So a lot of the investors will be the same investors. But you can see family offices, you could see some accredited

investors participating in that. And so it is a big market on both sides, and that's why we were excited to participate um in this new joint venture with Nasdak and the other investment banks. And the assumption is when you're buying pre i p O shares, you're getting a discount from not only a couple of years of growth, but what the I p O valuation might be. It depends. Sometimes you'll be getting a discount and sometimes the valuation

may go the other way. Right. It's just when people ask me the question about it almost makes it seem like you're guaranteed to make money because you're investing before a company goes public, and obviously or guarantee is always so loaded. Yeah, it's so it just doesn't work that way, right, It's but it's like when you buy a public stock. When you buy a public stock, you make an assumption about that stock. You believe it has upside and it will go up. Every stock that you invest in Bury

does it always go up? Is every single but not for the average actually actually for everybody for the past couple of years, it's gone up. But that's not what happens in the real world over longer periods of time. And look, it was only a year ago we watched we Work implode after a pretty rich uprounds. So maybe it's not that extreme of an example, but there's no reason to think that a successful C round or D round company can have things go off the rails and

the next round is appreciably lower. You asked me a question earlier in the discussion about you know, how do we deal with this high loss rate? Remember, I mean, even if they get to a later stage, a series C or D round, and they are doing fifty million dollars in revenue, it doesn't mean they may not struggle. It doesn't mean that there they may not go out of business. They still may go out of business. So

it's still it's a higher risk. You're just trying to give information and accessibility to these private companies so people can participate in it, institutions and individuals, and that's what's unique about it and that's what we're excited about. So, so you mentioned how much information is available for public companies. How do you go about doing your due diligence on private companies where you can't just sit at a Bloomberg terminal or punch something into Google and find everything there

is to find out about a company. What is that process like and how much energy and time and capital do you invest in it? Yeah, well, it is a function of a couple things, right. One is has to be the private company and what they're willing to share, and then the buyer takes that information and they marry it with any comparables that you can make in the public market, and then you make assumptions. Right, That's why

it's it is more difficult. Right, it will not be ever be as transparent, as clear and with information accessible the way a public market is. That's why that is still a private market. But you should be able to make certain assumptions. So let's say if it's as sassed assass enterprise software company. Well, even if it's private, you have public comps that you then can apply based on the industry, the market where it's going, growth rates, all those things. So you know, yeah, you have to do

work as an investor. But it's not you know, it's not as if there won't be comparisons out there that you can make in judgment that you can make in order to make your assessment whether it's a good investment or not. So I'm doing my research preparing for this conversation, and I start working my way back through some of Silicon Valley banks early relationships. They were Cisco's first bank, I know the relationships with Apple, Intel. Tell us about some of the history and some of the companies s

VB has worked with. Yeah, well, i'll give you some of the history. I was not here at the time, but I'll tell you the story that goes along with it. One of our co founders, a gentleman named Bill bigger Staff. The story goes that when the two individuals that formed Cisco started the company, that he had um given them alone, and he actually went to their house to actually give them a very very small a loan to help them, um so the capital plus that loan got them started.

So that's that's one of of many stories and kind of our in our history books that we like to certainly um reference and and given another story is that one of the first acquisitions, if not the first acquisitions that Cisco did, was one of my first clients when I was a junior banker at at SVB called Crescendo, and John Chambers and I, who know each other, we were talking about that that story, and it was a great acquisition for them, it was a great client of mine,

and it just it's again it's one of the great things about the institution where you can go back and look in history about these amazing, iconic companies that we were part of at the beginning, and that's it's just a it's a great thrill to look back at that. So so given that amazing history and and all these now giant names, SVB has been kind of low key.

And I don't know if media shy is the right word because you're here doing this, but certainly you guys don't advertise, you're not in the paper all the time. You tend to be pretty low key. What's the thinking behind that? Yeah, Well, from an advertising perspective, I mean when I think of advertising, that's mostly for consumers, consumers, consumer brands, and and that's not who we are. Um

we are. We work with companies, we work with venture capitalists, we work it with you know, the healthcare space to life science and where we spend time, and it's really it's about relationships and making sure we're top of mind with them. We're spending time with those individuals, spending time with the venture capitalists, We're spending time with the entrepreneurs. That's where our teams of people are and will sponsor things, will host events, will create events around that. But it's

not it's not in mainstream. It's becoming more popular, it's becoming more top of mind for individuals, but historically it has been more low key. To use your your word. So so let's let's stay with the organization. Guys are publicly traded. You're the CEO. How did you manage the organization? How did you run things during the pandemic when everyone

was forced to work from home. Well, the simple way to describe it is make sure if you're going to go through something like that, you've got a really good team of people, and it starts with that, and no CEO is making all the calls. No CEO is you know, using just their own thinking, their own decision making process. And so number one start with a great team, which we we had. And so as we started to assess the situation, it was thinking about our employees first and

thinking about our clients and shareholders. While important, always important. When to make that note, UM, you got to focus on the first two things. And so when we thought about employees, it was how fast we can make sure that we're taking care of them and protecting them. So we went very quickly from a remote perspective, making sure we were supporting them with home office, home technology capabilities so they could do what they needed to do UM

and also take care of their families. That was first and foremost. The second thing was taking care of our clients. So when you see a shock like that, they're worried about. I don't know what's going to happen next. My crystal ball becomes very cloudy. I what I don't want to have to deal with is my banking partner kind of ringing up the phone or call him or emailing me saying, hey, your loan payback your loan or we're worried about this.

So we give our clients a lot of flexibility and we're paying our loans, holding off on making payments because we said, we're in this together. This isn't your fault. You didn't do this, and so we should be working together to solve this problem, to get through this. And I look back at that and A it was absolutely the right call and be we got a lot of great feedback from our clients and how supportive we were

for them and how important that was to them. And as a CEO, you know, there's no better feeling than getting those positive comments from your clients that you really took care of them. And the same thing is true with employees. So UM, I think we weathered the storm really well. And and again our target market, this innovation economy, bounced back so quickly, UM that we were fortunate to

be in the right space as well. So here in New York there's drumbeat from a lot of big companies want to see their staffers back in the office, but there's a little resistance. Some of it is bi sector, some of it is generational. What are your plans for let's talk in the fall. Does everybody come back to office? Is it a little more of a hybrid situation? What what are the plans for a Silicon Valley bank post pandemic?

If I can dare use that phrase, Yeah, I think first it goes back to what I just said, which is you gotta take care of your employees first, right, safety is the most important thing. And as much as we want to get back together, we want to socialize, we want to connect um, we want to make sure that people are safe and there isn't you know, in an impact on their on their families as well, and so we we need to be first sensitive to that.

So what we're doing right now is we're doing some trials, um testing things out, bringing some people back, seeing how it operates, seeing what technology we need to adapt to in this new flexible environment which we're going to. So we want to make sure that first and foremost are employees are safe. Second part is that they're taking care of our clients and they've done a great job during the pandemic. No reason to think that it's going to slow down and they won't continue to do a great

job for our clients. But it's really the combination of those two things, and so we're doing a lot of surveys listening to our luis, and what our employees want is they want flexibility. And so the future of work at s VB will be to provide a more flexible work environment. We're redoing a lot of our offices to create more flexibility. We're allowing more UM support to have them build their home offices so they can work from home.

So I think we're gonna have a lot of people that are gonna be UM coming in a few days a week, but the vast majority will not be coming in UM five days a week. We think it's better for our employees and we think it's better for our clients. That's interesting. I'm I'm kind of fascinated by let's talk sector by sector. A lot of finance was able to work remotely. A lot of technology was able to work remotely. There are certain businesses travel, entertainment, hospitality that physically have

to be be there. You're doing a little bit of business travel. You're here in New York from California. What do you see as you travel around the country. Is California, because of the tech heaviness, more open to a hybrid model. What what are you seeing from your perspective. Yeah, I think technology companies are definitely more open to hybrid They're much more open to working remotely, They're more open to

being flexible. Part of it is is that you know you have a skill, a contribution that can be made, and if it's computer programmers or UM sales support or whatever you want to call it, that you can be more more remote. The more business or industry has an apprentice model, the more being in person like that's going to be even more important. So it it depends upon what the needs are of the of the business. So technology companies, by definition, are going to be more more flexible.

We're we're somewhere in in between. We're not we're somewhat of an apprentice model, We're not a full apprentice model. So we can be in that middle ground of not requiring everyone to be back, but also now having everybody be flexible wherever they want to work. And I think that's going to be the right balance. So I think of Silicon Valley as a place, but if you have a lot of people working remote, well, there's really no

latency difference between Colorado and Palo Alto. Do you run the risk of losing that nexus of intellectual capital all in in one place, if people are scattered to the four winds and don't have to be in on a regular basis. So I'll break that apart to two answers. One is the technology in the life science industry, and then I'll just speak for for our business on the technical life science area. Silicon Valley has been for years of people have said, oh, his Silicon Valley going to

fall apart. It's expensive, it's all these things are going to be more of a challenge, and other markets are going to pick up the pace and be more competitive. And my view is while other markets are going to do better than they have historically, right New York and Atlanta and Chicago and Denver and Austin and Seattle are going to continue to do better, it's not going to be at the expense of Silicon Valley. Silicon Valley, from

my standpoint, will continue to thrive. It will still be, at least for my lifetime, I believe, the innovation capital of the world. But innovation is everywhere, and so it makes sense that these other markets are going to still do really well. They're still gonna get more innovation jobs innovation companies in those markets, and so I believe kind of all boats will rise, not It's not going to be a zero sum game the way I think too many people think about. For our business, we do have

a lot of interaction. We do have offices all over the country, and so we want to make sure our people are close to those hubs so when they do come in that they have access to engaging with our other teammates that allow them to learn and develop and build relationships and all those things. So that's one thing.

The second thing is if you're a client facing individual, you obviously have to be in the market where your clients are, and so that that isn't going to change if your if your clients are in northern California, you can't live in Nashville, you can't live in you know, Austin, Texas, if your clients are in the Bay Area. So that obviously is one important important function, but we believe it's a it's a balance of apprenticeship as well as um

you can do things remote as well. Let's talk a little bit about fintech since that covers a little bit of both the areas that you guys play in it's obviously been a huge area of growth over the past decade. What are you doing to stay ahead of the curve? How do you make sure after helping all these disruptive

companies that you yourself don't get disrupted. Yeah, I'd say it's it's both a blessing and I wouldn't call it a curse, But I would say a blessing and a challenge to be so close to the innovation UH market and these fintech companies, because you see how fast grow, you see how fast they adapt, and so there's a there's a paranoid part about that, But I think that helps us as an institution realize that we have to keep pressing ahead, that we have to be bold, that

we can't wait for things to happen, that we need to try new things. We have an innovation team, We're investing in new businesses. Maybe it can't be part of our core competency inside SVB, but we can invest in those businesses and provide those solutions to our clients. So I believe it's actually we can benefit from it, and we can benefit from it in a business, but we can also benefit it in supporting our clients because we know, we have to innovate, So yeah, we spent a lot

of time. We have a national fintech practice and so we work with many, many, many fintech companies and support them in payments, We support them in warehouse lending when they're trying to do loans themselves to consumers or loans to small business. Um. So we support them in a variety of different ways, and kind of every day that goes by, we're figuring about what's the next thing we can do to support them. Let me real curve ble at you a little bit. WINEMI and wine business. Why

is Silicon Valley Bank. I know you work with life science and clean tech and venture capital. How does wine fit into that business other than the proximity of NAPA

and Sonoma so to where you guys are. Yeah, maybe I could claim it's a life science connection because it's all the health benefits, but it's actually a historical in the sense when the bank was first formed back in the early eighties, we did some innovation, so whatever technology was back then in the in the eighties, semi connector companies and some networking companies, and then we did general commercial industries and real estate, and then we also did

some you know, private banking back at that time as well, and so over time, when we were doing commercial industries, we're doing commercial real estate. What we realized is that maybe we weren't as good as we thought we were at it, and so the real estate crisis in the late eighties and the early nineties, we said, maybe that's not something we should be doing. But we're pretty good

at this technology stuff. So what happened is we kept whittling down what we are really good at until we ended up in the late nineties of technology and life sciences, and we had this one business, Premium Wines and NAPA and Sonoma, and it was a really good business. But with the other benefit to it is actually it's great

marketing and it's great connectivity. And if relationship building is so important as it is, you can leverage those clients, those winemakers, and those relationships and you can create connectivity across your client base in a really unique way. So we said, it's a great business that makes the rest of the business better, so let's keep it. And it's been it's been really nice to have and we host events up a NAP and Sonoma and we help those winery clients um sell more of their product to our

technology and innovation clients. And so there's a really good match between the two. That makes a whole lot of sense. And I am a giant fan of Napa Valley cabs that they come visit, come out um. Now that traveling is reopening, it's absolutely on my uh A list of things to do. As much as everybody claims to hate business travel, you miss occasionally getting out on a on a trip like that. The last conference I was in in San Francisco ended with a bunch of us heading

up to Napa for a couple of days. And you know, after three days of panels and that sort of stuff, it was a great break. It's a little bit too long of a flight to just go for a conference for a couple of days, so it became something fun. I could see how having Sonoma, Napa Valley in your backyard is a great multiplier for all the other businesses.

How that connection and and much like we have in healthcare and technology and software and all those industries, we have experts that this is what they do kind of twenty four by seven our wine group, they're experts in this industry. They really are are viewed as being the smartest people in understanding these industries, and and that's the way are we approached investment banking. That's where we approach

private banking. We want to be the best, the best people, the most knowledgeable people in giving advice in the industries that we serve. And I think the Wine Group is just another example of that. SVBS reputation is that it understands startups like very few banking institutions. Those relationships are a giant advantage that that you've had for a while. How long can you maintain this lead? Is this something that's specific to you? What are you doing to stay competitive?

As more and more financial institutions look at Silicon Vali and say we want to muscle our ways into that space. I look at it this way, Barry. You can take a defensive posture, or you can take an offensive posture. We are taking an offensive posture, meaning the way east keep our relationships, the way we continue to do what we're doing is you don't look back and say, what can we hold back from our clients? What can we how do we create more of a moat around them?

It is actually you end up doing a better job of providing one stop shopping all the products and services, so you go. It's like, the reason we did the acquisition of of Living Partners and we're building out our investment bank is to add more value to our clients. The reason we acquired Boston Private was to add more private banking and wealth management capabilities. The reason we acquired West River Group is to make sure we can lend even greater sums of money and higher risk type of

lending to them. All those things are My view is you could say it's being defensive. I don't view it as being defensive. VIEWS view it as being on the offense to take care of our clients, no matter how big they get, no matter whatever they need. From a financial solutions perspective, we want to be there for them, and I think we have to think about that every single day. We can't take our relationships for granted. We

have to win those relationships back every single day. And if every employee thinks that way, that's where I think we're gonna continue to be um the winning solution for these companies. That sounds really like like the right strategy. I know I only have you for a few more moments, so Let's jump to our favorite questions that we asked all of our guests, starting with tell us what you're streaming these days? Give us your favorite Netflix or Amazon Prime,

whatever is keeping you entertained. Two things. One, Ted Lasso love that show. I'm glad it came back for a season two. It's just it's such a great storyline and it's so funny. It's that's awesome. The second one, during COVID, my wife and I and family, we watch a ton of anything David Adenborough, Anything David Adenburgh about you know, the Earth and climate and you know it's the ocean.

I mean, it's the visual part and the just how fortunate we are to have the earth that we have and how we all need to do a better job of protecting it. Those are the two biggest things that we we stream. I'm trying to I'm googling while we speak, trying to look up the name of the newest show that he just came out with, and I'm drawing a blank on it. It was it Life on Earth Again, Life on Our Planet phenomenal. He has like the perfect

voice for narrating that sort of stuff. I'm a big fan as well, So tell us about your early mentors who helped to shape your career. Yeah, it's you know, being in in financial services as long as I have been UM and being at SVB for twenty eight years, a lot of my mentors have been here at at SVB. And actually one that was even before that. So Mark Arrissimo was an individual that I managed. I were with UM at another bank before I joined Silicon Valley Bank,

and he's the individual that brought me over. You know. Mark was great about you know, basically inspiring you to think differently, inspiring you to to just kind of try new things, and giving you the autonomy, giving the responsibility to fail. It's okay if you fail, what did you learn from your failure? And so Mark was one, Uh my predecessor, um Ken Wilcox. Um would definitely be a second mentor in addition to giving me incredible opportunities which

I greatly appreciate. Uh, he was so um. What was so important to him was leadership principles, and he taught leadership principles to me, taught leadership principles to the rest of the executive team about casting your shadow and how important that is about decision making process. All these things that even to this day, UM, I think of out maybe not on a daily basis, but I think about on a regular basis. And so UM clearly he was inspirational.

And the last person UM was a gentleman named Bob Samuels who was an executive coach of mine for a number of years. I learned a lot from Bob, but the one thing in particular was how important empathy is, how important empathy is to understand clients, how important empathy is to understand the people you work with, understand kind of everyone else, and you know, not faulting people when they have when of a certain point of view, because that's how they feel. And you can't take away how

people feel about something that's what they own. And understanding that and being empathetic to that really allows you to connect with people. And my view is in a very different way. So those are a few of the many mentors that I have had over the years that have really helped shape my career. Let's talk about everybody's favorite question books. Tell us some of your favorites and what

are you reading right now? Yeah? The one I described to our team at the bank UH for many many years, is this a book called The Boys in the Boat and it's actually timely because of the Olympics being around, and it's a set back on the I want to say the thirties and the forties, and it was a team up in Seattle and it was this individual who came from nowhere and working together as a team in the eight person's Skull to winning the Olympics in Germany.

And it's about teamwork. It is about um, the feeling when you're part of a great team, how important that is and how impactful it can be. So that that's a great That's a great book. Other books that I've I've read recently the Pacific War nineteen forty one to ninety five. And the most recent one which kind of fits into that same genre, is a book called two thousand thirty four and it's about a future war between the US and China and how bad decisions, small bad

decisions can create some thing very significant. You know to me that the war books are about strategy, it's about tactics, it's about human nature, um and in lessons that we can all learn from them. So those are a few of the things that I've been I have read UM that I like and I've been read read recently quite interesting. What sort of advice would you give to a recent college grad who was interested in a career in either

banking or lending or venture investor. Yeah, I would just say advice in general, and I'll talk about advice and banking and finance. And first of all, I gets an incredible career. I think anytime you can really understand how businesses operate and get exposed to a variety of different businesses the way, um you know, commercial bankers do, the way investment bankers do, I think that's an incredible skill.

It's incredible knowledge to be gained, and it will allow you to be successful in my view, no matter what you're doing. If you want to stay is at it as a career, or if you want to leave that as a career and then go into a business where maybe you're a CFO or you're a finance person. I think all those things are are great to learn, So I would I wouldn't say less about lessons on that part. I would say it is a great career. So if you get a chance, you know, go for it, do it.

I don't think you'll be disappointed. Advice in general, that I give to college grads, and I've got I've got two kids that have just graduated from college of the last couple of years, and I have three kids in college. And so UM, I do spend a lot of time thinking about about this and and talking about it. Whether they take my advice or not, I don't know, but I certainly am happy to share it. So one is

I think too many college kids when they graduate. I think that they're going from this place of happiness and joy in college too. I'm going to work for the rest of my life and it's going to be miserable. And my biggest piece of advice is if you don't find joy in what you do in your career, right,

you got to change your mind around there. I know when I first got out, I loved doing what I did because the people I got to meet and the lessons that I learned and understanding how different businesses work, and to me, that was incredibly exciting and stimulating. So the first thing is find joy in what you do. You may do it for a long period of time, but it's not forever, and you're gonna learn things are gonna be great, stimulating, motivating, UM. And so that's number

that's number one. The second thing is to um realize that it's not supposed to be easy. If you got took a job and it's easy, you're probably a not working hard enough or B. Well that's probably the main the main, the main thing, or you're setting your bar too low. Right. You should be thinking about something that's going to stimulate you and challenge you, challenge you more. So, It's not supposed to be easy, So get over it and go back to point number one. Still find joy

in what you do. The third one fits into that same vein as well, which is b curious. Um Again, the most frustrating thing that I see with with with people when they don't want to understand, when they don't ask questions, but they don't want to find out kind of things of like how things operate and how things work. And the last part I would say is advice I

would give is be part of a great team. I know when I look back in the best parts of my career, it has always been being part of a team of people that are not competing with each other, but that are working together to compete externally to drive a business forward. That has always been incredibly motivating, stimulating and inspiring to me. And so I encourage college grads to find that team where they're going to be inspired.

Quite quite interesting. And our final question, what do you know about the world of banking and startups and investing today that you wish you knew back in nine when you first joined Silicon Valley Bank. Yeah. Probably probably the biggest thing, and I think it's hard until you've gone through cycles is to realize that, um, the challenges, they will come up. You'll learn from those challenges, but they're

gonna be over a lot faster than you think. You get so caught up in how challenging or how big of an issue it is, you'll get past it. So don't stress out as much as you do when those challenges occur. You will get you will get through it, You'll be better off and things will be okay. That's terrific stuff. Thank you, Greg for being so generous with your time. We have been speaking with Greg Becker. He

is the CEO of Silicon Valley Bank. If you enjoy this conversation, well be sure and check out our podcast extras. Will we keep the tape rolling and continue discussing all things venture and banking related. You can find those at iTunes, Spotify, wherever you find your favorite podcasts. We love your comments, feedback and suggestions right to us at M I B Podcast at Bloomberg dot net. Sign up for my daily reads at Ridholtz dot com. Check out my weekly column

on Bloomberg at Bloomberg dot com slash Opinion. Follow me on Twitter at Ritholtz. I would be rumiss if I did not thank the crack team that helps put these conversations together each week. My audio engineer is maroufal Paris Wald is my producer. Michael Batnick is my researcher. I'm Barry Riholtz. You've been listening to Masters in Business on Bloomberg Radio.