Named 69th most powerful person in finance on the Worth 2015 Power 100
Q: How did you get your start at SVB?
A: I thought I wanted to do something in the corporate world, so I had an internship my junior year at IBM and worked in their accounting department. I realized that accounting—I was actually responsible for the cost accounting of a particular bolt that went into PCs—wasn’t that exciting. When I was out of college, I ended up working for a bank in Detroit. Two things happened. One, it was freezing cold in Detroit, and two, my manager came to me and said, “There’s a need for an associate in California for a short-term assignment. Would you be interested?”
I’d never been to California before and immediately said, “Sign me up.” The nine-month time limit came up—I extended a few months, and I basically said, “I’m not going back.”
You have cautioned that there may be a tech bubble. How do you prepare SVB, which is so deeply connected to the fortunes of Silicon Valley, to deal with it?
I’m not the person who’s saying there’s an imminent bubble. What I would say is valuations are high. But there’s a difference between saying valuations are high and the fundamental businesses shouldn’t be funded.
When I think about 1999–2000, two things happened. Companies raised a lot of money at high valuations, but then you looked at the underlying businesses and you said, “It just doesn’t make sense.”
You look at all of these companies that have raised more than $100 million in the second quarter, and they’re going after massive market opportunities—bigger than we’d ever seen back in the 1999–2000 time period.
That’s a big difference. But should the valuation still be $3 billion, $5 billion, $10 billion? That’s a big question. Because to grow into those valuations, you have to execute pretty flawlessly.
How does SVB protect itself against excessive valuations?
When we lend money, if a company has problems, we get repaid before equity investors do. We get a lower return, but we have less risk.
You’re also involved in banking in the wine industry. Where did that come from?
In the 1990s we kept paring down to become even more focused on technology and life sciences and venture capital. But there was this one piece left—the wine business.
We had good market share and it was a good business from a credit perspective. So we said, let’s just keep that.
It’s still a small part of the overall business, but it becomes both a really good business and a marketing connection to the technology side. We recently had a dinner for one of the law firms that’s focused on the technology market, and we had one of our winery clients join us to talk about their busi- ness and the wine. These are exclusive wineries. The winery gets access to clients that want to purchase their wine, and it benefits our technology ecosystem as well.
Whom would you pick as the most powerful person in finance?
Janet Yellen. Literally, every word that comes out of her mouth is interpreted in a way that has a dramatic impact on rates, which has a dramatic impact on the stock market.