Well you uh just saw this special report In the president uh speaking about the Plans in place uh to secure the money That has been put in the Silicon um bank I think that you know when he said when When uh when sorry now I'm having kind Of many many things to think about but The issue with this bank is that the Primary customers were startups and Startups don't have a lot of money they Take their money in and out quite Frequently and so it's not like a this Is a bank that serviced me and you Um to that point I want to bring in an Owner of a startup let's bring in Alex Uh meshkin now he is the co-founder and CEO of a health care startup called flow Health he's been unable to pay his Employees because of his payroll Provider uh is a client of the Silicon Valley Bank so it's like a couple Degrees of Separation there let us talk A little bit about your take on President Biden's remarks he says that The money in that bank for the customers That's going to be safe for the Investors no such luck Yeah so I mean obviously for the Technology Community First of all thanks For having me Um for the technology Community this is A you know a big win for the short term You know companies have access uh to Their funds they can make payroll and
Continue to operate Um our business actually didn't bank With Silicon Valley Bank just our Payroll provider did so we were very Unfortunate to be caught up in this Situation our employees were not able to Be paid on time on Friday we have Resolved the situation and by this Morning everyone will be paid all Thousand employees Um but there's a lot of hidden risks for All different types of businesses Beyond Startups I mean we're mostly we're a Healthcare company we are a medical lab Um that often you know has a lot of Technology that enables our service but You know we're a critical service Provider for many companies around the Country especially still in the coveted Pandemic and media companies like TV and Film Production rely on us every single Day and so having our employees be paid We're 24 7 operation Um you know and being caught up in this Failure is you know unfortunate but you Know I think the concern is Silicon Valley bank is probably not the only Bank to be facing the challenge right Now in the overall environment about a Lot of banks are scrambling to hope this Doesn't happen in in their wake Alex Explain when you knew something was Wrong that moment and what the response Was from your employees
So actually Thursday I was very well Aware of the Silicon Valley Bank Situation speaking with uh my financial Institutions On Friday morning the head of my HR Department calls me and as like an FYI Says payroll is going to be delayed Because Rippling our payroll provider Has an operational issue with their back Immediately I knew Um that it had to be connected to the Silicon Valley Bank and so I had some Very colorful words and said we're in Trouble our employees are not going to Be paid today and so we took a very Proactive approach I posted to my Personal Twitter I notified all thousand Employees about uh 9 A.M that they were Most likely not going to be paid today Because there's nothing we could do we Have the funds we could double fund Payroll it's not a big deal for us Financially Um but there was no operational way of Doing so and so we wanted to be Proactive be transparent and at the same Time our entire company mobilized to Figure out how to solve the problem for The current payroll as well as for Future payrolls Um you know I've I'm pleased that Rippling came up with a solution we put A lot of pressure Um through the media and we appreciate
The coverage and speaking directly to The company and payroll started to be Released Um Friday Saturday and this morning Through their new banking partner at JP Morgan Um so you weren't a direct customer of Silicon Valley Bank but the president Kind of announced other things he said That you know management was going to be Fired uh you know if if if the governor If the federal government had to sort of Take over I wonder though this bank had A very specific clientele Startups it's kind of required if we're Going to see Innovation we need sort of A banking setup that's going to take More risks than more traditional Banks Um do you think that maybe though there Needs to be a little more regulation Silicon Valley Bank has been around for 40 years as I understand it it didn't do Anything wrong but it was a sort of a Bad series of circumstances not enough Money having to sell bonds and then a Run on the bank do you think it's time For the government to maybe offer a Little more oversight when it comes to These sort of banks that are not your Classic Mainstream Banks if you will So you know it's interesting Silicon Valley Bank is a valuable partner in the Technology and early stage uh you know
Emerging Market company Community Um in their business model of course Extends uh credit and other services to Higher risk businesses and that Inherently makes them you know I think a Higher risk banking or a financial Institution but that's not the reason Um why they fail this week the reason Why they failed this week was they had Bought long-dated Um you know treasury bonds and they Classified Um those assets as held the maturity Which didn't force them to write down The assets on their balance sheet and so It had a hidden risk that most people uh Wouldn't have been able to see and I Think that they're a canary in the coal Mine to the broader Financial system Here because commercial real estate is Really the challenge that's going to Face most Regional banks around the Country and that's what worries me Um so we look at Silicon Valley Bank and You know Tech as a whole is you know a Target politically and I don't think That's necessarily Fair the issue we Have right now is inflation driving Interest rates up Banks holding Long-term treasuries at very low Interest rates and the mark to Market Risk is very large Alex that was really insightful very Insightful it's a complicated topic I
Think for all of us that that aren't Financial experts and Alex I hope if They haven't already been able to be Paid I hope your employees can't be paid Soon because not a lot worse than not Getting yourself so great perfect Alex Thank you so much Thanks for having me
