48 Hours Till Payroll, $200,000 to Go: Diary of a Bank Failure

Friday, March 10

8:45 a.m.

I didn’t sleep all Thursday night. I started texting with investors and they were telling me that people had actually gone to SVB branches to get cashier’s checks. I was like, “Wow, everyone got out except for me because I was doing my due diligence.” I am usually the fastest mover in a situation, but one of my resolutions has been to take more time to digest things before I react. I took all of two hours to digest, and it was too late. I missed the bank run.

I woke up on Friday, threw on clothes and got to the SVB branch in Palo Alto at 8:45. It was supposed to open at 9 a.m. or 9:30. I drove to the branch where I knew another founder had gotten a cashier’s check. There were already Federal Deposit Insurance Corporation notices posted to the bank door saying it was closed.

There were a few other people there super early, and it was raining, and we were all walking back to our cars looking sad. The other people there were also super nerdy looking and I was like, “Yup, those are founders.” The four of us who were there didn’t talk because I was not in conversation mode.

9:30 a.m.

I looked at payroll. The transfer from the SVB account to the payroll provider, around $200,000, was supposed to happen Monday. I called Gusto, our payroll provider, and I asked: “Is this transfer going to work on Monday?” They were like, “Yeah, it’ll work, I don’t know what you’re talking about!”

Later on Friday, they sent a notice along the lines of: “Actually it won’t work, if your account was connected to SVB you better wire us the money you need for payroll.” That was really when I started realizing I needed to come up with this money.

I scheduled a call with our employment attorney for Saturday because I wanted to understand — could we miss payroll? I knew it would hurt my employees, but what do you actually do if you miss payroll? It turns out you can’t miss payroll, especially not in the state of California.

10:30 a.m.

I got on a Zoom call with my co-founder and our operations lead to discuss the full situation and all the things going wrong. Our credit card was with SVB and I knew those charges were going to start failing. I was like, “We’re going to have to move credit cards for all of these services.” I took a quick average — Amazon Web Services, software like Slack and Notion, Google — and I realized it was probably not going to be more than $10,000 on a given day for charges that come in.

Article source: https://www.nytimes.com/2023/03/18/business/silicon-valley-bank-collapse.html