Yahoo Finance’s Brad Smith joins the Live show from the SXSW Conference in Austin, Texas, to discuss how founders and CEOs are reacting to the startup ecosystem amid the collapse of Silicon Valley Bank and the worrying state of U.S. banking.
Video Transcript
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BRIAN SOZZI: The South by Southwest Conference is underway in Austin, Texas. This, as the fallout from the sudden failure of Silicon Valley Bank continues to weigh on smaller tech businesses. Yahoo Finance's Brad Smith is standing by for-- with us here for more on what he's hearing at the event. Brad, of course, back here in New York City, all eyes on the banking fallout. What are you hearing on the ground over there?
BRAD SMITH: Yeah, we're here in Austin, Texas where the "You, up?" texts are hitting different as some of the founders and CEOs are really trying to figure out what their exposure to the collapse of Silicon Valley Bank and this bank crisis that we've been discussing throughout the show this morning, what their exposure might be here. And so some of the chills of the different exposure that they're talking about are really only being comforted by the thrills of a few free drink tickets, and then additionally some celebrity sightings.
But we had some conversations with one such CEO, the CEO of Cipher and Signal. Signal and Cipher's CEO who spoke with us and gave us a little insight into the pulse of what he's hearing from some of those group chats among founders, CEOs, that are really trying to get their heads around what this means for their own payrolls and just getting into next week. Here's what he had to say.
IAN BEACRAFT: We don't have a whole lot of time before this starts to have a ripple effect across the entire ecosystem. I mean, we'll see this startup ecosystem is already having an impact. I mean, Monday is D-day for a lot of companies. And within weeks, we'll start to see shops closing up. And within months, we'll see the ripple effect across the rest of the economy.
BRAD SMITH: Now, some of that action has been initiated. We had, of course, the combined statement that was issued by the Treasury, the Federal Reserve, and the FDIC. That was released Sunday. That approved actions that were enabling the FDIC to complete the resolution of Silicon Valley Bank, Santa Clara, California, in a manner that protects all of the depositors. That from the statement there.
And then, Monday, of course, this morning, President Biden also issuing and speaking further on the matter. Reiterating that no losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer. But in one of our other conversations with the DineSafe founder and CEO Patrick Quade, he gave us a little bit more insight into what the pulse is of some of those founders that he's speaking with and what the future looks like for them over these coming weeks and months. Here's what he had to say.
PATRICK QUADE: If there's not some additional help, some businesses seem extremely likely to fail, some small-- you know, some entrepreneurs and startup companies. It seems clear that will happen unless the recovery is fast and significant. And it's just-- there's so much uncertainty at present.
BRAD SMITH: Now, here's what's, too, key to remember here. South by Southwest, of course, is typically a fanfare music festival, also major immersive technology-- immersive technology that is really showcased here. And we've been able to get our hands on some of that experience, as well.
But it also a breeding ground for some of the deals that take place among founders of startup companies, CEOs of startup companies that are just looking for more funding, as well in the near term, to bridge them into some of their own brand and company expansion, as well. And so they're watching closely what's taking place with banking crisis at the same time that they're trying to secure more dollars for their future growth, as well.
But aside from some of those chills, the thrills here. I've got a few of those for you. One of them, we did see Intel CEO Pat Gelsinger. He was here yesterday hosting a Sunday service. That with the Grammy award-winning artist Lecrae.
We also were able to grab "Billions" actor Paul Giamatti in brief passing. I spoke with him and he gave me some insights on where one might find the best waffles in New York City. And the NSF answer will surprise you, indeed. So I'll keep that on my Twitter account. We were also welcomed by the Mayor of Austin in a conversation that we'll have for you later on today. And back to you guys in the studio.
JULIE HYMAN: So overall, Brad, and it's great to see you there. It sounds like it's going well. So overall, we love to do the vibe check here at Yahoo Finance. So like, what's your overall vibe check?
BRAD SMITH: The overall vibe tag for South by Southwest is that there is still so much of the opportunity in just making sure that there are those connections. I was even sitting down for lunch yesterday and hearing a pitch conversation that was taking place directly next to me.
So a lot of the founders that have made their way here for startups and pitch competitions, they're very much looking just for that opportunity to get facetime. And so as this has been a conference that for the last couple of years, for 2021 purely virtual and in 2020, of course, was canceled. 2022, started to make its way back. 2023, it's really been off and to the races.
And really one of those in-person touchpoints that everyone from founders-- or CEOs, rather, of megacap tech companies like Intel, all the way to some of the startups that are just looking for that opportunity to get in front of VCs. And we're gonna get the pulse of some of the VCs, as well, and what they're experiencing and if they're seeing pitches of companies that are actually recession resilient. We're gonna to speak with them and see what their vibe is, as well.
But that has largely been the vibe check thus far, Julie, is that this is the opportunity for a lot of those people who missed out on those connections and in-person opportunities over the past couple of years, to once again finally have that meeting point. And there are plenty of those to be had here at South by Southwest in Austin where, of course, they're trying to rival Silicon Valley with their own Silicon Hills here. And we'll have more of that discussion later on.
JULIE HYMAN: Well, it seems like that's been working. They've had a lot of growth there. Looking forward to your coverage all week, Brad. We'll check in with you as the week goes on.
