MBA2270 Lessons Learned From Silicon Valley Bank’s Failure

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Spoiler alert has nothing to do with lending to risky startups or crypto or any of that stuff. Just pure bad decisions is what caused them to collapse, which then led to lack of trust from customers, which led to panic, which led to massive withdraws in a short period of time, which led to game over. We're not going to dwell too much on what happened or why it happened. We're going to focus on how we can learn from this experience as business owners. How can we protect our own business, our assets, our cash flow so that we don't get stuck in a situation that's horrifying, where businesses can't pay payroll, can't pay their vendors, don't know where their Runway went. And, and more importantly, we're not gonna just look at Silicon Valley bank and say, oh, these are big banks, they're horrible, they're greedy. The reasons why they failed are not unique. This can happen to your own business. Cause it's all about trust. If your customers can trust your product, can trust you to deliver on your promise, can trust you to be there for them when they need you. So I wanna share with you the three top lessons that you can learn from this experience to help prepare, protect your business and your future. Let's get into it. Let's get down to business. This episode is sponsored by Time Doctor. Measure and improve productivity wherever your people work. Nicole and I run a remote team across many, many countries, a lot of continents. And we were really excited to team up with Time Doctor so that we can track our team's productivity. We can help them see what's working and what's not. I, I shared with you last week that we decided to do an experiment and roll out Time Doctor in our own team. Later on the episode, I'm going to share with you how I announced this to the team in our all hands meeting. What were the first steps in getting this started on our team, how we communicated it and how it's all going. If you want to join me and a half a million happy customers, unlock the power of visibility, accountability and productivity with Time Doctor, Go ahead and start a free trial today. Visit the Time doctor website@www.timedoctor.com. boost your productivity and enable a team to be better together with Time Doctor again, that's timedoctor.com. the biggest lesson you can take away from this whole Silicon Valley bank fiasco is your business is basically built on trust. Once people start not trusting you as a business that you can actually do what you promised, do your job, it's game over. And this is what makes business so hard. It's because you got to earn people's trust every single day. It doesn't matter if you run a software, it doesn't matter if you run an E commerce store. You're a consultant, you're a coach. At the end of the day, people are paying you money because they trust that you're going to deliver on your promise. If you don't deliver on your promise or they think you won't deliver on your promise, which is basically the same thing, this is where you get into trouble. People stop trusting you. Your reputation is your brand. So when people start talking, start putting reviews, start mentioning you in not the best light. Your immediate reaction to that needs to be on point. You need to be able to address people's issues immediately. Negative reviews immediately. Comments on Twitter immediately. Because silence does not build trust. You need to jump in there and make sure you convey, hey, hey, we got your back. We will deliver. If we made a mistake, we're gonna correct it and then some. Listen, you're gonna get complaints. You're gonna get people that are shouting from the rooftops on Twitter and Instagram and on social media and in your inbox and in your customer services inbox and commenting on your posts and all that kind of stuff. Do not just ignore them. Do not crawl under a rock. You gotta get in front of them. You need to address them. You need to be there. If not you, somebody from your team. Because sometimes by doing this, you build even more trust. You. A lot of people know that, hey, you are not just taking this lying down. You will take care of whatever the problem is. And sometimes there isn't a problem. Someone's just dissatisfied, or there's just a bad match for your team or a bad match for your product or service. And it's important for you to then be there as well and say, hey, we're sorry we couldn't serve you. This is what we do. This is what you need. Maybe you should go somewhere else or we recommend these people. The point here is that these are opportunities to build trust and not further break trust with your customers. Because these negative vibes, they snowball, as we saw in a matter of 48 hours, a company just totally dissolved. And obviously, when it comes to banking, you don't mess with people's money. But when you're doing business with somebody, you are messing with their money. You are risking their money because they paid you money for a service. So lesson number one is that your whole business is built on trust. So anytime there's a moment where you feel like there's a slightest lack of trust, you got to be all over it and build that trust up. Take this as an opportunity. Lesson number two. This should be obvious, but some people do not know this because they are in the rush of starting their business to get it off the ground to make some money, and then they forget about creating a plan B. Okay, I get it. You want to get traction. You want to make sure that you have a viable product out there. You want to make sure that you're just kind of not overthinking it. And I'm with you. I'm the first cheerleader of these ideas. But Once your business is rolling, once you have customers, once you have a system in place, you have to have a backup plan for all the most critical points of your business. What are the critical points? The critical points are how you do business. One is how you provide your service, how you get your customers, how you get paid. Okay, so for example, let's say you're an E commerce store, right? Your service or how you supply your product is your actual items. Let's say you create T shirts. You're a supplier of T shirts. You have to have a great relationship with them, and you have to have a backup, at least one backup, to somebody who can create your T shirts. If, for example, that vendor does not exist anymore, they collapse, they have a problem, they have an outage, they get hit by a hurricane, doesn't matter. You have to have a backup so that you can continue to serve your customers with your beautiful T shirts. They don't have to be fully integrated like your primary vendor, but they need to be able to fulfill the products and be able to supply you with what you need to be able to serve your customers. How do you get your customers? Well, your E commerce website, you need to have a backup for your server. So if your website goes down, is there a way for you to move the website to a different server, to a different hosting provider? Look into that. Make sure you can. How do you actually get paid? Well, you might have a payment processor. Do you have a backup payment processor? What about your bank and how you deposit your cash and do business and be able to pay your vendors and pay your team? Do you have a backup bank account, one that's online versus one that's a brick and mortar traditional bank. Having a plan B so that if anything happens, you have options, you have a way to kind of get around a crisis. And these are not a lot of things you need to worry about. These are just three areas of your business. Have a plan B for every aspect so that you can keep your business running. If any of these actually fall short, and sometimes, by the way, and it's not uncommon, you will fall short with more than one at the same time. For example, your vendor is not available to create your products while your website has gone down. But if you have a clear plan of action, a documented plan B, you, you know exactly what to do when the proverbial doo doo hits the fan, right? All right, so we talked about that. Your business is all about trust. And you need to take every opportunity to build trust whenever there's some cracks. Number two, Always have a plan B for your critical areas of your business. And takeaway number three, when things get hard, when things look like a disaster, whatever that is in your business, your website goes down, your product is not working, your launch flopped, your bank goes kaput, whatever that might be, you can get through it. Even the Silicon Valley bank situation here, this huge bank failed and a lot of people panicked. But the federal government swooped in. That's why we have regulations in every government made sure the depositors up to $250,000 were able to access those funds. And even portions of the bank have been sold internationally to other banks already, meaning that all the account holders will eventually be able to access their funds and be able to move on to other banks and be fine. Making this more of a temporary inconvenience than a total disaster. Most crises, most disasters in your business, most challenges you're gonna face are not insurmountable. You can rebound, you can recover. Even if it costs you your business doesn't mean you're over. You can come back with your new business, with a new idea, with a new venture, and still achieve success as an entrepreneur. Failure happens. This just happens. This is part of life. This is part of business. Challenges happen. Hardship happens. Just know it doesn't last forever when you're in it, when it's tough, when you don't like it and wish it wasn't the case. Understand, nothing lasts forever. You're gonna get through it. Stay calm so you can make the right decisions as you weather the storm. This episode is sponsored by Time Doctor. Measure and improve productivity wherever your people work. I shared with you that I teamed up with Time Doctor to rol rollout Time Doctor, this amazing productivity software with my own team. I run a remote team across four different continents. So I was a bit nervous about rolling out a whole new project, a whole new software, a whole new initiative. I took the opportunity of announcing this project and using Time Doctor in our all hands. Meeting in our all hands. We get everybody across the world to meet at the same time and we just basically give each other high fives, praise, give updates and make announcements like, hey, we're now going to be using Time Doctor. If you're thinking about using Time Doctor and you should, you're going to need to communicate this to your team. And my advice, just be transparent, be honest, and of course, be positive. I just said, hey, I'm excited about being more productive and getting us all more data on how we can get better as a team. That's where Time Doctor comes in. It allows us to actually know what we're doing so we can focus on what works and let go of what doesn't. I was very clear about the benefits of Time Doctor but also how it's going to directly benefit them and ensure that nobody on the team is putting in more hours than they should having that work life balance. After the All Hands meeting, we rolled out access to the team. We sent them invites so they can install Time Doctor on their computer and start tracking their time. We also share some great guides and videos that time Dr. Passed on to us to our team so they can easily know how to use Time Doctor really quickly and start optimizing their productivity. I'm so excited to start seeing how this helps us all as a team. As you start gathering data, as you start using Time Doctor day in and day out, why don't you join me on this experiment and join over half a million happy customers that have unlocked the power of visibility, accountability and productivity with Time Doctor. Start your free trial today. Visit the Time Doctor website at www.timedoctor.com. again, that's timedoctor.com to get started, boost your productivity and enable your team to get better together with time Dr. Hey fidelity, how can I remember to invest every month? With the Fidelity app you can choose a schedule and set up recurring investments in stocks and ETFs. Oh, that sounds easier than I thought. You got this? Yeah, I do. Now where did I put my keys? 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To wrap up today's episode. Winston Churchill is famous for his observation, never let a good crisis go to waste. The way I like to interpret that in this case is let's learn from other people's mistakes. Let's learn from other people's experiences so that we're prepared for for worst case scenarios. There's a peace of mind knowing that you are not just sitting there and observing. You're doing things to protect your business, protect your customers, protect your peace of mind if things go wrong. And when they do go wrong, you are a whole lot calmer because you got a plan of action, you got a fire drill. You know what to do and how to do it immediately, which turns a crisis into an opportunity to implement your Plan B. Thanks so much for listening to the $100 NBA show. If you love what you hear, hit subscribe, hit follow. Do that right now on your favorite podcast app, Apple Podcast, Spotify, Stitcher Radio, it doesn't matter. Go ahead and hit subscribe and follow so you get our next episode automatically as well as have access to our catalog, our back catalog of over 2200 episodes. Go ahead and hit subscribe or follow right now. Before I go, I want to leave you with this. During this whole fiasco svb, there's a lot of hype and panic around the this whole situation on Twitter, on Facebook, on Instagram. And it's important to be informed, but at the same time it's important not to get sucked into that panic. As we saw things kind of play out, we saw that things were going to be okay for most people and there are fail safety mechanisms for things like this. Worry and panic never solves anything okay? Don't get caught up in that. Have your fail safe plans in place. Implement if you need to stay calm. Because a panicked mind, a nervous mind, an angry mind, is one that doesn't make great decisions. Thanks so much for listening and I'll check you in tomorrow's Episode Q and A Wednesday. I'll see you then. Take care. Of foreign.

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