Banking collapse sends US companies scrambling
Well, it’s pretty obvious by now that the banking crisis isn’t over yet. And in the meantime, a big slice of the business world—from startups to big time players—is picking up the pieces.
It all started with the collapse of Silicon Valley Bank (SVB) back on March 10. SVB had been a major lender to the tech industry and its failure (the largest since the 2008 crisis) sent shockwaves through the markets. Then two other large US banks with significant ties to technology and cryptocurrency also failed; another entered liquidation under financial distress. And the dominos kept falling.
On the US business side, chaos ensued. Companies raced to withdraw their funds, new startups struggled to make payroll, and critical business transactions were put on hold.
The founder of FarmboxRx, a startup that delivers food to Medicaid and Medicare participants, described the panic of not being able to transfer funds from SVB to other accounts and tying up 8 figures of cash: “None of my reps will call me back. It’s the worst 24 hours of my life.”
The Dallas-based ride-sharing company, Alto was also hit hard, having a good chunk of change tied up with the failed banks. After the news hit, the startup pivoted to marketing tactics, putting together an email campaign to drum up support, complete with ride deals and membership discounts.
But the little guys aren’t the only ones who are feeling the heat. Roku had $487 million of its $1.9 billion in cash tied up at SVB. Sure, it may be conventional wisdom (and a pretty official FDIC recommendation) not to put all of your eggs in one basket, but let’s be real: no one is thinking those eggs could be cracked, poached, and scrambled in a matter of 72 hours.
The meltdown has been especially alarming for the tech industry, which is already off balance from months of massive layoffs and a slowing economy. According to Pitchbook, investments in U.S. start-ups dropped by a whopping 31 percent last year.
Even though the FDIC has promised SVB and Signature Bank’s customers will be made whole (making an exception to the $250,000 cap) the collapse is bringing back 2008 vibes for many. Social media has definitely played an outsized role in inciting panic, and that’s a wildcard that wasn’t in the mix before.
Imagine that, social media making things worse? Speaking of . . .
TikTok’s pickle with the US government
The tense saga between TikTok and the US government continues—this time with a five-hour hearing between CEO Shou Zi Chew and Congress. TL;DR It didn’t go great.
If you’ve just entered the chat, here’s some quick background on the drama. TikTok, one of the most popular apps on the planet, has drawn intense skepticism for years now due to consumer privacy and national security concerns.
The Biden administration has been pushing ByteDance, TikTok’s parent company, to sell its shares or face potential sanctions, the main contention being that there’s nothing preventing ByteDance from sharing user data with Chinese authorities. Chew refuted these accusations and insisted his team operates independently and within global privacy laws. Lawmakers were . . . errr . . . not convinced.
The future of TikTok remains uncertain, with both sides investing heavily in the battle. A ban would not only damage politicians’ relationships with its younger fanbase but also have significant financial repercussions. TikTok also plays an integral role in the $100 billion creator economy and according to a Capterra survey, three out of four marketers plan to increase their spending on the platform over the coming year.
It’s only fitting that the viral dance platform’s future could come down to a set of carefully choreographed moves and side steps. But now, all eyes are on TikTok . . . even more than usual.
Social media is in the hot seat
Families and school districts across the country are suing platforms like TikTok, Meta, Snapchat, and YouTube for exacerbating students’ mental health issues in order to turn a profit.
Parents and educators are calling the tech giants to account for the rise of dangerous viral trends, extreme ideological and political radicalization, self-esteem issues, online bullying, and more, claiming that the companies should be held responsible for the content they make available to younger audiences.
Plaintiffs argue that the “Big Tech’s” outsized influence in popular culture is similar to that of “Big Tobacco,” or “Big Pharma” and that common sense laws should be enacted in order to protect impressionable young minds from falling prey to the worst corners of the internet. Also up for grabs are hefty payouts to fund mental health and wellness programs for families and schools along with mobile and outpatient facilities.
From the looks of it, this is just the beginning of the public’s reckoning with social media as a national health crisis among teens and youth. The future of Section 230 (which protects website operators from liability for user comments) and other regulatory laws is being put to the test, even reaching the Supreme Court earlier this year.
Makes me nostalgic for the days when all kids had to worry about was coming up with the perfect AIM screen name. (Mine was Tdjohn12.)
Buckle up. It’s going to be a bumpy ride, folks.
Best of the Week
Stats to see
The White Lotus effect is alive and well. According to a survey by American Express, 70% of Gen Z and Millennials said they were inspired to travel to a destination after seeing it on a TV show, movie, or news source. Scouring Hopper for Thailand tickets in 3, 2, 1 . . . See you there?
Cameras off, please. If the last thing you need is more face time, you might appreciate Microsoft Teams’ new live avatar feature. Slightly cheesy? Yes. A fun new way to interact with work peeps? Brb.
What to watch
Not that we’re major fans or anything, but Ted Lasso Season 3 is in full swing (kick?) and we’ve never been happier. Like, goldfish-level happy. (IYKYK).
As the saying goes, April showers bring May flowers and, oh, looky here, a sweet new playlist, just for you.
More News from the Week.
- Penny pinchers rejoice. The FTC proposed a rule that would fine merchants up to $50K a day for not making subscriptions easily cancel-able.
- Awkward or cool? New Starbucks CEO Laxman Narasimhan says he plans to work once a month as a barista.
- Speaking of new hires. Ticketmaster is looking for a new social media director that’s “brave” and “resilient” enough to take on a whole army of Swifties.
- Canva is AI-ifying like crazy. Look for new tools that generate templates, copy, and more via text and image prompts.
- The website for the world’s lone Blockbuster is back online with the message: “We are working on rewinding your movie.” Quick. Cancel my Friday night plans and grab some Jiffy Pop.