SVB, SBF and (more) OpenAI: The 2023 chronicles, pt. 2
Dec 22, 2023
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Guests Mary Ann and Alex join the hosts to discuss the decline of Silicon Valley Bank, the chaos at OpenAI, and the outcome of the SBF trial. They also delve into the aftermath of SVB's collapse, the impact on companies like Brex, and the potential threat of OpenAI's GPT store to AI startups.
The financial collapse of Silicon Valley Bank (SVB) in 2023 had a significant impact on the global technology landscape, causing panic among venture capitalists and leading to a boost in business for fintech startups like Brex and Mercury.
The SBF Trial, which resulted in the conviction of FTX CEO Sam Bankman-Fried for financial crimes, marked a major event in the crypto and technology industries. Despite the trial, the crypto market has shown resilience and positive growth.
Deep dives
Silicon Valley Bank's collapse and aftermath
Silicon Valley Bank (SVB) experienced a financial collapse that led to regulators taking over the bank. Over the course of the weekend, SVB faced a significant loss of deposits and panicked venture capitalists. Many startups were concerned about payroll and potential contagion to other banks. Fintech startups like Brex, Mercury, and Ark saw an opportunity to assist SVB customers and experienced a surge in business. Brex alone opened 4,000 new accounts and received $2 billion in deposits in the first week after the collapse. While the immediate crisis has been contained, questions remain about future growth and sustainability for these companies.
The SBF Trial and its Impact on the Crypto Market
The SBF Trial marked one of the most significant events in the crypto and technology industries in 2023. The trial involved FTX's faulty balance sheets, which resulted in the collapse of the leading digital commerce platform. Sam Bankman-Fried (SBF) was found guilty on all charges related to false promises and the loss of billions of dollars for FTX investors. Despite the trial, the crypto market has shown signs of positivity and growth. Bitcoin and Ethereum have increased in value, and the overall market cap has also risen. While regulatory actions and legal proceedings may continue, the crypto market remains resilient.
OpenAI's Leadership Shake-up and Future Outlook
OpenAI went through a chaotic leadership shake-up, with Sam Altman regaining control and Helen Toner leaving. Altman is expected to lead the company with a more focused approach, and Microsoft, along with other investors, have strongly backed him. OpenAI's GPT store launch was delayed, but other product releases may see accelerated timelines under Altman's leadership. The effects of the shake-up on other AI startups remain to be seen, but the GPT store could pose challenges for startups relying on fine-tuned models and APIs.
Competition and Prospects in the AI Model Space
The landscape of leading AI model companies has evolved with OpenAI's repositioning. OpenAI's market strength and brand recognition give it an advantageous position in the industry. Competing models may offer better performance, but OpenAI's access to consumers and developers through the GPT store could be a significant advantage. Startups in the AI space may need to reevaluate their strategies and adapt to the changing competitive landscape with OpenAI's market presence and initiatives like GPT store.
This is the second of a two-part series looking back at 2023. Mary Ann and Alex called on two colleagues to help us chat through some of the year’s biggest events. Here’s what we got into!
The decline, fall of SVB: It’s a bit hard to believe, but the chaos at Silicon Valley Bank happened earlier this year. Yes, much has happened since, but the sudden, and shocking collapse of what was effectively the family bank of tech sent waves throughout the global technology landscape. Venture was impacted. Public companies were impacted, and some startups actually got a boost!
Chaos at OpenAI: Another weekend-powered period of high-drama in tech this year was the defenstration of Sam Altman from his role at OpenAI, only for the tide to entirely flip in short order, Altman back the co, and most of the folks who wanted him out gone themselves. This one is still developing, so we had Devin Coldewey on to help us understand what is coming next.
SBF’s trial: It was long. It was tedious. It was occasionally very interesting. But in the end, former FTX CEO Sam Bankman-Fried was found super-duper guilty for various financial crimes relating to his now-failed crypto exchange. We invited Jacquie Melinek back on the show to tell us more.
You can find part one of our year-end roundup here if you need even more! And don’t forget, Equity has even more great stuff coming your way, so stick close to your favorite podcast app.
Connect with Equity on X and Threads @EquityPods, and keep up with all of TechCrunch's podcasts @TechCrunchPods on TikTok.
Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.
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