But how did the bank run become so big so fast in the first place? According to one theory, it can be traced back to one email newsletter and an accompanying tweet, and the Twitter reaction that followed. 

Evan Armstrong, lead writer of the business-focused newsletter Napkin Math, on Friday tweeted: “This is the first time we’ve seen a social media induced bank run—if your customer base is active on twitter, this can happen to you just as easily.”

He elaborated on Saturday, writing that the “entire debacle was potentially caused” by Byrne Hobart’s newsletter, and outlined the steps behind his thinking.

Kinda insane that this entire debacle was potentially caused by @ByrneHobart‘s newsletter. Here’s how the butterfly effect happened.

1) Byrne posts this article/Tweet calling out SVB’s risk.
2) Pretty much every VC I know reads this newsletter
3) They all start to pay very,… https://t.co/zUSKF1ZW4J

— Evan Armstrong 📧 (@itsurboyevan) March 11, 2023

Hobart writes The Diff newsletter, which, Armstrong stated, “pretty much every VC I know reads.” 

Hobart’s tweet on Feb. 23 read: “Also in today’s newsletter: Silicon Valley Bank was, based on the market value of their assets, technically insolvent last quarter and is now levered 185:1.” He included in the tweet a few paragraphs from the newsletter.

“There’s like a non-trivial chance that your newsletter talking about the possibility of a SVB bank run is what will have caused a SVB bank run,” wrote one Twitter user in response to Hobart’s tweet the next day—to which another responded this weekend, “this aged well.” 

Armstrong laid it out as follows:

1) Byrne posts this article/Tweet calling out SVB’s risk. 

2) Pretty much every VC I know reads this newsletter

3) They all start to pay very, very close attention to SVB earnings

4) Absolutely massive earnings miss by SVB

5) Peter Thiel, USV, and Coatue are first to send out messages/mass emails to portfolio co’s to pull out funds

6) Tech Twitter catches word of this

7) Bank Run

8) Collapse

9) If FDIC/Buyer doesn’t come in, in the next 7 days, potential 20%+ collapse of entire startup industry. 

This weekend, more than 100 venture capital and investing firms signed a statement supporting Silicon Valley Bank. The statement indicated that investors would continue relationships with the bank if it were bought by another entity. Heavyweights Sequoia Capital, Kleiner Perkins, and others signed the statement, which was spearheaded by venture firm General Catalyst.

General Catalyst CEO Hemant Taneja told Bloomberg that “the run on the bank was an unintended consequence of many investors trying to do the right thing for their own companies” and that “panic wasn’t the way to handle it.”

Rather than advising companies to pull all of their money, he added, he wished investors had instead guided companies to take out three to six months operating capital. 

On Sunday, Treasury Secretary Janet Yellen told CBS’s Face the Nation that the federal government would not bail out the bank but was working to help depositors worried about their money. She sought to reassure investors there would be no domino effect after the bank run.

“The American banking system is really safe and well capitalized,” she said. “It’s resilient.”

But as Armstrong suggests, there may have been a different kind of domino effect behind the bank run itself.