If you’re lucky, a minute might buy you enough time to write a quick email, grab a coffee from the break room, or make small talk with a coworker. But in other situations, a minute can also be quite extraordinary. Imagine being a quarterback in the Superbowl in overtime, or finding yourself in a life-and-death situation in which every second counts towards the outcome.
Visualizing an Internet Minute
When it comes to gauging the epic scale of the internet, it would seem that each minute leans closer to the extraordinary side of the spectrum. Today’s infographic from @LoriLewis and @OfficiallyChadd aggregates the online activity of billions of people globally, to see what an internet minute looks like.
How is it possible that 188 millions of emails are sent every minute? How does Google process 3.8 million search queries in such a short span of time? Simply put, the number of actions packed into just 60 seconds is extraordinary.
A Side-by-Side Comparison
The internet is incredibly dynamic, which means there are always new and interesting segments that are emerging out of the internet’s ether. To get a sense of this, take a look at the comparison of last year’s version of this graphic with the more recent entry:
Platforms such as Instagram and Netflix continue to grow at a blistering pace, while new categories such as smart speakers are quickly building a strong foundation for the future. Last year, for example, only 67 voice-first devices were being shipped per minute – and in 2019, there are now 180 smart speakers being shipped in the same window of time. What will this look like in 2020?
Going Sideways or Backwards
Interestingly, even as more and more people gain access to the internet around the world each year, there are still parts of the web that are plateauing or even shrinking in size. You’ll see that Facebook logins and Google searches both increased only incrementally from last year. Further, the amount of emails getting sent is also quite stagnant, likely thanks to to the rise of workplace collaboration tools such as Slack. Snap is another story altogether. In the last year, the app saw a decrease in millions of users due to the infamous redesign that helped torpedo the app’s rising popularity. Regardless, we’re certain that by this time next year, an internet minute will have changed significantly yet again! on But fast forward to the end of last week, and SVB was shuttered by regulators after a panic-induced bank run. So, how exactly did this happen? We dig in below.
Road to a Bank Run
SVB and its customers generally thrived during the low interest rate era, but as rates rose, SVB found itself more exposed to risk than a typical bank. Even so, at the end of 2022, the bank’s balance sheet showed no cause for alarm.
As well, the bank was viewed positively in a number of places. Most Wall Street analyst ratings were overwhelmingly positive on the bank’s stock, and Forbes had just added the bank to its Financial All-Stars list. Outward signs of trouble emerged on Wednesday, March 8th, when SVB surprised investors with news that the bank needed to raise more than $2 billion to shore up its balance sheet. The reaction from prominent venture capitalists was not positive, with Coatue Management, Union Square Ventures, and Peter Thiel’s Founders Fund moving to limit exposure to the 40-year-old bank. The influence of these firms is believed to have added fuel to the fire, and a bank run ensued. Also influencing decision making was the fact that SVB had the highest percentage of uninsured domestic deposits of all big banks. These totaled nearly $152 billion, or about 97% of all deposits. By the end of the day, customers had tried to withdraw $42 billion in deposits.
What Triggered the SVB Collapse?
While the collapse of SVB took place over the course of 44 hours, its roots trace back to the early pandemic years. In 2021, U.S. venture capital-backed companies raised a record $330 billion—double the amount seen in 2020. At the time, interest rates were at rock-bottom levels to help buoy the economy. Matt Levine sums up the situation well: “When interest rates are low everywhere, a dollar in 20 years is about as good as a dollar today, so a startup whose business model is “we will lose money for a decade building artificial intelligence, and then rake in lots of money in the far future” sounds pretty good. When interest rates are higher, a dollar today is better than a dollar tomorrow, so investors want cash flows. When interest rates were low for a long time, and suddenly become high, all the money that was rushing to your customers is suddenly cut off.” Source: Pitchbook Why is this important? During this time, SVB received billions of dollars from these venture-backed clients. In one year alone, their deposits increased 100%. They took these funds and invested them in longer-term bonds. As a result, this created a dangerous trap as the company expected rates would remain low. During this time, SVB invested in bonds at the top of the market. As interest rates rose higher and bond prices declined, SVB started taking major losses on their long-term bond holdings.
Losses Fueling a Liquidity Crunch
When SVB reported its fourth quarter results in early 2023, Moody’s Investor Service, a credit rating agency took notice. In early March, it said that SVB was at high risk for a downgrade due to its significant unrealized losses. In response, SVB looked to sell $2 billion of its investments at a loss to help boost liquidity for its struggling balance sheet. Soon, more hedge funds and venture investors realized SVB could be on thin ice. Depositors withdrew funds in droves, spurring a liquidity squeeze and prompting California regulators and the FDIC to step in and shut down the bank.
What Happens Now?
While much of SVB’s activity was focused on the tech sector, the bank’s shocking collapse has rattled a financial sector that is already on edge.
The four biggest U.S. banks lost a combined $52 billion the day before the SVB collapse. On Friday, other banking stocks saw double-digit drops, including Signature Bank (-23%), First Republic (-15%), and Silvergate Capital (-11%).
Source: Morningstar Direct. *Represents March 9 data, trading halted on March 10.
When the dust settles, it’s hard to predict the ripple effects that will emerge from this dramatic event. For investors, the Secretary of the Treasury Janet Yellen announced confidence in the banking system remaining resilient, noting that regulators have the proper tools in response to the issue.
But others have seen trouble brewing as far back as 2020 (or earlier) when commercial banking assets were skyrocketing and banks were buying bonds when rates were low.
