Good afternoon, everyone. Welcome to the final presentation of the day here in the Grand Ballroom. It is my pleasure and honor to introduce Greg Becker, President and CEO of Silicon Valley Bank, SVB Financial. Greg and I sat on this stage literally two years ago, right before the beginning of COVID, and we'd hear a sneeze in the audience, and everyone would sort of freak out. So I'm really glad that the environment has changed. We're all back. I think what I've heard today is record attendance, so thank you very much. But it's interesting how much has actually progressed over the prior two years. So Greg, for example, I was looking at your stock price. It's gone from $170 a share up to over $700 before the most recent market rout. And your business touches the innovation economy in so many different ways. Obviously, you're a lender to private companies, to growth companies. You work with the venture capitalists, the funds, the principals. You work with entrepreneurs. During this COVID period, you bought a wealth management business. You bought an investment bank. You bought a research firm. And so all of that's just tremendous. And I think your insights into the innovation economy, it really is unparalleled in terms of the people we're having speak today. So maybe you could just share with us, through your experience and through the lens of SVB Financial, what's gone on in the innovation economy over the past two years, and then what should we expect looking forward? First, Tom, thanks for inviting us to be here, inviting me to be here. Really appreciate it. It was two years ago. It's amazing how fast time flies by and how slow it was over the last two years. Congrats to all the success of bringing so many great companies here. Of the companies that are presenting, I think we have 100 of them are clients of ours. So we like to say that you pick the best and the brightest of the companies for the presentations. The last two years for us have been transformational. So let's talk about why. What are the big catalysts? One is innovation has been the biggest thing that's actually, I would argue, got us through the COVID crisis the last two years. And so think about all the cybersecurity, all the virtual companies, the Zooms of the world, everybody else. So all the money that went into those companies, or not all, most of that money came to SVB as that money was raised. So we went from, if you go back in 2020, we were roughly $70 billion of assets. Now we're over $210 billion of assets. We went from $130-$140 billion of total client funds to now over $400 billion. So all that money flooded into our bank. So that was a really big catalyst, right? But think about all the behaviors that have changed with innovation companies. I mentioned a few of them, but whether it's in healthcare, biotechnology, almost every category of innovation has taken off. Venture capital flows went from $100 billion to $185-$187 billion to over $300 billion. So as we always said, the best place to be is in the innovation space, and we've certainly benefited from that. The second part is what I'll call a strategic question. And so we're in the innovation space. We've benefited from that. But then, as you said, we made some decisions that were also building out our business. So a year before COVID, we acquired investment banks, and now we're building that investment bank very, very broad. That's number one. Number two, we have a great opportunity in wealth and private banking. You think about all the wealth it's created in the innovation space, and we had a very tiny little private bank. And so how do we accelerate that? We accelerated that by buying Boston Private, going from roughly $1 billion that we had under management to now $17 billion under management. So our strategy is really building out what we call the four pillars: commercial banking, asset management, private banking and wealth, and then investment banking, all geared both domestically and globally toward the innovation economy. And so innovation economy does well, so do we. That's terrific. And I think one of the key parts of your growth and perhaps one of the opportunities that I see in the innovation economy is the private markets, right? So every day you can wake up, turn on CNBC, and look at publicly traded stock prices for companies X, Y, and Z, but there really is no price discovery for private companies. Morgan Stanley and SVB co-invested in the Nasdaq Private Market, for example. So Greg, I'd love to get your insights on how and what private market companies are going to be able to do from a market perspective, from a price discovery perspective. Can they be treated just as if they were public companies, even though they're not? I think many private companies are choosing to stay private longer for a variety of reasons. So I'd love to get your insights on that. Well, look, most of the companies here are private, and what's the biggest challenge? If you're a private company and you want to recruit people, you're competing against the big name public companies, the Amazons, the Facebooks, the Googles, etc. And what they have against you is the fact that basically they can get your stock as an employee, and you can trade it the next day. You obviously don't have that with private markets. And we believe, as you said, companies stay private longer. You have to have that flexibility. It's an HR requirement. It's a retention requirement to have that. So we came together with a few other investors to spin out Nasdaq Private Market into a separate entity to really be a catalyst. So where was Nasdaq Private Market before? They were mostly doing tender offers, which means they were doing big block trades periodically. Where we're headed to with Nasdaq Private Market is to make it a kind of constant flow, a trading platform that will mimic. It will never get to a perfect Nasdaq or New York Stock Exchange sort of continual flow, but it can certainly get a lot further. So how do I see that playing out? Private companies in a perfect world, they would certain times a year, maybe it's four times a year, maybe it's eight times a year, will go to their employees and say, "We're going to open up trading on Nasdaq Private Market for you to sell X% of your shares in the window. The price discovery occurs on Nasdaq Private Market, and you create liquidity for those employees such that they don't feel that they are really that different than public companies." Right? That's the place we're headed to. And then as companies get ready to go public, you start to get better price discovery. So when you do go public, you've had some shares trading in the market on a platform like Nasdaq Private Market. So you have a better idea of what that price is. Because look, it's hard to figure out. We've seen this with IPOs. It's hard to really know exactly what the right price is. This way, you get a better price discovery along the way. What inning are we in in terms of that market developing? There are a lot of institutional investors in the room, again, that could look at Bloomberg or watch CNBC and instantaneously get a price. Where are we in the J-Curve of the private markets? Yeah, I think we're early. I'd say we're in the second inning, and so we have a ways to go. Information sharing, I think, is one of the biggest issues that has not been solved yet. Private companies, they're private for many reasons. One of them is they don't want all their information shared the way a public company would have to share its information, but for you to really understand the value and understand the business, you need more information than you have right now to some of these private exchanges, so somewhere we've got to move that information sharing up the curve, and there's an openness to do that, especially as companies get later stage, so that's probably one of the biggest impediments along the way, and then just getting institutional investors more comfortable with these private companies, which again, is happening more and more. So it's early innings, but I actually think over the next two, three, four, five years, it's going to accelerate pretty quickly. And I'm excited about watching that all play out. Do you think there are late-stage companies that will basically say, "I prefer to stay private rather than deal with all the hassles of being public"? There's going to be some, but I still think in the end, it's going to be you're still going to see more companies drive towards being a public once they get to a certain size. Private markets, even what I said, Nasdaq Private Market, it will never be, or I have a hard time seeing how it will be exactly what the large public markets are. So I think it's a great interim step. It gives a lot more flexibility, but there's still advantages to be a public company on Nasdaq or New York Stock Exchange, etc. So taking one step back in a company's evolutionary life cycle is being owned by a venture capitalist. Last year, I think there was a record level of venture capital funding. It's still relatively small versus private equity asset classes or private debt asset classes. But yet sort of we have this explosive growth in the innovation economy. Where do you think the venture capital community sits in terms of continued growth, differentiating between top performers, mid-tier performers, bottom-tier performers? How does that all shake out? Does it look like private equity where there's four or five mega funds and then there's everybody else? Or what happens? Yeah. Well, venture capital, when you break it down right now, it is definitely dominated by the mega funds, and you can look at it at different stages. So at that early mid-stage, there's some, what I'll call it, some of the top brands who have done a phenomenal job. It's Sequoia. It's Andreessen Horowitz. It's Lightspeed. And there's probably five to seven firms that have just, my view, has hit it out of the park as far as being able to scale up from the startup seed all the way to large, large capabilities, late-stage, $100-$200 million rounds and actually be able to put that much money into these companies. But then the rest is, for the most part, it's bifurcated into very early, some mid-stage, and then some later stage of the Tigers of the world who are putting substantial amounts of money. That early in the seed and early stage, so far right now, we really haven't seen a change. Even with the market disruption, people are investing. They see lots of opportunities. It's a very healthy market. The later you get, the more it operates and looks like the public markets. And we know what's happening in the public markets right now. There's the risk-off mentality. And the same thing is holding true in late-stage private. How long that's going to last? I don't know. I can't predict exactly when. But I will tell you, when it settles out, I believe that we're going to continue to go up and to the right again. The value creation for private companies is incredible. It's incredible domestically, and it's incredible globally, and it will get back on that same trajectory. So I think we're going to see clearly a slower number in 2022, maybe even a lower number in 2023, but you're going to be back on that trajectory in the not-too-distant future because there's just too many opportunities in the private market for venture. The really high-growth, big venture-backed companies who are really doing transformative things. So you mentioned valuations. I'm going to ask you a corporate finance question. Is that okay? Greg also sits on the board of the San Francisco Fed, so there's an interest rate question embedded in this. So what I don't understand, and I'm not in the technology sector. I work in another part of Morgan Stanley, so forgive me if this sounds a little ignorant. But when the 10-year was at 150, tech valuations were high. The 10-year goes up 20 basis points, tech valuations crash. And I get the concept of discount rates and terminal values. But why is the technology valuation paradigm so sensitive to interest rates? Because it seems like there's a fundamental reason for these companies to be capitalized. Yet macro factors such as 10-year moving 20 basis points sort of makes all the difference in the world between a successful valuation and an unsuccessful one. It just seems awfully bubbly, if you will, in terms of how they're valued. Yeah. I'll give you a corporate finance answer partially and then a gut answer partially as well. I think part of it's what you said, which is just using the discount factor. And although, again, I think it's, in my opinion, kind of ridiculous that you can see a 50 basis point, 40 basis point swing and see that volatility. So that's one question. So I do believe it's true discount. The second part is I think it's just people are hardwired to think that way. As investors, it's when rates start to pick up, almost no matter what it is, that it has to correlate to a lower valuation, lower multiples for fast-growth, high-valuation companies, right? And if you go back in history, I think it's played out that way. And so I think when it happens, investors want to get ahead of what they believe is coming. So what do you do? You start to sell into what you believe is going to be higher rates, and it becomes a self-fulfilling prophecy. It goes down. They're like, "See, it's correlated." So part of it is, I believe, is true, and part of it is I think people are trying to get ahead of what they believe will happen. Any predictions for interest rates over the next year or so? You know, it's no. I don't have any predictions on rates. Because let's think about all. I would say the Fed has an unbelievably difficult job ahead of them right now in deciding, because look, you've got inflation. Even though they don't use the word transitory, you read all the things that are being said in the market, and it sounds like it's pretty transitory when you see that so much of it's related to supply chain. Then you look at what's happening. I mean, sadly, what's happening in Ukraine and Russia, and no one really knows the implications of what that's going to be on a global basis. You've got inflation that isn't transitory and what's happening. Look at the unemployment rate and how low it is and the open jobs that exist in the United States. All those factors make it really difficult. The Fed not wanting to overshoot the mark. They don't want to start to raise rates too quickly, and then all of a sudden it does create. And by the way, this is my own point of view. This is not a Fed point of view that you don't want to overshoot the mark and heading toward a recession. It is, and they don't have perfect information. You put all that stuff together. They have a really, really, really difficult job of navigating this. Seeing how it plays out is going to be difficult. I think what you read from Chair Powell and everybody else is exactly how they think about it. As they say all the time, they're data dependent, and they will be course-correct if they need to. Well said. I think investors also have a harder time, as maybe rising tides don't lift all boats, so if we were to pick a couple sectors within the innovation economy that will benefit from the economic environment that we're in, I'll just throw out a couple things that are topical. Cybersecurity is one, metaverse, Web 3.0, crypto. Any thoughts in terms of maybe top three growth opportunities within the innovation economy? I tell you what has been, crypto comes up. You guys, I'm sure, talk about it on a daily basis. What has been shocking to me over the last 45 days, 60 days is when I talked to venture capitalists, the amount of attention they're putting into crypto. It was the last, and if you go back in 2021 and 2022 and 2020, it was a fraction of the funds were playing in the space. Last year, the year before, it picked up a little bit more. It feels like the last 60 days, it is absolutely, completely blown up. And we had a venture capital advisory board a couple of days ago with some very notable venture capitalists, and the amount of money that they were talking about moving into crypto, a whole variety of different spaces. I mean, truly, a whole variety is, it is not on the periphery anymore. It is not on the sideline. It is mainstream. And so I was a little bit shocked about how aggressive they were in doing that. That was a surprise. I don't think we're surprised at what's happening in cybersecurity. I don't think we're surprised at what's happening in AI. I don't think we're surprised at what's happening in the transformation in so many different ways, fintech, etc. Crypto is the one that was the surprise. And do I really think that people truly understand exactly how this will all play out on crypto? The answer is no. But I believe they think so much wealth is going to be created that you can't miss it, that you have to play into it. What I, again, put in the surprise category, the number of funds that are actually raising specific crypto funds. And not small, not allocating like $50 million or $100 million. I was talking with the managing partner over the weekend of a top firm, and they went from having no crypto fund to they took one of the partners, put it into a fund, added three more partners to it, and raising $800 million. This is out of zero, zero allocation to it, raising a fund, $800 million being raised and being raised very quickly. And that's not. I mean, many firms are raising dedicated specific funds to crypto. Wow. Well, an interesting question since you are a bank. How far is Washington behind in terms of understanding crypto, setting up a regulatory framework around it? It is a store and transfer of value. That is kind of the point of it. I'm just curious sort of how you see the regulatory framework catching up. If you asked this group, which is probably so much more versed in crypto, and you took a test on all the things going on crypto to really find out how much you truly do know, you probably wouldn't do that well on answering that question. Now, you are closer than probably 99.99% of the population understanding it. So now they put that hat onto or ask that same question or take that same test. Give that same test to the regulators in DC. This isn't a knock on them. It is just really difficult to understand. So it's a long way to answer the question to say, "I think they're very far behind." And I think that's one of the risks to it because they're not pushing back as much as I thought they would, which either means that they're really trying to understand or they're waiting to put down a hammer and make it a lot more challenging. And I don't know for sure which one it is, but I think they're far behind, and we shouldn't be surprised by it. I do want to leave some time for questions, but maybe one last macro point. A lot of us worked from home over the past two years. The people equation has changed quite a bit in terms of hiring, retaining, sourcing entrepreneurs. Sort of where do you see the human aspect of the innovation economy in terms of recruiting, retaining talent, finding diverse talent, women, VCs in particular? Sort of what's changing, what's not, what's working, what's not? Yeah. I'll start talking about what we're doing and what we've experienced the last couple of years, and then I'll parlay that into what we're seeing in the innovation space. We're going to do what a lot of companies are doing is try out a hybrid. But so far, what's great about it, and I'll say this from a DE&I perspective as well as access to talent, opening up our aperture to find talent wherever it exists has been incredible. An example on DE&I talent. So in Charlotte, North Carolina, we had basically zero presence. Now we went over the pandemic. Now we have over 100 people, and it's incredibly diverse talent in Charlotte, North Carolina, setting up offices or expanding offices in Atlanta, expanding more dramatically in New York City. And it's access to talent, but it is much more diverse talent. So the pandemic has definitely opened up our eyes to going where the talent is as opposed to just keeping, like, "Gotta stay close to the office." What we're doing is we're setting up hubs. We have hub locations that we need people, roughly 80% of our people who we want to be coming to the office periodically. They need to be within a certain distance of a hub location. Some that are client-facing individuals have to be in-market. Other than that, we're actually pretty flexible. And I will tell you from a standpoint of bringing talent in, it's been amazing. I think the same is true with technology companies, by the way. I think they're much more open than they ever have been. Some of our clients are going to 100% virtual, which I'm personally impressed with. Those are bold moves. And they're burning the ships, if you will. They're getting rid of all their office space, and I think it's going to be a challenge, but I do think that I'm excited about where this goes. I think we're all going to be better. I think we're all going to be more flexible. I think there is going to be better quality of life for employees, and that's a good place to be, so I'm excited about that. Going to the innovation space, I think DE&I, two years ago, a year and a half ago with the George Floyd murder, I think, got a lot of attention. I'm a little sad that it got, or maybe a lot sad, that it hasn't stayed as top of mind as it was, and I actually feel it's actually started to slow down, and I think we have to think about as a society doubling down on that. One of the things that we do to keep it top of mind is I do town halls every quarter after earnings. But we talked about DE&I at those town halls, but we made a specific DE&I town hall that we do separate, where the only thing we talked about is our DE&I initiatives to make sure at SVB that we keep it top of mind. We have goals. We have objectives for our employees to hold us accountable. I think without keeping it doing that, it's going to get lost, and we'll be not back to 100% where we were, but we're not going to be moving the progress that we all need to as a society. Well, Greg, you have a remarkable business and a remarkable industry, and congratulations. I think we have somebody with a microphone. If there's questions, please raise your hand and use the mic. Any questions? Otherwise, I'll keep going. Is that your hand raised, or are you scratching your head? Okay. Yes. Could you talk a bit about some of the areas that you see sort of the most rapid growth in that didn't really exist as industries? So like quantum computing or some of the others that we're seeing that are likely going to be big markets at some point but are very much at the beginning right now. Yeah. I'd go back to be a broken record, but I go back to what I said on the crypto side. The amount of companies that are being formed there are truly astronomical. You just can't imagine how many companies are new businesses being formed. One of the VCs I was talking to over the weekend, he went to a Web 3 event, and in his words, and he's been doing this for a long time, the most talented engineers that he has run across over his career, they were highly concentrated. It was people that were at the most notable companies that had the biggest impact on companies over the last three, four, five, 10 years were there driving new company formation. And so as an indication where money goes where the best people are, I just think you're going to see so much innovation in that space. Outside of that, I would tell you what I get excited about is that innovation is so broad-based, it's really hard for me to pinpoint and say, "Oh, look, this new emerging area is something that's getting a lot of attraction because it's so dwarfed by what's happening in the crypto area." Yep. Oh, you'll be next. I guess we have somebody up front. Hi. Can you talk about the various headwinds? It seems like two years after, not after. It's not over yet, but two years after the beginning of the COVID. It seems like right now we're in the calm before the storm. It's like interest rates going up. There's tremendous money supply. There's anticipated inflation. There's a war going on in Ukraine. Now, this thing has been going on for a long time. Stocks rising. Bull market. It's almost like we're in a calm before the storm. So can you talk about the headwinds in technology in particular? What do you see? Yeah, so yes. I mean, look, we're in a very volatile time right now. But again, I've been at SVB for almost 30 years, and we've been through cycles: the tech crisis, the financial crisis, the blip in 2015 and 2016. And the one thing that, look, this is a biased comment, but I would have a hard time seeing how people wouldn't support this contention, is when you look at the innovation space, when you look at all the innovation that's happening in technology, healthcare, etc., that over the next 5, 10, 15, 20 years, that it's going to continue to go up and to the right. Now, it doesn't mean there's not going to be big zigs and zags along the way. I think we could be heading into one of those big zigs or one of those big zags. The question is, when you look at the last time, the financial crisis, and you saw the dramatic drop in a very short period of time of the stock market, and the innovation economy was part of that. I think there's a lot of investors that look back at that time period and say, "God, I wish I would have invested back then. I wish I would have stayed on the sidelines for three or four years. I wish I would have waited until I felt there was more of a bottom or valuations had come down and then put more chips on the table in the innovation space." And so I believe that's true today. I can't tell you what the market will be in six months, nine months, 12 months, maybe even 18 months. But I think over time, I just truly believe you can't bet against the innovation space. When you see what these companies are doing, and you guys are listening to what the companies are doing today and tomorrow and the next day and what you're going to hear from them, they're building incredible businesses. It doesn't mean the valuation's always going to be at the right price, but public markets are the same way. So again, I'm biased, admittedly, but I certainly feel that it is absolutely the best place to be. Yep. Hopefully, this isn't too specific of a question, but since you brought up the Nasdaq Private Market investment that SVB and Morgan Stanley and others made collectively, I would love to get your views on how you think about competition in the pre-IPO market space. It strikes me that there's Nasdaq Private Market and really CartaX have kind of the best avenues towards aggregating supply. It wouldn't surprise me if a company that's using CartaX for its cap table management is also using SVB as its bank. So as this develops, would love to just get your views on the competitive dynamics, both on the aggregating supply and aggregating buyers. Yep. So like almost all markets, there's not going to be one solution. I would argue if there's only one solution, it's not going to be helpful from a competitiveness, and you probably won't end up getting the best solution for clients at the end of the day. So when you look at all the players in the private space looking to help provide liquidity to individuals or investors in private companies, I think you're going to end up in a place where there's probably going to be four or five solutions at the end of the day. And I think it's the best thing possible because what's going to happen is every one of those competitors is going to think about, "How do I make this easier, simpler, less expensive, right, more valuable to the end customer?" And I think you end up, I mean, you can look at Uber and Lyft. If Uber existed without Lyft, what do you think our prices would be? I mean, I think right now they're competing for drivers and everything else. The same thing is true in the secondary market or in the private market. So how is it going to play out? Obviously, don't have a crystal ball on that, but I certainly believe that, I'll speak for us, that because of where we sit in the innovation space and how important it is to us, we're going to continue to put more money behind it. Not to say we're going to win, but we need a seat at the table so that when companies think about liquidity, that we're in the conversation. Yep. Any other questions? There's one more. Okay. Just talk loud. It's fine. There's one back here too. I know who's going to go first. Hi. Hi, Greg. What's happened in the last couple of months in the public markets within tech? Have you noticed sort of like you sit across private and public? Have you noticed any flow on back to the private markets on valuations? A little bit hard to understand. Was it where the private valuations are relative to the public markets and the public markets in decline? Yeah. Valuations, opinions, thoughts. Yep. What's great about private companies is they don't have to mark to market on a daily basis. That's definitely the positive, right? Whereas public companies, you know every single day how the market views you. And every time historically when you'd see a correction in public markets, tech companies, right, there's going to be this delay to see what happens, right? Because what the private markets don't know is how fast that will come back. The longer it goes, the more that the private companies have to go out and raise money. At some point, they've got cash. At some point, they'll burn through that cash, and they will have to tap the markets, private markets, and they'll know what their valuation is at that point. And so right now, I think what you've seen is in the later stage, you've seen a big slowdown with late-stage investors coming into these companies because they're waiting to see what the valuation is. They're waiting to see if the discussions with the management team, the valuation was $25 billion before last year. Is it $25 billion this year? Is it $30 billion, or is it $10 billion or $15 billion? And if they've got a lot of cash, that company is going to wait to determine how far along they are, have they made enough progress. So have we seen any, I'll call it, valuation change yet? We haven't seen anything material happen. The longer it goes, obviously, you're going to start to see valuations come down as companies raise money. But right now, the later-stage market has definitely slowed. Hi. Thanks for your time. So my question is on the GFB business. You have a very unique loan portfolio mix compared to other banks. How do you think about the risks in that portfolio, and what would kind of keep you up at night from a portfolio performance perspective? From a loan portfolio? That's right. Yep. So if you break our loan portfolio apart, it's roughly $66-$67 billion. And you've got more than 50% of it tied to private equity and venture capital. And it's really dependent upon the performance of the limited partners at the end of the day. That's our repayment source. So those are institutional LPs, and we think that's very, very safe and secure. You work your way down, then you've got mortgages to high-net-worth individuals, typically in markets that are with lower loan-to-values. And the rest are a whole variety of working capital loans and some venture debt. But if you look at that over time, we actually have de-risked our portfolio. The risk has actually gone down, and we believe even in market downturns, it's going to perform better than it has historically. So what we pay attention to is what's the volatility at the early-stage, mid-stage loans where the companies are still burning cash. And while that's increased on a dollar amount, on a percentage basis, it's actually declined. So while people would think the entire portfolio is very risky, you really have to understand the mix of the portfolio to understand that the risk has actually been dramatically reduced over the last five, 10, 15 years. Yep. All right. This is like the NFL playoffs. We're way in overtime. So Greg, thank you very much for your time. Thanks, Tom. Congratulations on your success. We'll see you again next year. Yep. Thanks. Thank you.