SVB COLLAPSE – FEAR OF TECHNOLOGY CONTAGION
What all gets impacted by one single incident is extremely difficult to decipher in present day intensely integrated world. We have seen such impacts happening, playing in a manner unimaginably, but still, we are not ready to face that reality, as we cannot see it. It is our misfortune that we try and limit ourselves to what can be seen and can be physically and financially felt, and not the inner wheeling dealing, even if we are reasonably aware of it. We try and dispense with it. Handling anything as a long-term problem, we are averse to.
We want to treat everything as a one-off problem, sorting it out as an isolated incident, and hoping that it would bring the whole ecosystem back to pre-crisis levels, but that has never been the case. Just think of what broken semiconductor supply chain did to the world. It was on verge of bringing large number of industries globally to a total standstill. Pre COVID we could not have even visualized it. That geographies and nations matter and all eggs cannot be kept in the same basket has been hit hard on all decision makers and government all across the globe.
Financial contagion has been written off from the story of the fall of SVB and Signature Bank. What impact would HSBC, UK, make with the merger there? No one knows how the issue of the impacted startups would fan out in India. Availability of their own funds and cash / credit flow is the lifeline. Assurance in one part of the story, legality, fine print and delay, can be killers. Added to this is what we can term as technology contagion. It has made out to be that the startup world is different ecosystem, from the more robust tech world, but that is not the case. It is enmeshed into that very system and has the capability to disrupt, slow down or throw out of gear large parts of the tech world. Companies like Stripe can well illustrate this point.
Just think of what APIs do to make the world work seamlessly. Getting that broken of large number of startups can spell gloom in a variety of ways. What about the cost factor? Smallest player has a role to play even in biggest of the scheme of things. Broken tech dependence in an already working product, service and tech solution cannot be even elaborated, at this point in time. When the process starts, we see large number of connected tech products giving way. Then what about the mindset leading to the non-entry of innovative and cutting edge tech player given the precarious scenario. This would impact the tech growth trajectory itself. OpenAI can be a good example of this genre. Negative technology contagion can push us back by a decade. Hope it does not happen.
TECHNOLOGY CONTAGION IS AN UNRESEARCHED AREA, TODAY’S EXPERTISE IS LIMITED TO SPECULATION AND COMMON SENSE.