According to Silicon Valley Bank lore, the idea for SVB was first conceived during a poker game in 1981.¹ Cofounders Bill Biggerstaff and Robert Medearis observed a number of technology and life sciences companies emerging in California’s Silicon Valley, yet these companies lacked ready access to growth capital. Biggerstaff and Medearis decided to create a bank that would specialize in the financing of these types of start-ups, and Silicon Valley Bank was incorporated on April 23, 1982.



The demand for capital among start-ups proved to be significant, and SVB grew rapidly in California during the 1980s. By 1986, SVB had opened offices in San Jose, Palo Alto, and Santa Clara. Also in 1986, SVB merged with National InterCity Bancorp as a means of reaching more customers. In 1988, SVB completed an initial public offering (IPO) and raised $6 million in equity capital.

During the 1990s, SVB continued to expand throughout the United States, finding numerous start-ups in need of financing. In addition, SVB expanded its services to several “niche industries,” including premium wine, independent movies, and churches. By 2000, SVB operated more than 20 offices across the country and served more than a dozen industries.

In 2001, Ken Wilcox was named CEO and president of Silicon Valley Bank. Unfortunately for Wilcox, he was faced with the immediate challenge of a widespread recession in the aftermath of the collapse of the dot-com bubble. He recalled: “I became CEO in April 2001, which was a very inopportune time. The recession had started at the same time I took over the bank. And for the first couple of years it seemed like every quarter was worse than the one prior. We were going in exactly the wrong direction.” Accordingly, Wilcox faced pressure to reduce the SVB headcount as a means of reducing costs. Despite the pressure, Wilcox decided against a substantial downsizing. He explained:

In addition, Wilcox faced a tough decision about SVB’s strategic direction. Although the company was best known for its technology sector clients, tech companies comprised only 20 percent of SVB’s portfolio in 2001. The remaining 80 percent consisted of real estate and niche industries. The entire SVB portfolio had suffered in the recession, and technology companies were hit especially hard. However, despite the losses in SVB’s technology business, Wilcox believed the bank’s future and competitive advantage lie in the technology sector. He recalled:

By the end of 2003, SVB began growing once again, and by 2005 performance reached pre-recession levels. Furthermore, SVB had succeeded in creating a portfolio focused almost exclusively on technology. Yet, by 2006, Wilcox knew that the company was at another critical juncture. SVB faced limited growth prospects by seeking to expand solely in the United States. In order to continue to expand further, SVB would need a new course of action. Wilcox described the next strategy move in his “perfect clock” speech:

In the early 1980s, after decades with a tightly managed planned economy, China’s state leadership began introducing capitalist market principles into the Chinese economy. In the following decades, the Chinese economy grew dramatically; from 1990 to 2005, China’s gross domestic product (GDP) grew at an average annual rate of more than 10 percent. During the same period, in comparison, U.S. GDP grew at approximately 3 percent per year.³



In addition, China had a large and growing entrepreneurial population. According to a 2009 Global Entrepreneurship Monitor (GEM) report, China had even more entrepreneurs than the United States, both in terms of the number of small business owners and high-growth-expectation ventures.⁴ Despite the growth of entrepreneurship in China, the financing landscape for start-ups in China was far less developed than the situation in the United States. China had limited sources of domestic funding, and Chinese banking regulations restricted the ability of financial institutions to support Chinese companies. It was especially challenging for banks to finance small and medium enterprises (SMEs) as well as companies with intangible assets (e.g., technology companies). However, given the need to sustain entrepreneurial growth, the Chinese government began to loosen the banking sector in the mid-2000s. The ability to finance China’s budding entrepreneurs presented a huge opportunity to financial firms, and foreign banks were eager to participate.

Although China’s growing economy was a great opportunity, it also posed many challenges, especially for western companies. In addition to language and cultural differences, foreign companies faced distinct customer preferences as well as stringent government policy hurdles. Navigating this new landscape was a challenge even for successful U.S. companies; eBay, Google, and Walmart, among many others, had struggled to gain traction in China.

An additional challenge for foreign financial firms was the inability to conduct business in renminbi, the Chinese local currency. International investors, including banks, could access the Chinese market and Chinese companies through the “offshore” market. However, the offshore process was complicated and cumbersome. If a foreign company wanted to invest in a Chinese company, the transaction would require the creation of new holding companies, navigation of complex Chinese M&A laws, updated company articles, the exchange of foreign currencies, and then months spent waiting for government approval of the foreign investment deal. To avoid such complexities, Chinese companies often preferred to work with domestic investors and banks who could invest directly in the company in renminbi. This was especially true for Chinese technology companies, the majority of which did not want to wait months to receive financing in a foreign currency. Yet in the mid-2000s, it was uncertain whether foreign companies could access the onshore renminbi market; and even if they could, making these deals would undoubtedly be time-consuming, expensive, and risky.

SVB established its first relationships in Asia in 1990. Wilcox recalled: “We started thinking about China for the first time in about 1990, which was exactly the same time I joined the organization. Roger Smith, our first CEO, set up a new function in the bank to look at Asia. But we started slow, especially in China.” After Wilcox became CEO in 2001, SVB began developing deeper relationships in China. In 2005, SVB established a subsidiary called SVB Business Partners Shanghai to conduct offshore business.

From 2005 to 2010, Becker, along with Chief Financial Officer Mike Descheneaux, spent significant time building SVB’s China network even further. They frequently traveled to China to meet with companies and government officials while learning more about the opportunity for SVB to provide banking services in China. Wilcox recalled: “Greg and Mike really laid the groundwork for us in China—the contacts they developed, the partnerships they built, the knowledge they brought back. This was critical for our continued expansion into China.”

In 2010, SVB established another subsidiary, SVB Business Partners Beijing. The two subsidiaries served local technology companies and venture capital investors, providing advisory services and offshore, dollar-denominated investment support to Chinese companies. They also advised U.S. clients that wished to expand into China. And despite the challenges of conducting business in China, as well as the shortcomings of offshore banking, both subsidiaries grew their client bases rapidly.

Given the success of SVB’s Chinese subsidiaries, Wilcox, Becker, and Descheneaux believed there was an even bigger opportunity in onshore banking. Much like U.S. technology companies in the 1980s, Chinese technology companies in 2010 also seemed to lack sufficient access to growth capital. While Wilcox, Becker, and Descheneaux were aware of the risks, they agreed that the opportunity was too big for SVB to ignore. If SVB wanted to be a global bank, this was a calculated bet they would have to take.

Although they were convinced this was the appropriate course of action, they knew it would require the consent of SVB’s board of directors, many of whom had concerns about the risks of operating in China. Becker recalled: “The board hadn’t gotten there yet. So in 2010, we took our entire board of directors to China for a week-long trip, and we had our board and strategy session there. We wanted to expose them to all of the things we had been exposed to for the past several years. And at the end of it, we wanted to make a decision—should we, or shouldn’t we go all in?”

Over the course of the week, board members discussed SVB’s prospects in China while viewing Shanghai’s bustling innovation economy firsthand. For several of the board members, this was their first exposure to China, and one that made a strong impression. After hours of open discussion, observations, and insights, the decision seemed apparent. Becker explained:

The board reached a near-unanimous decision that SVB should pursue the opportunity in China despite the apparent risks. Wilcox reflected on why this made sense for SVB: “People always ask themselves, what could happen if I pursue something? But they almost never ask themselves, what could happen if I don’t pursue it?” Wilcox and Becker knew that the opportunity cost of not entering China was far too high for SVB. If SVB passed up this opportunity, one of their competitors would surely take advantage. Despite their conviction, Wilcox and Becker knew the decision might come as a surprise to employees. Chris Edmonds-Waters, head of SVB’s human resources, summed up the reaction of the executive team:

Along with deciding “yes or no,” Wilcox and Becker had to decide how they would enter China. One of the biggest questions was whether they should partner with a Chinese company, or if they should instead conduct business on their own. To Becker, this was clear-cut:

The partnership, which was named Shanghai Silicon Valley Bank (SSVB), made sense to Wilcox as well. He explained: “Although we knew we had a lot to learn, one of the key things we understood from our Chinese subsidiaries was the importance of relationships in China. It would have been nearly impossible to develop the right relationships without a partnership. And for SPDB, they wanted to learn how to finance growing companies—our expertise. So it made sense for both parties.”

Developing the right team for the joint venture would be critical to its success. Thus, when Wilcox decided to move to China in 2011 to lead the effort, the venture’s probability of succeeding improved greatly. Wilcox would serve as president of the joint venture and chairman of SVB, while Becker would assume the role of SVB’s new CEO. Wilcox explained his decision: “In addition to the professional challenge, it was a personal challenge I felt excited about. If I didn’t move to China, I was just going to retire, anyways. So my wife and I talked about it, and we decided it would be a great experience for us. Not to mention I knew SVB was in good hands with Greg as CEO.”



Wilcox’s relocation to China was important for several reasons. First, given the significance of hierarchy in Chinese culture, Wilcox’s presence established a level of credibility for SVB that would have been difficult to establish otherwise. Becker recalled: “Having Ken there was huge, both because of the knowledge he brought as well as the signal it sent to SPDB. It earned us an immediate level of respect.”

Wilcox’s move also signaled the importance of the joint venture to those within SVB, which in turn made it easier to convince top SVB talent to relocate to China. This, however, raised a few questions for Wilcox, Becker, and Edmonds-Waters. SVB prided itself on its company culture, and those who moved to China would be instrumental in imparting that culture to their Chinese counterparts. But which employees were the best ambassadors for SVB?

In addition, the SVB employees that moved to China needed to be resilient and flexible. Edmonds-Waters described the employees SVB sought for the joint venture:

But how could SVB determine which employees fit this profile? Becker also recognized the competing interests inherent in the creation of the joint venture. On the one hand, SVB wanted its best representatives to lead the joint venture in China. On the other hand, if too many of SVB’s top employees moved to China, it could negatively impact the company’s core U.S. business. Striking the proper balance would be crucial for SVB’s long-term success.

Also of concern was how to instill SVB’s culture in the company’s Chinese employees. Unbeknownst to Wilcox, the top layer of SSVB Chinese management were appointed to the venture by the government, leaving little room for Wilcox to select those that might best fit the culture he hoped to create in the new venture. Wilcox explained:

But how could SVB determine which employees fit this profile? Becker also recognized the competing interests inherent in the creation of the joint venture. On the one hand, SVB wanted its best representatives to lead the joint venture in China. On the other hand, if too many of SVB’s top employees moved to China, it could negatively impact the company’s core U.S. business. Striking the proper balance would be crucial for SVB’s long-term success.

In addition, many of SSVB’s 53 Chinese employees expected the bank to operate like other state-owned banks, which emphasized hierarchy and the gradual development of key relationships. These relationships could often take months or even years to form, at which point the business relationship was cemented. SVB, on the other hand, was used to operating in a much more entrepreneurial fashion. Edmonds-Waters explained: “We try to position ourselves on the same side of the table as our clients. We are the bank of entrepreneurs, helping to make their dreams come true. We thrive on opportunities to showcase our entrepreneurial spirit and a go get ‘em attitude.” This direct-to-client approach and entrepreneurial culture would be a marked difference from traditional operating procedures at a Chinese state-owned enterprise.

A similar concern was the Chinese concept of “face.” In China, the concept represents the importance of a person’s reputation within professional and personal networks. One of the key components of face in China is showing respect for those who are more senior, including avoiding challenging or criticizing them publicly. At SVB, one of the key components of culture was universal accountability through consistent feedback. Edmonds-Waters recalled:

Given this contrast in cultures, Wilcox had to determine how much SSVB should resemble SVB’s “entrepreneurial,” accountable culture. This culture was a cornerstone of the company, but how would it be received within the joint venture? In addition, how would he communicate and demonstrate this culture to SSVB’s employees? And could he risk replacing Chinese employees who did not fit his vision for the joint venture?

Wilcox spent a significant amount of time crafting SSVB’s culture, a process that included discussions with a handful of personal advisors. He recalled: “When I got to China, one of the first things I did was find a few close personal advisors. I was familiar with China, but they really helped me navigate the nuance and minutia of Chinese society.” Through these conversations, he learned that although SVB’s culture was unique among Chinese businesses, the differences were not insurmountable. In fact, a large part of SVB’s appeal was the way they conducted business.

Wilcox explained: “SPDB and the Chinese government wanted to know how we’ve been successful at financing growth companies, and a big part of the answer is our culture—that’s our secret sauce. So while we had to tweak a few things, we knew it was important to bring a large part of SVB to Shanghai.”

On the whole, Wilcox’s approach proved quite successful in the joint venture. Edmonds-Waters described Wilcox’s impact:

Despite Wilcox’s best efforts and considerations, issues inevitably arose during the early stages of the joint venture. One example involved SVB’s standard approach to project management. SVB typically evaluated tasks and milestones in a spreadsheet with three designations: red (not on track), yellow (at risk), and green (on track). The spreadsheet was updated regularly and distributed throughout the organization. In SSVB, however, this system proved problematic, as Chinese employees felt offended by the classifications. In response, a new system was established; the colors were replaced by faces: frowning face, no smile face, and happy face. Edmonds-Waters described the impact: “You’d think this was silly. But from a cultural aptitude point of view, it made a big difference. Switching from colors to faces on a spreadsheet made all the difference relative to feeling engaged and acknowledged while not feeling judged too harshly.”

Along with these types of cultural challenges, Wilcox was confronted with several political hurdles. One of the first political challenges arose with respect to the location of SSVB’s office. Within Shanghai, the majority of banks, including the most prestigious companies, were located on the east bank of the Huangpu River in the Pudong area, a newly developed commercial zone with modern skyscrapers. As such, many of the SPDB representatives wanted the joint venture located in Pudong. Wilcox, on the other hand, thought it was important for SSVB to establish a unique identity among Shanghai’s financial firms. Thus, he wanted to locate the firm in Xintiandi, a trendy district where many expats and wealthier Shanghainese lived. He believed this would set SSVB apart from its competition and attract clients. However, the Chinese government dictates where companies operate, and determined that SSVB would operate in the district of Yangpu, across the river from Pudong.

In addition to choosing the location of SSVB’s offices, the government also selected several key members of the SSVB team, without input from Wilcox. Although most of the appointments worked out well, a few proved difficult. Wilcox explained:

Another major hurdle for SSVB was a Chinese law restricting the company from conducting business in renminbi. According to the law, any bank with foreign ownership could not use renminbi for three years, which posed a huge constraint for SSVB. Wilcox recalled:

At the outset of the joint venture, it was determined that Wilcox would serve as president while his counterpart from SPDB, Jianhua Fu, would serve as chairman. To Wilcox, these titles provided a clear indication of their roles. Wilcox would serve as the day-do-day head of SSVB, and Fu would preside over the board of directors. However, in China, the chairman acts much like a president would in the United States. Hence, the two frequently butted heads as they tried to differentiate their roles. Wilcox recalled:

Their disagreements spanned a variety of topics, from the organization chart to the IT system to the company’s logo. While Wilcox disagreed with Fu on many of these specific issues, he knew that it was ultimately more important to have a strong working relationship with Fu than “win” each of these battles. At the behest of his advisors, Wilcox spent significant time building his relationship with Fu, both inside and outside of work. In turn, many of these issues began resolving themselves. Becker explained the transition from his vantage point: “They got to the point where they worried a little bit less about hierarchy, and they created a ‘we’re all in this together’ atmosphere. It was like a start-up mentality that was an adaptation of the Chinese model and the American model. And we felt this adaptation would create true differentiation over the long term.”

Having successfully navigated several cultural and political challenges, Wilcox felt confident about the successful integration of SVB and SPDB by the middle of 2011. However, operating in China still posed many problems for SVB’s traditional business model. Due to Chinese government restrictions, SVB was severely limited in its ability to launch new products. The government dictated which products SVB could offer to clients, and Wilcox estimated it would take at least five years before SSVB had access to its entire product set. Wilcox explained: “In the very beginning, we could only do very simple onshore banking. We were doing loans and deposits—very, very, very simple. We would have loved to take our entire product set to China, but the regulators wouldn’t allow it.”

Another impediment to growth was the Chinese notion of guanxi. Wilcox recalled: “Guanxi means relationships, and everybody operates within a circle. Within their circle, they’ve known each other for years, and years, and years, and they trust each other. They don’t let new people into their circle often, and it can take a couple of years to get into somebody’s circle. So doing business with someone can take a long time. But then, once you’re in, they expect things to go fast, just like that. We weren’t used to thinking about things that way.

In addition, many Chinese businesses had a different perception of banking than many American firms. “There’s a cultural bias in the direction of thinking of banking as a utility,” explained Wilcox. “The money is like electricity flowing through the wires. Many people think they get a loan because they curried the favor of government officials, not because from an underwriting perspective they are financeable. Changing these biases was a big issue.” Similarly, many Chinese companies did not understand the distinction between debt and equity. Wilcox described the implications for SSVB: “They didn’t take Corporate Finance 101 in anybody’s business school. They’re used to getting money because the government wants them to have it. They’ll pay it back if the government wants them to pay it back, and they won’t if the government doesn’t care.”

Due to the different financial background of Chinese customers, Wilcox believed SSVB would have to modify SVB’s traditional products, a process that would take time. He explained: “The American tendency is, if the product works well in the U.S., it will work well in China. And if it’s not exactly what they want, maybe they can accommodate our product. Instead, we knew that we needed to figure out how to accommodate their tastes. That is a long-term project, not something you do overnight.”

Given these customer challenges and government restrictions, SSVB was limited in its growth opportunities within China. Because of that, it was challenging for Becker and Wilcox to assess the performance of the joint venture in its first few years.

By many measures, SSVB was excelling. The fact that they had received licensing approval from the government was a huge success for an American company. In addition, SSVB had retained a significant portion of its employees; the average Chinese bank had a turnover rate of approximately 20 percent, compared to less than 5 percent for SSVB. And, perhaps most importantly, SSVB had retained a significant portion of its Chinese clients. Wilcox explained: “We couldn’t offer them all of SVB’s financial products, but they were excited about our aura and eager to partner with us.”

At the same time, SSVB barely broke even in 2012 and 2013, but this was only by virtue of subsidies from the Chinese government; otherwise, SSVB would have experienced losses of more than $3 million annually. Becker and Wilcox knew that they were still several years away from realizing SSVB’s full potential in China, and perhaps years away from profitability. Furthermore, continuing to navigate the challenges of a drastically different market would take a significant investment in time and money.



However, despite the risks, expenses, and challenges, Wilcox and Becker remained convinced about the path forward. Becker expounded:

In spite of his conviction in this vision, Becker had two critical questions about SVB’s future in China. First, would SSVB be able to adapt sufficiently to the Chinese market, and ultimately be successful? Second, would the Chinese government, once it fully understood SVB’s business model, enforce selective regulations preventing SSVB from growing to an extent that would justify SVB’s continuing involvement in China? There was little doubt that China’s rapidly growing start-up economy remained a massive opportunity for SVB in 2014. Capitalizing on this opportunity, however, was anything but a guarantee.