Inside SVB's dramatic acquisition and the Future of UK Venture with Erin Platts, CEO of Octopus Ventures

0:00Welcome to Riding Unicorns. Today we're delighted to have Erin Platt, CEO of Octopus Ventures. Erin, thank you so much for joining us. We're really excited to record this conversation with you. Maybe you could just introduce yourself and sort of touch on a little bit of your experience leading up to now being CEO of Octopus Ventures. Sure. Well, thanks, James. Thanks, Hector, for having me. It's great to be here. So I have a bit of background on me. I'm American, grew up in New York, lived in Boston for about eight or nine years. And I've been lucky to be part of the technology and innovation ecosystem for over 20 years now.

0:36So I spent a couple of decades on the banking side. So first started in the U.S. with a company called Silicon Valley Bank and moved over to the U.K. in 2007. So over 18 years ago now, time flies to really start the international footprint and scale the international footprint for that business. I'm sure we'll touch on a little bit about that journey and what happened at the end of that chapter. but you know for me I've always absolutely loved being part of supporting founders right I'm so inspired by people who decide to take the leap to start their own business and it sort of builds a career around supporting that whether that be from a capital perspective and I loved being able to sort of scale the SVB business from four of us to you know eight or nine hundred over the last kind a couple of decades.

1:24When we sold the SVP business to HSBC, after we embedded that, I decided I wanted to have a little bit of fun and actually get closer to the amazing founders that we get to work with. So I decided to join Octopus Ventures to get into an equity deployment role, but also didn't really want to lose the operating muscle that I'd built over the last couple of decades. So being now dual CEO of Octopus Investments and Octopus Ventures allows me to support founders from pre-seeded growth. But also Octopus Group is such an interesting entrepreneurial story in and of itself. So it was the perfect combination of capital deployment, working with founders, but also getting to, again, really keep those CEO muscles fresh.

2:10Yeah. And I think you've already touched on it there, really. But, you know, the Octopus Ventures opportunity, what else really got you excited about that? Because obviously it's a well-known name now in the market, Octopus Ventures. And so that must have been an exciting move for you. Yeah, absolutely. So I am, you know, it's been really fun. It's only been sort of 10, 10 and a half months. But getting to know what the Octopus Group does more broadly is it's actually an amazing entrepreneurial, UK entrepreneurial success story that, frankly, a lot of people don't know as much about. So it started by Simon Rodgersson, Priscilla and a few others 25 years ago.

2:48They raised two and a half million pounds and then scaled this to just a really interesting, broad financial services and fund management business that invests in founders from our balance sheet. The biggest success story, of course, is Octopus Energy and Kraken, which are just unbelievable businesses in and of themselves. But we also invest pretty deeply in financial services and education from our balance sheet. And then having the broader ventures business, which is us raising external capital, both from a retail but also institutional and family office perspective, really is what attracted me to venture.

3:26So I think we're pretty unique in, at least in the UK and European ecosystem, where I think that diversity of funding sources will allow us over time to be just really fantastic partners across that capital continuum. So from pre-seed to growth, being able to deploy retail money, institutional capital, family office capital, and our own balance sheet to help companies scale. That was a big differentiating factor why I joined the brand, the fact that it had, of course, the dual component of being part of a larger group, but with a dedicated ventures team who, you know, done a great job serving the ecosystem over the last decade and a half, really.

4:10And Aaron, we should definitely touch on the SVP story. I think now because it's useful context for the rest of the conversation. But it was a crazy, I mean, tell us a bit about the journey leading up to it. But also like the implosion itself was crazy. I mean, I remember, you know, whenever it was a few years back and news started to emerge, you know, liquidity crisis, a run on the bank, not a good situation. We had all of our portfolio companies had money with you guys, a lot of them did. we had money with you guys you know our us as a manager it was looking like for a moment we were gonna have to forego our gp salaries to keep the company afloat so it was a really scary time for a lot of people so i want to lift the lid on the inside story from you you know i think a lot of people are going to really appreciate hearing that yeah i am you know it's one of these things and it was march 9th 2023 that will be you'll remember that day my memory and you know every time i speak to people and then they figure out that I was the CEO of the UK and European business during that crisis.

5:16We all have really this sort of shared professional trauma of that weekend. And it was, it was an acute, you know, trauma and emergency for several companies. And I'll come on to that and sort of what happened through those few days. But I think it's important to share some context maybe before, because it is a part of the, an important part of the story. So firstly, I feel really fortunate to have been part of Silicon Valley Bank for over 20 years. It was an amazing business brand, real values led organization that I sort of grew up in, right? I joined entry-level position, answering the phones and client service, and I got to become the CEO.

5:56So it is, it was an amazing organization that did a lot of things really well. I became CEO of the UK and European business in 2019. And we were part of, you know, like the whole ecosystem here, hyperscaling. So we were growing this bank, you know, 100 % year over year. We were really lucky to be part of the fabric of the ecosystem, expanded into six or seven countries, got multiple banking licenses. And we kind of got to the size and scale where the UK regulators have an important regulation, which means that if you are a foreign subsidiary or foreign branch of a sort of, if you were a domestic branch of a foreign-owned company, it means that when you get the size that we got, you have to then flip to a subsidiary.

6:40And what that means is you are a standalone bank in your own right. You have a separate board, separate balance sheet, separate liquidity profile, but you are owned by one shareholder. And that's what we did actually in August 2022. It was a huge body of work that took us almost two years. And that is what allowed us when the U.S. had the issues that they had and there was a bank run on the U.S. business on Thursday, I think, Thursday, the 8th to my memory. That's what allowed us to take a different path than the UK. And we were learning in real time, like the whole ecosystem was learning in real time through social media channels and elsewhere of how impacted the U.S.

7:26business was. Because of our separate setup as a U.K. standalone bank, we weren't experiencing the same issues that the U.S. were having. The Friday, actually, we had a full day of operating our bank, opening up new accounts, funding loans. And we fully operated that day. And it was only when after we closed and the U.S. announced that it was taken over by the FDIC that things really, really took a turn. And we worked, we had four all-nighters, the team and I, in our offices in the city. And we worked really, really closely with the whole ecosystem, with the prime minister and the chancellor, with the regulators, with private bidders to find a home for our employees, but importantly for our founders and our partners and venture community that trusted us with their heart and money.

8:16You know, I would say, and I've said this before publicly and privately, you know, when you build, especially a banking business and venture and actually most businesses should be built on trust. And if you build your business model and trust and you build your business model on long term relationships and then you're the source of that stress, it's really, it's personally extremely difficult to navigate. But you have a responsibility to find a solution. And so in many ways, it was absolutely the worst, worst few days of my life. But in others, I look back really, really proud of how the ecosystem stood up to say this is a really important part of the industry.

9:00But secondly, how the team reacted to give it their all, not just during that weekend. But the aftermath of these events are not publicly known, but are privately extremely, extremely difficult. So I'll stop there. I'm sure there's a lot of things to talk about. I mean, these literal all-nighters, are you like, how does the human body deal with four in a row? So I got 90 minutes of sleep on the Sunday night. So not quite. And that was when, after we had signed with HSBC and we're going through the legal docs, adrenaline, right? Like there is, like I didn't, you don't even think about it. You're not hungry.

9:38You're not tired. You are in an acute stress situation. we had in the seventh floor, which is where we had all of our boardrooms and meeting rooms. In one room, we had all the insolvency people because if we weren't able to find a buyer, I would be walked out that Sunday night. And then we had all of the different acquirers in various rooms. And I often talk to people and they want to be a partner in a venture fund. They want to be a founder. They want to be a CEO of a large business or a large corporate. it. I think that's wonderful. And my favorite part of working in this ecosystem is working with ambitious people, but you have to be ready for the good and the bad.

10:19One of the things I admired most about the executive team and the phenomenal board that we had is you just have to get on with it. It just comes with the territory of being in that position, but it took a long time to recover, actually, both physically and mentally. Right. No, how are you prioritizing in that four-day period, how are you prioritizing tasks and conversations? It's your job as CEO to be doing the most important thing at any given moment. How do you make those calls? It's very hard to prepare for something of that nature. So a lot of it, you're going on instinct and I think sort of values and integrity that you've worked with from a leadership perspective.

11:00So I've always believed in over-communication. And I think that was one of the things that really helped. We over communicated to our employees, even when we had nothing to say. We were timely. We were frequent. We were visible. And as a leader, you have to be visible in these really difficult scenarios. And equally, you have to be as visible as possible externally to various stakeholders, whether that be companies that were banking with us or partners like yourselves. You have to divide and conquer, but you have to be as visible as possible. then of course you're prioritizing conversations with regulators and potential acquirers.

11:40There's a potential that you focus on the wrong stuff or you kind of go into these rabbit holes. And I think that's where having a really strong team around you, and that was one thing that I figured out. I knew I had a great team. Of course, everyone's going to be really biased. But when shit really hits the fan, that's when you know who you have around you and how they're going to how they're going to react. Not everyone reacted how I expected, but most did. And most people just, you know, I saw the most brilliant, professional, brave behavior and everyone just leaned in and we didn't ask people to come into the office, but it was amazing to see.

12:18We probably had 50 or 60 people just milling around the office. A lot of them not doing anything, right? Getting food, checking in, because people wanted to be together, have that support for for us that were in the middle of the storm there. So I don't know if I, there was no plan. You just basically, your job is to triage in those situations. Absolutely. I mean, it's like that's a good CEO, has the right context and the right ability to process the context and information to hopefully make the right decisions and outputs. But like from a personal perspective, what was, I mean, the personal impact must have been huge.

12:59certainly at the time, you know, tiredness and adrenaline and all those things, but also in the weeks and months afterwards. And like, you know, you and the team, I'm sure lost a lot of money, like you would have had a lot of options in the firm. I don't know how all of that sort of panned out and how you can reconcile that. Because for content, I mean, our audience, you know, there's lots of founders who listen to these podcasts. And it's the trials and tribulations of being a founder that here you kind of experienced. And when you lose a company, it's really hard emotionally. You lose a lot of money.

13:35You lose a lot of pride. You can see some of the work as wasted over the preceding years. What was the personal impact for you and how do you deal with it? Yeah, this is not something I've ever talked about publicly before. And I think it's really important to be transparent about it. I think personally, I struggled for at least 12 months after. And you cannot afford to show that to anyone, right? You have to be that swan. The clients, regulators, your colleagues, employees are looking at you to make sure that you have complete control, that everyone's in a good place. That's the hardest thing about it, is you have to keep all of that.

14:18Whether that's healthy or not is a different thing. And I am a very much a proponent of vulnerability and authentic leadership. But when you're in an emergency, some of that you have to put to one side and you really have to be that sort of that swan and that sense of calm and purpose. I think maybe probably what will resonate a lot with the founders here is you put so much of your personal identity in what you're building into your company. And we're collectively a very time core group, especially founders that are really scaling business is. And so it becomes a part of the fabric of who you are.

14:54And I definitely felt that loss, right, of putting over two decades of my life and building something I was unbelievably proud of and then seeing it dissipate in 48 hours is really just heartbreaking. So I think there's about a little bit of growth that I had to do around what is that identity if it's not Aaron, the CEO of of SBB UK. Yeah, there's there's the money part, which is which is really tough. Right. And everyone has a different relationship with with money. And and it's it is what it is. And that's a part of the of the impact that, you know, founders and people have to take that risk.

15:36I'm very fortunate in that I grew up with very, very little and I never thought I'd be in the position I am now. And so it's a massive reality check. But perspective is always really important. It's a really interesting subject, I think, that. And you mentioned that people have different relationships with money. How did you see those different relationships manifest in that period? You'd have seen it with a lot of your colleagues, friends, yourself. What were the approaches people took? Do you know what's extraordinary is it almost never came up internally. Everyone just took it on the chin and everyone was just so thankful that we were able to continue to operate and support the ecosystem and that people had jobs and time to continue to pay their mortgages and all that sort of stuff.

16:28stuff, it's astonishing how much that didn't, well, frequently, it wasn't, you know, people would have a moan of it over a beer in a pub, but it wasn't part of the narrative. It was more like, gosh, you know, so thankful that we found a great home and were able to keep operating. And then you just have to figure out the rest later. And, you know, HSBC were really fantastic acquirers. So we're able to create that continuity of employment for most people. unfortunately we had a bunch of folks in in our European offices that we had to gracefully say goodbye to and that's really difficult yeah yeah well thank you for sharing so much about it and obviously SVB was a very important part of the landscape and HSB Innovation Bank HSBC Innovation Bank is a still a very important part of the landscape and the the hard work done over those four days was so incredibly important to so many people so thank you to you and your team for doing all of that as well because it can't have been easy but um it feels like from the outside the best outcome was achieved and um a lot of hard work i know went into that so so so thank you i do want to try and are we going to do a four-day all-nighter in solidarity with the we don't have to no hopefully not some of the details uh um that uh it's not very pretty the office actually to share one anecdote which is on the um on the monday morning i got a call from ian stewart the uk ceo at hsbc and we had just signed the paperwork it was probably probably, I don't know, 5 a, it was probably 4 or 5 a.m.

18:18And he's like, listen, you know, looking good, paperwork signed. We were all, you know, breathing a sigh of relief, trying to figure out what those next steps were. But anyway, long story short, he said, listen, I want to come in. I want to come to the office. I'm going to bring a few colleagues. I want to meet with you, meet the team. And I was like, great, wonderful. We can't wait to, to, to see you. Immediately hung up, called Jenna Cook, my EA at the time. I was like, we need to get cleaners into the office. this it was absolutely disgusting it looks like a you know a frat house after a party it was uh not in a fun way but it was there was oh it's just an absolute mess so we had to pick those swans and we got the cleanup crew in really quickly yeah that's great and uh and then just very quickly before i do want to move on to more about octopus but after the uh acquisition what was that period like obviously there must have been a little bit of a resettling and a slight, you know, adjustment, lost some team members.

19:16But did you feel like you got to continue the sort of mission that you'd been on and deliver your core purpose as a business? Yeah, I think there's a couple of small things to share. You know, Noel Quinn, the CEO of HSBC Global at the time, a phenomenal leader, just an amazing man. You know, he made the decision to keep us in our own or same office. So rebrand us as HSBC to make sure that everyone knew that we were part of part of the business, you know, the backing of a trillion dollar plus balance sheet. But he really wanted to keep what was unique about SVB, what made us successful and translate that into HSBC.

20:00I think that was one of the main reasons why we were able to largely, right, not completely continue with the level of service and appetite. And it's a partnership approach that we had taken historically. So I think that was just a great move by Noel. The other thing is we, you know, we had a lot of work to do outside of just BAU, right? You touched on it. When you go through that, people are shaken into the course and competitors are reaching out. So 100 % of our client-facing staff got offers by the end of March. So you're trying to keep the team together in that period. And again, that transparency and the trust that you build before bad things happen as a leader is really quite important, more important than what you're doing at the time.

20:46But we ended up having at our peak, and I forget the numbers, low teens, mid-teens attrition. And within six or seven months, So you got that back down to below 10 % from memory. It's probably not 100 % right. But even after a bank run, we had lower attrition than most financial services do in good times. So it just speaks to the quality of, I think, the team and the leaders that we had in the business. The other part, though, is one of the big reasons why we weren't able to continue to operate, A, because our parent was taken over, but B, because we had outsourced our technology to the U.S. And at the time, it was a really good idea, right?

21:25Why would you replicate when you have a huge technology team in practice in your parents? So we had to unwind that. We did it in basically a little over 100 business days. To rewire a bank and do that in 100 business days is, I don't think anyone's ever done it before. As a comparable, JPM bought First Republic, and I think 18 months, they were still working on it. So just the amount of dedication and the hours, I mean, it was pretty extraordinary. But it was, I have to give Noel and HSBC and Ian Stewart a lot of credit for being such, you know, graceful colleagues. And they welcomed us really well into HSBC.

22:06I mean, it was an amazing, amazing result in the end. And so, yeah, hats off to all of you. I wonder what the, I mean, you kind of alluded to a few of them, but the sort of leadership lessons that you've, that you keep front of mind in your new role at Octopus, like, you know, maybe from that period, maybe from before, but what are the sort of key principles that you enter Octopus with? Yeah, I think there's, I talked about communication, right? Internal comms, external comms. I think that it's an obvious one, but it's always extraordinary to me how much you have to communicate for it to land at every level of an organization.

22:44how long it takes to get the message out there externally as well, right? In terms of new products, what you're doing, you know, relaunching a brand. So there's, you know, communication internally and externally is a massive sort of tool that I use just to keep everybody on the same page. I think you can move faster by taking a little bit more time. I mean, there's some nuance in that though, because the idea that you can communicate everything is wrong, you know, like total transparency isn't the right approach. And so I think the skill is in finding the right level of transparency. So how do you think about that?

23:23How do you think other CEOs, founders listening to this should think about determining that right level of transparency to your different stakeholders and groups? Yeah, I would say starting internally first, like every great business needs to have a real North Star and clarity of vision and purpose. and I think real then clarity of what you need to deliver to get there in one year, three years, five years. And, you know, using OKRs or whatever tools that you need to use to communicate that around that progress is really, really, really important. I think being visible, again, is something that I wouldn't underestimate, especially when you're leading organizations of a couple hundred people, three, four, five, six, 800 people, it's quite different than sub-150.

24:12So you have to force yourself, even if you think it's overkill, to be really quite visible. You know, I think that your leadership team largely should have 90 plus percent, if it's the right group, of the information that you have, but with context. Context is really important. And then as you go through the organization, how you talk about things needs to evolve. And the level of detail will change depending on the type of message that you want to get through and whether it's really good stuff or really challenging stuff. You don't want to distract people. But the job, I think, of a good leader is to make sure that when you ask, you know, octopus investments right now, we've got about five or six hundred people.

24:55My goal now, two and a half months in, is to make sure that if I walk the floor, every single person in the organization knows what our top three most important things are, what our values are, and really why we're here, what our purpose is. That is really the key. And it's easier kind of said than done. Yeah. And obviously, a lot of people will be aware of Octopus because of the energy company. And you've got Kraken that is the sort of operating system underneath that that powers a lot of other energy companies that people might not be aware of, but is a monstrous business in its own right. Could you share a little bit about what the future for Octopus looks like and some of the plans, some of what are those priorities that everyone should hopefully be aware of internally?

25:39Yeah, it is really, like I was saying earlier, it is an extraordinary group. And it's this really cool UK success story that I'm hoping, you know, based on the work that the team has done, that we can use as an example that what Greg has done at Octopus Energy and Kraken is absolutely amazing. Maybe I'll start with Octopus Ventures because I think, you know, obviously the audience. So, you know, we've been an active earlier stage investor for 15 plus years in the UK and will remain really, really committed to early stage investing in the UK. However, where I'd like to bring us as a platform is because of the unique entrepreneurial nature of the operating company that we are a part of, because of the unique sources of capital that we have at our disposal, whether that be balance sheet, retail, institutional, family office, wholesale, I would love us to broaden out from pre-seed to growth and make sure that we've got multiple funds that we're investing out of, but those funds are managed by the right team with the right level of experience and the right source of capital.

26:47Being able to do pre-seed to growth out of one pot of money is probably not the right move. But being able to have the infrastructure and the horizontal sort of support system around talent and reg and marketing, all that infrastructure, it was really expensive to build. And a lot of smaller funds just don't have the capacity to do it. We do, right? So making sure that we're really investing in that horizontal platform to enable founders to scale as effectively as possible is important. Really leveraging the right source of capital at the right time is something that we're working on to not just expand from pre-seed to growth, but also from a UK to pan-European perspective.

27:35Yeah, and I think just on that, am I right in saying you joined the Capital Markets Industry Task Force recently? And how does that also play into what you're doing and the sort of landscape that you're trying to help develop here? Yeah, I think that was what I did. I joined the Capital Market Task Force earlier this year. Having been a huge fan of Dame Julia Huggett for a while, it was really a pleasure to be asked to join. And I think, you know, as an ecosystem, I believe having, well, maybe taking a step back, as an ecosystem, you really have to have depth of capital and really expertise at every stage of a company's journey for us to be the healthiest ecosystem that we can be.

28:23And if I think about what the venture landscape looked like in 2007 when I came over here from the U.S., one of my main concerns is, wow, I don't think this market is big enough. I'm probably going to stay for a couple of years, have a good time, and then go back to the U.S. So it's unbelievable to see over the last almost 20 years how much progress we've made, but we haven't even gotten started. And Sol Klein and Robin Klein, two of my favorite people in the ecosystem, Sol always says it took 20 years to get here and now off we go. As part of that, you need this capital continuum from first dollar a pound in through to a really, really healthy capital markets and everything in between.

29:10And I think it's fair to say we've got some work to do on that. The good news is that the problem from a capital continuum perspective keeps getting later and later. First it was, you know, we don't have enough money at Series A. Then it was kind of Series B, now growth capital, public markets. So we're making progress. But I've always been a firm believer if we've got some things that we want to optimize as an ecosystem, you can either kind of throw stones from the sidelines and complain about it, or you can lean in and see how you can help. And so it's been a pleasure to work with some of the team there on how do we make that bridge from capital to private to public as robust as possible and make it, I guess my personal goal is making it really, really hard for exceptional founders to decide where to list.

30:01Right now, I don't know if that's the case, but I'm convinced that we'll be able to get there. so hector just before you go on because um i've got a follow-up to that without getting too political because that you you might not want to sort of jump into that but how much can be driven by the industry and us all wanting to deliver all of that more growth capital better you know ipo opportunities things like that capital markets and how much are we somewhat limited by our geography in the sense of like we are smaller markets than you know each country is like a state in the US you know we're a smaller market and also the political culture how much impact can we have and maybe that's an opportunity to say lots which would be great um but yeah yeah it sometimes feels like we're all asking for the same thing and then we're getting resistance at a high level.