Silicon Valley is buzzing with recent activity from several notable investors, who’ve told their portfolio companies to batten down the hatches for an impending recession that will be extremely challenging. For example, Sequoia, one of the premiere venture capital firms out here, held an emergency meeting with its portfolio CEOs last week. Below is the extraordinary presentation they made. And here are notes from the presentation.
As always, I Will Teach You To Be Rich readers frown on predictions (because they’re almost always wrong). But, at the very least, here’s a look behind the veil at how startups are behaving to an economic downturn — along with some fascinating data.
Sequoia Venture Capital Warning to CEOs – Get more Business Plans
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Or read more links from my personal entrepreneurship section.
I'm the New York Times bestselling author of I Will Teach You To Be Rich. I co-founded PBwiki and graduated from Stanford.
12 comments
Leave a commentSome scary charts in there, but I like the “manage what you can” and “watch cashflow” bits. Very important reminders for entrepreneurs.
The advice that Sequoia gives its companies is advice that should be heeded regardless of the current economic situation. Stay lean, cash is king, reduce overhead: these are ideas that should have been implemented before the doomsday scenario that they presented.
If you need a more indepth analysis of how startups should respond, see this slideshow:
http://www.docstoc.com/docs/1857261/Whiner-Jerkins-All-Hands-101308
Also, you need to adjust the dimensions of your embedded presentation. It’s going into your sidebar.
That’s a good read!
Although predictions can do more harm than good, I believe preparation is the key here. It’s like planning for a hurricane. While nobody may be sure where it may end up next, it’s still best to be prepared just the same.
As the saying goes, “An ounce of prevention is worth a pound of cure.”
Why did they say spend every dollar like it’s your last in The Solution slide? Is that there way of saying enjoy life while it lasts or to not save…am I reading it wrong?
@topseekrit
They just mean to be as frugal as possible when it comes to spending dollars, because getting dollars in the door is very difficult in this environment.
It’s a tough world for startups. These venture capitalists aren’t dishing out the dollars like they were in years past. Even the most worthy endeavor has trouble getting financed these days, as the people with cash want to keep it close.
@ Topseekrit see slide 49. Being wise with your resources is always prudent. Knowing when to be prudent is especially timely.
> frown on predictions
Is the word “predictions” being used to describe more than it should? Instead of predictions, I’d like to think in terms of 1.) aggregating a range of possible outcomes 2.) recognizing what happened soon thereafter.
Take poker, for example. Is it a simple prediction of which card will appear next? No, it is a pricing of the most likely scenarios, which are then re-priced in light of additional information.
Or take driving. If you see a car swerving all over the road, you cannot predict exactly where it will end up. But you are sure going to drive more defensively.
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