A CEO's Sequoia Meeting Notes

There are bigger things in the global economy than the opinions of Sequoia. This may not be very popular to say here. It is likely companies like Sequoia got burned worse than many other businesses. Money that funds them comes from investments like the stock market which has lost ~ 2 trillion dollars in value in the last few months. On top of that the last thing most big companies are thinking about are acquisitions - let alone IPOs. I understand their pessimism but I don't think it necessarily applies to the whole economy over the next 15 years.

<i>We are in the beginning of a long cycle, what we call a “Secular Bear Market.” This could be a 15 year problem. </i><p>Really grim news if it turns out to be true.

<i>Operations review: Engineering: Since you already have a product, strongly consider reducing the number of engineers that you have.</i><p>:(

The whole "forget growth and get to positive cash flow" push sounds a lot like the 37signals business plan.

The speakers at that meeting don't need to worry about survival. They're probably all ultra high net-worth individuals. It's the CEOs who they want to make tough choices and live tough. In the end, the downturn just has status and reputation implications for these partners, and making sure they feel the pain of (or with) their comrades, or at least appear that way, like they are here.

I just sent these notes to many of my founder friends. Please do the same. I don't think I'd ever bet against Sequoia.<p>Even if they're wrong, most of what they said is a good practice regardless of economic state.

This whole line of thinking is great for companies as a whole. If it forces more companies to be more responsible and efficient with capital, I don't see a problem.

It makes sense. The credit markets are imploding so it's going to be harder to borrow. Basically you need to survive by not borrowing, so get cash flow positive.<p>I think this crash is analogous to the long depression:<p><a href="http://en.wikipedia.org/wiki/Long_Depression" rel="nofollow">http://en.wikipedia.org/wiki/Long_Depression</a><p>But I doubt it will take as long to recover as it did in 1873.

Counter this doombaya ceremony with these (wiser) comments (pulled from a CNN economic report), below. Most salient point: <i>This is a financial panic, not an economic one.</i><p>QUOTE:<p><i>The weak dollar is boosting demand for our goods abroad, and lower gas prices are making Americans feel more flush. Add in the cash that the Fed has been hosing into the banking system and we are bound to see growth in 2009. "If all this stimulus has no effect on the economy, that would be a rarity indeed," says Paulsen.</i><p><i>Standard &#38; Poor's chief economist David Wyss expects a mild recession that ends next spring. "Gradually we will regain confidence in the market. Lower oil prices and a falling trade deficit will help," he says. "This is a financial panic, not an economic one."</i><p><i>Of course, that could change if the financial panic doesn't abate soon. If banks remain too scared or broke to lend, would-be home buyers will be frozen out of the market. If that happens, home values could fall even more, crimping confidence and putting the brakes on the economy's greatest engine: the consumer.</i>

Smacks more of abject panic than it does common sense. If a company has to work <i>that</i> hard to survive, then it would never survive a 15-year (?? unprecedented and hyperbolic) depression anyway. Better to sell everything off and close the doors.<p>Seriously. If things are as bleak as the Sequoia panickers are saying, then most of their companies should probably just cut their losses by selling off capital assets and closing their doors. Better that than going down in three years with nothing left.