Thursday, October 30, 2008

Sequoia's Economic Meeting

Hat tip Ellen

More details on Sequoia’s economic “inconvenient truth” meeting

Sequoia Capital, a premier Silicon Valley venture firm, held a meeting on Tuesday during which it told its portfolio companies to cut costs and prepare for an economic downturn that could last many years.

The presentation, one attendee tells me, was like the global warming wake-up call movie “An Inconvenient Truth.” But instead of Al Gore running through a bunch of slides about the environment, it was billionaire investors running through a bunch of slides about a “very cataclysmic” economic future.

Here are presentation excerpts and comments drawn from a leak posted on GigaOm and left in comments on Silicon Alley Insider. Our sources have confirmed their accuracy.

Mike Moritz, General Partner, Sequoia Capital:

“We’re talking survival. Get this point into your heads.”

Companies need to be cash-flow positive, if nothing else in order to justify additional funding

Eric Upin, Partner, Sequoia Capital, formerly ran Stanford University’s $26 billion endowment fund:

This could be at least a 15-year downward cycle, judging by historical trends; the credit market will take a long time to recover

Startups need to deeply cut expenses, and throw out existing projections
Michael Beckwith, Partner, Sequoia Capital:

A dramatic recovery is unlikely

The final point: Get real or go home

Briefing Below:

Sequoia Capital on startups and the economic downturn

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