First Adopter

GigOM has his notes on Sequoia Capital’s meeting with their portfolio companies to tell them to prepare for the upcoming severe recession. Sequoia is widely regarded as the best venture capital firm in the world. Here’s some choice quotes:

His message to companies was don’t worry about getting ahead, instead, “We’re talking survive. Get this point into your heads.” He warned that companies need to be cash-flow positive, and if they are not, then they need to get there now, because raising capital without being cash-flow positive is going to be tough. He was warning that there will be a price to pay for those who hesitate to act. - Mike Moritz

Told the room that we are in the beginning of a long cycle, what he called a “secular bear market.” This could be a 15-year problem, he said. This comment was accompanied by many slides that showed historical charts of previous recessions averaging 17-year cycles. He pointed out that the issue here is not the equity markets but the credit market, and that will take a long time to recover. - Eric Upin

This downturn was a different animal and one from which it would take “years to recover.” When it comes to deciding between capital preservation and grabbing market share, he advised that everyone should be preserving capital. Cutting deeper is the formula to survive, and this is an era of survival of the quickest. - Doug Leone