
Sequoia Capital’s 56 Slide Presentation Of Doom - jasonlbaptiste
http://www.techcrunch.com/2008/10/10/sequoia-capitals-56-slide-powerpoint-presentation-of-doom/
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anamax
Supposedly one of (Sequoia partner) Doug Lenone's slides was "If the product
is ready, cut the number of engineers."

That’s going to make it tough for to get and keep engineers. When hiring,
there will be increased resistance to four year vesting and one year cliffs,
especially when a product is close to "ready". The engineers that they have
will be more likely to leave a 3/4 to "ready"product for another
company/product that is only 1/4 to "ready".

“Cut engineers when ready" makes sense only for companies only have one
product and it’s "done" at some point. Companies that work that way shouldn’t
employ engineers - they should contract out.

~~~
skmurphy
Slide 47 from [http://www.slideshare.net/eldon/sequoia-capital-on-
startups-...](http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-
the-economic-downturn-presentation) shows that they are encouraging cuts in
every department. The line for engineering is "Decrease headcount for next
version?" which is in line with their other questions

    
    
       Product: What Features Are Absolutely Essential? 
       Marketing: Measuring & Cutting What's Not Working? 
       Sales & Bus Dev: Getting Return On Expense Increase? 
       Pipeline: Real Probabilities Of Closing Deals? 
       Finance Cashburn: Where Can Payments Be Deferred?
       Finance G&A: What Departments Are Essential?

~~~
anamax
Yup, and those folks should react the same way.

~~~
skmurphy
After the dotcom crash, the number of jobs in Silicon Valley dropped about 25%
from their peak. This affected most people's ability to negotiate better
compensation because demand dried up. Depending upon the severity of this
contraction many different disciplines and professions may experience the same
thing. Sequoia folks understand that engineering is a key driver for
innovation, the fact that they are telling portfolio CEO's to consider cutting
engineering indicates their concern as to the severity and longevity of a
contraction.

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rgrieselhuber
I find it difficult to believe that these guys didn't see this coming at least
a year ago; their own data from a year ago certainly points in that direction.
So, why are they presenting the doom deck now?

The VCs I have met were talking about a serious downturn over 16 months ago
and I've known for at least 4 years that the real estate bubble was going to
cause a lot of problems. I think lots of people saw this coming. So, why did
we have to get to this point before getting such sober advice? Seems odd to
me.

~~~
alexandros
have you read the black swan? graphs can be made to explain everything. after
the fact.

~~~
alecco
You don't need to read Taleb to know that. "Lies, damn lies, and statistics"
:)

About Taleb, "when all you know is the hammer..." He is no renowned economist.
MBA and Phd. in management. Oh, and he teaches risk. Try Roubini, it's even
more dramatic.

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biohacker42
Anyone here lived through the Japan depression care to share their experiences
with us?

~~~
hugh
It was terrible. People were forced to eat raw fish for sustenance. They
couldn't get full-sized electronics, so they were forced to make tiny ones.
Unable to afford proper entertainment, folks would make do by taking turns to
get up and sing songs.

~~~
ojbyrne
And they couldn't find beer or proper mix for their drinks. So they drank
scotch.

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alaskamiller
How many souls of Sequoia interns went into this?!?!?

~~~
Sam_Odio
I'm pretty sure sequoia doesn't have internships. Or, at least, they're not
easy to get.

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fallentimes
Agreed. But they have lots of secretaries. Lots of hot, smiling secretaries. I
need to schedule another appointment soon.

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stcredzero
Having lots of young, nubile women around is a primitive Homo sapiens
dominance signal. Gartner group pulls out this sort of stuff for their
junkets.

~~~
fallentimes
Tongue in cheek.

~~~
nostrademons
Your cheek or hers? ;-)

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JoelSutherland
I find it fascinating that just a couple of slides have data for this year.
Should this financial mess be a "surprise" at all? Just the chart of home
values should have been a clue:

<http://www.1stmillionat33.com/posts/06-09-12/house_his.gif>

~~~
SwellJoe
While that graph is interesting (and I've seen it referenced a number of times
in a number of places), I've always found the scale misleading. Almost the
whole bottom of it (0-50) is chopped off...so what looks like a logarithmic
leap, is really merely doubling. While doubling is dramatic, and certainly a
sign of something amiss (either tremendous inflation, or something else that
is distorting value), it's not the astronomical rise the chart feels like when
you first see it.

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apstuff
Doom? Looks more like a countdown to something. While most major corrections
since 1929 have occurred on 4/1, 7/1 or 10/1, this one dropped out on
10/09/08. Hmmm, let me guess, the Dow's bottom is at 7,654.

We are currently at T minus 8 and holding . . . our breath.

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sunilbhargava
These slides seem to suggest that the exits will be smaller for while. They
are missing one critical slide - one that tells entrepreneurs to look at their
cap table and terms and if they don't make sense at a small exit, get
recapitalized or go home (take off the suit, put on some jeans and apply for
the next YC session)

~~~
prakash
good point :-)

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jedc
That's a great summary of the macroeconomics that led to the current
situation. I'm a bit surprised Sequoia went into that much detail, but they've
got some great advice for their CEO's at the end. (Get cash-flow positive!!)

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josefresco
This is one of those threads that just never dies.

