Thursday, October 09, 2008

venturebeat: scary stuff from sequoia regarding the economy

"Here are presentation excerpts and comments drawn from a leak posted on GigaOm and as 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
Spending cuts will accelerate through this quarter and into next year
Only lean companies with proven sales models will be acquisition targets
Doug Leone, General Partner, Sequoia Capital

Get aggressive with public relations communication strategies; cut marketing that doesn’t work
Offer a product that reduces expenses and drives revenue
Preserve capital over trying to gain market share
Begin with zero-based budgeting to help prioritize necessary expenses
Have at least one year’s worth of cash available
Reduce expenses around products and boost sales; if product is ready, cut engineers (wow)
Build essential product features first
Reward salespeople based on commission, not base salaries
The final point: Get real or go home"

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