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Sequoia Capital: Armchair quarterbacks

37signals.com

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Re: Sequoia Capital: Armchair quarterbacks

#21

Post by cstejerean »

sabat wrote: post #9
pg wrote: post #3

This is an attack on a strawman. What the Sequoia presentation says is: Economic conditions vary. In bad times you can't take as much risk. Bad times are here. Stop taking risks. Though I don't endorse Sequoia's conclusions (I don't know how bad the economy will get, or how long it will stay that way), the chain of reasoning is just common sense. It doesn't make them hypocrites, or imply that what they had been telli…

It's not an attack on a straw man. It's an attack on Sequoia's logic and its presumptions -- a valid attack, if you ask me. Except for Sequoia's recommendation for stasis (bad advice in any conditions), all of its suggestions are how you run a startup . If you aren't doing everything that the deck suggests, your startup probably isn't going to do well. As a startup, you should not be taking stupid risks. Smart risks:…

"If you aren't doing everything that the deck suggests, your startup probably isn't going to do well."

It depends on the business models. Some companies can be built cheap and they can reach profitability quickly. Not all companies can follow this model. Sequoia doesn't just invest in YC style companies that can be built by 2 people over 3 months. I highly recommend you take a look at http://www.sequoiacap.com/company/all-stages

"Google, while a startup, added value to the universe and soon enough figured out how to take monetary advantage of that value."

How do you define "soon enough"? IMHO soon enough at a time where there's plenty of venture capital to go around might be very different from soon enough at a time when capital is scarce. Take a look for example at the story of how Amazon reached profitability. http://seattlepi.nwsource.com/business/158315_amazon28.html Amazon also figured out how to become profitable, but it took them 6 years to do so. That was soon enough back then, it might not be soon enough today.

Re: Sequoia Capital: Armchair quarterbacks

#22

Post by pg »

smakz wrote: post #12
mixmax wrote: post #2

This seems like blatant linkbaiting from 37signals, and frankly I think it's childish. They know quite well (or at least they should) that the reason some companies get a huge cash injection from investors is to grow fast and grab marketshare. This costs a lot of money. It's a risky strategy but if it works it pays off bigtime. The get fast big strategy is obviously not for 37signals, but I'm sure they are aware that…

Just curious, can you think of another company besides Amazon where 'get big fast' actually worked? "Get big fast" was actually a rather symbolic phrase for the excesses of bubble spending. It worked for amazon and few others.

It was used fairly successfully by both of the two most famous early Web cos, Netscape and Yahoo. In fact it was their example that made the idea popular.

Re: Sequoia Capital: Armchair quarterbacks

#23

Post by dhouston »

smakz wrote: post #12
mixmax wrote: post #2

This seems like blatant linkbaiting from 37signals, and frankly I think it's childish. They know quite well (or at least they should) that the reason some companies get a huge cash injection from investors is to grow fast and grab marketshare. This costs a lot of money. It's a risky strategy but if it works it pays off bigtime. The get fast big strategy is obviously not for 37signals, but I'm sure they are aware that…

Just curious, can you think of another company besides Amazon where 'get big fast' actually worked? "Get big fast" was actually a rather symbolic phrase for the excesses of bubble spending. It worked for amazon and few others.

facebook, youtube

Re: Sequoia Capital: Armchair quarterbacks

#24

Post by nostrademons »

mixmax wrote: post #13
smakz wrote: post #12

Earlier quoted context omitted.

Just curious, can you think of another company besides Amazon where 'get big fast' actually worked? "Get big fast" was actually a rather symbolic phrase for the excesses of bubble spending. It worked for amazon and few others.

I'm not on firm ground here, but I would think that ebay, Cisco and paypal are all in that category.

EBay got big slowly...they went almost 2 years between initial launch and VC funding. Also, they're one of the few companies that was profitable before the founder quit his day job.

Re: Sequoia Capital: Armchair quarterbacks

#25

Post by hooande »

Personally I think Sequoia's goal with these slides was to calm people down and provide reassurance during tough economic times. I don't think they were trying to really get people to change their spending or strategies. The people at Sequoia are definitely smart enough to not recommend major business changes based on the events of a few weeks.

Kind of saying "Just stick to the basics and everything will be fine people". As a vc, I would imagine there is some incentive to keep the confidence of your portfolio companies up in tough times.

Re: Sequoia Capital: Armchair quarterbacks

#26

Post by dhuck »

fallentimes wrote: post #16
sabat wrote: post #9

Earlier quoted context omitted.

It's not an attack on a straw man. It's an attack on Sequoia's logic and its presumptions -- a valid attack, if you ask me. Except for Sequoia's recommendation for stasis (bad advice in any conditions), all of its suggestions are how you run a startup . If you aren't doing everything that the deck suggests, your startup probably isn't going to do well. As a startup, you should not be taking stupid risks. Smart risks:…

It's not like this is the first time Sequoia has said this to their entrepreneurs. They've been doing it in private and in meetings. This just represented their first public stance on the issue. In good times, it can (but not always) make sense to spend more money on marketing and headcount for experimentation purposes and because a really talented person is available (even if you don't have an immediate role for the…

I think it's important to note that this was not a public meeting for all CEOs of all companies everywhere - just their portfolio companies. Sequoia asked the CEOs to keep everything private, but then the notes leaked, then the slides leaked, and then Sequoia was forced to discuss it. Splitting hairs, maybe, but I think it's an important distinction.

Re: Sequoia Capital: Armchair quarterbacks

#27

Post by skmurphy »

mixmax wrote: post #13
smakz wrote: post #12

Earlier quoted context omitted.

Just curious, can you think of another company besides Amazon where 'get big fast' actually worked? "Get big fast" was actually a rather symbolic phrase for the excesses of bubble spending. It worked for amazon and few others.

I'm not on firm ground here, but I would think that ebay, Cisco and paypal are all in that category.

Cisco grew profitably from before they took Sequoia's money. Some years they grew rapidly, but always profitably until the dotcom crash.

Re: Sequoia Capital: Armchair quarterbacks

#28

Post by netcan »

sabat wrote: post #9
pg wrote: post #3

This is an attack on a strawman. What the Sequoia presentation says is: Economic conditions vary. In bad times you can't take as much risk. Bad times are here. Stop taking risks. Though I don't endorse Sequoia's conclusions (I don't know how bad the economy will get, or how long it will stay that way), the chain of reasoning is just common sense. It doesn't make them hypocrites, or imply that what they had been telli…

It's not an attack on a straw man. It's an attack on Sequoia's logic and its presumptions -- a valid attack, if you ask me. Except for Sequoia's recommendation for stasis (bad advice in any conditions), all of its suggestions are how you run a startup . If you aren't doing everything that the deck suggests, your startup probably isn't going to do well. As a startup, you should not be taking stupid risks. Smart risks:…

he other point makes the simplistic assumption that because advice is do A, when A is universally good, that it's useless advice.

When Sequoia (or anyone) advises to now reduce debt, focus on positive cash flow etc. etc. What they mean is not that these things are suddenly good things. What they mean is that they are suddenly more important. Your ability to raise capital has just sunk. The likelihood of new, highly funded competition has just sunk.

The post just makes a silly sort of a 'positive cash flow? wasn't that a good idea yesterday?'

Re: Sequoia Capital: Armchair quarterbacks

#30

Post by fallentimes »

dhuck wrote: post #26
fallentimes wrote: post #16

Earlier quoted context omitted.

It's not like this is the first time Sequoia has said this to their entrepreneurs. They've been doing it in private and in meetings. This just represented their first public stance on the issue. In good times, it can (but not always) make sense to spend more money on marketing and headcount for experimentation purposes and because a really talented person is available (even if you don't have an immediate role for the…

I think it's important to note that this was not a public meeting for all CEOs of all companies everywhere - just their portfolio companies. Sequoia asked the CEOs to keep everything private, but then the notes leaked, then the slides leaked, and then Sequoia was forced to discuss it. Splitting hairs, maybe, but I think it's an important distinction.

Let's be honest - they knew what was going to happen. It's Silicon Valley.
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