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Adapting to Endure – Sequoia Capital [pdf]

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Re: Adapting to Endure – Sequoia Capital [pdf]

#31

Post by twayt »

polote wrote: post #24

I really struggle to believe all this thing. We have some inflation because of covid stimulus and Ukraine war, sure. So the fed is going to increase the rate, sure. And everyone is panicking at the same time so markets are falling. Poor people have less money because they need to pay for more expensive food but all the others still have money to invest, so I don't understand what it changes for vc ( except for the mo…

On the outside, VC should theoretically be about value investing in the best startups that have sound fundamentals and can grow. Practically, when the market is optimistic and everyone wants to invest in high growth startups, the game can become about "passing the bag". Invest in a company at a low valuation in their seed or series A and wait for a later stage investor to come in and be the one left holding the bag. Ideally, the startup generates enough hype to IPO and then all the investors have a successful exit. You can see this trajectory with startups like WeWork.

When the market is not that optimistic anymore and people are in conservation mode, there's no one to pass the bag to anymore so VCs have to appropriately adjust which businesses they are going to invest in and the valuation.

This is why hype, signaling and FOMO plays such an important role in fundraising. It is about whether the startup can generate enough promise to convince others that they're a high growth investment vehicle and not as much about whether they are profitable in the short term.

Re: Adapting to Endure – Sequoia Capital [pdf]

#32

Post by deeptote »

this_user wrote: post #29
tyingq wrote: post #17

Earlier quoted context omitted.

The party was over in 2008 too, yet here we are.

In 2008 monetary and fiscal policy was not constrained by high inflation. Not it is. Anything that depends on inflows of cheap new capital will suffer. That concerns unprofitable companies as well as assets that generate no cash flows like anything crypto.

Crypto is a fucking scam and I will die on this hill.

Re: Adapting to Endure – Sequoia Capital [pdf]

#33

Post by bloodyplonker22 »

Panzer04 wrote: post #23

Of course, they have a vested interest in companies believing that this is going to be both an impactful and severe downturn, given they are capital providers. I'd take this with the appropriate grains of salt.

I'd take your comment with a much larger grain of salt. Be aware that all of Sequoia's existing VC investments are getting marked down drastically as well. Private company valuations don't just magically stay at above market levels when the public markets go down.

Re: Adapting to Endure – Sequoia Capital [pdf]

#34

Post by rdxm »

eloff wrote: post #16
sshine wrote: post #12

These slides feel surprisingly like a twitter-style blog sequence. . . Somehow, I feel like I’m being served ads. By a hedge fund. Walk away.

Technicality: Sequoia Capital is not a hedge fund. It's a private/venture capital firm.

No post body was provided.

Re: Adapting to Endure – Sequoia Capital [pdf]

#35

Post by throwawaylinux »

polote wrote: post #24

I really struggle to believe all this thing. We have some inflation because of covid stimulus and Ukraine war, sure. So the fed is going to increase the rate, sure. And everyone is panicking at the same time so markets are falling. Poor people have less money because they need to pay for more expensive food but all the others still have money to invest, so I don't understand what it changes for vc ( except for the mo…

Is there significant inflation due to the Ukraine war?

Inflation started to take off about April last year, and was 7.9% at the end of February this year when Russia invaded Ukraine. Since then it rose about a half percent and then started to drop, as sanctions have been implemented.

Re: Adapting to Endure – Sequoia Capital [pdf]

#37

Post by version_five »

deeptote wrote: post #32
this_user wrote: post #29

Earlier quoted context omitted.

In 2008 monetary and fiscal policy was not constrained by high inflation. Not it is. Anything that depends on inflows of cheap new capital will suffer. That concerns unprofitable companies as well as assets that generate no cash flows like anything crypto.

Crypto is a fucking scam and I will die on this hill.

Yes, it's a scam. I don't see a downturn making people more wise about this though. Crypto shills have a plausible reason for a decline in value, and otherwise it's not like anything is happening to get the scammed (often just the greedy) to increase their sophistication so they can understand it's a scam.

This is one of the rare times I'd say it, but I think legislation is needed. Crypto is a so-far-legal outlet for various financial schemes (ponzi, pump-and-dump, securities fraud, etc) that all are covered under existing laws. We just need to extend the law to these new instruments so people can't legally con others just by saying "blockchain"

Re: Adapting to Endure – Sequoia Capital [pdf]

#38

Post by iancmceachern »

deeptote wrote: post #32
this_user wrote: post #29

Earlier quoted context omitted.

In 2008 monetary and fiscal policy was not constrained by high inflation. Not it is. Anything that depends on inflows of cheap new capital will suffer. That concerns unprofitable companies as well as assets that generate no cash flows like anything crypto.

Crypto is a fucking scam and I will die on this hill.

I'll be there with you. It doesn't add value to the world. If you go mine some gold, silver, coal, he'll, even dirt. It all has an intrinsic value for what it can be used for. Even dirt can be used to grow crops or fill in the sea.

Crypto is worthless because it doesn't DO anything.

Re: Adapting to Endure – Sequoia Capital [pdf]

#39

Post by voisin »

paulpauper wrote: post #21
eloff wrote: post #18

Earlier quoted context omitted.

Bear rallies are fierce. I do not think we've hit bottom yet. Notably this opinion is shared by Michael Burry, Jeremy Grantham, and Ray Dalio, among others.

bear markets tend to be much briefer than bull markets. Odds are if you try to time it you will end up selling too soon, buying back too late. How do you know if a bear market rally is the start of a new bull market? You don't, which is why I err on the side of not selling.

> bear markets tend to be much briefer than bull markets.

Is this because governments are quick to drop rates and add QE but slow to do the opposite?

Re: Adapting to Endure – Sequoia Capital [pdf]

#40

Post by greatpostman »

Panzer04 wrote: post #23

Of course, they have a vested interest in companies believing that this is going to be both an impactful and severe downturn, given they are capital providers. I'd take this with the appropriate grains of salt.

Sequoia is the top of the top, I don’t think they think like this
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