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Adapting to Endure – Sequoia Capital [pdf]

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Re: Adapting to Endure – Sequoia Capital [pdf]

#61

Post by refurb »

rzazueta wrote: post #56
throwawaylinux wrote: post #35

Earlier quoted context omitted.

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.

A lot of the "inflation" is straight up corporate profiteering at this point. How else do you explain the record profits many companies experienced during and after the pandemic before the threat of rate hikes? The answer to the why of all of this is super easy: greed.

You realize that inflation hit corporate profits too?

If a company has a profit of $10M and inflation is 10%, then the following year a profit of $11M is a "real profit" of $0.

Re: Adapting to Endure – Sequoia Capital [pdf]

#62

Post by refurb »

FormFollowsFunc wrote: post #47
throwawaylinux wrote: post #35

Earlier quoted context omitted.

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.

Inflation in America has more to do with the COVID lock downs in China. Ukraine is having more of an effect on Europe which is highly dependent on gas from Russia.

China didn't start it's Covid lockdown until after inflation started.

Re: Adapting to Endure – Sequoia Capital [pdf]

#63

Post by throwawaylinux »

bcassedy wrote: post #60
throwawaylinux wrote: post #58

Earlier quoted context omitted.

I don't find that answer very satisfactory at all. Did they suddenly become greedy in 2020 where previously they were foregoing profit out of the goodness of their hearts? Corporations are a tool, like a hammer. They're not good or evil. They exist and operate as they are permitted to. And human nature hasn't changed either, everyone is "greedy" to a first order approximation. So what has changed? What conditions hav…

An inflation narrative gives cover for price hikes driven by greed.

It could do. And a greed narrative gives (poor) cover for price hikes driven by any number of other things. Just stating these things does not help us get an understanding though. I want to know what changed.

I'd be more inclined to believe the disruption from production to supply chains to storage and demand, migration, etc due to covid regulations (not just the Chinese lockdowns) to have had the major impact. But it could also be for example energy costs due to expensive green regulations, or cartel behavior from energy producers because energy prices have been a major leader in price increases and those affect virtually everything else. Just saying "greed" doesn't help understand anything. People are greedy, we already knew that. Aristotle knew that.

Re: Adapting to Endure – Sequoia Capital [pdf]

#64

Post by throwaway_1928 »

PheonixPharts wrote: post #51
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…

What you're missing is the larger picture. Anyone paying attention in the industry knew in 2019, pre-pandemic, that something wasn't quite right. Companies were hiring way more people than they needed, growing way too fast, building products that didn't make sense, pivoting to increasingly user hostile products, etc. But it kept going because VC and other investor money just kept flowing in. Then pandemic hit. Everyo…

Well said. 2021 was the perfect year for VCs to unload their trash on the retail investor.

Re: Adapting to Endure – Sequoia Capital [pdf]

#65

Post by tyrfing »

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.

Disagree. They want to maximize the number of portfolio companies that survive in an environment where a significant fraction will not. This is a message that the money faucet has turned off, and that there will be pain - a timely breakdown of the ongoing macro effects. Note how "raise more money" is at the very bottom of suggested actions (pg35).

> Time to get your team's commitment for the path forward or... politely ask them to lighten the lifeboat

That's a gem.

Re: Adapting to Endure – Sequoia Capital [pdf]

#66

Post by CamperBob2 »

rzazueta wrote: post #56
throwawaylinux wrote: post #35

Earlier quoted context omitted.

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.

A lot of the "inflation" is straight up corporate profiteering at this point. How else do you explain the record profits many companies experienced during and after the pandemic before the threat of rate hikes? The answer to the why of all of this is super easy: greed.

For any company making things -- well, to be fair, I can only speak for one of them -- the costs of goods sold has gone to the stratosphere.

This is not a joke, or an excuse, or an apology, just a statement of indisputable fact. Inflation hasn't really gotten started yet. And it's not (just) greed. An FPGA that cost us $40 at DigiKey two years ago is now $700 at $SKETCHY_CHINESE_BROKER. Somebody^WEverybody is going to pay for this.

Re: Adapting to Endure – Sequoia Capital [pdf]

#67

Post by bcassedy »

throwawaylinux wrote: post #63
bcassedy wrote: post #60

Earlier quoted context omitted.

An inflation narrative gives cover for price hikes driven by greed.

It could do. And a greed narrative gives (poor) cover for price hikes driven by any number of other things. Just stating these things does not help us get an understanding though. I want to know what changed. I'd be more inclined to believe the disruption from production to supply chains to storage and demand, migration, etc due to covid regulations (not just the Chinese lockdowns) to have had the major impact. But i…

I'm not saying none of those things are factors. I am saying that you can find quotes of executives talking about how great it is to raise prices right now. And plenty of evidence of profit increases substantially above inflation.

Re: Adapting to Endure – Sequoia Capital [pdf]

#68

Post by Sylveste »

Apofis wrote: post #52
PheonixPharts wrote: post #51

Earlier quoted context omitted.

What you're missing is the larger picture. Anyone paying attention in the industry knew in 2019, pre-pandemic, that something wasn't quite right. Companies were hiring way more people than they needed, growing way too fast, building products that didn't make sense, pivoting to increasingly user hostile products, etc. But it kept going because VC and other investor money just kept flowing in. Then pandemic hit. Everyo…

Me thinks you're overstating it because you don't understand how VC's function. Venture Capitalists borrow money from Investment Bankers based on percentages. The market has lost all of its gains during the pandemic, that trend is still bearish. The risk percentages were adjusted, and now there's less money to go around. It's seriously basic math.

>The market has lost all of its gains during the pandemic

No it hasn't. Not even close.

Re: Adapting to Endure – Sequoia Capital [pdf]

#69

Post by randomsearch »

PheonixPharts wrote: post #51
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…

What you're missing is the larger picture. Anyone paying attention in the industry knew in 2019, pre-pandemic, that something wasn't quite right. Companies were hiring way more people than they needed, growing way too fast, building products that didn't make sense, pivoting to increasingly user hostile products, etc. But it kept going because VC and other investor money just kept flowing in. Then pandemic hit. Everyo…

Agree except I had assumed the VCs were being opportunistic in unloading, rather than actually shaping policy. Do you have any evidence that they shaped it? Seems there were other significant reasons for stimulus programmes not just saving VCs.

Re: Adapting to Endure – Sequoia Capital [pdf]

#70

Post by simonebrunozzi »

PheonixPharts wrote: post #51
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…

What you're missing is the larger picture. Anyone paying attention in the industry knew in 2019, pre-pandemic, that something wasn't quite right. Companies were hiring way more people than they needed, growing way too fast, building products that didn't make sense, pivoting to increasingly user hostile products, etc. But it kept going because VC and other investor money just kept flowing in. Then pandemic hit. Everyo…

> This happened for what is in retrospect and obvious reason: Big name investors and VCs needed time to cash out.

HUGE conspiracy theory here. Also, you are giving VCs too much credit. They're not super smart, with a few exceptions.

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