Sequoia Capital, Ron Conway Issue Warnings
It’s officially time for tech companies to take cover. Sequoia Capital (a venture capital firm known for backing Apple, Google, and YouTube) and Ron Conway (an angel investor behind Google and PayPal) have advised entities in their portfolios to cut costs and hunker down.
Sequoia started a meeting yesterday with – no joke – an image of a gravestone and the phrase "R.I.P.: Good Times," according to Om Malik. Malik reports, "The message delivered to those in attendance was that things could get a lot worse than people think, and it will be a more protracted downturn. To give a historical perspective, Sequoia had a similar meeting back before the last bubble unraveled. We know how that turned out."
As for Conway, he sent a note to the CEOs of his portfolio companies, and actually included the text of two emails from 2000. Quite a few executives’ assistants were probably sent out to acquire antacids as a result.
Anyway, the main points made by Sequoia and Conway were that companies should focus on survival more than anything. Sequoia alluded to a years-long slump. Conway talked in terms of months, but specifically mentioned the drastic step of employee layoffs as a way of reducing expenses.
The odds of both Sequoia and Conway being off base are pretty slim, and even if they made a mistake, there are such things as self-fulfilling prophecies. Companies that haven’t done so already should probably get to work on their economic collapse plans.