Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Sequoia BS . . . and the Stepford Wives of Sand Hill Road

Posted by Tom Foremski - October 29, 2008

I've been covering the venture capital community for many years and I'm always mystified why they all act like sheep yet think they are wolves.

Why is the VC community running around like Chicken Little saying the sky is falling when their horizons aren't in the now, they are in the future?

If I'm a startup, what do I care about what the economy is like today? I care about what the economy is going to be two to five years out.

If the sky is falling today it likely isn't falling one or two years out, paradoxically these are good times.

As a startup you should be investing for that future and working to line your ducks up instead of cutting valuable people and cutting back on outside services such as PR and social media relations.

The savviest Silicon Valley companies know that you double up your investments in down times because business cycles are cycles: you want to be ready when the upturn comes.

Since you can't time market swings you are better off building a company in down economic cycles because you know there is going to be an upside.

That's why the Sequoia RIP presentation is puzzling. Why are these VC veterans reacting to what has been happening now rather than positioning for what's coming next?

Could it be a that Sequoia is hoping that it can scare competitors to its portfolio companies into cutting back, pull their foot off the pedal? And that that would give their companies a fighting chance? Is it a setup? That's what I would do, but I don't think Sequoia is quite so Machiavellian.

Sequoia has been a huge influence on the VC community. I've come across many people telling me that their VCs are all the same, telling their startups to cut, cut, and cut some more. One of my contacts says: "It's interesting, all the VCs are using exactly the same language." These are the Stepford Wives of Sand Hill Road.

But there are VCs and plenty of others, prepared to call BS when they see BS, and they don't act like sheep, and they are continuing to fund.

This is a good time to invest, this is a good time to startup, imho.

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