Updated
portfolio companies to cut costs and prepare for an economic downturn that could last many years.
The presentation, one attendee tells me, was like the global warming wake-up call movie "An Inconvenient Truth." But instead of Al Gore running through a bunch of slides about the environment, it was billionaire investors running through a bunch of slides about a "very cataclysmic" economic future.
Here are presentation excerpts and comments drawn from a leak posted on GigaOm and left in comments on Silicon Alley Insider. Our sources have confirmed their accuracy.
Mike Moritz, General Partner, Sequoia Capital:
- “We’re talking survival. Get this point into your heads.”
- Companies need to be cash-flow positive, if nothing else in order to justify additional funding
- This could be at least a 15-year downward cycle, judging by historical trends; the credit market will take a long time to recover
- Startups need to deeply cut expenses, and throw out existing projections
- A dramatic recovery is unlikely
- Spending cuts will accelerate through this quarter and into next year
- Only lean companies with proven sales models will be acquisition targets
- Get aggressive with public relations communication strategies; cut marketing that doesn't work
- Offer a product that reduces expenses and drives revenue
- Preserve capital over trying to gain market share
- Begin with zero-based budgeting to help prioritize necessary expenses
- Have at least one year's worth of cash available
- Reduce expenses around products and boost sales; if product is ready, cut engineers (wow)
- Build essential product features first
- Reward salespeople based on commission, not base salaries
Also, if anyone has a copy of the actual Sequoia presentation that they'd like to send over: eric (at) venturebeat (dot) com. Update: Here's the presentation.