R.I.P good time, SEQUOIA capital told us a little story about crisis
We all know now that a big crisis is now coming. Some articles in the past was annoucing a financial crisis first.
We have a health crisis topped with a global problem on political governance.
Both are driving us to a “monster crisis” if politicians are not taking the good measures and few countries are doing right now.
Back in 2008, Sequoia Capital shared with its portfolio companies some tips for surviving the economic downturn.
Sequoia has been a fixture of Silicon Valley helping firm like Apple, Google or Instagram to grow.
Advices of Sequoia about crisis can’t be taken like any other else advices.
They come from people for who money matters.
Here’s the original RIP Good Times presentation.
And angel.co in its daily newsletter is resuming well what do, basically, when time of crisis comes :
- Get ready, cut expenses, preserve cash. Think through how much cash you have. “Do you really have as much runway as you think? Could you withstand a few poor quarters if the economy sputters?”
- The money is going to dry up. Don’t count on raising money. “Private financings could soften significantly,” Sequoia warned, before adding an optimistic note. “Many of the most iconic companies were forged and shaped during difficult times. We partnered with Cisco shortly after Black Monday in 1987. Google and PayPal soldiered through the aftermath of the dot-com bust. More recently, Airbnb, Square, and Stripe were founded in the midst of the Global Financial Crisis. Constraints focus the mind and provide fertile ground for creativity.”
- Prepare to survive tough sales. Be forewarned that sales might just fall apart. “Deals that seemed certain may not close. The key is to not be caught flat-footed.”
- Cut advertising and marketing expenses. Take a hard look at your marketing spend. “You might find that your customer lifetime values have declined, in turn suggesting the need to rein in customer acquisition spending.”
- Be prudent with capital spending. Take a look at capital spending. “Examine whether your capital spending plans are sensible in a more uncertain environment.“