Re-published with permission from NYUGrad’s substack:
I question if this memo was truly leaked at all. It reads to me like an email from your CEO warning that it is time time to get ‘hardcore’ but hey didn’t Elon get slapped for similar message?
If you have never heard of Sequoia Capital, they are arguably the most successful VC firm in the world with the most Unicorn exits.
Here is the full 52 pager. (PDF)
My summary for those time constrained:
- We believe this is a Crucible Moment, one that will present challenges and opportunities for many of you. First and foremost, we must recognize the changing environment and shift our mindset to respond with intention rather than regret.
- It will be a longer recovery and while we can’t predict how long, we can advise you on ways to prepare and get through to the other side.
- Capital was free, now it is expensive
- When capital was free, the best performing companies were capital consumptive.
- As capital has gotten expensive, these have become the worst performing companies.
- Given every dollar is more precious than it was, how are you going to change your priorities?
- We’re experiencing the 3rd largest Nasdaq drawdown in 20 yrs-28% (as of May 22)
- Focus is shifting to companies with profitability
- Cheap capital is not coming to the rescue
- Recovery will be long○That cycle will take a while and hard to peg it to a specific time horizon. But it won’t be quick.
- Opportunities○ “You cannot overtake 15 cars when it is sunny but you can when it’s raining.” There is opportunity ahead. Recognize it.
- Who doesn’t just survive but win?○The founders / CEOs who face reality, adapt fast, have discipline rather than regret.○It is easier to preserve cash when you have more than six months left. ○Recruiting is about to get easier. All the FANG have hiring freezes.○Look at this as a time of incredible opportunity. You play your cards right and you will come out as a strong entity.
Page 36 has slides from ABNB 2.01%↑ CEO addressing the board on how to survive the pandemic and what it meant to travel and Airbnb back in 2020.
If you look at my previous stack, “Death of a Salesman” or “Dear Santa, I Poisoned your Milk and Cookies,” very few companies are profitable!
Winter is HERE!
