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Soothsayers of Silicon Valley
Eventually, stuff started to stir again, largely because of Google, which rendered web traffic “monetizable” through search advertising.
But Sequoia is now saying that VCs cannot continue to fund companies that don’t have a revenue model, and are distant from profitability. No more NASA-like burn rates. In a chart headlined “survival” there’s a list of business imperatives including “cash is king.”
The deck ends simply: Get Real or Go Home.
This is a profound change from the environment of just a few months ago, when companies like Twitter and Digg could raise tens of millions before earning a penny.
We expect twitchy public companies to pull in, to cut investments at the first sign of trouble. But VC is the the game-changing gang that funds the entrepreneurs who give America its competitive edge no matter how much better the math scores are in China, India and Japan. So a venture capital crash could be a far more pulverizing loss to our economy, in the long-term, than the job losses in finance.
Sequoia’s message, prepared for internal consumption, is now part of the national dialogue. Read it and worried. Be very worried.
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