Friday, October 10, 2008

All Aboard the Pain Train: The Valley View

Eric Eldon, at, obtained a copy of the recent presentation given by Sequoia Capital, entitled "RIP Good Times" and presents their VC perspective on how the current economic crunch came about, how it will impact the high-tech sector, and what can be done in response. It ain't pretty but Sequoia should know since they are a major Si Valley VC company that has provided financial backing for local emblems like Apple, Cisco, Oracle, and Yahoo.

Naturally, they commence by pointing fingers at Wall St. (hint, hint, hint) and the lack of regulatory oversight (although, I think Sequoia is probably more concerned about potential new regulations). Paraphrasing some of their points that are relevant to the IT sector:

  • In terms of the standard econo-metrics, this crisis appears to be unique and therefore recovery may take much longer.
  • If you want to see the future, look at Japan's recent economic history.
  • Manage cash expenditures and focus on quality. [That last one's a doozy. QUALITY ... What's that!?--ed.]
  • Advertising markets are cracking. Retail and e-commerce are deteriorating. Mobile is not immune.
  • IT spending is now being scrutinized more than at any time since the 2003-2007 period. [??? But 2007 was only last year.--ed.]
  • These concerns have triggered a sudden and unexpected drop in business activity.

Although these comments are based on US market data, we do live in a global village . Here is the Sequoia presentation.

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