Dear Sequoia: Please Call Off the Dogs
Having spent the bulk of the Summer in San Francisco, I am starting to sense a difference in the tone and tenor of the business mood between the East and West Coasts.
It used to be the Silicon Valley entrepreneurs who were willing to bet big; their self confidence was infectious. And indeed, when it comes to the quality of their technologies, that is still the case. But, when it comes to “pulling the trigger” on their launches, I still sense a palpable hesitation that, in recent weeks, seems to have ebbed in Boston and NYC.
I blame Sequoia Capital.
The “R.I.P. Good Times” presentation that got all that buzz 10 months ago was timely, accurate, appropriate — and bone-chilling. As TechCrunch’s Michael Arrington noted at the time: “Of course all this negativity helps create the very downturn that venture capitalists are warning their companies to defend themselves against, perpetuating a sort of vicious cycle downward. But that’s ok, sometimes the hedge needs to be pruned. And this is what makes Silicon Valley its ugly, beautiful self.”
Ten months have passed. Has the hedge been adequately pruned?
The news outlets are starting to brim with cautious, tentative, but sustained enthusiasm about the direction of the economy. According to a WALL STREET JOURNAL poll of economists this week, 57% believe the recession is already over, while another 23% believe that the economy will turn in the next month or two.
We can’t breathe easy, but we can maybe breathe a sigh of relief. This is what Americans do: absorb the body blows, shrug off the naysayers, and flip the bird at cruel fortune.
But despite the trickle of good economic news — which used to be all that Silicon Valley needed; this is a place that subsists on the barest glimmers of hope — that hesitation in Silicon Valley persists. It’s not just me who thinks this, by the way: I hear it from my Silicon Valley peers in the media, in PR, and in business overall. It’s pervasive. And depressing.
Maybe if the gang at Sequoia called off the dogs, it would set the Bay Area back on its natural, leadership course? The companies we work with in Boston and New York (and Madison and Miami, etc.) are done waiting.
It’s not enough to load-up on munitions. Sometimes you gotta pull the trigger.
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Sequoia’s kinda like Google. It creates its own weather. Of course, it’s been doing it much longer so it’s better at it.
Totally disagree – the full shakeout isn’t over, and shouldn’t be. Let companies be lean.
But, as Sequoia noted in their preso, PR is vitally important.
This is a result of the investment philosophy in SV, which is feast or famine. Other VCs have been content to just eat well. SV ventures are meant to scale and then worry about making money. In a down economy which is absent of acquisitions and IPOs, SV has to continue to spoonfeed cash to their startups for longer than their investment model can sustain. The rest of the country trends more closely to the broader economy and can thus feel more positive now…It will take time for SV to dig out.