I really agree on the straw man comment. If they wanted to disagree with Sequoia's stance on this, that's fine, not everyone is on the same page. The problem is that they didn't approach this sensibly. Sequoia never really made most of the claims Jason takes issue with. The root of it all is just sustain rather than grow for the time being, which is a fair argument given the circumstances.

I understand the logic that the Sequoia presentation endorses. The problem that I have is with their timing. The signs were clear of bad economic times at least a year ago and probably much earlier than that.

That being said, I still think it's a great time to be working on a startup. I knew the economy was going to tank and yet I still started my company earlier this year. Smart investors who still want to be in the game and yet have fiduciary responsibilities should have been providing at least some warning earlier to their portfolio companies long before it all hit the fan in the last few weeks.

Correction, your interpretation is that it says: Economic conditions vary. In bad times you can't take as much risk. Bad times are here. Stop taking risks.

That said, the presentation says what it says; it talks about the what happened, how we got here, how it's gonna be like what (their) companies are supposed to do now.

And what they're supposed to do now, is exactly what any sane company (outside of SV perhaps?) would be doing from the minute they open shop.

What is your specific objection (if any) to the Sequoia presentation? I assume you have no issues with the data, but its interpretation. Would love to know what you think!

It's not an attack on a straw man. It's an attack on Sequoia's logic and its presumptions -- a valid attack, if you ask me. Except for Sequoia's recommendation for stasis (bad advice in any conditions), all of its suggestions are how you run a startup. If you aren't doing everything that the deck suggests, your startup probably isn't going to do well. As a startup, you should not be taking stupid risks. Smart risks: you need those, even in "bad" times.

If a startup can only survive in "good times" (still trying to figure out what that means, given the past eight years), then it probably shouldn't have existed to begin with.

Google, while a startup, added value to the universe and soon enough figured out how to take monetary advantage of that value. Google busted out of the dotbomb era like a bat out of hell.

Pets.com did not. Turns out the world needed a better way to find information/ideas/people, but not a "better" way to order dog food.

I disagree that it's a valid attack. They aren't telling people to stop taking any risks-- they are telling people to prepare for a down market, which DOES affect the trajectory of a startup (even if they are on the right track). Pasting bits from my comment on SvN:

In a happier financial times, customers are flush and buying. Buyer confidence is high. Growth is easier, your sales/marketing spend can be a touch lower, etc.

In happier financial times, VC-backed startups can count on more investment if they are generally moving in the right direction. Whether you think VC-backed startups are stupid or not, that’s how the game they are playing works. Funding in a down market is scarce and terms are rougher.

In happier financial times, VC-backed startups have a better shot at an exit (IPO, M&A). Again, whether you think it’s stupid or not, that’s the game.

Your Google/Pets.com argument is kinda strawmanny itself. Pets.com died because they didn't create much value. There were times in Google's growth that they would've DIED if they couldn't get funding. Growth costs money and revenue can be realized months or years after smart spending. If you don't have a big war chest and capital is scarce (and expensive) it makes sense to grow a touch slower.

"If you aren't doing everything that the deck suggests, your startup probably isn't going to do well."

It depends on the business models. Some companies can be built cheap and they can reach profitability quickly. Not all companies can follow this model. Sequoia doesn't just invest in YC style companies that can be built by 2 people over 3 months. I highly recommend you take a look at http://www.sequoiacap.com/company/all-stages

"Google, while a startup, added value to the universe and soon enough figured out how to take monetary advantage of that value."

How do you define "soon enough"? IMHO soon enough at a time where there's plenty of venture capital to go around might be very different from soon enough at a time when capital is scarce. Take a look for example at the story of how Amazon reached profitability. http://seattlepi.nwsource.com/business/158315_amazon28.html Amazon also figured out how to become profitable, but it took them 6 years to do so. That was soon enough back then, it might not be soon enough today.

A quote from the seattlepi.newsource:

"What few people understood was that the reason that they didn't make money was that for the previous five years every time there was a trade-off between making more money or growing faster, we grew faster,"

They were making money.

I'm sorry, I don't understand what you mean.

It's not like this is the first time Sequoia has said this to their entrepreneurs. They've been doing it in private and in meetings.

This just represented their first public stance on the issue. In good times, it can (but not always) make sense to spend more money on marketing and headcount for experimentation purposes and because a really talented person is available (even if you don't have an immediate role for them). And while most of their advice applies regardless of economic situation, running a business in a recession is not the same as running a business in a boom.

Edit: This was also discussed here: http://news.ycombinator.com/item?id=327937

I think it's important to note that this was not a public meeting for all CEOs of all companies everywhere - just their portfolio companies. Sequoia asked the CEOs to keep everything private, but then the notes leaked, then the slides leaked, and then Sequoia was forced to discuss it. Splitting hairs, maybe, but I think it's an important distinction.

Let's be honest - they knew what was going to happen. It's Silicon Valley.

he other point makes the simplistic assumption that because advice is do A, when A is universally good, that it's useless advice.

When Sequoia (or anyone) advises to now reduce debt, focus on positive cash flow etc. etc. What they mean is not that these things are suddenly good things. What they mean is that they are suddenly more important. Your ability to raise capital has just sunk. The likelihood of new, highly funded competition has just sunk.

The post just makes a silly sort of a 'positive cash flow? wasn't that a good idea yesterday?'