Sequoia takes things seriously. The storied venture firm has been known to react to macroeconomic events with big memos aimed at portfolio companies and sometimes the broader business scene. Most recently, Sequoia created a 52-slide deck, first reported by The Information, titled “Adapting to Endure.” The document says how a follow-up course to its infamously ill-timed “Coronavirus: The Black Swan of 2020” memo from March 2020. The company isn’t always right in its forecasts, perhaps why this time it stuck to internal musings rather than a post from Medium: But it does a service by providing a snapshot of how one of the most resilient and successful venture capital firms of all time thinks about a looming recession.
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“Our intention in meeting today is not to be a beacon of sadness,” says the deck. “But we also believe that winning in the coming years will depend on making tough and decisive decisions to meet uncomfortable challenges that may have been masked during the exuberance and distortions of free capital in the last two years.” Sequoia’s advice largely followed the same script other ventures have been using: broaden the runway, focus on sustainable growth and acknowledge that economic recovery may be a long way off. However, there were a few details that stood out, like a subtweet that I assume is intended for Tiger Global and a precise explanation of how founders should define fluff these days.
The provider of capital blames capital itself: capitalism, eh?
One of the clearest subtweets within the platform is Sequoia’s comment about cross-funding. The firm says that “cheap capital is not coming to the rescue” at the moment:
