Sequoia: When Big Wood Loses Fiber

October 9, 2008

GigaOM reported on October 8, 2008, “Sequoia Rings the Alarm Bell: Silicon Valley Is in Trouble” here. For me, the most interesting point in the write up was this statement:

“R.I.P. Good Times”

The second most interesting thing was the comments the article. Three postings I found telling were:

  • I’m not going to lie, that is daunting and scary to hear it from Sequoia who clearly know what they’re talking about.–Zee
  • In a forest fire lots of trees burn, but not all trees.–Robert Scoble
  • This is a PR stunt.–Anonymous

The thought that occurred to me as I read the article and the posting was that we have to think about the venture capitalists. Forget the entrepreneurs. As difficult as life may be for a start up to suffer cash deprivation, what about the slick entitlement generation’s deal makers? These folks take money from pension funds, government-owned and backed banks, and really rich people. Pension fund managers will kick these folks’s tail in squash. The government-back outfits will fund a party similar to the one AIG held. But Rich people and their investment advisors expect returns. The venture firms have to produce. What’s less pleasant? Explaining to a rich person who runs a billion dollar gambling and garbage collection business that you blew his / her hard-earned money or having to go to a party?

In my experience, rich people want their money back and then some. Bad things come to VCs and their MBA wizards who don’t produce. The R.I.P. may be the marker for some of the venture firms themselves. This addled goose thinks that this Sequoia announcement is very similar to Leonidas’ telling the remaining Spartans to get ready for their last day. The good news is that as I recall, the battle was lost, but the Greeks eventually triumphed, helping to create the powerful economic model of modern Greece. See. There is a bright side.

Stephen Arnold, October 9, 2008


Comments are closed.

  • Archives

  • Recent Posts

  • Meta