Skip to content
Y M L P-222

Y M L P-222

Did Somebody Say Business?

Primary Menu
  • Foreign Exchange
  • Business Markets
  • Business News
  • Business Ideas
  • Traffic Finance
  • About Us
    • Advertise Here
    • Contact Us
    • Privacy Policy
    • Sitemap
  • Home
  • Sequoia warns on long crisis and slow recovery
  • Business News

Sequoia warns on long crisis and slow recovery

By magenet 1 month ago

Table of Contents

Related Posts:

  • General Atlantic CEO: Opportunities are still at exorbitant prices
  • RELATED ARTICLES
    • BeyondMinds closure a watershed for Israeli tech

Sequoia Capital has warned on tough times ahead for the tech sector. Last week the US venture capital firm gave a presentation on Zoom to 250 of its entrepreneurs and details have leaked to “The Information” website with the clear messages and immediate measures that it felt its portfolio companies should be taking. Suggestions included a demand to cut expenditure, to reassess the budget over the next month, and to focus on profit rather than rapid growth.

Sequoia Capital is one of the largest and longest-established venture capital firms with extensive investments in Israeli startups including unicorns like Wiz, Gong, Fireblocks, and Starkware and over the years it has also invested in tech giants like Google, Apple and Airbnb.

Sequoia has also built a reputation over the years as an unofficial barometer for by publishing reports ahead of economic crises in the tech sector with forecasts and tips for entrepreneurs to cope with the anticipated storm. In 2008 at the start of the sub-prime crisis, Sequoia gave a presentation entitled “R.I.P. Good Times,” while at the start of the Covid pandemic it sent out a memo headlined “Coronavirus: The Black Swan of 2020.” The reports aim to help the heads of Sequoia’s portfolio companies cope with difficult realities without cutting corners and denying reality.

Sequoia’s latest report urges entrepreneurs, “to adapt themselves in order to strengthen their position.”

The forecast: Slow and long recovery

In contrast to the Covid situation, Sequoia does not see a swift exit from the latest crisis. On the contrary, the venture capital firm told entrepreneurs that the recovery from the crisis would be slow and long, among other things because the government incentives and monetary policy that injected cheap capital into the tech industry have been exhausted by the Covid crisis.

“Recovery will take time,” the presentation said, “and it is difficult to see when it will end but it won’t be fast. The Covid pandemic forced governments to inject grants into industry; the war in Ukraine has raised fuel prices; global supply chain problems have also led to inflation – and now it seems that the only way to stop it is simply to stop buying, but that will essentially lead to an economic downturn.”

Market expectations for interest rate hikes began to circulate last September as the stock markets began to fall. The rate hikes by the US Federal Reserve have serious consequences for the market: over the past six months new US mortgages have become 67% more expensive – the biggest such hike in more than 50 years.




RELATED ARTICLES




The balloon bursts  credit: Shutterstock

BeyondMinds closure a watershed for Israeli tech






The rise in US interest rates will make it difficult for startups and tech companies to take loans. From now, the cost of capital so that a startup can protect its valuation will be much higher.

The plan: Don’t be scared of cuts

Cuts have always been a painful process for entrepreneurs. Even if they do not include layoffs, they can result in the cancellation of development plans for new products and entering new markets, or simply delaying hiring more employees that could support the company’s growth. Sequoia does not seek to console entrepreneurs and suggests that they be prepared to make swift cuts in expenditure. “Don’t view cuts as a negative but rather a means to conserve cash and run faster.”

Sequoia said it is not calling for immediate cuts but rather the preparation of backup plans so that when the time comes their finger is already on the trigger and they can put the plan into action.

Sequoia proposes that entrepreneurs examine spending on special projects, development, marketing and other expenses and prepare a plan for cuts that can be implemented within 30 days. “In the 2008 crisis, companies that made cuts were clearly more efficient and better.”

In order to encourage entrepreneurs to adopt a realistic approach and not to deny reality, Sequoia recounts the story of US Navi Vice Admiral James Stockdale, the most senior American officer to survive captivity and repeated torture during the Vietnam war. Stockdale said that it was the optimistic who thought that they would be released by next Christmas, Easter or Thanksgiving that did not survive. When this did not happen again and again, they died of a broken heart. Stockdale told his fellow captives that they would not be out soon and to get used to the idea. This has become known as the Stockdale paradox.

Recommendations: High revenue from every user

Based on the experiences that have survived previous crises like online footwear company Zappos and Airbnb, Sequoia recommends that startups generate higher revenue in the short term from all users. “That’s the best thing that entrepreneurs can do during this period. In previous crises, Zappos increased the range of shoes that it sold and consequently encouraged buyers to place bigger orders.”

Sequoia’s second in priority recommendation is to focus on revenue for higher profitability as the expense of expanding and acquiring a greater market share. Airbnb, for example, achieved this by cutting marketing budgets. Zappos achieved this by cutting customer payment plans, requiring buyers to pay a higher proportion of the price of the shoes in their first payment. A third recommendation by Sequoia is to cut staffing levels and the final recommendation is to take loans.

The opportunity: Shortage leads to creativity

A lack of financing can lead to companies finding creative solutions. Zappos, for example, made use of capital from customers to implement special plans like gift cards, building financing plans for stores that they worked with and extending repayments to stores from 30 to 90 days. Although the company cut marketing, it actually invested in customer service and technology to encourage customers to order more items in each order.

When the FANG tech giants (Facebook, Amazon, Netflix and Google) freeze new employee hiring, hiring for startups becomes easier. Whoever copes with the reality, adjusts themselves to the situation and adheres to discipline, without any regrets, will triumph. Try to view this period as an opportunity for you: if you want to overtake a long line of cars, it is easier to do it on rainy days than sunny days.”

Sequoia’s grim forecasts are dramatic presentations that resound throughout the tech industry. But the venture capital firm did come in for harsh criticism after its misleading forecast at the start of the Covid pandemic in 2020, when tech companies were boosted rather than hit hard. Although Sequoia did then couch its gloomy predictions by saying that it would take several more quarters to know if we could gain control of the virus and a lot more time to discover if the world economy was recovering.

On this latest crisis, Sequoia admits that it does not understand the way in which fiscal and monetary policy (government incentives during the Covid crisis) are distorting the whole picture. But this time those tools have been exhausted while galloping inflation combined with geopolitical conflicts are very much restricting the ability of governments to provide quick solutions.

Published by Globes, Israel business news – en.globes.co.il – on May 26, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.


Tags: "Georgia Business Search, American Express Business Cards, Att Business Customer Service, Att Business Internet, Att Business Login, Bad Business Codes, Bank Of America Small Business, Buffalo Business First, Business Administration Jobs, Business Administration Salary, Business Analyst Jobs, Business Card Dimensions, Business Casual Female, Business Casual For Women, Business Casual Women Outfits, Business Ideas 2021, Business Letter Example, Business License California, Business Name Search, Business Process Reengineering, Business Proposal Template, Buy A Business, Card For Business, Chase For Business, Chase Ink Business Card, Columbia Business School, Costco Business Center San Jose, Emirates Business Class, Facebook Business Account, Fictitious Business Name, Florida Business Entity Search, Ga Sos Business Search, Google Business Email", Houston Business Journal, Illinois Business Search, Instagram Business Account, Is Lularoe Still In Business, London Business School, Master Of Business Administration, Men'S Business Casual, Pittsburgh Business Times, Qualified Business Income Deduction, Sacramento Business Journal, Secured Business Credit Card, Standard Business Card Size, T Mobile Business, Texas Business Search, Tië³´o The Business, Top Business Schools In Us, Types Of Business

Continue Reading

Previous Chinese Inflation Hits Highest Fee Since 2012
Next Best HR Software Platforms in 2022

Recent Posts

  • Is Google Stealing Your Content?
  • Alibaba shuts Israel development center, lays off 60
  • Sales are off, costs are soaring. For some small-business owners, the recession has already arrived
  • Division Of Management
  • European markets open to close, data, earnings, G-7, Ukraine

Archives

  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • December 2016

Categories

  • business
  • Business Ideas
  • Business Markets
  • Business News
  • Foreign Exchange
  • Traffic Finance

Visit Now

Lance Travel Trailers

BL

TL

Intellifluence Trusted Blogger

promo toyota malang

ymlp222.net © All rights reserved. | Magazine 7 by AF themes.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT