Saturday, October 11, 2008

Sequoia's message to startups: Wrong and dangerous

This Sequoia slideset has been doing the rounds for the last few days. Most of the stuff it says is obvious, but some of the stuff does not make sense to me and seems dangerous and wrong:
  1. All the macroeconomic stuff it talks about -- overextended US households, for example -- is something that has been developing for a while; something that each and every business should have taken into account for a long time; what's new there?

  2. The prescription seems a mix of the obvious and the dangerous:
    • PERFORM SITUATION ANALYSIS: Well... duh!
    • ADAPT QUICKLY: Again... d-u-h
    • USE A ZERO-BASED BUDGETING APPROACH: Duh... again!!! You're a startup, hello?
    • MAKE CUTS: That does not make sense... if the company wasn't running as lean as possible, what are the chances it's going to cut in the right places now?
    • REVIEW SALARIES: Same as above
    • EMPLOY A HEAVILY COMMISSIONED SALES STRUCTURE: Stupidest thing I've ever heard -- read how commissions screw things up in Joel Spolsky's column
    • BOLSTER BALANCE SHEETS: Who wouldn't want to?
    • BECOME CASH FLOW POSITIVE AS SOON AS POSSIBLE: Who wouldn't want to?
    • SPEND EVERY DOLLAR AS IF IT WERE YOUR LAST: Who wouldn't want to?

  3. What's missing is useful tips, like "sell to the Federal government". In this nuclear winter for business, governments will be forced to spend more and this time, they'll spend on tech and services too, not just roads and bridges. Start selling to the governments, people.

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