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I just sent these notes to many of my founder friends. Please do the same. I don't think I'd ever bet against Sequoia. Even if they're wrong, most of what they

I just sent these notes to many of my founder friends. Please do the same. I don't think I'd ever bet against Sequoia. Even if they're wrong, most of what they said is a good practice regardless of economic state.

acgourley 18y ago
That's not true ... if you define 'good' as what will lead to maximum growth then you would not want to follow these survival tactics in 'good times'
- fallentimes 18y ago
  That's why I said "most". Focusing on profitability, becoming cash flow positive, trimming fat & reducing overhead are good practices always. Some of the other ones, especially if you're trying to attract and retain talent, are not. You'd think this would be common sense, but based on how many companies are run, it's not.
  - acgourley 18y ago
    Well, you're right that companies should always focus on profitability. The part left open for debate is their time frame for profitability - that should grow and contract with their ability to find capital. Maybe I'm reading your posts wrong, but it sounds like you're saying to always strive for short term profitability, even if it costs you growth in the long term.
    - fallentimes 18y ago
      Exactly. Your first two sentences were much more eloquently put than mine. I never said anything about short term profitability directly, but I should have clarified. Some companies - and yes I know this sounds ridiculous - don't focus on short-term or long-term profitability. They are built to be acquired. Or they only focus on the top line (sales) while almost entirely ignoring the bottom line (net income, cash flow).
  - DaniFong 18y ago
    I don't think that focusing on profitability is always a good idea. If you extend the argument to what you work on personally, then there's no way to ever start a product company, or a new line. And in the last bust, Google didn't focus on profitability until much of the storm had already passed. They're doing fine now. The difference was that they had time. Lots of runway. We might very well not, and the goal is to extend that runway.
    - fallentimes 18y ago
      I wasn't talking about what I or anyone works on personally; I was talking about Companies. Google is the exception, not the rule.
      - acgourley 18y ago
        Statistically speaking, most startups ventured have a poor chance of being a Google, but must dollars earned have a good chance of being a Google's. Don't discount their type of business strategy just because it doesn't suit your personal risk preference.
        fallentimes 18y ago
        I'm trying to understand what you're saying. "but must dollars earned have a good chance of being a Google's" Are you saying that the few companies "make" the portfolio (i.e. the anomalies and hits carry the return) or? If so, I agree, but the hits aren't all run like Google. My personal risk preferences have nothing to do with this argument.
        acgourley 18y ago
        Just to set things straight, you are suggesting companies shouldn't start like Google where they are focused on a technology that has no obvious way to make money (at the time). You agree the high growth long term strategy has its place, but claim companies should not just start down their runway before making sure there is even a profit to be made there. I was talking past you because in my mind I wasn't seeing a distinction between having a long term, high growth business and being unsure of how to monetize. While your stance is prudent, most of the greatest tech company success stories of this decade were from companies that didn't know (for certain) how to monetize, because they were so far into uncharted territory. And even though there are only a few of those companies, they seem to be earning most of the money between companies started in this decade. So being more focused on technology than profitability is a valid business strategy, as long as you have runway. That's what I'm saying, and what I think you disagree with.

acgourley 18y ago

That's not true ... if you define 'good' as what will lead to maximum growth then you would not want to follow these survival tactics in 'good times'

fallentimes 18y ago
That's why I said "most". Focusing on profitability, becoming cash flow positive, trimming fat & reducing overhead are good practices always. Some of the other ones, especially if you're trying to attract and retain talent, are not. You'd think this would be common sense, but based on how many companies are run, it's not.
- acgourley 18y ago
  Well, you're right that companies should always focus on profitability. The part left open for debate is their time frame for profitability - that should grow and contract with their ability to find capital. Maybe I'm reading your posts wrong, but it sounds like you're saying to always strive for short term profitability, even if it costs you growth in the long term.
  - fallentimes 18y ago
    Exactly. Your first two sentences were much more eloquently put than mine. I never said anything about short term profitability directly, but I should have clarified. Some companies - and yes I know this sounds ridiculous - don't focus on short-term or long-term profitability. They are built to be acquired. Or they only focus on the top line (sales) while almost entirely ignoring the bottom line (net income, cash flow).
- DaniFong 18y ago
  I don't think that focusing on profitability is always a good idea. If you extend the argument to what you work on personally, then there's no way to ever start a product company, or a new line. And in the last bust, Google didn't focus on profitability until much of the storm had already passed. They're doing fine now. The difference was that they had time. Lots of runway. We might very well not, and the goal is to extend that runway.
  - fallentimes 18y ago
    I wasn't talking about what I or anyone works on personally; I was talking about Companies. Google is the exception, not the rule.
    - acgourley 18y ago
      Statistically speaking, most startups ventured have a poor chance of being a Google, but must dollars earned have a good chance of being a Google's. Don't discount their type of business strategy just because it doesn't suit your personal risk preference.
      - fallentimes 18y ago
        I'm trying to understand what you're saying. "but must dollars earned have a good chance of being a Google's" Are you saying that the few companies "make" the portfolio (i.e. the anomalies and hits carry the return) or? If so, I agree, but the hits aren't all run like Google. My personal risk preferences have nothing to do with this argument.
        acgourley 18y ago
        Just to set things straight, you are suggesting companies shouldn't start like Google where they are focused on a technology that has no obvious way to make money (at the time). You agree the high growth long term strategy has its place, but claim companies should not just start down their runway before making sure there is even a profit to be made there. I was talking past you because in my mind I wasn't seeing a distinction between having a long term, high growth business and being unsure of how to monetize. While your stance is prudent, most of the greatest tech company success stories of this decade were from companies that didn't know (for certain) how to monetize, because they were so far into uncharted territory. And even though there are only a few of those companies, they seem to be earning most of the money between companies started in this decade. So being more focused on technology than profitability is a valid business strategy, as long as you have runway. That's what I'm saying, and what I think you disagree with.