10 ms·

"RIP Good Times": Silicon Valley's Cuban Missile Crisis

143 points by bdb 14y ago

foobooboo 14y ago
"...the US financial system was literally melting down." Really? The financial system was becoming a pool of molten goo, possibly spreading radiation all over its vacinity?
- kposehn 14y ago
  > The financial system was becoming a pool of molten goo, possibly spreading radiation all over its vicinity? Metaphorically, I'd say that was fairly accurate if you consider the molten goo to be defaults and the radiation to be bank malaise and bad assets; it also managed to start the same reaction in the EU, which continues to this day.
- StevenRayOrr 14y ago
  Even intelligent people that know the meaning of the word will make this mistake when writing casually. The English language would be much better off if we removed the word "literally" from it. Or, I suppose, if we all just decided to accept that "literally" now means "metaphorically". In which case, please kill me.
  - SomeCallMeTim 14y ago
    If it's a "mistake", then it's one that has been made for 300 years: http://www.slate.com/articles/life/the_good_word/2005/11/the_word_we_love_to_hate.html http://www.slate.com/articles/life/the_good_word/2005/11/the... Relevant excerpt: 'As is often the case, though, such "abuses" have a long and esteemed history in English. The ground was not especially sticky in Little Women when Louisa May Alcott wrote that "the land literally flowed with milk and honey," nor was Tom Sawyer turning somersaults on piles of money when Twain described him as "literally rolling in wealth," [...more...] Such examples are easily come by, even in the works of the authors we are often told to emulate.' Given the caliber of authors that have used "literally" for emphasis, I have a hard time standing behind the concept that it's even poor style. We can decide that, moving forward, we'd like to clean up English and use "literally" differently, but calling it a mistake rather than a offense to modern style is inaccurate. REGARDLESS, I thought this was exactly the kind of thread that Hacker News hated. :|
  - giblfiz 14y ago
    do you literally want me to kill you now?
  - pyre 14y ago
    "...the US financial system was literally melting down." is probably better written as: "...the US financial system was seriously melting down." Adding literally is an attempt to make the statement stronger than just: "...the US financial system was melting down."
  - lifeisstillgood 14y ago
    Literally kill you?
- giblfiz 14y ago
  Definition of LITERALLY 1: in a literal sense or manner : actually <took the remark literally> <was literally insane> 2: in effect : virtually <will literally turn the world upside down to combat cruelty or injustice — Norman Cousins> http://www.merriam-webster.com/dictionary/literally http://www.merriam-webster.com/dictionary/literally
  - StevenRayOrr 14y ago
    Definition of VIRTUALLY 1: almost entirely : nearly 2: for all practical purposes <virtually unknown> http://www.merriam-webster.com/dictionary/virtually http://www.merriam-webster.com/dictionary/virtually
  - tedsuo 14y ago
    That's really funny, I didn't realize the hyperbolic use had become official at some point.
    - joshuahedlund 14y ago
      Me either. Just part of the long trend of diluting intense words and chasing after new ones I guess (see: awesome, incredible, epic, etc). Kinda wonder where the language will go next.. doubleplusgood?
    - rmc 14y ago
      Nothing is official. English, unlike other languages, does not have an official governing body. There is no official One True English Language.
    - Daniel_Newby 14y ago
      It didn't. The dictionary is literally lying.
- dalton 14y ago
  I think it's awesome that you just created a new hn account to leave this comment.
  - foobooboo 14y ago
    Why thank you, I've been lurking around for quite a while, but this did it.
  - moron 14y ago
    I don't!
    - bugmenot 14y ago
      Moron.
- mdemare 14y ago
  I see this usage of "literally" more as a dereference, or an unquote. I mean, it takes a dead metaphor and tries to bring it back to live. It means "hey, pay attention to this metaphor!" If you'd say, "the financial system was melting down", that is such a stale metaphor that it might not even trigger any associations with nuclear reactors. "Literally" forces you to stop and think about molten goo and radiation. And as such, I approve of it (although it is much preferred to use fresh metaphors than to resurrect stale ones.)
- pbreit 14y ago
  lit·er·al·ly/ˈlitərəlē/ Adverb: 1. In a literal manner or sense; exactly: "the driver took it literally when asked to go straight over the traffic circle". 2. Used to acknowledge that something is not literally true but is used for emphasis or to express strong feeling.
- clebio 14y ago
  So, yeah, while misuse of literally literally bugs the shit out of me a lot, I'm fairly tossed up about whether it's worth bugging out over. The recent surfacing of the 'poisonous/venomous' distinction smacks of pop-culture faddism and as such, is just dull and tedious. Academics, scientists, and engineers generally understand these details (indeed, Dalton Caldwell almost certainly _does_ know the distinction, being as he was, I gather, a 'Founder/CEO of a Sequoia portfolio company'). Complicated, careful work (in nuclear physics or space launches, for instance) generally depends on this, no doubt. But outside those domains -- in a personal blog, for instance, or when noodling catfish in the bayou, say -- splitting infinitives might be ok, or even a shibboleth. See Dave Chappelle's analysis on Inside The Actors Studio regarding speaking as a black American. And, while I don't care to hurtle ad-hominems ad-hoc, if you _are_ going to be pedantic about the minutiae of someone else's considered work, it's possibly worth knowing that the word is 'vicinity'.
  - ricardobeat 14y ago
    For some reason this is one of the hardest to read comments I've ever encountered on the internet.
    - clebio 14y ago
      I'm vaguely aware that my writing style is somewhat dense. I try to work on that, I really do. Still, I consider yours a sort of compliment -- an obscure achievement.
    - deleted 14y ago
      [deleted]
ebiester 14y ago
The issue isn't that Sequoia was wrong -- in fact, everything they said came to pass. It wasn't a quick recovery, and people spent less money on technical acquisitions. That didn't stop people from creating startups. What the slide deck didn't account for is that there was nowhere for big money to put their money - everything was in trouble. So, people started to look for new opportunities, and Silicon Valley suddenly looked mighty attractive as a place for investment. On Main Street, there are people who have been out of work for years now. It really was that bad, is that bad. We just happened to be under one of the few umbrellas in a storm.
- tatsuke95 14y ago
  You're talking in the past tense, like the situation is over. For all we know, it's just beginning. >"We just happened to be under one of the few umbrellas in a storm." It's not different there. It never is.
  - ebiester 14y ago
    The first deluge is over. The economy isn't currently in freefall; rather, it is slowly growing. That doesn't mean the storm system has moved on and everything is sunny from here on out. Further, an umbrella (sorry to extend a potentially leaky abstraction here) doesn't mean that you are immune to the storm. It just means that you deflect most of the rain around you. But it's different for IT, much different. I was let go from multiple contracts, but the time I spent out of work was by choice, and I had two interviews a week the moment I put my resume out while friends in other sectors would have killed for even an interview. I was able to choose the job I wanted once I was willing to move out of my home city. I don't have a star studded resume either, and I've seen mediocre and worse developers stay on because replacements couldn't be found. It's different for IT, and programmers more specifically.
dannyr 14y ago
Dalton: I interviewed for an engineer position at Imeem a week before. I passed the interview & I was told that the offer letter was just waiting for your signature. It was delayed because you just had a baby. Then days later, I saw the "RIP Good Times" presentation & I was told that the job offer was put on hold indefinitely. Weeks later, I read about the layoffs & the job was gone for good. It was a blessing in disguise for me since I realized that I should learn a new language & framework (Python/Django) aside from .Net. Turned out well for me since there are more Python jobs than .Net in the area.
- dalton 14y ago
  Yes, that all sounds about right. I am glad you think of it as a blessing. Incidentally, all of the work I do now is Python/Django. The story of why we had a massive .NET codebase is a long story.
amix 14y ago
The crisis is far from over and the financial systems are still in a Cuban Missile Crisis situation. Nothing has really improved since 2008 - other than the different governments pumping trillions of $ into the different markets. I think the crash of 2008 is a little taste of what's to come (that's at least what I am preparing for).
- roc 14y ago
  To be fair: the delta has improved and that's not nothing. A morass is certainly preferable to a calamity.
  - AJ007 14y ago
    4 decades of famine or 1 typhoon? What the actions of world leaders have effectively said is that we will sacrifice our economic growth in exchange for the ability to ensure that current debt can continue to be serviced.
    - roc 14y ago
      Sacrificing economic growth compounds the problem of current debt. What the actions of world leaders have effectively said -- loud, clear, underlined and bolded -- is that the protection of existing wealth is of paramount importance and the generation of new wealth is secondary-to-incidental. That said, one needs to know the breadth and depth of the impact of famine vs a typhoon to know which would be worse. 4 decades of famine that negatively affects half the population may be the lesser evil compared to 1 typhoon that outright destroys half the population and thus future economic potential.
- koide 14y ago
  Would you care sharing what exactly are your preparations? I'm at a loss figuring what is a good way to prepare. I've moved some cash to the less troubled economies but, what else?
  - ricardobeat 14y ago
adventureful 14y ago
The cold war continues (going with the missile crisis line), and it is thus the Fed is preparing for QE3. I agree strongly with another comment: Sequoia was right, and then some. Nothing actually got better, it's just that people think it did. A moment of respite from the turmoil is all the last two or three years represents. That moment of respite cost between $8 and $15 trillion depending on what you're counting (total deficits + Fed bailouts). In fact, things are far worse today than they were at the height of the crisis, as we've loaded up on $6 or so trillion more in public debt we can never pay back. We've added about $400 to $500 billion more in student loan debt, and a few million college graduates are sitting on the sidelines without jobs and experience, and we've got millions more living on food stamps without jobs. The only thing separating our system from absolute implosion is the global reserve currency that we're currently massively abusing at our leisure. If mortgage rates had to rise to their natural rates (absent Fed manipulation holding down both long term and short term rates), housing would quickly plunge another 1/3, and that alone would rupture the entire financial system and bring it to its knees. The truth is, we look a lot like the imploding EU zone across the Federal and State levels. Except we've got the dollar, for now.
- paulsutter 14y ago
  You're right, but we can be part of the solution. As Max Levchin says, the long term question is not whether the US is printing too much or too little - it's whether we (that's us, here, reading Hacker News) can focus on real innovation, which causes real productivity improvements, and thus real growth. That's the best way out and it rests on us.
  - cynicalkane 14y ago
    The Republicans were saying the same sort of stuff in 1929. America learned, at great cost, that macroeconomics matters. We'd do well to remember those lessons.
    - paulsutter 14y ago
      Macroeconomics matters enormously. The financial crisis was caused by illusory growth from the ponzi innovation of a bonus culture + fraudulent ratings agencies. Real growth comes from technological innovation. That has been equally true in 1929, 1933, 2006, 2008, and 2012. Go read Wealth of Nations (published in 1776). And I invite you to come out here to Silicon Valley. EDIT: can't reply / too deep. I've never read Ron Paul newsletters, and I'd love to hear you explain how CDOs of highly correlated assets deserve AAA ratings. Love even more to hear how you think macroeconomic policy caused the shock.
gaius 14y ago
Interesting, and disturbing, that Sequoia only suggest reducing head count in the engineering department (slide 47).
- tatsuke95 14y ago
  Perhaps they know something you don't. What are you implying?
- anigbrowl 14y ago
  I read that to include cuts to general and administrative expenses, as well as underperforming marketing and business development. I think engineering was at the top because it's the core asset, while products and other functions are less and less unique to a given firm.
hexis 14y ago
"I remember getting an email from Sequoia asking for my personal presence (ie don't send a VP in your place) to some sort vaguely positioned mandatory meeting." By what mechanism can an investor in a firm, presumably an investor with less than 50% equity, make attendance at a meeting mandatory for the CEO of said firm?
- klodolph 14y ago
  "Mandatory" is a surprisingly vague concept, even when used by people with real power.
deleted 14y ago
[deleted]
freshbreakfast 14y ago
Dalton, I don't know if you remember this, but I used to a major imeem fanboy, wrote a personal blog (freshbreakfast dot com) to count the ways I loved imeem, the links for which I spammed to team/all/dalton/steve/gina/matt@imeem.com. Anyhow, I ended up becoming employee #2 at Ustream. So I was at that presentation, doing them a favor running a private live stream for the CEOs that couldn't make it. Not to sound creepy, but I observed for your reactions quite a bit at that Seqouia meeting, and I even introduced myself to you after the presentation. It's true, your mind seemed to be elsewhere, but you were still very kind. And if that many full circles aren't enough for ya, today we're both trending on front page of Hacker News :-). This one's mine: http://news.ycombinator.com/item?id=4080074 http://news.ycombinator.com/item?id=4080074
- dalton 14y ago
  Yes, I certainly do remember you. And I do remember you being there that day as well. I read the hypebot post this morning, didn't notice your name on the byline :)
  - freshbreakfast 14y ago
    :) Thanks man, means a lot coming from you. And great great post, really a privilege getting to peer into your thought process during a moment we nominally shared.
herdrick 14y ago
I don't buy it. The world used to let highly interconnected financial institutions fail and we had sharper, nastier recessions (we called them 'panics') but they were over sooner. I think that, much like the reaction to the WTC/Pentagon terror attacks was worse than the attacks, the panicky reaction - bailouts and stimulus - has been much worse than the problem they tried to fix.
- trevelyan 14y ago
  You should read Alan Blinder about "The Great Moderation" -- recessions since the late 1970s have been shorter and shallower than their predecessors. And far shorter and shallower than their counterparts under the gold standard in the 19th century. Also empirically, the reason the United States is doing better than Europe is because of the stimulus/bailout. It might be hard to think of the United States as a success story since it is only a relative one, but look at the much more dire situation in countries like Britain and Greece and Spain where governments were forced or choose to embrace austerity. There is no reason the world cannot produce the same amount of goods as it was producing in 2007 - there are more rather than less people willing to work and the cost of borrowing money is very low. The only big outside constraint is energy costs, which are being offset by some fairly amazing reductions in the prices of alternative energy, including solar power. So why the mess? The problem is a classic liquidity trap, a preference of investors for highly-liquid and safe assets that results in less money being spent in the private sector. This is visible in the way the borrowing rates of the Federal Government have fallen despite the best efforts of the Republican Party to drum up a debt scare the moment it fell from power and stopped spending the money itself. Bailing out the banks did somewhat stabilize the banking system and probably prevented catastrophe. What remains necessary is getting out of the liquidity trap, which means increasing the amount of spending in the private sector. One way to do this would be having the government borrow at essentially zero cost and invest that money in public infrastructure projects which offer a return on investment. Another approach would be having the Federal Reserve declare an inflation target of 4% until the economic crisis is over. This would reduce the expected ROI from parking money in Treasuries and provide a greater incentive for firms to make private sector investments instead of just parking cash in the bank.
clarky07 14y ago
So I just looked through the slide deck again, and it seems to me most of what was in there should be standard advice AT ALL TIMES. Don't spend money on things you don't need. Watch expenses. Build a profitable company. This should be the default rather than here's 10 million see how many users you can get maybe facebook or google will buy you.
ivankirigin 14y ago
It would be awesome to see an update to each of the graphs in that presentation. Does anyone know if that exists?
confluence 14y ago
In reference to Sequoia possibly crying wolf. In statistics there are 2 types of errors that one can make. A Type 1 error is when you aggressively reject the status quo for change, even if the status quo was just fine (crying wolf!). A Type 2 error is aggressive rejection of change for the status quo, even though the status quo isn't right any longer (not crying wolf!). There is no way to escape these errors, and depending on evidence, you'll sway one way or another (these errors always exist and are complementary in nature). The financial crisis looked like it could blow up the world (there might be a wolf in the flock!). Assuming status quo - that nothing is happening (no wolf) - you might not prepare for it (a wolf), and if the world blew up you'd lose everything (wolf eats you!). Assuming change (hello wolf!), you prepare and adapt for the crisis where you have to lose a bit (growth/funding/employees sadly), but if it all goes down - you are prepared (wolf meet gun!). This is an example of the precautionary principle at work, and based on my understanding, Sequoia did an outstanding job. The Federal Reserve also did a great job (during the crisis). I have no opinion about the lax rates in the lead up to the bubble - but I presume that was highly detrimental to our collective financial health! :D Sequoia are the best in the business, they've been around the block a couple of times, and all they care about is making sure their companies survive. RIP Good Times was prudent. Better to cry wolf, than to not do so, and be eaten while you sleep. When the cost/benefit balance changes, assume catastrophe, minimise chances of a Type 2 error (bias yourself towards change - a Type 1 error), and plan for the worst thing that you can possibly imagine - think of it like paying for insurance against storm damage if the data shows a few too many clouds over the Atlantic. A false positive error, commonly called a "false alarm" is a result that indicates a given condition has been fulfilled, when it actually has not been fulfilled. In the case of "crying wolf" - the condition tested for was "is there a wolf near the herd?", the actual result was that there had not been a wolf near the herd. The shepherd wrongly indicated there was one, by calling "Wolf, wolf!". In terms of folk tales, an investigator may be "crying wolf" without a wolf in sight (raising a false alarm) (H0: no wolf). A false positive (with null hypothesis of health) in medicine causes unnecessary worry or treatment, while a false negative gives the patient the dangerous illusion of good health and the patient might not get an available treatment. [1] The future is very uncertain. Act accordingly. Or as our ancestors would say: If you hear any type of rustling in the bushes; always assume that it's a tiger trying to kill you. Temporary fear/worry is a good deal better than a permanent and painful death. [1] - http://en.wikipedia.org/wiki/Type_I_and_type_II_errors http://en.wikipedia.org/wiki/Type_I_and_type_II_errors [2] - http://en.wikipedia.org/wiki/Precautionary_principle http://en.wikipedia.org/wiki/Precautionary_principle
tlogan 14y ago
VCs are similar to all other investors: they buy when it is high they sell when it is low. BTW, whoever invested in or started social gaming and iOS companies during that time is golden now...
blacklooksgreat 14y ago
I don't fault your story or intentions, but this quote: "That all sounds like bullshit to me. I was there, I looked in the partners' eyes, they weren't bluffing. They were trying to help us" Really rings hollow with me. You may have believed you could stare into their soul to know their being, but these guys eat people like you for breakfast. You wouldn't see a knife to the back coming, so don't think you could look in their eyes and know they weren't bluffing.
SkyMarshal 14y ago
>That being said, I am glad that presentation ended up being wrong, just as I am glad the Cuban Missile Crisis did not turn into a full-blown nuclear war. The presentation wasn't wrong it was dead on. It's just that the massive Federal Reserve intervention and US Government stimulus prevented the worst. Similar to Y2K - lots of noise was made about it, while thousands of engineers worked around the clock fixing it, so that when it finally happened it was a nonevent. In both cases, people who accuse the warners of crying wolf after the fact seem oblivious to the scope and nature of the problem and the effort it took to fix. Though in the case of the financial crisis, it's not fixed. The trillions of non-performing debt has simply been shifted from private to sovereign balance sheets, and the crisis continues. Some or all of it will default eventually, there's no way around that. It's only a question of whether it's a managed, orderly, gradual default, or an acute chain reaction collapse.

143 points by bdb 14y ago

"...the US financial system was literally melting down." Really? The financial system was becoming a pool of molten goo, possibly spreading radiation all over its vacinity?

kposehn 14y ago
> The financial system was becoming a pool of molten goo, possibly spreading radiation all over its vicinity? Metaphorically, I'd say that was fairly accurate if you consider the molten goo to be defaults and the radiation to be bank malaise and bad assets; it also managed to start the same reaction in the EU, which continues to this day.
StevenRayOrr 14y ago
Even intelligent people that know the meaning of the word will make this mistake when writing casually. The English language would be much better off if we removed the word "literally" from it. Or, I suppose, if we all just decided to accept that "literally" now means "metaphorically". In which case, please kill me.
- SomeCallMeTim 14y ago
  If it's a "mistake", then it's one that has been made for 300 years: http://www.slate.com/articles/life/the_good_word/2005/11/the_word_we_love_to_hate.html http://www.slate.com/articles/life/the_good_word/2005/11/the... Relevant excerpt: 'As is often the case, though, such "abuses" have a long and esteemed history in English. The ground was not especially sticky in Little Women when Louisa May Alcott wrote that "the land literally flowed with milk and honey," nor was Tom Sawyer turning somersaults on piles of money when Twain described him as "literally rolling in wealth," [...more...] Such examples are easily come by, even in the works of the authors we are often told to emulate.' Given the caliber of authors that have used "literally" for emphasis, I have a hard time standing behind the concept that it's even poor style. We can decide that, moving forward, we'd like to clean up English and use "literally" differently, but calling it a mistake rather than a offense to modern style is inaccurate. REGARDLESS, I thought this was exactly the kind of thread that Hacker News hated. :|
- giblfiz 14y ago
  do you literally want me to kill you now?
- pyre 14y ago
  "...the US financial system was literally melting down." is probably better written as: "...the US financial system was seriously melting down." Adding literally is an attempt to make the statement stronger than just: "...the US financial system was melting down."
- lifeisstillgood 14y ago
  Literally kill you?
giblfiz 14y ago
Definition of LITERALLY 1: in a literal sense or manner : actually <took the remark literally> <was literally insane> 2: in effect : virtually <will literally turn the world upside down to combat cruelty or injustice — Norman Cousins> http://www.merriam-webster.com/dictionary/literally http://www.merriam-webster.com/dictionary/literally
- StevenRayOrr 14y ago
  Definition of VIRTUALLY 1: almost entirely : nearly 2: for all practical purposes <virtually unknown> http://www.merriam-webster.com/dictionary/virtually http://www.merriam-webster.com/dictionary/virtually
- tedsuo 14y ago
  That's really funny, I didn't realize the hyperbolic use had become official at some point.
  - joshuahedlund 14y ago
    Me either. Just part of the long trend of diluting intense words and chasing after new ones I guess (see: awesome, incredible, epic, etc). Kinda wonder where the language will go next.. doubleplusgood?
  - rmc 14y ago
    Nothing is official. English, unlike other languages, does not have an official governing body. There is no official One True English Language.
  - Daniel_Newby 14y ago
    It didn't. The dictionary is literally lying.
dalton 14y ago
I think it's awesome that you just created a new hn account to leave this comment.
- foobooboo 14y ago
  Why thank you, I've been lurking around for quite a while, but this did it.
- moron 14y ago
  I don't!
  - bugmenot 14y ago
    Moron.
mdemare 14y ago
I see this usage of "literally" more as a dereference, or an unquote. I mean, it takes a dead metaphor and tries to bring it back to live. It means "hey, pay attention to this metaphor!" If you'd say, "the financial system was melting down", that is such a stale metaphor that it might not even trigger any associations with nuclear reactors. "Literally" forces you to stop and think about molten goo and radiation. And as such, I approve of it (although it is much preferred to use fresh metaphors than to resurrect stale ones.)
pbreit 14y ago
lit·er·al·ly/ˈlitərəlē/ Adverb: 1. In a literal manner or sense; exactly: "the driver took it literally when asked to go straight over the traffic circle". 2. Used to acknowledge that something is not literally true but is used for emphasis or to express strong feeling.
clebio 14y ago
So, yeah, while misuse of literally literally bugs the shit out of me a lot, I'm fairly tossed up about whether it's worth bugging out over. The recent surfacing of the 'poisonous/venomous' distinction smacks of pop-culture faddism and as such, is just dull and tedious. Academics, scientists, and engineers generally understand these details (indeed, Dalton Caldwell almost certainly _does_ know the distinction, being as he was, I gather, a 'Founder/CEO of a Sequoia portfolio company'). Complicated, careful work (in nuclear physics or space launches, for instance) generally depends on this, no doubt. But outside those domains -- in a personal blog, for instance, or when noodling catfish in the bayou, say -- splitting infinitives might be ok, or even a shibboleth. See Dave Chappelle's analysis on Inside The Actors Studio regarding speaking as a black American. And, while I don't care to hurtle ad-hominems ad-hoc, if you _are_ going to be pedantic about the minutiae of someone else's considered work, it's possibly worth knowing that the word is 'vicinity'.
- ricardobeat 14y ago
  For some reason this is one of the hardest to read comments I've ever encountered on the internet.
  - clebio 14y ago
    I'm vaguely aware that my writing style is somewhat dense. I try to work on that, I really do. Still, I consider yours a sort of compliment -- an obscure achievement.
  - deleted 14y ago
    [deleted]

ebiester 14y ago

The issue isn't that Sequoia was wrong -- in fact, everything they said came to pass. It wasn't a quick recovery, and people spent less money on technical acquisitions. That didn't stop people from creating startups. What the slide deck didn't account for is that there was nowhere for big money to put their money - everything was in trouble. So, people started to look for new opportunities, and Silicon Valley suddenly looked mighty attractive as a place for investment. On Main Street, there are people who have been out of work for years now. It really was that bad, is that bad. We just happened to be under one of the few umbrellas in a storm.

tatsuke95 14y ago
You're talking in the past tense, like the situation is over. For all we know, it's just beginning. >"We just happened to be under one of the few umbrellas in a storm." It's not different there. It never is.
- ebiester 14y ago
  The first deluge is over. The economy isn't currently in freefall; rather, it is slowly growing. That doesn't mean the storm system has moved on and everything is sunny from here on out. Further, an umbrella (sorry to extend a potentially leaky abstraction here) doesn't mean that you are immune to the storm. It just means that you deflect most of the rain around you. But it's different for IT, much different. I was let go from multiple contracts, but the time I spent out of work was by choice, and I had two interviews a week the moment I put my resume out while friends in other sectors would have killed for even an interview. I was able to choose the job I wanted once I was willing to move out of my home city. I don't have a star studded resume either, and I've seen mediocre and worse developers stay on because replacements couldn't be found. It's different for IT, and programmers more specifically.

dannyr 14y ago

Dalton: I interviewed for an engineer position at Imeem a week before. I passed the interview & I was told that the offer letter was just waiting for your signature. It was delayed because you just had a baby. Then days later, I saw the "RIP Good Times" presentation & I was told that the job offer was put on hold indefinitely. Weeks later, I read about the layoffs & the job was gone for good. It was a blessing in disguise for me since I realized that I should learn a new language & framework (Python/Django) aside from .Net. Turned out well for me since there are more Python jobs than .Net in the area.

dalton 14y ago
Yes, that all sounds about right. I am glad you think of it as a blessing. Incidentally, all of the work I do now is Python/Django. The story of why we had a massive .NET codebase is a long story.

amix 14y ago

The crisis is far from over and the financial systems are still in a Cuban Missile Crisis situation. Nothing has really improved since 2008 - other than the different governments pumping trillions of $ into the different markets. I think the crash of 2008 is a little taste of what's to come (that's at least what I am preparing for).

roc 14y ago
To be fair: the delta has improved and that's not nothing. A morass is certainly preferable to a calamity.
- AJ007 14y ago
  4 decades of famine or 1 typhoon? What the actions of world leaders have effectively said is that we will sacrifice our economic growth in exchange for the ability to ensure that current debt can continue to be serviced.
  - roc 14y ago
    Sacrificing economic growth compounds the problem of current debt. What the actions of world leaders have effectively said -- loud, clear, underlined and bolded -- is that the protection of existing wealth is of paramount importance and the generation of new wealth is secondary-to-incidental. That said, one needs to know the breadth and depth of the impact of famine vs a typhoon to know which would be worse. 4 decades of famine that negatively affects half the population may be the lesser evil compared to 1 typhoon that outright destroys half the population and thus future economic potential.
koide 14y ago
Would you care sharing what exactly are your preparations? I'm at a loss figuring what is a good way to prepare. I've moved some cash to the less troubled economies but, what else?
- ricardobeat 14y ago

adventureful 14y ago

The cold war continues (going with the missile crisis line), and it is thus the Fed is preparing for QE3. I agree strongly with another comment: Sequoia was right, and then some. Nothing actually got better, it's just that people think it did. A moment of respite from the turmoil is all the last two or three years represents. That moment of respite cost between $8 and $15 trillion depending on what you're counting (total deficits + Fed bailouts). In fact, things are far worse today than they were at the height of the crisis, as we've loaded up on $6 or so trillion more in public debt we can never pay back. We've added about $400 to $500 billion more in student loan debt, and a few million college graduates are sitting on the sidelines without jobs and experience, and we've got millions more living on food stamps without jobs. The only thing separating our system from absolute implosion is the global reserve currency that we're currently massively abusing at our leisure. If mortgage rates had to rise to their natural rates (absent Fed manipulation holding down both long term and short term rates), housing would quickly plunge another 1/3, and that alone would rupture the entire financial system and bring it to its knees. The truth is, we look a lot like the imploding EU zone across the Federal and State levels. Except we've got the dollar, for now.

paulsutter 14y ago
You're right, but we can be part of the solution. As Max Levchin says, the long term question is not whether the US is printing too much or too little - it's whether we (that's us, here, reading Hacker News) can focus on real innovation, which causes real productivity improvements, and thus real growth. That's the best way out and it rests on us.
- cynicalkane 14y ago
  The Republicans were saying the same sort of stuff in 1929. America learned, at great cost, that macroeconomics matters. We'd do well to remember those lessons.
  - paulsutter 14y ago
    Macroeconomics matters enormously. The financial crisis was caused by illusory growth from the ponzi innovation of a bonus culture + fraudulent ratings agencies. Real growth comes from technological innovation. That has been equally true in 1929, 1933, 2006, 2008, and 2012. Go read Wealth of Nations (published in 1776). And I invite you to come out here to Silicon Valley. EDIT: can't reply / too deep. I've never read Ron Paul newsletters, and I'd love to hear you explain how CDOs of highly correlated assets deserve AAA ratings. Love even more to hear how you think macroeconomic policy caused the shock.

gaius 14y ago

Interesting, and disturbing, that Sequoia only suggest reducing head count in the engineering department (slide 47).

tatsuke95 14y ago
Perhaps they know something you don't. What are you implying?
anigbrowl 14y ago
I read that to include cuts to general and administrative expenses, as well as underperforming marketing and business development. I think engineering was at the top because it's the core asset, while products and other functions are less and less unique to a given firm.

hexis 14y ago

"I remember getting an email from Sequoia asking for my personal presence (ie don't send a VP in your place) to some sort vaguely positioned mandatory meeting." By what mechanism can an investor in a firm, presumably an investor with less than 50% equity, make attendance at a meeting mandatory for the CEO of said firm?

klodolph 14y ago
"Mandatory" is a surprisingly vague concept, even when used by people with real power.

deleted 14y ago

[deleted]

freshbreakfast 14y ago

Dalton, I don't know if you remember this, but I used to a major imeem fanboy, wrote a personal blog (freshbreakfast dot com) to count the ways I loved imeem, the links for which I spammed to team/all/dalton/steve/gina/matt@imeem.com. Anyhow, I ended up becoming employee #2 at Ustream. So I was at that presentation, doing them a favor running a private live stream for the CEOs that couldn't make it. Not to sound creepy, but I observed for your reactions quite a bit at that Seqouia meeting, and I even introduced myself to you after the presentation. It's true, your mind seemed to be elsewhere, but you were still very kind. And if that many full circles aren't enough for ya, today we're both trending on front page of Hacker News :-). This one's mine: http://news.ycombinator.com/item?id=4080074 http://news.ycombinator.com/item?id=4080074

dalton 14y ago
Yes, I certainly do remember you. And I do remember you being there that day as well. I read the hypebot post this morning, didn't notice your name on the byline :)
- freshbreakfast 14y ago
  :) Thanks man, means a lot coming from you. And great great post, really a privilege getting to peer into your thought process during a moment we nominally shared.

herdrick 14y ago

I don't buy it. The world used to let highly interconnected financial institutions fail and we had sharper, nastier recessions (we called them 'panics') but they were over sooner. I think that, much like the reaction to the WTC/Pentagon terror attacks was worse than the attacks, the panicky reaction - bailouts and stimulus - has been much worse than the problem they tried to fix.

trevelyan 14y ago
You should read Alan Blinder about "The Great Moderation" -- recessions since the late 1970s have been shorter and shallower than their predecessors. And far shorter and shallower than their counterparts under the gold standard in the 19th century. Also empirically, the reason the United States is doing better than Europe is because of the stimulus/bailout. It might be hard to think of the United States as a success story since it is only a relative one, but look at the much more dire situation in countries like Britain and Greece and Spain where governments were forced or choose to embrace austerity. There is no reason the world cannot produce the same amount of goods as it was producing in 2007 - there are more rather than less people willing to work and the cost of borrowing money is very low. The only big outside constraint is energy costs, which are being offset by some fairly amazing reductions in the prices of alternative energy, including solar power. So why the mess? The problem is a classic liquidity trap, a preference of investors for highly-liquid and safe assets that results in less money being spent in the private sector. This is visible in the way the borrowing rates of the Federal Government have fallen despite the best efforts of the Republican Party to drum up a debt scare the moment it fell from power and stopped spending the money itself. Bailing out the banks did somewhat stabilize the banking system and probably prevented catastrophe. What remains necessary is getting out of the liquidity trap, which means increasing the amount of spending in the private sector. One way to do this would be having the government borrow at essentially zero cost and invest that money in public infrastructure projects which offer a return on investment. Another approach would be having the Federal Reserve declare an inflation target of 4% until the economic crisis is over. This would reduce the expected ROI from parking money in Treasuries and provide a greater incentive for firms to make private sector investments instead of just parking cash in the bank.

clarky07 14y ago

So I just looked through the slide deck again, and it seems to me most of what was in there should be standard advice AT ALL TIMES. Don't spend money on things you don't need. Watch expenses. Build a profitable company. This should be the default rather than here's 10 million see how many users you can get maybe facebook or google will buy you.

ivankirigin 14y ago

It would be awesome to see an update to each of the graphs in that presentation. Does anyone know if that exists?

confluence 14y ago

In reference to Sequoia possibly crying wolf. In statistics there are 2 types of errors that one can make. A Type 1 error is when you aggressively reject the status quo for change, even if the status quo was just fine (crying wolf!). A Type 2 error is aggressive rejection of change for the status quo, even though the status quo isn't right any longer (not crying wolf!). There is no way to escape these errors, and depending on evidence, you'll sway one way or another (these errors always exist and are complementary in nature). The financial crisis looked like it could blow up the world (there might be a wolf in the flock!). Assuming status quo - that nothing is happening (no wolf) - you might not prepare for it (a wolf), and if the world blew up you'd lose everything (wolf eats you!). Assuming change (hello wolf!), you prepare and adapt for the crisis where you have to lose a bit (growth/funding/employees sadly), but if it all goes down - you are prepared (wolf meet gun!). This is an example of the precautionary principle at work, and based on my understanding, Sequoia did an outstanding job. The Federal Reserve also did a great job (during the crisis). I have no opinion about the lax rates in the lead up to the bubble - but I presume that was highly detrimental to our collective financial health! :D Sequoia are the best in the business, they've been around the block a couple of times, and all they care about is making sure their companies survive. RIP Good Times was prudent. Better to cry wolf, than to not do so, and be eaten while you sleep. When the cost/benefit balance changes, assume catastrophe, minimise chances of a Type 2 error (bias yourself towards change - a Type 1 error), and plan for the worst thing that you can possibly imagine - think of it like paying for insurance against storm damage if the data shows a few too many clouds over the Atlantic. A false positive error, commonly called a "false alarm" is a result that indicates a given condition has been fulfilled, when it actually has not been fulfilled. In the case of "crying wolf" - the condition tested for was "is there a wolf near the herd?", the actual result was that there had not been a wolf near the herd. The shepherd wrongly indicated there was one, by calling "Wolf, wolf!". In terms of folk tales, an investigator may be "crying wolf" without a wolf in sight (raising a false alarm) (H0: no wolf). A false positive (with null hypothesis of health) in medicine causes unnecessary worry or treatment, while a false negative gives the patient the dangerous illusion of good health and the patient might not get an available treatment. [1] The future is very uncertain. Act accordingly. Or as our ancestors would say: If you hear any type of rustling in the bushes; always assume that it's a tiger trying to kill you. Temporary fear/worry is a good deal better than a permanent and painful death. [1] - http://en.wikipedia.org/wiki/Type_I_and_type_II_errors http://en.wikipedia.org/wiki/Type_I_and_type_II_errors [2] - http://en.wikipedia.org/wiki/Precautionary_principle http://en.wikipedia.org/wiki/Precautionary_principle

tlogan 14y ago

VCs are similar to all other investors: they buy when it is high they sell when it is low. BTW, whoever invested in or started social gaming and iOS companies during that time is golden now...

blacklooksgreat 14y ago

I don't fault your story or intentions, but this quote: "That all sounds like bullshit to me. I was there, I looked in the partners' eyes, they weren't bluffing. They were trying to help us" Really rings hollow with me. You may have believed you could stare into their soul to know their being, but these guys eat people like you for breakfast. You wouldn't see a knife to the back coming, so don't think you could look in their eyes and know they weren't bluffing.

SkyMarshal 14y ago

>That being said, I am glad that presentation ended up being wrong, just as I am glad the Cuban Missile Crisis did not turn into a full-blown nuclear war. The presentation wasn't wrong it was dead on. It's just that the massive Federal Reserve intervention and US Government stimulus prevented the worst. Similar to Y2K - lots of noise was made about it, while thousands of engineers worked around the clock fixing it, so that when it finally happened it was a nonevent. In both cases, people who accuse the warners of crying wolf after the fact seem oblivious to the scope and nature of the problem and the effort it took to fix. Though in the case of the financial crisis, it's not fixed. The trillions of non-performing debt has simply been shifted from private to sovereign balance sheets, and the crisis continues. Some or all of it will default eventually, there's no way around that. It's only a question of whether it's a managed, orderly, gradual default, or an acute chain reaction collapse.