Thursday, November 18, 2010

Bulls, Bears and Bubbles- how wrong we can be

Yesterday, I posted on the 'investing bubble' which many participants and analysts feel is building today. We obviously won't know if they are right for a couple of years. This thinking sparked me to dust off the Sequoia Capital presentation which they presented to a gathering of portfolio companies during the height of the financial crisis in October of '08. It was well thought out, reflected the cold sentiment of the time, and lauded by the press and pundits.

It was also dead wrong advice. It missed the 'change' in the financing environment, missed the 'social' business model basics of building an audience and missed the drivers for exit (growth vs profitability). In hindsight, the time was right to be contrarian; use capital to fund innovation to gain market share and seize expanding opportunities.

Sequoia is a great firm with decades of success behind it. Sometimes, smart and informed people just get it wrong.

Here it is:

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