Every start-up board is having the same conversation these last few weeks: how will this economic crisis affect us and what should we do in our own business?
We had our annual investor meeting this week and warned our investors that it was going to get ugly over the next year or two (surprisingly, they indicated that some of their other VC investors had sounded positively pollyanna during this annual season). For all the reasons I described in my recent blog, “Short-Term Bear, Long-Term Bull”, we remain a fan of the start-up economy in the long run. That said, CEOs need to take swift action to make sure they survive to see the long run. For as economist John Maynard Keynes observed, “In the long run, we are all dead.”
My partner, David Aronoff, wrote a good blog outlining what CEOs should be doing to ensure survival. TechCrunch reports a similar note that angel investor Ron Conway has sent out to his portfolio companies. GigaOm reports that Sequoia Capital called an all-hands, emergency meeting with its portfolio CEOs to walk through a recommended plan of action. I have received copies of emails from a few other funds alerting their CEOs with similar messages. Take action now. Don’t dither. Cut costs, cut projects, raise incremental capital, be proactive and plan for the worst.
If you don’t, you might be watching Kenesyian economic policy being implemented from the vantage point of six feet under.