Maggie Shiels

Surviving in Silicon Valley

  • Maggie Shiels
  • 31 Oct 08, 12:20 GMT

From day to day the markets reel from stratospheric highs to plunging lows. It seems few people know what is really going on but there is perhaps one thing most can agree on and that is, that this economic crisis will touch everyone in some way or another.

Dollar billsThe $64,000 question is just how will people survive it?

Well this week the venture capital blog VentureBeat gathered a bunch of VC's together in Silicon Valley to ask them to impart wise words on this very topic to an assembled crowd of start ups and entrepreneurs.

John Doerr came armed with a list of 10 top things that chief execs should do to help them come out the other end of this downturn.

Mr Doerr is with the famed VC company Kleiner Perkins Caufield & Byers and when he speaks, people listen. That's because his early investments in companies like Google, Amazon, Intuit, Compaq, Sun and Symantec have earned him some serious kudos.

So here are his tips...

1. Act now. Act with speed. Raise money. Get a loan. Focus, cut or sell.

2. Protect the vital core of the company. Use a scalpel instead of an axe. Be surgical.

3. Make sure you have 18 months or more of cash on a conservative revenue forecast.

4. Defer any facility expansions. Don't spend money on tech infrastructure, such as new computers or software if you don't need it. Re-evaluate your R&D priorities.

5. Renegotiate any contracts that you can. Everything is negotiable.

6. Everyone in the organisation should be selling, from the receptionists to the engineers. It's a noble profession.

7. Offer people equity instead of cash as bonuses. You can do this with outside vendors as well.

8. Pay attention to where your cash is. Treasuries, for example, are more secure than money market funds.

9. For your revenue plan, pay attention to leading indicators.

10. Over-communicate with everyone: employees, investors, key customers. Let them know your resolve and don't sugar coat things.

For an alternative perspective, a panel of entrepreneurs offered their tips for survival.

Max Levchin of Slide and previously co-founder of PayPal said "Don't listen to anybody. No-one really knows what is going to happen next. It's better to be a contrarian in times like these than not."

Toni Schneider of Automattic said "Consider open source. It costs nothing and is a great way to keep a project going and continue to build on your dream."

Nirav Tolia of Epinions said "Constant transparent communication is the best way to transcend fear."

Paul Sieber of O'Melveny and Myers said "Have a back up plan."

Jason Calacanis of Mahalo said "Focus on the product. It's all that matters."


  • Comment number 1.

    The one thing the tech industry has in its favour this time around is experience. Lessons have been learnt from the tech bust at the turn of the century, which will no doubt serve businesses well in riding out this current storm. The first thing to accept is that cut backs will have to be made, so smart companies should look to cut fast and cut deep to avoid further repercussions down the line.

    Also, don’t rule out the possibility of businesses actually prospering in the downturn. There is a natural tendency to shy away from these conditions, whereas competitive gains are there for the taking for those businesses that decide to take a risk and grasp opportunities. When combined with a good balance sheet, companies that thrive in the current conditions may also find they have a head start when the market picks back up.

    Michael Liebow, CEO, Dexterra

  • Comment number 2.

    it must be hard to survive in the silicon valley...when the economy is going thru hard times....


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