Roelof Botha shares what Sequoia’s Black Swan memo got wrong – ClearTips
In March, the well-known investment company Sequoia Capital Published the Black Swan Memo, a founder warning of the potential commercial consequences of coronaviruses, which had not yet been labeled an epidemic.
“It will take a long time – probably several quarters – before we can be assured that the virus is contained. It will take even longer for the global economy to establish its foothold, ”the memorandum reads.
Six months later, Sekoya’s Roloff Botha is “surprised” at the state of venture capital and startups in the country, which are largely benefiting – not struggling with the COVID-19 tailwinds.
VCs are pouring money into teletecine, along with edtech, SaaS, low-code and no-code in one fast clip. In some cases, investors say that venture funding has been hotter than before in the US elections, with a record not only of March 2020 but 2019 overall.
Sequoia, it seems, is happy to be mistaken. This week, Sequoia Capital will support three of the 12 companies going public: Sumo Logic, Unity and Snowflake. Snowflake is expected to go beyond its $ 30 billion valuation, which some say will be the largest US software company to go public so far. Beyond the firm, the number of unicorns is gearing up, or teasing, to go public in the coming weeks.
“I’m proud that we saw some things and anticipated some things,” he said during ClearTips Disrupt. “But we also got many things wrong.”
Botha pointed out some factors that protect startupland from the cold. First, he said that the US government’s stimulus package helped ensure that there was “not a complete economic recession.”
“I did not expect a reaction of that scale at all,” said Botha. He is referring to the $ 2 trillion CARS Act passed by Congress and signed by President Trump, which includes PPP loans designed to provide direct incentives for small businesses to put their workers on the payroll. Tech recipients included Bolt Mobility, Getaround, Luminar, Stackin, Tusimple and Velodyne.
Botha described how tech companies have helped sustain businesses and operations amid an epidemic that has led to new customer growth and declining revenues.
Zoom, A Sequoia portfolio company may be the best example of how a technology company skyrocketed during an epidemic. According to Botha, who still owns shares in the company, he wishes he had held his post longer. Sequoia invested in Zoom when it was valued at $ 1 billion. Today, it is worth more than $ 100 billion, a domestic consumer product graduated from an enterprise to a videoconferencing service.
To be fair, some of Sequoia’s warning signs turned out to be true: the trimmed Silicon Valley; The companies closed citing revenue declines; And the market remains volatile.
“We also have to realize that there is a lot of pain and there are many mainstream businesses and local services and restaurants and coffee shops that often suffer financially,” he said. He said, “I just don’t want technology stocks to be good. As a country, we need to curse ourselves to help everyone. “