by bdb on 6/7/12, 5:41 PM with 118 comments
by ebiester on 6/7/12, 7:12 PM
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.
by dannyr on 6/7/12, 6:51 PM
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.
by amix on 6/7/12, 7:02 PM
by clarky07 on 6/7/12, 9:57 PM
by freshbreakfast on 6/7/12, 9:05 PM
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
by herdrick on 6/7/12, 9:07 PM
by foobooboo on 6/7/12, 6:36 PM
Really? The financial system was becoming a pool of molten goo, possibly spreading radiation all over its vacinity?
by hexis on 6/7/12, 8:56 PM
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?
by ivankirigin on 6/7/12, 10:17 PM
by SkyMarshal on 6/8/12, 8:49 AM
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.
by blacklooksgreat on 6/8/12, 1:35 AM
"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.
by gaius on 6/7/12, 8:28 PM
by tlogan on 6/8/12, 1:33 AM
BTW, whoever invested in or started social gaming and iOS companies during that time is golden now...
by confluence on 6/7/12, 11:57 PM
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
by adventureful on 6/7/12, 8:12 PM
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.