I received an intriguing email at the end of December from Arun Taneja, the founder of technology industry analyst firm Taneja Group. I didn't originally plan to write a post about it, but now I think it's worth bringing up.
The email was a "Happy Holidays"/"2008 recap" message, presumably directed towards clients, business partners and other technology industry interests. In addition to the holiday "well-wishes,” Taneja raised a very provocative argument about the widely circulated PowerPoint presentation by VC firm, Sequoia Capital, which was recently leaked on the Web.
For those of you who haven't seen it, the presentation focuses on the economic crisis and recession,
and how it is impacting the tech. industry -- and, let's just say, the analysis and conclusions are pretty dim. The fact that the title slide reads, "R.I.P. Good Times," and another reads, "Death Spiral" (including a skull-and-crossbones image), should give you an idea of the tone.
In any event, the argument Taneja makes is this: the doom and gloom scenario presented by Sequoia caused unnecessary panic, and may actually undermine future tech. industry innovation and the recovery process. He writes:
"Since their well meaning but ill-conceived presentation leaked out to the industry I have seen otherwise sane CEOs running around in panic cutting costs in an almost irrational fashion. Not that there is anything wrong with cost cutting in these tough times. It must be done. But it is the hysteria that Sequoia has created that I believe will be destructive to the creativity that this industry is known for...I have seen start-ups doing unnatural things like cutting R&D along with everything else..."
In supporting his argument, he talks about the situation in the early 2000s:
"...[these were] lean years when the IT industry buckled down and 'laid low' for a few years. But I found that the start-ups from that era worked hard, spent money, albeit wisely, and we saw the results by 2004. Excellent technologies with transformational capabilities came out of that work...I have not seen that level of innovation in three decades...Just imagine if a 'Sequoia' of that era had put a wet blanket on the industry at that time. We would not have all those technologies that today are taking the brunt of the data tsunami that never stopped coming."
He goes on to discuss his belief that new leaders are created and technology innovation thrives in troubled times like these. Taneja also points out that innovative products with excellent value propositions "will do quite well in the next few years" – which is why it’s critical to keep technology companies encouraged and focused on innovation.
Now, obviously the nation and world is in the midst of an extremely serious economic crisis that is impacting virtually all industry sectors. And, it would be would be damaging and extremely irresponsibly to ignore or try and sugar-coat the real issues at hand.
But the question is, is there too much negativity out there? Is the non-stop barrage of negative reports about the economy and a dismal IT future hindering – or at least, delaying – the recovery in the tech. business?
More importantly, did Sequoia step over the line – by generating unnecessarily levels panic, and leading to poor, emotionally-based decisions that will end up making a bad situation remarkably worse?
Really curious to hear your opinions on this. Feel free to comment.
Geo2
