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Illustration: Aïda Amer/Axios

On March 5, Sequoia Capital issued a dire warning to its portfolio company CEOs, telling them to "question every assumption" about their businesses.

Flashback: At the time, the WHO wouldn't categorize COVID-19 as a pandemic for another two weeks. The NBA was still playing games in front of fans. Congress had just committed $8 billion to fight the virus, believing it to be a sufficient amount, and non-citizen travel from Europe into the U.S. was still allowed. Kids were still in school.

Nine months later, Sequoia's letter stands as prophetic, befitting a firm long viewed as venture capital's platinum standard. And, like with Sequoia's "RIP Good Times" warning from October 2008, this one deserves credit for waking entrepreneurs — and other VCs — to the mortal danger before it was too late.

  • The goal, as Sequoia's Roelof Botha told me at the time, was to "sensitize" companies to compound risk, which is something people don't intuitively contemplate (particularly when it comes to public health).
  • Sequoia didn't tell people their businesses were on the brink. Rather, it provided a brief playbook for how to lessen the odds they'd reach that point, advising founders to recalibrate cash assumptions and reconsider spending plans in areas like marketing and new hires.
  • In short, the best way to keep the gravy train rolling was to give it a respite.

No, Sequoia didn't get everything right.

  • The firm suggested it would take "perhaps several quarters before we can be confident that the virus has been contained." Clearly an underestimation.
  • It also argued that Fed interest rate cuts "may prove a blunt tool in alleviating the economic ramifications of a global health crisis." That was true, but neglected to predict how monetary policy would help cleave the investment economy from the real economy, and how that dichotomy would keep fueling private and public equity deal-making.

The bottom line: We should all hope Sequoia never again feels compelled to pen another of these letters. But, if it does, we'd best pay attention.

Go deeper

Dan Primack, author of Pro Rata
Dec 11, 2020 - Technology

TikTok owner ByteDance set to become world's most valuable VC-backed company

Illustration: Rebecca Zisser/Axios

ByteDance is closing in $2 billion in new funding co-led by KKR and existing backer Sequoia Capital at a $180 billion valuation, per Reuters.

Why it matters: This would cement China-based ByteDance as the world's most valuable VC-backed company, worth 3X the next-largest unicorn, and comes despite the U.S. government's efforts to force its divestiture of TikTok.

Updated 6 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Health: Most vulnerable Americans aren't getting enough vaccine information — Fauci says Trump administration's lack of facts on COVID "very likely" cost lives.
  2. Politics: Biden unveils "wartime" COVID strategyBiden's COVID-19 bubble.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong to put tens of thousands on lockdown as cases surge.
  5. Sports: 2021 Tokyo Olympics hang in the balance.
  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.

Trump impeachment trial to start week of Feb. 8, Schumer says

Senate Majority Leader Chuck Schumer. Photo: The Washington Post via Getty

The Senate will begin former President Trump's impeachment trial the week of Feb. 8, Majority Leader Chuck Schumer announced Friday on the Senate floor.

The state of play: Schumer announced the schedule after reaching an agreement with Republicans. The House will transmit the article of impeachment against the former president late Monday.