John Doerr's Top 10 (or so) List

By Elizabeth Corcoran 10.30.08, 9:09 AM ET

Burlingame, Calif. -

'Tis the season of fear and inspiration in Silicon Valley.

Earlier this month, leading venture investing firm Sequoia Capital shocked Silicon Valley by blasting its entrepreneurs with a slide show featuring a slaughtered pig and a dead clear message: the fun and games are over. The slides were almost instantly shared throughout the Valley.

Then, Oct. 28, other leading Silicon Valley investors, including the oracle John Doerr of Kleiner Perkins Byers and Caufield, offered tempered cautions--along with a twist of optimism. "The world has really changed," Doerr said, noting that public equities have plunged by 40% in the past month. But the epicenter of this crisis is not the technology world.

"We have a crisis of confidence--in government, in our money," said Doerr.

In the spirit of putting a calm hand on the start-up tiller, Doerr compiled 10 or so ideas for keeping businesses healthy during a downturn.

He presented the ideas at a forum convened by VentureBeat. Joining Doerr on stage were investors Ram Shriram, an early investor in Google; Matt Cohler, formerly at Facebook and now with Benchmark Capitol; Kittu Kolluri, a partner at New Enterprise Associates; and Ron Conway, a prolific early-stage investor.

Many of Doerr's principles amount to a head-clearing dose of common sense after a time of unbridled market enthusiasm. Act with speed, Doerr urged. Use a scalpel--not an ax--to protect a company's key assets. Have 18 months of cash--or more--available. Put off spending on capital equipment or facilities. (Google's online documents and spreadsheets are saving customers money, he noted.)

Reprioritize your research and development. Recognize that everything is negotiable, including big contracts such as your lease. Everyone in a company--from the receptionist to the engineers--should be selling your products. Offer equity instead of cash to anyone, from the landlord to other creditors.

Put your own cash into "safe" places. Doerr noted that he's been nudging firms to put money into Treasury-backed securities. Identify "leading indicators" that can give you a sense of how your business is going. And "overcommunicate" with your shareholders and employees about how the market and company are doing.

The other panelists chimed in: Avoid long-term spending commitments, urged Cohler. Renegotiate your building's lease, Conway reiterated. Use equity, not cash, added Shiriam. NEA's Kolluri said he expects to see consumers flock to brands they trust.

Conway added that the companies he's supporting have tightened their spending. In the year 2000, the average burn rate for one of Conway's investments was $750,000 a month. Now his portfolio companies have trimmed their costs to a svelte $200,000 monthly, he asserts.

And he still sees the same number of proposals from entrepreneurs that he did six months ago. "There's a lot of cash and a lot of great ideas out there," concurred Conway. "Innovation isn't slowing."

http://www.forbes.com/2008/10/30/investors-doerr-sequoia-tech-personal-cx_ec_1030doerr.html

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