“RIP Good Times”: Silicon Valley’s Cuban Missile Crisis
Not too long ago, I found myself sitting in the second row of a conference room, anxiously scribbling notes, at what is now known as the “RIP Good Times” presentation. The presentation has become a cultural touchstone of modern-era silicon valley. I am writing this post because I am of the opinion that some of the context of that particular event has been lost.
At that time I was the Founder/CEO of a Sequoia portfolio company. I remember getting an email from Sequoia asking for my personal presence (ie don't send a VP in your place) to some sort vaguely positioned mandatory meeting. The meeting was held at a conference center on Sand Hill Road, which I have been to many times since. There were roughly 60 people in the room. It was nicely catered.
You have probably seen the PowerPoint deck. I don't feel a need to discuss the content of it. At the meeting, I couldn't have imagined that the deck, or any of the content of the presentation, would be leaked. Rather, I felt that I was just briefed into proprietary knowledge.
Imagine for a second: the meeting took place October 9, 2008. On September 15, 2008, Lehman declared bankruptcy, and the US financial system was literally melting down. CNBC coverage was tantamount to a deathwatch… scared-looking, disoriented television pundits trying to figure out what the hell was going on, who was exposed to the financial fallout, who was going to fail. These failures, bailouts, and back-room deals were all happening in realtime, over the course of days. The factual details of the Lehman bankruptcy are fascinating, and even have served to make a very interesting movie.
Once the presentation was over I had a conversation with one of the most important people in the room, and he told me several things that were so scary that it made my head swim. For example, he mentioned that GE Capital might default. It is difficult for me to imagine what would have happened in the ensuing chain of events if GE Capital defaulted, but suffice it to say I don't think it would have been good.
The press read a lot of ulterior motives into the deck at the time. Some said that Sequoia was just trying to scare people, or drive down prices, or hurt their competition. 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. Present day commentators like to mock that presentation as a “boy who cried wolf” moment that “ultimately did more harm than good.”
My perspective is that our financial system was in a Cuban Missile Crisis sort of moment. Most normal people were oblivious what was actually going on, but I think we were just minutes away from a financial disaster at least one, possibly two orders of magnitude worse than what actually happened. I don't see how Sequoia's efforts to communicate a (somewhat sanitized) version of the knowledge they had to their portfolio CEOs, and to provide actionable tactical instructions to us, could be perceived of as anything but good faith. That being said, I am glad that presentation ended up being wrong, just as I am glad the Cuban Missile Crisis did not turn into a full-blown nuclear war.
After the presentation was over I vividly remember walking to my car, closing the door, and sitting there in silence for ten minutes, trying to catch my breath.