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One of the top VC firms in Silicon Valley, Sequoia Capital, has a message for its portfolio of startups and the rest of the startup community in Silicon Valley:

  • Stop your bellyaching. Get your butt off the couch and back to working 24/7. If you don’t, startups from China are going to take your lunch money and kick you in the shin.

Before jumping into the details of the Mike Moritz byliner in the FT, “Silicon Valley would be wise to follow China’s lead,” it’s worth noting that this isn’t the first time that Sequoia smacked its startups.

Back in 2008, Sequoia caused quite an uproar when it required its startups to attend a showing of the “R.I.P., The Good Times” presentation. The moral of the story went something along the lines of “stop spending money on things that don’t matter, or your little venture won’t matter.”

For the visual learners, this slide nicely captures the moment:

 

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You can check out the entire deck below if you’re looking for 56 slides that essentially deliver an economics lesson for having more money coming in the door than going out the door.

 


 

Back to the recent byliner in the Financial Times, I guarantee that all the Sequoia partners discussed and agreed to this move, a byproduct of frustration that had probably been building for some time. After all, is there anything worse that counting on a $10 million investment morphing into a $1 billion windfall, and the coders get distracted by silly things like friends and Netflix and sleep?

In this passage, Sequoia seems to be making the point that the world has gone mad, but the memo hasn’t reached China:

In California, the blogosphere has been full of chatter about the inequity of life. Some of this, especially for women, is true and for certain individuals their day of reckoning has been long overdue. But many of the soul-sapping discussions seem like unwarranted distractions. In recent months, there have been complaints about the political sensibilities of speakers invited to address a corporate audience; debates over the appropriate length of paternity leave or work-life balances; and grumbling about the need for a space for musical jam sessions. These seem like the concerns of a society that is becoming unhinged.

These topics are absent in China’s technology companies, where the pace of work is furious. Here, top managers show up for work at about 8am and frequently don’t leave until 10pm. Most of them will do this six days a week — and there are plenty of examples of people who do this for seven. Engineers have slightly different habits: they will appear about 10am and leave at midnight. Beyond the week-long breaks for Chinese new year and the October national holiday, most will just steal an additional handful of vacation days. Some technology companies also provide a rental subsidy to employees who choose to live close to corporate HQ.

In California, this sort of pace might be common for the first couple of years of a company, but then it will slow. In China, by contrast, it is quite usual for the management of 10 and 15-year-old companies to have working dinners followed by two or three meetings. If a Chinese company schedules tasks for the weekend, nobody complains about missing a Little League game or skipping a basketball outing with friends. Little wonder it is a common sight at a Chinese company to see many people with their heads resting on their desks taking a nap in the early afternoon.

It also seems that Sequoia prefers those working at their startups to drink the “Kool-Aid” and blindly worship what counts, money.

And there are so many things off with this passage:

There is also a deep-rooted sense of frugality. You don’t see $700 office chairs or large flat panel computer screens at most of the leading technology companies. Instead, the furniture tends to be spartan and everyone works on laptops. It is common for facility managers to allocate 80-100 square feet to each employee, compared with two to three times that amount in California.

On long-haul business flights most employees will fly economy and many share hotel rooms to save costs. It is also striking to the western eye how frequently a tea bag is reused or how, in winter, employees dress in coats and scarves at their desks to ward off the bone-chilling temperature.

Traveling to China since 1998, I’ve spent in aggregate over a year in the country. Though hardly an expert in Chinese society, what I’ve observed is that the Chinese like capitalism as much as Americans do. Just like Silicon Valley, bootstrapped startups in China are frugal, and those flush with funding will trick out their offices. And if Sequoia’s startups are shelling out $10K a pop for business-class flights over the Pacific, someone has lost control of the kitty.

His final two lines also warrant comment:

… in many respects, doing business in China is easier than doing business in California.

Someone needs to give Sequoia a refresher course on what goes into establishing a Wholly Owned Foreign Enterprisewor (WOFE) in China as well as the control that the government exercises over the internet and the flow of information. If Kafka were alive, he would write about the experience.

And his closer:

As the Chinese technology companies push ever harder outside the mainland, the habits of western companies will start to seem antique.

The idea that people have a life outside of work will seem antique? I don’t think so.

Look, there are admirable qualities in the Chinese startup culture and admirable qualities in the Silicon Valley startup culture. No one has cracked the code on the perfect set of circumstances that make for a winning startup (Let’s not forget Sequoia pumped millions in the fiasco called Webvan).

Still, there is one common denominator. Achieving greatness requires sacrifice. Those toiling for startups not just in Silicon Valley and China, but around the world understand this.

In my view, Sequoia sounds like the old man on the porch shouting, “Get off my lawn.”


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