Sequoia’s Doug Leone says today’s downturn is worse than 2000 and 2008

Sequoia Capital Global Managing Partner Doug Leone speaks onstage throughout Day 2 of TechCrunch Disrupt SF 2018 at Moscone Center on September 6, 2018 in San Francisco, California.

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HELSINKI, Finland — American enterprise capitalist Doug Leone does not assume the tech wreck is going away anytime quickly.

The Sequoia Capital associate gave a dismal outlook for the worldwide financial system, warning that at the moment’s downturn was worse than recessions in 2000 and 2008.

“The situation today I think is more difficult and more challenging than either ’08, which was really a protected financial services crisis, or 2000, which was a protected technology crisis,” Leone mentioned, talking onstage on the Slush startup convention in Helsinki.

“Here, we have a global crisis. We have interest rates around the world increasing, consumers globally are starting to run out of money, we have an energy crisis, and then we have all the issues of geopolitical challenges.”

Tech leaders and buyers have been compelled to reckon with greater rates of interest and deteriorating macroeconomic situations.

With central banks elevating charges and reversing pandemic-era financial easing, high-growth tech shares have been on the decline.

The Nasdaq Composite is down practically 30% year-to-date, going through a sharper decline than that of the Dow Jones Industrial Average or S&P 500.

That’s had a knock-on impact on privately-held firms, with the likes of Stripe and Klarna seeing their valuations drop.

As a consequence, startup founders are warning their friends that it is time to rein in prices and concentrate on fundamentals.

‘Best classes you are ever going to be taught’

“Think of what happened in the last two or three years: whatever you did was rewarded by some investor because of the plethora of capital,” Leone mentioned.

“You were rewarded no matter what — you made a s–t decision, a crap decision, you got money; you made a good decision, you got money — which is a lousy way for you to learn your craft. All that is gone.”

“What you’re going to learn now is the best lessons you’re ever going to learn, even in our business,” he added.

Leone mentioned he does not count on tech firm valuations to get well till at the least 2024.

“My forecast is that we’re not going to get away with this very quickly,” Leone mentioned. “If you turn back in the 70s, there was a malaise of 16 years. Even if you go back to 2000, a number of public companies didn’t recover for 10 years.”

He added, “I think we have to be ready for a prolonged time where we’re going to find … consumers running out of money, demand decreasing, tech companies’ budgets being cut.”

In the personal markets, seed-stage firms can be much less affected than later-stage corporations, that are extra delicate to actions within the public markets, Leone mentioned.

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