A year after 'black swan' warning, Sequoia tells founders to step on the gas 

The times they are a-changin'—again. So says renowned Silicon Valley investor Sequoia Capital.

On March 5, 2020, Sequoia Capital warned its founders about the COVID-19 "black swan" event in a note, asking them to brace for the worst. A famously aggressive investor preaching caution was noteworthy and a bellwether for the times.

A year on, Sequoia has written another note and this time the message to the founders is—there is a window of opportunity, we are at an inflection point, accelerate now.

"The US is poised for stronger economic growth in the second half of 2021 than we’ve seen in decades. As vaccines bring an end to lockdowns closer, consumer debt has dropped, savings have risen and more stimulus is on the way," it said on March 19.

"COVID was an unexpected curve in our lives and for countless businesses. When you’re driving, you need to slow down before reaching a sharp curve, or you could skid off the road. That’s why we published the Black Swan memo. But if you want to maintain momentum, the time to start accelerating is when you’re at the apex of the turn. The current moment in our road to recovery represents an opportunity. If you feel confident about your business post-vaccine, now is the time to start carefully stepping on the gas (or accelerator pedal, if you’re driving electric."

The note, which can be the playbook for businesses emerging from the Covid shock, advises founders to reassess and reaffirm their long-term mission, remain measured and not lose the operating rhythm they got during the pandemic when they became more cost-efficient.

Companies also need to be nimble. "As the storm of the pandemic begins to clear, uncertainty will continue to linger. Continue the best practice of scenario planning that helped you navigate the pandemic. While you prepare to take advantage of the opportunities ahead, remain nimble as you fine-tune your tactics. Knowing when to upshift and downshift in changing conditions will be important moving forward," it said.

The current moment in our road to recovery represents an opportunity. If you feel confident about your business post vaccine, now is the time to start carefully stepping on the gas (or accelerator pedal, if you’re driving electric.

-Sequoia Capital

It also warned that companies should not get distracted by vanity metrics and that markets can be erratic and irrational.

"Focus on input metrics that reflect how your core business is performing. Continue to innovate on behalf of your customers. Systematically build advantages for your business operations. Don’t get distracted by vanity metrics. Stimulus spending and monetary policy have helped create buoyancy in public and private markets, and some of you may find you can fundraise at attractive valuations," it said.

Company leaders also need to be people-first, given that remote work dissolved the line between work and personal life.

"Employees are burning out and feeling isolated after a year at home. Parents are frustrated that their children are missing in-person education. We’re seeing a difference between how business metrics are performing and how many people in those companies are feeling. Keep an open dialogue about the challenges your employees face. Strong leadership that puts people first will continue to be critical" it said.