In a note to its CEOs and founders, American venture capital firm Sequoia has said that the company must evaluate ‘headcounts’ in order to survive the economic downturn that can be caused by China’s coronavirus.
American venture capital firm Sequoia in a not-so-veiled message to its CEOs and founders has said that the company must consider laying off workers in order to survive the economic downturn that can be caused by China’s coronavirus. Amid many other suggestions for surviving what Sequoia calls the “Black Swan of 2020”, the company said, “Given all of the above stress points on your finances, this might be a time to evaluate critically whether you can do more with less and raise productivity,” it said in a note dated March 6. The company also asked its CEOs and founders to consider how much cash it has to face the headwinds of a sputtering economy.
While scientists, governments, and doctors around the world are trying to contain the spread of coronavirus, it will likely take some time for the same to materialise. “It will take even longer for the global economy to recover its footing. Some of you may experience softening demand; some of you may face supply challenges,” Sequoia said addressing its top management. In the wake of the possible ramifications of the virus, Sequoia said that it needs to act fast on protecting the business. “Nobody ever regrets making fast and decisive adjustments to changing circumstances. In downturns, revenue and cash levels always fall faster than expenses… Those who survive “are not the strongest or the most intelligent, but the most adaptable to change.”,” it said.
Coronavirus has caused serious concerns for industries around the world as China’s economy remains shut down. There is a drop in business activity for some and in India, manufacturers are facing a supply chain disruption as China is a major supplier of key raw materials to the country. Other industries such as aviation have also taken a major hit to the business with major international carrier Emirates asking its employees to consider taking unpaid off and the UK’s Flybe reporting a collapse due to lesser passenger numbers.
In India, the total coronavirus cases have risen to 30 so far.