We live in difficult times – but keep your eyes on the prize

According to GigaOM Sequoia yesterday called their portfolio company CEOs to a meeting, greeted them with the above image (or something like it), and went through a set of presentations telling them how they could cut costs in each functional area of their businesses.

On a similar note I have heard that a leading European VC is instructing all of its portfolio companies to cut costs by 25%.

So what to make of all this?

Clearly times are bad, and I agree with the assessment of Mike Morritz (probably the most successful VC on the planet), from the FT earlier this week:

It’s pretty clear that demand is going to soften across the board for every company – it doesn’t matter if you’re selling to consumers or

But at the same time opportunity often comes out of adversity and I agree with Alan Patrick that there is now a risk the herd starts stampeding in the opposite direction and companies over-compensate for the changes in the macroeconomic environment.

As ever in life small company success is about striking the right balance between risk and opportunity, and whilst for sure the balance has shifted it would be a mistake to think the equation has changed fundamentally (unless of course you are in banking …. or from Iceland … ).