Israeli Startups Please Read: “RIP: Good Times.”

Many Israeli startup  companies have been wondering how — or if — the larger economic crisis may affect them. This is perhaps the surest sign yet that there’s no “if.” 

Leading Silicon Valley venture firm Sequoia held an emergency meeting to tell its portfolio companies to get ready for the worst, GigaOm is reporting and confirmed from multiple sources. To drive the point home, startups were greeted at the gathering with a grave stone that said “RIP: Good Times.” 

“It was scary,” one Sequoia-backed chief executive said about the Sequoia meeting, attended by scores of his peers. It lasted several hours, and the message was bleak. The speakers and presentation were to be kept confidential. Things could get a lot worse than people think, and it will be a “more protracted downturn,” Sequoia partners told its companies. “They were not fear-mongering,” one chief executive told us. “They were smart speakers. Sequoia runs on specifics, they’re very data driven.”

Startups are being told to cut expenses, and somehow survive a downturn that the firm thinks may last years.

This wasn’t just general advice — presenting partners went through various components of company operations and specified how to cut.

The firm has a track record of bust survival not unlike its scarred but still-surviving namesakes up in the Sierra Nevadas. Last time, in the late 1990s, Sequoia partner Michael Moritz helped drive the firm to raise a fund devoted specifically to invest in late-stage companies — those about to go public.

 Sequoia held a similar meeting when the last Silicon Valley bubble burst and  hoped to partake of the IPO bonanza at the time, but then the stock market fell off the cliff in April 2000, and Sequoia’s investments in risky companies like eToys, Scient and Webvan plunged with it. That fund performed poorly, but Sequoia’s subsequent massive successes in other companies, such as Google, has let Sequoia thrive. Moritz, who reportedly helped lead the meeting yesterday, is likely to be more conservative this time.