That's what's funny - most VCs aren't profitable - at least not to their investors. They make their money administrating. That's why the best VC firms, and hedge funds for that matter, waive or reduce their admin fee (normally ~2%).

You realize, I hope, that Sequoia cannot be accused of either being a "bandwagon VC" or not being profitable.

Sequoia is, by most measures one of the best, if not the best, VCs in the world, in terms of success and respect from peers and the companies they fund.

So, pick on the VC model all you like...but this is an article about something Sequoia has said that effects pretty much all of us. If Sequoia-backed companies are being told to tighten their belts, then we'd all be smart to do the same. Sequoia hasn't gotten to where they are by investing in companies that waste money...so the assumption that they're saying, "Stop wasting money, as you've been doing lately." probably isn't the right way to take this advice. It should probably be taken as, "I know you all run a tight ship, and you're doing the best you can to maximize returns without being wasteful, but now might be the time to focus on outlasting your competitors, rather than outgrowing them."

The companies that survive will be the ones that will be best placed to become market leaders when the market begins to recover. That's the points I'm taking away from this, anyway. I guess I could be wrong.

Definitely. I've met them and I'm well aware who they are and what they've done.

I was _not_ talking about Sequoia or any of the VCs listed here: http://ycombinator.com/topvcs.html (I know for a fact Greylock doesn't take a management fee). That list is roughly the smart money even if it is somewhat dated. On the hedge fund front, Clarium has reduced management fees and higher performance payouts. Those types of VCs and hedge funds are few and far between, however. I was talking about the industry in general.

Love the outlast instead of outgrow quote. I think your last paragraph is dead on.