StrongMail Lays Off 25% of Staff

E-mail insourcing technology provider StrongMail has laid off about 25% of its staff, or between 25 and 30 people, this newsletter has learned.

According to a well-placed source who asked to remain anonymous, the cuts were across the board, including in sales, customer support and engineering.

News of StrongMail’s cuts comes as reports circulate the Internet that high-tech investment firm Sequoia Capital called an all-hands meeting of its CEOs recently to tell them the country is in for a long recession and they must slash spending and get cash-flow positive if they want to survive.

Sequoia reportedly held such a meeting only one other time—during the dot-com crash.

StrongMail is backed by Sequoia—an investment firm with a reputation for being ruthless with the firms in which it has a stake.

StrongMail is the third Sequoia-backed firm known to have made recent drastic cuts in staff.

According to an unnamed attendee at Sequoia’s now-infamous meeting who leaked notes that were published on Silicon Valley gossip site ValleyWag.com: “There were about 100 CEO’s in attendance and let me tell you, the mood was somber.”

The lead slide for the presentation at the meeting featured a tombstone with the inscription: “RIP, Good Times.”

“We are in drastic times. Drastic times mean drastic measures must be taken to survive. Forget about getting ahead, we’re talking survive. Get this point into your heads,” said Mike Moritz, general partner, Sequoia, according to the leaked notes. “For those of you that are not cash-flow positive, get there now. … There will be consequences for those who hesitate.”

Also according to the notes, Doug Leone, general partner, Sequoia, urged the CEOs to honestly assess their products in comparison to their competitors.

“You must get to profitability as soon as possible to weather this storm and be self-sustaining,” he said according to the notes.

He also reportedly urged the CEOs in attendance to slash staff, salaries and marketing expenses.

“Since you already have a product, strongly consider reducing the number of engineers that you have,” he reportedly said.

As for marketing, Leone reportedly said: “Measure everything and cut what is not working. You don’t need large product marketing, product management teams.”

He reportedly added that many firms’ sales forces and their salaries have become unacceptably bloated.

“The Valley has gotten fat with sales people: big bases, big variables,” he reportedly said. “Cut base salaries on sales people, highly leverage them with upside (increase variable) and make people pay for themselves via increased sales productivity. Don’t add sales people until you’ve achieved your goals with sales productivity.”

He also told the CEOs their companies should have at least one year’s worth of cash on hand.

StrongMail declined to comment for this article.

As for the other two Sequoia-backed companies making news for layoffs, San Francisco-based AdBrite is laying off 40 people, or about 40% of staff, including its vice president of marketing and vice president of finance, it was reported last week.

The company claims it will be profitable after the layoffs.

And Portland-based Jive Software let go of about 40 people, or a third of its staff, it was reported last week.