You know things are bad when venture capital is panicking. Venture capitalists live at a higher altitude than most investors -- they take the long view. With the glaring exception of the dot-com boom (which they helped create by pumping half-baked startups into the stock market), they have always shrugged off wild market swings. But last week, Sequoia Capital, one of the most respected venture shops in Silicon Valley, called in entrepreneurs and CEOs of its portfolio companies for an emergency meeting to, as blog GigaOm put it , "buckle down for what could be the worst economic downturn of their relatively short lives." Sequoia, which backed Apple ( AAPL), Electronic Arts ( ERTS), PayPal, Yahoo! ( YHOO) and Google ( GOOG), among others , did this once before, during the dot-com bust. This time, details and Powerpoint slides soon appeared on the Web, and the message was stern enough to sober up anyone. There are all kinds of scary phrases that CEOs never want to hear, like: "death spiral," "years to recovery," and "spend every dollar as if it were your last." There are also words startups hoped they'd never hear from a VC, like "need for profitability," "must-have product" and "become cash-flow positive as soon as possible." "Get real or go home," one Sequoia executive told the assembled crowd, sounding a bit like a coach at halftime to a losing team. "We're talking survive. Get this point into your heads," barked another. Until very recently, venture capitalists were shrugging off the credit crisis. The last market blowup had Silicon Valley as ground zero, they reasoned, so now it's someone else's turn. We'll ride this one out as Wall Street suffers.