I'm wondering how many companies already had plans to lay people off and are now using the current situation as an excuse. - Holger Eilhard

That's a bummer. Seesmic just got another partnership the other day too. - Rob Diana

Holger: none of us had plans to lay people off a month ago. The economy is pushing us to make these decisions. - Robert Scoble

"Tough deciders" at startups, be glad you're in the U.S.--many (most?) European countries prohibit such sudden layoffs, as they are deemed too disruptive to families. - Robert Linthicum

Here in San Diego SuggestionBox laidoff a majority of their employees last week, a few them I consider friends. It's hard to stomach. :( - Jennifer Van Grove

I call BS, Robert. Nothing has changed in terms of measurable economics for Main Street in a week (aside from stock prices). I'm not saying that Loic's lying, but if anything, it's economic fears, not economic realities, driving these layoffs. - Mark "Rizzn" Hopkins

plus they overstaffed to begin with... - Jeremy Toeman

Mark: that's bullshit. The market has fundamentally changed in the past three weeks. Totally completely changed. Customers have disappeared. Advertisers have disappeared. But you all keep ignoring me at your own peril. This economy isn't coming back anytime soon. Jeremy: that's possible, but then it's better to get down to core staff now, than keep up the burn rate for months which will hurt their ability to survive long term. - Robert Scoble

i work in a BIG company and the VP sent out a message today that we were immediately to cease all travel and other expense items like lunches. FWIW - Shawna Benson

Many of the Web 2.0 startups were way over funded in any case. This shakeout will be painful but was bound to happen anyway. We have all seen companies that do next to nothing profitable get huge investments in the last two years. - Soulhuntre

@linthicum - absolutely true and horrifying to contemplate. No easier way to destroy your innovation and business base than by laws like that forcing companies to suicide. - Soulhuntre

yeah, except according to your post they fired their marketing/PR team, which means no more growth... - Jeremy Toeman

Yeah that sucks. seriously. - Santa CW™

Jeremy: they laid off their NON CORE marketing and PR team. Not everyone. Loic does marketing and PR (and does it better than anyone I've seen in the industry) and one other person does that too. Seriously, do you use things that have PR and marketing teams? I don't. I usually find out about the things I use from other people. - Robert Scoble

Robert: Don't even get into this whole debate again. Word-of-mouth is, of course, the most effective way for anyone to adopt a new service/product. But it's only 1 piece of a marketing plan. Your iPhone didnt come via WOM. Your car didnt come via WOM. And frankly, the "big" Internet sites/services *ALL* have big marketing efforts. If you believe Loic alone is enough to make Seesmic a world-class play, you are quite mistaken. - Jeremy Toeman

Jeremy: you are right about that, but Seesmic has a bigger problem: YouTube. IT hasn't figured out how to make money yet and it's far larger. Until Loic can answer the question about how Seesmic is going to make money when YouTube isn't, he's best off cutting employees and saving his precious money until he DOES have an answer to that. - Robert Scoble

And Jeremy: you overplay the role of marketing and PR. How did I hear about Qik, for instance? I first saw it from a friend of the company by accident in an Apple store. No marketing or PR people involved. I still like hearing about stuff that way instead of via a PR email. Same with Cocomment (I saw that in a Swiss Chalet). Why do you know about Seesmic? One guy: Loic. I never heard about that from a PR company or a marketing person. - Robert Scoble

Qik, Seesmic, Cocomment. All cool companies, all really really tiny. "BIG" companies require marketing work. Period. Find me examples of BIG companies who get there without real marketing plans. The irony of this debate, Robert, is that I am a huge believer in WOM marketing, and actually DO IT for a living - I just don't think it's ALL of marketing... - Jeremy Toeman

Robert, I have to agree with Jeremy here. I, too, think WOM is awesome and important and admirable and should be the *foundation* of any company's awareness efforts. Treat your customers/users well, and *much* else will follow. But not all. Do you think Google hires Corporate Communications folks just for the fun of it? No, it doesn't. When reporters have questions about projects or products or policies, do we really want the engineers and product managers be the ones to answer all the questions?! - Adam Lasnik

In other words, conversations sometimes have to be sharded... and by conversations, I mean info in both directions (sharing information about products, handling questions and concerns and so on). - Adam Lasnik

Jeremy: true enough. But the chances that a startup will "get big" in the next year is MUCH LOWER today than it was a year ago because of the fundamental changes in the economy. So, now companies need to think differently. This is actually why you'll see a lot of consolidation over the next few months (I am under embargo for a couple stories coming soon). - Robert Scoble

Adam: I think we're both right. Funny, the companies that have gotten big in last year or two, like iLike, did it on the backs of bigger companies who provided the PR and marketing (iLike did it in partnership with Facebook). Yes, iLike had PR (the best in the business, Brooke Hammerling) and threw parties and such, but that was AFTER it got big due to Facebook's new application platform. That game is over. So, what do the other startups do now? - Robert Scoble

Why would the economy prevent any of the three companies you referenced from getting big? All three are free services. I don't quite think Internet use will slack off due to a downturn... - Jeremy Toeman

The Dow crashes, tech gets screwed. The internet bubble bursts, tech gets screwed. Terrorists attack the USA, tech gets screwed. The banks f**k up, tech gets screwed. Every time there's a wobble in the economy, tech is the first place where capital flees from. - john conroy

Robert: Entrepreneurs are leaders, and leaders tend to think differently in order to succeed. Besides, isn't that a given in tech? The upcoming months will be the true test that separates innovative leaders vs those who are pretending to be. - Mona Nomura

Jeremy: getting big (if it happens due to great execution) requires capital. iLike has thousands of servers now. They don't come cheap and the capital isn't there anymore and you can't get credit in a bank. Also, advertising is going to be down next year. So, how would a company get big on an advertising model next year and survive if they have no cash? Seesmic actually has a chance because they have cash in the bank to buy servers and live through this crappy time. - Robert Scoble

Mona: entrepreneurs are optimists. Often too optimistic in times like this. They have trouble cutting back their dreams. Leaders make tough choices, even ones that seem to go counter to their dreams. - Robert Scoble

I think these problems existed prior to the current economic situation. The reality check is: there was no business model before, but now it's an actual issue. This is why so many of us have been scratching our heads at the crazy number of startups with absolutely no model in sight... again, a fairly "unreal" financial landscape enabled this to begin with, now we are seeing the corrections. plenty of startups will do just fine, btw, they'll just need to have a revenue plan rather than a traffic plan. - Jeremy Toeman

@Robert shouldn't the companies with "innovative technology" be growing despite the economic crisis? If you are a true believer in word of mouth they shouldn't have a problem adapting because the evangelists will take the reigns and drive people - Kyle Lacy

I completely agree with the lack of business model. Of course they are laying off people in a down economy... they started a business with no cash flow system.. - Kyle Lacy

Kyle: Bingo. - Mona Nomura

+1 Mona.. You cannot have a business if you do not have an adequate plan to drive cash into the company. - Kyle Lacy

One more. It probably has something to do with the economy. But first and foremost it is because they became fat with VC funding, focused to much on innovation and user experience, and ignored the business model. Isn't that what happens to most social companies? Youtube? Facebook? Myspace is the only one that had a solid ad platform in place. - Kyle Lacy

Robert, did you get a chance to read Dave's (who is on your list and someone you've said numerous times is 'smart') piece on 500 hats? http://500hats.typepad.com/500blog... @Kyle, Dave was basically saying the same thing as you. Highly recommended reading! :) - Mona Nomura

As long as unemployment says below 10 per cent, there will be dollars for advertising. Companies may be more conservative as to where they put those dollars, however. - Robert Hafer

Mona: not only did I read Dave's post, but I had lunch with him this week too. It's a post worth reading and is one reason I like FriendFeed so much. You get to hear from everyone along the fear dial so you can decide for yourself where the truth lies. - Robert Scoble