The Well Funded Layoff

Today Seesmic laid off seven staff members, after laying off three other members a couple of weeks ago.

They have millions of dollars in the bank and are well funded. Why would they do that?

Well, I went over and hung out with the remaining staff and CEO Loic Le Meur this afternoon to learn more and to try to discern the advice that Le Meur got and how many other startups are about to do the same thing. Here’s what I learned.

First, Le Meur has a really deep set of advisors. People like Pierre Omidyar , the founder of eBay and Martin Varsavsky founder of Fon.

They are telling him that the downturn will be deep and will be multi quarter. They told him it was a good idea to conserve cash and bunker down.

Translation: Le Meur isn’t the only one getting this advice. Sequoia Capital told its companies the same thing.

The thing is Le Meur is better connected around the world than most of us. He’s been seeing this downturn coming for months and has been tracking it, so he’s one of the first who is mentally ready to move. He told me that he predicts other CEOs will do the same thing over the next couple of weeks. Those who don’t, he told me, will be told by their boards over the next few months to take the same actions if the CEOs don’t make the hard decisions to do this today.

“But what if the economy turns back up in the next month?”

Well, Le Meur told me he just cut jobs that aren’t core to the mission of Seesmic. Designers. Marketers. PR. He told me all those functions are outsourceable and aren’t core to what they do. The folks sitting around the table were developers, people who kept servers running, who were directly responsible for keeping customers happy.

This is a smart strategy. First, it keeps people who are core to the mission happy because they know the CEO took steps to protect their jobs even if the world goes to hell. CEOs who wait until their hand is forced won’t see the same morale saving effect that Le Meur will see here. Second, it saves capital for potential acquisitions after other companies run out of cash and are forced to beg to be purchased the way my old company was (PodTech sold for a few hundred thousand dollars after having millions in capital pumped into it). Third, it saves capital for later when the storm clears and they will want to expand. Fourth, it gives them more time to find a business model since advertising is going to be a tough sell for a company like Seesmic right now.

But, Le Meur didn’t come to this decision easily. He literally teared up with me today. Being a leader and making really tough choices isn’t easy and this market isn’t easy to navigate for anyone.

My thoughts are with the workers who are laid off. How can we help you find jobs? Let’s have some innovative thinking about that too.

Who is next?

Comments

  1. Just hang on for another 3 weeks, Obama will fix the whole thing in the matter of a few hand shakes.

    What’s the solution?

    Put Google in charge of society, give Google the $700 billion, they can make things work again. Within 5 years, we’ll all have wind and solar energy powered electric cars, every child in the world will have a laptop, all wireless Internet will be free, the global warming problem will be under control, there will be cures for nearly all diseases, food for everyone, no more terrorists.

    By the way, everyone replaces their credit cards with an Android phone that manages everyones money wirelessly.

  2. I found your post very insightful whilst hoping the downturn is not as bad as when the .com bubble burst.

    I am currently in the job market as well and hope that I can find a place where I can work full-time as well.

    It is perhaps a great time for serendipity and I second your suggestion to have innovative thinking. There is great alchemy with all the talent pool.

    Thanks,

    Arturo.

    founder, MediaAlchemy.org

  3. I found your post very insightful whilst hoping the downturn is not as bad as when the .com bubble burst.

    I am currently in the job market as well and hope that I can find a place where I can work full-time as well.

    It is perhaps a great time for serendipity and I second your suggestion to have innovative thinking. There is great alchemy with all the talent pool.

    Thanks,

    Arturo.

    founder, MediaAlchemy.org

  4. Just hang on for another 3 weeks, Obama will fix the whole thing in the matter of a few hand shakes.

    What’s the solution?

    Put Google in charge of society, give Google the $700 billion, they can make things work again. Within 5 years, we’ll all have wind and solar energy powered electric cars, every child in the world will have a laptop, all wireless Internet will be free, the global warming problem will be under control, there will be cures for nearly all diseases, food for everyone, no more terrorists.

    By the way, everyone replaces their credit cards with an Android phone that manages everyones money wirelessly.

  5. Robert, pls let the PR folks know to contact me. Even if we don’t have the right position ourselves, we sometimes use freelancers and have a portfolio of clients who may be looking.

  6. Robert, pls let the PR folks know to contact me. Even if we don’t have the right position ourselves, we sometimes use freelancers and have a portfolio of clients who may be looking.

  7. wew. outed as teared up for a brief moment with my remaining team, you and Loren, that is right, I am human and not ashamed of that.

    Robert, thank you so much for showing up immediately as you heard the news. Meant a lot to me.

  8. wew. outed as teared up for a brief moment with my remaining team, you and Loren, that is right, I am human and not ashamed of that.

    Robert, thank you so much for showing up immediately as you heard the news. Meant a lot to me.

  9. Robert,
    Great blog post. Smart entrepreneurs are going to do exactly what Loic and Seesmic did. Cut out non core services.

    This is a tough call with all CEO’s. Especially with startups; you feel so connected to every employee who has believed in your vision.

    I understand his pain; but in the long run it is the right thing to do. Conserve as much cash as possible and try to innovate when no one else is.

    Let’s all try to keep the faith! This too shall pass.

  10. Robert,
    Great blog post. Smart entrepreneurs are going to do exactly what Loic and Seesmic did. Cut out non core services.

    This is a tough call with all CEO’s. Especially with startups; you feel so connected to every employee who has believed in your vision.

    I understand his pain; but in the long run it is the right thing to do. Conserve as much cash as possible and try to innovate when no one else is.

    Let’s all try to keep the faith! This too shall pass.

  11. >arturopelayo everyone I talk with says that this wil be deeper, longer, and harder than the 2000 tech bubble burst. Why? Because that affected mostly just tech. This is starting elsewhere in the economy and coming toward us like a Category 5 hurricane and the devastation it leaves elsewhere in the economy is going to guarantee it’s long and hard.

  12. When I read this news, it didn’t make sense to me completely.

    I don’t think external conditions should matter to the extent that they don’t impact your bottom line, but merely impact sentiments or emotions.

    From a strict econ perspective, you hire a worker when the marginal benefit of someone is greater than the marginal cost. I’ve had to let people go, but that was because I didn’t think their contribution > cost.

    I don’t see what a “downturn” has to do with anything. Decisions should be based on internal conditions. I don’t know enough about Seesmic’s inner goings to know their internal financial conditions or business model, but I think it’s a mistake to take this as a sign that the sky is falling. For all we know Seesmic had to let these people go because their business model is not gaining traction, not because the external conditions are failing.

    Would the same decision had been made regardless of the financial downturn?

    I think more focus should be paid to building a business that generates positive cash flow. We’ve done it and we didn’t raise VC money.

    Then when the markets crash around you and everyone is running for the hills, you just shove all your resources towards the edge that you have built up and blow up your profitability. It’s like getting dealt a poker hand with +EV — you just push your chips in to maximize your winnings from the edge.

    I think my problem with all the posts out there lately is that they assume people are building businesses without profit in mind. Obviously you have to bunker down and cut cash if you’re spending is out of control, but you probably shouldn’t have been there in the first place.

    All of these advice posts and warning posts should be modified to read: “For Companies With Negative Cash Flow”

    I don’t think this changes a thing. Keep your head down. Work your fucking ass off. Hustle harder.

    -Boris

  13. >arturopelayo everyone I talk with says that this wil be deeper, longer, and harder than the 2000 tech bubble burst. Why? Because that affected mostly just tech. This is starting elsewhere in the economy and coming toward us like a Category 5 hurricane and the devastation it leaves elsewhere in the economy is going to guarantee it’s long and hard.

  14. When I read this news, it didn’t make sense to me completely.

    I don’t think external conditions should matter to the extent that they don’t impact your bottom line, but merely impact sentiments or emotions.

    From a strict econ perspective, you hire a worker when the marginal benefit of someone is greater than the marginal cost. I’ve had to let people go, but that was because I didn’t think their contribution > cost.

    I don’t see what a “downturn” has to do with anything. Decisions should be based on internal conditions. I don’t know enough about Seesmic’s inner goings to know their internal financial conditions or business model, but I think it’s a mistake to take this as a sign that the sky is falling. For all we know Seesmic had to let these people go because their business model is not gaining traction, not because the external conditions are failing.

    Would the same decision had been made regardless of the financial downturn?

    I think more focus should be paid to building a business that generates positive cash flow. We’ve done it and we didn’t raise VC money.

    Then when the markets crash around you and everyone is running for the hills, you just shove all your resources towards the edge that you have built up and blow up your profitability. It’s like getting dealt a poker hand with +EV — you just push your chips in to maximize your winnings from the edge.

    I think my problem with all the posts out there lately is that they assume people are building businesses without profit in mind. Obviously you have to bunker down and cut cash if you’re spending is out of control, but you probably shouldn’t have been there in the first place.

    All of these advice posts and warning posts should be modified to read: “For Companies With Negative Cash Flow”

    I don’t think this changes a thing. Keep your head down. Work your fucking ass off. Hustle harder.

    -Boris

  15. Boris: you are nuts. But that’s OK. :-)

    This economy is being slammed. When people get slammed they cut back in advertising and lots of other expenses. My brother’s bar used to have $15,000 a week in sales, now is only seeing $9,000.

    That means that customers have disappeared and the chances you’ll get a business that was counting on an advertising model appearing will be tough. This gives Loic time to build a new business model and have enough runway to stay in there until the business climate improves.

  16. Boris: you are nuts. But that’s OK. :-)

    This economy is being slammed. When people get slammed they cut back in advertising and lots of other expenses. My brother’s bar used to have $15,000 a week in sales, now is only seeing $9,000.

    That means that customers have disappeared and the chances you’ll get a business that was counting on an advertising model appearing will be tough. This gives Loic time to build a new business model and have enough runway to stay in there until the business climate improves.

  17. Great post. Very insightful info and well written. I got turned onto this blog from twitter and have been reading it for a few weeks. This is my first posting to the site.

    Hopefully, Obama will get into office and restore some confidence. Right now is a scary scary time.

  18. Great post. Very insightful info and well written. I got turned onto this blog from twitter and have been reading it for a few weeks. This is my first posting to the site.

    Hopefully, Obama will get into office and restore some confidence. Right now is a scary scary time.

  19. Got rid of marketing & PR? Maybe I’ve got it wrong, but a consumer-oriented venture that is heavily dependent on a huge user base probably shouldn’t get rid of the arm of the company responsible to grow the user base!? I don’t get it.

  20. Got rid of marketing & PR? Maybe I’ve got it wrong, but a consumer-oriented venture that is heavily dependent on a huge user base probably shouldn’t get rid of the arm of the company responsible to grow the user base!? I don’t get it.

  21. There shouldn’t be any “non-core” jobs in a startup, period. Funny that you (and Loic I guess?) think that marketers and designers and less core than developers. Good way to run a company into the ground? Develop lots of code that provides a really shitty user experience (because you don’t have any designers) and solves a problem that doesn’t exist (because you don’t have any smart marketers). Not saying layoffs aren’t necessary, but need to look at the business holistically.

  22. Wow, I thought bars would be doing well in this economy – people have to drown their sorrows – right? :-)
    Seriously though, tough call for Loic – my thoughts go out to the folks laid off…

  23. There shouldn’t be any “non-core” jobs in a startup, period. Funny that you (and Loic I guess?) think that marketers and designers and less core than developers. Good way to run a company into the ground? Develop lots of code that provides a really shitty user experience (because you don’t have any designers) and solves a problem that doesn’t exist (because you don’t have any smart marketers). Not saying layoffs aren’t necessary, but need to look at the business holistically.

  24. Wow, I thought bars would be doing well in this economy – people have to drown their sorrows – right? :-)
    Seriously though, tough call for Loic – my thoughts go out to the folks laid off…

  25. Jeremy: easy to get it. Marketing and PR is being done by Loic. He’s better at those functions than anyone he’s hired. He hasn’t stopped doing them. But as customers disappear from the market (and they ARE disappearing) you’ve got to cut back in kind. Especially in marketing that isn’t working or that isn’t trackable to real results.

  26. Jeremy: easy to get it. Marketing and PR is being done by Loic. He’s better at those functions than anyone he’s hired. He hasn’t stopped doing them. But as customers disappear from the market (and they ARE disappearing) you’ve got to cut back in kind. Especially in marketing that isn’t working or that isn’t trackable to real results.

  27. [...] I do see a missed opportunity and I think it is an indication that we are not thinking correctly yet. There was only one project based on saving people money, Smart Shopping. My personal assessment is that Smart Shopping is too big for Startup Weekend. We need to be thinking about startups that can thrive in a prolonged recession. These are strange times. [...]

  28. Thanks Robert and Loic. The transparency is appreciated. I think its time for all of us to put more effort into our respective endeavors, increase our contribution to the community, and maintain perspective. As Rodney said above: This too shall pass.

  29. Thanks Robert and Loic. The transparency is appreciated. I think its time for all of us to put more effort into our respective endeavors, increase our contribution to the community, and maintain perspective. As Rodney said above: This too shall pass.

  30. Robert,

    Your brother’s bar use to have $15,000 a week in sales, now is only seeing $9,000???
    I would think that the unstoppable dive of the market would drive more people to drink!

    That being said, I do agree with you that businesses with advertising models should substantially scale back their expectations for the year to come and thing Loic did the right (albeit hard) thing to do.

    - Nikos

  31. Robert,

    Your brother’s bar use to have $15,000 a week in sales, now is only seeing $9,000???
    I would think that the unstoppable dive of the market would drive more people to drink!

    That being said, I do agree with you that businesses with advertising models should substantially scale back their expectations for the year to come and thing Loic did the right (albeit hard) thing to do.

    - Nikos

  32. Interesting how less than 2 weeks ago when Calacanis sent out his email ‘prediction’ so many people thought it was ridiculous. Yet, what he thought would happen is happening and the advice you share here is very similar to what he shared. Great lessons to be learned.

    Thanks for this post. As sad as it is to hear about layoffs like this starting, I think there is a great amount of hope that can yet be found as a result of what has been learned in the last 8 years (since the ‘bubble’).

    Thanks too for your example of supporting those you care about. Hopefully we’ll hear more stories of that happening as these tough decisions have to be made.

  33. Robert,

    I understand the gist of at what you trying to communicate with this post, although I feel there is some slight misdirection. You say Loic, “…cut jobs that aren’t core to the mission of Seesmic. Designers. Marketers. PR. He told me all those functions are outsourceable and aren’t core to what they do.” then go on to say, “This is a smart strategy.” I comprehend that the market is seeing a shallow deep and that funding (especially startups with business models that depend heavily on advertising revenues), should keep cash on hand and guard their long-term equities.

    The thing I don’t understand is the closing paragraph. You first start off by explaining that all the roles that are not directly related to the product are useless, then try to turn around and help them find jobs… huh? If use the market as a level playing field, won’t those jobs, in your eyes, be fluff for someones else’s company? I understand your words are coming from compassion, but the market is going to be the same for all companies. Let us not mislead folks…

    By the way, I am an avid Seesmic user and I haven’t seen you on in awhile. Jump on and let’s get to talking!

    Regards,
    TaylorBarr

  34. Interesting how less than 2 weeks ago when Calacanis sent out his email ‘prediction’ so many people thought it was ridiculous. Yet, what he thought would happen is happening and the advice you share here is very similar to what he shared. Great lessons to be learned.

    Thanks for this post. As sad as it is to hear about layoffs like this starting, I think there is a great amount of hope that can yet be found as a result of what has been learned in the last 8 years (since the ‘bubble’).

    Thanks too for your example of supporting those you care about. Hopefully we’ll hear more stories of that happening as these tough decisions have to be made.

  35. Robert,

    I understand the gist of at what you trying to communicate with this post, although I feel there is some slight misdirection. You say Loic, “…cut jobs that aren’t core to the mission of Seesmic. Designers. Marketers. PR. He told me all those functions are outsourceable and aren’t core to what they do.” then go on to say, “This is a smart strategy.” I comprehend that the market is seeing a shallow deep and that funding (especially startups with business models that depend heavily on advertising revenues), should keep cash on hand and guard their long-term equities.

    The thing I don’t understand is the closing paragraph. You first start off by explaining that all the roles that are not directly related to the product are useless, then try to turn around and help them find jobs… huh? If use the market as a level playing field, won’t those jobs, in your eyes, be fluff for someones else’s company? I understand your words are coming from compassion, but the market is going to be the same for all companies. Let us not mislead folks…

    By the way, I am an avid Seesmic user and I haven’t seen you on in awhile. Jump on and let’s get to talking!

    Regards,
    TaylorBarr

  36. Much as I hate to say it, it sounds like a smart strategy. Cut costs quickly without affecting your core competencies, and assume that you’re going to be living off your current bank account for several quarters to come. In a micro sense this is a smart move for a single company, but to paraphrase Keynes’ “paradox of thrift” what’s good for a single company is really bad for the economy at large if everyone starts doing it.

    The only shred of hope I see at the moment for a near-term market recovery is a well-coordinated global effort by the G7 to get credit markets “unfrozen”, while some very intelligent financiers figure out how to unravel or nullify the credit default swap mess.

  37. Much as I hate to say it, it sounds like a smart strategy. Cut costs quickly without affecting your core competencies, and assume that you’re going to be living off your current bank account for several quarters to come. In a micro sense this is a smart move for a single company, but to paraphrase Keynes’ “paradox of thrift” what’s good for a single company is really bad for the economy at large if everyone starts doing it.

    The only shred of hope I see at the moment for a near-term market recovery is a well-coordinated global effort by the G7 to get credit markets “unfrozen”, while some very intelligent financiers figure out how to unravel or nullify the credit default swap mess.

  38. What are Seesmic revenues anyway ?
    Splurge, downturn, whatever, I can’t see how a firm with no revenue could be affected by the economic environment… sorry.

    Quoting Loic from June 2008 (http://www.loiclemeur.com/english/2008/06/how-omidyar-net.html):
    “Monetizing Seesmic won’t occur in the next 12 months, we are focusing on the community and the platform. I believe video adsense like advertising will be huge and TV advertising dollars will finally shift online, but it will take 3 to 5 years, this is why we need funding to be there when it grows.”

  39. What are Seesmic revenues anyway ?
    Splurge, downturn, whatever, I can’t see how a firm with no revenue could be affected by the economic environment… sorry.

    Quoting Loic from June 2008 (http://www.loiclemeur.com/english/2008/06/how-omidyar-net.html):
    “Monetizing Seesmic won’t occur in the next 12 months, we are focusing on the community and the platform. I believe video adsense like advertising will be huge and TV advertising dollars will finally shift online, but it will take 3 to 5 years, this is why we need funding to be there when it grows.”

  40. Who’s next? Any business that is depending borrowed money to make payroll and keep their business running. (which is a huge majority) There is no money to be loaned. If you have no cash in the bank, well, good luck staying in business.

    But Charbax is right. Just hold out a few more weeks. Once the Obamunist is elected this will all magically disappear. Afterall, he’s the Savior, right? (At least that’s what I keep hearing)

  41. Who’s next? Any business that is depending borrowed money to make payroll and keep their business running. (which is a huge majority) There is no money to be loaned. If you have no cash in the bank, well, good luck staying in business.

    But Charbax is right. Just hold out a few more weeks. Once the Obamunist is elected this will all magically disappear. Afterall, he’s the Savior, right? (At least that’s what I keep hearing)

  42. Taylor. No. Let’s see. A car mechanic might be nice for me to have around, but he’s not core to my business, but to an auto shop? He’s very core. So, a designer might not be core at Seesmic, but would be very core at someplace like IDEO. Get it?

  43. Taylor. No. Let’s see. A car mechanic might be nice for me to have around, but he’s not core to my business, but to an auto shop? He’s very core. So, a designer might not be core at Seesmic, but would be very core at someplace like IDEO. Get it?

  44. It is human nature to overreact. First the pendulum swings to the far right and people/companies are overly optimistic and spend themselves into trouble. Now the pendulum swings the other way and everyone is putting money under their “mattresses”. The pyschology is maddening. VCs propogate it…bloggers emphasize it…and consumers have to deal with it…

    The market just needs to clean house and purge itself. I’ve worked with many of the street firms and have many colleagues who made and created this toxic mess. They weren’t stupid people –just motivated by GREED. Now, main street feels the pain and wall street will resurrect its head in a couple of years and move past this point.

    In the meantime, best thing to do is acknowledge what is happening and move on with our daily lives, but if we all spend our time watching the sky fall down we may miss out on the real opportunity.

    Start-ups and mature businesses simply need to behave rationally and operate with fiscal responsibility. There’s nothing revolutionary about that concept. People just forgot about it for the past few years as times were good.

  45. It is human nature to overreact. First the pendulum swings to the far right and people/companies are overly optimistic and spend themselves into trouble. Now the pendulum swings the other way and everyone is putting money under their “mattresses”. The pyschology is maddening. VCs propogate it…bloggers emphasize it…and consumers have to deal with it…

    The market just needs to clean house and purge itself. I’ve worked with many of the street firms and have many colleagues who made and created this toxic mess. They weren’t stupid people –just motivated by GREED. Now, main street feels the pain and wall street will resurrect its head in a couple of years and move past this point.

    In the meantime, best thing to do is acknowledge what is happening and move on with our daily lives, but if we all spend our time watching the sky fall down we may miss out on the real opportunity.

    Start-ups and mature businesses simply need to behave rationally and operate with fiscal responsibility. There’s nothing revolutionary about that concept. People just forgot about it for the past few years as times were good.

  46. Calling PR and Marketing and Design, “non-core” is brain-dead. This is all labor theory of value, Soviet flavored. You produce widgets that people want, you don’t produce “core” widgets, just to produce widgets.

    Cut taxes, get governmental easy loaners out of biz, and let gamblers that risk and lose, spin their heels, apply Chicago School 1983-84 economic solutions at every turn, with serious real cutbacks. Due for a correction anyways, easy dot.com eyeballs-era VC money, easy Web 2.0 pastel-colored widgets money, easy loans. Eventually, someone has to play grown-up. It’s really just a return to fundamentals. Capitalism is not dead, it wasn’t even applied. China won’t take over the world, unless milk that kills is your idea of capitalism. Now we have taxpayer money fronting up bad loans, and bad banks. The arsonists, have been called in as the firemen. Good luck with that.

    Puritan-Work-Ethic Midwestern Credit Unionish values win out (again).

  47. Calling PR and Marketing and Design, “non-core” is brain-dead. This is all labor theory of value, Soviet flavored. You produce widgets that people want, you don’t produce “core” widgets, just to produce widgets.

    Cut taxes, get governmental easy loaners out of biz, and let gamblers that risk and lose, spin their heels, apply Chicago School 1983-84 economic solutions at every turn, with serious real cutbacks. Due for a correction anyways, easy dot.com eyeballs-era VC money, easy Web 2.0 pastel-colored widgets money, easy loans. Eventually, someone has to play grown-up. It’s really just a return to fundamentals. Capitalism is not dead, it wasn’t even applied. China won’t take over the world, unless milk that kills is your idea of capitalism. Now we have taxpayer money fronting up bad loans, and bad banks. The arsonists, have been called in as the firemen. Good luck with that.

    Puritan-Work-Ethic Midwestern Credit Unionish values win out (again).

  48. I’m not close enough to the situation to judge, but before jumping on the bandwagon and arguing that those positions are core to the business it’s important to know what specifically the positions were. “Designer” is broad, and “marketer” is extremely broad. Perhaps they were individuals that didn’t make a big impact on the business. Otherwise, I’d imagine they wouldn’t have been laid off(And probalby shouldn’t be there anywyas). Either that or the CEO is a masochist, :-)

    I wish Seesmic the best of luck!

  49. I’m not close enough to the situation to judge, but before jumping on the bandwagon and arguing that those positions are core to the business it’s important to know what specifically the positions were. “Designer” is broad, and “marketer” is extremely broad. Perhaps they were individuals that didn’t make a big impact on the business. Otherwise, I’d imagine they wouldn’t have been laid off(And probalby shouldn’t be there anywyas). Either that or the CEO is a masochist, :-)

    I wish Seesmic the best of luck!

  50. Prediction: Beg to be purchased the way my current company is.

    Fast Company/Inc. hot air, is just so ready for a deflation (again). The recipe: Layoffs, in “non-core”, kill the offshoot webby-social networking brands, hug all around the magazines, glide for a bit, brag about affluent audiences, kick more smaller and smaller prospective partnerships, early-bird renewals 2 or 3 issues in, watch ad revenue drop off, put on a good front, tout good single copy sales and subscription increases, but delay payment to writers, cutting back seriously on expenses and curtailing perks, expenses running faster than revenue, logistical nightmares rock morale, ill-will all around, gets a bad smell, ad revenue drops, rebrand, dropping the Wired irrational exuberance copycatting, less tech focus, less design-happy focus, more Biz Week Mutual Fund Hawking, but ad revenue drops further, single sales drop, renewals don’t renew, ad revenue drops further still. Snowball serious, and the “Conflicts of Interest King Mansueto” personal investment “miracle” brief-bump becomes a rathole headache. $35 million to lose more and more.

    But he can go Congressified bailout package, infusing it eternally, turning off the ‘investment’ radar, so it can tread water. And the world can have landfills of start-up fake-buzz-spam on video, all throw-away, all a laughing-stock 3 to 4 months forward.

  51. Prediction: Beg to be purchased the way my current company is.

    Fast Company/Inc. hot air, is just so ready for a deflation (again). The recipe: Layoffs, in “non-core”, kill the offshoot webby-social networking brands, hug all around the magazines, glide for a bit, brag about affluent audiences, kick more smaller and smaller prospective partnerships, early-bird renewals 2 or 3 issues in, watch ad revenue drop off, put on a good front, tout good single copy sales and subscription increases, but delay payment to writers, cutting back seriously on expenses and curtailing perks, expenses running faster than revenue, logistical nightmares rock morale, ill-will all around, gets a bad smell, ad revenue drops, rebrand, dropping the Wired irrational exuberance copycatting, less tech focus, less design-happy focus, more Biz Week Mutual Fund Hawking, but ad revenue drops further, single sales drop, renewals don’t renew, ad revenue drops further still. Snowball serious, and the “Conflicts of Interest King Mansueto” personal investment “miracle” brief-bump becomes a rathole headache. $35 million to lose more and more.

    But he can go Congressified bailout package, infusing it eternally, turning off the ‘investment’ radar, so it can tread water. And the world can have landfills of start-up fake-buzz-spam on video, all throw-away, all a laughing-stock 3 to 4 months forward.

  52. Things aren’t always what they seem. Perhaps seesmic doesn’t have the financial fortitude that you think it does.

    Healthy companies won’t be laying anyone off.

  53. Things aren’t always what they seem. Perhaps seesmic doesn’t have the financial fortitude that you think it does.

    Healthy companies won’t be laying anyone off.

  54. The thing is this. With Apple, Google, and many other amazing companies down 50% so far. With other types of well managed and profitable companies like Netgear down almost 70% start ups go back to the end of the line. I was investing in start ups but last week I went back into stocks with the high risk funds. Before Seesmic was one of my high risk investments, now Apple is, this is how things have changed. So money for start ups will dry up except for one absurd rule and that is that VCs can´t invest in public securities. So maybe VCs who by logic should be buying stock in the companies that used to buy start ups will continue investing in start ups because that is all they are allowed to do, but valuations should come down at least what public valuations are down to. Yes this maybe short lived. Yes Obama may become president and the recession may evaporate. All is possible, but you can´t run a company and believing in Santa. You have to analyze the data as it comes. Home sales collapse, car sales collapse, computer sales are next, and we are in a recession. What Loic did is sad but prudent. I did the same at Fon 4 months ago.

  55. The thing is this. With Apple, Google, and many other amazing companies down 50% so far. With other types of well managed and profitable companies like Netgear down almost 70% start ups go back to the end of the line. I was investing in start ups but last week I went back into stocks with the high risk funds. Before Seesmic was one of my high risk investments, now Apple is, this is how things have changed. So money for start ups will dry up except for one absurd rule and that is that VCs can´t invest in public securities. So maybe VCs who by logic should be buying stock in the companies that used to buy start ups will continue investing in start ups because that is all they are allowed to do, but valuations should come down at least what public valuations are down to. Yes this maybe short lived. Yes Obama may become president and the recession may evaporate. All is possible, but you can´t run a company and believing in Santa. You have to analyze the data as it comes. Home sales collapse, car sales collapse, computer sales are next, and we are in a recession. What Loic did is sad but prudent. I did the same at Fon 4 months ago.

  56. Layoffs are like surgery. It’s hard to imagine doing one without an emergency.

    If you’ve got people who are underperforming, who aren’t as good as you hoped and who you can’t lead to better output, then you should fire them, not lay them off.

    If you have great people, amazing people with vision, and you have venture money designed to help you grow, how dare you lay them off. Isn’t that what the money was for? And when better to grow then right now, when everyone else is getting quiet and selfish?

    I’ve been through a lot of ups and downs over 25 years and never once did a lay off. To do it with millions in the bank is a true shame.

  57. Layoffs are like surgery. It’s hard to imagine doing one without an emergency.

    If you’ve got people who are underperforming, who aren’t as good as you hoped and who you can’t lead to better output, then you should fire them, not lay them off.

    If you have great people, amazing people with vision, and you have venture money designed to help you grow, how dare you lay them off. Isn’t that what the money was for? And when better to grow then right now, when everyone else is getting quiet and selfish?

    I’ve been through a lot of ups and downs over 25 years and never once did a lay off. To do it with millions in the bank is a true shame.

  58. Layoffs at new start-ups are a horrible idea. Your company will become a self-fulfilling prophecy. Older start-ups that were experiencing trouble before the downturn are different story. They probably needed to rationalize before and are now admitting it. But for someone that just started and still believes in the fundamentals of their business plan, a downturn is just as good as a healthy environment and maybe even more so. The companies that grow during difficult times become dominant in good times.

  59. Layoffs at new start-ups are a horrible idea. Your company will become a self-fulfilling prophecy. Older start-ups that were experiencing trouble before the downturn are different story. They probably needed to rationalize before and are now admitting it. But for someone that just started and still believes in the fundamentals of their business plan, a downturn is just as good as a healthy environment and maybe even more so. The companies that grow during difficult times become dominant in good times.

  60. Robert,

    A great post and I wish Loic and the remaining team all the best.

    I believe the coming weeks / months will result in many of the over-hyped and over-funded 2.0 businesses being dumped by their investors. Over the past 18-months or so people seem to have started funding 2.0 businesses based exclusively on their ability to deliver ‘eye-balls’ – just like the bad old .bust days.

    A business needs to have a way to generate revenue – otherwise it dies as soon as the VC money is pulled.

    I love Twitter and am keen to see how the guys there are going to monetize it. I hope it works because the service is excellent!

    Thanks for the post Robert,

    Jim Connolly

  61. Robert,

    A great post and I wish Loic and the remaining team all the best.

    I believe the coming weeks / months will result in many of the over-hyped and over-funded 2.0 businesses being dumped by their investors. Over the past 18-months or so people seem to have started funding 2.0 businesses based exclusively on their ability to deliver ‘eye-balls’ – just like the bad old .bust days.

    A business needs to have a way to generate revenue – otherwise it dies as soon as the VC money is pulled.

    I love Twitter and am keen to see how the guys there are going to monetize it. I hope it works because the service is excellent!

    Thanks for the post Robert,

    Jim Connolly

  62. “Sequoia Capital told its companies the same thing.”

    I’m sure they are – I’m no economist but banks need all the cash they can get right now to avoid being someone else’s bait.

    I dunno, the companies I’ve worked in for the most part have been very Dilbertesque – they waste money in obvious places where they could save it. I mean if you layoff a non-core person then contract out that job at 4x the rate and then loose any institutional memory you would have had at some point you are just shooting yourself in the foot. There has to be a balance.

    Sometimes the non-essentials are what make life worth living. Is art essential? Is volunteering time and money essential? Friendship – its not essential. Posting on this blog – ask my wife – I bet its way down on the priority list!

  63. “Sequoia Capital told its companies the same thing.”

    I’m sure they are – I’m no economist but banks need all the cash they can get right now to avoid being someone else’s bait.

    I dunno, the companies I’ve worked in for the most part have been very Dilbertesque – they waste money in obvious places where they could save it. I mean if you layoff a non-core person then contract out that job at 4x the rate and then loose any institutional memory you would have had at some point you are just shooting yourself in the foot. There has to be a balance.

    Sometimes the non-essentials are what make life worth living. Is art essential? Is volunteering time and money essential? Friendship – its not essential. Posting on this blog – ask my wife – I bet its way down on the priority list!

  64. read: don’t really have plan to make money, so let’s hunker down until google is buying companies again.

    dead pool.

  65. read: don’t really have plan to make money, so let’s hunker down until google is buying companies again.

    dead pool.

  66. When everybody starts talking about something, then it becomes reality (“perception is reality” they say). Let’s stop talking about Doomsday and as my friend John Le suggested above, let’s move on with our lives, start working hard and stop talking loud! Putting to much emotion into it is not helping anybody… except the VCs that use the situation as a leverage point to buy cheap and cut cost, so, the blogosphere should stop making it easier for “those people”. :-)

  67. When everybody starts talking about something, then it becomes reality (“perception is reality” they say). Let’s stop talking about Doomsday and as my friend John Le suggested above, let’s move on with our lives, start working hard and stop talking loud! Putting to much emotion into it is not helping anybody… except the VCs that use the situation as a leverage point to buy cheap and cut cost, so, the blogosphere should stop making it easier for “those people”. :-)

  68. [...] Robert Scoble should know, he hangs out with in Silicon Valley and talks to most everyone – and his employer, Fast Company, is one of the first to lay off employees, but not him, of course.   Scoble went over to Loic and spoke to him the other day to find out why a well funded company like Seesmic would lay off employees just now: “… I went over and hung out with the remaining staff and CEO Loic Le Meur this afternoon to learn more and to try to discern the advice that Le Meur got and how many other startups are about to do the same thing. Here’s what I learned. [...]

  69. Just a thought: when you use the device of starting a paragraph with “Translation:” (a technique whose primary purpose is to assure one’s readers that you are smarter than they are), it’s helpful if the sentence that follows is an actual variation of the preceeding sentence(s).

    Cheers.

  70. Just a thought: when you use the device of starting a paragraph with “Translation:” (a technique whose primary purpose is to assure one’s readers that you are smarter than they are), it’s helpful if the sentence that follows is an actual variation of the preceeding sentence(s).

    Cheers.

  71. [...] “Online startup’s  vallen nu allemaal om”: “Startups verbranden teveel geld zonder goed business model (want dat komt later wel)” .  Voor een aantal bedrijven zal dit het geval zijn maar ik verwacht dat we die op een hand of twee kunnen tellen. Veel startups denken juist heel lang na over hun “burnrate” en dit brengt enkel meer focus. Dat het schadelijk is voor hun verdere groei moet ik onderkennen. Als de potentie er is(lees gebruikers overvallen je in grote getallen) maar er komt geen funding voor uitbreiding van je serverparkis datfunest natuurlijk. Dat er ook veel startups zijn die hun inkomsten nog niet optimaal organiseren is ook duidelijk maar daar zijn ook eenvoudige oplossingen voor . Er zin bedrijven die het ander aanpakken zoals bij Seesmic met het ontslaan van medewerkers. Helaas is dat moeilijk te voorkomen maar kies dan wel voor je core, de dienst omhoog houden en technisch verzorgen wat de dienst zo aantrekkelijk maakt voor je gebruikers. Hier lees je de inzichten van Robert Scoble mbt de Seesmic ontslagen. [...]

  72. Robert, you should really use Zemanta. I keep noticing that your auto-generated related news articles are always way off. Plug in Zemanta for lazy blogging goodness!

    (Great post BTW – It’s bleak out there but no reason to hide behind the sofa)

  73. Robert, you should really use Zemanta. I keep noticing that your auto-generated related news articles are always way off. Plug in Zemanta for lazy blogging goodness!

    (Great post BTW – It’s bleak out there but no reason to hide behind the sofa)

  74. Robert, very insightful piece. I appreciate you bringing the human side to this business equation.

    Re: you comment on your brother’s bar… that’s weird b/c we have seen a 15 point jump in alcohol consumption since the beginning of the “bail out” talks.

    I think our local economy is pumping more into booz to ease their nerves – unfortunately?

    Loic, tough decisions. I can relate to the heart-wrenching a layoff can be. It is a tough decision, but it is good that you found your way to a balanced reaction to tough times.

    May peace be with you all,

    Ken

  75. Robert, very insightful piece. I appreciate you bringing the human side to this business equation.

    Re: you comment on your brother’s bar… that’s weird b/c we have seen a 15 point jump in alcohol consumption since the beginning of the “bail out” talks.

    I think our local economy is pumping more into booz to ease their nerves – unfortunately?

    Loic, tough decisions. I can relate to the heart-wrenching a layoff can be. It is a tough decision, but it is good that you found your way to a balanced reaction to tough times.

    May peace be with you all,

    Ken

  76. I agree with Seth Godin.

    You should never lay off talented employees if you still have a few millions dollars in the bank.

    I don’t know anyone who works at Seesmic. But, I want to ask: if those laid-off positions are outsourcable, why aren’t outsourced at first place?

    Silicon Valley companies (and American businesses in general) have the tendency to over hire when they have the money, and then lay people off when there is signs of down turn. It’s like binge eating.

    I miss the old HP, who rarely lay off people. It was a great culture. It’ll tighten its belt during hard time. But, it treats its employees like that most important asset.

    Very few company in the valley is like HP. It’s sad. (By the way, I’m not one of those HP old-timers. I’m in my 30′s. )

    To help folks who are laid off, I have been writing like mad to offer some advice (from my previous layoff experience in 2001). Please go to http://www.GeekMBA360.com if you’re interested.

  77. I agree with Seth Godin.

    You should never lay off talented employees if you still have a few millions dollars in the bank.

    I don’t know anyone who works at Seesmic. But, I want to ask: if those laid-off positions are outsourcable, why aren’t outsourced at first place?

    Silicon Valley companies (and American businesses in general) have the tendency to over hire when they have the money, and then lay people off when there is signs of down turn. It’s like binge eating.

    I miss the old HP, who rarely lay off people. It was a great culture. It’ll tighten its belt during hard time. But, it treats its employees like that most important asset.

    Very few company in the valley is like HP. It’s sad. (By the way, I’m not one of those HP old-timers. I’m in my 30′s. )

    To help folks who are laid off, I have been writing like mad to offer some advice (from my previous layoff experience in 2001). Please go to http://www.GeekMBA360.com if you’re interested.

  78. [...] J’aurais conclu ici si je n’avais pas déjeuné hier avec une amie longtemps perdue de vue et aujourd’hui directrice générale d’une société. La discussion s’est portée sur les licenciements : elle me dit tout de go qu’elle n’avait pas d’états d’âme. J’essayai une ou deux des idées de ce billet mais je crois qu’elles lui sont apparues chimériques, pour ne pas dire absurdes. Par contraste, un Loïc Le Meur qui prend la décision de séparer d’un tiers de son effectif pour munir son entreprise de trois années de trésorerie s’en trouve sensiblement affecté. [...]

  79. [...] This is where I would have left it if I had not met yesterday with a long time friend who now runs her own company. The discussion turned to layoffs and she told me, right of the bat that she handles it as a totally unemotional decision. I tried a couple of the ideas exposed in this post, but I think she considered these wild-eyed, or even ludicrous. In comparison, when Loïc Le Meur had to let go one third of his staff to rebuild three years worth of cash-flow, he was deeply affected. [...]