Welcome to Black January: Microsoft, Intel, IBM and others lay off tons

I’m tracking the dismal news on all the various blogs. This is the worst month the tech industry has ever seen. The bad news from Microsoft, Intel, IBM is all over TechMeme and TechFuga.

Wake me up when it ends. More later, but today there is some good news, just not enough to stop the tide of bad. A new startup, Plinky, will come out of stealth mode at 1 p.m. (we’ll have a video of that up on FastCompanyTV) and I’m getting around Silicon Valley and San Francisco starting at 9 a.m. at Seesmic, with stops in Mountain View to see something secret, and Sunnyvale. Back to San Francisco tonight for a Fast Company dinner event. Whew!

My heart goes out to all the people who’ve lost their jobs this month. What’s worse is it isn’t over.

Solution? Next week at the World Economic Summit my “Davos Question” is how can we create one million new startups with a failing/failed VC system?

That’s what it will take to repair the damage this month has done to the tech industry and our economy. Yes, the depths of our problems ARE that deep. Got any ideas?

60 thoughts on “Welcome to Black January: Microsoft, Intel, IBM and others lay off tons

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  2. The pain is as real as the empty cube next to me. I’ll feel better when the economy reaches bottom.

  3. The pain is as real as the empty cube next to me. I’ll feel better when the economy reaches bottom.

  4. Some Guy is right, although I’ve been flamed in the past for pointing out the absurdity of pretending that the portion notionally paid by the employer is somehow different from the portion also paid by the employer but shown on the payslip as notionally having been given then taken back. Each month my employer writes two checks regarding my employment: one to me, the other to the government. Officially, my “gross salary” is somewhere in between the first figure and the total of the two – but nobody ever actually sees that except in a job listing!

    As for the creation of new businesses, investment hasn’t stopped entirely – as the story on this very site about Twitter having just secured some shows – but I imagine we’ll see a lot more companies bootstrapping. Instead of dropping tens of thousands on colocated servers, they’ll be spending hundreds on cloud hosting initially, getting up and running with a much smaller outlay. Instead of working full-time on VC cash, they’ll build the business in evenings and at weekends. Ultimately, successful companies and failures will both benefit: greater equity for the founders of the latter, smaller losses for the latter. Meanwhile, someone newly laid off might spend the first few months and some payoff money building a startup, rather than trying to find a job working for someone else in this climate. Given a good idea and suitable skills, building a company might just be a better use of your time than sending out resumes – more so now than a year or two ago when jobs were easier to find.

  5. Some Guy is right, although I’ve been flamed in the past for pointing out the absurdity of pretending that the portion notionally paid by the employer is somehow different from the portion also paid by the employer but shown on the payslip as notionally having been given then taken back. Each month my employer writes two checks regarding my employment: one to me, the other to the government. Officially, my “gross salary” is somewhere in between the first figure and the total of the two – but nobody ever actually sees that except in a job listing!

    As for the creation of new businesses, investment hasn’t stopped entirely – as the story on this very site about Twitter having just secured some shows – but I imagine we’ll see a lot more companies bootstrapping. Instead of dropping tens of thousands on colocated servers, they’ll be spending hundreds on cloud hosting initially, getting up and running with a much smaller outlay. Instead of working full-time on VC cash, they’ll build the business in evenings and at weekends. Ultimately, successful companies and failures will both benefit: greater equity for the founders of the latter, smaller losses for the latter. Meanwhile, someone newly laid off might spend the first few months and some payoff money building a startup, rather than trying to find a job working for someone else in this climate. Given a good idea and suitable skills, building a company might just be a better use of your time than sending out resumes – more so now than a year or two ago when jobs were easier to find.

  6. Robert,
    Most startups should really be funded through founder equity or credit, rather than outsider equity. Equity is very expensive capital: just ask any VC what their targeted rate of return is. Unless your startup is one that will grow very large and very fast (rare), paying 30% or 40% for capital just doesn’t pencil. Which is why most VC-funded startups eventually die.

    I don’t know about a million startups, but I did develop a plan that would be far more effective, and infinitely more cost-effective, than the bailout monstrosities coming out of Washington.

    In the old economy, the assets were things like factories and inventory. Unfortunately, those are still the only assets that banks will lend against. In the new economy, the assets are people: their ideas and their work product. But you can’t borrow to keep or grow your most important asset. This plan solves that problem, and best of all, it would actually turn a profit for the government, even if the default rates were double the historic SBA rate.

    The plan has been seen by several U.S. Senators, economists, and even the Obama team. People on both sides of the political spectrum like it, and can’t find any big holes. Forbes.com even published it. But not surprisingly, no politician has the courage to champion it. Too darn practical, I guess…
    http://www.printingforless.com/pressreleaseStimulusProposal.html

    The only objection would be that government should stay the heck out of the private sector. I actually share that view, but that horse is far, far out of the barn.

  7. Robert,
    Most startups should really be funded through founder equity or credit, rather than outsider equity. Equity is very expensive capital: just ask any VC what their targeted rate of return is. Unless your startup is one that will grow very large and very fast (rare), paying 30% or 40% for capital just doesn’t pencil. Which is why most VC-funded startups eventually die.

    I don’t know about a million startups, but I did develop a plan that would be far more effective, and infinitely more cost-effective, than the bailout monstrosities coming out of Washington.

    In the old economy, the assets were things like factories and inventory. Unfortunately, those are still the only assets that banks will lend against. In the new economy, the assets are people: their ideas and their work product. But you can’t borrow to keep or grow your most important asset. This plan solves that problem, and best of all, it would actually turn a profit for the government, even if the default rates were double the historic SBA rate.

    The plan has been seen by several U.S. Senators, economists, and even the Obama team. People on both sides of the political spectrum like it, and can’t find any big holes. Forbes.com even published it. But not surprisingly, no politician has the courage to champion it. Too darn practical, I guess…
    http://www.printingforless.com/pressreleaseStimulusProposal.html

    The only objection would be that government should stay the heck out of the private sector. I actually share that view, but that horse is far, far out of the barn.

  8. Right now an EMPLOYEE pays just as much as an EMPLOYER for this tax.

    Nope. The employee takes 100% of the hit for payroll taxes, and the pretense that it’s somehow split between the employer and the employee is just a shell game. The employer is spending money for labor that the employee’s not getting.

    Corporations don’t pay taxes, they only collect them. People pay taxes. Don’t ever let a government leech try to tell you otherwise.

  9. Right now an EMPLOYEE pays just as much as an EMPLOYER for this tax.

    Nope. The employee takes 100% of the hit for payroll taxes, and the pretense that it’s somehow split between the employer and the employee is just a shell game. The employer is spending money for labor that the employee’s not getting.

    Corporations don’t pay taxes, they only collect them. People pay taxes. Don’t ever let a government leech try to tell you otherwise.

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