Signs Of A Struggling Economy? Laid Off Bloggers, Web Sites For Sale

by Silicon Valley Blogger on 2008-11-2316

Additional casualties and signs of economic recession: laid off bloggers and your favorite web sites for sale.

Do you see what’s in store for you next year? Well, I’ve peeked at my crystal ball and can see the same thing you’re all seeing, an ugly 2009 as the economy continues to contract. Still no relief in sight (or maybe just a little, with Obama stepping in with a pep talk, an action plan) and the promise that each of us will receive a coveted stimulus check in the form of a tax cut.

Still, the tremors reverberate in the blogosphere.

More and more bloggers are reporting that they’ve been laid off, or are afraid that they will be. Some of the ones I know:

Judging by the dates on these posts, changes have been coming fast and quick! I’ve also mentioned that TechCrunch has this layoff tracker while Gawker (the online media name that bloggers look up to 😉 ) is selling off The Consumerist, and Valleywag (what!? one less Silicon Valley blog?) and trimming its staff. You can see how the online world has been taking its hits.

The trends have been reflecting reality for a while now, so when are they announcing that we’re officially in the dog house?

I’ve also talked about how we’re coping with the recession in Silicon Valley, but whatever else I’ve got to say about this can fill a book. Anyway, it’s been the subject of deep conversation between me and my close friends and family these past few weeks.

More Signs of Economic Recession Where I Live

Just to see how widespread the financial pain is, I’ve polled the people I know for their stories and concerns — here are just a few:

  • A couple of people I know have been laid off in the last two weeks. These are people who work at smaller companies that are now embarking on cost cutting measures. With the VC spigot closing off, startups that aren’t solvent will be forced to cut back heavily or close down completely. Startups are living on borrowed time. These events are reminiscent of massive layoffs in Silicon Valley in 2000 during the tech bust, so it’s not new to me. I should get used to this happening every 5 to 8 years, I guess.
  • Friends of mine who are consultants are experiencing delays in payments. Uh oh. They’ve done the work, but there’s some worry they’ll end up on a long list of creditors waiting to get paid.
  • Too close to home! I never thought it would happen, but someone I know pretty well actually is in the process of losing their house. The story is complicated — he was a victim of a drawn out scam that got exposed by the housing downturn. And I’ve heard rumors of acquaintances going on short sales on expensive homes they purchased only a few years ago (and which I had the pleasure of visiting during house-warming parties galore way back when).
  • I heard about how there are scores of luxury cars just sitting on Long Beach right now, with no takers. I got this story from a guy who’s well insulated from the crisis because he’s sitting on a huge pile of cash (he’s very conservative with his savings). Yet, he’s concerned about the effect of currency exchange on his international business.
  • Some of us self-employed folks are seriously thinking of joining the many out there who’re already chasing what few jobs are around. I read that Cisco’s job listings have dropped by 93% in one week, from many thousands of openings to a trickle of a few hundred.
  • I miss “happy” news. Could this be capitulation? Or close?

Break Open Your Emergency Funds

For many whose lives have been viciously upturned by the forces of the economy, it sure feels that this recession isn’t “normal”. But the reality is that this is probably what a “true” recession feels like. The waves of an economic downturn are much like dealing with the effects of an impending tornado. The tornado spares some while it devastates others. You just pray it doesn’t hit your household when it comes, although you can expect it to do a number on your landscape.

This has become a time of emergency for many. Our situation clearly emphasizes the importance of having enough insurance to cover ourselves when such a “disaster” hits — and when I mean insurance, I am referring to emergency funds and enough liquidity to tide you over during the storm. Does this mean we should have at least 1 years’ worth of expenses in cash? Maybe so, especially since nasty recessions can last that long! If you’ve got unemployment benefits covering you for 6 to 9 months plus a one year stash of cash, you could get through this nail-biting ride.

So let’s hunker down in the basement and see if we can ignore the angry winds out there for now. I’m doing it by starting the ball rolling on some portfolio rebalancing efforts (gah!) and selling off investment losers.

Copyright © 2008 The Digerati Life. All Rights Reserved.

{ 15 comments… read them below or add one }

Manshu November 23, 2008 at 2:01 pm

So what happens to a start up that closes in silicon valley?

I guess they would have built considerable know-how, what happens to that? Is it all lost or is it broken in pieces and sold off to bigger companies?

Silicon Valley Blogger November 23, 2008 at 2:16 pm

The VC’s who have invested in the startup try to work out a way to have this startup be “absorbed” by one of their more successful companies.

Think of the VC like the Fed, trying to bail out an ailing startup with assets by finding a buyer from within their portfolio of companies.

Another possibility is to sell off the company at firesale prices to any buyer who’ll consider it. In fact, my husband’s previous startup in the late 1990’s had a company bail it out at the last minute, and this big company got their startup for a song. Today, that 1990’s startup is now one of the top 10 stickiest sites in the internet, with a very healthy annual revenue. Of course, we no longer have any ties to this company (the only returns we saw were from the limited valuation offered by the buyout).

But the lesson here is that during times like this, great startups can be had for peanuts. They can implode and go bankrupt, shelved and dissolved, or they can get resurrected in some other capacity, care of a larger company (with or without the retention of its employees) as they get absorbed.

It’s hit or miss.

Kyle November 23, 2008 at 3:25 pm

Over the last few weeks at least 7 or 8 of my friends have gotten laid off as well. It seems like it’s gotten really bad really quickly.

James Raider November 23, 2008 at 10:04 pm

About that crystal ball…

These announcements are great for perceptions, however the long term impact remains questionable. The state of the economy presents a serious challenge for unusual Vision. Where will it come from?

Post election we look for actions that might provide a glimpse into the potential of serious “change” arriving with an Obama Presidency, beyond re-assembling the Clinton entourage.

We seek something not self evident, something that might provide insight into whether or not Obama has capacity for “vision,” and leadership for the Nation.

The first Tell – – –

AmeriGlide November 24, 2008 at 8:06 am

Where I live we have been pretty lucky. The housing market dodged a lot of the loss in value that has been prevalent in other areas and there is still a lot of commercial building.

There is still a lot of hunkering down in the basement going on and there have been a few big layoffs, but overall my area has been weathering the storm fairly well.

It was interesting to read Ted Turners response to the Bailout…

matt @ Thrive November 24, 2008 at 9:37 am

I’m with SVB, in noting that really good startups can be had for peanuts these days. One of the things I think you’ll see from this is some consolidation, where larger companies like Google can swallow up a lot of good ideas on the cheap and then use their size to incubate them to release on the newly revitalized market that is sure to come a few years from now.

There are basically three outcomes that I can see as possible. One, the economy fails completely and it is the end of the US as we know it. Two, the economy readjusts and we maintain a new lower level. Three, the economy rebounds within the next few years to previous levels.

If you think one is true, VC’s are screwed anyway and should liquidate all holdings into gold and flee the country. If you think two, a conservative approach is best, but again, is that really that much different from one? If three is true, buy like crazy at super cheap prices, acquire some amazing companies, and basically emerge from the recession as IP giants.

For me, I’d be going with three’s approach as a VC: drive hard bargains and be a little cautious, but basically recognize that what was a good investment a year ago is a fantastic investment now.

Lindsay November 24, 2008 at 12:19 pm

Well, I am a blogger (working for myself), and November is looking to be my best month ever (yesterday was my record highest day). I’m certainly appreciative of such fortune when others are struggling, but I don’t think it’s all luck.

In good times, it’s a lot easier to make money. It’s during bad times that you really have to have a model with meat.

A lot of companies are going out of business (or will be soon) because their models frankly suck (U.S. automakers, for instance).

In the world of blogging, you have to focus on building a model that not only attracts visitors but attracts visitors that become buyers (either for products you sell or the products your advertisers sell). Even in tough times, money flows, but you’ve got to be in the now-narrower stream in order to continue to survive and thrive.

Friends and Money November 24, 2008 at 12:22 pm

Many of these bloggers are excellent at what they do, so times must be hard if even they are struggling. It’s a crazy market place out their right now but I hope that it picks up in the next 12 months, even a little.

Fortune Hunter November 24, 2008 at 3:16 pm

Actually it isn’t just start up companies that can be had for a song, everything is on sale these days! I am a self employed entrepreneur and for the moment I am still growing and getting new contracts, albeit at a much reduced pace to last year.

In my past life I was part of a tech start up that didn’t start and was sold for scrap (our source code) to another outfit that I don’t think ever did anything with the code. I lost my options and had to start over again, it is the nature of the game.

During the 2000 crash the WSJ did a story about an investor that was known in Silicon Valley (can’t remember the name) that would come in when a dot com went bust and buy up their inventory and even some of there equipment for pennies on the dollar. The article said he was legendary in that part of the country and every dot com person knew when his car pulled into the parking lot that it was curtains. He profited very well from these various ventures.

I look at this situation as a HUGE buying opportunity for both stocks and real estate. This year I have bought 1 rental property and I have put various limit buy orders in for stocks I know have been beat down as low as they are going to go and represent the best buying opportunity in probably 15 years or so.

You can also buy used stuff, cars, boats, motorcycles, tools, etc. during this crash for dirt cheap if you know where to look. The fact is the people with cash right now and minimal debt are going to clean up. I wish I had even more money because sale prices this good won’t last. If I were were like SVB’s friend above sitting on the pile of cash because of his conservative investments I know I would be sitting on a much, much bigger pile of cash when this is over.

Austin Real Estate Broker November 24, 2008 at 5:06 pm

The more news I watch the more I think we’re not on the way out of this crisis, but are firmly entrenched in it. We haven’t lost a lot of house value here, but I’m seeing a lot more short sale, bank owned, and pre-foreclosures hitting the MLS every day.

Just like startups being able to be had cheap, real estate around here is generally a good deal. The issue is that most people are afraid of how long this crisis will last and how “bad” it will truly get.

Based on all the bad news, sinking investments, job layoffs, and belt tightening we have to wonder how many businesses and people can fail without causing an actual recession. I’m hopeful that, as a self employed individual, I’m able to hold out on my financial diet long enough to start seeing some improvements. I’m pulling for all of you out there with family, friends, or you personally who are losing sleep over the state of things as well.


doctor S November 24, 2008 at 8:16 pm

The more news that occurs every day the worse this situation is going to get. For those who still do not think it is a recession, its time to open your eyes.

I have friends getting laid off, elders worried about retirement, and a gf scared about my financial situation as we embark on getting hitched! Crazy life but the only thing you can do is prepare yourself for the worst. Optimize everyday in case the next day at work is your last day on the job. I have new found motivation for finding new sources of income whether they are big or small. We shall see.

Roger Hamilton November 26, 2008 at 7:15 am

Everyone is hoping this period would go away as quick as possible. Although from what I read, it seems that this might be one of the worse recessions ever in the past few years..

Tuubol March 8, 2009 at 7:54 am

Although some bloggers have been laid off, still there are opportunities where one can make little earnings by blogging.

raymond bailey November 21, 2011 at 2:03 pm

There are plenty of opportunities out there to make money online. The online markets are the wave of the future!

Silicon Valley Blogger November 21, 2011 at 2:17 pm

@Raymond Bailey,
Being successful online depends on your longevity in the business. Sure, there are many opportunities to make money via the Internet, but it’s more than being a flash in the pan. Some ideas have a very short shelf life and you’ll need to know how to time things out when you’re working with some of the more short term ideas in order to turn in a profit. For more long term ideas, then that’s all about evolving the business to keep it afloat and relevant throughout the years. Best of luck!

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