At the risk of reiterating what’s been said lots of places before – we’re facing a perfect economic storm in tech land. But unlike the dot com burst and ensuing nuclear winter, this one is way more systemic. This time it’s affecting the entire economy and therefore directly impacts on customer spending – be it advertising, services or products.

The pain is going to be significant and long term. Witness the first of the high profile cuts to surface – Sequioa tells it’s companies to hunker down, FastTV cuts 20 jobs while start-up Seesmic cuts its workforce by a third. To add fuel to the fire Seesmic founder Loic le Meur states that;

I don’t want to fuel the growing panic but I have received tens of messages of entrepreneurs who just did, are doing or will do the same

The Sequoia show got the world watching – hey these guys are arguably the most succesful VC’s in the world – when they spell out a message of doom, people listen. The FastTV and Seesmic announcements garner attention only because they have two hyper-recognizable faces behind them, but these announcements are only the first of many, many more.

Funnily enough nearly a year ago Le Meur gave his top ten tips for start-up success. One of those tips was

Be the first to recognise a problem.

If only he’d known how prescient that advice was, and how soon he’d have to use it himself.

Great to see then that mainstream media are picking up the message, evangelised by Tim O’Reilly, that the trend of recent years towards narcissistic and meaningless web offerings that do little more than fuel self absorption and low-brow pursuits will fall by the wayside when people’s livelihoods, homes and ability to feed their families is questioned.

TechCrunch‘s Arrington chimed in with a response based on self-interest saying he appreciates the effort to get entrepreneurs and engineers to consider doing more, such as volunteering in schools to teach kids how to program computers. But saying O’Reilly’s lament trivializes the good work done by Silicon Valley.

The landscape is changing out there – but I have to contend that it’s actually a good thing. The money and hype formerly generated by meaningless offerings only served to fuel a spiraling consumer-driven ethic of instant gratification. Most of these will fall by the wayside. Some useful tools will be affected too (some really useful ones according to Rafe) – but what we’ll arrive at, out the other side of this storm, is a situation where businesses provides truly valuable products and services – with a clearly defined monetization and revenue stream, and a vision of sustainable growth based on more than the VC invest-and-exit mentality.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

1 Comment
  • Hi Ben,

    An actual business model is a fine thing.

    I’ve viewed the Sequoia slideshow a few times and read the post over at GigaOm on that meeting. Their strategy needs to be different to mine because they have more at risk.

    Yes we are in tough times but we don’t all live in Silicon Valley and while thinking global is smart – acting locally will require our own adaptations.

    I had an illuminating chat with one of my Australian colleagues this morning. In a downturn it can be easier to make changes and so if you have a competitive product or service your new busness chances might even be improved.

    I’m old enough to have been through a few of these (economic shocks) and the hype around the “credit-crisis” is way bigger than it needs to be.

    The sky is not falling everywhere. If you have a real business model it is going to be tough / but there can be an upside as customers might be able to save money by switching service providers for example.

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