Harsh economy is biting: Loic Le Meur’s Seesmic lets go 7 employees
Written on 11th October 2008
5 COMMENTS 
Mircea Goia, Next Web US Webtipr
Recently, Benchmark Capital and Sequoia Capital advised startups to tighten their belts for the crunch times ahead. There’s no safe haven for startups. Except, to a degree, for those which already generate revenue and profit.
Companies that have already raised money need to monitor every penny spent from now on. Those trying to raise money will have a hard time finding investors if they don’t have a real business plan. It seems that the idea of “we’ll figure out later how to make money, first let’s concentrate on acquiring users” is dying.
One company which is trying to navigate in today’s troublesome waters is Seesmic.
Loic Le Meur, the founder and CEO of the company, just announced on his blog that it will let go seven employees (about one third of Seesmic workforce). That’s on top of another three employees who were let go already a few weeks ago. Not good news, but at least he was open and said it straight… It is very open with the press too – he was very fast in responding to some of my questions as well.
Seesmic raised about $12 million dollars so far. The last $6 million round raised a few months ago came from Wellington Partners and Omidyar Network. Seesmic acquired the Adobe AIR desktop client Twhirl which allows users to access the Twitter service directly from their desktop, and also cross post to other services (Pownce, Jaiku being one of them).
Hopefully, they will have enough money to get out on the other side of the tunnel.
Good luck, Seesmic!
Now, I suppose we will hear more news about these kind of lay-off’s from other startups.
Jason Calacanis warn us that 50%-80% of the venture-backed companies will not make it or be on life support in the next 18 months.
But venture capitalist William Quigley (Clearstone Venture Partners) has a more cold-blooded assesment of the situation (via Venturebeat).
Five years after the dot com crash, investors came to realize that in fact Internet and telco centric business models (think Google, RIMM) were among the most profitable businesses of our era. This lesson is now well known. What does that mean? I believe this time around the entire tech sector will not be abandoned. If anything, there will be more conviction around the best businesses and business ideas.
This very same phenomenon is happening now in the banking sector. In the middle of the panic phase of the financial crisis, investors speak highly of BofA, JP Morgan, and US Bankcorp.
Amen to that!
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By Patrick de Laive on Oct 11, 2008
Interesting. When I was in San Francisco I noticed that the startups there have a lot more employees than the average startup in Europe.
I was at the Seesmic office as well, I feel sorry for the people who have to leave the company.
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Had the same feeling Patrick, and top management had way better salaries, difference without justification IMHO.
I believe the backbone technology supporting a service is vey relevant in these market conditions/sentiment, since the possible “need to change” and productivity behind it may play an important role when you are tighten. I believe Seesmic may be more exposed here due to their flash-everywhere site but that’s my opinion.
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By Frederik De Wachter on Oct 11, 2008
I was @ Popkomm where the questions obviously came up in a panel discussion with VC. Charles Grimsdale of Eden Ventures predicted a 30% shrimp of the available capital. For now Popkomm is still flourishing of announcements, innovation and concrete deals. But nobody knows how long this crisis will last and I’m sure we should anticipate a walk through the desert.
We just started (better than your money on the bank right? :) and will focus on the local market. Build a good application and prove our business model. If that works, than investors will always be interested. If it doesn’t, why would it work on a larger scale?
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By Allan on Oct 13, 2008
This is a nice survey of all the recent reactions in the blogosphere regarding the market downturn.
Please try and get some interviews with bootstrapped startups that are not venture funded. I’d like to know how this market is affecting them besides having a harder time finding funding.
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By Short Sale Assistance on May 11, 2009
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