Technosailor.com

Last week, Seesmic let seven of its 21 employees go — a full third of the company. Were they in a crisis? Depends on how you look at it. CEO Loic LeMeur had raised $12M, a Series B $6M of which came in June. But do the math: 21 employees, fully loaded is around $200k/month. Tack on bandwidth, storage, other hosting costs, legal and other services, marketing expenses, T&E . . . expenses are upwards of $300k/month. And with negligible revenue, that’s pure burn. At that rate, Seesmic would hit the wall in just over a year.

All the warnings about the forthcoming next nuclear winter for startups drive home the need for a management system. Tough times call for tough measures, but that doesn’t mean CEOs should get carte blanche for discretionary cuts — a sure way to undermine morale.

Prospectors joining the dot-com gold rush in the ’90s were mainly coming from large organizations seeking to capture some of the new wealth. But along with the promises of stock options and casual dress came another bonus — no bureaucracy. No meetings! No Microsoft Exchange! And no more onerous management systems.

Like others before us, we came to an ill-informed conclusion: We’ll work everything out without filing for Chapter 11. Surely all the creditors will go along with it, since it will have a much better chance of success! Who wouldn’t prefer it to being crammed down by a curmudgeonly bankruptcy judge? It will be so much more . . . civil! Only, it doesn’t work that way.

It’s a timely topic, but when asked to detail my experience with Chapter 11, the line that came to mind was from the end of ‘Misery,’ when James Caan is lunching with his agent: “Gee, if I didn’t know better, I’d think you were asking me to dredge up the worst horror of my life, just so we could make a few bucks.”

This week’s Interact 2008 conference began upbeat enough, with Ted Leonsis’s inspirational keynote signaling an ‘anything’s possible, mix-and-mashup’ world of opportunity where entrepreneurs can offer (and perhaps find) fulfillment by providing one of the five keys to self-actualization: relationships, community, self-expression, giving back, or pursuing a higher calling. But then, the sky began to darken . . .