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Don’t Quit that Job Just Yet


Photo by Egan Show

The economy has everyone shaky, even those in the web space who have been largely unaffected, so far, by the ups and downs in the market. The Web market is largely filled by companies who have, at best, private equity via venture capital or angel funding, or they simply are bootstrapping and don’t have any outside investment.

Times are tight, but even in the VC-stage where a company might have anywhere between a million dollars in investment capital to $35M or more, the money really isn’t that big in the grand scheme of thing and the funding is privately held. Mostly.

Here in Baltimore, VC money flows toward Biotech companies where significantly higher investments are made in comparison to small investments in the web space. Obviously, biotech has a higher overhead when it comes to research facilities, labs, expensive chemicals and doctoral employees. Web startups deal with much smaller costs like commodity priced hardware, and much cheaper salaries. Again, by comparison. Biotech is drying up, but web investments continue to happen.

However, just in the last three days, at least three people I know in the web space have lost their jobs due to the slowing economy. We’ll probably see more of it as well. eBay, who is admittedly a public company and outside the realm of the “typical” web company, just announced a 10% reduction in their workforce. That’s not going to be the end.

The worst time to try to change jobs is right now. If you are able to get a great job, you’re going to be subject to a last in, first out layoff policy. It’s likely anyway. Nothing is ever guaranteed.

If you’re independent, you may very well encounter a slowdown in business (so I hope you’ve saved!), but you probably aren’t going to fire yourself. Now would not be the time to start that practice.

Conflicting recommendations exist. Some recommend that work is going to be hard to come by in an entrepreneurs world, so flee for stability and medical benefits. The other side says, as I do, that work is going to be hard to find and if you get it, you’re going to be far from stable.

Be very careful how you proceed. Make sure you have a backup plan. Try not to panic. Hunker down for the long-haul and do what you can. Don’t let the economy frighten you but instead, lean on your strengths and make money how you can. It’s going to be tough for everyone, myself included, but there will always be a demand for quality people in essential positions.

If you’re in a stable “day job”, I would not recommend quitting now to go the entrepreneurial route. It’s going to be tough going. However, if you’re already there, stay there and kick some butt. It will be slow. Times will get tough. But you can survive!

Sucks to be a Blog Network These Days

Having come from the blog network space, I have a mostly unique understanding of the difficulties encountered when running a content business. There is always a war between traffic and community, profitability and loss, long term projections and short term realities. It’s not an easy business.

It’s even more challenging when you’re a blog network. Unlike more traditional style content companies like Newscorp (owners of MySpace, AskMen.com and FoxSports.com) or the New York Times, blog networks attempt to take a relatively new medium, a blog, and lump it together with other relatively new media – blogs. There’s no counter-balance of strengths and weakness. They are all blogs, possessing the same inherent strengths and weaknesses.

One of the core problems with the “traditional”, if there is such a thing in the space, blog networks – and really any online media – is that the business model almost always comes back to advertising models of revenue generation. Historically, the advertising market has come and gone in a predictably cyclical way.

As expected, the advertising model is taking somewhat of a hit during these difficult economic times and only in the past two days, two major media players in the blog network space have had to cut pay, create layoffs or otherwise cut costs due to an impending, or in some cases already present, decline in online ad revenue.

Gawker Media, the second largest blog network and home to industry favorites Gizmodo, Gawker, Valleywag and Lifehacker has announced a restructuring of staff – laying off 60% of Valleywag staff, as an example, and increasing the staff on their flagship properties. Consolidation is the name of the game in this case.

Likewise, b5media (with whom I worked for several years), had an internal memo leaked (and TechCrunch published) describing a complete revamp of their compensation system “to reduce costs”. Many bloggers are taking significant pay reductions as the company streamlines their burn rate.

This on the heels of AOL/Weblogs Inc layoffs and pay reductions a few months ago and the very public walk-out of Profy staff when pay was to be reduced shortly thereafter.

Let me be clear. If you’re in the content space, you are dealing in a non-tangible asset. Therefore, the economic rules of asset valuation do not apply. There is no “market price”. There is no assessment value. There is no depreciation. If anything, content can appreciate over time. Typical rules do not apply and in a market where investors, advertisers and publishers are trying to identify concrete ideas and assets that they can count on as a sure investment, non-tangible assets will always take a hit.

Publishers, particularly publisher networks, have to look around and identify means to continue to generate non-tangible assets cheaply (yet fairly), and I imagine some models might end up looking to non-tangible compensation (such as community benefits) to acquire new publishers and content.

Problem is, bloggers have this idea that they can be rich by blogging. Some are smarter and think they can simply “make a living” by blogging, without ever uttering the rich word. Truth is, unless you’re a few important people in the world, it’s not happening. It won’t happen. There are other meaningful ways to benefit from blogging, and most of them are non-monetary.

East India Wall Street

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The company was booming. It was harvesting tea from Asia and selling throughout the empire. Times were good and tycoons were fat and wealthy. Times couldn’t be better as the government subsidized East India Company collected record profits from the subjects throughout the British Empire.

In Parliament, and with an economic need for further subsidization for a sprawling empire, Great Britain passed tax levies on East India Company tea that affected colonists throughout the empire. With little or no influence in Parliament – certainly no representation – John Hancock of Massachusetts Bay Colony began a black market operation to bypass British tea, instead choosing to import from the Dutch who levied no such taxes.

The year was 1773, and the actions initiated by Hancock and others in the Thirteen colonies culminated in a Continental Congress and a Declaration of Independence three years later.

Several hundred years later, a different economy exists. Again, business was booming as traders and bankers invested in assets with unlimited potential. In fact, the only limit of value on the assets was that which the imagination could merit.

Money flowed freely, encouraged implicitly by Congress and central banks across the globe. Indeed, the age of the American Empire extended and exported its wares in the form of the dollar far and wide across the globe, affecting Asia, Europe and points in between. Times were golden and assets gained steam.

When the market realized an over-inflation of prices and assets, it was too late. As Parliament realized that a dying industry required economic infusion, and passed an import tax that resulted in the revolt and the beginning of the end of economic dominance for the British Empire, America faces a similar scenario.

Does it infuse and, by proxy, prop up an economic policy that has reached its potential limit, and by doing so ignore the history that can teach them so much? Or does it allow an economic recession to happen, recognizing that one mans loss is another mans profit?

I’ve been given grief, even by my own people here at Technosailor, for covering content that is not directly social media related. That is not the point of this blog. We cover the technology, business and trends of the day to help readers understand the landscape.

These are difficult times, and people are losing money hand over fist. It’s going to happen. It has to happen. The American empire is not about territory. It is about the Dollar and the economy of America is the economy of the world. It needs correction and, like Parliaments actions of 1773 resulted in the ultimate death of the British Empire, the meddling of Congress in markets affected by failed policies of the same, will ultimately result in the death of the American Empire.

Of course, the death of the American Empire is not entirely bad either. The U.S. could use a little bit of humility, but to do so will hurt for many many people… not just Americans.