It’s been on my mind to write about the recent layoffs at Seesmic and Fast Company; it seems to mark the end of an era where Web 2.0 companies grew up, often without a revenue model.  I’m not sure if it means, down the line, the end of companies like Twitter or not, or even great services like Quantcast, or not, but it seems to me, the days of just doing a startup, because an idea seems like a good one, are over for the foreseeable future.

Robert Scoble should know, he hangs out with in Silicon Valley and talks to most everyone – and his employer, Fast Company, is one of the first to lay off employees, but not him, of course.   Scoble went over to Loic and spoke to him the other day to find out why a well funded company like Seesmic would lay off employees just now:

“… I went over and hung out with the remaining staff and CEO Loic Le Meur this afternoon to learn more and to try to discern the advice that Le Meur got and how many other startups are about to do the same thing. Here’s what I learned.

First, Le Meur has a really deep set of advisers. People like Pierre Omidyar , the founder of eBay and Martin Varsavsky founder of Fon.

They are telling him that the downturn will be deep and will be multi quarter. They told him it was a good idea to conserve cash and bunker down.

Translation: Le Meur isn’t the only one getting this advice. Sequoia Capital told its companies the same thing.

The thing is Le Meur is better connected around the world than most of us. He’s been seeing this downturn coming for months and has been tracking it, so he’s one of the first who is mentally ready to move. He told me that he predicts other CEOs will do the same thing over the next couple of weeks. Those who don’t, he told me, will be told by their boards over the next few months to take the same actions if the CEOs don’t make the hard decisions to do this today.

“But what if the economy turns back up in the next month?”

Well, Le Meur told me he just cut jobs that aren’t core to the mission of Seesmic. Designers. Marketers. PR. He told me all those functions are outsourceable and aren’t core to what they do. The folks sitting around the table were developers, people who kept servers running, who were directly responsible for keeping customers happy.

This is a smart strategy.”

“…But, Le Meur didn’t come to this decision easily. He literally teared up with me today. Being a leader and making really tough choices isn’t easy and this market isn’t easy to navigate for anyone.”

Gee …. hmm … didn’t Sequoia Capital also invest in Google?  You know, TechCrunch had a post the other day on an Ignoble But Much Needed End To Web 2.0, Marked By A Party In Cyprus

… and here’s the party, but I can’t say I understand exactly why this video represents the end of Web 2.0, but then again, half the stuff Arrington does these days, isn’t as transparent as it used to be.

What if Google started laying off people?  Then you’d really know it’s bad.   Well, I predict, that’s going to happen – maybe not next week – but I bet, it’s going to happen within the next year.   It makes sense, the only thing they make real money on in AdWords and AdSense -everything is advertising based.  Can you imagine if Google fired a bunch of marketing people – it’s not so far fetched.  But what does that say about the rest of the economy.   I shudder to think – I don’t think we want to know – but, unfortunately, we probably will start finding out soon.

However, coming in with another point of view is Gary Vaynerchuk (I can’t seem to stop updating this post - that’s rare, instead of writing a few posts, my inner process is directing me to adding more to this particular post as these responses all belong together in this context), who thinks that Google will do well in the coming years because it’s invested in Measurement Tools and methodologies that will drive advertising their way, and away from Magazines, Newspapers, Television and Radio – and I think Gary is probably right.  Whew, Google bites the bullet – but many other Web 2.0 companies will be unprepared.

Getting back to LeWeb and Loic Le Meur, I met Le Meur last year at LeWeb03, where I also bumped into Scoble a few times, but I’m wondering – what laying off at Seesmic might say about Le Meur’s dream of creating a Silicon Valley in Paris – or even if it makes sense to go this year (I wanted to speak at LeWeb, actually – I’m finding when given the choice of being Press or a Speaker, I’d much rather speak, in spite of my own fear of public speaking – which I seem to have largly overcome).

I’m also thinking about the layoffs at these few Web 2.0 Startups as being the tip of an iceburg and what it means if it ends up going to Main Street.

For the last twenty years, at least, I’ve been hearing about the imenenant Stock Market Crash and the next depression and it never really happened; yeah, we had our ups and downs, but nothing like what we’ve seen in the last month or so – it’s like almost every day – something major went wrong – and it just kept building, I think things totally fell apart after Lehman Brothers was left to go into bankruptcy – and I think about why that happened.

In fact, there’s a good video on this at BloggerHeads, at the New York Times – it’s clear that letting Lehman fail triggered the worst of this mess – and it appears this could have been avoided had Paulson had been more careful.

I believe, the reason Lehman Brothers was left to fail, but Bear Sterns and AIG were bailed out, was the administration, particularly the FED, had fundamentally misunderstood the nature and magnitute of the financial problems – thought that if they let Lehman fail, that would be an experiment to see how Wall Street reacted – but it went wrong …. and now it’s out of control and has a life of it’s own.

Incidentally, and I had forgotten that I wrote this a year ago, about Sobering Market Analytics Predictions – Paul Tudor Jones II. On October 13th, 2007 the New York Times published an article titled  The Man Who Won as Others Lost -

“….Paul Tudor Jones II leans back in his chair and grins. The stock market is going to crash, and he knows it. “There will be some type of a decline, without a question, in the next 10, 20 months,” he says in his rich Memphis drawl. “And it will be earth-shaking; it will be saber-rattling.”

“….Now, Mr. Prechter is suggesting that the country is facing not just a market crash, but also a depression. On every measure, he says, the market is more overvalued than it was in 1987 before the reversal. The price-to-book ratio of the S.&. P 500-stock index today is 4.04, compared with 1.73 in 1987. And measures of the bullishness of Wall Street traders confirm Mr. Prechter’s assessment of the overvaluation.”

I’m not really sure what happens now – not too many people are – I was thinking more of Krugman’s Failure of leadership, part LXXIV where it appears that getting a consensus on what to do next is really hard.

But maybe, were at the Event Horizon – a point where it’s really hard to see what comes next; according to Wikipedia, an Event Horizon is:

“… a boundary in spacetime, an area surrounding a black hole or a wormhole, inside which events cannot affect an outside observer. Light emitted from inside the horizon can never reach the observer, and anything that passes through the horizon from the observer’s side disappears.”

I take it more as we’re at a point, in the Event Horizon, where we can’t see yet beyond it – I noticed that about Paul Krugman’s advice too – he’s been right for several years, right about Bush, the Iraq War, the Sub-Prime mess, and now the $700 Billion Dollar Bailout – but lately, I think, he’s at the point where all his predictions came true – and then … what now?

Well, this is what I think ….. I’d rather follow someone who has been right most of the time, all along, than someone who has been wrong most of the time. Thanks to smart people like Krugman, the White House Overhauling it’s own Rescue Plan.

Since none of us know what is going to happen next, for sure, or even what is going to happen on October 13th 2008 (after this weekend, one has to wonder what the Stock Market is going to look like next week).

Who does that remind you off – I don’t think I have to say it any more clearly.  We might not know what comes next, but we know what did not work, and we know where those policies came from.

We might not have much of choice about what happens immediately, we’re at the Event Horizon, no one really knows what’s going to happen now, even those who let us into this mess.