Web 2.0 in and beyond the recession

in Financial Times

Chris Nuttall, in his Valley View column in Digital Business on October 22, pointed to a severe belt tightening in California by the Web 2.0 cohort. On the advice from the venture capitalist Mike Moritz of Sequoia, a number of companies are preparing for a long, slow and perhaps painful downturn.

It makes for gloomy reading. With consumer confidence at a low and debt at a high, no technical sector will be immune.

Throughout Silicon Valley and San Francisco’s South of Market, everyone is preparing for the shock. People are being laid off and business models re-examined.

Advertising has been the lifeblood of many of the Web 2.0 sites, and companies that pay for that advertising will chop this discretionary spend, cutting those sites’ lives short. There were already a lot of me-too types of Web 2.0 properties out there that were not long for this world, regardless of a recession. A smart venture capitalist would mercifully end the life of some of these companies now and avoid prolonged agony. Even those with a sufficient critical mass of users and momentum should seriously look in the mirror and decide where to trim the fat.

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