Ripples in Silicon Valley
“As if waking from a dream, Silicon Valley has suddenly realized that the collapsing economy means trouble for tech companies, too.” Writes Daniel Lyons in a recent Newsweek article. He goes on to discuss the high level of risk that new startups (since the dotcom bust of 2001) are facing in trying to create revenue streams to sustain their operations,
Twitter, opened for business in 2006, is especially mentioned. The company raised $15 million in venture funding earlier this year. CEO, Jack Dorsey comments “We’re prerevenue. We’re focused on growth.” Ostensibly, Twitter has a plan to create revenue in the future. But the nagging question remains: Social media tools are creative and gaining widespread support – but are they viable in economic terms?
The market here in Seattle isn’t much better. Redfin, the online real estate broker, just laid off 20% of its workforce as reported in the Puget Sound Business Journal . Venture capitalists don’t part with their millions easily, and the PSBJ also reports of warnings from Sequoia Capital and Benchmark capital that their portfolio companies must reduce their burn rates to weather the economic turmoil.
Interesting times ahead for companies with names like: Slide, Tumblr, Publr, Chatterous, Posterous, Stream, Pownce, Spoink and Plurk.
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2 Comments, Comment or Ping
Peter Luyckx
To add to the discussion:
“According to a new Epsilon CMO Survey, Chief Marketing Officers at many of the biggest brands in the nation are seeing a major shift in the marketing landscape. 63% of the 175 marketing executives surveyed see an increase in their spending on interactive/digital marketing while 59% report a decrease in traditional marketing spend. 65% of CMOs say that the money spent on advertising as a whole will decrease due to the current economy. In contrast, 94% of CMOs and marketing executives agreed with the statement, ‘A tough economic period is precisely the time when marketing plays a key role.’”
http://www.mediapost.com/publications/index.cfm?fa=Articles.showArticleHomePage&art_aid=92498
That’s the good news.
The less-positive news for digital media companies is that display ad prices are trending down
http://www.mediapost.com/publications/?fa=Articles.san&s=92664&Nid=48333&p=974844
Plus eMarketer reports that in the first half of 2008, online classified ad spending was down 5% YOY, which they see as a sign of things to come
http://www.emarketer.com/Article.aspx?id=1006626
Oct 21st, 2008
seanwang
This is not necessarily a bad thing. Great ideas like Twitter seems to have been in need of a makeover. This maybe the push for Twitter 2.0 that makes it real social media platform instead of a novelty.
Oct 22nd, 2008
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