A Dark Day, MySpace Dirt, and a Novel Business Model
BY Max Chafkin
75,000 in one day. Monday was a dark day for American workers. U.S. employers announced job cuts totaling 75,000 yesterday, led by Caterpillar, which will cut a whopping 20,000 jobs. The VC and blogger Fred Wilson, puts those numbers into context and figures that, over his 22 year career, he has been involved with companies that created 40,000 jobs. That leads him to a sobering conclusion: "There's a lot of talk about creative destruction and renewal and many are looking at the venture backed tech companies to lead the way in renewal and job creation. And I am among those who believe that tech-based entrepreneurship is a big part of the way out of the mess we are in. But can we in the venture business collectively replace 75,000 jobs per day? No, we can't."
The other layoff story. Amid news of all those big company layoffs, the Wall Street Journal files a report about a small tile maker in Minerva, Ohio engaged in its own wrenching round of layoffs. "[S]mall companies are staffed with people who have spent their entire lives in one place, creating tight factory-floor communities, but also making it harder to land a new job," writes Timothy Aeppel. Although most of the focus of the business press has been on large company layoffs, he points out that small companies account for more than half of the country's private sector workforce.
The built-in small business advantage: empathy. Of course, those companies may have an advantage amid all the corporate slashing. Looking at a recent interview about how big businesses have lost their ability to identify with their customers, Bizbox argues right now it's better to be small. Marc Tracy says, "If managed correctly, smallness leads to greater interaction and subsequent identification with the customer."
No revenue. No problem! Bloggers have been knocking Twitter for its failure so far to come up with a business model to sustain its wildly popular service, but Om Malik says that Twitter is making the right call by going back to VCs at a rumored $250 million valuation rather than selling out to a larger company. "Twitter needs to swing for the fences," Malik writes. "Ev Williams already has a notch on his belt — he sold Blogger to Google — and doesn't need to cash out now. In the meantime, venture capitalists are lining up, ready to fund the company. In other words, he should go for gold."
Getting the dirt on MySpace. Techcrunch has snagged a draft of Stealing MySpace a soon-to-be published book that should give voice to Brad Greenspan, the disgruntled founder of MySpace's former parent company, Intermix media, and who has long argued that News Corp. grossly underpaid for the social network. The book reports that MySpace had the chance to buy Facebook—once for $75 million and once for $750 million—and that founder Tom Anderson lied about his age and operated a pornography site.
Another Jobs health scare (or not). Another day, another inscrutable dance between the Silicon Valley press and Apple's public relations department. Valleywag set off a wave of media activity yesterday, reporting that someone told someone at a party that Apple founder Steve Jobs was undergoing surgery at Stanford Hospital. But Alley Insider says that someone called them to say that Jobs actually went to work.
Can you build a business on encouraging customers to buy less? Today Independent Street points out a provocative entry by GreenBiz.com's editor Joel Makower, which advocates that businesses actually encourage customers to buy less stuff. He argues this is a great way to take competitive advantage of a growing "voluntary simplicity" movement. Would you consider adopting such a strategy?
Last updated: Jan 27, 2009
Senior contributing writer MAX CHAFKIN has profiled companies such as Yelp, Zappos, Twitter,
Threadless, and Tesla for the magazine. He lives in Brooklyn, New York. @chafkin