Bad time for start-ups
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The search and Web 2.0 companies that will suffer the most under the oncoming “Internet Winter”, as some has called it, are probably smaller companies and start-ups, companies that are not yet generating a sustainable stream of revenue.
The reason for this is the lack of venture capital. Banks starved of cash will also be more reluctant to help smaller companies stay afloat during a recession.
Mahalo has cut some 10 percent of its staff. Mahalo, who is a kind of human powered search engine, is now outsourcing much of its editorial department to freelancers instead of in-house staff.
In a blog post Jason Calacanis, the CEO of Mahalo, writes:
Although we’ve got a significant amount of cash on hand, and the business is ahead of schedule in terms of traffic (4m uniques a month, double where we thought we would be at this point), we’re fairly certain that the advertising climate for the next two years will be severely depressed. To ignore this obvious fact would be irresponsible.
He writes that market conditions are much worse than he thought they would be.
Another human search tool, Wikia, is getting rid of a third of its staff. Wagging the Long-Tailed Dog: Search Behavior & The Economy
