4 ms·

I have to wonder how much of this is a chicken and the egg thing. Ever since the beginning of this crisis the media has been hammering the same meme: "This is

by SamAtt 17y ago

I have to wonder how much of this is a chicken and the egg thing. Ever since the beginning of this crisis the media has been hammering the same meme: "This is as bad as the great depression" So now we're almost a year later and everyone stands around shocked at the fact that jobs are being lost even faster than in a normal recession. But job loss, at it's heart, is mostly just companies gauging how many employees they'll need for the future and making adjustments. So if every news agency is telling these companies we're at the start of a great depression what else would you expect them to do but to cut jobs at an even higher rate? How many tech companies have we seen in the last year who cut jobs before they even noticed a revenue drop? Jason Calacanis says he had enough money to keep Mahalo running without revenue through 2011 yet he cut jobs and moved his operations overseas. How is that not panic?

jasonmcalacanis 17y ago
We didn't panic as much as we realized the revenue and fund raising opportunity had changed radically. Given that we cut our spending by 25-35% by moving from inhouse editors to community-based editing with a virtual currency. The truth is we were on our way to this model already as it is the most efficient in term of cost and motivation. In other words, the folks in the virtual economy get more done for less and they are enjoying themselves. This user is on track to make $3,000 "Mahalo Dollars" over the next year (which translates to 75% that amount in USD). http://bit.ly/kXQTp http://bit.ly/kXQTp We'll break even in the next year I think, and by making the cuts/getting more efficient we extended our runway by a year. If the market wasn't so fracked up I would have spent more and raised more money.... however, I felt there was a significant chance that raising money would be very difficult for a year or three. It turns out I'm probably wrong and we'll be able to raise more money if we want/need to (we've started getting a lot of calls recently in fact... I guess VCs are looking to place bets again, which is a good thing). all the best, Jason
steveklabnik 17y ago
I don't mean to take away from your main point, because I agree with you, but... > But job loss, at it's heart, is mostly just companies gauging how many employees they'll need for the future and making adjustments. Sometimes, it's also because people can't afford to have said employees. I used to work at a pizza shop, and when the state raised the minimum wage $2/hr over the course of a year... we had to get rid of people, and drop other people's hours, and raise prices. We simply couldn't afford to give the majority of our employees a pay raise. Sometimes, there's just no money in the bank.
- andyking 17y ago
  In Britain, the minimum wage is £3.53 when you're under 18, £4.77 when you're 18-21 and £5.73 when you're 22 or over. When I was still at school, I worked part-time in a big chain store. A lot of the time, when someone turned 18, they were suddenly "not needed as often" and had their hours cut and were first in line when the shop was laying off. I got laid off about two weeks after my eighteenth birthday and the shop suddenly hired a bunch of new 16-17 year old kids... Still, they went bust about two months after that!
timwiseman 17y ago
How is that not panic? If you think revenues are about to decline it is rational to reduce work force before that happens. The point of a for-profit company is to maximize profits (publicly traded companies are legally required to do this and can be sued by shareholders if they don't, privately held companies have a littl emore freedom, but most are still out to maximize profits.) In order to do this you need a work force sufficient for your current and anticipated future needs. If your anticipated future needs fall over the long haul, you not only can but should slice down to precisely what you need for the orders you currently have. This does not apply so much to short term dips because the cost of hiring and training new employees is high, but if you believe that you are in for a long term decline then it is not panic, but rational to cut as soon as you have that beleif.

by SamAtt 17y ago

jasonmcalacanis 17y ago

We didn't panic as much as we realized the revenue and fund raising opportunity had changed radically. Given that we cut our spending by 25-35% by moving from inhouse editors to community-based editing with a virtual currency. The truth is we were on our way to this model already as it is the most efficient in term of cost and motivation. In other words, the folks in the virtual economy get more done for less and they are enjoying themselves. This user is on track to make $3,000 "Mahalo Dollars" over the next year (which translates to 75% that amount in USD). http://bit.ly/kXQTp http://bit.ly/kXQTp We'll break even in the next year I think, and by making the cuts/getting more efficient we extended our runway by a year. If the market wasn't so fracked up I would have spent more and raised more money.... however, I felt there was a significant chance that raising money would be very difficult for a year or three. It turns out I'm probably wrong and we'll be able to raise more money if we want/need to (we've started getting a lot of calls recently in fact... I guess VCs are looking to place bets again, which is a good thing). all the best, Jason

steveklabnik 17y ago

I don't mean to take away from your main point, because I agree with you, but... > But job loss, at it's heart, is mostly just companies gauging how many employees they'll need for the future and making adjustments. Sometimes, it's also because people can't afford to have said employees. I used to work at a pizza shop, and when the state raised the minimum wage $2/hr over the course of a year... we had to get rid of people, and drop other people's hours, and raise prices. We simply couldn't afford to give the majority of our employees a pay raise. Sometimes, there's just no money in the bank.

andyking 17y ago
In Britain, the minimum wage is £3.53 when you're under 18, £4.77 when you're 18-21 and £5.73 when you're 22 or over. When I was still at school, I worked part-time in a big chain store. A lot of the time, when someone turned 18, they were suddenly "not needed as often" and had their hours cut and were first in line when the shop was laying off. I got laid off about two weeks after my eighteenth birthday and the shop suddenly hired a bunch of new 16-17 year old kids... Still, they went bust about two months after that!

timwiseman 17y ago

How is that not panic? If you think revenues are about to decline it is rational to reduce work force before that happens. The point of a for-profit company is to maximize profits (publicly traded companies are legally required to do this and can be sued by shareholders if they don't, privately held companies have a littl emore freedom, but most are still out to maximize profits.) In order to do this you need a work force sufficient for your current and anticipated future needs. If your anticipated future needs fall over the long haul, you not only can but should slice down to precisely what you need for the orders you currently have. This does not apply so much to short term dips because the cost of hiring and training new employees is high, but if you believe that you are in for a long term decline then it is not panic, but rational to cut as soon as you have that beleif.