The lastest Web startup to join the layoff parade is Mahalo.com Inc., the ballyhooed search company fronted by Jason Calacanis. In a post on his blog titled "Tough times, hard decisions," Calacanis said the
company has laid off "just under" 10% of its full-time staff and implemented other cost-cutting measures, including leasing office equipment and replacing in-house editors with freelancers.
"The net result of the
effort is we are giving Mahalo another year of 'dry power' (or runway)
to complete our mission."
Mahalo, which has raised $20 million in outside funding, is backed by Allen & Co. Inc., CBS Corp. [
CBS], Hubert Burda Media Inc., News Corp. [
NWS] and Sequoia Capital, and by angel investors such as PayPal Inc.
founder Elon Musk and Union Square Ventures co-founder Fred Wilson. Sequoia,a top Silicon Valley venture capital firm, recently
warned its portfolio companies to prepare for an economic downturn (Sequoia's
Roelof Botha sits on Mahalo's board.)
Calacanis
's first business, Silicon Alley Reporter, crashed after the dot-com bust in 2000. He later launched Weblogs Inc., sold to AOL for $25 million in 2005. With Mahalo, he acknowledged underestimating the severity of the current crunch, which is hitting Internet companies dependent on online advertising especially hard.
"While I anticipated and prepared for the 'Internet winter" we're now facing (you've read my posts and e-mails about
the startup depression
I'm sure), I failed to realize how bad the situation would get. It's
much worse than I thought it would be, and ignoring market conditions
today would only mean deeper cuts down the road."
The cuts at Mahalo highlight the growing turmoil among some of the most prominent Internet startups, a number of which have recently announced layoffs. These include Gawker Media, Imeem Inc. Jaxtr Inc., Pandora Media Inc., SearchMe, Seesmic, Veoh Networks Inc., Wikia Inc., Zillow.com and Zivity.
-- Alain Sherter
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