More job cuts hit Silicon Valley: Zivity and hi5

Even as the startup world watched bubbles popping in other industries over the past year, we hoped it wouldn’t hit us quite as hard. But it looks like we were hoping in vain. During the past week, a number of startups have announced job cuts as they prepare for what will likely be a long recession.

Here are latest two that we’ve heard about. Zivity, an adult-focused social network featuring tasteful photography of female nudes, has cut a third of its staff:

Co-founder Cyan Banister says that cuts were made across the board, and that the layoffs are a preventative measure that will ensure the company’s sustainability over the next few years as it has become much more difficult to raise further rounds of financing in the current economic climate.

Hi5, the third-place social network in the world, according to comScore, has also cut up to 15 percent of its 110 positions — although it is also still hiring. The company tells TechCrunch’s Erick Schonfeld that it “should not be lumped in with other startups that are cutting back right now in order to lower their burn rate and survive longer.” Hi5, popular in Latin America and various other countries around the world, saw growth surge over the last year, nearly doubling to 56 million in August from 32 million a year earlier.

We’ll continue covering how Silicon Valley retrenches to survive the coming years. For more, see our past coverage of cuts at Sequoia-backed Jive Software, at Seesmic, and at Tesla as well as Skyrider’s closure.

On a more personal note, there is no joy for me in covering this news. I grew up in Oregon in the ’80s when the timber industry disappeared and recession wracked the state; my parents were unemployed for a few years after my dad lost his produce store. I have some idea what it’s like for those who are losing their jobs, and for their families.

Let’s hope that the pain today at least leads to survival. As slide 49 from Sequoia Capital’s now-infamous presentation on the downturn illustrates, above, cutting early helps avoid out-of-control problems later on, and instead positions companies to continue growing.

Startup executives, looking for how to make your business prosper during the recession? Consider attending our conference on the topic, October 29, 2008, featuring input from leading Silicon Valley thinkers.

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About the Author, Eric Eldon

Eric currently covers digital media technology and business news, especially what's happening on social networks and their platforms. He also writes and edits stories about venture capital, and lots of other stuff, too. He started at VentureBeat in the spring of 2007, half a year or so after Matt Marshall left his reporting job at the San Jose Mercury News to found the site. Eric previously cofounded a startup called Writewith, that was building editorial software for newspapers and other groups of writers. The startup didn't work out, but he learned a lot.

  • I met Cyan down in Hollywood and she struck me as a can do kind of chicky-dude (no slander meant, I call my daughters chicky-dudes and I hope to help them take over the world someday and rule with an iron fist) that speaks soft in-order to throw you off guard and then she hits you with the brain power. Odd business model but they are making money.

    This “Was that my out loud voice?” moment brought to you by:

    Michael Kassing
    MarkTend.com (decidedly unsexy except to Trademark Lawyers)
    http://marktend.com
  • Hey Michael,

    Your comment totally made my day today. Thanks!
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  • good view, eric. think VB crossed chasm with grey lady deal, but wonder if redmond is chuckling at the fact that one powerpoint (and one vc firm) probably woke up a lot of these folks averting their eyes like it's Q3 2000. and just me, or is zivity (a "blue" social net) being run by "Cyan" either a great eponym or a great pen name.
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    Thanks for sharing with us
  • Hold on tight. It's going to be quite a ride. People shouldn't live with their families' futures impacted by poor management at the company they work at, Wall Street, etc. Consider alternatives and the possibility that you can be self employed. Entrepreneurs are developed, not born. www.LikeSoup.com
  • Simon
    Most people that were laid off remain hopeful. There are many good jobs posted on employment sites - links found on About.com:

    http://www.linkedin.com (networking)
    http://www.indeed.com (aggregated listings)
    http://www.realmatch.com (matches you to jobs)

    Good luck!
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    The economy in the UK seems to be taking a turn for the better. Lets hope this is a sign that we're over the worst of these difficult times.
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