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More Job Cuts Hit Silicon Valley: Zivity and Hi5
Even as we in the startup world watched a series of bubbles pop in other industries over the past year, we hoped it wouldn’t hit home so hard. But now the job cuts have arrived, as startups prepare for what is likely a long recession.
Here are two latest ones 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 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 Jive Software cuts and Skyrider’s closure. On a more personal note, there is no joy in covering this news. I grew up in Oregon in the 80’s 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. Let’s hope that the pain today results in success. As slide 49 from Sequoia’s now-infamous presentation on the downturn illustrates, cutting early helps avoid out-of-control problems later on, and instead positions companies to continue growing.
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