Seesmic layoffs and a new reality?

Valleywag's somewhat unkind depiction of the layoffs at Seesmic: Seesmic's newest feature: layoffs is but the latest in an emerging trend of Silicon Valley startups reigning in their spend. Over in Denmark, a remarkable account of failure has emerged. Earlier this week, I debunked some of the talk around ROI, scalability and sustainability while over at Mashable, Mark 'Rizzn' Hopkins takes a long winded way to say what many of us inside the enterprise have known for a long time: The Wisdom of Crowds - at least as re-interpreted by many in social media - is nonsense. Along the way, he makes a number of interesting points. This caught my eye:

Crowd wisdom has this sort of philosophical feel that “cloud computing” does. It’s a catch all term that broadly describes the bulk of what’s produced in the Web 2.0/social media world. I think the best thing that can be done to solve the problem is for a more thorough understanding of crowd wisdom to be kept in mind by those who design these systems in the first place (that is, if they are designing these systems to be anything more than white-noise generators).

Buzzword bingo has been with the IT industry more years than I care to remember, predicated as it is on the idea that what catches on as a trend is indicative of the fashionista nature of the biz. You sure as heck don't find any wisdom there. On this occasion I suspect that much of what we're seeing in the new critiques is exposing the poverty of social media I wrote about in April and kindly reminded by John Reed. At the time I said:

In any business, power relationships are what provide the hidden glue that makes organizations develop hierarchies and structures. We see this reflected in almost every major form of software you care to examine. From process workflows that mange order to cash, through problem resolution in the call center and out to procurement. We have baked those relationships into the structure and organization of everything we see as providing the means of operating successful businesses. Then all of a sudden, business leaders are asked to forget everything they know, accept that structures can and will be subverted but that it will all be OK because people will naturally want to collaborate to get things done. This is a fundamentally incorrect assumption.

If my observations about the way structures operate in the enterprise is correct, then my remarks of six months ago are equally valid today. Add in recent events in the financial markets and it is easy to see the ripple effect of a cold winter of investor retrenchment coupled to a re-examination of some of the more outlandish claims made for SocialAnything. It can't come a moment too soon.

The firehose blast of half baked pseudo science that pervades so much of social media blogger diatribes has reached the point of drowning in its own stupidity, especially as it applies to the enterprise. More to the point, the fact Mike Arrington appeared to be nursing the hangover from hell following the TechCrunch 50 tells me one thing: the party's over. I hope all those advertising based startups are watching carefully. Which begs the question: quo vadis?

Jason Perlow talks a lot of sense about SMB saas, virtualization and consolidation of the data center, concluding with a question:

Will the economy force us to do more with less and use radical enabling technologies to help us accomplish it?

Clearly it will. That should benefit the innovators, especially the saas business apps operators who are prepared to charge for their services. I'd go further and say they have little choice. As the investment dollars dry up, you either sink or swim based on your ability to generate enough sales to cover costs. Charging models that make sense to the enterprise must come onto play. It is therefore no surprise to see more services coming out the gate with a charging model. Good for them. Equally, it is good to see Seesmic finally getting ready to open up a revenue generation steam. Not before time and back to commercial reality.

UPDATE: Duncan Riley says in relation to the Lehman Brothers' collapse:

Across the country, Silicon Valley may seem far removed from the mess. The startups in Palo Alto go on, and on Sandhill Road, the VC’s are still turning up to work. Although we may not see the links to Wall Street on the surface, they are strong, and Silicon Valley is not immune to the crisis.