Well, things caught my attention after I viewed Loic’s seesmic post on their decision or sad news relating to reduce the number of team members which I think now would be around 13 personals. On the other hand, Om’s NewTeeVee reported that similar actions was taken by FastCompany, leaving behind Scoble alone.

Now, why such things can happen. Simple. It is an usual practice for angel investors in the U.S to pump in money into startups and pump them up with high spirits, which eventually leads the startup founders in increasing employment rate etc, without focusing on revenue and expenses. 

Revenue may come in 2 or 3 years later, that’s not the worries of a Founder, nor for an investor at the beginning, which is bad(a trend). On the other hand, raising funds in large amounts often, increases all those cash flow, productivity etc, but in a bigger picture, you are calling your self to a downfall. As there is a serious economic credit crisis around the corner. And when your investors realize there is an economic crisis ahead, they refrain from increasing your funds to operate! That calls for job retrenches! Companies are forced to cut cost and to prepare them selves for the future.

On another note, due to people raising funds blindly, I have a feel, this is also a contribution factor to a credit crisis occurring besides loan mortgages and so on. (sorry for the off topic issue)

This type of culture that has grown among the U.S. startup though has some benefits but there are occasional blind spots. My advice, if you were a startup and seeking for crazy funding, Stop. It’s not that easy as it used to be. What you should do instead, just like any small business or sole-proprietorship, run with a simple capital and run the business along your profits & loss. Work with smaller amounts of cash flow at the begining. Hire people at a slower rate. Increase productivity progressively. Overall grow slowly. There is a saying, “If you grow to quick, you might hit a downfall.” Do not depend on your Investors!

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