One of the worst feelings in the professional world is having to let people go not due to performance (that's easy) but due to financial constraints. I've been reading about the latest rounds of lay-offs in our sector and it's pretty sad.

It's times like this that I'm so glad we've decided to stay lean. Yeah, maybe a project gets delayed here and there but I'll take that over having to tell someone they lost their job not because it was their fault but because it was my fault for not planning properly ahead of time. It's just unfortunate that it took a soft investment market for companies to realize they should pay attention to pesky little things like revenues and/or profits. My personal philosophy has always been that if cash flow cannot support a full-time employee (salary, benefits, taxes, etc) PLUS at least 25%, then don't hire that person. If it's a revenue generating position, have the person work on commission until they generate enough cash flow per the last sentence. Maybe it's time start-ups began running their businesses like nearly all the other businesses out there (ie, make profits now) instead of waiting for that next round or the buy out.

I'm reading Jessica Livingston's "Founder at Work" book and one particular chapter is quite appropriate. It's about how Charles Geschke and John Warnock only needed about $50K to start Adobe and that shortly thereafter they got $1 million plus contracts from guys like Apple and others to license their printing software. Why don't entrepreneurs think like that any more? Build something, make more money than you spent building it, repeat. Maybe that's just too pedestrian for today's founders but that's one way to ensure your business is recession proof. Another great read is Paul Graham's article about starting a technology company during a recession.

For full disclosure, I sold every last stock that I owned right after the first dot-com bust in 2000/2001 so I never get overly excited or bummed when the market does well or not. I still track the usual suspects in my industry though and noticed an interesting trend. Below is today's results for Google, Yahoo, and Microsoft.

Not a bad day all around. But does it seem bad that Yahoo isn't rebounding as much as the others. Shouldn't a rising tide raise all ships? A more alarming stat is that since October 1st, Yahoo has fallen almost 38% while Google and Microsoft have fallen a little over 24% and 23%, respectively. I hope the folks over at Yahoo can pull through this. I think with 3 major companies in the online space, there will be more competition and innovation. I've always tried to stay loyal to Yahoo but gave up using their search engine a couple of years ago. Still have my My Yahoo page and like their Sports section and I'm sure their other properties are doing well. Still, they need to shore up their search technology and NOT do the Google deal as that is a slippery slope down to technology mediocrity no matter what they say. Given the choice every quarter of whether to invest in technology or squeeze out a few more pennies per share in earnings by using Google technology, I'd say most folks would take the easier path. Let's hope I'm wrong.