Fortunately for those laid off, there are probably still hundreds of other startups eager to hire them, so I don't expect these folks will be showing up in bread lines any time soon. But if the layoffs are relatively small, they are nevertheless symptomatic of a change in the economic climate. VCs invest for the long term, they will tell you, and they can ride out any temporary downturn in the market, even if it's a relatively deep one. Sure, the Mercury News just published the results of its survey of first-quarter VC investments in Silicon Valley, and once again the amounts of capital are breaking records. But that was before April.
Cautious investors mean cash flow problems for startups.
Of course, layoffs don't necessarily mean that things are going badly. In other words, an efficient economy is one where businesses actually get tested in the marketplace, and occasionally fail. So if the VC-backed carnival is winding to a close, maybe we can all get back to the work of building solid businesses. I was a bit taken aback by the question. But for a large part of the country, there has been little upside to this economy.