Techcrunch, VentureBeat and others have been reporting on the lowering of VC confidence, layoffs by startups, and "batten-down-the-hatches" warnings by investors and VCs.


One Techcrunch report predicts the end of Web 2.0. Others are not quite sure it's the end of Web 2.0. Still, everyone seems to agree that change is in the air for Silicon Valley.

Kara Swisher at Boomtown makes this prediction about Web 2.0 startups:

" ... most will likely fizzle away quietly, with no exits in sight as the economy weakens and puts a vise grip on companies that cannot survive the very tough financial road ahead.

That means the popular Web 2.0 maxim of 'growth before profits' is in for a very bumpy ride."

She also goes on to report layoff rumors at Internet giants like Yahoo and eBay, not to mention various unnamed startups.

Another report has a prolific angel investor in tech startups, Ron Conway, emphasizing survival tactics until better times return: preserve cash by making cuts, try to find acquirors. All the usual cost-cutting and cash-preservation stuff. :)

And what about Main Street's small businesses -- all those NOT located in Silicon Valley and NOT on the Web 2.0 bandwagon? What do tough times in Silicon Valley mean to us?

Not much -- directly. The vast majority of small businesses are not Web 2.0 companies. Most of us already have profits as a goal and don't need angels telling us to suddenly focus on revenue and profits. In fact, the vast majority of us don't have investors and aren't looking for an exit.

However, economies are finely tuned ecosystems. Small businesses count other small businesses and startups among their customers. Take, for instance, marketing and PR agencies, which count those tech startups among their best customers over the past few years' boom time. Also consider technology providers such as hosting companies, software programmers, Web designers, and so on. All the smaller independent publishers out there could be impacted, too, just like after the big Dot Com bust, when all the startups that were the biggest advertisers one day just stopped advertising.

And there will be many others impacted. The rest of us as small businesses may feel the ripples of Web 2.0 startups that go under because we are all part of one business ecosystem.

So if you're tempted to feel smug because you were not part of the Web 2.0 excesses of the past few years -- don't! We're all in this together.

Big companies, if you're reading this, you can help a lot. Offer extended payment terms to startups. Partner with tech startups. Become their customers so they can start getting more revenue and drive toward profitability. In the end, we'll all benefit and you'll be touching more than a few Web 2.0 startups. You''ll have an impact on the whole small-business ecosystem.