What Not to Do in a Downturn: Lessons from CEOs

No doubt that in today’s uncertain financial climate, the work of startup founders and CEOs has grown exponentially more challenging, with every major decision akin to an absurd minefield. Communicating such decisions to outsiders can’t be a walk in the park, either.  Easier to identify are several ways not to discuss such developments, like:

Fire people, then advertise your own glamorous life to the world.

On October 26, in a landscape piece about belt-tightening, the New York Times featured Loic Le Meur, chief executive of the San Francisco-based video blogging service Seesmic, observing his “lone goal” of survival. Le Meur told the paper that to make stretch the $6 million it raised in May, it recently laid off seven employees, or one-third of its staff. “If I can’t make this work in three years it will be a failure,” Mr. Le Meur said. “If I can and I get through this, it will be much stronger.”

Le Meur’s battle for survival would be more convincing if he would stop Twittering about his international travel schedule, including stops in Berlin, Paris, and Tokyo. In France, he mentioned a “meeting every hour or so,” and he’s in Japan to attend a conference. But Le Meur also talked of meeting up with friends at the “Elysee,” posted about his sushi outings (“aux foie-gras French Japanese fusion — hated it”), and is clearly having fun in Tokyo this week, where he was photographed being giddily prodded by waitresses and someone dressed like a Stormtrooper at a Japanese “maid café.” (The pictures are on his Facebook wall.)

Tell reporters you don’t need the money you just raised.

Earlier this week, after profitable, do-it-yourself book publishing company Blurb raised a $5 million C round, its CEO, Eileen Gittins, told VentureWire that “[Investors] wanted to put more money to work. We didn’t need the money, but a little insurance in the bank is nice.”

Fine for Blurb, but if I were an LP in the funds of Anthem Venture Partners or Canaan Partners, which had already given Blurb $16 million, I might find myself wondering: what the &%#@ are they doing with my money?

Beg your audience to finance you.

Yes, National Public Radio does it all the time, but Mobuzz, a Madrid-based video blog about technology and culture, is no National Public Radio. Far from an organized fundraising campaign, it posted a video several days ago, saying that it needs money in one week or it will have to shut down.

The founders say that by supporting the startup with just five euros, “you can become a part of Internet history.” More likely, your five euros will be history. (The site, which features five video posts every day, costs $50,000 a month to run.)

Try to brown-nose Valleywag.

When Nick Grouf, the CEO of advertising tech startup Spot Runner, called Valleywag editor Owen Thomas the other day to get out in front of a big layoff (115 people were canned, following 50 layoffs in August), Wilson ripped him a new one for his attempt to spin what had happened. “When he wasn’t sounding like a get-out-the-vote robocall, Grouf did a decent job of feigning optimism,” wrote Thomas.

It could have been worse.