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Summary:

Some young startups up north have downsized, John Cook of the Seattle PI reported this week. Layoffs aren’t peculiar on their own, but it seems that more than one company has let people go. It could mean — gasp! — it’s a trend. Blue Dot, the […]

Some young startups up north have downsized, John Cook of the Seattle PI reported this week. Layoffs aren’t peculiar on their own, but it seems that more than one company has let people go. It could mean — gasp! — it’s a trend.

Blue Dot, the social bookmarking startup that’s heavier on the social angle than others, told Cook it has cut its staff nearly in half, dropping four people. That company launched last summer on $1.5 million in angel funding.

Meanwhile, Vizrea, a digital media syncing and sharing service, is “significantly scaling back operations,” dropping half of its 16-person staff and expecting more cuts. It seems that it hasn’t been able to raise funding to compensate for its burn rate. Vizrea had also raised angel funding, $3 million.

Like most things in Seattle, both companies have Microsofties in their lineage. Some Venture Blog commenters suggest this could be the problem. Both companies also have quite a bit of competition in their respective categories.

But that theory won’t take you too far. In the same week, another ex-Microsoftie startup in a crowded market — social music service iLike (which we profiled at launch) — raised $13.3 million from IAC/Interactive’s Ticketmaster. Not to say money buys you everything, but that’s a big chunk coming from a good strategic partner.

So it seems we are reaching a time of reckoning. Let’s see how it all plays out in the new year.

  1. It’s now Two.OhOh time.

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  2. let’s see…12 people get laid off, and we now have a trend?

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  3. Poor revenue model, looks like bluedot is only source of revenue is ads.

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  4. Kevin Federline Friday, December 22, 2006

    @Alfred

    The Big GOOG has the same business model ;-)

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  5. It is about time.

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  6. The problem is simple. These businessese have no real business model. They get a few thousand users, slap some ads on the site, and expect the millions to roll in. Taking tons of money in VC will not create a good company without a solid business plan.

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  7. Do we see any trend, some of these so called web 2.0 sites are just awful to me.

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  8. @kevin federline.

    Yes, running ads is only one of Google’s revenue stream, the big bucks comes from selling ads. Ads revenue only works if you have traffic like Digg, Myspace, Facebook and not when you have 500,000 pageviews per mth

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