Ignoring Downturns Is Unhealthy And Dangerous

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Daily Crunch: Train in Vain Edition

Ok, here we go again. As soon as people get tired of blaming the venture capitalists for the downturn and layoffs, they start to point the finger at bloggers and journalists who write about them. In a blog post, SocialMedian founder Jason Goldberg criticizes us for our coverage of layoffs and deadpooled companies, saying it’s “sensationalist journalism,” adding “there’s no need to go tabloid when startups go sideways or don’t make it.”

Fred Wilson brought this up almost two years ago when he criticized our coverage of failed companies as well. A year ago Louis Gray said similar things. Our response is the same now as it was then: Don’t shoot the messenger.

Reporting on layoffs or a dead company isn’t tabloid journalism. We do not take pleasure in seeing companies fail. But it’s inevitable that most will. And not only is it news, but readers have a right to know about it.

I also think it’s important to look at the balance of our reporting, which focuses on the positive: new ideas, new technology, new startups and the success stories that follow. Nothing makes me happier than when a company that we launched on our blog, or at TechCrunch50, becomes profitable or gets acquired.

But when a company stumbles, it’s important to note that too, and talk about why it may have happened.

It’s also important to remember that real lives are being affected, notably those who no longer have jobs. In the U.S. there are very few restrictions on letting employees go, which allows companies the freedom to hire quickly in an upturn, knowing that they aren’t married to these employees forever and can trim down in hard times. But that doesn’t mean those companies shouldn’t have to think twice before laying people off (and over hiring to begin with). If they’re called out for it when it happens, other companies may weigh that cost and be more careful in the hiring to begin with.

To ignore layoffs and other bad news is to pretend that there’s no downside to starting a company, or going to work for one. That’s not the reality of startup life. And it would be irresponsible of us to lead people to think otherwise.

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