I have a lot of respect for Jason Calacanis.  For that reason, this was hard to read...

Jason Calacanis' Wikipedia-for-profit Mahalo laid off 11 of its 20-to-25 member editorial staff and two developers yesterday, says a former employee. The source tells us some of the positions will be rehired in the Philippines. About 10 Mahalo employees in administrative and executive positions remain based in Santa Monica.

Anyone whose followed this blog knows I'm not a big fan of the "pre-emptive lay off" strategy and this is no exception (and I know I've covered it too much as it is so this will be the last time for a while).  But before getting into this I need to take a Brief Trip into the Macro Economics of Things.

Things to remember...

• As of October 7th, 15 days ago, the Unemployment rate was 6.1% which was the exact same as it had been a month earlier (and only 2.2% higher than the lowest rate recorded in my lifetime)
• As of September 30th, 22 days ago, Consumer Confidence had inched up from 58.5% to 59.8%.
• As of August 28th, 54 days ago, the U.S. GDP was UP 3.3%

But more important than those figures is one fact: There isn't a fundamental flaw in the economy.  What I mean by that is the current crisis was created by people getting loans they shouldn't have which caused undue risk in the financial sector and an overvaluation of assets. 

What we are seeing now is a correction of those overvaluations and the corresponding downward trend. Losing that chunk of perceived value will almost certainly cause a recession.  But once everyone shakes it off and comes to terms with what's happened the essential functions of the economy are still in tact (provided people are willing to grant credit which the Governments of the world have all but said they'll personally back if necessary)

What that means is we won't know how big a mess we're in until everything settles 6 months from now.  Which, coincidentally enough, is when businesses actually start seeing an impact on their bottom line.

Now Onto The Micro...

Businesses should make decisions based on their own unique circumstances.  Because there is no telling how macro economic issues will impact any given business.  There are millions of cases of businesses that not only succeed but grow and prosper in hard economic times.

Getting back to Mr Calacanis, he told Silicon Alley last month that he had enough money on hand to make it at least 4 years.  In his blog post today he says the layoffs bought him another year without any ad revenue whatsoever.  So basically he's firing people so he can make it to 2013 without any revenue.  To me, that's ridiculous.

What if they start making money 6 months from now?  What if the recession is shallow and the economy itself has recovered in 6 months?  The economy was sound a month ago, the fundamentals of the economy haven't changed, so whose to say it won't be fine 6 months from now?

Isn't it worth waiting until we see an actual down turn before firing people?  Ask yourself, is an extra 6 months in the year 2013 going to be so significant to Mahalo that they need to rush into action now?