No, not the Mustafa Kemal Atatürk nation. They have their own communities. But Mechanical "Turkers"?... better than Mechanical Turkeys, I suppose, have a community: Turker Nation. Everything for requesting and providing services using the Turk.

We look forward to the day that Mechanical Turk has their own eBay Live-like convention. Even more, we look forward to the day when they stop holding the convention because it has grown too large and unfocused. Then the Turk will have truly arrived.

The author topped out at $0.50 for users to hold up picture of them with a sign. But that only got him 20 submissions in two days. One can imagine all sorts of interesting experiments along these lines. File this one away for future use.

Our position is that the only problem with virtual sweatshops is that there aren't enough of them. Still, Katharine Mieszkowski's article for Salon on Mechanical Turk is a light, but interesting read; rightly pointing out how tight the economics are for anyone hoping to make a living from it in a Western country. But, this being Salon after all, it adds the "contractually required" shout-out to their anti-sweatshop readership.

To a labor activist like Marcus Courtney of WashTech, a tech workers union, the whole arrangement represents a dystopian vision of a virtual sweatshop. "What Amazon is trying to do is create the virtual day laborer hiring hall on the global scale to bid down wage rates to the advantage of the employer," he says. "Here you have a major global corporation, based in the United States, that's showing the dark side of globalization. If this is Jeff Bezos' vision of the future of work, I think that's a pretty scary vision, and we should be paying attention to that."

And

Rebecca Smith, a lawyer for the National Employment Law Project, seconds that. "The creativity of business in avoiding its responsibility to workers never ceases to astound," she says dryly. "It's day labor in the virtual world." Smith sees Mechanical Turk as just another scheme by companies to classify workers as independent contractors to avoid paying them minimum wage and overtime, complying with non-discrimination laws, and being forced to carry unemployment insurance and workers compensation. "It's an example of cyberspace overtaking a country's labor laws," she says.

Take as given a recitation of the endless, economics debates here. If you aren't convinced already, you will have to wait until you come back to life as a developing-world peasant farmer to achieve enlightenment.

Last week’s doom & gloom CEO summits, venture capitalist advice and angel investor emails have shown how broad the sentiment is that Silicon Valley is going to go through a major business downturn. Taking the downturn as a given let's look at what you need to create an action plan on how to survive and prosper; it isn't enough to just cut costs and increase revenue.

In my 12 years in Silicon Valley, I’ve experienced the tough choices that have to be made for companies to survive. From restructuring my own venture backed company to being a senior executive as a public internet company during bubble 1.0, I’ve seen everything from multiple rounds of lay offs (the proverbial death by a thousand cuts) to default notices from venture debt providers to renegotiations with VCs and service providers. It can be a long tough road but it pays off for the survivors.

Below is a 7 step action plan for cost cutting and restructuring. No matter how my business was doing, I would take this opportunity to go through each of the seven steps and rethink people, expenses, processes and economics.

1. Discontinue All Unprofitable Sales & Marketing Activities There is a very simple formula to determine what sales & marketing to keep or turn off. For marketing programs, if they are not ROI positive today, cease them immediately. For sales programs led by sales people, it’s a similar formula: Take the revenues brought in by the salesperson then subtract her salary, commissions, taxes, benefits, etc. As long as that person’s total compensation is substantially less than the sales he brings in, keep him. Otherwise, you’d be better off losing the sales in the short to medium term and conserving the cash.

2. Stop Focusing on Product I know this is going to be antithetical to many start up CEOs. However, your VCs are focused on revenue and profitability right now. Hence, this is probably not a great time to heavily invest in the product unless you think those investments will pay off in near-term revenue.

   What you probably need at this point is a product person and a small team of engineers to maintain the product. Yes, I know how hard you worked to build a great engineering team. I did it too and when I had to let my engineering team go, I was in shock. It took me so much time and so much recruiting money to find a decent engineering team, it was difficult to even think about downsizing. Unfortunately, I couldn’t ignore the hard facts necessitating cash preservation. And frankly my users were more concerned that I could keep the product that I had running, rather than trying to improve it with an end result of not having it at all.

3. Reduce Headcount Cutting staff is the hardest thing to do but it’s the most vital as well. Be bold. If you think you need to cut 20% of your work force, then cut 35%-40%. I’ve never seen a situation where I thought I cut too many people. Instead, I’ve had experiences where my superiors weren’t bold enough and we ended up doing layoffs four times within a few months. This was bad for morale, the bottom line and for the business.

   If there are a few folks that you think you could use short term but don’t really need in the long term, give them notice now but let them have a transition period. You don’t want to be faced with another round of cuts in a month or two.

   Outsource whatever tasks you can. Hire contractors - although some may seem more expensive than employees, you don’t pay them benefits, taxes, vacation, etc and you can let them go at anytime without the guilt of not paying them severance.

   You can also use this opportunity to upgrade your team. Take a few months, see how you do with a smaller team and if you have the luxury to hire again, you will probably find some great people.

4. Keep the “Do-er” Employees What employees would I keep? I would keep the do-ers. The people who actually are on the front lines running the business day-to-day. People who are working with the customers, partners, vendors, etc. The ones that make stuff happen in the company.

   In today’s market, you don’t need a lot of senior people to ‘strategize’. You need people who are heads down executing. Specifically, in addition to the small engineering team and profitable sales people, I would keep some customer service reps, and a finance person who can aggressively renegotiate contracts and hawkishly watch the bills and cash burn.

5. Renegotiate Contracts / Cancel Services Review every contract. Don’t assume that you’re stuck with long term contracts. Any deal can be renegotiated. Determine what your leverage is and how you can use it. From my experience, partners and service providers that agree to renegotiate sooner rather than later usually get the best returns.

   For services and partners that you no longer need, cancel them immediately. Do you really need that phone system? Are you using Omniture or can you just switch to Google Analytics? Do you need those additional seats in the CRM system? Is the SEO consulting firm making a real impact on your rankings? Do you have too much space for staff? Should you consider subletting? Ask the questions.

   For early contract cancellations, negotiate early exits even if you have to pay a bit upfront to get out. My general strategy has always been to explain to the partner that that they are lot better off getting something today then nothing tomorrow (and yes, that is a real possibility).

6. Stay Ahead of VC Debt Issues If you don’t have any VC debt, you can skip this section. But I know many start ups today have VC debt, as I did. And you will have to deal with the consequences of having debt obligations as I did. When I told my debtors that I was no longer looking to raise another round of financing for my start up, but rather wanted to restructure the business to make it more viable, my top tier VC debt firm that was recommended by my VCs, sent me a letter of default and froze the company’s cash. I worked it out with them but it was a tough road and forced me to make decisions for the company that I wouldn’t have made alternatively.

   So many startups today have VC debt and with an environment where the VCs are publicly telling everyone that it’s going to be tough for startups to raise funds, the companies with only a few months of cash could be in some trouble from their debtors. Technically, if you or your investors think you can’t raise more money to keep the company in business, the debtors could determine that your business has had a material negative change and could ask for their money back.

   If you accept that theory, many VC debtors could start getting really nervous about their investments and start taking a much closer look at their portfolio and asking some pretty tough questions. Some of them may have the right to pull their funds. If you fit this category, engage your investors in talks with your debtors. Create a plan that will make your investors and VC debtors feel comfortable with your ongoing strategy but whatever you do, don’t sign away rights to your IP.

7. Know Your Cash Position & Stretch Out Your Payments to Vendors Since cash is king so track your cash balance daily down to the last dollar. That means track uncleared checks, upcoming obligations, cost cutting expenses, etc. Extend payments to your lawyers, accountants, and other service providers who can afford to wait a month or two to get paid. Turn your payments into a net 90 payment cycle rather than a net 30. They can afford to wait and you can increase the flexibility of your cash flow.

Going through this action plan and doing everything on it is not easy. It emotionally heart wrenching but it has to be done if you want to come out on the other side and in one piece. You have to believe and make your team believe that this new thinking will make your company stronger and more efficient with the best chance for future success.

Not specifically on-topic, but it is always good to see someone taking a stand against legal blackmail Too often businesses settle to avoid the hassle of a court case, much less the possibility of losing even when the accusation is baseless. The whole system, from top "practioneers" who go after large companies (read deep pockets) and who may be considered presidential material on down to ambulance chasers, is corrupt and in need of massive reform.

It's a cost of business we could all do without.

According to a study discussed in Slate, if you are under water on your home, you are less likely to relocate for a new job until you are foreclosed.

[this] recent study by economists Fernando Ferreira, Joseph Gyourko, and Joseph Tracy finds that homeowners who have "negative equity" in their homes—that is, a mortgage that exceeds its resale value—are 50 percent less likely to move than those who can afford to pay off their mortgages with a home sale.

The result being that not only will capital makets be effected -- harder for businesses to get financing, but so too will labor markets. Workers will be stuck in areas where capital may be even scarcer and unable or unwilling to relocate to areas that are still functioning.

The authors calculate that every two years, about 12 percent of home-owning Americans moved. But for those with negative equity—about 2.6 percent of respondents during the 1985-2005 period of study—the probability of moving is cut nearly in half.

Which, I suppose, unfortunately, just reinforces the fact that the home work trend should be better off than ever. If it doesn't matter where you live, you can "happily" stay put in undersea home while continuing to work remotely and waiting for flood waters to receed.

A great book, Cool It: The Skeptical Environmentalist's Guide to Global Warming, delivering calm, rational, non-hyperbolic alternatives to dealing with issues related to climate change. Bjørn Lomborg delivers points that, at a minimum, any serious person thinking about global warming/cooling needs to address and rebut, before continuing down the path of blanket CO2 reductions.

What does it have to do with home work? I could probably gin something up, but really I just like the book.

That's our national investment banking strategy... not losing their own shirts so much, but your shirt. Well you weren't really planning on wearing it anyway, were you? For anyone who hasn't read Nassim Taleb's book The Black Swan, it is well worth the effort. It shakes the foundations of much of what we assume about how the world works. Working from home may soon be your only option (just kidding, I hope)!

A current essay The Fourth Quandrant: A Map of the Limits of Statistics, a bit heavy going at times, continues the discussion and addresses some of the current financial banking mess.

[In discussing] the fate of close to 1000 financial institutions (includes busts such as FNMA, Bear Stearns, Northern Rock, Lehman Brothers, etc.). The banking system (betting AGAINST rare events) just lost > 1 Trillion dollars (so far) on a single error, more than was ever earned in the history of banking. 

I'm not worried though. I have my head buried deeply in the sand.

I've never been totally clear as to why this kind of thing --an umbrella organization for independent contractors that would allow them to get health insurance, etc. -- would not work in the US. Apparently quite successful in the UK but non-existent? here.

I recall hearing that eBay looked into offering something along these lines for their top eBay sellers but abandoned the effort perhaps due to excessive state and local tax issues.

Still seems like something worth pursuing... maybe it could be rolled out on a state-by-state basis.

There has been speculation around the valley that a downsizing has been in the works, as well as that they might delay it to avoid causing Meg (and thus McCain) political trouble. Of course, on a day like today, who would have noticed!

Clearly eBay is struggling to see where their future growth is going to come from. Even if their core business is just fine, in cutthroat Silicon Valley stasis can feel like death.