It's been interesting watching the blogosphere come to terms with the recession/depression over the past week.  With typical dot com speed, I've watched people go from denial to anger to bargaining to depression to acceptance, all within the span of a week.

Now that people are coming to grips with the reality of the situation, we can start to analyze it, sift thru the wreckage, and identify opportunities.  Denial is counter-productive.  Accept that the economic climate is not going to be good for several years regardless of what Tweedle Dee and Tweedle Dum (aka Bernanke and Paulson) do, take note of the new reality we're living in, and move on with our lives.

On that note, I came across this memo from VC John Borthwick of Betaworks to his portfolio companies, and there are some real gems in here that I'd like to comment on.

I had been using Disqus as my comment provider since I redesigned my site.  I really like having threaded comments, but I decided to ditch them, for two reasons.

• They store all the comments in their database, and generate the display in my pages on the fly.  That means that comments ultimately live on their servers, which means if they ever go down, or something happens to the Javascript in a visitor's browser, my comments go down.  It also means Google can't index comments.
• I can't see a good business model for them.  This is made more troubling because of #1.  If they ever croak I anticipate nothing more than an email saying "We're sorry but Disqus is no longer able to serve your comments it's been a pleasure serving you have a nice life"  As nice as they might be, making sure my comments are preserved will be the least of their worries at that point.

Like I said I really enjoy the output of the service, but with the current economic environment I just can't put myself in the position of relying on a company with no real revenue model that I can comprehend.  I don't think this is just Disqus, either.  I would like to use Seesmic video comments too--but again, if they ever go out of business (and they just laid off a handful of people) then I would assume that all the content they host goes to Web 2.0 heaven with them.

Nothing against the service or the company, as I said I've been happy with the results.  But I suspect you will be seeing a lot more people hesitant to rely on 3rd parties to host their content as the Depression unfolds.  This really all goes back to what I've been calling the SaaS trust issue--how much can you really trust your critical service providers, and how much will it cost if you get that bit wrong?

I remember when I first started blogging in 2006 or so and there were all kinds of cool things to write about, all the time.  This was only a couple of years ago, but there were great new innovative ideas popping up on a weekly basis.  Comet, microformats, Live Clipboard (R.I.P.), Gmail, Amazon S3 and EC2, OpenID, and the list goes on.  In the years since, some of the ideas flourished while others died.  In either case, it was great to visit  TechMeme and see new ideas being discussed, with bloggers weighing pros and cons and contemplating the future.

SAP announced that it was going to miss its third quarter targets.  Henning Kagermann, SAP's CEO, had this to say:

Color me unsurprised.

The reason I bring this up is because I suspect we are going to see a lot more of this.  SAP has two things working against it:  an expensive premise-based model that requires big capital outlays and large staffing requirements, and steep (STEEP!) price tags.  Businesses typically acquire loans to fund both, and loans are nowhere to be found right now.  Banks are hoarding cash because they don't know who to trust.

As I wrote before, I expect the deflationary credit collapse we're in the midst of to do bad things to enterprise software companies' bottom lines.  However, there are opportunities in the midst of the chaos.  As I said when talking about the effect the recession will have on IT spending, companies that take advantage of cloud-computing and Software as a Service models should do well.  In fact, they should turn a pretty penny cannibalizing companies like SAP which need financing to survive.

The ideal solution would be for our government to fix the problem, but that doesn't seem to be in the cards. All they have to do is force companies to bring everything back on-balance sheet, force all credit default swaps onto regulated exchanges, bring back Glass-Steagall, and outlaw this ridiculous Level III asset crap.  As I've said all along, this is a TRUST and TRANSPARENCY problem, not a liquidity problem.  But that would instantly expose many zombie banks as dead, and those banks pay for our Congress' campaigns, so I expect to see the carnage continue.

I have tried to stay away from political posts as much as possible lately, but this is just so outrageous that I have to spread the word on this.

Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.