Silicon Valley startups slash costs to survive in downturn

Silicon Valley is renowned for tech wizardry. But with the global economy sputtering and the valley's unemployment rate at a record 11 percent, many innovators are focusing their most creative energies on managing every penny. From venture capitalists on Sand Hill Road to techies bootstrapping new startups, business people are trying new tactics to control costs and survive what one techie describes as "the biggest economic smackdown of our lifetime." With money scarce, equity options are being re-emphasized as a form of compensation. Some tech entrepreneurs are negotiating creative business terms with lawyers, public relations firms and other vendors, including a wave of cheaper, on-demand back-office software services. A difficult economy, many say, presents opportunities as well as hardships.