San Francisco start-up Seesmic laid off 18 employees this week

Why so much sympathy for Loic, and not for people being laid off? Loic will be fine. He didn't burn his own cash, he burned VC and angel money. And given that he already has success track record, his reputation will not be damaged too much.

I hope those 18 guys were working for market salary, and not for some equity/options schema.

Otherwise, it's 18 more people that learned the hard way that it doesn't pay taking risks and salary sacrifice if your are not the one that makes decisions, and will avoid working for startups in the future.

Nope. That's part of the risk assumed by investors.

Plus "you can't get blood from a stone"---how much of that money exists that they could pull it out? And whose money is it exactly when you have multiple investors? At best they would only be entitled to a fraction of a fraction.

It would also set a bad precedent for companies they've invested in if startsup are not allowed to adapt because they'd lose funding, making it more likely that investments fail due to stagnation.

With promises of mounds of equity and hoards of cash?

Startups are inherently risky. Loic made a very difficult decision (layoffs are hard). I am sure when he first hired those people it was in good faith. No one wants to fail.