About 500 people converged this week on the AlwaysOn Venture Summit West at the luxurious Ritz Carlton hotel in Half Moon Bay, Calif. Apparently shell-shocked investors, venture capitalists, and entrepreneurs still want to commisserate and await the upturn in a group setting.

The conference itself is a kind of barometer of the economic downturn and what its impact will be like for Silicon Valley. After sitting through the survivor tales at the conference for a day and a half, I can share my impressions of where things stand in what we might later call the Cosmic Collapse of 2008. (Sounds worse than the Great Depression, right?).

The messages about how to survive in the downturn are becoming familiar homilies. At AlwaysOn, I heard these ones over and over: Innovation lives on. Companies need to batten down the hatches, Sequoia Capital style, but they should spend what it takes to innovate their way out of the storm. Be capital efficient. Focus on what you do best and cut out the rest. And (my personal favorite from angel investor Ron Conway) if your company doesn’t have a year of cash in the bank, you’re in intensive care unit.

“This economic drought is going to last at least a year,” Conway said. “If you don’t have a year of cash, you might as well shut down.”

Opinions differed on how long the down will last, ranging from predictions of a recovery in the third quarter of 2009 to bleaker assessments of a three-year to four-year downturn, said Tony Perkins, head of AlwaysOn and organizer of the conference. Valuations of start-ups have been slashed and venture capitalists have engaged in portfolio triage. But there are clear bright spots such as cleantech firms, he said.

Paul Kwan, managing director at Morgan Stanley, delivered the bad news in an opening talk on Tuesday. He said that the S&P 500 gained $3.5 trillion in the six years that ended October, 2008, but the index has lost $2.5 trillion in value since October. He rattled off a lot of bleak stats — initial public offerings are down 94 percent in 2008 — but he said that liquidity is returning to the credit markets in the past days.

He believes that ad-spending will not crater entirely. Rather, he believes it will follow the pattern of the gross domestic product, recovering as GDP does. He thinks signs of recovery will be evident in two or three quarters. On the bright side, Kwan ticked off a bunch of reasons for optimism, including the fact that digital consumer Internet traffic is expected to surpass business Internet traffic for the first time in 2008.

Moreover, he said investors can find gems by paying attention to alternative metrics, aside from profitability, that are associated with high growth companies. As an example, he said that companies can calculate the lifetime value of a customer. That number will show why it’s justified early on to spend more money acquiring customers than they generate in revenue.

Jeff Matthews, a partner at RAM Partners, said that it will probably take a high-profile IPO to bring the confidence back to the tech sector, much like Google’s 2004 IPO brought back optimism to Silicon Valley after the “nuclear winter.”

While IPOs are down, there are still a lot of companies that have filed registrations for IPOs and are awaiting a better stock market. That means that there are a lot of healthy private companies out there that may be looking to go public in 2009 or 2010, said Lise Buyer, founder of the Class V Group.

“We shouldn’t underestimate what a huge disaster the economy is,” Buyer said. “But the only way to get out of a disaster is to innovate.”

Sequoia Capital’s warning to its portfolio companies was a common point of discussion. Buyer said that the presentation was meant to scare companies into contemplating what is next for them if they cannot secure another round of funding.

Ivan Brockman, senior managing director at the private equity firm Blackstone Group, said, “The 2001 bubble era was about growth at any cost, not growth balanced with cost. That was the point of the Sequoia presentation and it has gotten across.”

Josh Tanzig, managing director at Revolution Partners, said that early-stage companies are raising $2 million to $4 million extra now because of a concern that the next round might not come so easily. Angel investor Jeff Clavier said that he believes that companies can stay in business longer on a shoestring budget because it’s cheaper to operate Internet companies, at least in comparison to the 2001 downturn. Conway said that the quality of deals coming to him is still high caliber and his pace of investment is the same.

Corporate venture investors such as Microsoft, Google and IBM said they have been buying or investing in a company a month and that they expect they will continue to do so in the downturn.

While big corpoprate investors have the upper hand in valuation assessments now, they aren’t being so hard nosed as to wait for start-ups to go bankrupt before making a bid. David Lawee, vice president of corporate development at Google, said the key talent which the big company wants to acquire would walk out the door before the transaction closed. While valuations have dropped and that has made it hard for two sides to come to agreement on valuations, Lawee said that the best companies still command high prices.

Peter Nieh, a partner at Lightspeed Venture Partners (who has his own blog predictions about cleantech today), said that cleantech is a bright spot but investments will slow in 2009, forcing start-ups to find creative financing.

He said cleantech is often capital intensive and that small companies should think about doing joint ventures with big ones to defray the capital costs. He also held out hope that the Obama administration may set up a venture-like arm of the federal government to invest in cleantech research that is harder for private companies to finance.

Cleantech is likely to catch on first in emerging markets, not mature markets, for the same reason that cell phones took off faster overseas: everyone in developed countries had land lines, so it was easier for the emerging markets to adopt new technologies such as cell phones. Similarly, countries that are building new structures or entire cities are likely to build them with more energy efficient technologies. And Nieh thinks that investments in over-funded areas like solar cells will lead to more investment in fresh areas like energy storage.

Steve Jurvetson, managing director at Draper Fisher Jurvetson said that his own cleantech investments aren’t dependent on oil prices staying high. So even though they have fallen, he said . He said he is optimstic that the combination of genetic engineering and cleantech concepts will result in plants that take fewer resources to cultivate and thus don’t consume as much energy in their production.

Among the pitches that resonated was one from oDesk, a Menlo Park, Calif.-based company that creates a marketplace for online work teams. Its web site enables companies to hire freelance talent on demand, manage them, watch exactly how much work they do, and then pay them accordingly.

Gary Swart, chief executive of oDesk, said the company eats its own dog food. It has 23 employees, but much of the work is also done by 43 contractors around the world who cost less than $800,000 a year. The site has 15,000 customers and there are 46,000 jobs listed on it right now.

Outsourcing technology startup oDesk has raised a $15 million third round of funding led by DAG Ventures.

Menlo Park, Calif.-based oDesk allows companies to hire technology “providers” like programmers and web designers, and it provides companies with the technology to monitor those remote employees. Chief executive Gary Swart says the need for such a site is growing, as the number of companies looking to outsource some tech work and the number of workers tempted by the flexibility of remote, outsourced employment are both on the rise.

ODesk is best-situated to take advantage of that growing interest, Swart says, because it’s the only company whose service handles the hiring, management and even the payment of outsourced employees. Sites like Rentacoder.com and Elance function more like marketplaces without the management or payment components. That works for small, fixed projects, but creates problems for more long-term hiring or when you want to integrate the outsourced employees into your team. Swart offered some pretty compelling evidence, too — comparing the highest-paying jobs on Rentacoder, Elance and oDesk (in oDesk’s case, the numbers are presented through a cool feature called oConomy), it’s pretty clear that the top end of oDesk jobs offer more money.

This round was actually unsolicited, Swart says, because oDesk still had around $3 million of its $8 million second round in the bank. (In fact, oDesk controls costs by using its own technology to manage 41 contractors.) But DAG’s offer, along with the fact that the venture firm didn’t insist on taking a seat on oDesk’s board, was too good to pass up, he says, and it will mean that the startup doesn’t have to look for funding later this year or early next year, freeing it to continue focusing on building its customer base and improving the product.

Existing investors Benchmark Capital, Globespan Capital Partners and Sigma Partners also participated in the new round.

Online outsourcing marketplace oDesk has launched a new feature called oConomy, where you can browse through global job statistics that are both hopelessly unscientific and endlessly fascinating.

We reported on oDesk in 2006, when the Menlo Park start-up raised a $10 million second round of funding. Basically, the site allows companies to hire technology “providers” such as programmers and web designers, and to monitor them through tools like screen shots, keystroke tracking and photos of the employee at work. Now, oDesk says it’s helped companies outsource more than 1.6 million hours of work completed by more than 47,000 providers in more than 90 countries. And through oConomy, the company is giving the public a chance to browse through data about all of those jobs.

The most interesting new feature is the “global provider map,” which shows every country with workers in the oDesk network. Click on an individual country, and the map displays some basic statistics. (See screenshot below.) I learned, for example, that there are 8,486 oDesk providers in the United States, who work for an average of $23 per hour and who have been given an average satisfaction rating of 4.3 (out of 5) from their employers. India, on the other hand, has 8,018 providers who work for an average of $14 per hour and have been given an average rating of 3.8.

oConomy also offers lists of the highest-rated countries (among those with at least 100 providers, it’s Indonesia), provider companies (ISS Art in Russia) and individual providers (”Vikramsinh J.”, a software professional in India).

You’ve probably figured out that oConomy is probably not, shall we say, the most reliable place to find data for research about outsourcing or international job markets (for that, I’d suggest starting with the federal Bureau of Labor Statistics). I’m also assuming our readers know better than to use oConomy to make sweeping generalizations about which countries have the “best” and “worst” workers. oConomy is probably most useful as a marketing tool for oDesk (”Look how many providers we have!”) and as a way for oDesk users to get some global context. Nonetheless, oConomy offers a glimpse into outsourcing that’s fun and easy to navigate, if admittedly narrow.