Buckling Down for 2005
Like the odometer on your Dad's station wagon, the number for the date of the telecom recovery keeps rolling forward. As 2002 ends, venture capitalists and even startups are now conceding that the long-hoped-for recovery now appears as distant as 2005.
"People are saying 2005 is when the market's going to come back, from a carrier viewpoint," said Wes Raffel, partner with Advanced Technology Ventures (ATV).
Speaking at the Electronicast OADM & Advanced Photonic Communication Networks Conference in San Mateo, Calif., Raffel and other VCs said their portfolio companies are setting up for the long, long term.
The award for the biggest numbers tossed about goes to Ray Conley of Oak Hill Capital Partners, talking about Terabeam Corp.. "We've got the burn rate managed on that one to last to 2006 or 2007," he said.
Startups are getting more glum as well. Polychromix Inc.'s business plan calls for a trickle of revenue in 2004 but no serious business until the following year. CEO Brian Mitchell said it's time to drop the widely held hope of a mid-2003 recovery. "By now, we think we would be seeing some substantial signs of that."
Indeed, all indications lately have pointed to a flat 2003 -- or worse (see Carrier Spending Hopes Dim and Bludgeoned Budgets).
Of course, if you're a startup, this poses several problems, one of which involves the staff. It might seem sensible to plan for a recovery that is four years away, but what should your employees do in the meantime? The VCs acknowledged that it might be tough to get people motivated for all-nighters and weekend work, especially if long hours are expected to persist for years to come.
Executives will have to "ratchet down [their] own expectations" of employee enthusiasm, Raffel said. On the plus side, he noted that many employees will be grateful just to have a job in optical networking, and they'll be satisfied "if they're working with people they like and they can see light at the end of the tunnel."
Moreover, given that the telecom boom is long gone, it's doubtful that employees are looking to cash out quickly.
"If people are anxious for something big to happen [right away], they're in the wrong place," Conley said.
— Craig Matsumoto, Senior Editor, Light Reading
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