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dietaryfiber 12/4/2012 | 10:57:03 PM
re: Startup Shelf Life Confucius,

My experience has been somewhat different than what you portray. What I have seen is very half baked products with marvelous future specifications from startups. The reality of what really works is greatly less than what is in the data sheet. In fact, it is often less than that horrible bunch of slugs (the legacy vendors) have produced. It is also clear that speeds and feeds are not the only part of the equation. Let me put it simply: "Would you bet $10Ms or $100Ms on vendors without a track record?" Think about it. What do you do in your own life? That is the power that incumbency brings to the party. A startup has to be an order of magnitude better than an incumbent, in most cases. Otherwise it is just not worth it to the carrier.

dietary fiber
elvislives 12/4/2012 | 10:57:02 PM
re: Startup Shelf Life diet,
my point exactly.. they are in the funding process.. no money yet!

Valo is one of them and has been in the funding process for quite some time now (like 4 months+).

The other 2 are ?
ARBoy 12/4/2012 | 10:57:02 PM
re: Startup Shelf Life <<to and="" be="" caspian="" closed="" could="" end="" equipe="" heard="" last="" next...="" pluris="" shop="" that="" this="" week="">>

reoptic == hadn't heard that Caspian closed shop. Where did you get that information? Was it announced anywhere? As for Equipe and Pluris, you may be right. Haven't heard anything positive out of either one in the past months. Pluris has been quiet and the only thing out of Equipe is a patent - that won't pay the bills.</to>
reoptic 12/4/2012 | 10:57:02 PM
re: Startup Shelf Life This is a very nice article well thought out with important implications. One of the best pieces have read on this site in quite a while!

And I think his point is proven out no better than in the core, where they technical pace of change is quite steep and technology goes stale. To this end heard caspian closed shop last week and that equipe and pluris could be next...
big daddy 12/4/2012 | 10:56:59 PM
re: Startup Shelf Life I think this piece is passage from Doug's new book "Round Four", where, after sucessfully dumping two early stage projects, he decides to do a Jim Bouton and tear the lid off the telecom industry.
diag_eng 12/4/2012 | 10:56:59 PM
re: Startup Shelf Life You are right on the money (no pun intended). My first startup was in the early 90's when getting funding was as difficult as it is now. In '99 I worked at one those startups that received funding easily and sold for a lot of money before the product was even ready. I am now going to a new startup which did receive funding, but it took a while - the VCs are back in control. It truly has come full circle.

You are exaclt right about the xLEC's going away along with their PO's. The leftovers from '99/00, e.g. Equipe, simply had the wrong timing. If they do raise money they will have to "give away the store". They probably won't be acquired without any real customers/revenue.

With startups it all comes down to timing and right now the worst possible position to be in is in a company seeking Third Round (or later) funding.

dietaryfiber 12/4/2012 | 10:56:58 PM
re: Startup Shelf Life VK ex-Fibex has one called Naveon. Just funded. The other one is closing its funding, don't know what they are calling it and its in stealth mode with ex-Mahi folk.

dietary fiber
ivehadit 12/4/2012 | 10:56:57 PM
re: Startup Shelf Life why did LR take my post off? All it said was, there's not a lot of insight in this article.

must be server error! i cannot imagine LR editors are so sensitive that they cannot take positive criticism.
optodunce 12/4/2012 | 10:56:57 PM
re: Startup Shelf Life I know a friendGǪ.that is involved in an optical startupGǪhe says his company presently in intra-stealth mode has filed some patents and looks like they will be issued soon (2 month time frame)GǪon a shoe string budget no less. They had gone the venture round but the VCGs wanted too much of the companyGǪmy friend and his colleagues felt that the technology was worth much more than the vcGs wanted and that the vcGs wanted virtual control of the company.

The philosophy of the management was, that they had some, incredibly inexpensive access network technology, that could be prototyped for under $20 million to demonstrate proof of technology and staff requirements would be less than 30 people. The VCGs said you need $ 50 million in 2 stages, and would need to grow to 100 peopleGǪthey didnGt even refer to the planGǪthey just looked at their formula for gaining value for their initial investment and putting the people in place to bring it publicGǪand then sell out depressing the stock into bankruptcyGǪ! GǣSound familiar!

The management decided it would be better to starve a bit, wait until the IP gets issued so they can secure technology. They have held out! Although struggling, they believe that had they taken money on the terms of the VCGs the VCGs would have eventually closed the business, sold off its assets to a major player, and that player would have stumbled upon innovation beyond belief. Although I was told this in confidence, I can say this company is in the northeast.

The point of all this is that the VCGs know going in that 9 of every 10 business that they fund goes under or is swallowed up for their assets. That is why they demand low valuations! The VCGs goal is not to build businessGǪit is simply and harshly to make a quick return! They hedge bets and demand 51% control. They donGt concern themselves with the people in the company, the technician, the secretary, the years that had gone into thinking up great ideasGǪno they could care less!

Most disruptive technologies take 3 to 4 years to see market impact even at a fully funded aggressive startup. The problem was that hype prevailed (i.e. Xros 1022 x 1022 mems switch!) and true innovation was placed secondary to Gǣwell packaged boxesGǥ and Gǣso called proven management track recordsGǪunfortunately, proven management track records meant Gǣhow successful did you push that IPO or sold out to a major playerGǪsure great initial return for VCGs and senior management, but where are those companies now and what happened to the rest of the staff? Z

When my friend started, 18 months ago, every VC wanted full disclosure, with no disclosure agreement, at least 45% stake, VC board control and a CEO assigned by them. According to my friend, GGǪthey want you to drop your draws, stand naked before them, wait until they evaluate your endowments - regardless of your wealth - get ridiculed for not being as large as themGǪand at the end you must thank them for the experienceGǪhe said it felt like being gang raped by needle d*%s! The VC is the millenniums version of Gordon Gecko where Gǣgreed was goodGǥ! LBO and junk bonds were found to be disruptive to American business/economy in the 80Gs just as the VC is destroying American innovation and business todayGǪGǥ he ended by saying GǣGǪthe VC is the devil incarnate!Gǥ E

I thought he was being a bit harsh, although much of what he has said has been disclosed lately in other published stories. N

In order for the telecom economy to turn around, we need to look at long-term investments, providing greater government incentives to motivate investors and big players to look at a 5 year plan rather than a 12-month revenue cycleGǪ! A
opticguy 12/4/2012 | 10:56:56 PM
re: Startup Shelf Life There are rumours that Mahi had a big layoff last Friday ? Please confirm !!!
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