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VCs Slammed in Poll

Venture capital companies are most to blame for the boom and bust that’s befallen the telecom industry, according to Light Reading’s June research poll: Who's to Blame? Where's the Hope?

In the poll, respondents are asked to pick the folk they hold most responsible for the current, sorry state of affairs.

So far, 22 percent of votes have been cast for "venture capitalists, for over-inflating the bubble" -- way out ahead of the next category of possible culprits, "top executives, for feathering their own nests at the expense of workers," which has got 14 percent of the votes at present.

Other groups that get it in the neck include "telecom regulators, for failing to curb anti-competitive behavior" (13 percent) and "analysts, for not telling the truth" (11 percent). (Somehow, we forgot to include journalists in our list.)

At the other end of the scale, there are some real surprises. Nobody so far has blamed "governments, for charging too much for 3G wireless licenses," even though this appears to be one of the main reasons some European incumbent carriers are weighed down with huge debts (see British Telecom on the Mend).

Likewise, only 4 percent of respondents blame "financial regulators, for failing to blow the whistle on corrupt behavior." Also getting off lightly are "traditional systems manufacturers, for offering vendor finance," which get a mere 3 percent of votes. (The scale of this issue is laid out in Vendor Financing.)

Respondents were also asked to name the current development that gives them most hope for recovery.

The biggest surprise here is that "less competition" is currently tying for top place with "advances in access technologies," both of which garner 23 percent. Less competition probably equates to carriers being able to charge higher prices for their services -- the hope being that this will lead to more infrastructure investment. (Dream on.)

The next biggest hope is that "new sources of traffic such as 3G wireless" will encourage carriers to resume investment in infrastructure. That gets 11 percent, just ahead of "advances in metro technologies," which gets 10 percent.

"Bargain-basement acquisitions" and "bargain-basement telecom infrastructure from bankrupt/distressed carriers" get 7 percent and 8 percent of votes, respectively -- a reflection of the belief that if someone can't make money out of an asset, then the likelihood is that no one else can either.

To take the poll yourself, and get the latest results in detail, click here.

— Peter Heywood, Founding Editor, Light Reading
http://www.lightreading.com
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BobbyMax 12/4/2012 | 10:15:15 PM
re: VCs Slammed in Poll VCs are very notorious breed of people. This is particularly true of VCs in California. VC thrive very well in a third world country like California. Any productts and technologies coiming from Caliufornia simply cannot be trusted. Because of third world culture of California, it is very easy to form a third class team and present to the VCs. Company valuations are outrageous. Any company that acquires a California company is buying a ticket to hell. Many companies such as Lucent, Nortel, and Alcatel are already in hell.

It is not uncommon for a serial enterpreauner in California to copme out with a business plan after attending a trade show. They usually copy from each other and out with a low technology product.

There are over 10,000 VCs in the US. Probably about 80% of them are located in California.

There are many examples of insider trading but SEC fails to take any action. Any thing goes.

The Telecom Act of 1996 have created many crumy and third rate companies to emerge. These newly started companies wuth dobyful future tend to destabilize larger companies.The net result is commotion in the market place.

There is too much money with the VCs. They misuse the funds. They also feel like king and queens.

There is nothing to stop the trend of making very weak products and use dirty tricks to facilitate acquisitions at exhorbitant prices.
pablo 12/4/2012 | 10:15:14 PM
re: VCs Slammed in Poll
...2 years after the bubble burst, is this the best our industry can do - still sit there whining, unable to snap out of it and move forward with some enthusiasm? Some body show some enterprising pioneering spirit, please.

As long as the best business plan people have in their heads is "eventually, CY2000 will be here again and we'll all somehow make gobs of money again by sheer luck" this industry is not going to turn a single degree, and rightly so. It means it is still caught up in a sense of entitlement.

This still is a $80B industry. I can not blame VCs for trying to exploit it. I can not blame analysts for writing the stuff "the market" wants to hear anyway - they represent consensus rather than anything groundbreaking. This is all market economy in effect, and we are all very willing accomplices to it.

There's just one thing to it: good old fashioned operational excellence. If you're an incumbent, work on quality and profitability. If you're a newcomer, pick a visionary niche that sufficiently differentiates you, work like hell, and cross your fingers. Managing a business towards profitability is not such a revolutionary new concept. Too many people out there still believe the goal of technology companies is to bring the coolest, latest technology to market, and that is a tragic misconception.
xoip 12/4/2012 | 10:15:14 PM
re: VCs Slammed in Poll On top of what you mention very often they are also
- inexperienced
- dont have a clue about the technolgy and what is involved
- dont know when and how to get the company to deliver (when to stop)
- they listen to inexperienced low level managers /directors to come to a conclusion
- they are incapable of identifying talent
- they hope their rolex and porsche will do the talking.

They killed too many companies in california.

There are still good VCs and hopefully one will be lucky to work for one funded by one or start one with their support.The search must go on.

"May passion for technology be rewarding"

XoIP
Belzebutt 12/4/2012 | 10:15:14 PM
re: VCs Slammed in Poll So now the people who took the money from the VCs are blaming them for giving the money. Yeah, sure.

Here's who to blame:
- analysts, for making crazy-ass predictions
- execs, for believing those predictions

Everyone else was just sheep, the people above were the shepards.
Dr. Smallberries 12/4/2012 | 10:15:14 PM
re: VCs Slammed in Poll
Sorry, it's nice to have such a juicy scapegoat as moolah-prurient VCs, but LR has overhyped the blame-hype, as usual. While VCs may have pumped the weasel a few too many times, our market woes are primarily due to:

-the dotcom crash casting shadows
-September 11 blowing them up
-and those Enron boneheads.

Not to mention Tyco and a few others who were monkeying around. The average schmoe investor now thinks we're all crooks. Regardless, start making POSITIVE noises based on REALITY and they'll come back. If you build it, they will come back, Ray.

Everything's a cycle. So, stop wallowing in negativity, put your heads down and grindstone that nose. No whining.

-Dr. J.
wilecoyote 12/4/2012 | 10:15:13 PM
re: VCs Slammed in Poll Well put Beez. We're all to blame here. I believe there are VCs who are so dumb, so irresponsible, that they should be thrown in jail just to protect themselves from their own stupidity, and to protect their even dumber LPs from squandering their money any further. But that said, the VCs are a critical part of the communications business and they can't be blamed for everything. They are just like the rest of us, only richer, smarter, better looking and less accountable. And without them, a lot of us have to work for large public companies which really, really suck...as places to work when you like to get stuff done for a living.
let-there-be-light 12/4/2012 | 10:15:13 PM
re: VCs Slammed in Poll I think we should all be honest and just blame our own greed.

Any power the VC's had was in being able to use money to convince many of us to jump ship and try something new (hoping to be rewarded with millions of dollars in a few weeks or months time). Surprise, surprise, things don't work that way for the majority.
wdog 12/4/2012 | 10:15:13 PM
re: VCs Slammed in Poll Peter,

You're asking the wrong question. It isn't who is to blame, but what is to blame. What got us into this mess?... Greed. And there was(is) plenty to go around. Name any group who wasn't looking to make a fast buck. What will get us out of this mess? Once the fear subsides, it will be greed again. Pretty sick, but all too true.
willywilson 12/4/2012 | 10:15:12 PM
re: VCs Slammed in Poll I can not blame VCs for trying to exploit it. I can not blame analysts for writing the stuff "the market" wants to hear anyway - they represent consensus rather than anything groundbreaking. This is all market economy in effect, and we are all very willing accomplices to it.

==============

Nice apology for rampant fraud and corruption.
strands555 12/4/2012 | 10:15:12 PM
re: VCs Slammed in Poll re: Too many people out there still believe the goal of technology companies is to bring the coolest, latest technology to market, and that is a tragic misconception.
===============

No, if technology companies STOPPED believing that, it would be tragic. Sustaining products and tweaking operations is the stuff of low or no growth companies and/or divisions of companies. If the pipeline of innovation is emptied because of short-sighted thinkers, there will be no future growth. None. Zero.

By your definition, RBOCs are technology companies. That is sadly mistaken. If the communications and networking world follows the RBOCs with the mistaken belief they will lead them to the promised land, those followers will perish.

The hype and subsequent losses of the bubble doesn't even compare to the losses we will see if companies, lawmakers, and policymakers believe that is the right path, and take us down that path.
How long, to the Point of Know Return.
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