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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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willywilson 12/4/2012 | 10:15:12 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.

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

What a load of self-justifying crap. Grab a few headlines and pretend that this is the full extent of the corruption rather than the tip of the iceberg.
sauron5 12/4/2012 | 10:15:12 PM
re: VCs Slammed in Poll Personally, I think Vulture Capitalists are
getting a bad rap here. ;-)

Sauron
sauron5 12/4/2012 | 10:15:11 PM
re: VCs Slammed in Poll I am definitely not taking any credit or responsibility for exorbitant CEO salaries, clueless analysts, and corrupt accountants. To say that
investing hard-earned money in stocks is "greed" is
the same kind of "it's your own fault" reverse-psychobable BS that turns you into sheeps
in the first place.

Sauron
willywilson 12/4/2012 | 10:15:11 PM
re: VCs Slammed in Poll I have a friend whose company has received equally valued financing proposals from two groups, one being a private angel investor and the other a major California VC offering "connections" within the industry.

I have advised very strongly to take the private individual's money. The VC has already demanded to appoint a new top executive, which I've told my acquaintance is a prelude to an outright takeover of his firm.

VCs are, by and large, stupid and dishonorable and should not be dealt with by honest people unless there is absolutely no other alternative, including suspension of operations to await a better day.
sauron5 12/4/2012 | 10:15:11 PM
re: VCs Slammed in Poll Yeah, and we wouldn't have microwaves, just
better "toaster ovens" :)

Sauron
willywilson 12/4/2012 | 10:15:11 PM
re: VCs Slammed in Poll 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.

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

This idea of diffusing the blame so widely that no one is accountable is a real dodge.

If there was a scintilla of justice out there, the corrupt VCs, corporate execs and Wall Streeters who conspired to manipulate stocks (IPO spinning and laddering; phony "strategic alliances" and other empty press releases; "purchases" of non-working equipment that was never actually deployed) would be investigated, fined heavily (including auctioning off those mini- and not-so-mini mansions) and jailed.

The fact that middle-class engineers accepted jobs at these companies does not make them culpable in fraud. It might make them chumps, but not criminals.

Come on children, at least have the self-respect to acknowledge that you were taken for a ride and to ask that those who stole be brought to justice. Now, was that so hard??
willywilson 12/4/2012 | 10:15:10 PM
re: VCs Slammed in Poll 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.

==========

True, how true. Unfortunately -- no, tragically -- the VC-financed shyster fraud CLEC operations and their equally fraudulent equipment suppliers have so royally screwed things up that it looks like there's a damn good chance that the RBOCs might take back everything.

That's what I think on my bad days, anyway. On my good days, I think maybe there will be a second crop of CLECs funded from outside the usual VC groups. If the FCC doesn't get corrupted by TechNet and the RBOCs, the opportunities are still huge. Big "if," though.
skeptic 12/4/2012 | 10:15:10 PM
re: VCs Slammed in Poll I have a friend whose company has received equally valued financing proposals from two groups, one being a private angel investor and the other a major California VC offering "connections" within the industry.

I have advised very strongly to take the private individual's money. The VC has already demanded to appoint a new top executive, which I've told my acquaintance is a prelude to an outright takeover of his firm.
==============

The thing about taking private individuals
(angel) money is that you better be sure that
they are going to be financially able to back
you up if you need more money in future.

There are circumstances where its the right
thing to do, but one of the key things to
evaluate when you are out looking for money
is to figure out how you are going to get
the next round of money, not just focus on the
immediate round.

Because if your angel money runs out and you
need more, your going to end up in front of the
same VCs you are turning down now in the most
unfavorable negotiating position imaginable.

I'm not saying that there is one right way
to fund things, more that with any sort of funding
there are a whole bunch of issues that have to
be watched closely.

And don't have any illusions about "takeovers".
Unless you fund something with your own money,
the people who fund you will always be in charge
whoever they are. Its only "your" company when
its "your" money on the line.





boozoo 12/4/2012 | 10:15:09 PM
re: VCs Slammed in Poll Guys, it amazes me how we need to find scapegoats when we don't succeed (of course, that is only after the fact).

I can argue that we are in fact guilty because we believed in the hype, we did not look at the economic fundamentals, we were stupid enough to believe them.
Why blame somebody for preaching when you have the freedom to judge for yourself and chose to believe or not?
I know why: because it takes guts to be objective towards onself and most of us don't have it.

Boozoo.
ivehadit 12/4/2012 | 10:15:07 PM
re: VCs Slammed in Poll ""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.)""
-----------------
i think lightreading misread the results here. less competition equates with VC excess, not higher prices on the part of carriers. when someone clicks on "less competition", imho, they are talking about all the equipment startups with nowhere to go, except pull everyone else down with them. thats a consequence of VC excess that the market will have to deal with before the industry rights itself.
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