If you looked recently at the companies started by venture capitalists and touted as the "next Cisco" or "next Google," you know the meaning of the term "bad ending." Start-ups don't do well generally, and technology start-ups seem to be faring particularly badly. Recently, Sequoia Capital, one of the major Silicon Valley venture capital firms, pointedly told its portfolio companies "Get real, or get out." So, can start-ups get real, particularly in networking?

For openers, it's kind of ironic that a venture capital firm would say, "Get real!" This from the guys who spawned the tech bubble, financed tech companies, financed competitive local exchange carriers to buy from them, then called the result an industry. Truth be told, nobody in the world is as responsible for the "flip (sell the company) and walk" mind-set as the venture capitalists; and that's what has created the reality problem. I've listened to many venture capitalists say, "We don't want to be in that business; success takes too long."

Even before the current economic crisis, it was clear that networking was facing some major systemic problems. In the enterprise space, networking has received less than its average share of IT budgets every single year since 1991, and the numbers got worse in the last seven quarters. In the service-provider space, we're throwing money at companies whose business model consumes capacity rather than creates it, and whose revenue model depends totally on the shrinking pool of advertising.

Now we have our economic mess, and getting real isn't what got us into it. You can see from a comparison of government numbers that we've tried to grow "wealth" faster than "value," in the tech bubble and today. The charts of wealth vs. GDP in the Nasdaq bubble and the current crisis are strikingly similar. So, it's likely that regulation will try to rein in the excesses of the financial industry, and maybe even of the venture capitalists. What will we in the industry do? One thing might be to assume that a "real" business is one that can make a profit.

The time for running scams is over. We need to resolve the real issues in networking. Start with cost. Worldwide, service providers report 4.3 times as many support incidents with IP networks as with old-time TDM or frame relay. Today we have no greater spending on improving service and network operations, as a percentage of total infrastructure, than we did before. Until NEC bought NetCracker, no major vendor even had an operations-support-system product. Instead of figuring out how to do peer-to-peer to share files, we need to look at whether it could optimize operations. The cost of running a service-provider network is greater than the cost of building it, even discounting customer care. Standards groups are poking around at the problem but won't get to a solution for years, if at all. Why not entrepreneurs?