The Solyndra
debacle is no surprise to this cleantech venture capitalist. The inherent
conflict between trying to get money out of the U.S. Treasury as quickly as
possible to stimulate the economy and, at the same time, have government
agencies that are ill-suited at making business decisions do just that was
nothing other than a recipe for disaster.
Anytime a government program is giving money to the private
sector with the intent of getting the money back, the program is doomed to
failure. Bureaucracies, politics and the
lack of a profit motive simply don’t allow government to succeed in
business. Anyone who was surprised that politics played
a role in the loan decision for Solyndra (and almost certainly other awardees)
is very naïve.
Even if, by some miracle, the government could make good
business decisions void of political influence, such programs are still doomed
to failure because the public and media won’t allow for even one loan or
investment to fail. In venture capital we make investments that don’t succeed
and we fail often. Yet, we are still
successful on the whole. Our successes
more than compensate for our failures. The
government has no ability to operate this way.
Even if a program like the DOE loan guarantee could operate with an
overall effective return (which I find unlikely anyway), its first failure
would sink it. The government can give
away money, but it cannot effectively invest money in individual companies.
Solyndra won’t be the last default from the DOE loan
guarantee program. The huge amounts of
money that will ultimately have been wasted in the cleantech stimulus – both in
terms of loans that won’t be repaid and the
stimulus’ failure to create any meaningful job growth when growth was most
needed - is bad for tax payers. The negative
PR and the future demise of cleantech policies that otherwise may have had
broader bipartisan support is bad for cleantech.
In 2009, amid the euphoria of the Obama Administration’s
cleantech programs, I
wrote that the Administration’s cleantech
stimulus was bad policy but good politics. I was wrong… not only was the cleantech
stimulus bad policy, it was bad politics too.
While the politics by which the Administration pushed through these ill-thought
programs may have been deft, the ultimate political impact is clearly bad for
both the Administration and cleantech itself.
Ultimately, we may look back at Solyndra as the dagger that
burst the cleantech bubble. The hype and
euphoria are officially gone. The long,
hard work that will be required to diversify our energy base and increase
energy efficiency wasn’t reduced when the government sent floods of money out
the door to cleantech companies, and it won’t change now that the hype of those
programs is gone. The good news is that,
like the Web and every other technology bubble, the real value creation comes
after the bubble has burst.
So, let’s get back to work.
