Tim O'Reily offers this assessment:
Tim O'Reilly - Yesterday 10:23 AM (edited) - Public
+Ben Holtsclaw alerted me to the Solyndra collapse and asked if I'd comment.
Overall, I'd say that the lessons of this failure are probably different than libertarians and small government advocates might think. Yes, our government is a terrible VC, and this was a very bad investment, based on a quasi-religious faith in American technological innovation as the solution.
But the reasons for Solyndra's failure are classic business reasons: competition. But the competition in this case wasn't from "the market" in some generalized free-market sense, but from a concerted strategic market intervention by another government, namely the government of China.
I heard recently from +jack hidary how the Chinese have driven solar panel prices down via vertical integration of the manufacturing process. No technological breakthroughs, just better market coordination through top-down planning.
In short, the Chinese are just smarter than we are about government intervention. For what it's worth, it happens to private investors and private companies all the time too. Competition between governments and their strategies is just as real as competition between companies.
I do agree very much that the Solendra investment was crazy - way too big given the competitive context. But the heartening news is that prices for solar panels are coming down.
Here are some US government strategic interventions in the market that paid off big-time: the US interstate highway system in the 1950s, the research funding that led to the internet, the spinoffs from the space program (including satellite launch capabilities, weather forecasting improvements, crop monitoring from space, not to mention the usual suspects cited like Teflon pans), the GPS satellite system that has fueled tens of billions of dollars in private enterprise, making possible all the "local" frenzy that is driving additional investment. Ideal targets for government intervention are "platforms" or platform technologies that enable the market as a whole, rather than bets on individual companies.
In short, the US government is like a VC firm, once first-tier, but one that has now lost its way. Getting out of the VC business is one option. Getting better at it is another. Given that the Chinese government is pretty good at making strategic investments, it seems to me that we need to at least consider what "getting better" at government investment means, rather than just getting out of the business.
Overall, I'd say that the lessons of this failure are probably different than libertarians and small government advocates might think. Yes, our government is a terrible VC, and this was a very bad investment, based on a quasi-religious faith in American technological innovation as the solution.
But the reasons for Solyndra's failure are classic business reasons: competition. But the competition in this case wasn't from "the market" in some generalized free-market sense, but from a concerted strategic market intervention by another government, namely the government of China.
I heard recently from +jack hidary how the Chinese have driven solar panel prices down via vertical integration of the manufacturing process. No technological breakthroughs, just better market coordination through top-down planning.
In short, the Chinese are just smarter than we are about government intervention. For what it's worth, it happens to private investors and private companies all the time too. Competition between governments and their strategies is just as real as competition between companies.
I do agree very much that the Solendra investment was crazy - way too big given the competitive context. But the heartening news is that prices for solar panels are coming down.
Here are some US government strategic interventions in the market that paid off big-time: the US interstate highway system in the 1950s, the research funding that led to the internet, the spinoffs from the space program (including satellite launch capabilities, weather forecasting improvements, crop monitoring from space, not to mention the usual suspects cited like Teflon pans), the GPS satellite system that has fueled tens of billions of dollars in private enterprise, making possible all the "local" frenzy that is driving additional investment. Ideal targets for government intervention are "platforms" or platform technologies that enable the market as a whole, rather than bets on individual companies.
In short, the US government is like a VC firm, once first-tier, but one that has now lost its way. Getting out of the VC business is one option. Getting better at it is another. Given that the Chinese government is pretty good at making strategic investments, it seems to me that we need to at least consider what "getting better" at government investment means, rather than just getting out of the business.
Jim Geraghty
Always... shovel-ready!
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Renewable Energy - Only Available from Marin Clean Energy! Click Here
'Believe me, my young friend, there is nothing— absolute nothing— half so much worth doing as simply messing about in boats.
Mr. Ratty, "Wind in the Willows"
Marin Peace and Justice Coalition
http://mpjc.org
Why We Come - the film
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