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There is no formula for success. You are on Y-Combinator, built on the notion of spreading risk around through diversification. The DoE actually has a better r

There is no formula for success. You are on Y-Combinator, built on the notion of spreading risk around through diversification. The DoE actually has a better record than most venture capitalists and angels, but in reality, you need a pile of failures to get a success. Failure is the engine of success, and the demand from the right that the government not do anything that might fail actually acts to increase government failure and expense, by making agencies so risk-averse that they spend way way more money on analysis and over engineering to avoid failures. That's one reason why SpaceX can beat NASA military contractors because they design and test to try to reduce failure to zero. If you care about small, effective, cheap government, it would be paradoxically better IMHO, to let the government dole out cash like a VC with the expectation of 40 failures for every 1 mammoth success. What I don't get is, people on the right never complain about all of the government failures on military spending. X-Ray lasers, planes and tanks that don't work, crazy and kooky DARPA projects. Hundreds of billions are flushed down the toilet, trillions if you look at the disaster that is the F-35/JSF, and here they are whining about Solyndra. Isn't the huge military industrial complex a ginormous distortion of the market? Why is it so much more terrible for the government to fund early stage industry (which is relatively cheap), but perfectly ok to give huge incentives to oil companies in taxes, regulations, military and state department support, or to spend hundreds of billions on weapon systems that never get deployed or used? I wonder if it has has more to do with cultural conservatism than fiscal conservatism. The kind of George Will "Fossil fuel Cars are American/Apple Pie, and Trains, electric cars, are squishy European stuff" feeling. Green energy = hippies, latte sipping coastal elites, not real 'mericans who drive gas guzzling SUVs across the plains.

ams6110 13y ago
people on the right never complain about all of the government failures on military spending. X-Ray lasers, planes and tanks that don't work, crazy and kooky DARPA projects Crazy and kooky DARPA projects... like the internet? Joking aside, some people on the right do complain, especially those with libertarian leanings. You are correct that mainstream politicians (in both parties) do not, they are in bed with these industries and you will never see anything but occasional feigned outrage over something absurd and irrelevant like a $300 toilet seat. I actually think the question is, would Tesla have succeeded anyway? I think the answer is yes. The people buying them now are not people who could not afford them absent the tax incentives. Musk did all the right things, he was an established success story to start with, he started his company in California, home of large numbers of wealthy environmentally concerned people who will overlook practicality if they can make a fashion statement. On the other hand you don't see very many middle class people who can afford a Tesla even with the tax breaks, or whose needs in a car match what a Tesla offers. Investments in companies like Solyndra failed because those companies would have failed anyway, they either had a bad business plan or were trying to enter markets that didn't really exist.
ensignavenger 13y ago
The problem was the DoE gave out loans, not equity investments. If the DoE had received an equity stake in Tesla (and the others), then it would be a more apt comparison to VC and PE. As it stands, the DoE took on tremendous financial risks with little financial reward. Regarding military waste- there are many conservatives who are just as upset about that. I don't think the media pays as much attention to it, for one reason or another, and thus it is not part of the day to day rhetoric. Also, defense is also generally considered by conservatives to be the Federal Government's primary reason for existence. ("To provide for the common defense"). Spending a large percentage of the Federal budget on Defense initiatives therefore makes sense within this paradigm. Lastly, there is a major problem in our society, both right and left, conservative and liberal, that believes that throwing money at any problem will automatically fix it. Is Education lagging? Spend more money on it! Need a next generation airplane and it isn't getting here fast enough? Throw some more money at it! Etc.
- cromwellian 13y ago
  But when the government takes equity stakes, the right complains even more loudly about interference, especially if they are voting shares. The purpose of the DoE isn't to invest to get monetary award, it's to invest to drive basic engineering forward. The government isn't as business and isn't supposed to derive a profit, that's the basic fallacy of the idea that the government's budget should reflect how CEOs run corporations. Throwing money at research, science, and technology is pretty much how you get breakthroughs. As a said, there's no formula, breakthroughs are often serendipitous, unpredictable, and happen over long time scales. I view technological advancements as exploring an infinitely large landscape of possibility. There are mountains of opportunity, but you don't know if a given mountain is worthwhile until you scale it, and you may fine nothing, or a local optima, in which you see a better mountain farther away. From the ground level, most of the mountains look the same, and the landscape is always shifting. What is the best strategy for finding the successful mountains? Hire as many teams of climbers as possible and distribute them around the landscape far and wide. That's what capitalism is, that's what the startup economy is, it's lots and lots of people doing local hill climbing. There are some mountains that are too big to climb, the gear is too expensive, and the time horizon to summit, too long. That's the government's role in basic R&D, to fund research and development at an early stage that is not economic, has little chance for ROI in the short or near term, stuff that even VC's won't touch. Could any private company have built the GPS system all our phones used, if the government hadn't funded rocketry, satellites (most for military reasons?) You've talking from the 1950s until the 2000s when practical consumer GPS became a viable business. What company could have stomached 50 years of spending for ROI? Much of the technology we have today is the result of government spending in the military, national labs, the space program, and state funded academic research. Often, the private companies are successful in taking the basic advancements and figuring out how to manufacture them, but it is usually the government that proved the basic design first.

ams6110 13y ago

people on the right never complain about all of the government failures on military spending. X-Ray lasers, planes and tanks that don't work, crazy and kooky DARPA projects Crazy and kooky DARPA projects... like the internet? Joking aside, some people on the right do complain, especially those with libertarian leanings. You are correct that mainstream politicians (in both parties) do not, they are in bed with these industries and you will never see anything but occasional feigned outrage over something absurd and irrelevant like a $300 toilet seat. I actually think the question is, would Tesla have succeeded anyway? I think the answer is yes. The people buying them now are not people who could not afford them absent the tax incentives. Musk did all the right things, he was an established success story to start with, he started his company in California, home of large numbers of wealthy environmentally concerned people who will overlook practicality if they can make a fashion statement. On the other hand you don't see very many middle class people who can afford a Tesla even with the tax breaks, or whose needs in a car match what a Tesla offers. Investments in companies like Solyndra failed because those companies would have failed anyway, they either had a bad business plan or were trying to enter markets that didn't really exist.

ensignavenger 13y ago

The problem was the DoE gave out loans, not equity investments. If the DoE had received an equity stake in Tesla (and the others), then it would be a more apt comparison to VC and PE. As it stands, the DoE took on tremendous financial risks with little financial reward. Regarding military waste- there are many conservatives who are just as upset about that. I don't think the media pays as much attention to it, for one reason or another, and thus it is not part of the day to day rhetoric. Also, defense is also generally considered by conservatives to be the Federal Government's primary reason for existence. ("To provide for the common defense"). Spending a large percentage of the Federal budget on Defense initiatives therefore makes sense within this paradigm. Lastly, there is a major problem in our society, both right and left, conservative and liberal, that believes that throwing money at any problem will automatically fix it. Is Education lagging? Spend more money on it! Need a next generation airplane and it isn't getting here fast enough? Throw some more money at it! Etc.

cromwellian 13y ago
But when the government takes equity stakes, the right complains even more loudly about interference, especially if they are voting shares. The purpose of the DoE isn't to invest to get monetary award, it's to invest to drive basic engineering forward. The government isn't as business and isn't supposed to derive a profit, that's the basic fallacy of the idea that the government's budget should reflect how CEOs run corporations. Throwing money at research, science, and technology is pretty much how you get breakthroughs. As a said, there's no formula, breakthroughs are often serendipitous, unpredictable, and happen over long time scales. I view technological advancements as exploring an infinitely large landscape of possibility. There are mountains of opportunity, but you don't know if a given mountain is worthwhile until you scale it, and you may fine nothing, or a local optima, in which you see a better mountain farther away. From the ground level, most of the mountains look the same, and the landscape is always shifting. What is the best strategy for finding the successful mountains? Hire as many teams of climbers as possible and distribute them around the landscape far and wide. That's what capitalism is, that's what the startup economy is, it's lots and lots of people doing local hill climbing. There are some mountains that are too big to climb, the gear is too expensive, and the time horizon to summit, too long. That's the government's role in basic R&D, to fund research and development at an early stage that is not economic, has little chance for ROI in the short or near term, stuff that even VC's won't touch. Could any private company have built the GPS system all our phones used, if the government hadn't funded rocketry, satellites (most for military reasons?) You've talking from the 1950s until the 2000s when practical consumer GPS became a viable business. What company could have stomached 50 years of spending for ROI? Much of the technology we have today is the result of government spending in the military, national labs, the space program, and state funded academic research. Often, the private companies are successful in taking the basic advancements and figuring out how to manufacture them, but it is usually the government that proved the basic design first.