Blog Post

The danger of politicians backing high risk startups

Bloomberg is reporting that Republican Representative Darrell Issa — whose committee has been investigating a Solyndra/Obama connection and the Department of Energy loan guarantee program — once sought to help now-struggling electric car maker Aptera score a DOE loan. Aptera recently started returning the deposits of customers who had stuck around for months of delays to buy its inaugural electric car, and Aptera never received one of the DOE loans.

If Aptera had received a DOE loan, it would have been a worse bet than Solyndra, for sure. In light of the Bloomberg scoop, I’m resurfacing the bulk of a story I wrote earlier this month on “The danger of politicians linking with high risk startups”:

Solyndra’s high-profile flameout is getting an unusual amount of attention, not only because of the massive size of the funds lost, but because President Obama visited the factory in the Spring of 2010. Politicians Vice President Joe Biden, Energy Secretary Steven Chu and then California Governor Arnold Schwarzenegger also visited the ground breaking of the factory in late 2009. When politicians go out of their way to praise and support a company, turns out the public doesn’t like it when the company fails.

But Solyndra is by no means the only greentech startup or tech startup that has become a darling of politicians. The move of both politicians in office, and former legislators out of office, to attend ceremonies at plants, join companies’ boards, and align themselves with hot startups is very common. It’s actually become almost expected for retired politicians to act as advisors to startups, and use their political connections to aid the innovations that they favor. Venture firm Kleiner Perkins has Al Gore and Colin Powell for that, and Khosla Ventures has Tony Blair.

However, politicians in office and out of office, need to be very mindful of how risky the startup is that they are connecting with. To note: the majority of startups fail, and linking with a company that doesn’t succeed isn’t all that bad. It’s just linking with a startup that spectacularly flames out and wastes public funds that could be very dangerous and could sink a promising private sector career, or lead to a failed re-election bid.

We’ve written about this before, back when Representatives John Carter of Texas and Mark Schauer of Michigan, lent their support to the highly-controversial energy storage company EEStor. I’m not sure why any politicians would take such a risk. Back then California Governor Arnold Schwarzenegger also hailed solar thermal startup Ausra as “one of the best companies in the world,” very shortly before the startup laid off staff and was forced to dramatically scale back its ambitions (it was later bought).

Former politicians that have joined boards of somewhat risky startups include Condoleezza Rice, which linked with both Khosla’s biofuel company KiOR and Tom Siebel’s carbon software startup C3. Colin Powell is on the board of high profile fuel cell maker Bloom Energy. At the same time, far less risky tech companies like Facebook and Google have been the venues for Presidential events.

I’m not advocating that politicians don’t embrace and support tech and greentech companies. Avoiding all risky and unproven technologies, would mean simply preserving the status quo — not an appealing option when it comes to energy sources, technology and climate change. But politicians need to do their home work and tread carefully when it comes to the more high risk companies. In an environment when most startups fail, but are naturally trying to put their best face forward, it’s on burden of the politicians to know what they’re getting into.

20 Responses to “The danger of politicians backing high risk startups”

  1. Katie, I am one of the thousands of people that got interested in buying an Aptera ever since it showed up in the magazine Popular Science so many years ago. I wish you looked into who is behind the conspiracy to keep this car off the market. Is it the major car companies and their allies in congress? And if you think the Aptera is too small for most people I suggest you open your eyes to all the people on motorcycles. Many of us do like the idea of a small, efficient vehicle as a second or third car for a household just as a motorcycle fits in to so many peoples lives. Start thinking outside your box and more for what would be good for this overly polluted world.

  2. concernedabouteestorLIES

    Katie, I find it interesting EESTor is suppose to be a “secretive” company, but Brennan Joseph Murphy AKA “b”, eestor news blogger the one with the bag over his head, administrator of knew for a fact Dick Weir, CEO of EESTor “was actually seeking from AFRL was a trade reference which is an intrinsic part of startup development”. Mr. Murphy also knew “Mr. Weir simply had a list of people, including AFRL, who were willing to vouch that if he produced the technology, they would be quick to issue an order”. How did Mr. Murphy know Mr. Weir “had a list of people” if EESTor is a “secretive” company?

    Now it is obvious where Mr. Murphy received names of Air Force Research Labratory employees whom were skeptics of EESCAM. In an AFRL email, Mr. Murphy the eestor news blogger attempted to “bait” an AFRL employee to say something negative about EESTor. The AFRL employee was a skeptic of EESCAM.
    Mr. Murphy, “b”, the eestor news blogger is not coming clean with his relation with EESTor. The FBI needs to investigate this EESCAM story!!!

    • Seslaprime

      interesting, you keep saying EEStor is a scam. Do you know anything about EEstor? I am curious as to what, in your opinion, constitutes the EEstor Scam. particularly, Who have the Wiers Scammed? bet you have Nothing but propaganda for that one.

      • concernedabouteestorLIES

        @Seslaprime, why don’t you and Brennan’s team of EESCAM pumpers purchase more Zenn stock? EESCAM is going to be worth >150 Billion USA. Dick Weir is ahead of schedule, assembling units; reveal is “imminent”, “so close”, “microns close”, and the technology was developed 20 years ago, hahaha. Don’t forget the smart man in this EESCAM story Tom Villars says Dick Weir has always been off by a month or two.

    • There is nothing more than hearsay that EEStor sought federal funding in the way we are discussing here which is in regard to the stimulus. There’s a difference between funding provided to spur a market and funding set aside the fulfill government needs which industry has not addressed. If you consider it that way, EEStor did pursue funding from NASA as part of their SBIR program. This is very different than the stimulus funding because such funds relate to specific needs NASA has to do it’s mission. Therefore, EEStor wasn’t seeking a corporate handout. They were seeking to fulfill NASA requirements by developing their technology to NASA specs. The difference is similar to welfare vs working for fees. Whereas the stimulus provided for grants and loans, SBIR programs are designed to lead to acquisitions of technology.

      It may not be easy for people to see the difference. I take former Zenn investor Haig Rakidjian’s point though in regard to the AFRL remark that Dick was seeking funding. What he was actually seeking from AFRL was a trade reference which is an intrinsic part of startup development. VC’s are more reluctant to fund a startup who cannot identify who might be their initial customers. Weir simply had a list of people, including AFRL, who were willing to vouch that if he produced the technology, they would be quick to issue an order (all other things being equal–such as that another competitor did not emerge). I would change my mind in regard to AFRL if some further evidence were produced.

      This is all getting away from main topic. No evidence has emerged that Weir has asked politicians for any help whatsoever. Unless Cedar Park has provided him some aid in some form–if they did so, they didn’t release it in a Freedom of Information request. Secondly, no politician has done anything for EEStor. The closest we have to anything like this is that Senator Carl Levin attempted to champion the same proposal Shauer did, to put a facility in Michigan. According to Lockheed, Levin asked Lockheed for thoughts on EEStor prior to supporting Zenn. Since he is the chairman of the armed services committee, ie, Lockheed’s govt boss, I’m sure they gave him what they could disclose. Anyway, Levin lended his support to Zenn but the DOE rejected it. This had nothing to do with EEStor.

    • KarmThubten Kalzhing

      Katie, the eestoryblogger is asking for you to use your investigative journalism skills to end the eestory mystery. He wants you to determine why eestor has not produced the product they claimed to have. Was it because they were incompetent at interpreting capacitor energy density science? Was it because they made claims to attract investments and faked patent measurements? Was it because they were micron close to demonstrating production samples but hit a road block? Or are they waiting for the moment when the country is in most need of being SAVED?

      • No, I’m not asking Katie to do anything except present the facts as she discovers them. The fact is it is unfair to say any politicians have done anything for EEStor in a way that would make it similar or comparable to Issa’s support of Aptera.

        She should correct the record on that point.

        Additionally, if you’re going to write about EEStor negatively, then at least perform a little bit of research. For now, Katie’s work has only served as a bullhorn for people who wish to libel EEStor and anyone associated with them. This appears to be the place one goes to make false statements about EEStor to manipulate public opinion.

        No one is saying she has to discover something nice to say about EEStor. I’m merely recommending that she discover something new and present it. She’s a reputable journalist in the field. She could gain access to VC’s in the area.

        It is interesting that she never published an article about Kleiner Perkins’ Bill Joy making the first public comments about EEStor of any Kleiner partner. As she said, EEStor is a company who has received among the most coverage for any renewable energy company. Yet, when Kleiner finally makes a public statement, somehow it’s not news.

        It’s her blog. She can do with it what she wants. I simply think she could do a better job.

        And also, Thubten, on the topic of OBJECTIVITY, are you ever going to write about the close source you uncovered who has a technical connection to EEStor and is very positive about his interactions with EEStor? You dont have to identify the source. But you should disclose in broadly generic terms what that story is.

        I’ve got hope for you Thubten. But so far, you’ve only been a recurring disappointment.

      • concernedabouteestorLIES

        It is interesting Brennan Joseph Murphy AKA “b”, administrator at, the number 1 PR agent for EESCAM on the Internet, has never published an article about his interview with Carl Nelson the co-founder of EESTor. The reason Mr. Murphy will not publish the interview is because it shoots a big hole in his EESCAM story and would not help Mr. Murphy’s agenda to pump EESCAM. He should look in the mirror before he gives advice to anyone what to publish.

        Mr. Murphy, you can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time. The bag did not help you.

      • KarmThubten Kalzhing

        Blogger a reason she might not want to comment on your Bill Joy interview is because like most of your work it was edited to look more favorable for Eestor. We see it over and over. You get information and then selectively release it to make Eestor look favorable. My favorite example is when both you and Haig received a FOIA release from AFRL. You posted the emails about Weir talking to them about a demo of his capacitor, but you didn’t post the email where AFRL said Weir was setting up a demo of efficiency not energy density and where AFRL expressed antipathy for Weir and his claims. Fortunately, Haig had the same FOIA release. You talked to Eestor coinventor Carl Nelson before I did but never reported it. Nelson likely said the same thing to you as he did to me, that he had nothing to do with Eestor’s energy density claim and that he had no idea if capacitors could have the energy density of batteries. Plus, he obviously was distancing himself from eestor by saying he only worked with them for less than a year starting in 2005 and saying I should look to Penn State for credit on advancing capacitor technology. Blogger you have passed yourself off as a journalist. Reality is you are a de facto PR agent for eestor.

  3. concernedabouteestorLIES

    Katie is 100% correct!!! Brennan Joseph Murphy AKA b, the eestor news blogger with the bag over his head is a biased source. He has a team of pumpers of EESCAM whom have investment in ZMC. Why doesn’t Mr. Murphy take the bag off his head, sign his real name, post who his employer is, and come clean with his connection with the Weir family? Mr. Murphy the eestor news blogger is also a big LIAR when he says EESTOR never sought federal funding. Mr. Murphy wants everyone to forget his baiting, “verge of threatening” and quoting out of context Air Force Research Lab employees. From Air Force Research Lab email obtained through a FOIA request:
    Yup. I’m guessing he has a list of people to bug. And I did decline. I did not give him your name.
    I remember some press out there a while back when EESTOR was getting their “Angel Venture Funding” where someone claimed the DoD was “trying to prevent this technology from becoming a commercial product because it was so great”(paraphrase). In reality, the DoD declined funding EESTOR at the level that they desired (several tens of million $$) and recommended they put in a SBIR proposal to prove they have something worth funding – Mainly because they are full of it.
    Anyhow, I can just imagine the way any criticism of EESTOR would be twisted by the “press”.

  4. Katie, you are right, politicians should keep an arms length from individual companies, but not the industry.
    But when you put this in context, the bigger story is really a lack of focus, the Greentech market will grow to over a $Trillion Dollars/year over the next three years, and you have to ask the question whether the US is really ready to walk away from it? See your colleague’s Ucila’s story on Boston power.

    China is pouring massive investments in green, and they have really focused on dominating the market, Solar Leds and now onto Electric vehicles. I think it is even a bigger problem for us when you have Politicians espousing hard anti-science views, when that is where our focus should be.

  5. KarmThubten Kalzhing

    Blogger you should know why reporters like Katie don’t dig deeper into eestor. What if they find some deception about the progress of eestor’s technology. You would be the first person threatening libel.

    • Are you denying that you have a financial stake related to EEStor via your current occupation? A simple yes or no will do. And if the answer is yes, then simply update your blog profile and disclose it. It’s very easy.

    • Katie, advocated is what Issa did for aptera. It is not what Carter did for Eestor. He simply provided a comment about Eestor after touring there facility.

      Thubten, you need to update your profile to disclose that if Eestor delivers, in a few years you might not have a job. Your undisclosed bias derives from your occupation which depends onthe existence of waste oil and waste batteries….things that may be eliminated to some large degree by Eestor. All this time you’ve been bashing Eestor as an unbiased source of truth and it turns out you have a clear financial motive. I was sad to learn that Thubten.

  6. Katie, would you please stop saying any politicians have lent support to EEStor unless you are aware of evidence to that effect? EEStor has never sought federal funding. Yes, Congressman Carter toured EEStor’s facility and issued an encouraging statement about what he saw. But he didn’t lend them any support in the way you are suggesting with the larger context of your article. Mark Shauer supported a grant proposal for Zenn Motor Company on the chance that they might locate a facility in his district. Supporting a DOE grant or loan application is a significant step less serious than providing an earmark…depending on the amount of course.

    Additionally, I think it’s bad form to keep declaring EEStor controversial when you’ve put so little effort into investigating them yourself. Is it really THAT hard to get a question or two in about EEStor when you have Kleiner Perkins and Khosla Ventures right there in your area? Really? Honestly, have you ever even gotten a single first hand question in to anyone on EEStor? Sorry if I missed it, but have you? Did you even cover the remarks Bill Joy made about EEStor in March of this year? You’ll have to agree, as a partner at Kleiner Perkins, his remarks hold some merit on the controversy, no? You cover a lot of green topics and you do a good job but I wonder if you should target controversy if you’re not willing to dig a little more than you have. I like your work but I really question your impartiality. You seem to be showing a political angle in this article which I dont mind but it’s a bit unsubstantial considering all of the facts together.

    As to the larger point, the government has a long history of making significant investments in science that have lead to enormous economic benefits. (flight, electricity, computers, Internet, non-stick pans, satellite based mind control, UFO denial) These investments have been in areas that private industry has been reluctant to pursue. Yes, it is fair to ask whether the DOE can actually pick a winning company. But it isn’t impossible. What some say is it would be better to create a market reward to spur investment rather than pick a company outright. For example, in energy storage, it might make sense to offer a tax credit that is heavily favored around specs needed for a revolution: energy density, charge time, durability, recycleability. Make the credit favor excellence in each of these areas. Dont leave it out there forever…just get the market off the ground. Create a reward that spurs consumers to purchase products whose existence required great innovation.

    Finally, there have been times when companies like Lockheed Martin would have gone bankrupt if the government hadn’t bailed them out with a contract here or there. I’m not saying they are like Solyndra but the precedent is there. We have to ask ourselves if our economic security is important as our national security and get serious about renewable energy.

    Journalists have a duty to nudge our rulers in the right direction and I’m not sure your article gets the job done. But I still respect your work.