The news show 60 Minutes fell further from the pantheon of respected journalism with their recent story targeting of the Greentech Industry. They broadcast a segment claiming massive failures amid the new “Cleantech Industry” when in fact what they reported on was the high failure rate of Venture Capitalists. Which begs the question; in attacking Venture Capitalism , isn’t 60 Minutes Really Badmouthing America? We, at PowerTWO have composed this Letter.
Open Letter to 60 Minutes
Dear 60 Minutes –
“ Sure there are a lot of VCs out there with absolutely no business acumen. But you can’t hold Cleantech responsible for the failure of a few inept (see Dave McClure’s colorful language below) (see Vinod Khosla) (see Vinod’s own rambling 60 Minutes letter) investors. In so doing, aren’t you indicting all new-businesses and start-ups, and aren’t you then attacking entrepreneurship itself, along with the whole free enterprise system? And isn’t this then an indictment of American capitalism, the American Dream, and our entire American way of life? Well, we’re not going to sit here and listen to you, 60 Minutes, badmouth the United States of America.”*
– Animal House, 1978 inspired letter
The VC Fraternity is sacrosanct to America, like Vegas, like Wall Street, like Megamillions Lottery, and it is considered one of the great engines of the Free Enterprise System. It is high risk in nature. According to Shikhar Ghosh, a HarvardBusinessSchool lecturer, about 75% of all VC funding startups fail. Ghosh recently released research showing that 3 out of 4 venture-backed start ups do not survive. Dave McClure, a former PayPal executive and founder of the Silicon Valley accelerator 500 Startups, was more succinct last month at a tech conference in Canada. “ The last 10 to 20 years you’d think that it has been all about VCs making money, because that’s all we hear.”
“But it’s really about VCs failing and failing to return capital and being fucking idiots.” “VCs are stupid.
They are absolutely stupid.”
For Khosla, who was interview bombed by Stahl for 60 Minutes, it seems that failure is not an option, it is the only option.
This quote that is bannered on Khosla’s homepage:
“Our willingness to fail gives us the ability and opportunity to succeed where others may fear to tread.”
“I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games.Twenty six times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”
According to a recent report by the Kauffman Foundation, the VC industry hasn’t produced its promised returns for more than ten years, “Over the past decade, public stock markets have outperformed the average venture capital fund,” Kauffman said. “For 15 years, VC funds have failed to return to investors the significant amounts of cash invested, despite high-profile successes, including Google, Groupon and LinkedIn.”
Reality: Cleantech Industry is thriving, VC not so good
So 60 Minutes’ attack against “Cleantech” could have been just as easily pointed at any new business: The Internet, Biotech, Robotics, Organic Farming, The Natural Gas Market – because any new business that utilizes VC money is be open to attack due to its 75% failure rate. In this sense 60 minutes is really attacking New Business, as opposed to business as usual.
ironically, in spite of such a high failure rate. VC funding still managed enough home runs to keep VCs in the game. The 25% that are successful startups, on average sell for $196.8 million and give shareholders a 676 percent return. That keeps the gamblers coming back.
After the obligatory mentioning of Solyndra, Leslie Stahl says in her 60 minutes piece: ” Then I’m gonna give you a list of other failures: Abound Energy, Beacon Power, Fisker, V.P.G., Range Fuels, Ener1, A123. ECOtality….. Pff….. I’m exhausted.” Stahl is exhausted after reading 9 names, which makes us wonder how she might handle a flight of stairs. Here’s a list that would make Leslie need a nap. (see RIP list of solar companies ) – One could produce an equally debilitating list for Stahl from the early days of the computer or the internet. Despite the many dead left by the side of the road on the way to the computer again, the internet and now hopefully a greener planet, Cleantech by most all standards is thriving.
CREDIT: DEPARTMENT OF ENERGY
By numerous indicators cleantech is booming. One could just read the recent Department of Energy (DOE) report, “Revolution Now: The Future Arrives for Four Clean Energy Technologies. ” Installations are skyrocketing, as are solar company stock prices. And the costs of solar are coming down. Solar and Wind are reaching parity with coal and even natural gas. This is happening as gas prices remain flat. And this present growth rate has far surpassed predicted rates 10 years ago. Greentech’s success has exceeded the most optimistic predictions.
To be fair, Greentech is not unique in its success rate. America is not called the land of opportunity for nothing. It is good for business. New business in America, that is not VC based has a remarkably high survival rate. Highest in the world.
* Headd, B. Redefining Business Success: Distinguishing Between Closure and Failure, 2002 # Shane, S. Startup Failure Rates – The Real Numbers, 2008 Phillips & Kirchhoff. Small Business: Critical Perspectives 1989
An impressive average business survival rate of 45% after 5 years. These statistics would come as a shock to Rand Paul,
Ron Paul thought he had the answer to the CleanTech Collapse last week and why Obama was destined unwittingly to throw away tax payer money by subsidizing businesses like Solyndra. He presumed to lecture Obama on the reality of business in America – something he clearly knows nothing about.
Rand Paul stated last week on State of the Nation to Cowley:
“What he [Obama] doesn’t understand is that 9 out of 10 businesses fail.”
The quote went straight to Fox News and to the fact check websites, where Ron Paul is a regular feature.
Snopes.com Perennial Rand Paul
So to answer the question what happened to 60 minutes? CBS hired a man to guide their news programming with a history of hack journalism – meaning he used to work for Fox News. The President of CBS News is now David Rhodes. He was hired in February 2011. He was formerly the Vice President of News at Fox “News”. CBS is now following the same tactics that Rhodes engineered
“Rhodes began his career as a Production Assistant at the newly-launched Fox News Channel in 1996, where he later became Vice President of News. At the network he managed coverage of three presidential elections, wars in Afghanistan and Iraq, hurricanes including Katrina, and was the channel’s Assignment Manager on the news desk the morning of September 11, 2001.”
That means, as The Nation’s Greg Mitchell pointed out Rhodes “was the guy who worked hand-in-glove on the biased, often propagandistic, Fox ‘coverage’ of the run-up to the Iraq war, the 2000/2004/2008 elections, the Plame affair, the worst years in Iraq, and all other things Bush and Cheney, and so on.” And now he oversees CBS News. Some are calling it the “Foxification” of CBS. It seems a reasonable explanation.
In conclusion we would like to say:
Starting a business is basic to the American Dream. It is quintessentially American – that entrepreneurial spirit of innovation and risk/reward. To own ones business is one of the things that has kept America a place of dreams, of a better life. It is innovation and renewal that has enabled our great country to constantly surprise the pundits and the world and some politicians who have declared America in decline. We hope America, American Innovation, American Ingenuity and American Cleantech will continue to surprise cynics like Leslie Stahl, David Rhodes, and Ron Paul .