Opinion: In Business, Quitters Never Win
This opinion piece originally ran in POLITICO
America was built by entrepreneurs who failed often, learned much and pressed forward despite significant obstacles. As we look toward economic recovery, coupled with ever increasing global competition, not only must American citizens embrace this spirit, but so do our government leaders.
We all need to re-commit ourselves to supporting innovative growth sectors that can guarantee our economic leadership for decades to come — despite the challenges we are likely to face. Anything short of that is like falling down and remaining there — while the competition runs on by.
Solyndra, a high profile, venture-backed and government-funded solar company recently announced that it had failed and was planning to declare bankruptcy. Irrespective of subsequent investigations into the company, on which we reserve judgment, this failure was a wake-up call on two crucial fronts.
First, it was an important reminder that, while the clean energy industry is among the most promising for innovation, job creation and growth, it is still in its infancy — and prone to failures along the way.
Second, Solyndra’s troubles were reportedly due to intense competition from heavily subsidized Chinese manufacturers. This clearly demonstrates that the United States is no longer the default leader in everything that we do.
In fact, the United States is at risk of losing this international race and we are dangerously close to becoming an also-ran to overseas competition. Faced with this unfamiliar challenge, the question is: “What do we do?”
If the venture industry was the only source of financing for these highly innovative but high-risk energy companies, the answer would be simple: Press forward. Company failures, and large ones at that, have always been a part of the venture capital business model – a model that has worked to create with entrepreneurs our country’s most innovative industry sectors — including semiconductors, biotechnology, Internet and software.
Our losses have often been significant, but our successes have been tremendous. Venture capitalists have remained with companies and sectors for the long term and that that commitment has translated into amazing economic value.
However, the nascent clean energy industry needs more than venture capital to succeed. The federal government must also remain committed to supporting these long-term projects that are in the best interest of our country.
It is not the sole mission of venture capital, and nor do VCs have the funds required, to support the ground-breaking basic research necessary to fill the innovation pipeline. In addition, venture capital does not have the funding to scale large manufacturing operations in a competitive manner. This is where the United States can apply its considerable capability.
As the global demand for energy rises, and the U.S. is no longer the default for those resources, we will likely need all the energy generation we can harness. The countries with the most plentiful energy and lowest costs have a major competitive advantage over the long term.
The support granted to Solyndra is just one example of what is needed going forward. To remain in the game, we must take an “all the above” approach to energy. In the long run, Americans will lose if we abdicate our commitment in the face of short-term financial losses.
Competitiveness and resolution are a hallmark of U.S. economic success. “Failure is the opportunity to begin again,” Henry Ford said, “this time more intelligently.”
The federal government did not cut and run in the early days of computers or the space race, despite tough lessons learned along the way. We must again pick ourselves up, dust off and move forward in supporting America’s clean tech economy. As we learned before, here again the short-term losses will very likely pale in comparison to the long term gains.
The venture capital industry remains committed to funding and nurturing our emerging clean energy companies — even in the wake of Solyndra’s bankruptcy. We ask Washington to join us in this pursuit of leadership and continue to support this vital sector.
The next industrial revolution – one anchored by renewable energy – is upon us. But is only beginning. As we enter this new era of innovation and competitiveness, failure is always a possibility. Quitting, however, is not.
Paul Maeder is a general partner at Highland Capital Partners. Ray Rothrock is a general partner at Venrock. Joshua Green is a general partner at Mohr Davidow Ventures.