It’s hard enough being a member of a demonized class without watching your colleagues go rogue. As a venture capitalist, I have never been comfortable being lumped in with leveraged buyout shops, hedge fund moguls, and, God forbid, investment bankers.
Although we take crazy risks in search of outsized rewards, we rarely use debt. And while our exuberance fueled bubbles that sometimes popped, deflating overvalued stock markets, we never crashed the economy. We were proud that we kept our distance from Washington. And when our businesses failed, which happens a lot, we never took the taxpayers down with us.
A new breed of venture capitalist has blossomed during the Obama administration, like mushrooms after a rainstorm. I call them venture porkulists.
The scale at which these people have feasted on your money as they hosed it down rat holes like Solyndra, Beacon Power, Ener1, and others is unprecedented. The leverage they’ve obtained through political connections – risking pennies against your tax dollars – to ramp up manufacturing of immature and economically unsustainable technologies boggles the mind.
The wreckage that awaits as this cycle of malinvestment runs its course will distort the economy for years, not only because of the money vaporized but because public policy aggressively tilted the playing field, harming real, value-creating businesses. Reversing these policies will take time, during which even more damage will be done. And it’s all in the name of saving the world from the dire predictions of climate models increasingly shown to be suspect.
I used to admire a guy named John Doerr, a rock star in our business. Compaq, Netscape, Symantec, Sun Microsystems – all of these and more were financed by John and his colleagues at Kleiner Perkins Caufield & Byers. I remember when John started to change,writing about it back in 1997 after he founded a liberal Silicon Valley lobbying outfit called TechNet.
TechNet’s mission was to attract federal government involvement in technology businesses that had previously thrived without Washington’s “help.” Along with it came a cycle of campaign donations, policy initiatives, and regulatory arbitrage that continues to this day.
The cleantech/renewable energy/green investment boom was on. Al Gore became a partner at Kleiner Perkins on his way to becoming the first carbon billionaire, as The New York Times put it, “profiteering from government policies he supports that would direct billions of dollars to the business ventures he has invested in.”
The companies spawned during this frenzy managed to pry some money out of George W. Bush’s administration. But the spigots didn’t really start gushing until after Obama was inaugurated, his presidential campaign generously financed by the cleantech crowd, his administration peppered with their people.
Kleiner Perkins is not alone. Vantage Point Venture Partners is the venture porkulist poster boy of the week. The Washington Post reports that the Obama administration funneled $2.4 billion in public funding to clean-energy companies financed by Vantage Point after one of the firm’s partners joined the Obama Energy Department.