With the annual Federal deficit at around $300 billion, a weekly $1.5 billion cash burn in Iraq, and the National Debt a little north of $7 TRILLION, you would think our trusty lawmakers would be watching OUR pennies.
Instead, they are finding new and creative ways to waste OUR money.
The Washington Post announced this morning that "NASA Invests in Its Future with Venture Capital Firm." In a project that is called "Red Planet" but surely should have been called "Red Ink," the wise folks at NASA have set aside $75 million of your dough to fund projects so "NASA could see a lot of technical innovation" through its direct ownership in technology companies.
This idea is a screaming loser on so many levels it is almost hard to get started.
First, venture investing is one of the most difficult types of investing. It requires tremendous expertise and experience. I am sure the "three venture fund veterans" NASA has found to run this captive fund are perfectly nice people. But in all deference, successful VC investors are very well paid and NASA simply could not recruit the A-Team. So I cannot imagine performance will be competitive with industry.
Second, with this small sum of money NASA will likely be able to invest in 15 to 20 companies. With thousands of companies in the US, this will be a window on not very much.
Third, the article says this fund will have an advantage because "they will have constant input from NASA officials about what kinds of technologies and services the agency is looking for." Now, there is a concept which basically assures failure. I always look to Federal officials for key ideas on technology. In fact, the other day, I just heard about The Google.
But the most important point is this: The U.S. has the largest, smartest, best funded venture capital industry on the planet (of Earth). There are hundreds of firms with brilliant technologists investing billions of dollars per year in leading technologies of all types -- including private space exploration, which will hopefully put NASA out of business. Why on earth does NASA think they need to add to that? It is truly crazy and beyond wasteful. If NASA wanted a window on technology for the Federal Government, all they needed to do was write a letter to all VCs thought the National Venture Capital Association (Cost: about $200) and all of these good patriots would have sent them every promising business plan in their files. Then they would have had a REAL window on technology.
But with this move, they have added scientific value: they have created a new Black Hole.
Please write to the Administrator of NASA, Michael D. Griffin, to let him know how very pleased you are that he has decided to put seventy-five million of your bucks into "Red Planet."
Rick Rickertsen is a managing partner at Pine Creek Partners, a Washington, D.C.-based private equity firm, and author of Sell Your Business Your Way.
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Reader Comments (Page 1 of 1)
10-31-2006 @ 2:07PM
Myron VonBeaker said...
I could not disagree more with the attitude of this article. I am thrilled that NASA will invest $75 million in innovative private sector companies that will futher technological advancement and innovation for space exploration! I am proud that some of the $75 million is MY money.
I do agree with the author on two points though.
The first being that $75 million will not reach alot of companies. This is actually good. NASA will invest, what little money they alotted, in those companies that show the most promise. More money should be alotted to the Red Planet, however, with NASA's meager budget (as compared to other government agencies) I guess this is as much as we can hope for.
The second point with which I agree with the author is I will write to the NASA Administrator, Michael Griffin. I will sincerely express how very pleased I am that he has decided to put seventy-five million of MY bucks into "Red Planet."
Knowledge requires time. Time is money. Knowledge requires money.
11-02-2006 @ 10:15PM
Bill McCoy said...
I am by no means a venture capitalist expert or even a savvy investor but here is my take on the topic. I would have to agree with Myron VonBeaker.
I do believe our government should be careful on how they spend our money. However, don't quote me but I think the space program only accounts for like 1% of the national budget. These recent steps being taken are by no means a waste. There are plenty of wasteful things going on but this isn't one of them in my opinion.
Even if that 75 million reaches only 15 - 20 new small private space companies I think that is absolutely fantastic. Finally the little guys have a chance. It's not a lot of money considering what NASA spends but to a small efficient company it could be enough to ensure its survival. At the very least give them a great start.
Also it's probably important to point out that NASA also just awarded almost $500 million between to two private space companies in a proposal called COTS (Commercial Orbital Transportation Services) We did an ezine issue on it and interviewed three of the competitors. Find the mp3s here.
http://rocketsawaymedia.com/rockets_away_ezine_082006_cots.htm
The COTS money will allow these companies to demonstrate their technology that could provide delivery of cargo and humans to the ISS after the space shuttle retires in 2010. The two companies are Rocketplane Kistler and SpaceX.
I thought this was a brilliant idea on Griffin's part. First of all small private companies have to be competitive to stay alive. They have to operate in an efficient and creative way. They can't raise taxes when they run out of money!
Seeding these companies is helping the private industry take off and eventually space exploration will become cheaper, safer, and more frequent. Don't forget it will also become available and affordable to the public. Yes, someday we normal folk will all be able to experience space. Not just the elite and wealthy. That can only happen through the private sector not our government. Lucky for us our government is now helping. I'm thankful NASA is taking the steps to help the private sector achieve this. Nothing is perfect but they are taking steps. That's something. I think they should dedicate even more funds to this agenda.
Another reason COTS is important because our country shouldn't have to rely on other countries for access to space. There is a gap after the Shuttle retires that NASA can't fill. The $500 million they are investing in American companies is comparatively cheaper than if they devised their own temporary solution. However the technology these companies develop won't be temporary they will provide similar services to other customers and continue to grow. NASA is helping them build products that can be sold to other customers other than NASA. That's good for the company and good for the American economy.
To quote the article and re-quote Rick above "they will have constant input from NASA officials about what kinds of technologies and services the agency is looking for." This not only serves true in the Red Planet Fund but also in the COTS program. I think it makes perfect sense. If NASA is the customer paying a company to provide a service shouldn't they be communicating what they want? At least in my opinion I see it as NASA (the customer) telling the service provider what they want them to build. There would still be flexibility for that company to be creative and reach those objectives in an innovative way. That's the point. I'm making the assumption they don't want to micro-mange but communicate what the needs are. I could be wrong but that's my best guess. I hope I'm right because otherwise they're going to end up awarding funds to companies building products that NASA will never buy from them. What good would that be? That would be a waste.
I still have two big concerns in all of this. One, I hope after President Bush finishes his term that the next administration will continue to support these initiatives. This shouldn't be a political agenda it should be something that is set in motion and carried out through all Presidential administrations in the future. Politicizing space is going to set us up for failure and that would also be a waste of our hard earned money.
My second concern is the existing workforce. It's declined over the years from lack of interest in space. The public is not engaged enough. I think part of this Red Planet Fund should invest in organizations that set out to inspire young people and encourage them to take careers in related fields. Don't just invest in the small companies who will build the technology but also small companies and schools that are reaching out to young people. The young people will take the helms. We have to get them more engaged now to ensure our future in space. Who is going to work at these private space companies? Not going to be robots is it? : - ) Then we'll need another fund to get the robots built.
Agree? Disagree? What do I know; I'm just a poor country boy from Illinois.
I would love to hear your thoughts
Bill1McCoy@RocketsAwayMedia.com