Thursday, April 26, 2007

The Technician Versus the Venture Capitalist

I continue to worry about the blinders that cultures wear that inhibit just about any chance of their communicating with other cultures, even in the face of the persuasive arguments set forth by the likes of Isaiah Berlin, Anthony Appiah, and Jürgen Habermas. These blinders inhibit conversation on just about any topic, even those of critical global importance. One of the most important topics right now is the climate crisis. Yet, whatever Habermas may tell us about the need for enlightened understanding, it would appear that heated disputation occupies most of the spotlight.

The "heat," of course, comes from what I have called "'points of friction' across social boundaries;" and those points of friction constitute a fact of life in the social world. In fact, as Anna Lowenhaupt Tsing argued, in her appropriately-titled book, Friction, they can be a source of innovation as readily as a source of conflict. What will result from the friction can rarely be predicted, but often it helps to have a better understanding of those points that are actually bumping into each other.

On February 15 Pacific Gas and Electric, along with the MIT Club of Northern California, organized a forum on the topic of solar technology. This forum turned into a prime example of heated disputation; and, unfortunately, when we start to tease out the "story behind the story," we discover that this particular source of friction is unlikely to turn into a source of innovation. The specific points of friction that bumped into each other were Vinod Khosla, who can probably be described fairly as one of the most influential venture capitalists in Silicon Valley, and Hermann Scheer, whose early resume presents a background of qualifications for dealing with both technical and social issues:

Born in 1944, Hermann Scheer graduated from highschool in 1964. He attended the Officers School of the German Federal Army from 1964 to 1966, serving as lieutenant during 1966-67. Hermann studied economics, sociology, political science and public law between 1967 and 1972 at the University of Heidelberg and the Free University of Berlin. He received his PhD in Economic and Social Science in 1972. Dr Scheer was appointed Assistant Professor at the Technical University of Stuttgart in the Faculty of Economics, 1972-76. He worked as system analysts at the German Nuclear Research Center from 1976-1980.

To understand the origins of the friction, we should first recognize that any event sponsored by Pacific Gas and Electric will have, as its first priority, the business of energy. To warp my recently-cited Mencken adage, no one ever rose through the ranks of an energy company by obsessing over the consequences of a clearly sound business decision. (When the energy companies put out those advertisements that try to convince you otherwise by showing really cool nature footage, it helps to remember another adage: Whenever anyone says, "It's not about the money;" you know it's about the money!) So, when we read about what happened at this forum, we should put aside anything Al Gore may be trying to tell us about the future of the planet and recognize that this was a discussion about making good business decisions.

In that context Khosla, with his reputation for making some of the best business decisions in the history of Silicon Valley, was perfect for the forum. The fly in the ointment was Scheer, whose combination of technical and social expertise has earned him a seat in the German parliament, where he now feels more beholden to the German public than to any business institution. Thus, the heated dispute that ensued was not so much about energy policy as it was about the classic question of whether an enterprise is more accountable to its customers than it is to its shareholders, with Scheer serving as advocate for the customer and Khosla assuming the role of "shareholder par excellence."

The good news is that the debate has spilled over from verbal exchanges to text; and CNET has provided a "venue" for the resulting texts. Khosla provided his position statement last week. His rhetorical strategy was to frame the argument as one between environmentalists and pragmatists. Personally, I think this put him in a weak position, since everything else he said then begged the question, "Pragmatic for whom?" After all, this would not have been the first time in history where what was pragmatic for the shareholders was not at all pragmatic (and perhaps even damaging) to the customers! This forced Scheer into the position of defending his own pragmatism from the customers' point of view, and that is basically what he did in responding to Khosla this morning.

Since, in this particular situation, I feel I am more of a customer (of Pacific Gas and Electric, mind you) than a shareholder (since I have no direct investment in any energy company but I know that the energy sector is covered in many of the funds whose shares I hold), my sympathies tend towards Scheer's arguments. Nevertheless, I fear that Scheer has not really grasped that the playing field for this argument is not one of "technology facts." Scheer can throw as many of those facts as he likes a Khosla, and he can even back many of them up with sound economic figures. However, he never really recognizes that these are not necessarily the criteria for making those good business decisions; so I doubt that he will score any significant points against Khosla. The real problem, however, is, as I observed above, that, while their differing contextual assumptions could complement each other in innovative ways, both parties are so intensely invested in their own contexts that this is unlikely to happen.

I would like to conclude by not trying to reduce this to a four-legs-good-two-legs-bad situation, pitting "two-legged" business decisions against "four-legged" public policy. I am a firm believer that sensible business decisions played a strong role in breaking the oppressions of apartheid in South Africa at the end of the Eighties. I am more concerned with that metaphor of cultural blinders that I invoked at the start of this post. Yes, the interests of the general public are in opposition to the interests of the shareholders; but, if that opposition is now cutting off any possibility of conversation, then we are in really deep yogurt. Furthermore, if the climate continues to change the way many of the models are predicting, a large number of us, shareholders included, may soon find ourselves in very deep water!

No comments: