Still No Words For This

I’ve mentioned before that sometimes when I’m surfing through the various news sites online I’ll come across a news story – usually something being breathlessly reported as astonishing and novel – that is so obvious that words fail me and it’s all I can do to keep from posting what would end up being the word “duh!” repeatedly for several hundred characters. Once such story turned up on the local news station serving Salinas, California’s website regarding a company called Green Vehicles. According to the site, this company had set up operations in Salinas two years ago and was planning to start manufacturing electric cars – three-wheeled vehicles in the same general class as a Smart Car or Mini, but running entirely on rechargeable batteries. It offered the possibility of dozens, if not hundreds, of new jobs for the economically depressed area, and at least the potential for turning Salinas into a center for electric vehicle production. Impressed with the company, the City government decided to pour over a half-million dollars into the project…

Now, even before I finish mocking the City of Salinas, you’ve probably already figured out what happened, haven’t you? Sure enough, the company went under after the grant money ran out, without establishing much of anything except a bad reputation for the “founder” and the city that was naïve enough to shell out money for a high-risk start-up company like this. But the real point here isn’t that it will take time to enter the automotive market, even with proven technology, let alone something as exotic as a three-wheeled plug-in-only vehicle. Nor is it that despite the ink that zero-emission vehicles and vehicles using alternative power sources are getting, neither the State of California nor the Federal government has allocated any real capital to support entrepreneurs in this field. It’s not even the fact that Salinas is a backwater (several hours from anywhere), or that without either personal or brand awareness even marketing this product would have been a huge challenge…

No, the punch line to this story is when the founder is quoted as saying that the reason the company ultimately failed is a lack of capital. This isn’t quite as dumb as saying that the sun came up this morning because of the rotation of the Earth – there are, in fairness, many other ways that a fledgling company can be made to fail. However it is only fair to point out that there is no way to keep a fledgling company in business once it has expended all available capital. Most companies have only a limited time before they must either start turning a profit or go under; a point beyond which their initial capital will not be able to sustain them. In such a case, bankruptcy follows as surely as the night following the day, and no matter how hard the local news attempts to paint it otherwise, even an imbecile should have been able to tell that this would happen unless the company had raised enough money to sustain itself until it began to break even on product sold…

I can’t tell from the news story what the local government was thinking – if they assumed that the entrepreneurs running the company knew what they were doing, or that the company would be able to sell stock and take our loans as it went along, or that the demand for these new products would be so huge that even a few sales would sustain the company’s operations. You and I weren’t there during the pitch meeting, so we really don’t know whether the city representatives were credulous fools or if the entrepreneurs sincerely believed that they could get the job done, or if there is some other explanation altogether. All I know for sure is that if that was my tax money, I’d be calling for the firing of the people who made the grant decision – and that if any of them materially benefited from the award, I’d be calling for them to be jailed…