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Khosla: MS green energy start-ups have 90% chance of failure

By Amy McCullough

Vinod Khosla

Vinod Khosla

Vinod Khosla, founder of Khosla Ventures, says Mississippi’s green energy start-ups have a 90 percent chance of failing.

That means Stion, Soladigm and KiOR, all of which are backed by Khosla Ventures, and all of which have been allocated tens of millions of dollars by the Mississippi Legislature, are very likely to fail.

At least that’s what he sounds like he’s saying in the story “Betting on Green” in The Economist magazine:

“Mr Khosla has a different plan to save the planet. He is investing over $1 billion of his clients’ money in ‘black swans’-ideas with the potential for sudden jumps in technology that promise huge environmental benefits, easy scalability and rapid payback. The catch? Mr Khosla expects nine out of ten of his investments to fail.

“‘I am only interested in technologies that have a 90% chance of failure but, if they do succeed, would change the infrastructure of society in some radical way,'” he says. Khosla Ventures’ portfolio reads like an eco-utopian wish-list: non-polluting nuclear reactors; diesel from microbes; carbon-negative cement; quantum batteries; and a system for extracting methane from coal while it is still underground.”

Later in the article he modifies his statement with respect to KiOR:

“Another start-up, KiOR, is hoping to go one step further, converting cellulosic biomass (such as waste wood and leaves) into a crude oil replacement called Re-Crude. Fans of cellulosic biofuels hope that they can produce ethanol without competing with food crops for agricultural land. According to Mr Khosla, KiOR can produce Re-Crude in America today for less than $90 a barrel. ‘Three years ago, I would have said that there was a 90% chance of KiOR failing. But these things aren’t predictable. Forecasting is based on assumptions, and technology changes those assumptions,’ says Mr Khosla. ‘I never compute returns. If you start forecasting cash flows, you lose innovation, you lose instinct. You average yourself down to mediocrity.'”

I would like to know what Khosla thinks the percent chance of KiOR’s failing is today. 80, 70, 60 … ? One can only guess.

If Khosla’s negative outlook is right, however, Mississippians won’t likely see the hundreds of stable jobs that are promised from KiOR’s three proposed plants. And does that also mean that a taxpayer-funded $75 million investment in the plants is likely a bad idea?

See the MBJ’s Magnolia Marketplace blog for Clay Chandler’s update on KiOR, which has taken another necessary step to gaining access to the $75 million that the Mississippi Legislature allocated for the project.

One comment

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