Jonah Lehrer, who I think is brilliant, writes a defense of the Solyndra investment, which I think is wrong:
A few years ago, a team of economists at MIT and UCSD analyzed the data from NIH and HHMI funded labs to see which funding strategy was more effective. The economists tried to control for every possible variable, such as outside scholarships and the quality of graduate students. Then, they compared the output of NIH researchers to HHMI investigators with similar track records.
The data was clear: In every biomedical field, the risky HHMI grants were generating the most important, innovative and influential research. Although HHMI researchers had similar qualifications to their NIH counterparts when they first applied for funding, they went on to produce twice as many highly cited research articles and win six times as many awards. They also introduced more new "keywords" into the scientific lexicon, which is a marker of highly original work.
The bad news, of course, is that all this creativity comes with a cost. This is why, according to the economists, the HHMI researchers also produced 35 percent more research papers that went largely uncited. (These papers were abject failures, the Solyndra of peer-review.) The moral is that these scientists weren't producing better research because they were smarter or more creative or had more money. Instead, they had more success because they were more willing to fail.
I am a huge fan of Tim Harford's Adapt, and indeed am now attempting to write a book of my own on a related theme. But it isn't a brief for hog-wild speculation on any sort of project. Scale matters--you can't take billion-dollar fliers on too many ideas. Appropriateness matters--retirees shouldn't put their living expenses in tech stocks. And the potential payoff matters--we should not invest billions to develop a slightly better form of white-out, or into experiments that have a 1-in-a-trillion chance of developing a low-cost way to turn lead into gold.
My company was a vendor for Solyndra from 2008 to 2010. We built machine components both directly for Solyndra and indirectly for their third party assembly machine builders. In total we did about $500,000 worth of business with them during this time. It's not a lot given the scale of their business, but we gained a lot of insight about their business model from the shop floor level during our visits to install and service equipment.
What we saw on the production floor was total chaos! Nobody knew what was going on. Their assembly lines were way too ambitious and complex, difficult to setup and maintain. I personally spent a day on their production floor and I don't think they got more than an hour's worth of parts out of an 8 hour shift. We built about $100,000 worth of components for them that never went into production because they kept changing the plan.
At least we got paid in full. And when they lost faith in the abilities of their US based machine builders they contracted with a European builder for an even more ambitious and complex machine. The last thing I heard was that the machine never worked and they were in litigation to get their down payment money back.
I distinctly remember a conversation that I had with a Solyndra engineer in 2009. He was complaining about how messed up (not his words) things were in his department. Somehow they had misplaced $50,000 worth of sensors, either through theft or incompetence, and that he needed to replace the entire order. I got the feeling that things like this were happening accross the board. That's how you spend so much money in such a short period of time. It's too bad for the employees. We worked with some very bright and dedicated people, but they got no support from the top. The investigations need to continue, both for their sake and for the sake of the taxpayers.
As far as I can tell, Solyndra was having these troubles with its first fab . . . so we lent them money to build a second fab. No one ever said, "hey, this manufacturing process is really fussy and may never work;" the idea was always that if you could just scale up and spend more money, somehow, eventually this product would break even. Again, if they were going to discover cold fusion, maybe this would have been worth it. But their only competitive advantage--using no silicon--was dependent on continued high prices of silicon. No, it's worse than that; it was dependent on there being a big cost wedge between the price of silicon, and the prices of the commodities that Solyndra did use, like copper, gallium, and iridium. This was a bad bet; Lending them money seems like a very complicated and expensive way to take a large bet in the commodity markets. And not necessarily a good bet. Copper, gallium, etc are mined and in limited supply. The primary ingredients in silicon are wood, charcoal/coal, and silica, aka sand.