Into the Valley of Death

greentechmedia (Hargadon) - Everybody is talking about how new breakthroughs—in energy and elsewhere—require helping startups through the valley of death. This is a well-intentioned but dangerous policy. Saying that most startups perish in the valley of death is like saying that most patients die of cardiac or respiratory failure -- the moment when the heart stops pumping or the lungs stops breathing. Indeed, doctors now take great care in noting not just the immediate cause of death but also the antecedent causes: patient died of [blank] due [antecedent cause] due to [antecedent cause]. Without looking past the obvious, few lessons can be learned.

Innovation policy must similarly take great care not to confuse the ultimate with the antecedent causes of failure. Running out of money is the ultimate cause of death for almost all ventures. Without considering the antecedent causes, it's also a dangerous basis for policy decisions.

Supporting the success of small companies advancing clean technologies requires more than financial or physical capital; it requires ensuring that these companies have access to the best knowledge and experience, and the right social networks, as they get started.

The traditional energy sector is extremely large, bureaucratic, and entrenched. The competitive landscape in which new companies hope to thrive is a product of regulatory policies and industrial coordination that transpires in places and ways that are difficult for entrepreneurs to see, let alone access. Yet this is a large portion of the knowledge and networks that new companies must acquire if they are to survive and make a difference.

Institutions are emerging to provide new startups in clean technology with these resources. At UC Davis, for example, the Green Technology Entrepreneurship Academy, in coordination with the Graduate School of Management and with support from the Kauffman Foundation, brings scientists and engineers from across the country together to explore the commercial potential of their research with instruction and mentorship from leading entrepreneurs, investors, and corporations. The emphasis is on combining entrepreneurial knowledge and networks -- the critical intellectual and social capital that new ventures need before the financial capital can be put to best use.


Andrew Hargadon is the Charles J. Soderquist Chair in Entrepreneurship and a Professor of Technology Management at the Graduate School of Management at University of California, Davis. He is the author of How Breakthroughs Happen: The Surprising Truth About How Companies Innovate (Harvard Business School Press, 2003).