In Defense of the Bio-Skeptic

By Todd Taylor, partner, Fredrikson & Byron

Skeptic: from the Greek “skeptikos” meaning “to consider, examine”

“Skeptic does not mean him who doubts, but him who investigates or researches as opposed to him who asserts and thinks that he has found.” [Miguel de Unamuno, “Essays and Soliloquies,” 1924]

“Trust, but Verify” – President Ronald Reagan

The biotechnology business is challenging. Biofuels and biochemicals are no exception. High technology, regulatory, financial, competition and commercialization barriers exist, any one of which if not managed properly can spell doom to a promising business.

Every serious player in this industry understands its challenges, as evidenced by all the panels, presentations and articles on the challenges we face. A quick and unscientific Google search revealed 3,400,000 hits for “challenges to biofuels” including articles such as “Top 10 Scariest Challenges for the Biofuels Industry” and “Biofuels Still Face Challenges,” many articles written by industry experts.

In the face of such overwhelming concern about the state and future of the industry, it often surprises me how often the industry promotes and accepts, without question, technological and business claims made by some of our fellows. Please don’t get me wrong (though I am sure many will), I am a believer in this industry and have practiced as a finance and project lawyer in this area for over fifteen years.

But belief in the ultimate good does not mean that I, or anyone, should accept every story we hear. Every industry suffers its share of fools making ridiculous and unsupportable claims and ours is no different. From crazy and impossible yield claims, premature announcements of victory over all competitors to policy demands detached from reality, we far too often silently shake our head, perhaps exchange a comment with a colleague, but do little more.

Before I take on a new client, I always do some due diligence, I check out the management team, ask around about the technology, think about competitors and ask about the financial model. I am not passing judgment on them, but I want to make sure that anyone who I work with and spend significant professional and often personal time on, can pass at least some basic test of viability.

Being properly skeptical

When we, as an industry, fail to be properly skeptical of companies and technologies that are in “stealth mode” or clearly have technical or business challenges, we do ourselves a great disservice. Stealth means they are only telling us what they want us to know, with no third party validation. I don’t have a problem per se with companies in stealth mode, but they should not expect to receive near universal adulation simply because they have a great PR team.

Take KiOR as an example. Last year, Biofuels Digest readers voted them the #3 Biofuels Company. #3…. Even during the voting, the Digest was reporting on serious signs of concern as they had troubles with production and processing. Prominent scientists in the industry were privately telling me that KiOR’s technology would never work. I have no independent reason to doubt KiOR or their skeptics and bear no ill will to anyone at KiOR. In fact, I mourn their troubles, not only for their sake, but for the sake of all of the rest of us that now have to deal with the fallout. Significant private and public funds went into KiOR that now may be lost, making it harder for the next company to convince the financial markets that they will not suffer the same fate.

Failures like this create other problems. Every failure gives our critics ammunition to fight us on key policies that we need to protect. Every failure makes potential customers and strategic partners less willing to trust us, forcing us further down the development path before doing a deal. Every failure makes the public more susceptible to messages that we are actually bad for the environment and are starving kids in Egypt.

Look for overall progress

When we look for positives, we should focus less on the current “hot” companies and technologies, and more on the overall progress made by this industry. As an industry, we are achieving some remarkable things, but in our quest for personal or corporate glory (and the money that often follows), we too often ignore the big picture, to our detriment.

Instead of making hard to support big claims, we should be building from the ground up. Build the small pilot to verify, then scale. We are so busy trying to convince everyone that our big dreams are possible, that we often fail to take the smaller, more concrete steps to make our dreams a reality. We try to build the Pyramid from the Top Down.

Finally, if you are the target of some healthy skepticism, please be aware it is not personal and take it as a learning opportunity. No one likes criticism, but we all get it from our spouses, children and friends. The best revenge is to prove them wrong.