Lead Article in this week's Houston Business Journal: "Port of Houston lands $25M federal grant for new hydrogen project"...not so fast friend!!!

(01-29-2025 03:55 PM)Houston Owl 2 Wrote:  Lead Article in this week's Houston Business Journal: "Port of Houston lands $25M federal grant for new hydrogen project"...not so fast friend!!!

With Trump as President, you've gotta be quicker than that to keep up with the changes - he's already reversed himself, after creating the intended result - "chaos is a ladder".

The project looks like a solution in search of a problem. Not a lot of hydrogen-powered trucks cruising around looking for somewhere to fill up. I guess the idea is if you build it, they will come.

(01-29-2025 04:04 PM)Frizzy Owl Wrote:  

(01-29-2025 03:55 PM)Houston Owl 2 Wrote:  Lead Article in this week's Houston Business Journal: "Port of Houston lands $25M federal grant for new hydrogen project"...not so fast friend!!!

With Trump as President, you've gotta be quicker than that to keep up with the changes - he's already reversed himself, after creating the intended result - "chaos is a ladder".

The project looks like a solution in search of a problem. Not a lot of hydrogen-powered trucks cruising around looking for somewhere to fill up. I guess the idea is if you build it, they will come.

This following comment isn't related to hydrogen, specifically.

But that is one of the pro's of government funded infrastructure - without the profit motive they can be a leader in nascent technologies that are still loss leaders. There are countless examples of that, and why I'm generally a big proponent of government funded research and investment in infrastructure.

The downside is that the government will swing and miss. But personally, I am generally OK with the misses, as they seem (to date at least) to be outweighed by the hits.

To your first comment, my initial thought is that this EO/OMB debacle is an Overton window shift, essentially. Cause chaos, get people up in arms across the spectrum, and then it sounds like making smaller (but still wide) cuts is a compromise. I think a lot of folks have absolutely no idea of the impact, chaos, and uncertainty that this EO and OMB document has caused for, I would guess, 10's of millions of US citizens.

(01-29-2025 08:36 PM)RiceLad15 Wrote:  This following comment isn't related to hydrogen, specifically.

But that is one of the pro's of government funded infrastructure - without the profit motive they can be a leader in nascent technologies that are still loss leaders. There are countless examples of that, and why I'm generally a big proponent of government funded research and investment in infrastructure.

The downside is that the government will swing and miss. But personally, I am generally OK with the misses, as they seem (to date at least) to be outweighed by the hits.

That's the one notable downside?

By the way, the usual argument for government infrastructure projects is that they do have a positive return on investment, just over a time frame that is too long for private investors. Sometimes it is argued that while the return is not strictly quantifiable, it is still worth the quantifiable cost. I'm not sure I've heard even the most freewheeling spendthrift argue that the return doesn't really matter at all.

One downside is that successful infrastructure is often then ‘leased’ or sometimes even sold to ‘favored’ private entities.

I have no problem with government investment…. But we need to profit from the winners…. Because we lose so often.

(01-30-2025 11:02 AM)georgewebb Wrote:  

(01-29-2025 08:36 PM)RiceLad15 Wrote:  This following comment isn't related to hydrogen, specifically.

But that is one of the pro's of government funded infrastructure - without the profit motive they can be a leader in nascent technologies that are still loss leaders. There are countless examples of that, and why I'm generally a big proponent of government funded research and investment in infrastructure.

The downside is that the government will swing and miss. But personally, I am generally OK with the misses, as they seem (to date at least) to be outweighed by the hits.

That's the one notable downside?

By the way, the usual argument for government infrastructure projects is that they do have a positive return on investment, just over a time frame that is too long for private investors. Sometimes it is argued that while the return is not strictly quantifiable, it is still worth the quantifiable cost. I'm not sure I've heard even the most freewheeling spendthrift argue that the return doesn't really matter at all.

I'm sure there are others - that's just the one that comes to my mind first.

I think you misunderstood my point, and probably because I didn't fully articulate the thought. It wasn't that the return doesn't matter at all. It's not spending money for the sake of spending money. Rather, the certainty of a return (or the timing of one as you point out) is too uncertain or risk for the private industry. The government is able to fund innovative research because they don't have to show how it will generate an ROI in X years. But research grants are reviewed, and their potential impact - short term and long term - is considered. The spending has to have a purpose and provide some value, but it doesn't have to be a fiscally profitable in the immediate term.

Probably still not articulating this well, but it's late.

(01-30-2025 10:35 PM)RiceLad15 Wrote:  

(01-30-2025 11:02 AM)georgewebb Wrote:  

(01-29-2025 08:36 PM)RiceLad15 Wrote:  This following comment isn't related to hydrogen, specifically.

But that is one of the pro's of government funded infrastructure - without the profit motive they can be a leader in nascent technologies that are still loss leaders. There are countless examples of that, and why I'm generally a big proponent of government funded research and investment in infrastructure.

The downside is that the government will swing and miss. But personally, I am generally OK with the misses, as they seem (to date at least) to be outweighed by the hits.

That's the one notable downside?

By the way, the usual argument for government infrastructure projects is that they do have a positive return on investment, just over a time frame that is too long for private investors. Sometimes it is argued that while the return is not strictly quantifiable, it is still worth the quantifiable cost. I'm not sure I've heard even the most freewheeling spendthrift argue that the return doesn't really matter at all.

I'm sure there are others - that's just the one that comes to my mind first.

I think you misunderstood my point, and probably because I didn't fully articulate the thought. It wasn't that the return doesn't matter at all. It's not spending money for the sake of spending money. Rather, the certainty of a return (or the timing of one as you point out) is too uncertain or risk for the private industry. The government is able to fund innovative research because they don't have to show how it will generate an ROI in X years. But research grants are reviewed, and their potential impact - short term and long term - is considered. The spending has to have a purpose and provide some value, but it doesn't have to be a fiscally profitable in the immediate term.

Probably still not articulating this well, but it's late.

Most subjects of most research grants *dont* generate income, or appreciable income of sort. The ones that do -- they can be outstanding.

I always thought of the issue as the big bad father of startup VCs. In the startup world, dealing with A or B round money, the expectation is that 3 out of 20 make it to profit. And about 8 of 100 make it to *real* profit. The returns on the 8 make up for the other 92, and multiples of that make up as well.

Stretch the success rates thinner, the returns upward, and the timelines way past those for VC --- and that is the paradigm for government research grant stuff.

What is lost in the glare of successful 'bigguns' is the sharp upward tick in what becomes basic underlying research that comes out of and with the failures.

But there is definitely a vetting process for potential advances and goals of such potential advances.

(01-30-2025 11:14 PM)tanqtonic Wrote:  Most subjects of most research grants *dont* generate income, or appreciable income of sort. The ones that do -- they can be outstanding.

I always thought of the issue as the big bad father of startup VCs. In the startup world, dealing with A or B round money, the expectation is that 3 out of 20 make it to profit. And about 8 of 100 make it to *real* profit. The returns on the 8 make up for the other 92, and multiples of that make up as well.

Stretch the success rates thinner, the returns upward, and the timelines way past those for VC --- and that is the paradigm for government research grant stuff.

What is lost in the glare of successful 'bigguns' is the sharp upward tick in what becomes basic underlying research that comes out of and with the failures.

But there is definitely a vetting process for potential advances and goals of such potential advances.

All VERY true. The problem I have is that VC normally captures large portions of the gains of the winners... while governments only capture SOME of it for the taxpayers... with a lot more of it going to serve political aims as a result of the process.

If public VCs acted like private VC, our tax rates, deficits etc would all be much lower for the reasons you mention.

(01-30-2025 11:32 PM)Hambone10 Wrote:  

(01-30-2025 11:14 PM)tanqtonic Wrote:  Most subjects of most research grants *dont* generate income, or appreciable income of sort. The ones that do -- they can be outstanding.

I always thought of the issue as the big bad father of startup VCs. In the startup world, dealing with A or B round money, the expectation is that 3 out of 20 make it to profit. And about 8 of 100 make it to *real* profit. The returns on the 8 make up for the other 92, and multiples of that make up as well.

Stretch the success rates thinner, the returns upward, and the timelines way past those for VC --- and that is the paradigm for government research grant stuff.

What is lost in the glare of successful 'bigguns' is the sharp upward tick in what becomes basic underlying research that comes out of and with the failures.

But there is definitely a vetting process for potential advances and goals of such potential advances.

All VERY true. The problem I have is that VC normally captures large portions of the gains of the winners... while governments only capture SOME of it for the taxpayers... with a lot more of it going to serve political aims as a result of the process.

If public VCs acted like private VC, our tax rates, deficits etc would all be much lower for the reasons you mention.

Many times the grant approach is used by personnel at a University -- the most logical place for much of the work. Captures the efficiencies of low cost grad assistants, in place facilities, etc.

When the *very first* basic research shows promise, sometimes the Univ. will get involved when they are smart and organized) to capture that basic IP.

At that very time, the typical roadmap is that the core group of researchers bails out of the grant apparatus, and starts a shoestring equivalent in the real world. Trade univ labs for industrial strip center offices and kludged together lab / engineering/ research areas. Maybe an angel investor to foot some bills. Maybe F&F. Or both.

Then they license the basic Univ patent, which feeds the Univ coffers. After that, its on the VC track. I dont see how much more to capture for the public than that.

The main 'growth' outlet for the taxpayer is to fund more IP work at the base research level. No way to effectively grab the high upsides for the public -- will almost always have to be happy with the base IP licensing stream.

Of course, think of how much the base IP for TCP/IP license revenues might be had they (DARPA and its group that sparked the internet) had that foresight. Or the abse Ip for basic router and server technologies. Small base license x a gobsmack of end products is still a gobsmack of moolah.

(01-30-2025 11:56 PM)tanqtonic Wrote:  After that, its on the VC track. I dont see how much more to capture for the public than that.

According to VC guys I used to work with... The process/requirements for bidding for these programs sometimes didn't result in the best price... sometimes it literally gave away the farm to ensure that 'the right' investors won the bids.... and because of the '8 winners that MORE than cover the 92 losers' you mentioned... giving up meaningful portions of those winners still result in good profits, but not nearly AS good overall.

Sometimes these were legitimate reasons... like US based or 'not an adversary'... but many times it was things like DEI like initiatives or 'back scratching companies' as opposed to the highest bid.

(01-31-2025 12:58 AM)Hambone10 Wrote:  

(01-30-2025 11:56 PM)tanqtonic Wrote:  After that, its on the VC track. I dont see how much more to capture for the public than that.

According to VC guys I used to work with... The process/requirements for bidding for these programs sometimes didn't result in the best price... sometimes it literally gave away the farm to ensure that 'the right' investors won the bids.... and because of the '8 winners that MORE than cover the 92 losers' you mentioned... giving up meaningful portions of those winners still result in good profits, but not nearly AS good overall.

Sometimes these were legitimate reasons... like US based or 'not an adversary'... but many times it was things like DEI like initiatives or 'back scratching companies' as opposed to the highest bid.

I can safely say that in the two decades that I dealt (and still somewhat deal) with the VC community (both in the seller companies, and afterward doing outside work for some) that I never encountered that. They were almost all dog eat dog to get the most. On both sides of the deal.

Most VCs stayed the hell away from direct Univ programs for bid outs. Most Univ also didnt want direct private investment in the school program activities. Because of that mutual want to stay away from direct involvement with each other -- that was why the 'breakaway' group with a back license to base IP was the almost exclusive way to do it.

I dont think I ever saw, or ever heard of a 'bid for a Univ program'. Lots for breakaway groups as private entities. None for a research program.

As for the 'give up big portions of profits' -- because of the above and the issue you raised on 'feed back to the taxpayers' -- Univ dont have any leverage if that type of deal were to happen for a program. They literally cannot stop the movement of researchers into the private world. Being institutions, the traditional roadblocks to that arent available for the most part. A research group wants to break out and go into their own company, the Univ typically only has the ability to IP the already done research and license it to the departing researchers,.

If you are referring to VCs and the now-private groups, I just havent seen the prevalence of back scratching and DEI initiatives impact a private company VC deal. With bigger hedgie acquisitions of private 500 million valuation - I have seen the DEO thing. But thats not VC territory.

Didnt (and still dont) see the plethora DEI bugaboo that seems to be the bane of existence these days for apparently a great number.