Let’s begin with a simple premise: Fantasy is bad. Reality is good.
Entrepreneurs begin with a dream. But things go badly when they drink their own Kool-Aid. That’s when valuable advisers can force entrepreneurs to swallow the bitter pill that is reality. And only when aspiration collides with reality and makes the necessary adjustment does true, positive change occur.
If it were only so easy to practice that philosophy.
We’re in a world that’s short on jobs, short on tax revenue, short on investor capital, short on opportunity and, I would argue, even short on hope. If someone with credibility appears waving dollar signs or selling the perfect entrepreneurial dream, it’s easy to drink the Kool-Aid by the gallons and support something endlessly even when facts on the ground screech, “get a grip!”
Resisting that urge as both an entrepreneur and as a journalist is crucial.
It’s why I’m going to break a journalistic code and publicly rebuke another news organization. My beef is with the Rochester Post-Bulletin’s coverage of the Elk Run project in southeastern Minnesota and their most recent article on the status of a $1 billion fund tied to it.
Venture capitalist and biotech observer G. Steven Burrill promised to raise that money more than two years ago. Over the years it has become apparent that Burrill has had difficulty raising that Elk Run fund. But then Burrill recently filed notice with the U.S. Securities and Exchange Commission to raise a $500 million Burrill Capital Fund IV.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Could these be the beginnings of the long-awaited Elk Run investment? After an email exchange with Burrill, it’s clear that’s not the case, although the money from Capital Fund IV and other funds he is raising from investors in Chile, Brazil and Malaysia could be invested in promising companies interested to come to Elk Run, Burrill stated.
In other words, while cumulatively these funds total more than $1 billion, they are not exclusively tied to Elk Run or even the state of Minnesota. And so Burrill has still not delivered on the promise of the $1 billion Elk Run fund.
On Monday, the Post-Bulletin’s online article carried this headline: Investor raises promised $1 billion for Elk Run. The next day a slightly more detailed story ran on the front page above the fold with a similar headline. It quoted Burrill saying that these funds in total “exceed the $1 billion earlier discussed,” a statement that Burrilll sent me as well. But I chose to ignore it because, well, it’s just not true. A dedicated fund for Elk Run as Burrill promised earlier cannot be conflated with a number of funds that may or may not fund companies at Elk Run.
When I contacted them today, Jay Furst, managing editor of the Post-Bulletin, said the newspaper is running a correction and more reporting will follow. But that is also a pattern at the paper: A big front page story, followed by a correction. And the paper has continually oversold the project instead of offering real scrutiny of whether it’s worth the hoopla (this is also probably a good moment to note that the Post-Bulletin has taken issue with my reporting style when I covered Elk Run for Finance & Commerce and that has been noticed by others.)
The kind of boosterism the Post-Bulletin is engaging in is a net loss for the medical industry and the state, which is sinking millions of dollars in building an interchange specifically because they saw Elk Run as an economic development powerhouse. This kind of cheerleading prevents people from seeing the facts and take appropriate action — in this case, the state could have halted building the interchange. It also distracts from other projects that may take a more incremental approach to innovation and economic development, but is grounded in reality.
It is OK to take facts and make different interpretations. My previous employer, Finance & Commerce, had a hopeful headline that said: “Elk Run project could get piece of $350 million fund.” But it is quite another thing to swallow sand and call it wine like the Post-Bulletin has done in the past and continues to do. It’s a pattern with an increasing number of media types, analysts, economic development wonk and others who simply see dollar signs, do no due diligence and decide to shout, “Oh yeahhhh!”
Let me break it down. Burrill is never going to deliver a $1 billion fund for Minnesota’s medical industry, not for lack of trying, but simply because there is no appetite for it. And for anyone — least of all a newspaper organization that has a moral obligation to its readers — to keep abetting that fantasy is akin to a poker player who won’t get off what’s clearly a bad bluff. They keep pumping money into their losing hand.
In this case, it’s creating fake buzz that will likely convince startups, trade groups and governments to chase or continue to wait for something that’s not going to come. It is not smart to swallow the Kool-Aid. Hard truth is the best tonic.
