Whether it’s media or medical industry, Kool-Aid is a killer

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.

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.

Arundhati Parmar

Arundhati Parmar is the Minnesota Bureau Chief for MedCity News.

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Tags: Minnesota, Steve Burrill, Twin Cities

Comments Post a comment

Well done, Ms. Parmar. The Post Bulletin, under Managing Editor Jay Furst, has a history of taking information from “a source” and running with it regardless of whether or not the “source” is actually credible or the information checks out as “fact”. This lack of journalistic integrity can destroy lives, family’s, and businesses. As of now the word about town is that “they (Elk Run)have the money”, when Elk Run does not, in fact, have any more money today than they had yesterday. Anxious readers will now watch to see the Jobs! Jobs! Jobs! appear as biotechnology businesses “sprout like acorns”. When this does not happen they’ll wonder what happened to the billion dollars banked for this by Mr. Burrill and Tower and why they have, again, failed to perform. It’s one thing to thoughtlessly or unwittingly print incorrect information for public consumption, but that does not appear to be the case here. No, this story and the content on the entire first page appears to have been carefully edited to cause readers to believe that the billion dollar designated fund existed and includes a sub-heading telling readers that “Tower says they have raised the promised funds.” Publisher Randy Chapman said he would be looking further into the history of the story to see where the miscommunication started so he could be sure this did not happen again. This seems a bit disingenuous when this is the second time the Post Bulletin has published a screaming headline proclaiming PROGRESS at Elk Run only to have to issue a “correction”. The PB has missed the boat on several other important Elk Run stories: kickbacks, illegal brokering of real estate and suspicious real estate transactions, wild horse contract discussions, etc., not because the information was not available but because Jay Furst did not think informing the public of misconduct or bizarre twists and turns in a project receiving hefty taxpayer funding/support was newsworthy.

Reality may suck, but it does matter.

Comment by Kool-aide free — August 4, 2011 @ 4:45 pm

Thank you for actually reporting what is going on with this development.
Can you please contact the Pine Island staff and MNDoT to alert them of the incaccurate reporting by the Post Bulletin. They need to know what is actually going on and a major decision will be made soon whether to proceed with this development or not. It would be unfortunate for them to proceed without a full understanding of the Fund.

Comment by Anon2 — August 4, 2011 @ 9:52 pm

Thank you for reporting the facts. This is just a ploy to give MN DOT an excuse and cover to continue with the ‘Chronic Wasting Interchange’. Urban interchange designed to handle 40% of pure fantasy: more retail space the the Mall of America and more lab and office space than 2 IDS Towers. Unfortunately State legislators drank the Kool Aide on this project too. Tower and Pine Island brought the pull string jobs dolly who said “Jobs. Jobs. Jobs.” and the legislators swooned. Dave Senjam is FULLY informed and does nothing. BTW – I’d like to donate my driveway temporarily to MN DOT to have it widened and paved at State tax payers expense too…same as Pine Island’s “donation” to this interchange.

Comment by King Julien — August 5, 2011 @ 1:12 am

A bit more background for your readers who are new to Elk Run:

The “chronic wasting” of tax dollars has been happening at this sink hole a lot longer than 2 years: March 21, 2007 Higher Education and Work Force Development Policy and Finance Division Representative Sviggum presented HF 1775, providing a grant for utility upgrades and extension for bioscience research park and integrated medicine facility, appropriating money.

Terry Ward – you might recall that 6/3/2010 at a meeting at MNDOT headquarters with your boss in St. Paul you confirmed this quote as accurate:

August 14, 2009 BRN By Alex Philippidis
For MnDOT to move forward and “let” the interchange project by soliciting bids from contractors, [Terry] Ward said, “we’re looking for [Tower] to have their first building platted, and to have their first building under construction, and to have raised the $1 billion capital fund that Steven Burrill is working with them on. Those are some of the triggers that we’re looking at before we actually will let our interchange project.”

Mm Hmmm. MN DOT “let” the interchange anyway. Now the frontage roads are on hold but the urban interchange designed for 40% of the fantasy continues forward.

Comment by King Julien — August 5, 2011 @ 10:00 am

The Post-Bulletin issued a correction their article just hours before this one was posted: http://postbulletin.com/news/stories/display.php?id=1463022

Comment by A — August 5, 2011 @ 11:01 am

It’s shocking it took them two days to figure out that a correction was needed. The original story came out Monday. I would classify this as reckless disregard for the truth.

Comment by Arundhati Parmar — August 5, 2011 @ 2:11 pm

Arundhati- Has the city council and mndot been notified of the error? I expect additional media pressure will be put on by the developer so that the city/mndot does not back out of the August 15th deadline.

Comment by Anon2 — August 5, 2011 @ 2:43 pm

Anon2, I don’t know about city council, but I did forward my original story from Monday to Terry Ward of MnDOT before I wrote this post yesterday. I think Tower and/Burrill will announce that they are investing in one company who wants to occupy space at Elk Run soon and I am guessing this time they would have to name the company. Whether it will be enough for MnDOT to decide to complete the frontage roads for Pine Island is anyone’s guess. From past experience I can tell you that MnDOT prefers not to ask too many questions.

Comment by Arundhati Parmar — August 5, 2011 @ 3:29 pm

I wonder which flavor Kool Aide is Mr. Ward’s favorite? I’m thinkin’ it’s Cheery Cherry because no matter how bad the decision, or how wrong they obviously are, he seems so happy to move ahead anyway.

Comment by M. Hartman — August 5, 2011 @ 3:52 pm

Presumably Recombinetics?

Comment by Anon2 — August 5, 2011 @ 4:27 pm

So. . . another bridge to nowhere? But no need to tell the truth in the press, as we heard today;

” The media has got to begin to not give equal time or equal balance to an absolutely absurd notion just because somebody asserts it or simply because somebody says something which everybody knows is not factual.” John Kerry

Comment by Cuz we think? — August 5, 2011 @ 4:53 pm

Maybe but I am not sure. Burrill is more interested in human bio than animal bio, at least that’s my sense, but then I don’t have a clue what pressure makes people do. It might be a whole new company that we haven’t heard of completely.

Comment by Arundhati Parmar — August 5, 2011 @ 5:17 pm

I’ll be surprised if it’s not Recombinetics that shows up at Elk Run. Mayo and the U of M announced their Decade of Discovery, which is supposed to be aimed at eliminating diabetes within 10 years. While many find it distasteful, much of what we enjoy in terms of medical advancement has initially been used on animals. Ideas move from the lab to animal applications to trials with small populations of people….. I suspect that Mr. Burrill will invest in any number of biotechnology sectors if he sees real potential to take a concept all the way to market, so Recombinetics may not be out of the question for him. Still, I think the Venture Capital group looking to invest in what they called “The Frozen Triangle” is a more likely bet for money for Recombinetics. They announced an office in Rochester and one of their Officers was previously with Mayo. There was also a tie to the U of M. I can’t recall the group but they’re tied to all sorts of heavily subsidized investments: ethanol was a biggie for them.

Comment by m.hartman — August 6, 2011 @ 12:10 am