(and I comment).
One thing about the money that is being talked about is that every year IH (and all the other players) will need to produce accounts and pay taxes. That means that people who do some digging will find out the truth or otherwise of all the rumours. There are legal implications for lying about the money.
Indeed. Darden and Vaughn have high experience with Cherokee, making risky investments, where some fail, and would be thoroughly aware of the possible pitfalls of failure to fully disclose risk to investors, and knowing that fraud would likely fail to escape detection. In the attempts by Planet Rossi to show that Darden and Vaughn are crooks, examples are dredged out of Cherokee history; but, when examined closely, none of these have held up as evidence of fraud or deceptive behavior; the fact that reporters have strongly implied fraud and that investigations have been started is used by Planet Rossi as if it were proof, but the lack of conclusions is actually evidence of the opposite. The worst thing found, so far, was an accounting error, an understandable one, arcane, where a particular expense was, by securities regulations, not to be charged to investors, whereas IH did make that charge. No wrongdoing was found, only error.
Similarly, if IH did get Rossi’s IP to actually run, and later try to sell it without acknowledging (and paying) Rossi, then he will have legal redress. They can’t “steal” the IP and get away with it.
Right. Again, Planet Rossi must imagine that somehow the IP would be hidden, disguised. I can only imagine that as possible if the IP were not actually patentable. Further, to pull off this scam, IH would be risking billions in legitimate profits, all to … what? Take some secret payments under the table from some other company, perhaps Brillouin, where they have only a relatively small and old investment? They would be risking that some whistle-blower would reveal their perfidy. Rossi tried hard to find evidence along these lines and apparently failed, though we may not have seen everything.
The point about VCs (Venture Capitalists) is that they are gamblers. Where most investors want to get a certain return on investment, VCs estimate the risks of losing their money and calculate whether the possible gains outweigh the risks so that, on balance, they gain more money than they lose, but it is known that since the investments are high-risk then a certain proportion will in fact fail and they’ll lose their money on those ones. In fact, if not enough projects fail then the VCs are not earning their money, since they ask a high percentage of the profits of those that succeed. No-one would take a low-risk project to a VC, after all – it costs too much.
This accords with my understanding. VCs are gamblers, but in a game where they can act to play odds that, overall, favor them. This all is dependent upon their ability to estimate those odds. Typically, there are not betting the farm on a single project, but engage in many projects, distributing risk, increasing the potential gain, or hedging it.
(That is, they might bet on exclusive possibilities. This is the simple answer to why IH was not immediately offering to return the License. After all, what if Rossi actually has something? What are the odds of this? And … what would Rossi be offering in return? He seems to have imagined that he could just unilaterally cancel the License “for nonpayment,” but the Agreement was certainly not written that way, this was just another Rossifiction. IH has a License until and unless they give it up or a Court takes it away — which is unlikely unless their investment is returned, at least the original investment.)
Analysing the risks correctly requires that the truth be told by the receivers of the VC backing. At least the truth as far as they know it. IH of course knew that Rossi tended to not tell the truth, which raised the risks somewhat, but the payback if Rossi had actually had some real technology was sky-high and a 1% probability of that was deemed to be worth the risk. Dewey states that 1% probability as their cut-off point.
They will, if sophisticated, include the possibility of lies in their estimations. Humans lie.
1% is actually conservative, if the loss can be sustained. I estimate the value of a practical LENR technology, something like what Rossi was claiming, at about a trillion dollars. So 1% would, in theory, be worth about $10 billion. However, straight game-theory play is not how humans actually operate. We want better. We also have alternatives, other ways to invest, and may seek maximization among choices, not merely some absolute average return from one.
I think that all of the above should be pretty self-evident to most people who have been watching, and that most of these points have been made at various times. Everyone (IH, Woodford etc.) should have been aware of the risks of backing Rossi. There’s also an obvious risk in backing LENR in general, since the main scientific consensus is still that it is a measurement error.
Yes. The risk involved with LENR, however, may depend on time-horizon. Short-term returns in LENR are very unlikely. Longer-term profit is much more likely, even probable. But “longer-term” might be in excess of twenty years. I assume that IH and Woodford were quite aware of risk, and quite aware of the extensive criticism of Rossi. They certainly knew about Krivit, and we see McLaughlin taking Krivit (mispelled) into consideration in February, 2015. I would assume they had read everything Krivit had written. Krivit, however, is a yellow journalist, and draws firm conclusions from evidence that is less than conclusive. And WTF does a certain unfortunate figure’s child molestation prosecution have to do with Andrea Rossi? Is Rossi responsible for every reprehensible action taken or allegedly taken by everyone who supported him?
Krivit wrote about the obvious, so I’d assume that IH knew all this, likewise Woodford. This was all extensively discussed in the CMNS community, which was mostly very skeptical of Rossi.
Still, the big profits go to the people who correctly bet that some fringe science can be turned into a technology. Of course, the profits can be even bigger if you can get the government to put the initial research money in and you then utilise that research, but that’s another story….
Right. So part of an IH strategy might be to encourage and support governmental and other non-business investment in research. That is where APCO might shine. I see a sane long-term IH approach as being an observer, ready to act quickly if the opportunity arises, but not routinely spending a large budget. Probably maintaining a lab but only engaging substantial staff for specific and vetted projects.
As I see it, IH began with a fairly low estimation of achieving success, and during the Doral test that estimation went down (below 1%) because of the way Rossi ran his operation, stopping any verification of his process. It seems unlikely that Tom Darden would have kept such estimations secret from Woodford or anyone else who intended to invest, since that would open him to being sued for fraud by such investors. Since we haven’t seen Woodford suing Tom Darden, it stands to sense that they must have been happy, and are still happy, with his honesty in telling them what he knew of the risks.
For reasons that others have stated, we cannot conclude from the absence of a lawsuit that Woodford is happy with IH. However, there is no sign that they are unhappy, so far. There is no sign that they have attempted to withdraw their investment. I’m sure they are unhappy about so much being spent on lawyers, but it is possible that this, or some of it, might come back from Rossi and Johnson. I don’t expect Bass and Fabiani to be big sources of recovery. Sad cases, in my opinion. I doubt criminal indictments would stand there, but … if one through carelessness aids a civil fraud, one can be held liable, and this could be “joint and severable” liability, where the total liability can be collected from each.
Though we’re not privy to what went on between IH and Woodford, that lack of any legal proceedings implies strongly that there is no problem with that relationship and that Woodford are happy with the information they received from IH. They may be annoyed with Rossi, though.
Though we may not be able to trust what people say, what they do is a reliable indicator.
The operative word is “indicator.” So often in internet discussions, indications are taken and presented as proof.