Wednesday, July 4, 2012

Independence and Being Independent

Today we celebrate the 236th birthday of America. I love Independence Day. During, the past few months, I have blogged quite a bit about Delaware our First State and it being the little mid Atlantic state that had the foresight to be first in ratifying our constitution. Delaware is a small state with precisely one representative in the US House for its 2010 population of 897,934. The Delaware congressional district is an at large district covering the whole state. It is the oldest unchanged congressional district in the US and has not changed shape or size since 1787. For ten years (1813 till 1823) Delaware had two representatives in the US House but they were both chosen on a general ticket from the same geography covering the entire state. I like Delaware because it is first and foremost as well as consistent. These qualities are lacking nowadays.

Talking of consistency and being independent, Bloom Energy claims to have two independent directors on its board of directors. These two people are Colin Powel and TJ Rodgers.

This from Bloom Energy’s web site

“General Colin Powell Independent Board Member

General Colin L. Powell, USA (Retired) served as the 65th U.S. Secretary of State from January 2001 to January 2005. He served 35 years in the U.S. Army, rising to the rank of Four-Star General and from 1989 to 1993, served as the 12th Chairman of the Joint Chiefs of Staff. He also served as the National Security Advisor to President Ronald Reagan. General Powell is the author of his best-selling autobiography, “My American Journey.” Since returning to private life, he has become a strategic limited partner at Kleiner Perkins Caufield & Byers, a renowned Silicon Valley venture capital firm. General Powell is the Founder of the Colin Powell Center for Policy Studies at his alma mater, the City College of New York. The Center is student-focused with a mission to develop a new generation of publicly engaged leaders. He is the Founder and Chairman Emeritus of the America's Promise Alliance, dedicated to forging a strong and effective partnership alliance committed to seeing that children experience the fundamental resources they need to succeed. General Powell is also helping to raise funds for the Martin Luther King, Jr. Memorial in Washington, DC and for the construction of an education center for the Vietnam Veterans Memorial.

T.J. Rodgers Independent Board Member

T.J. Rodgers is founder, president, CEO, and a director of Cypress Semiconductor Corporation, and Chairman of the Board at SunPower. In addition to Bloom Energy, he sits on the board of directors of high technology companies including, SolarFlare Communications, Silicon Light Machines, Silicon Magnetic Systems, Infinera, and Cypress MicroSystems. T.J. was a Sloan scholar at Dartmouth College, where he graduated as Salutatorian with a double major in physics and chemistry. He attended Stanford University on a Hertz fellowship, earning a master's degree and a Ph.D. in electrical engineering.” defines an independent director of a company as:

• An independent director is one which has no ties to the firm in any way. With an independent director, there is no chance of having a conflict of interest

On Independence Day I have to opine on Bloom’s use of the word Independent as it certainly does not correspond to’s view that the person “has no ties to the firm in any way”. TJ Rodgers by his own admission at the May 2012 meeting of Cypress Semiconductor shareholders had the following to say of his involvement with Bloom Energy.

”I have been working for eight years on a company called Bloom Energy, which is currently private. Bloom Energy makes fuel cells. I meet with Bloom Energy several times a quarter, and I help them much above and beyond the investment that I have made in them. I believe Bloom Energy will be the most important IPO ever in the high-tech [energy] sector. We’ll see if that works out, but this is a change-the-world kind of company.”

I don’t have any data on Colin Powell’s investment in Bloom Energy if any and how often he works at Bloom, but Colin is a “Strategic Advisor” to Kleiner Perkins and Kleiner Perkins is a large shareholder in Bloom Energy.

In previous blogs I had called for Colin Powell to resign from Bloom Energy’s board and for TJ Rodgers, as an independent board member, to investigate the Bloom Energy project for power generation in Delaware. It is patently obvious I was in error to consider TJ Rodgers as an independent board member. Forgive me as I only found his address to the Cypress shareholders two days ago. Now I don’t believe that Bloom has any independent board members who have no conflict of interest and I doubt that the board of directors has anyone who can impartially investigate their permit application in Delaware. Perhaps more seriously Bloom told investors in their recent round of funding that raised $150 million that Colin Powell and TJ Rodgers were independent directors. These investors were misled by Bloom’s claims of having two independent directors.

I suggest you all read the full text of TJ Rodgers’ speech to his Cypress shareholders in which he castigates Warren Buffet for suggesting the US should have invested in “shovel ready” projects. TJ is known to be an outspoken person in Silicon Valley, this time he may have just dug his own grave.