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Risk Averse Romney

A fascinating opinion piece in the Boston Globe really resonated with me. It discusses how Mitt Romney seems to be unwilling to pin himself down on any issue, and even if he sort-of does, he’s willing to change his tune depending on who is paying him to fiddle. From his response to the Supreme Court decision upholding ObamaCare, how he would bring down the deficit, or dealing with illegal immigration, we keep seeing “a familiar pattern: a ringing affirmation of some major policy difference with President Obama, followed by a lot of vagueness about what he would do instead.”

What we are seeing is “the Romney Fog Machine: a great outpouring of words intended to obscure, rather than clarify, the issue at hand. … Romney has plainly calculated that he can win without explaining what he’d do as president, and seems intent on becoming the ‘generic Republican candidate’ that pollsters include in surveys (and that often outperform real Republicans).”

But the fascinating part of the article is the assertion that this is not a campaign strategy for Romney, this is who he is and has always been — someone who refuses to take any stand or any risks at all. For example, a recent biography of Romney says that “Romney initially declined to become CEO of Bain Capital for fear that it might fail and damage his career prospects.”

He did become CEO, but his risk-averse paranoia only increased:

A few years ago, a former partner at Bain Capital with Romney explained to me that this impulse to be “paranoidly downside risk-averse” had been key to Bain’s early success. In the mid-1980s, he said, once this success was evident, the firm conducted a study to better understand what had brought it about. Two things jumped out: The failure rate of their deals was “almost zero.” And, he said, “there was no deal we did in the first years that did not have incredible downside protection — you’d have assets that, in the worst case, you could sell for 90 percent of what you paid for it.”

As some of you know, I’ve started a few companies in my life and worked as CEO of other early-stage businesses. In that capacity, I frequently interacted with sources of capital, including venture capitalists. What really surprised me when I started working with venture capitalists is that they like to tell you how they take big risks and how they are helping small companies. But what I found is that they are as a class some of the most risk-averse people I’ve ever met. And they don’t actually help small companies, they act as gatekeepers. Saying that venture capitalists are helping small companies would be like saying that health insurance companies are curing cancer.

A friend of mine used to work as a venture capitalist and still works with them, and she totally agrees. (In fact, the only point on which we disagree is that I think that venture capitalists believe they are taking risks and helping small companies. She claims that is just PR, and they don’t actually believe it.)

I started thinking about this and it helped explain some things about Romney. I remember when Obama sent in the Navy SEALS to kill Osama bin Laden, and afterwards Romney’s main complaint was that it was too risky. Clearly, he would think that. I also remember during the primary, when the only time he really campaigned in a state was when the chances of him winning were already pretty good. Other states he left to his competition, not wanting to try and fail.

Would someone like this make a good president? Even worse, since we don’t know what he really believes in, how can we tell?



  1. DaddyO wrote:

    Risks are anathema to most politicians. But leaders have to be willing to take those risks. Some fail, some come out ok. Risks in business are not treated nearly as generously. That’s one reason why a CEO should not lead the country. How I wish someone like Colin Powell would run!

    Sunday, July 8, 2012 at 12:56 am | Permalink
  2. Richard wrote:


    “How I wish someone like Colin Powell would run!”

    Colin Powell could have prevented the war in Iraq singlehandedly. He didn’t. He lied to the UN, the US, and to the world about WMD in Iraq. He’s not fit to be President.

    Sunday, July 8, 2012 at 4:54 am | Permalink
  3. ebdoug wrote:

    Richard, I think you have not read the books on Bush. Powell believed Bush about the WMD. Bush was Powell’s top commander. Powell also left out of his UN speach what he knew was wrong. What Powell did wrong was declaring himself a Republican after the Gulf War. How his life would have changed had he signed on to be a Democrat. He and Alma would have had thier eight years in the White house. He was such a hero that party and color would not have mattered. I remember after the Gulf war waiting to see which party Powell was going to align with and being so disappointed.

    Sunday, July 8, 2012 at 6:30 am | Permalink
  4. Scott wrote:

    Perhaps a valid reason to vote for the smarmy POS: “there was no deal we did in the first years that did not have incredible downside protection — you’d have assets that, in the worst case, you could sell for 90 percent of what you paid for it.”
    Considering what he and his supporting PACs will have ‘paid’ for this country, when they finish making it fail, we can probably sell it for enough to pay off the deficit.

    Sunday, July 8, 2012 at 8:36 am | Permalink

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  1. […] Political Irony, there is a well written post about “Risk averse Romney” addressing Romney’s habit of saying he would do things differently from Obama and then […]