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Following Up: More On ChaCha, State Dollars And Public Perception

MoneyhandoutThose of you who had nothing better to do on a Monday night than hang out on this site may have noticed a bit of friendly verbal sparring between yours truly and Tennessee-based entrepreneur Bob Compton, who's a big supporter of Mitch Daniels.

Compton, who's been part of some mighty impressive projects, came here to defend against the possible appearance of impropriety created by a recent big-bucks fundraiser for the Guv at fellow entrepreneur Scott Jones' home. (Compton put $100,000 of his own money on the table to help meet the event's $1 million goal.)

Not long after the fundraiser, the 21st Century Research & Technology Fund, which operates under the Indiana Economic Development Corp., announced roughly $12 million in grants for the 2007-2009 biennium. Of that total, almost $4 million was awarded to two companies: Carmel-based ChaCha, a people-powered search engine, and Carmel-based Precise Path Robotics, which is developing and marketing a mowing robot for golf courses.

Jones is at the helm of both efforts.

Earlier this year, amid a dash of controversy, Indiana University dumped Google in favor of ChaCha.

What does it all mean? Has something shady transpired behind the scenes? Did Jones and his investment get preferential treatment because he raised a million bucks for the Guv? Did other companies and projects get passed over for grants because ChaCha and Precise Path ate up almost one-third of the total amount appropriated for the biennium? Was the IU deal a smart move or inside baseball?

Who knows.

But the fact that there are so many unanswered questions about the distribution of a large chunk of taxpayer money is troubling. And the very real perception that this could be all about back-scratching and political pay-for-play begs for public clarification.

In his defense of Jones and the Guv, Compton used this argument: "We don't need high-tech entrepreneurs in Indiana! Let's get them all out of town. We don't need them coming here and trying to create new ventures that might fail."

While that line of thinking makes for good rhetoric, this isn't a black-and-white situation where you're either with the Guv or against entrepreneurial growth. Rather, it's a sepia-toned example of the need for greater accountability to taxpayers and transparency in government.

The business world might be all about the bottom line and cutting the best deal, but for the rest of us, perception trumps all, and getting defensive about something that smells funny doesn't typically do much to clear the air.

When it's our money on the line, it's fair to ask where it's going. Maybe this will turn out to be the best $4 million we've ever spent. Maybe not. Either way, the Guv's got some 'splaining to do.


You summed it up perfectly: This may have been a good investment, but who knows, the Governor needs to explain himself. You can't give away $4 Million in taxpayer dollars to your friends and not explain it.

This reminds me of a West Wing episode where a computer chip maker had to recall all of their chips. Leo wanted the President to guarantee loans to bail out the company (think Intel) but the President couldn't do it because the head of the company was a HUGE supporter of his and had given tons of money. He knew the perception would be bad, and he was correct. In the end, the President did not guarantee loans to the company, but he made it publicly known that the US Government was going to remain a client of the chip maker but also at the same time, the President made sure that they refunded the head of the company for every but of campaign money he had ever donated.

If the Governor wants to start handing out money to his friends, he needs to make sure he's not getting any campaign money from them. He needs to either keep the campaign cash and recind the grants, and keep the grants on the table and give back the campaign cash, he can't have it both ways.

If ChaCha or Precise Robotics truly are the great companies that these grants are supposed to make us believe, then the Governor needs to ante up and do the right thing.

It may be the modus operandi of big business to operate on OPM (other people's money) but government isn't a business and the money isn't from stockholders or other investors. It's the taxpayer's and we should have a damned good idea that it's not being doled out with the hopes of re-electing the hand that's doing the feeding.

It is ignorant and naive to think that the government shouldn't ever give support or grants to people and companies who have donated to a particular elected officials campaign. What about the X number of employees who work at Cha Cha (and future employees from growth thanks to the grant)? Just because their boss donates some money to the Governor they should be exempt from receiving the benefits of a grant that promotes business in Indiana?

Also, does the Governor himself hand out the grant, or hand pick the winners of the grant? Thats a real question by the way

Another question, how many other technology firms that are as large as Cha Cha exist in Indiana? I saw someone complain that 4 million of the 42 million went to Cha Cha and some other Scott Jones company. Well what other companies are out there in Indiana, which has become more of a manufacturing state than anything else? Who deserves that money more?

A final point, why can't IU switch over to a search engine created and run by and Indiana Company?

I did say final point on the last point, so we'll call this a post script. Where would the world be without favors? Please try not to blow this comment out of proportion, I'm condoning favors like mob favors, but just saying. Maybe by moving over to Cha Cha IU will get some help in developing their computer science programs or help some of their grads land jobs at Cha Cha. Just saying, where would the world be without favors?

Wow, Sugar, there's just nowhere to go with those comments so I won't try.

But I am disappointed (not surprised) that the knee-jerk response to questioning these grants is "then I guess you don't want any high tech jobs in Indiana." Good grief, kids, that is NOT what TDW said.

The fact is that there are at least dozens of (maybe a few hundred?) small companies doing very exciting high-tech stuff and for whom a 21Fund grant is hugely important. Not simply nice. Not simply "a favor." But the difference between new technology and a new business being able to develop in Indiana, or not being able to develop in our state (or perhaps at all). So please do not think that the state had the choice only of giving $2 million or $4 million to Scott Jones' companies, or putting the money back in the desk drawer. The 21Fund is highly competitive - although it is now clearer how to compete, isn't it?

For the record, my understanding is that only 10 percent of those who apply for 21st Century Fund grants receive them.

How can a governor who continually derides government's ability to do anything right turn around and say that government can be a great private equity investor. Why is the government in the business of investing if it can't, according to our governor, do just about anything right. Such hypocrisy.

Exactly my point, FDW, the money should be about supporting companies, not supporting candidates! And having a huge fundraiser followed by a huge donation raises some very large red flags!

Oops dyslexic fingers today .... it would be FWD wouldn't it?

Like I said in the last thread, of course the state should be investing and promoting technology companies. The question is whether or not it should be giving grants to companies that are already well-funded, or should they be looking for lesser-known companies with compelling products but no connections to the Jeff Bezoses of the world. Should the fund be donating money to companies who's goal for a "liquidity event" appears to be "sell out to Google or Yahoo" or to companies who want to build an enduring business in Indiana?

And to the person who asks "how many other technology firms that are as large as Cha Cha exist in Indiana?", wow. I'd recommend learning something about the IT industry in this state before asking stupid questions. There's actually quite the burgeoning community of IT companies around Indianapolis alone, including plenty much larger than ChaCha, which is hardly a large company.

And why would the state need to give grants to larger established companies anyway? Exact Target and Interactive Intelligence don't need the state's money. Small startups (that don't already have tons of money like ChaCha) do.

"why can't IU switch over to a search engine created and run by and Indiana Company? "

IU has not done that. It has switched to using Cha-Cha to present query results, using search results provided by other companies. This is about the same thing as the Indy Star publishing "local" content using material written by national stringers.

You whine about the Guv of sending contracts out of state... He gives a contract to ChaCha, based in Indiana,and you still whine. Must be the pregnancy.

No, darlin', it's the hypocrisy that's getting to me.

And, of course, the fact that you're deliberately mixing apples and oranges.

The Guv has sent more than $2 billion in taxpayer-funded contracts to out-of-state companies since he took office. Many of those contracts could have stayed here -- or he could have chosen not to outsource the work in the first place.

The 21st Century Fund is intended for Indiana companies. Of all the Indiana companies that apply for grants, let's assume only 10 percent receive funding. Of that 10 percent, one-third of the money disbursed in this latest round went to companies controlled by Scott Jones, who happens to be a big donor and who threw a well publicized, million-dollar bash for the Guv not long before the funding was announced.

I know you're trying to draw a line between the arguments, but if you follow the bouncing ball, I'm sure you can figure out that we're dealing with two separate issues.

Or are you pregnant, too?

Well said Jen! Are any of the "traditional" media outlets picking up on this? I'd like to know who makes the decisions on where this $$ goes. If not the Gov., (and I'd be surprised if he were involved directly), then who? His direct Appointee or a bi-partisan committee?

Some people don't get it even when you draw them a picture and connect the dots! It's not the grant and it's not the fundraiser --- it's the grant AND the fundraiser. Coincidence? Me thinks not!

Mainstream media doesn't pick up on it because it's fabricated by minions like you who couldn't hold onto the Mayor's office.

Whatever you say, 5:45. Just keep reading.

And don't forget Bill Clinton's penis too, 5:45 !

P.S. That's Ms. Minion to you, pal.


I bow to the superiority of your logic. Keep up the good work.


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