A Disaster Decades In The Making

In the August 27, 2022, print edition of the Wall Street Journal, Katherine Blunt wrote a piece entitled “Getting to ‘Guilty’ for 84 Wildfire Deaths” linked in comments below.* The Camp Fire of 2018 holds many lessons for life generally; this SpringTide thought piece quotes selectively from Katherine’s piece, then reflects on lessons for early stage ventures specifically.

The Fire

“A brilliant flash broke the morning darkness on Nov. 8, 2018, as strong winds pummeled a power line scaling the Sierra Nevada mountains 90 miles north of Sacramento, Calif. A worn hook hanging from a century-old transmission tower owned by PG&E Corp. broke clean, dropping a high-voltage wire that spit electricity just before sunrise. A shower of sparks set dry brush aflame . . .?

Within an hour, the fire had spread 7 miles to arrive at the outskirts of Paradise, a town nestled in the Sierra foothills. Residents awoke to emergency evacuation orders as softball-sized embers collided with dead trees. The fire was entirely out of control. At its fastest, it engulfed the equivalent of 80 football fields a minute, by some estimates. As the evacuation process began, thick black smoke took on the hellish orange hue of the flames. Escape routes became choke points, lines of cars inching along melting asphalt . . .?

The Camp Fire, named for the road near its place of origin, burned for 17 days, destroying more than 150,000 acres and nearly 19,000 structures, most of them homes. It killed 84 people.”

The Point of Failure

“If you think about the nation’s electricity grid as a network of roads, transmission lines are like highways, built to carry large amounts of power over long distances. The high-voltage wires must be kept away from the towers that support them. If the space between them narrows too much, electricity can jump from wire to tower in what’s known as an arc, a lightning-like bolt hot enough to melt metal and send sparks flying. To reduce that risk, the wires are suspended from strings of insulator discs hooked to the T-shaped arms of their towers . . .?

Peering out of the helicopter, the troubleman saw an insulator string dangling. A hook about the width of a fist had broken nearly in half, dropping the insulator and the wire it held. An arc of electricity surged from the wire as it fell, scorching the tower in a blast of molten steel and aluminum . . .?

Later, inspectors would discover that the hook, which had hung from a hole in a long metal plate, was almost totally smooth at the point of fracture, evidence of a deep groove that had formed over decades. Millimeter by millimeter, the plate had cut into the curve of the hook, which was scarcely an inch in diameter. A jagged edge a few millimeters across showed just where it had broken.”

The Systemic Failure

“In June, seven months after the Camp Fire, the company released an apologetic statement. It told the public that the inspections had revealed the need for more than 250,000 repairs across the system. Ten towers supporting a transmission line near the Golden Gate Bridge needed complete replacement. And the Caribou-Palermo, riddled with problems, would never run again . . .?

A few months before the company exited bankruptcy, the grand jury concluded that PG&E was well aware that its negligence had created a serious fire risk in the Feather River Canyon but did almost nothing to mitigate it. On March 17, 2020, the grand jury indicted PG&E on 84 counts of involuntary manslaughter. The company agreed to plead guilty.

Neglect, shoddy record-keeping and overlooked warnings added up to a crime, not an accident.”

Lessons for Ventures

First, companies bear significant responsibility towards not only direct customers and shareholders, but also to the broader communities affected by companies’ externalities. Joseph Badarraco, an ethics professor at Harvard Business School, taught the author of this piece that caveat venditor (“seller beware”) is as important a principle in doing business as the much more familiar caveat emptor (“buyer beware”). Thus, early stage ventures should take great care to mitigate negative externalities, and maximize positive externalities of operating. Over time, this does right by customers and shareholders as well: After the Camp Fire, PG&Es stock price crashed and is currently trading down more than 80% of its 2017 high.?

Second, specific point failures can be symptomatic of general systemic failures such as system design flaws, QA process flaws, or a culture of management negligence or even malfeasance. Such systemic failures often have their origins in the nascency of the business when the foundations of company tone, culture, and processes are formed. Thus, early stage ventures should take care to operate at the highest level of principle, care, and concern to establish a high quality of culture and product: It’s so much more difficult to fix ingrained problems than to start off on the right foot, or to fix emerging problems quickly.?

*From “California Burning: The Fall of Pacific Gas and Electric—and What It Means for America’s Power Grid” by The Wall Street Journal’s Katherine Blunt, to be published on Aug. 30 by Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright ? 2022 by Katherine Blunt. Link to purchase the book in comments below.