Friday, October 26, 2007

Seeing Green -- the Omega 5 oil innovation may not suit Silicon Valley

Silicon Valley and the mystery of Omega 5 oil disruptive green technology
By Harry Fuller:

There’s another attempt by an observer to capture the essence, the source, of Silicon Valley’s success at churning out new, and sometimes successful ideas. his one happens to be from an East Coast newspaper. Bemused but impressed is the usual attitude of those who live outside the halo of Silicon Valley. Microsoft’s investment in Facebook and the resulting calculations about the overall valuation of Facebook will inevitably lead to much tsk-tsking by the eastern media about the nutso economics of Silicon Valley.

I once had an interesting discussion with a Chinese consular official. He scolded me for the licentiousness, rampant anarchism and overall hedonism of the San Francisco Area. There was not enough central control he warned. I laughed at him and said a certain level of chaos and madness is needed to maintain the freedom and creativity that can produce companies like Intel, Apple, Cisco, Google, Yahoo, Facebook, YouTube, Oracle, CNET, HP, innumerable blogs and countless Web 2.0 companies. Even the Wordpress tools for this blog, come from San Francisco. You want control, I told him, you sacrifice the risk-taking and individualism that produce new ideas and new technologies. I’m still waiting for the first major tech breakthrough from China. No country’s economy can coast forever on cheap labor and central planning. Eventually somebody comes along who is even cheaper because of an even lower standard of living.

The most telling quote in the article is from a local explaining his Silicon Valley, “Paul Saffo, a technology consultant who teaches at Stanford, says the valley owes much of its success to the remnants of a ‘frontier culture that disrespects elders, values risk-taking and honors failure’ in a way that is simply inconceivable in a government or financial center.”
Boy, that would create apoplexy in my friend from China.

The article goes to talk about venture capitalists in eastern cities being obsessed with business plans. Huh? The story explains how Facebook, founded at Harvard, had to become a Silicon Valley company to succeed. But building an Internet company or software company or even designing new kinds of chips can be done easily in the Bay Area. The server farm or the manufacturing can be put somewhere with cheaper land and labor. This is not always going to be possible or workable with GreenTech firms. There are GreenTech software and design firms. But much of GreenTech will require manufacturing. Hardware and lots of it. That means land and labor. Warehouses and railway lines. Few high tech companies maintain major manufacturing in Silicon Valley. Lucasfilms is one inhteresting exception. George Lucas owns and runs Lucasfilms. He can keep all his animators and tech geniuses on site at the world headquarters in The San Francisco Presidio if he wants to. He doesn’t have to answer to a board of directors every quarter asking him to cut costs by 10%. He can pay Bay Area salaries to everybody who works for him and not worry about it. And all Lucas’s product is essentially digital. He doesn;t have to sotore huge windmill blades or acres of solar panels. Apple is a more typical company: their design and business headquarters are in Silicon Valley. The iPod is made in China.

Many GreenTech firms are going to need lots of land and/or labor if they are to reach the scale of the current utility companies or fossil fuel companies. That’s not going ot happen in the Silicon Valley where real estate prices are far higher than most of the rest of the U.S., not to mention Malaysia or Vietnam. So Silicon Valley VCs are quite active in the green tech arena because they sense the possibly brilliant future of some of the start-ups. It’s going to be far easier to raise money to grow a solar or wavefarm business in Silicon Valley than on Wall Street or K Street. Yet many of the new green tech companies may do much or all of their work in other places.

The Wash Po article did have an incisive observation. It pointed out that Fairfax County, Virginia, which really wants to be cutting edge and creative, actually had a conference on same, and one topic was creativity at the Homeland Security Department. Steven Colbert could do five minus on that one. So could you or I.
Source : ZDnet blog dated October 26, 2007

1 comment:

Anonymous said...

IN BRIEF: VCs Keep Bringing the Green to Greentech
VentureOne and Ernst & Young study finds venture capital grew in the third quarter. As if to underline the point, Aldis, an energy-efficiency and traffic-management startup, raises its first round.
by: Rachel Barron and Jennifer Kho
October 22, 2007
VCs Still Like Green

Being classified as "other" usually doesn't feel this good. But "other" is the category name where Dow Jones VentureOne and Ernst & Young place many greentech companies when adding up the number of venture-capital deals made.

Advertisement And, on Saturday, the financial firms said the category hit an all-time high of $9 million in VC deals in the third quarter.

Digging deeper into the "other" category, there are two subgroups -- "Energy" and "Advanced Specialty Materials & Chemicals" -- which the firms say made up the bulk of cleantech investments.

Energy investments jumped to $590 million, up 28 percent from the same quarter last year. And the nichier materials-and-chemicals category more than doubled to $277 million.

Greentech also was represented in two of the 10 largest U.S. venture-capital deals in the third quarter.

A $77-million round of funding for HelioVolt, an Austin, Texas-based company with a thin solar that uses no silicon -- an attractive characteristic in a worldwide shortage of solar-grade silicon -- ranked No. 4. (On Monday, the company said it added another $24 million to that Series-B round.)

An expected $70-million round of funding for Emeryville, Calif.-based Amyris Biotechnologies came in at No. 5 on the list. The company has raised an undisclosed amount toward that round so far (see Biofuels Get Financing Downpour).

Overall, U.S. venture capitalists invested more money in fewer deals last quarter. Total investment grew to $8.07 billion, up 8 percent from the year-ago quarter, while the number of deals dropped by 41, to 635.

But will the venture market continue to see growth? Ernst & Young thinks so.

"The overall level of investment and larger deal sizes are suggestive of a continued bullish view of these companies' prospects and liquidity options," said Joseph Muscat, a director for the Ernst & Young Venture Capital Advisory Group, in a statement.

Startup Gets Cash to Turn Traffic Lights Green

Most drivers can relate to the frustration of waiting futilely at an empty intersection as a traffic light refuses to turn green. These red lights aren't just bad for road rage; they also are bad for the environment, according to traffic-management startup Aldis.

The company is developing a so-called "Guardian Eye" that can identify different types of vehicles approaching an intersection and determine the distance and speed of those vehicles, and then can use the information to manage the lights to bring about the least possible delay.

The technology, which is being jointly developed with the Oak Ridge National Laboratory, could reduce the 296 million hours the lab estimates is wasted at traffic lights each year, said Glenn Kline, a general partner at Innovation Valley Partners.

Battelle Ventures and Innovation Valley Partners said Monday it had invested $1.9 million in Aldis, with another $1.9 million committed if the company reaches future milestones. Meritus Ventures also participated in the Series-A round.

While it works on the Guardian Eye, Aldis is entering the market by replacing electricity-guzzling incandescent lights with more energy-efficient light-emitting diodes at traffic lights. As it replaces those lights, Aldis is adding a proprietary signal that will allow it to connect its Eye to those lights when the technology is ready, Kline said.

"From a market perspective, in the traffic-management space, this is an extremely underserved market," he said. "It's a point of pain that a lot people have experienced, when you're just sitting there at a light. The Guardian Eye [could bring about] a dramatic reduction in carbon emissions."

Matt Horton, a principal at @Ventures, said his firm looked at the deal and "thought it was very interesting," but didn't pursue an investment -- although he hasn't ruled out the possibility of a future deal.

One challenge that traffic-management providers face is the length of time it takes to sell systems to municipalities and government agencies, he said.

These customers "can be slow to commit to a technology, and will often subject a company to 'death-by-trial,' where they will do small pilot programs over very long periods of time before making a final commitment" he said.

Still, Horton said traffic management could have an important place in the cleantech investment category.

"Limiting the amount of time that vehicles spend in traffic, on our roadways and searching for parking directly affects the amount of fuel burned and emissions levels," he said. "So, any new technologies that can help alleviate traffic should be very beneficial."