Packet sized water plant

Seen from digg.com
ketchup packet sized water plant?

A few cents for 2.5 gal of water.

It's an interim step towards getting clean water everywhere, but it is a huge step forward.

I've said it before, I don't care who makes it happen. I want to be part of the process, but if it's someone else, that's fine as well.

1 packet, 1 piece of cloth, and enough water for a family? It's almost the ideal box, pour water in, get clean water out. It's cheap, and easy to do.

Perhaps there's hope yet.

Don't you wish you were in?

When a deal gets done, one where people know you were looking at it, but ended up not being part of the syndicate, the question is asked. Did I miss out on something, or did the other folks see something I didn't.

The answer is yes, someone saw something in the deal that the other folks did not.

Either I saw a hole, or flaw in the plan that I couldn't accept, whereas the investors were able to consider that gap an acceptable risk. Or they didn't see the gap, or I missed the opportunity the company was going after.

Unlike simple math, where 1+1 = 2. (for all those folks who have advanced math degrees, I understand it's not a simple proof, but today this is dogma). There is no right answer in investing. Each investment and investor has to judge the risk/reward of the own situation.

There is a quick post-mortem on deals you do due diligence with and ultimately decide not to pursue. Sometimes it is as simple as saying "they could accept X, and it was a deal breaker for us." Other times, someone was an idiot.

Profanity in language

CNN's article on profanity.

The excessive use of profanity does weaken one's argument.

I've had some presentations laced with a few choice words. And those impressions left on me were never favorable.

The entrepreneur is the face of the company. If he/she can not manage to provide the best face possible to a potential investor, what will that person do with a customer?

I've said many times, people change themselves, I can't change them. So to take an interesting idea and trying to change the management team to be what I want them to be is impossible. At least without replacing the people in full.

Watch what you say, your words mean more than you realize.

If I were to listen to myself, then this blog should be redacted and scrubbed. Unfortunately, the last thing I do is listen to my own advice.

10 yrs, and 40 mil

I was talking with a friend over drinks tonight, and I tossed out the saying that it takes $40 million to train a VC. And you can't really tell if a VC is any good or not, until about 10 years have passed.

This made me think of another conversation I had at Cleantech, where one person mentioned “Perhaps because this investment group put money into the company, the company will do well.”

Investors have less influence on the success of a company vis-a-vis the amount of credit they seem to receive. A good company, with good customers, will do well. No matter who invested, or when the investment was made. The market and execution are important, not the name behind the money.

The best an investor can do is accelerate the execution. But a bad investment is a bad investment. And no name behind the company can save it from itself, or market conditions.

Now, if you throw out the management team, listen to customers, sell something they'll buy, and you can make a profit. Then you've got the beginnings of a success.

Cleantech not all easy

Redherring's article on how not all VC's are into cleantech.

It's good to hear the otherside of the story.

It is a different type of financing needed for some investments. And right now those investments are falling by the wayside. They're structured for project financing, but utilities are unwilling to provide the type of assurances needed for project backing.

Wind is becoming more stable.

Solar is following, but other sources of energy don't have the history or reliability yet.

The premium provided by the AIM to cleantechnologies or a pentalty attributed to them on the NASDAQ has been a bit of a puzzle. But Europe does value cleantechnology higher than the US.

The gains are there to be made. How, Who, What, When, and Where are the questions.

Other portfolio risks

Fortune Magazine's article on how Global Warming can affect your public stock portfolio.

Some folks use the fact that companies take climate change risk into account as a proxy for good corporate governance.

But as companies try to improve, and differentiate themselves from the competition, being green is seen by some as only marketing. Other businesses will actually believe in the principle and incorporate it into their strategy.

More companies will begin to incorporate the full cost of their business, much like tobacco companies are now forced to incorporate the "hidden" costs of their industry into the financial calculations. This changes the metrics of risk and rewards.

The challenge will be if/when these costs are brought to bear. If it's a long time from now, then preparing today doesn't make much economic sense. If the costs become due soon, then only the companies that are prepared now will survive.

I don't know what will happen or when. But you can see which companies and industries are preparing for what they think is inevitable. And which companies have decided that waiting is the more profitable path.

Cleantech IX Wrap up

The final day of Cleantech had panels and information sessions.

Some of these were helpful, others, less than valuable to me. The networking was of greatest interest, and being able to catch a word with the other investors was of highest interest.

There are the folks I've done business with. And the people I want to do a deal with in the future.

But in a final blast, here are my other scribblings from this forum.


-----
globalization of VC
impact on VC's industry is large

Drivers -> technology regulations entrepreneurship
-> mobility: goods/services info capital people
-> markets: become more competitive
-> Drivers


until 3 years go 85% of innovation came from the US

now other areas are growing faster

Cycle is putting pressure on VC's

Now VC's must have global capability

markets are disperse

most VC's will do collaboration
VC's become LP's in international funds

Global VC 31 Bil
69% US, 14% Europe 5% Israel 13% Asia

more companies investing outbound deals

VCs should introduce senior management teams overseas
customers overseas

Must think international earlier
Capital efficiency

Must have clear thinking syndication models

the practice of the past 30 years will not be copied
we are now at a disruption point

Constraint: Sustainability
Ability to operate in global environmental international negotiation is necessary
and soft issues are needed.



------

Make government policy helpful.

Collectively slow to act on
Air pollution
Mercury
Fossil fuel usage

People are not good trustees of common resources

solar companies have gone boom/bust in relation to subsidies
incentives/policy are important to business

---

CleanTech can drive attractive returns for LP's

CleanTech is an under served sector
huge markets
ripe for tech and investment

Now, starting to see innovation and good companies

CleanTech has become a hot area
Venture Capital Journal,
mentioned CleanTech many times in the past few issues.

Quality of investments is improving

---

Global Environment Fund

Profitable environment tech
more efficient utilization of resources
stimulate technology innovation
production areas

Demand for tech innovation to promote cleaner technology would be global

US has lost margin on many technologies Solar/Wind/Wave

2 questions asked
what size of markets?
How will governments respond to CleanTech markets?

VC has to be in a growth industry

Environmental industries is growing in high population concentrations.
This must be in areas of growth

Countries are leapfrogging in pollution control

first 80% of pollutants are cheapest to remove

simple high tech solutions will do well

10% of revenues are overseas

Countries like South Africa needsreliable electricity to continue growth.

Cleantech IX Kleiner presentation

Ok,
Here are my notes from the CleanTech Presentation from Kleiner Perkins. John Denniston and John Doerr gave a very entertaining, eloquent and insightful.

The reasons they claimed to be entering into CleanTech are:

1.Threat to National Security
2.Urbanization
3.Climate Change

National Security risk
half of the oil is in unstable or unfriendly countries
1% decline in supply has caused a 5% increase in price

a 5-10 times multiple effect in a price change at the source

Oil is being used as a weapon.

The US is exporting dollars
high price of oil hurts developing countries more.

developing countries will compete for energy.


Urbanization
Largest trend is migration to cities
1950 2 mega cities were New York City and London
Today we have 18
in 2050 we'll have 400 megacities, all with people in need of transportation, water, air.

Climate Change
Temperature Increase 1 degree centigrade
1 mm increase in ocean levels

Green land is losing a lot of ice, and adding water to the oceans.

They went on to explain how we need to use less energy to create economic wealth, since the 3rd world countries are climbing fast, and they want to have a similar lifestyle that we enjoy.

California's per capita usage of carbon has been flat for the past few years.
Policy matters
Cap and Trade for Carbon is needed
we need to kick the oil habit

incentives for renewables

innovation matters
pumps use huge amounts of energy
Instead of using thing long pipes in industrial production, use shorter, fatter pipes.
Redesign is important

Transportation design must change

The Johns both mentioned that durable companies after the dot com burst held some similarities: They were run by missionaries, not mercenaries.

• Mercenary
• Drive
• Opportunistic
• Pitch/Deal
• Sprint,short run
• obsessive compulsives
• Aristocracy
• Financial statements
• Loners
• Entitlement
• Deferred life plan
• Make money
• Success

• Missionaries
• Passion
• Strategic
• Big Idea
• marathon, long run
• obsesses on customers
• Meritocracy
• Mission Statement/Values
• Coaches of teams
• Contributor
• whole life plan
• Make company
• success and significance

Kliener has made 8 cleantech investments, some stealth.

Solar investment – miasole solarr pv flex sheets

lilipution – LION SOFC

We now havincrediblele computing power, new materials.
Nano-tubes
bio-mimicry

we can get more energy efficiency

going into the next century, it will be necessary

state policy should make things easier

VC industry – longer timeline in CleanTech
huge markets
hydrogen is a dud
transportation will be electric in 30 years.

In VC the Lfoundationsons are starting to incorporate CleanTech principles into formal evaluations

But policy is different in CleanTech.


More institutional money is coming in
$5 bil overhang..
too much money in VC
maybe not too much money in Cleantech.

Cleantech IX LP sessions

Today was focused on educating LP's interested in getting into Cleantech.

Summary: LP's today are where VCs/GPs were a few years ago. It'll take a while for them to come over.

The most honest statement I heard was from the Govn't of Singapore. They're going to wait this out. Allow one of their Generalists VC's to make a Cleantech investment, see what the sector is like, and later on, decide if they want to enter the area.

Diversification, portfolio management, and risk management were the criteria I heard on the panels.

Unfortunately, this is the “standard” speech given to VC's and is fundamental money management. So nothing new was heard from the people involved.

Some early money is coming out of family resources. Not large portfolios. People who can manage their own finances, and are willing to take unknown risks. Or those who believe or understand the fundamentals of CleanTech. There are not many of them.

It will be a slow process for the fund of funds groups. The LP's being locked out of top tier funds today are trying to find the next generation of upper quartile funds in areas not already saturated. CleanTech might be that field.

The challenge is, we don't know how long the lifecycle of a CleanTech investment is going to be. It will vary dramatically, unlike software or gene therapy. Energy investments can stretch out over decades, as can water. But software controls or small sensors can mature much faster.

There are a lot of mistakes out there waiting for investors. More investors in the space means we'll run into the mistakes faster, learn quicker, and hopefully harvest earlier.

Hopefully, but not necessarily.

Cleantech IX

Flew out today for the Cleantech venture event.

This should be interesting to see. Everytime I attend these events, I get a new refresher course on what's going on. Plus having been on the selection comittee, I want to see which ones made the final cut. And how much progress they've made since I last saw the company.

Nick Parket and Keith Raab have done a lot of work keeping the cleantech torch aflame during these past few years. They're now the defacto resource people quote about the industry. And a lot of new faces are expected this time. More interest, and more deals.

Lots of changes, lots of opportunities.

This will be fun.

The other path

Talked with a “reformed” entrepreneur. Someone who tried to have a consulting business a few years ago. Then, when life interfered, he moved to a more stable job at one of the Big Internet companies, and afterwards went onto work for the Federal Government.

He's much happier now. The area he works in fits his personality better. So take heart, there is life after a start-up. Some succeed, some don't. But every entrepreneur is out there trying.

I can't tell which ones will succeed, and which ones aren't suited to the life. The market decides, and tells you in no uncertain terms. Customers are the final arbitrators. Customers vote with their wallets, not their words of encouragement, or their support. If the cash doesn't flow, then you have your answer.

No next big thing

According to IBM from news.com.

So far, every prediction like this that's been made, 100% has been wrong.

Yay!

Now we celebrate, and go out and prove those people how wrong they are.


As a believer in the schumpaeter idea of creative distruction, where new products/processes/ideas destroy the old market/way of doing things, I'm happy to hear there's no more innovation.

It means guys like IBM will stop trying.

It means the mentality that allowed the early main frame guys to miss the personal computer and the early software folks to miss the web still exists.

Doesn't make it any easier to come up with the next big thing. But it does reduce the competition a bit, when the big boys are resting on their laurels.

Does this mean they're right? No, just keep doing what you're doing. Real entrepreneurs won't let one little interview from IBM stop them from doing what their doing. Real companies with real customers can afford to ignore someone else saying "slow down". Real companies listen to real customers. Customers give you the right to exist. No one else, not IBM, not governments, just customers.

Thinking we've "perfected" anything is short sighted. There's a next new thing. Otherwise there's no reason to start a new company.

More on insurance companies

From Salon on insurance companies and climate change.

How the people who will ultimately foot the bill, are trying to keep costs down as much as possible.

In this case, the article talks about insurance and re-insurance of Directors and Officers liability for Exxon, and global climate change.

If there's nothing to climate change, as Exxon claims, then there's no reason for such liabilities to be covered with their D&O insurance.

For the same reason that it's getting harder and harder to get insurance for homes in hurricane prone areas. It will get harder and harder to get insurance for companies that have exposure to climate change litigation.

Maybe they're not so dumb after all.

Warning to founders

For some inventors, it can be intimidating being a business person. You've spent your entire life in research or design. So when making the "management team" you spend your time looking for the right person.

It usually comes down to:
Find person with MBA, put into CEO slot
Find person who can add numbers, put into CFO slot
Find person who can pick up phone, put into VP Sales slot
Etc.

And once the formula is finished, you're done with your "top notch" team and can wait to have the company take off.

But that same crackerjack team you put together can lead you astray.

If running the company isn't the ONLY thing that group is doing, find someone else. IF they don't need the company to be successful as much as you need the company to be successful, then there's a misalignment of goals.

And people will be unhappy.

You have got to be kidding me.

From the redherring article:
Just fill plastic water bottles, shake to oxygenate, and then leave them in the sun for six to eight hours, if possible, on a surface that will increase the heat, such as corrugated metal roofing or black plastic. The radiation from sunlight and the increased temperature of the water are enough to kill
many forms of bacteria and viruses


Cheap clean water technology.
This sounds great.

The answer to clean water, whichever one we end up using, has to be cheap, easy, robust, and effective.

The water that we clean, won't have to be perfect. Right now, compared to the water being used now, it's much better.

And in this case, better is good. The human body is able to handle some organisms in our food and drink. Killing off the majority leaves a smaller contingent to deal with.

It wouldn't pass muster in most first world countries. But compared to what's being consumed in other parts of the world, this is a start.

There's no such thing as sub standard healthcare. This is not a permanent solution, but in the interim, it's better than where we are now.

Other thoughts on VC

George Washington University has a Lab2IPO session.

It's interesting to see the thoughts of other VC's.

A few common themes come up.

There is no secret sauce, no formula to getting capital. Nor is there a secret handshake, or guide who can get you to the promise land. Getting capital is effort.

Success requires more cash than failure. Building up resources, infrastructure is expensive.

Most people don't make money in this industry. It's still a young industry, only about 20 years in its current incarnation.

Today there's money available for investments.

During the bubble, everyone got caught. Some of them were new comers, others should have known better.

But one idea that the panel felt was the big secret:
Customer Acquisition Cost. Companies that can figure that out have an advantage. If you don't know what costs are incorporated into that number, you will be in for a bad surprise.

In writing the bplan, the numbers are all “credible fiction”
It isn't the actual values that matter, but how and why you came up with them. If it's reasonable, rational, then you'll get the trust of the investors. But if you put numbers, just to have numbers, then the investors should shred you.

The panel also agreed that the perfect/ideal angel was a myth.

Gasoline from other than crude

Red herring article on getting oil from shale.
this is why fossil fuels will not "run out" for a while. Whether it's Israel, or China, or the US that builds the first plant, the concept of coal gasification, methanol, or fisher-tropsch to help replace crude oil will occur.

As it continues, we'll see some folks tout this as the new crude. Some might call it "cleantech", but in the end, it is still a fossil fuel. It will guarantee that the price of a barrel of oil won't get too astronomical.

But as far as alternate fuel and zero carbon, this can't be seen as a good advancement.

More CleanTech

From the CleanTech Capital Group, via redherring.

There have been more and more cleantech deals.

Granted, some of these are relabeled deals from nanotech, or manufacturing. But there is a genuine increase in deals and dollars.

It's great to see all this interest and activity. Not just poking and prodding that we saw in earlier years.

More funds, bigger funds, more money coming into the field. So it's a change, a big change from earlier years.

Is it harder than before? It's different. And it requires being adaptable to changing conditions. Being lucky enough to have been around before the wave crested, I am in the position of having to avoid being drowned by the new money and new competition.

It means becoming more aware of what's out there, what funds are making which investments, and evaluating the companies, deals, and deal makers objectively.

The good news is, there are a few more years before the geniuses are separated from the fools.

Build a better mousetrap...

These people did.

And you can read the results of listening to a poet for business advice.

The halo effect gone wild. Just because someone is a master craftsman with words, why would you expect that person to be an expert in business?

There's also the concern with one-hit-wonders. Entrerepenurs who were good enough, lucky enough to do well once. But try to focus on the WRONG elements to their success, as they go at it again.

If you're going to listen to people on running a business, look at the ones who have been successful multiple times. After a while, it's no longer a fluke, and it begins to look like skill.

Art of the demo

A good demo is part showmanship.

And as much as I hate to admit it, a good demo highlights the good, while hiding the bad.

If an investor is going to let you get away with a quick dog and pony show. Then let him. And don't highlight the stuff that will go awry.

However,
If the investor starts to pry, then don't lie. Someone who's smart enough to know what's "wrong" with your demo, is smart enough to detect the lie.

If he's in on the magic, then we hope he's more intelligent as an investor. At the very least, he'll be able to make an informed decision.

Now slick demos are a favorite of con-men. The slight of hand and amazing pronouncements are one thing. Claiming "proprietary" information and not letting anyone see the DVD player under the hood is another. A skilled enough showman can make a DVD player seem like the next coming of HAL 2000.

During a demo, you control the conversation, you're in control of the console, and you should know, like the back of your hand, what buttons work, how they'll work, and how long it'll take.

Medical Trial Ethics

This article on wired where companies outsource drug trials to poor populations, made me cringe.

There are advantages to the test population, as pointed out. 2 free medical checkups. Monetary compensation. But an intelligent, informed decision from the patient is almost impossible.

And then the squishiness comes in. Do you pay for this trial? What if the benefits of the medicine are not apparent to the population being tested? Some simple things, clean water, soap, malarial pills, will do these people more good. But big pharma has no need to supply, or sell these things. Phara companies are set up to do what they do, because it's the best way they know how of creating benefits (in this case, money).

If they knew an other way of making more money, with fewer risks, and greater benefits, don't you think they'd be doing that?

So these trials will go on, poor countries, and poor populations being used a dumping grounds, and guinea pigs. No clean cut answer, to a pressing question and need.

Energy is Fungible

This argument in CNN Money against energy independence makes sense.

I've never touted the idea of complete energy indepenence. It will come,
eventually, in anycase. When the economics force it to happen, people will go after the most convenient source of power there is out there.

For now, it is liquid oil. Gasoline is a very dense storage of energy. Easy to transport, and cheap to attain.

This is why it works so well.

As we go forward, other factors will come into play. Carbon may become more important. But until that time, oil is fungable. And any alternative is going to have to compete against it.

I'd prefer it if everyone competed on an even playing field. But that's never going to happen. So accept that the advantages go to the gorillas, and compete accordingly.

Resume Problems

CNN's report on some killer errors in resumes.

These mistakes show up in resumes. and in business plans as well.

Make sure that these types of mistakes are avoided, in the bplan, the powerpoint, the executve summary, and any other material you are using to promote yourself. All these pieces of paper represent you. Any errors reflect on your ability to present, and fairly or unfairly, your ability to generate the information.

Sloppy presentations have been used as justification to presume sloppy research.

There are some investors who like to see errors, knowing that their competition won't be bidding up these companies. But that doesn't help the entrepreneur at all. Since it is a limited universe of investors to begin with, eliminating investors for any reason makes the universe smaller, and reduces the amount of people who get involved.