Posts Tagged ‘green technology’

Silver Spring: A Growing Presence in Green Tech

February 19, 2009

Today, BusinessWeek published my story on Silver Spring Networks–the most important green technology company you’ve never heard of. Silver Spring makes digital power meters that utilities are buying up by the millions to lay the foundation for a smart electricity grid.

Here’s the top of the story:

Silver Spring: A Growing Presence in Green Tech
Its smart energy meters are winning big customers in California and an investment from Google

California’s ambitious green agenda is swiftly pushing startup Silver Spring Networks into the black. In July 2006, the Golden State leapfrogged to the forefront of the environment-friendly tech movement when regulators gave the state’s largest utility the go-ahead to spend big on so-called smart meters that can moderate energy use. Once a dumb electro-mechanical machine that garnered little attention outside a once-a-month reading, the lowly meter has become a cornerstone of energy innovation by morphing into a two-way communications device.

And thanks to a measure approved by the California Public Utilities Commission, Pacific Gas & Electric (PCG) had $1.7 billion to spend on them. To fulfill its mandate, in July 2008 PG&E tapped a digital meter technology from Silver Spring Networks in Redwood City, Calif. Over the next four years, PG&E plans to replace all 5 million of its electric meters with Silver Spring’s technology.

Smart meters are part of what’s known as the smart grid, an upgraded national power infrastructure designed to dole out energy more efficiently and make both consumers and companies more knowledgeable about their use of electricity, gas, and other utilities. The government stimulus package signed into law on Feb. 17 includes billions of dollars for smart grid technology. “Smart grid is pretty critical to the future of our company,” says Andrew Tang, senior director of PG&E’s smart energy Web division. Rolling out millions of Silver Spring meters will mark “the beginning of a smart grid solution.”

A Green Startup You Never Heard Of

Demand for smart meters in particular may make six-year-old Spring Networks the most important green technology startup you’ve never heard of. Thanks to contracts from PG&E, Florida Power & Light, and other utilities, Silver Spring boasts a backlog of orders for meters and related technology worth $500 million, a princely sum for a company of Silver Spring’s age. The company is on track to generate positive cash flow in the second half of 2009, says President and CEO Scott Lang. “We are trying to transform the power industry for the 21st century,” Lang says.

Before the government announced plans for smart grid spending, Lang says Silver Spring was on track to hit $75 million in sales this year. The company now is revising those estimates “significantly upward,” Lang says, though he won’t say by how much. Silver Spring’s backlog is expected to double in the next 12 months, he adds.

Some of the most powerful players in Silicon Valley believe Silver Spring could be one of the first home runs to emerge from the clean tech boom. The latest sign: On Feb. 9, Google (GOOG) confirmed that it made an investment in Silver Spring. Representatives from Silver Spring declined to comment, but a source close to the company says it was in the range of several million dollars.

Google Investment Builds Confidence

Last October, Kleiner Perkins Caufield & Byers, an early investor in Google, led a $75 million investment in Silver Spring. According to the National Venture Capital Assn., that brings the total raised by Silver Spring to $167.5 million. That money will help fund a global expansion and should give utilities more confidence to form a partnership with the little-known player on a critical project. “This company is potentially one of the largest outcomes in clean tech,” says Warren Weiss, a Silver Spring director and general partner with Foundation Capital, one of Silver Spring’s early investors.

Click here to read the rest of the story.

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A Bubble in Green Tech? VCs say “Not”

September 24, 2008

Venture capital investing in green technology is soaring. So you have to wonder: Is this the beginning of the next tech bubble?

So far, VCs say no, according to a survey by KPMG of 301 venture capitalists, corporate executives, entrepreneurs and bankers. VCs expect investment in the greentech sector to significantly increase in 2009. KPMG found that 91 percent of respondents indicated they expect venture capital activity in the greentech sector to continue rising in 2009, compared to only 76 percent who indicated the same the previous year.

When asked which sub-sectors of greentech would receive the most investment over the next two years, no one category dominated. Fifteen percent of respondents say energy storage (fuel cells, batteries, etc.) will see the most funding, followed by clean coal and wind with 14 percent each. Alternative fuels and solar rounded out the top five with 11 percent and 10 percent respectively. When asked what will become the dominant clean-air energy source in the next 20 years, 39 percent of venture capitalists say solar, 27 percent say nuclear and 18 percent say wind.

I don’t believe this is wishful thinking. The energy problem is huge and complex. And green tech investing only began to take off two years ago. What’s more, these investments will tend to take longer to pay off than your typical Web 2.0 Valley play. But at a certain point, say three to five years from now, VCs will want to start to see some pay-off from all this investment. Already, big-time green VC Vinod Khosla has pooh-poohed green technologies that don’t have the ability to scale economically to the point where they can effect billions of people.

“If it doesn’t scale, it doesn’t matter,” says Khosla. “Most of what we talk about today–hybrid, biodiesel, ethanol, solar photovoltaics, geothermal–I believe are irrelevant to the scale of the problem” of climate change.

He Blinded Me with Science: Barack Obama Talks Science & Technology Policy

September 7, 2008

If you haven’t checked out ScienceDebate2000.com, you probably should. A group of ordinary Americans got together last fall and called for a presidential debate about the future of science and technology. On September 5, Barack Obama answered the 14 questions that scientists collectively came up with. Although John McCain has not answered the questions yet, the Web site said he will.

I come away impressed with Obama’s policy positions, which was a bit of a surprise. I’m definitely ready for regime change in America, but when I listen to Obama it’s not clear to me that he understands the genius of the American economy–which is our entrepreneurial spirit.

Sometimes, Obama sounds so populist and anti-corporation that it worries me. I fear that he’ll fall back on the same old tired Democratic ideas of worrying more about redistributing wealth than creating new wealth. But having read Obama’s detailed answers to these important questions, I feel as if his real policies are more pro-growth and pro-entrepreneur than the change-centric rhetoric found in his spellbinding speeches.

Among the highlights in his answers:

* Ensuring that the U.S. continues to lead the world in science and technology will be a central priority for my administration

* My administration will increase funding for basic research in physical and life sciences, mathematics, and engineering at a rate that would double basic research budgets over the next decade.

* As president, I will launch a Service Scholarship program that pays undergraduate or graduate teaching education costs for those who commit to teaching in a high-need school, and I will prioritize math and science teachers. Additionally, my proposal to create Teacher Residency Academies will also add 30,000 new teachers to high-need schools – training thousands of science and math teachers.

* My proposals for providing broadband Internet connections for all Americans across the country will help ensure that more students are able to
bolster their STEM achievement.

* Specifically, I will implement a market-based cap-and-trade system to reduce carbon emissions by the amount scientists say is necessary: 80 percent below 1990 levels by 2050. I will start reducing emissions immediately by establishing strong annual reduction targets with an intermediate goal of reducing emissions to 1990 levels by 2020. A cap- and-trade program draws on the power of the marketplace to reduce emissions in a cost- effective and flexible way. I will require all pollution credits to be auctioned

* First, I have proposed programs that, taken together, will increase federal investment in the clean energy research, development, and deployment by $150 billion over ten years. This research will cover:
• Basic research to develop alternative fuels and chemicals;
• Equipment and designs that can greatly reduce energy use in residential and commercial buildings – both new and existing;
• New vehicle technologies capable of significantly reducing our oil consumption;
• Advanced energy storage and transmission that would greatly help the economics of new electric-generating technologies and plug-in hybrids;
• Technologies for capturing and sequestering greenhouse gases produced by coal plants; and
• A new generation of nuclear electric technologies that address cost, safety, waste disposal, and proliferation risks.

* Overseas, I will launch a Shared Security Partnership that invests $5 billion over 3 years to forge an international intelligence and law enforcement infrastructure to take down terrorist networks.

* I strongly support expanding research on stem cells. I believe that the restrictions that President Bush has placed on funding of human embryonic stem cell research have handcuffed our scientists and hindered our ability to compete with other nations. As president, I will lift the current administration’s ban on federal funding of research on embryonic stem cell lines created after August 9, 2001 through executive order, and I will ensure that all research on stem cells is conducted ethically and with rigorous oversight

How IBM’s Venture Capital Group Can Help Your Startup

January 25, 2008

The other day I had a chance to meet Claudia Fan Munce, managing director of IBM’s VC group since March 2004.  Born in Taiwan and raised in Brasil, Munce is a double threat with a Master of Science in Electrical Engineering from Santa Clara University and an MBA from Stanford.

Munce

While many VC arms of corporations invest directly in startups, Munce has fashioned a totally different strategy for Big Blue. IBM does not actually invest money in companies. Rather, Munce helps IBM form strategic relationships with hundreds of startups that can help the company deliver technologies that solve customer problems.  “The measurement we had was never financial return,” she says. “We take that strategic aspect and feed it back to the company.”

Since its formation in 2000, IBM has gone from working with 20 VC-backed startups to more than 1,300 today. Her group helps these young companies navigate the labyrynthian bureaucracy of Big Blue, connecting them with various business units, and offering them managerial advice and support. Munce and her team will help entrepreneurs with marketing, connect them with customers and sometimes fund joint development projects. “We invest very heavily in building these partnerships,” says Munce.

And every now and then, those relationships end up with IBM acquiring the company. Over the last few years, Munce says that IBM has scooped up 18 companies that have worked with the VC group, including Corio, Bowstreet, AlphaBlox, Trigo and most recently, AptSoft.

Currently, Munce says IBM is really focused on forging relationships with startups focused on blade servers, virtualization software and green technology. “The utility industry has always been a big customer of IBM,” says Munce. “And IBM has so many data centers around the world. The power management side is very important. Governments are asking IBM to come up with a solutiion to deliver power in a more efficient way.”

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Valley Boy: Part 1 of an Interview with VC Pioneer Thomas J. Perkins

January 17, 2008

Thomas J. Perkins is a Silicon Valley legend. In 1972, Perkins, a former Hewlett-Packard executive, and Eugene Kleiner, a founder of Fairchild Semiconductor, created one of America’s landmark venture capital firms, Kleiner, Perkins. The partnership made its mark with two blockbuster investments: Tandem Computers and Genentech, the first successful biotechnology company. As chairman of both companies, Perkins played a huge rule in developing each of these groundbreaking, multi-billion dollar businesses.

Today, Perkins is more well-known for his role in helping to expose the spying scandal at Hewlett-Packard, where he was a director of the company. I got to know Perkins when I interviewed him several times for my book. In November, Perkins dropped by the BusinessWeek office to plug his new memoir, Valley Boy. Although he is not actively investing today, Perkins was as forthright and insightful as ever, looking trim and dapper in a blue, peak-lapel suit.

In the first part of this two-part interview, Perkins discusses the state of venture capital, his views on various technologies, why Microsoft doesn’t scare him as much, and the future of Silicon Valley. (Yes, he think we’re seeing some signs of a bubble.) In the second part of our interview, which we’ll publish on Monday, Perkins offers his candid comments on Hewlett-Packard and how he helped to turn around the company.

Is Kleiner Perkins not funding Web 2.0 companies anymore? There was some discussion of that in the blogosphere recently, with valuations for Facebook and other Web 2.0 companies getting really, really high.
I’m not aware of that. A lot has been done but we haven’t made it an official policy. I love bubbles. We made a lot of money in bubbles.

Every time Google passes one of the century marks, 100 to 200 to 300, everybody said, “My god.” If you bought Google on the offering you would have made about 10 to 1. Is the market always right? No. Is it always wrong? No. You don’t get rich by betting against the market.

Is there too much venture capital floating around?
There’s always been too much money in venture capital. It doesn’t mean you can’t make too much money in venture capital.

What’s the worst investment you ever made?
There are so many. Hundreds of them. In all of these things if you put the risk up-front and use your initial money to try to reduce the risk, you won’t lose that much money. But one Google covers an awful lot of early stage losses. That’s just the way the business works. When you write the check you think it’s going to be a home run. You’d never knowingly say this one isn’t quite as good. If you think that, don’t write the check.

Speaking of Google, what do you make of all this talk about platforms?
I am on the board of News Corp. so I am delighted to see MySpace participate in this war. The growth is just incredible and the involvement everyone has with these platforms. Five years ago I never heard of Google. Now I use it constantly

Did Rupert Murdoch bring the MySpace acquisition to the News Corp board?
Yes. And he discussed it with me a little bit ahead of that. I was very enthusiastic about. He discussed another one with me, which I won’t mention, that I was unenthusiastic about. It was acquired by somebody else and it has fizzled. For a long time I was Rupert’s listening post in Silicon Valley.

Why were you enthusiastic about it? A lot of people thought he was kind of crazy.
Because of Google. And because these things can take off. I thought it was a good bet. The people were impressive.

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What do you think about this whole movement to open the wireless world?
The phone companies scare me. The size, the power, the investment. They have the customers. They’ve got everything except for the last quarter mile. So they’re tough but they don’t move very quickly. An agile group like Google can do pretty well.

Does Microsoft scare you?
Not as much as it used to. They are a great company. We’ve always used them as a partner and as a target. I think that will continue.

Will Kleiner Perkins be around another 30 years? Succession has always been a challenge.
We are in our 35th year. We are on the threshold of another fund next year, which I think will be number 13. So we’re doing pretty well. We’ve lost some partners, but never in an angry or competitive way. We’ve had more retirements than the competition. We have a very good management structure: Ray Lane, John Doerr and Brook Byers are the three managing general partners. They are all pretty comfortable in the saddle. None of them want to quit. And we’ve got some pretty interesting folks coming up behind them. I think it depends on the bets we make, rather than who is in the pipeline.

Are you still bullish on green technology?
Yeah, there’s so much momentum. There’s fresh technologies and new things to be done.

It’s not trendy?
Sure, it’s trendy but you can’t ignore trends.

Will the credit crunch affect Silicon Valley earnings? Anything to worry about there?
No. There’s far more than adequate capital, as we’ve said earlier. It’s always a good time to be in venture capital. If the markets come off a bit, the prices come down. You can’t look at the stock market and decide whether or not to invest in a startup venture. You have to totally ignore that. You have to assume sooner or later there will be a market for liquidity. After all, the growth of technology has been just about the only constant in our economy for a very long time.

Do all these proposed tax increases on venture capital concern you?
Yes. I would hope that there’s an adequate distinction between a venture capital fund, which has a very long time scale, and something that’s measured in months, as in the hedge fund world. And maybe the tax code has to recognize that.

Historically, Congress has been pretty good in understanding what venture capital has been all about. When I was chairman of the National Venture Capital Association I lobbied to reduce the capital gains to 20% from 28%. President Carter vetoed that. But [Congress] overrode the veto. So Congress understood the importance of venture capital. I used to say venture capital was like a pilot light. But now it’s like a roaring glass furnace.

Do you worry about liquidity, in terms of how companies can sell out
If you have a good business there is always liquidity. The value has to be there. It has to be a decent business. It used to be in earnings per share, and now it’s in market share or growth rate. It can’t be smoke and mirrors.

Doesn’t that sound a little bit like the thinking of the bust?
Yeah but we can’t ignore that. It’s value. If you’re like us and get in on the ground floor, it’s always OK.

Where would you be if you were just getting into the Valley today?
Always as an entrepreneur. Never as a venture capitalist. My advice: You can go to Wall Street and get in on the ground floor of the next scandal. And there will be one. You can become a venture capitalist, and you might do alright. But if you really want to have some fun, make an contribution, and maybe make money, you become an entrepreneur. It’s a buyer’s market for entrepreneurs. There is so much venture capital out there. As I said in my book, money is the least differentiated of all commodities. And venture capitalists are in the business of selling money.

Do you sense that Silicon Valley is doing well today?
It’s better. The Valley is a meritocracy. It’s taken for granted. But it is a true meritocracy But it’s tough, too. An entrepreneur can fail and still get backing for the next deal, if we think he failed for the right reasons. We have primarily invested around the Valley and now we are branching out into China and far afield.

Now that you are going overseas, how will globalization impact America as money starts going overseas?
It’s not our primary focus. It’s still experimental. We don’t know how it’s going to play out. We are moving carefully and deliberately. I am very optimistic about the Chinese-American relationship. Always have been. I’m not concerned about co-habiting with the enemy or anything like that.

Do you think about investments differently there?
Oh yes. Historically, we never went very far from Silicon Valley because we couldn’t drive there and check on [the investments]. China is quite far away but we have a partner who commutes to China every couple weeks. We don’t know the [Chinese] as well but they come to us as well. There’s a lot of interaction. We think we’re doing it in a cautious careful way.

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