Vinod Khosla: Forecasters Are Wrong, Maintech Not Cleantech

June 4, 2009

Speaking yesterday at the Silicom Ventures Summit 2009, serial entrepreneur and “greentech” venture capitalist Vinod Khosla did his presentation on “Maintech” vs. Cleantech; about the same for the last 6 to 9 months!

For Khosla, Maintech refers to mainstream technologies like engines, lighting, appliances, cement, water, glass and buildings – which are huge markets – and can therefore impact significantly the carbon emission problem; as opposed to Cleantech which is more about huge and complex infrastructure projects like nuclear, solar, wind, etc.

I think this is more about semantic than anything else, but it does allow Khosla to rise above the rest of the “Cleantech” investors.

Don’t believe forecasts, invent your future

Khosla started his keynote by discrediting forecasters and analysts, by proving how wrong they were in several occasions; predicting oil and coal prices or the future of the mobile industry.

You just can’t predict the future with yesterday’s technologies or extrapolate the past. And the best way to predict the future is to invent it! So typical Silicon Valley.

Black Swan solutions needed, not Greenwashing

Khosla then went on at looking for some “black swan solutions” that are responsible for market shifts and ultimately energy innovation. Some of these disruptive solutions could be:

  1. the best way to clean up the air would be to build more coal plants but using carbon sequestration (Calera)
  2. create crude oil from wood chips/waste at refineries through a catalytic process (Kior)
  3. A 5% difference in demand brought oil prices down from $147 to $37. So the idea is to double the efficiency of combustion engines, from 20% efficiency today to 40% and would cut oil consumption in half! “It’s not that hard.” (Transonic)
  4. replacing incandescent bulbs with more expensive LEDs which are 10 times more efficient. The idea here is to significantly reduce the cost of LEDs

To succeed, these “black swan” solutions must return investment in 3 to 5 years, be relevant in cost, scale and not rely in any long term government subsidies and above all survive the Chindia test: it must work in countries like China and India.

Beware of charlatans

Despite being disruptive ideas, investors and the public must be wary of irrational ideas or “silly stuff,” like Sheryl Crow’s one man, one toilet paper idea! There are no “lazy” green solutions, Khosla contends.

The pragmatics survive!

Finally, for Khosla, pragmatism should prevail and that means focusing on mainstream green technologies as well as the large infrastructure projects.

And here’s a copy of an earlier version of Khosla slides:

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Posted by TechPulse 360

Silicon Valley Venture Firms Look To Taiwan, China For IPOs

June 3, 2009
With the IPO window closed in the U.S., venture capital firms are looking to Asia and Europe for exits

With a closed IPO window in the U.S., venture capital firms are looking to Asia and Europe for "exits"

Silicon Valley venture capitalists are looking beyond the U.S. and Nasdaq to cash in on their start-up investments.

For the panel of venture capitalists speaking at the Silicom Ventures Summit on “early stage investing,” Taiwan and China stock exchanges are the immediate beneficiaries for the lack of technology IPOs in the U.S.

Both countries have recently loosen their regulations, allowing foreign companies to go public in their respective Bourses.

“One or up to 2 to 4 of our portfolio companies will go public in the China exchange in the next 24 months,” said Jennifer Fonstad, partner at Draper Fisher Johnson.

Low M&A valuations push venture capitalists to seek outside the U.S. for exits

Storm Ventures founding member Ryan Floyd also confirmed that iML (Integrated Memory Logic), one of its portfolio company filed for IPO in Taiwan.

“If you’re a start-up with Asian customers and an Asian supply-chain, Taiwan is a good option with less stringent rules than the U.S.,” added Floyd.

The lack of technology IPOs in the U.S., as well as stricter accountability rules needed to go public is just one part of the story. “Mergers and acquisitions valuations don’t seems to be very interesting,” admits Floyd who also expects there will be more tech IPOs in the U.S. this year than the 2 of last year, and this, despite the recession.

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Posted by TechPulse 360

Web 2.0 Is Social Media, Web 3.0 Is Ubiquity

June 3, 2009

Web 2.0 was defined by user interactivity and rise of social sites, such as Facebook.

Audience is inversely related to power or complexity, says Trip Hawkins

Audience is inversely related to power or complexity, says Trip Hawkins

Web 3.0 will be remembered for the ubiquity of network connectivity as the Internet truly extends to every device everywhere at any time.

No telling how long this transformation will take.

But as always-available connections become commonplace, the Internet will enter a new phase with substantial new possibilities.

This was the view of Trip Hawkins, CEO of the game company Digital Chocolate. Hawkins, speaking Wednesday at the Silicom Summit at Stanford University, said the key to prospering in this environment is to become truly cross platform.

Google may be the first genuinely ubiquitous platform with its ability to reach PCs, all sorts of phones and ultimately a variety of consumer devices.

But it won’t be the last. “This is really a huge opportunity and the industry hasn’t yet scratched the surface,” says Hawkins. It’s going to be disruptive for some established players with new competitors coming out of the woodwork.

Hawkins says Web 3.0 comes with an interesting tradeoff. The convenience of an application is often more important than its power, or the quality of its video.

You Tube became successful because it was easy and simple to use, despite the company’s decision to sacrifice video quality for convenience. “The size of the audience is inversely related to power because power is perceived as complexity,” he says.

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Posted by Mark Boslet

Web 3.0 Will Create Small Companies, Not Large

June 3, 2009

The next Google may not be the size of Google.

Instead, scores of successful small companies will define the next stage of the Web as the Internet goes mobile and connects billions of portable devices to a ubiquitous public network.

If you aim to build big businesses, you will fail, says Ram Shriram

If you aim to build big businesses, you will fail, says Ram Shriram

“They will have 10 to 15 employees” and there will be a lot of them, says Ram Shriram, a Google board member and founder of the investment firm Sherpalo.

“If you try to aim to build big businesses out of this, you will fail,” he said Wednesday during an appearance at the Silicom Summit 2009 at Stanford University.

Shriram said the Internet is generating opportunities for small-scale applications, such as those that entrepreneurs have built for Apple’s iPhone. Smart phones and portable devices are starting to replace the PC as the consumer’s primary data communications device, he said.

The result is an opportunity for two or three people to toil, build and application and take home half a million dollars if they are successful.

“I think this emerging trend will create a lot of little companies,” he says.

And instead of relying on advertising as the main source of revenue, they will broaden the economic base of the Internet by charging for the applications or subscriptions.

“There will be some micro payment models that could work,” he says.

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Posted by Mark Boslet

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