Archive for June, 2008

Budapest, not United States, wants to be the green car capital of the world

June 27, 2008 4 comments
How is it that a cool looking eco-friendly car will come to Hungary while the US is stuck with the Prius? Since when is there a fashion tax for trying to save the planet?
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Budapest (Hungary) – You wouldn’t expect the country of Hungary to be an automotive powerhouse, but it strongly desires to be the green car capital of the world. By 2012 Antro Solo want to produce a solar, human and gas-electric hybrid vehicle that drives more than 150 miles per gallon of gas. The Antro Solo is not only the most fuel efficient vehicle currently thought of, but will also be extremely affordable, costing consumers around $20,000.

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More dollars going into clean technology, just the tip of the iceberg lot has been written about the potential bubble in the clean tech industry with the influx of large amounts of venture capital and the emerging numbers of clean tech funds. Unlike the Internet bubble of the earlier part of this decade, the products and services from the clean tech industry solve fundamental problems with respect to the increasing costs of living. In contrast, the Internet bubble companies like Webvan,,, etc… provided little sustainable customer value or a business model with any return on investment.
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NEW YORK–You can’t avoid the bubble question when it comes to clean-tech investing. Get used to it: with a massive movement of capital into the sector projected in the future, people are bound to fret.

Bill Green, a panelist from VantagePoint Venture Partners, had a chart that made the point in a compelling way.
On one side was the market capitalization of the top 10 companies in energy, chemicals, auto, materials, and water–a whopping $3.5 trillion. Venture capital investment in the clean-tech sector–which sells into all of those industries–was about $2.2 billion last year.

Meanwhile, the market capitalization for the top 10 IT firms is $1.5 trillion. Venture capital investment into all IT-related sectors was $16.4 billion.
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Saving the Earth while maintaining profitability

Social commentary on global warming from 30 Rock. Vodpod videos no longer available.more about “Saving the Earth while maintaining pr…“, posted with vodpod

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Killing the energy pain with Capitalism

June 20, 2008 3 comments

Can you introduce new products into a segment that has no immediate pain and drive change in consumer buying behavior? No.

Global Warming falls into the category of problems that have no immediate pain to the consumer. This is not to say that Global Warming is not the largest social problem facing this and future generations, because it is. The way that businesses and corporations start to address the problem is through the identification of a revenue opportunity in offering alternative energy products and services that address immediate customer pain. That is the capitalist solution to addressing Global Warming.

Wikipedia on Solar EnergyResistance to change
A big problem facing alternative energy vendors is the built-in institutional resistance to changing the status quo. There are Billions of dollars being generated with the current energy solutions based on petroleum. Up until recently, a $2 and $3 per gallon price point has not been enough of a reason for consumers to seek alternatives to their current energy consumption. Even the increasing social consciousness brought on by Global Warming has not been enough of a factor to drive change. And in fact, the Global Warming argument puts energy efficiency into more of a vitamin rather than pain killer category. A potential threat to the increasing drive for change to move to more energy efficient products are the oil companies ability to manipulate the price per gallon of gas back down to $3 and even $2 per gallon. If you think this is a case of skepticism, then just remember that capitalism can both drive companies to build alternative energy products and drive the price of gas down to increase demand.

The Fundamental energy question
Have energy costs become enough of a pain that people are willing to change their lifestyles to adopt more energy efficient products and services? There are a lot of venture dollars going into the renewable and green energy segment so the greed factor is forming. But can that be enough of a driving factor without consumers clamoring for energy efficiency? And can all of this be done in a vacuum without considering the built-in institutional resistance to change?

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Cash is king if you want to keep peace of mind

If you have ever been married, you know that you are not just marrying your spouse, but also adding their family and friends to your extended family. On that wedding day, you also introduce new demands on your time such as yearly visits to the in-laws, requests for grandchildren and an endless stream of birthday parties, anniversaries and baby showers. To make sure you keep your sanity, it is critical to maintain a budget that can afford these activities or at least know when to say no. You risk increasing debt and hungry creditors without an effective budget. Being pulled in all different directions with new expectations is a predicament that any CEO of a start-up company can sympathize with. In their case the critical event is not marriage, but rather taking in venture capital. So in order to delay this outside funding event for as long as possible, here is another tip for start-ups: preserve as much cash as possible. As for delaying the marriage event, you will have to take that up with your spouse.

Cash is King
Extending cash and keeping a low burn rate is a pretty simple concept in principle but difficult in practice. Beg, borrow and steal to get your product to market and start building a customer base. The most important thing you can do with your seed or angel money is to build your prototype, identify market demand, demonstrate your team’s ability to execute and get customers that will vouch for the problem you are solving. Do odd jobs to get extra income, pool money from family, friends and relatives to help with cash flow. The extent to which you can keep funding your business on your own without the need for VC funding, the better off you will be in the long term.

Why is this so important?
Once you open your company to outside board members, especially institutions, you have accelerated your expected time to revenue and some type of liquidation event. Most VC firms are not in the business to just build companies that last with year over year returns, they are in it to get a high return on their investment. Going back to the marriage analogy, taking VC money is like adding a father-in-law and mother-in-law and daily reminders about grandchildren. If that is along the same timeline as you and your spouse, then you should not have a problem with it.

For some, venture capital is a required next step. If so, here is a post on Rick Segal’s blog with an overview of the funding process.

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Lunch in or out – the company culture dilemma

Blue Mango, Santa Clara CAI have read a few blog entries about the need to bring lunch in so that workers stay in the office. There is an opposing view that it doesn’t really gain the business much by providing free in-house lunches.
My personal opinion is that this type of activity by itself will not build or break a start-up. You might see this as a way to gauge the personality of the team. Do they like hanging out together? One solution is to have a blended lunch in/out model where you pick a place close to the office to have lunch for the team. It gets everyone out of the office and to a neutral place where they can bond. It makes sense when the number of people within the company is manageable.

Company Culture
Going back to the point about team personality. It cannot be stated enough how important teamwork and company culture are critical to a group of people achieving their goals. Beyond just serving lunch, there are other areas to look at that help to form company culture. For example, does everyone work on the same office schedule, is the layout of the building conducive to working together and is the reporting structure flat or a hierarchy. All of these are important aspects but I’ll start with the first question this time and talk about the others another time.

Does everyone work on the same office schedule?
If your sales, marketing, engineering and exec team all work different hours with limited overlap, then you will run into problems. I am a firm believer that in a start-up you should work the same hours as your customers and your engineers. Thus if your customers start calling at 8am and your engineers are at work until 10pm, then the other parts of your organization should model themselves around these hours. That may mean being accessible on email early in the morning or late a night, but it is critical to be within a Skype session or phone call away. This becomes much more difficult when you are servicing different regions, but that just means it is a test of your companies commitment to success in these foreign regions. If you are a 9 to 5 type of person and don’t check e-mail or IM at home, then please spare your start-up co-workers and join a grocery store or bank.

Why a blog on lunches?
Company culture is one of the most difficult aspects of start-ups to establish since it is essentially determined by the relationships between individuals and their sense of responsibility to the group. There are no magic tricks to build a perfect company, but you can start by building around the right people. And when it comes to lunch, your employees might already have their favorite lunch places or afternoon coffee hang outs. It may be a good idea to facilitate those ‘out-of-office’ meetings as much as reasonably possible.

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Moving full speed, full stop and back to full speed

TitanicWhen you have an ocean liner running at pretty good clip and then throw on the brakes, you can imagine the impact on the ship and resulting waves. Then when you try to get the ship going again, it takes time to rev the engines and get momentum. No easy task.

I am in a similar stage after spending the last four years works at a start-up and having recently left at probably one of the most invigorating times during those four years. The recovery process has already begun. I spent part of the morning with a few co-workers reminiscing and thinking up ideas for new stuff to build and potential business opportunities. The challenge now becomes taking enough time to decompress while not losing that killer instinct to build something new and exciting.

I ran across a job site called which seems to be a good overview of new opportunities. Some interesting stuff, especially outside of the industries I am more familiar with.

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