Why I still focus on cleantech?

Somebody I know well recently asked me why I still focused on cleantech investments? Had I not been dissuaded by all the rather public failures of cleantech startups? Was the political climate not anti-cleantech almost everywhere, and was this really solving the biggest problem faced by humanity today?

These were well meaning questions and came from someone I trust to be smart and thoughtful. I think he wasn’t trying to tell me I am crazy, but as a friend who knows me well, was just wondering if this was the best thing I could be doing with my limited time in this world?

And the answer back to him was “I couldn’t think of a bigger challenge than this to take on, and such an important one at that.” So far I have loved working in cleantech despite the down cycles and the spate of negative news that have hit the industry.

Don’t get me wrong, I get it that it kinda sucks as far as cleantech successes are concerned. There are few of them, and seen from 30,000 ft they look like tiny specks instead of inspiring feats. And it gets tougher when your colleagues discuss billion dollar exits in 15 months. But we are just in the 3rd inning of this game and those who give up now may be should not have played at all.

This is not meant to be a long philosophical post. But I apologize in advance. Just wanted to expand on some thoughts I shared with my friend. I don’t think I convinced him, but that’s OK. We have always loved that we can agree to disagree. It pushes us to think harder about our positions. So here are some reasons why I still focus on cleantech:

• Long term trends are secular and not changing no matter what some might like to believe. Global warming is happening, fossil fuel supplies are limited and geopolitically troubled, much of the world is just coming up the development curve and is hungry for energy/water, and people around are more conscious about their ecological footprint than ever before in modern times. Just imagine when all of China gets to travel the average 12000-15000 miles per person per annum that average Americans travel. We may not have enough cars, fuel, or roads to support that. How do we solve that problem? And what’s the commercial opportunity? This is a resource-constrained world no matter how we look at it, and therein lies the opportunity to optimize and build the next generation companies.
• I would never bet against technology, and cleaner, more efficient technologies are not science fiction but already mainstream and important part of our lives. Reverse Osmosis is not expensive technology that Arabs or Israelis use to produce fresh water, but Coca Cola uses it as well to produce Dasani water bottles. Apple, Facebook, and Google are buying solid oxide fuel cells to power energy hungry data centers, I no longer have to remember to shut lights off at work because every room in the building is equipped with advanced proximity sensors, and I can download apps on my cellphone that would give me turn-by-turn driving instructions optimized for fuel efficiency. Let’s be clear that technological breakthroughs have allowed shale gas found in the US and elsewhere in significant quantities to be extracted in economically viable ways. Don’t bet against technology.
• Today’s generation of adults have grown up in a networked, globalized world and are more aware of the disasters that can result from extreme weather and climate change. They have a more personal understanding of the impact of drought in sub-Saharan Africa or floods in Bangladesh that the generation before them did reading National Geographic. Our children are growing up knowing about happenings in Syria and Japan faster than their parents who watch cable news. How this world works and is at risk is ever more present in their conscience, and they want to make it better.
• Einstein once said “God does not play dice with the universe”. In the same vein, I believe we have a one-shot at this experiment we call life on earth. I don’t want to play dice and see if all ends up well on the other side of this great human experiment. Lets correct our course as we go and to improve our collective lives while preserving the future. Our predecessors used wood, coal, oil and gas. What will we use going forward? All of the above plus solar, wind, biofuels, nuclear? Just like we went from large digital computers to personal computers to iPads, why won’t we make the switch from incandescent to fluorescent to LED light bulbs? Batteries twenty years ago barely powered hand-held radios for a few hours. Now they power powerful computers for hours. Why would the same not happen in electric vehicles that could drive 300+ miles without recharging?
• Solar, wind etc are variable sources, and inherently there is uncertainty in their availability. But if you take a long term view (5-10-20 years), I woud wager that perhaps even the most variable natural resource like wind or solar is more predictable in availability and pricing than fossil fuel that remains at the whim of dictators and other idiots, and on yet-to-be-developed extraction techniques. Unfortunately our financial system just hasn’t developed ways to monetize clean energy well. Can that change and unleash capital that is otherwise tied up?
• Cleantech is not a single industry but so many different industries. From the renewable power sources such as solar, wind, biofuels, hydro, automotive to lighting, energy efficiency and energy IT, to devices, sensors, robotics, behavior psychology, big data analytics, cloud computing to gaming. There are cleantech opportunities abound, and there is no shortage of buzz words if cleantech is now a four-letter word. A rose by any other name is still a rose, right?
• The quality of entrepreneurs I see entering cleantech fields today is impressive. They are ten times better than my peers from 10 years ago when I started my cleantech company. They understand the challenges they are taking on and are determined to succeed. They understand that their markets are large and real (not virtual), lifecycle of their products & companies would be decades (not months), and acceptance of their products if economically viable would be nearly universal.  It’s just that they have to usually build stuff, and building real stuff at scale is tough and takes time/money. Not only that, they are sometimes also dealing with unfair business practices from their competitors in other parts of the world. So be it. Creative entrepreneurs will always win in the end. Generations of entrepreneurs before them built the electric grids, railroad systems, highway systems, aircrafts, and nuclear power stations. So they know who their ideals are and are aiming high.
• Great entrepreneurs and good investors build companies that last, not exits. Exits come when companies reach a certain level of maturity, or when luck shines upon them. I hate to see investors chasing dreams of exits when they really should be building companies in large markets, solving real problems, and building products that customers truly need and want. And such companies are being built today. Let’s just have some patience. The entire freaking country of Greece melted away in less than 2 years, so please cut these entrepreneurs some slack! They will rebound with better products and more robust businesses.

While I am hopeful that I am not totally wrong, that is perhaps besides the point. At the end of the day I am just a cog in the wheel; but a wheel that is on an important journey. I am an entrepreneur at heart and entrepreneurs want to solve problems they see before themselves. And I see this as a great challenge. And in every challenge lies an opportunity that would pay plenty if successful.

Tasterie.com – Looking for healthy, tasty, food/snacks, esp if you have food allergies?…look no further.

My second child arrived 1.5 years ago looking as much a bundle of joy as my older one, except that he was born with multiple food allergies. Well, like all good parents, we learnt as much as we could about dealing with food allergies….and frankly got very frustrated along the way. It is NOT easy dealing with food allergies. Not only can you not enjoy food other people can, but you also feel you are being a drag on everyone else. My wife continues to be the primary line of defense for my son, and wanted to change the experience for other food allergy parents.Serial entrepreneur that she is, she is now doing so with www.tasterie.com.

Tasterie wants people to discover great tastes, eat well & healthy, and live happily allergy free. It has been an honor & pleasure to be an advisor and an angel investor to this small team of passionate individuals (doctors, nurses, moms, students) who want to bring amazing food and snacks to you every month, curated with your dietary restrictions in mind, and  verified rigorously for being safe for your food allergies. They are utilizing the now rather popular subscription commerce model to serve their customers – for $29.99 + FREE shipping, I am told you get 20-30 servings of food and snacks each month. You can choose the simply HealthyBox like I did, or get a Vegan one, or Gluten-free, Dairy-free, Nut-free or several others…choose your pick.

As much as I would love for my investment to succeed in dollar terms, I know this is a team that puts their mission first and their business second. And that does not concern me. They have quickly gotten to know a ton of food allergy experts and are building a kick-ass customer advisory board not to decorate  their board decks for the next investor or business development meeting, but to understand how they can realistically improve their ability to verify allergen contents in the food, and certify vendors with tightly managed manufacturing practices. Since my children are part of the extended tasting team, they are not kidding around I am very proud of being associated with them.

Check out the website:
http://www.tasterie.com
 and blog.
Check this video of some members of the team from when they visited my office.
Check out a short review of their service by a prominent food allergy blogger.

Tell your friends who may have food allergies and could benefit from this. Hey, even if they don’t buy, they can benefit from lots of free give-aways they seem to organize all the time…

Thinking about student entrepreneurship…Boston can do better!

Below is a terribly written note, but I hope it conveys the point I am trying to make…

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May is a special time in Boston. With finals & graduation around the corner, students make their push to complete the semester and finalize their summer/next year plans. This is typically also when student projects either turn into real companies, or die as students move into other career paths.

I had the fortune of meeting many students in the last few weeks, including those who joined us at General Catalyst’s annual Entrepreneur Forum (700-800 entrepreneurs attending). I also got to meet some students who have been selected in to the Y-Combinator program, and some who are Thiel fellows. Their brilliance is mind boggling. But it was also a bit disheartening to see how many of them had plans to quickly move to the west coast to either build their companies there, or work at one of the more well-known startups under a charismatic CEO, CTO or founder.

As someone engaged in the local Boston startup ecosystem, I walked away from all my discussions thinking Boston is really not doing a good enough job meeting, mentoring and supporting the next generation student entrepreneurs. No, I do not mean this post to de-ride all the amazing work that our local ecosystem has done in the past few years to bring back its mojo. But I think Boston can do better.

As a broad generalization, I feel students fall into three broad categories in terms of their readiness to start companies, and trying to reach them all with a broad brush of activities is not helpful. At a recent angel bootcamp dinner my friend Michael Grinich asked a poignant question of all angels present “how do you even find the best young entrepreneurs?”. Unfortunately the question went unanswered…but by focusing on finding the best student entrepreneurs, and providing them with what they need, we can do much much better at retaining talent here.

1. Maniacally product-focused entrepreneurs. These students know exactly what problem they want to solve, and are often discovered after they have already started hacking away at it in the confines of their dorm rooms or in academic ‘projects’. These guys are not interested in casual networking, chit-chat, or generalized dialogues on entrepreneurship skills. They don’t want to meet someone unless they know in advance that it will be a useful meeting. This is the group that is most likely to produce the next Zuckerberg or Drew Houston, and I believe it is often the most neglected group in Boston. While founders of companies like DropBox, Square and others fly in to try and recruit them, our VCs/angels sometimes don’t even know these entrepreneurs exist in our midst. So what can we do better? I believe our product centric founders and CEOs need to more active on college campuses as advisors and mentors and especially accessible to these students. Frankly, product centric founders are also more likely to identify these special students early rather than VCs and/or angel investors. Once identified, we should find out who is it that these students wish to meet and work our butts off to make those connections happen. If they want to bounce their idea off Dave Morin, or Drew Houston or Kevin Systrom, we should make that happen…not our peers on the west coast. These guys are shooting for the stars and we better match them in their ambition or shame on us. If we are unable to inspire them and show we can be resourceful on this coast, CA is only a short $300-400 flight away. Reality is we are losing student entrepreneurs to the west coast relatively rapidly.
2. Brilliance looking for inspiration/focus: A significant part of our student entrepreneur community tends to be super-excited about entrepreneurship but still searching for something that they could dedicate a few years of their life to. Kudos to them that in addition to their regular course-work and partying (which is what their peers do with their free time) they find time to build a network in Boston and familiarize themselves with the eco-system. They have caught the bug of entrepreneurship but are still searching for inspiration. I believe it should be dead simple for these students to find apprentice-type roles directly under founders & senior product guys at startups. They shouldn’t spend summers coding away at Google/Microsoft or even Kayak, but should be spending time closer to Paul English, Paul Sagan, David Cancel, Jeremy Allaire and others who are inspiring individuals and who can help these students find a product focus. Some such relationships tend to develop in ad-hoc ways (for example me sending one of them to a CEO I know well) but there is no coordinated activity that I can think of.
3. Future entrepreneurs: One of the biggest strengths of the Boston startup ecosystem is the amazing student community that exists here. I am a strong believer that every student here should seriously consider a career in startups (as a founder or otherwise) before taking on any other job. I talk about this plenty when I am invited to speak at local colleges, but I think we can do better than that. We need to make it easy for students to not only understand what startup life is like, and the joys/pains of the roller-coaster rides that accompany company building, but also find ways for students to easily find practical experience inside startups. It is unbelievable but until StartLabs.org started their annual startup career fair there was no such thing even at MIT. Now I hear there is an effort across multiple campuses to do the same. Not everyone interested in startups may be prepared to take on a founder role, or have an idea that inspires them, but they may benefit tremendously by spending time at a company that is rapidly scaling to understand what life is like in the fast lane. (As pointed out by an entrepreneur, they may not be ideal hires into a pre-series A startup but by Hubspot, Jumptap, Kayak etc.)

Boston community has rallied wonderfully around young entrepreneurs, especially if you look at the TechStars eco-system. But the student entrepreneurship community is more fragmented, harder to meet, short on time, and often needing a different set of advice than fully-formed startups do. It needs more attention by us, but not in the form of generalized talks, gatherings, lectures & group therapy sessions. Students are getting bored of that, and the best of them don’t find them inspirational. They want dialogues around products, around specific startup issues, and around decisions they are about to make in their lives. By having our successful founders, CEOs and product focused entrepreneurs become more active and accessible alongside investors we can hopefully improve our chances that the next big student startups would stay and grow here.

The Entrepreneur: A Masterpiece of Dexterity, Grace and Risk | New England Clean Energy Council | Blog

Thank you to Kimberly from NECEC for rather eloquently summarizing some of the thoughts I shared at a workshop on “Resourceful Entrepreneurs” at URES 2012.

Bilal Zuberi led the 2012 University Research & Entrepreneurship Symposium (URES, pronounced by those in the know as U-Rez) breakout session titled “Resourceful Entrepreneurs.” An innocent title, it called up images of a boy scout with a good Swiss army knife and a set of dry matches, but what followed seemed more like instructions on how to be part of a contortionist trapeze troupe embedded in an every changing landscape of ropes and bars.  Let me explain.

Zuberi said that, from the viewpoint of a potential investor, technology usually comes in second in importance to the quality of the entrepreneur. He went on to praise entrepreneurs who could operate effectively on a shoestring budget, overcome the many and varied hurdles set before them, call upon their own internal resources to pull together necessary analytics and due diligence, be the champion for their idea and do whatever else was required to give wings to their idea; in short, a contortionist.

In their flexibility, great entrepreneurs clearly identify their place in their team, they recognize the critical role of mentors and role models, and importantly, they understand that, maybe, they may not be the best person to step into the role of CEO, notwithstanding their passion for and dedication to their blossoming idea.  The successful contortionist entrepreneur exists as part of a team. She understands when to let go of the trapeze bar and trust that her network of experienced team members will do their part in the aerial ballet to make the move successful.  She must pay attention to the commands and signals of the troupe and react with humble and coordinated aplomb.

Similarly, the successful entrepreneur outlines a path, describes scenarios, and imagines what each step of the process must look like for success.  She’s got a plan. She’s outlined the supply chain, she knows where she fits in, she sees clearly and can even describe the road to market. Thank goodness, because with all these team members coming together, proper execution depends first on careful choreography, but also on being a well rounded athlete – especially when the landscape of ropes and bars changes, the plan takes a radical detour, and mid-swing it’s not clear how to land that triple summersault.

Zuberi described the resourceful entrepreneur with equal color, significantly less chaos and in a more concise way than I have.   He summarized that raw intellect and the willingness to learn are at the root of the successful entrepreneur. She is a living paradox, a self-reliant and yet humble part of team, maneuvering the business forward with an astute and agile plan.  Oh, and let’s not forget she’s got some really fantastic technology too.

via The Entrepreneur: A Masterpiece of Dexterity, Grace and Risk | New England Clean Energy Council | Blog.

Over-simplification of hard problems and nuanced technological innovations doesn’t really help.

Just saw this tweet and was left quite confused: I thought we were done making speeches like this in 2008!

My assumption is that Vinod’s description of the technology got a bit too simplified in somebody’s attempt reduce it to quotable 140 characters. Of all investors, Vinod probably knows best how difficult it is to realize and commercialize crazy materials science ideas and discoveries in real life.

My guess is that this “magic material” is possibly a bit like the new material described in a business plan I recently saw with the tag line: Zap material in a kitchen microwave oven to produce power from heat. That actually quite turned me off from the biz plan until I checked in with the professor whose lab this had came out of and learned that the reality was a more nuanced materials science project developing novel nano-structured materials for thermoelectric power generation. Microwave energy was only a way to orient crystalline structures resulting in higher than average ZT values. They fully understand how much more they need to characterize and understand the materials’ properties before making real world claims.

Just a request: for real progress’ sake, let’s make sure we don’t over simplify what are indeed rather complicated science and engineering problems.

Tradition of Presenting Scientific Innovation at URES

Every year I look forward to one special event that is held in Cambridge, MA – the annual University Research & Entrepreneurship Symposium (URES). This year it will be held on April 18th at the Microsoft NERD. Where else would you get approximately 30 universities presenting their most exciting research & innovation in the fields of Energy, IT and Healthcare? Professors, graduate students and post-docs present their ideas to an audience of angel and VC investors, entrepreneurs and CEOs to get feedback and help in commercializing technology out of universities.

I have been a part of organizing this event since its beginning and once again will be leading the Energy track and a lunch discussion on “What are Resourceful Entrepreneurs?”. Inventors who have presented in the Energy track in the past have gone on to create companies that have attracted top talent hires, won Arpa-E grants and received venture funding. This symposium is specifically designed to not be a pitch competition, a business plan competition, or a fundraising event. It is really to bring raw and early, but commercializable technology to the attention of the entrepreneurial ecosystem to facilitate the next steps in spinning these technologies out as successful enterprises.

Below is a brief teaser on the energy technologies presenting at URES 2012. I look forward to them telling their stories and presenting the brilliant work done in the labs. I encourage presenters at URES to (a) Try and define what could be their unfair advantage as a startup in the space, (b) Let the audience know how they can be helpful, besides the immediate funding needs. Most people do act on the advice, making for not just a more fruitful 1-1 interactions that continues after the event, but for a more engaging discussion for all those present.

This year we have chosen 6 technologies to present in the URES Energy Track. They were selected from a bigger set that could all have easily qualified to present…but below lists the ideas we eventually chose based on creativity, boldness and viability as a potential commercial entity.

1. Drexel University team will present a very interesting energy storage concept that is partly an ultracapacitor and partly a fuel cell. The configuration leads to development of a battery system that has high energy and high power densities…at low cost.
2. Cornell University team is working on nano-organic hybrid materials for high energy li-ion batteries. Technology allows for 3x the energy density, has been tested to at least 1000 cycles and integrates with existing manufacturing techniques.
3. MIT team is focused on polymer-ionic liquid rechargeable batteries, with a very interesting initial application focused on oil and gas drilling, down-hole activities.
4. Rensselaer Polytechnic Institute team has developed an extremely low cost manufacturing technique for nanostructured thermoelectric materials that show marked improvement in ZT characteristics over incumbents.
5. Utah State University team has developed an integrated sensor that is applicable for lighting, HVAC, fire and security markets. Technology is getting spun out of the Energy Dynamics Lab.
6. Columbia University team is using autolithoautotrophy to  convert CO2 into chemicals and fuels by using safe, soluble mediators that can be utilized by chemolithoautotrophic bacteria and that can be reduced electrochemically.

URES 2012 has been sold out and we are working with a waiting list. However, if you are really eager to attend, please drop me a line to let me know why you should be included. We would love to make space if we can at all.

I look forward to the URES tradition continuing into the future. Boston is not just an eco-system where great technological progress gets made in the labs, but also where amazing technologies get converted into products and businesses. Thank you to all the entrepreneurs who make that possible.

This post was also featured at: BostInno

What are Resourceful Entrepreneurs (for University spinouts)?

Starting a company from scratch is not easy, especially a university startup. I have had hundreds, if not thousands, of conversations with people who have interest in university spinouts and they all point to the many difficulties that they have had to face. The risks stack up high in the face of success: technology is often pre-maturely spun out, translational research, engineering, productization often needs to happen on a startup’s lean budget, and manufacturability and costs are often not even close to thought through when the inventions are typically made and disclosed. Then you layer on top complications of dealing with IP licensing offices, finding early customers, hiring great talent when you have nothing but a professor, passion and some pieces of paper to show for yourself, and then there is the sometimes terrible task of fundraising.

However, there are entrepreneurs, and investors, who just cannot resist the charm of building companies based on university IP.  I think I am one of them as well. I believe in the value of university spinouts and that is why I have chosen to co-organize University Research and Entrepreneurship Symposium (URES) every year. At URES we bring together university technologies & technologists, technology licensing officers, angel/VC and strategic investors AND successful entrepreneurs who are likely looking for the next big thing. WHen these circles overlap, and discussions take place in a frank open manner, good things can happen.

At GC, we continue to believe in university startups for many reasons: its where some of the most amazing innovation happens, usually serendipitously. Our society is built on technological progress that is often initiated by the great thinkers at our leading research universities, and whose work has been partly supported by us, i.e. government. If we believe in taking not just incremental, but quantum steps forward in how we think about and solve human problems, then bringing university research to real world is an honorable and valuable challenge.  And financial rewards are plenty for those who are able to succeed, be in IT, Health Sciences, Energy or other areas.

I belong to the camp that believes that while the probability is high that any single university spinout may not make for a dramatic commercial success, it is also not a total hit or miss game. There are general learnings that have emerged over the many decades of entrepreneurs and investors commercializing university research, and if due/disciplined attention is paid to them chances of success improve significantly.

There is considerable debate in entrepreneurship circles that the university startup creation process is a bit broken (i.e. startups built around core and deep technologies developed through research at universities). For example we often notice:

1. technologies that are incremental in nature getting spun out as companies when they really should be licensed to existing companies.
2. wrong mix of technologists, entrepreneurs and investors in earliest days of a company. A giant messed up soup of skills/needs match.
3. mind-numbing slow process of getting some faculty members to understand that invention is an important, but only a first step in what it takes reach even moderate commercial success.
4. lack of technologist joining startup as inception who can carry with him/her the entire breadth and depth of knowledge around the topic.
5. difficulties in navigating the IP licensing process, esp if Tech Licensing Offices are inexperienced, not motivated to license to startups, and otherwise constrained by regulations or laws.
6. etc.

Every time I think of all the difficulties that most university spinouts face, and then I look at those startups that have succeeded, one thing almost always stands out as stark difference. And that is the nature and quality of the entrepreneurs behind the effort. Successful startups almost always tend to have resourceful, brilliant, creative entrepreneurs. Investors often say that it is the team that is the most important variable in a successful startup, and I agree that its a true statement. But it is nowhere more true than in the case of university research spinouts. At URES, perhaps the most important conversation we can have is around this topic. At this invite only event we invite researchers from across the east coast universities to present technologies that they are most excited about for their commercial potential. And we invite investors to hear those pitches and ideas and build networks…but perhaps an extremely important category of people we invite to this event are the entrepreneurs who have successfully built companies before and are either looking for the next big thing, or are invested enough in the startup ecosystem to provide advice, support and guidance to startups even before incorporation. They bring a tremendous amount of practical wisdom and experience to the table.

I have written some of my thoughts on commercializing university technologies in a blog post elsewhere. But at this year’s URES on April 18, 2012 I will be leading a lunch discussion titled “What are Resourceful Entrepreneurs?”. We will talk about some of the topics I mention above. If you are interested in joining, drop me a note (bz at gcvp.com) and we will try our best to get you an invite. I won’t be doing all the telling. All of you will be. And hopefully we will all come out wiser.