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.