Bloom or Gloom & BYD vs. Toyota

Here are some great insights straight from the analyst team at Lux Research on Toyota’s race to secure lithium supply and how it affects Warren Buffett’s BYD stake; the bloom or gloom around the PR extravaganza and the real numbers behind this past week’s launch of Bloom Energy…

Toyota Joins the Race to Secure Lithium Supply

Is Bloom Energy a Better Place redux?

Bill Gates and Nuclear Swords to Ploughshares

I’ve just wrapped a whirlwind of new Forbes video interviews on entrepreneurship and disruption, from all walks ranging from NYC School Chancellor Joel Klein to nuclear power player Exelon’s President Chris Crane. Stay tuned for their postings…

Meanwhile, speaking of videos, regular readers know I’ve long been a champion for nuclear. The trend through humanity has been from consumption of carbohydrates to hydrocarbons to uranium. This incessant march of energy density (more energy per unit of raw material) has undeniable logic, deniable only by the illogical or irrational. Indeed, the only barrier to this arrow of progress has been political misinformation or emotional misunderstanding. But now: droves of environmentalists, once opponents are now proponents. President Obama and Energy Secretary Chu just announced $8.3 billion in loan guarantees as many other countries in the world are racing to build new nuclear and increase the percentage of electrons they get from the only zero-carbon source of clean baseload power.

And here’s an amazingly remarkable nuclear statistic for you: 1 out of every 10 electrons you consume in America comes from dismantled Russian warheads. Half the uranium we consume comes from a program called Megatons to Megawatts. And 20% of our electricity comes from nuclear. Hence 10% of all electricity in this country comes from post-Cold War weapons dismantling. Bombs once pointed at your cities now power them—from swords to ploughshares, indeed.

So this weekend, the most important video you can watch is Bill Gates noting as I have for several years now that a molecule of uranium has a million times more energy than a molecule of coal.

Guest Column: Ben Dupont on Friction Between Capital & Ideas

This week I’m sharing a guest column from friend, entrepreneur, innovator and investor Ben DuPont of Yet2.com. His insight and inclusion of Ben Franklin, a true renaissance man caught my attention.

“The Friction Between Capital and Ideas”

The dictionary says friction is ‘a force resisting the motion of surfaces in contact’, but I think there is another type of friction – the friction between capital and great ideas. I think this latter kind of friction is key to economic growth and it’s about to undergo significant transformations.

In 1720, if you were bright and ambitious (and free), the only legal way to make money was to either to have rich parents or to spend a life toiling away - and if you were lucky you just might be able to provide for your family. The situation was so bleak that even Ben Franklin, about the brightest those times had to offer, found his best choice was to run away from home and apprenticeship. Fast forward 200 years, friction drops a little with the aid of low tax rates and democracy, and the industrial revolution takes a hold.

In the 1990’s we saw the second drop – an even larger decrease in friction aided by the internet and a rich ecosystem of venture capital – that democratized entrepreneurship. No longer was a life of toil required first – and the world changed so much that a kid named Michael in his dorm room, revolutionized how computers were made and capital found its way to his door step – or students like Larry and Sergey changed how knowledge is indexed and shared. Now, these guys toiled plenty – but there was much less toil finding capital or customers – they toiled perfecting their business models. Ben Franklin would have loved this world.

I predict in 2010 we will see the 3rd, and largest drop, in the friction between capital and good ideas. What are the first signs?

The adoption of ‘Open Innovation’ and the liquidity in the patent market.

Who would have thought, 10 years ago, that companies would spend million to look externally for ideas? When we founded yet2.com 10 years ago, most thought companies would never look externally for ideas and technology. Patents being bought and sold? Are you crazy? We got this response more than once. I don’t want to claim to be a genius here, Google was founded about the same time and let’s just say, they are modestly more successful But liquidity in ideas – is happening – patents and technologies are being traded, and over the next 10 years we will see a rich economic boom as a result. You heard it here first.

What will happen?

1) Technologists will get rich, a few will get really rich. Michael Dell, Larry and Sergey, and all of the others, still had to build companies around their ideas. They needed 2 skill sets; the idea and the ability to form a company around it. How many inventors don’t have the 2nd skill set? Lots. How many great ideas/technologies are out there – that we could all benefit from? Lots. I know, because yet2.com sees these every day as we connect companies with TechNeeds with inventors.

2) Companies that embrace Open Innovation will get rich. I think most large companies are still only 1% effective at OI. What happens when they get to 10%? Economic growth. 85% of the Fortune 500 are already experimenting with OI. When they start to perfect their models over the next few years, this will drive #1.

3) VC’s are watching these activities closely, A few big examples of #1, will drive investment into pure play technology development. This, of course, is already happening. Which is why yet2.com has started venture investing.

4) Consumers will benefit from this friction reduction, getting better products at a lower price (with less harm to the environment) - but there will also be fewer steps and less time spent. Think for a moment how much friction there is in scheduling a meeting? A lot less than there was, but we’re on 50% there. How much friction is involved in planning a trip? Sending a birthday present?

Ironically, Ben Franklin invented the ‘free library’ but it took 2 centuries of friction reduction for Larry and Sergey to make money at it. Old Ben would have loved this. Where else is there a lot of friction?

Water Security and the Recession's Impact on Nanotech

Here are two great insights on water security in Israel and the recession’s impact on nanotech, both from Lux Research’s Lux Populi

1. Water Security Carries a High Cost for Israel’s Citizens:

Changes in Israel’s water industry are having a drastic effect on the nation’s water bills. At the start of the year, Israel’s national water company, Mekorot, which provides 80% of the nation’s water, increased water rates by 25%. Additionally, rates will increase by another 16% during this summer, and at least another 2% at the start of 2011. Currently, water rates range between $1.5 and $2 per cubic meter.

The additional money will help fund a rapid integration of desalination plants into Israel’s water infrastructure. Currently, Israel sources 80% of its drinking water from Lake Kinneret. However, recent water usage levels have caused the lake to drop 1.5 meters in the past two years, and created a total deficit of 2 billion cubic meters. In a report, Mekorot stated there is a 38% chance that the lake will drop to a level by the end of 2010 that prohibits further pumping.

Mekorot instituted a program in 2008 to drill relief wells, which reduced water sourcing from Lake Kinneret by nearly 50%. The company’s long-term water solution involves installing a series of desalination plants that draw from the Mediterranean Sea. Currently, three plants are fully operational, providing approximately 150 million cubic meters of water per year. A fourth plant in Hadera became operational in December 2009, and is expected to reach its full capacity of approximately 125 million cubic meters per year within a few months. Mekorot is planning on bringing two additional plants online by 2012, bringing the total production to 600 million cubic meters, or 80% of Israel’s residential demand. The Israel Water Authority predicts that the increased water production will end the country’s water shortage within three years.

Once completed, the company will invest an additional 5 billion ILS ($1.36 billion) to install a new east-to-west pipeline. The company will focus on reducing water loss with the new pipeline, but it has not made an estimate on the increase in yield at this time.

Even with such drastic rate increases, Mekorot’s CEO believes that the company will still endure heavy losses, and the company is already facing an $8 billion gap in the project’s funding. This indicates that the Israeli people can expect further increases over the coming years. The Israeli government has attempted to ease the impact on customers by temporarily suspending the national Drought Tax until April 2010. At this time, there are no additional plans for government funding or support of the project.

2. The Recession’s Impact on Nanotechnology

The economic downturn has hit key nano-enabled product segments hard, particularly automotive, construction, and electronics. The output of these three sectors is immense, accounting for 10% of the U.S. GDP in 2008, and 9% worldwide. Plus, because all are big end markets for nanomaterials and their intermediates, the disruption within them has rippled back up the value chain.

As a result, Lux Research has lowered its previous projections for nano-enabled product revenues by 21%: We now expect nanotechnology to generate $2.5 trillion in 2015. Hardest hit will be two nanomaterials and two types of nanointermediates.

Among materials, carbon nanotubes and ceramic nanoparticles will see the biggest impact from the recession, due largely to their out-sized applicability in the struggling automotive and construction sectors. The relatively diverse applications for ceramic nanoparticles will enable them to recover more quickly. Among nanointermediates, nanocomposites and coatings will take the biggest whack. However, both should return near previously projected revenue levels by 2015.