Weekly Insider (Solar's dimming IPOs & brightening M&A)

This week: a quick investable insight from the all-stars at Lux Research. This time on Solar’s dimming IPO and brightening M&A prospects.

M&A activity brightens among solar thermal developers, as photovoltaic IPOs dim

Early February saw 2010’s first concentration of M&A activity in the solar market. First, French nuclear power giant Areva acquired Ausra, a linear Fresnel lens solar thermal plant equipment supplier. Ausra struggled in early 2009 as investment in solar thermal installations all but halted (see the February 5, 2009 LRSJ – client registration required), and changed focus from a power plant developer to an equipment provider. The company was rumored to be up for sale since mid-2009. The Areva-Ausra match-up could breathe life into Ausra’s low-cost solar plant technology, and use the experience and reach of Areva’s power plant equipment business to push forward solar thermal installations.

Meanwhile, dish Stirling solar thermal technology developer Infinia raised $11.5 million in an equity financing round. This follows a $50 million capital raise mid-2009, and a $58 million raise in April 2008. Infinia competes directly with Stirling Energy Systems, which received $100 million in financing from NTR in May 2008.

The hoard of cash flowing into solar thermal component developers follows theacquisition of leading parabolic trough technology provider Solel by Siemens for $418 million in October 2009. But two questions remain.
First, who’s next to buy? Large component firms, including energy and defense firms, may see a strong fit between their competencies and the large-scale, highly regulated processes required for solar thermal plant execution. As for targets, we’ll keep our eyes on three firms:

Heliostat and power tower developer BrightSource Energy, which continues to execute in plant development
Linear Fresnel lens and parabolic trough developer SkyFuel, which offers a lower-cost technology option and potentially lower price tag, and
Power tower technology developer eSolar, which recently signed a licensing agreement for a 2 GW facility in China
The second question is tougher to answer. Where is all that solar thermal set to go? While 50 MW plant installations continue in Spain, regulatory issues continue to dog the U.S. market (see also the January 7, 2010 LRSJ – client registration required). Clients should expect large-scale wrangling among new solar thermal owners as they push through complex solar thermal projects and offer the reliability, and balance sheet, needed to get the huge projects off the ground.

All of this stands in sharp contrast to IPO activity among photovoltaic technology firms. In Q4 2009, Trony Solar indefinitely postponed its IPO followed by Daqo, a Chinese polysilicon producer, which filed (see the January 21, 2010 LRSJ – client registration required), then lowered, and then in January postponed its IPO. Then, earlier this month, Jinko Solar – a vertically integrated ingot, wafer, and cell producer, joined the list and withdrew its IPO due to “poor market conditions.”

Even the completed IPO of U.S.-based STR Holdings in Q4 2009 yielded lackluster results after repricing twice in the days ahead (see the November 5, 2009 LRSJ – client registration required).

While the general market slump since the first of the year will put investors off, their greater concern likely lies in the volatility of the subsidy-driven solar market – and with good reason. A fresh storm of price cuts and continued margin pressure is brewing for late 2010.

Weekly Insider (Water Security & Recession's Impact on Nano)

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.

Weekly Insider (Petro Parity, Biofuels or Biofools)

Our latest premium Forbes report was just released to subscribers. Some choice quotes from Robert Tjian, founder of Tularik:

The best scientists I know share one common denominator: a willingness to take risks.

And from Nobel laureate Bob Grubbs, a pioneer in catalysts:

It's really easy to start a company, but it's harder than hell to get any money out of it.

Meanwhile, I’ve long lamented biofuel ventures, dubbing them “biofools”.

Well, the expert analysts at Lux Research have an open webinar on the issue LIVE on Feb 10th at 11:00am EDT. It’s called, “Biofuels' and Biomaterials' Path to Petroleum Parity”

You can register here

Environmental and economic problems posed by petroleum are spurring the search for renewable, bio-based alternatives. To date, most biofuels and biomaterials developers have focused on lab- and demonstration-scale studies to improve performance and reduce cost so they can compete with petroleum products, and those goals are coming within sight. The hurdle on the horizon, however, is scale: Today’s biotechnologies would need an area the size of Russia to replace the 30 billion barrels of oil consumed annually. Complementing or replacing oil will require integrated, dual-use facilities in the biofuels value chain, and bio-based carbon capture to move from the realm of science fiction into science.

Join them to hear Lux Research’s first-of-its-kind analysis of how bio-based materials will compete with oil, and when and how they’ll reach the elusive goal of “petroleum parity.” Learn:

• How biofuels and biomaterials costs stack up against petroleum-based products

• What performance metrics biofuels and biomaterial stack up on – and where they fall short

• Whether biofuels and biomaterials technologies have the potential to scale up to match petroleum’s output

• Which biofuel and biomaterial technologies look most promising in the areas of cultivation, processing, and production

• How to follow the path toward petroleum parity and where the opportunities to profit will arise

Weekly Insider (Electric Cards from Lux Research)

Here’s the latest inside scoop from the stellar team at Lux Research:

ELECTRIC VEHICLE MARKET GROWTH REQUIRES PRICEY OIL

Demand-side projections for electric vehicles contradict the hype, says Lux Research.

Boston, MA – October 7, 2009 – Environmentalists, automakers, entrepreneurs and politicians all argue that the next generation of electric vehicle cars will be a boon for the economy and the environment alike. Despite the hype, however, the final judge will be consumers, who will be voting with their wallets – and electric vehicle enthusiasts might not like the returns, according to a new report from Lux Research.

Titled “Unplugging the Hype around Electric Vehicles,” the report takes a hard look at the economics of electric cars, including today’s hybrid electric vehicles (HEVs), as well as hotly anticipated plug-in hybrids (PHEV) and all-electric vehicles (EV). In preparing its report, Lux Research developed a demand-driven market model that calculates how fuel savings could counterbalance the higher price tags on electric vehicles. It includes projections for how the costs of these vehicles could fall as auto and battery manufacturers scale up production, and figures in the impact of oil prices using scenarios in which oil reaches $70/bbl, $140/bbl, or $200/bbl through 2020.

“Our model showed the HEV market doing well in every scenario,” said Jacob E. Grose, Ph.D., an analyst for Lux Research, and lead author of the report. “The markets for PHEVs and EVs, however, will remain small unless oil prices skyrocket. Even in the scenario with $200/bbl oil in 2020, only about 4% of the vehicles sold worldwide will be PHEVs or EVs, due to the high costs of the battery technology for these vehicles.”

Lux Research’s report is required reading for automakers, Li-ion battery suppliers, and even utility executives, who will find realistic projections of future demand for their products and services. The report also provides solid footing for government officials charged with drafting strategic policy and subsidies for their domestic EV industries.

Among the report’s key conclusions:

Oil prices are a key determinant of adoption of electric vehicles. HEVs are the only winner if oil prices hold steady at around $70/bbl. But regardless of oil prices, sales of these vehicles should reach roughly 3 million units annually by 2020. PHEVs, by contrast, will require oil prices around $200/bbl to achieve a similar level of success, and EV sales will be a factor of ten smaller, even in this scenario.

Geography and subsidies figure prominently in the adoption of PHEVs and EVs. With oil at $200/bbl, light PHEVs could be the best-selling electric vehicle in the U.S. by 2020, with over one million units sold. At those oil prices, Japan could generate the biggest demand for electric vehicles, due to the country’s high gasoline prices and generous government subsidies. Meanwhile, a lack of subsidies in Western Europe and China spells poor adoption rates in those markets for either class of electric vehicle.

Regardless of the scenario, Li-ion battery technology is a clear winner. Even relatively modest success for the PHEV and EV market will be an enormous boon for the global battery market. Costs for automotive Li-ion cells will drop from over $720/kWh today to between $405/kWh and $445/kWh in 2020 depending on oil prices. Moreover, sales of Li-ion batteries for electric vehicles in 2020 range from around $510 million at $70/bbl, to over $9 billion at $200/bbl. The market for NiMH batteries for HEVs, meanwhile, changes little in any oil price scenario, ranging between $1.3 billion and $1.6 billion in 2020.

“Unplugging the Hype around Electric Vehicles” is part of the Lux Alternative Power and Energy Storage Intelligence service. Clients subscribing to this service receive continuous research on the industry, as well as market trends and forecasts, ongoing technology scouting reports, and proprietary data points in the weekly Lux Research Power Journal, and on-demand inquiry with Lux Research analysts.

Weekly Insider (Tsunami of Thought, Three Things)

I’ve been inundated by insights in a tsunami of takeaways from Lux Research. Here are three things for you. 

First: take this invite to register and listen in on their call this Tuesday, October 6th, Lux Research Power State of the Market: Unplugging the Hype around Electric Vehicles, from 11:00 AM - 12:00 PM EDT

Why? Because in March of this year, U.S. President Barack Obama announced, “We will put one million plug-in hybrid vehicles on America's roads by 2015,” and almost every major automaker – including Toyota, GM, Volkswagen, and BYD – plans on introducing lithium-ion-powered plug-in hybrid vehicles (PHEVs) and all-electric vehicles (EVs). For these vehicles to succeed on a large scale, however, they must make economic sense – not simply be a niche high-end product bought for altruistic reasons. The economic viability of these vehicles will depend on many factors, including the price of oil, governmental subsidies (such as the $1.5 billion over the three years the Chinese government has pledged to green vehicles), and the reduction in vehicle costs that come from increasing manufacturing volumes. Yet despite all the money invested, governmental support offered, and hype generated, the current high prices of PHEVs and EVs compared to standard hybrids (HEVs) mean that widespread adoption remains a question mark. In this webinar, we will examine this issue using a quantitative model for electric vehicle sales through 2020, answering the following questions: 

How will the price of oil affect full-sized electric vehicle sales? What role will the different subsidies offered in the U.S., Japan, Western Europe, and China play in the success of electric vehicles in those regions? How much will prices drop for the lithium-ion batteries that power PH/EVs? What technologies go into electric vehicles and what distinguishes one vehicle type from another? What are the implications of the relative success or failure of electric vehicles? How will the electric vehicle market interact with other vehicle technologies – such as clean-diesel, micro-hybrids, heavy vehicles, and e-bikes?

Next, within days, they’ve also released two killer reports with shocking findings for their clients. 

The first, “Alternative Power and Energy Storage Financing: Can VCs’ Good Times Last?” notes the alternative power and energy storage sector is on pace to raise a record level of venture capital (VC) in 2009, with the majority going to battery technologies. However, the mergers and acquisitions (M&A) have slowed drastically, and initial public offerings (IPOs) have dried up, limiting exit opportunities for VC-backed companies. And IPO markets are struggling and starting to weigh on VCs. Leading executives at venture capital firms indicated enthusiasm for alternative power and energy storage technologies in general, but cited real concerns over time to market, capital requirements, and exit opportunities. Their views suggest that VCs' interest in alternative power and energy storage technologies is broad but not deep. VCs are likely to desert alternative power and energy storage, forcing a rethinking of financing for emerging technologies in this field.

The second, “Finding exits for Biofuels and Biomaterials Investors” notes venture capitalists (VCs) planted $1.12 billion in 2008 into industrial and agricultural biotechnologies like biofuels, biomaterials, and enzymes, a 26-fold increase from 10 years ago and a cumulative total of $4.17 billion. But even as investors venture ever deeper into these new fields, they have not yet found a clear path to exit. To date their fixation on bioenergy companies has been a response to policy decisions and investments by leading VCs, but to see returns grow, they will need new strategies. They should seek technologies that support multiple feedstocks and products so they don’t wander into dead ends like corn ethanol, and pursue opportunities in food, water, and carbon that balance the challenges inherent in biofuels and biomaterials.

Weekly Insider (A123 IPO & Lux Research)

The big news this week: the long-awaited nanotech and cleantech battery company, A123 a spin-out from MIT had a smashing IPO approaching $2 billion in market cap.

Here’s Lux Research’s take as covered by Nature:

University spin-out opens trading as a billion-dollar company. 

By Katharine Sanderson

More shares in battery manufacturer A123 were sold than initially expected.

One university spin-out company has suddenly turned investors batty for batteries. A123 Systems, a rechargeable-battery manufacturer founded in 2001 by materials scientist Yet-Ming Chiang and colleagues from the Massachusetts Institute of Technology in Cambridge, got a flying start to its life as a publicly traded company.

A123, based in Watertown, Massachusetts, first announced its intention to offer public shares in August 2008, with predictions that they would sell for between US$8 and $9.50. But yesterday, they flew off the shelves at $13.50 a share, with around 28 million shares being sold — 3 million more than expected. This bagged the company a cool $380 million ahead of its first day's trading on the NASDAQ stock exchange today. "It's very exciting news," says John Petersen, a lawyer specializing in energy-storage companies at law firm Fefer, Petersen and Cie in Barbereche, Switzerland. "I think the next 20 years are going to be times of immense prosperity for the battery industry," he says.

The cash boost comes shortly after A123 received a $249-million grant in August this year from the US Department of Energy to develop batteries for electric vehicles. The company has also raised more than $350 million in private investments. Add to this the money from the shares, a $69-million investment from General Electric and $100 million in refundable tax credits from the Michigan Economic Development Corporation, and A123 Systems becomes a billion-dollar company. The firm also applied for a $1.8-billion loan from the US government in January this year, with the intention of building a mass-production facility in Michigan.

"It's a very solid company poised to continue to grow," says analyst Michael Holman from Lux Research in New York. But, cautions Holman, "There are a lot of risks, particularly in the electric-vehicle market for A123."

A full copy of the article can be found on the Nature website.

Weekly Insider (Water Tech & A School Grows in Brooklyn)

A big thank you to Vince Capri who earlier this week in Chicago on behalf of the Nanobusiness Alliance presented a check, made out to Coney Island Prep, to me after my opening keynote. What a class act.

I hold the deep belief that kids, especially inner-city kids, need two things: the right heroes and a deep desire to learn. Usually the former results in the latter. Nearly two years ago, I was recruited by passionate and visionary school founder, Jacob Mnookin, to become founding Chairman of Coney Island Prep--the first ever charter school in my native Coney Island Brooklyn. We opened our doors last week to 90 5th graders for our inaugural class of 2021 (their future college graduation date set in their minds now), adding a new class every year until we reach grades 5-12.

The governance, staffing, financials, marketing and strategic decisions are not so different from high-tech startup boards I sit on, but arguably the stakes are higher. Entrusted with children’s future and maximizing their (and their families’) chances of success in life is extraordinarily fulfilling.

A final reminder for Tuesday’s private invitation and chance to listen to Lux Research’s webinar: “Lux Research Water State of the Market: Global Energy - Unshackling Carbon from Water” on Tuesday, September 15, 2009 11:00 AM - 12:00 PM EDT Register by clicking here.

Weekly Insider (Dean Kamen, Water Invitation & A123 Battery IPO)

Here’s three things for your Labor Day weekend.

First, join me and Dean Kamen at the NanoBusiness Conference next week in Chicago at www.nanobusiness.org

Second is a private invitation to listen to a Lux Research webinar: “Lux Research Water State of the Market: Global Energy -- Unshackling Carbon from Water” on Tuesday, September 15, 2009 11:00 AM - 12:00 PM EDT Register here: https://www2.gotomeeting.com/register/269154627

The huge water footprint associated with energy production plays second fiddle to worries about carbon dioxide output in the popular imagination, but it is a vitally important consideration in our increasingly parched world. New energy technologies – from advanced methods of extracting fossil fuels to low-carbon renewable energy – may look appealing, but they exacerbate water worries, creating ugly trade-offs between carbon and water. As water stresses, multiply energy technologies’ water intensity will often play as great a role as their carbon footprint in determining the future makeup of the global energy mix.

In this webinar, Lux Research will examine conventional and alternative fuels and electricity generation and investigate the myriad of technologies – including water reuse and recycling, increases in energy production efficiency, and large-scale distribution – and answer the following questions: How much water is used today to produce electricity and fuels through conventional means? What is the relationship between water intensity, carbon intensity, costs and reliability for alternate energy sources? How does the water relationship affect the viability of biofuels and alternative methods of extractive fossil fuel? What technologies and approaches are available to reduce energy related water intensity while allowing for a reduced carbon footprint? What are the implications of water intensity on the future roll-out of energy technologies? Which companies stand to win or lose and how will this affect investors?

Third, here’s fellow Forbes columnist Mark Mills citing Lux Research’s battery team in his newest piece: “Battery IPO Could Recharge New Issue Market”

“Confidence, the Rorschach of economic indicators, is a weird thing. Easier to recognize than define or measure. We may soon learn something about confidence in our economic future via the market's reaction to the forthcoming IPO of A123, a Boston-based energy green-tech company just over half a dozen years old with cool new MIT-derived battery technology.

The Conference Board's Consumer Confidence Index (CCI), benchmarked as 100 in 1985, dropped to 65 in 2008 and plummeted to 25 earlier this year, even lower than post 9/11. We're a long way from the heady days of confidence exhibited during tech mania when the CCI approached 200, but the index has been tracking up recently, hitting 47 in July and 54 by late August.

For calibration; the index was 100 in 1985, the year Nintendo came out; one year earlier Apple had launched the Mac at a time when only 40,000 people in America used cell phones.

Confidence both reflects and creates the economic future we want more than any single characteristic of the human enterprise. Of course confidence is what drives people to create new companies, and jobs, to compete with big established guys, and, apropos of emerging from our Great Recession, let us not forget that small businesses with one to 499 employees account for nearly two-thirds of job creation..."

The full article can be found on Forbes.com, to be linked to the article click here.

Weekly Insider (Lux on China Solar and Mexico Water)

From the brilliant global emerging technology team at Lux Research here are a few choice nuggets for you. First on Solar (remember my call that this will be a flight of Icarus with most US investors getting badly burned) and China’s deflationary forces. Then on Mexico’s water infrastructure woes.

**New entrants put on a brave face at Intersolar North America:

We recently attended the Intersolar North America Conference in San Francisco, CA. The conference was notable as much for the companies that did not attend as for those that did. Most major Japanese manufacturers – including Sharp, Sanyo, Kaneka, and Kyocera – did not present, while other industry heavyweights – including First Solar and Suntech Power – were also absent. The buzz remained focused on the size of the U.S. market, with all eyes set on the anticipated announcement of the Department of Energy loan guarantee program. Due to the slow drag of the stimulus package announcements in the U.S., module vendors and suppliers we spoke with were already focused on the U.S. market in 2H 2010. We wrote in the February 2009 report “Finding the Solar Market’s Nadir” that, for the U.S. market, “it’s unlikely that 2009 will be a breakout year.” Our outlook of 495 MW in the U.S. in 2010 continues to look accurate, while the greatest potential upside in the global market will come from China.

In contrast to the largely absent Japanese manufacturers, a host of Chinese firms – JA Solar, Canadian Solar, ENN Solar Energy, Best Solar, Trina Solar, and more – showed up in grand style, boasting huge displays. However, these large shells echoed with talk of still-slipping prices, with top-tier Chinese crystalline silicon manufacturers now selling at $2.30/W to $2.40/W according to our network. What’s more, one Chinese firm we spoke with expected prices to fall below $2.00/W by the end of 2009.

Chinese thin-film entrant ENN Solar Energy was on hand with a full 5.7 m2 tandem junction (microcrystalline silicon/amorphous silicon, or “micromorph”) thin-film panel on display. Since we last briefed the company in April 2009, ENN Solar received TÜV certification for its full panels, but the ramp-up has fallen behind schedule. According to the company, the ramp-up of its 60 MW Applied Materials line has been pushed out from the end of Q2 2009 to the end of Q4 2009 or Q1 2010, implying that full micromorph production with AMAT tools continues to drag down customers’ roadmaps. Nevertheless, the company, like many of its compatriots, was out to put on a bold and brave face throughout the show.

**Mexico City attempts to save water to avert sinking into the abyss:

On July 26, Mexico City authorities announced an emergency, 10-month water rationing plan in response to severe shortages resulting from an extended drought that has gripped the region since 1994. The National Water Commission, Conagua, warned in recent days that the seven reservoirs that make up the Cutzamala System, which supplies 24% of the Mexican capital were at dangerously low levels. (Over 70% is supplied by ground water, and the reservoirs are the sole source of water for 10 municipalities on the city’s outskirts.) Conagua, in response, plans to reduce the water flowing from Cutzamala’s dams in the southwestern state of Michoacan to 13 municipalities of Greater Mexico City by between up to 10% during the weekdays to 50% on the weekends; the goals is to reduce water use by 6.7 million m3/month, representing 3.5% of consumption. The 20 million residents of the giant metropolis were already hit with partial stoppages earlier this year, including a cutoff in April that affected roughly a quarter of Mexico City’s population.

Although the city’s mayor blames the crisis on global warming, demographics and ill-conceived management have played a far greater role in the local crisis – one that is now far too severe for temporary austerity measures to solve. The inhabitants of Mexico use on average 300 liters per day, roughly double that used in some water-conserving cities of Europe. Because the population is growing by 4% annually, water demand is expected to jump by 20% in the next four years to five years. The problem is further compounded by a self-reinforcing water withdrawal/leak cycle. Overdrawing groundwater has led to the land’s surface dropping by 10 centimeters per year. This causes the water distribution system to crack, which in turn has led to the loss of more than 40% of the water from water mains, yielding an equivalent demand for more groundwater.

The self-reinforcing nature of the problem makes it one that is particularly challenging and expensive to solve. Although the citizens of the city use a lot of water, nearly half of the “consumption” is in the form of leaks, so water restrictions on end use will be doubly painful. Those same leaks will also blunt the efficacy of water recycling. And because water withdrawal causes stresses that result in leaks, a slow piecemeal effort to replace pipes will not work. It seems that the only solution is to replace the entire distribution system within a few years; however, the Mexico City government has only allocated 770 million pesos ($57.8 million) to substitute water networks and capture systems and fix leaky pipes – a number orders of magnitude smaller than what’s required to rectify the problem. Given the political finger-pointing and token responses seen to date, it unfortunately seems unlikely that the needed investment will materialize. The city may very well have reached a tipping point where its only future is one of depopulation and decline.

Weekly Insider (Supercharged on Supercapacitors)

It's my pleasure to share some exlcusive tidbits from the stellar team at Lux Research on a breakthrough area of technology supercapacitors.

DEMAND FOR SUPERCAPACITORS EXPECTED TO SURGE

Lux’s report is divided as well. Its first section explains the basic technologies enabling supercapacitors, and what properties make these devices attractive. The second half explores opportunities in each of the market’s sectors, including their potential size and growth, and how individual companies are poised to capitalize.

Incumbent supercapacitor players will find the report offers comparative analysis of future growth opportunities for each sub-segment, while companies arriving late to the game will learn what technologies offer appealing entry points to the market. Prospective investors will also find insights into which individual companies are best positioned to compete in their respective sectors.

The report derives its intelligence, in part, from interviews with 19 supercapacitor manufacturers and four application developers in different application areas. Among its key conclusions:

*Cell phones and digital cameras will drive adoption in electronics. Multimedia cell phones and autofocus cameras both impose high pulse power demands that batteries and conventional capacitors are poorly equipped to provide. This will spark supercapacitor growth in consumer electronics from $122 million in 2008 to over $550 million in 2014.

Transportation will drive large supercapacitor applications. It takes a lot of power to get a large bus or truck moving, which will fuel demand for most large supercapacitor applications. Wind turbines are another key opportunity, although relatively high supercapacitor prices will limit adoption rate. Overall, large storage applications are expected to expand from $86 million last year, to over $320 million in 2014.

*Commoditization of carbon-based supercapacitors will give large players an edge. Carbon-based supercapacitors – which will define the market for the foreseeable future – are a relatively undifferentiated technology composed of base materials in very price sensitive markets. That creates a textbook case for commoditization, wherein high volumes will help to lower costs, and allow large players to gain more market share.

"As volumes increase, we expect large players including Panasonic, NEC‐Tokin, and Maxwell Technologies to benefit most from economies of scale,” said Grose. “As that trend unfolds, the market may see more diversification as large companies bolster their portfolios through acquisitions of smaller firms.”

“Bridging the Gap with Supercapacitors: a Tale of Two Markets,” is part of Lux Research’s Alternative Power and Energy Storage Intelligence service. Clients subscribing to this service receive continuous research on the industry, as well as market trends and forecasts, ongoing technology scouting reports, and proprietary data points in the weekly Lux Research Alternative Power and Energy Storage Journal, and on-demand inquiry with Lux Research analysts.

Weekly Insider (Lux's Peter Hebert on Smart Grid)

This week my Lux Capital partner Peter Hébert who leads many of our energy VC investments weighs in with great insights from a recent interview on the “Smart Grid” which he says is getting smarter by the hour.

PLI: Lately, we've been hearing a lot about smart grid technology? What exactly is it?
PETER HÉBERT: "Smart grid" has definitely become the topic du jour in both Silicon Valley and Washington, DC. One of our portfolio companies Lux Research—which analyzes energy technologies on behalf of large corporations and hedge funds—defines the smart grid as a “two-way real-time network connecting distributed generation, distributed storage, and distributed intelligence to increase grid reliability and enable green technologies such as wind turbines and plug-in hybrid vehicles." Smart grid technologies will help modernize the electrical power grid to support increasing demand, more intermittent renewable energy as well as increase overall energy efficiency. This is a big deal—Lux Research expects the smart grid to grow from a $2.7 billion market today to $4.8 billion in 2013—that represents an 11.8% compound annual growth rate (CAGR).

PLI: Can you give an example of smart grid technology?
PETER HÉBERT: Sure. First it's valuable to take a step back and understand our current electrical power infrastructure. Today's power grid is a one-way transmission and distribution network that allows utilities and other generation companies to deliver power to residential, commercial and industrial customers. Much of our grid dates back to the days of Edison—more than 50% of the transformer assets are over 40 years old! The aging grid can't keep up with ever-increasing electricity demands. If the infrastructure fails during periods of peak demand, we see blackouts—like those that swept the Northeast in the summer of 2003 and knocked out New York City's electricity. Replacing or adding additional power lines is prohibitively expensive, so utilities are looking for alternative ways to deal with peak demand—particularly in the summer.

Smart grid technologies fall into three broad categories: advanced metering infrastructure (AMI), networking systems, and software. A smarter grid infrastructure can help integrate renewable generation sources (like wind and solar) and in the long run, smart grid technologies will help utilities expand to more customers (such as plug-in electric vehicle drivers). At Lux Capital, we've made investments in several technologies that power a smarter and more efficient grid. The smart grid will also enable both utilities and energy users to better understand and control power usage. Demand response systems can help mitigate blackouts despite old power lines, and connects distributed storage and generation to the grid. Real-time energy information and time-of-use pricing can help consumers make better decisions—for example running a load of laundry when electricity prices might be cheapest late at night.

PLI: Can you give us a brief history of the technology?
PETER HÉBERT: As I said earlier, smart-grid is not one technology, but rather the combination of a number of products and technologies in hardware, software and networking. Over the past few years, utilities and local governments have been aggressively building out smart-meter infrastructure. The first step to enabling a smarter grid is upgrading meters for enhanced data capabilities, including two-way meters that read electricity flow in both directions — from the utilities to the customers, and vice versa. Around 20 million smart meters are already installed worldwide and many more are on the way. Based on announced and likely installation programs (and assumption of meter costs), Lux Research forecasts that the smart meter hardware segment alone will be a $2 billion/year business in the next five years.

PLI: How committed is the federal government to deployment of the technology and what steps is it taking to promote it?
PETER HÉBERT: In short—very committed. There has been huge government support and financing driving the deployment of the smart grid. Power outages and power quality disruptions cost U.S. businesses roughly $100+ billion per year. The Energy Independence and Security Act of 2007 mandates the deployment of smart-grid technologies. The recent $787 billion economic stimulus package included $4.5 billion for R&D, pilot projects and federal matching funds for the Smart Grid Investment Program to modernize the electricity grid. It's not just in the U.S.—the European Union has also formally promoted smart-grid technologies.

PLI: Are there any states, local governments or other communities that are already successfully using a smart grid?
PETER HÉBERT: Many utilities, as well as local and regional governments, have designed programs to roll out smart meters to enable the shift. Lux Research identified 147 such programs planned in the next 10 years worldwide, which would outfit global power grids with over 90 million smart meters in 2013 — and reach roughly 150 million 10 years from now. As an example, last month Florida's state utility Florida Power & Light and several corporate partners announced a state-wide smart grid-initiative, anticipated to cost upwards of $700 million.

Other utilities that have already announced major smart grid initiatives include PG&E, Nevada Power, San Diego Gas & Electric, Southern Maryland Electric Cooperative, Southern California Edison, Tampa Electric, Tennessee Valley Authority, Ontario Power Authority, ISO New England, PJM Interconnection, Toronto Hydro and ENEL. As part of these announced installation programs, about $28 billion of investments (government and private) have already been committed.

PLI: What companies are considered the “key players" in smart grid technology?
PETER HÉBERT: Some of the major smart grid pure-plays include public companies like Comverge (COMV), Echelon (ELON), EnerNOC (ENOC) and Itron (ITRI), as well as venture-backed start-ups like Silver Spring Networks, GridPoint, Trilliant and eMeter. Technology giants like IBM (IBM), Honeywell (HON), GE (GE) and Cisco (CSCO) also have major initiatives underway.

The biggest differentiator among smart-grid companies today is not rooted in technology, as much as in their business strategies. Companies like EnerNOC are focused on grid reliability for utilities, while firms like Comverge are targeting commercial and industrial customers that are trying to reduce their energy consumption.

PLI: What are some of the obstacles to a successful deployment of smart grid technology?
PETER HÉBERT: There are a plethora of different technology approaches to upgrading the grid, but the principal obstacles to successful deployment are not technical. Some major obstacles include future decisions on tax incentives, decoupling, and time-of-use pricing. While one driver for this increase on the utility side is a desire to decrease the number of blackouts, the conservation aspect serves a headwind to adoption. Many generators are paid by the megawatt-hour produced, and thus don't have a direct incentive to conserve. In fact, Lux Research has heard from many sources (including the CEO of a major U.S. utility) that utilities are getting paid less due to demand response and smart metering.

The bottom line: Whether or not utilities ever believe energy conservation is in their best interest, in the near term their focus will be on reliability. In the long run, smart grid technologies will likely help utilities expand to more customers, such as drivers of electric cars. At a recent conference I attended, one large energy company CEO said that he predicted the electric car would be the air conditioner of the 21st century for utilities.

Weekly Insider (Water, water, everywhere)

You must find and edge in information. You must find a contrarian view and the variant perception from conventional wisdom. Thus if you’re interested in breakthroughs in water you should run, not walk to the team at Lux Research. I can now share publicly some exclusive data points with you from Lux Research’s “Hydrocosm”. It blew me away with its level of detail--by far the deepest and most comprehensive dive done by anyone, rifling into untapped markets and dispelling conventional wisdom where investment will be wasted. My own venture firm Lux Capital is actively using this to map our investment thesis and avoid the water traps. Here are a few excerpts:

A RISING TIDE FOR NEW DESALINATED WATER TECHNOLOGIES:
Lux Research sees a wave of new technologies challenging incumbent reverse osmosis

The global desalinated water supply will grow at a CAGR of 9.5% over the next decade, reaching 54 billion m3/year (cubic meters per year) in 2020 – 54 trillion liters/year – or triple what it had been in 2008, according to a new report from Lux Research entitled “Desalination’s Future Champions.” According to Lux’s analysis, the demand for desalinated water will foster a rising wave of new water treatment technologies, all aiming to challenge the incumbent reverse osmosis (RO) in desalination’s three market segments – seawater desalination, inland brackish water, and water recycling.
RO dominated the desalination equipment market with a 54% revenue share as of 2008, and the relative success of its challengers will vary by market segment. “The bottom line is that there are growth opportunities in brackish water and recycling,” said Michael LoCascio, a senior analyst at Lux Research and the report’s lead author. “But RO is so entrenched that its variations will dominate for 20 years, with new technologies coming to market only through RO hybridization.”

The report offers the first commercial analysis of emerging water treatment technologies, offering strategic insight to corporations, utilities, bulge-bracket banks and early stage investors looking to tap growth opportunities enabled by emerging desalination technologies. To determine which technologies will succeed, the report establishes a benchmark with 13 criteria across two axes measuring each contender by its value and maturity. Because the factors for success differ so by market segment, Lux Research’s report weighted the criteria to come up with separate rankings for each segment. It then scored 18 current and future desalination technologies in this framework, learning that:

1. Forward osmosis (FO) and RO variants will win in the seawater segment. Set to grow from 10.9 billion m3/year in 2008 to 38.4 billion m3/year (or 71% of total supply) in 2020, the seawater segment could see simpler technologies, like cloud-point and ammonium carbonate FO, beat RO on energy and cost.

2. The brackish water segment will fragment with nine successful technologies. Increasing comparatively slowly from 6.4 billion m3/year (35% of total) in 2008 to 7.2 billion m3/year (13% of total supply) in 2020, brackish water’s widely varying operating conditions combined with the water market’s hyper-locality will foster nine sustainable technologies.

3. RO will go unchallenged in recycling. The fastest-growing segment – increasing from 0.9 billion m3/year in 2008 to 8.4 billion m3/year in 2020 (16% of total supply) – the recycling market’s low energy needs and levels of brine waste minimize RO’s weaknesses, securing its dominance in the segment for decades.

“Of particular interest are firms that build, own, and/or operate desalination facilities,” said LoCascio. “Since they are technologically agnostic, these firms stand to benefit as the value of desalinated water continues to increase over the next 20 years, while the cost to produce it declines.” “Desalination’s Future Champions” is part of the Lux Water Intelligence service. Clients subscribing to this service receive continuous research on water industry market trends and forecasts, ongoing technology scouting reports and proprietary data points in the weekly Lux Research Water Journal and on-demand inquiry with Lux Research analysts.

Weekly Insider (Nightmares, Delicate Machines & Strange Zoos; Of Keynes, Darwin & Cato)

Our new issue comes out next week with exclusive sit-downs with iconic

inventor Dean Kamen, ex-McKinsey veteran and innovation luminary Dick

Foster and Lux Research President Matthew Nordan. Their words are

breadcrumbs. Follow the clues...

Today, we'll follow the rational clues of Keynes, Darwin and Cato. And

then next week stay tuned for I will-unable to resist railing against

the foolhardy futility of prioritizing global warming as direr than

cancer, heart disease, AIDS or alzheimers-share two of the most elegant

and persuasive arguments I've heard yet on why curbing carbon isn't

worth the cost.

First some thoughts on time. The more time until a hoped-for-event

occurs, the more chance it won't happen. Or inversely the more chance

the undesired event does. When a target is in your sight, do everything

you can to seize it, for it can quickly flee your scope. Time is the

marshall of Murphy's Law; it paves detours to the undesired; it's a

bedfellow of uncertainty; an inept shepherd of the sought; an agent of

entropy and an enemy of the anxious.

Now for some soothsaying sages who are unusually un-anxious. Following

Warren Buffett's style, Bill Gates released his first annual letter this

week. Buffett passed Gates a quote from John Maynard Keynes on the

current environment. It said this:

"This is a nightmare, which will pass away with the morning. For the

resources of nature and men's devices are just as fertile and productive

as they were. The rate of our progress towards solving the material

problems of life is not less rapid. We are as capable as before of

affording for everyone a high standard of life-high, I mean, compared

with, say, twenty years ago-and will soon learn to afford a standard

higher still. We were not previously deceived. But today we have

involved ourselves in a colossal muddle, having blundered in the control

of a delicate machine, the working of which we do not understand. The

result is that our possibilities of wealth may run to waste for a

time-perhaps for a long time."

Meanwhile, on a similarly delicate machine-the human mind-and the animal

spirits swirling in us social primates which caused the current crisis,

professor Paul Seabright, says "If Darwin had been around to reflect on

the financial crisis, he might have reminded us, in his diffident way,

to think of human beings not as inadequate calculating machines, but as

remarkably well-adapted apes. As group living primates, they are

intensely competitive, alert to the narcissism of tiny differences in

status, navigating their social life through coalition formation.

The way to get ahead is to join powerful groups. The key to social life

is not unfettered competition, nor universal cooperation, but a subtle

mix of the two: competing fiercely to join up with the most attractive

cooperators. And the cognitive capacities they deploy involve a capacity

for strategic reasoning of the second, third, even the fourth degree.

You have to be impressed how well they have adapted to life in the wild.

The problem is that many primates do not adapt well to life in zoos, and

Wall Street is the biggest and strangest zoo of them all. It presents

our large primate brain with vast challenges, of which the greatest has

been solving strategic reasoning of the thousandth degree.

Faced with evidence that a housing boom can't continue forever, we do

not unravel it back to the beginning but try to ride the boom till the

very end, to do just a little better than the very best of the others.

Those differences in status, you see.....Though Darwin's name is often

wrongly associated with admiration for the outcomes of natural

selection, the man who wrote "what a book a devil's chaplain might write

on the clumsy, wasteful, blundering, low, and horribly cruel work of

nature!" would doubtless have been less than surprised at the kinds of

terrible games Homo sapiens gets up to when he spends too much of his

time in the zoo."

One advocate of avoiding the zoo as much as possible has been Vanguard

fund founder and advocate of indexing, John Bogle. John recently said,

"We can't say that we haven't been warned about the perils of ignoring

the past. More than 2,000 years ago, the Roman orator Cato noted that,

'there must be a vast fund of stupidity in human nature, or else men

would not be caught as they are, a thousand times over, by the same

snares . . . while they yet remember their past misfortunes, they go on

to court and encourage the causes to what they were owing, and which

will again produce them.'"

Have a great weekend and enjoy the Super Bowl.

Weekly Insider (Senate, Solar & The World's Greatest Gift)

First: Matthew Nordan, President of Lux Research, gave a captivating testimony on nanotech yesterday in front of the Senate about the National Nanotech Initiative. Quoting Matthew, “The NNI has funded prodigious research in areas ranging from noninvasive cancer therapies to high-efficiency solar panels. But moreover, it’s spurred a renaissance of materials science development in the private sector. U.S. corporations like GE and Motorola spent $2.4 billion on nanotech R&D last year – 23% more than government spending at the federal and state levels combined – and venture capitalists put $632 million into U.S.-based nanotech start-ups, four times the annual figure before the NNI began.”



Second: Take this with a grain of salt. Recent conversations and scuttlebutt revealed that an alarming number of my hedge fund friends are short solar or looking at putting puts on. Of course, they know that markets can stay irrational longer than they can stay solvent, but they are calling the solar boom, “watt-coms” and seeing lots of patterns in common with the dot.com debacle. One CEO of a public solar company apparently told his audience he’d be raising new money every year. When an investor questioned him about dilution, the CEO snapped back: all my investors rent my stock anyway (meaning they were speculators not long-term holders).



From a technology view, let me be clear: solar is Occam's razor—it simply makes sense. But from an investors view, it’s the razor’s edge—good luck. Here's my controversial view: solar will end up as the Global Crossing of energy. Whereas the unintended consequences of biofools, er-biofuels are now being deemed "crimes against humanity"...the unintended consequences of solar will eventually be the exact opposite, what I’ll call "a gift for mankind".



When I say gift: it’s not what you think. Unfortunately the mass of VCs and public market investors flocking like Icarus to the sun will experience how cynically true the wisdom of 17th century French writer Pierre Corneille’s words are: “The manner of giving is worth more than the gift.”



Worth—as in billions of dollars being lost to give it. Startups are already marketing to municipalities and city bureaucrats to buy panels that people and recessionary roofs (corporations) aren't. Here's my prediction: The big winner? Africa.



Solar is to Africa as Global Crossing was to the world a decade ago. The latter helped do a great public good, connecting the world—by laying massive fiber with cheap capital provided on flawed (or fraudulent) assumptions. It was an invisible emerging market tax on speculators—that is: speculators subsidized massive infrastructure buildout. The local people in foreign lands ended up being the real winners. Solar too, at great expense to its private investors is doing a great good for the public. I predict Africa, with low or no baseload power will be the biggest beneficiary.



As William Wordsworth wrote: “Pleasure is spread through the earth; In stray gifts to be claimed by whoever shall find.” Eventually, some years from now, some opportunistic entrepreneur will buy up excess panels and capacity and distribute distressed solar power assets to a distributed population (in Africa). As I’m so found of quoting so often from Jim Surowiecki: in greed and avarice lies the hope of progress.

Weekly Insider (Jungle, Munger, Nobel & Sneezing)

Firstly, as noted in our quote of the week below from Ted Sullivan of research firm, Lux Research: there’s a massive solar shakeout coming. Efficiency this and dollar per watt that--absent cessation of the laws of economics: all those vaunts vaporize in vacuums—no technology is developed in isolation without competition. The lone jungle tree, (like the lone solar entrepreneur) seeks to grow its stalk taller and leaves wider than all others. But the crowded competition (for sunlight) leaves a twisted tangled thicket—and eventually Mr. Market sees the jungle for the trees and comes marching through with his machete. May the strongest and most adaptable survive…



If I gave a weekly prize, I’d give it this week to a scientist at Sun Microsystems: Ron Ho. Not because of any tech breakthrough, but because of how he spoke with the media. I think it’s irresponsible to give predictions without probabilities and time frames. But this scientist, in describing a silicon photonics effort (to connect chips with light) said, “This is a high-risk program. We expect a 50% chance of failure, but if we win we can have as much as a thousand times increase in performance.” While his assessment of success (1-p) was probably too high and he didn’t give a time frame, he did give an expected outcome. If more politicians and corporate leaders spoke like this, them and their constituents would have better judgment under uncertainty and make better decisions.



On prizes, William James said, “he who refuses to embrace a unique opportunity loses the prize as surely as if he had failed.” Then again comedian Steven Wright said, “I’d kill for a Nobel Peace Prize.”



Speaking of Nobel prizes, a few weeks ago I heard Charlie Munger give a talk (Warren Buffet’s partner at Berkshire Hathaway) while at Caltech. A story was recounted of Nobel Laureate William Shockley (he who co-invented the transistor). Shockley known for outrageous antics allegedly wanted to start a sperm bank of Nobel Prize winners, offering would-be clients prodigy progeny. As he went from fellow Nobel colleague to colleague, one of them said, “Shockley, you’ve got it all wrong. I’m a Nobel Prize winner and both my sons play guitar. What you want is the poor illiterate immigrant tailors like my parents were!”



Speaking of Munger, he’s fond of a phrase capturing a phenomenon called, “lollapalooza”. The first time I heard the word was actually 15 years ago, when I used to go to an annual rock concert called Lollapalooza (eating Red Hot Chili Peppers with Pearl Jam while Raging against the Machine).



But the lollapalooza to which Munger refers isn’t a concert, but instead when all kinds of psychological biases are working in concert. Take global warming hysteria. You’ve got at least three effects I’ve identified; availability bias, social proof and authority bias



1. Availability Bias, arising from the prevalence of a major [and inconvenient] movie and from incentive-caused bias of all kinds of media from cable TV to every magazine’s requisite Green Issue to every advertisement having a “Green” theme—after all, “if it bleeds it leads” has become “if it’s green it’s seen”;



2. Social Proof, arising from information cascades, seeing and imitating others who are imitating others and not wanting to be apart from the tribe. Recall my prior writings on a single individual pointing at nothing in particular on a corner, whereupon a crowd will form and grow exponentially all staring at precisely nothing. Going along with the crowd has been mostly adaptive for most of humanity and failing to do so can lead to being ostracized (or at least lead to fear of being ostracized, an emotionally motivating state to avoid). As Keynes noted begrudgingly, “It is better to fail conventionally than to succeed unconventionally". The tribal imperative is a powerful part of our genetic makeup. It’s the same reason by Brooklyn grandmother used to go temple though she knew not about religion.



3. Authority Bias and Halo Effect, men with Oscars and Nobels are the white lab-coat equivalents of Stanley Milgram’s shock experiment. We revere the rich, famous and infamous. But the faithful flocks have followed many a charlatan, hypocrite or huckster: Jim Jones, Jim Swaggart, Jim Cramer. I started with the J’s but am an equal opportunity quipping and whipping cynic, “On Prancer!…on Spitzer!…on Haggart!…on Clemens!”



Speaking of Authority Bias, consider the marketing tactics (now settled in lawsuits) of Airborne—that fashionably packaged over the counter hoax taken on the onset of sneeze. “But”, my friends would say as I cringed at their credulity, “it was created by a school teacher!” And I cringe tighter still knowing nowhere is the appeal to authority more penetratingly persuasive than in venture capital. Cringing upon news of the latest deal priced to the doctor and dentist crowd and groaning in vane as the sheep flock to the haloed shepherds, “But,” they appeal “it was created by a famous rich person!”



And speaking of sneezes, most quietly seethe at the thoughtless brute who doesn’t yield a “bless you” when in the presence of another’s flying germs--or worse yet, fails to offer a “thank you” upon receiving such a salutation—unsolicited though it may be. Why do we bless sneezes, but not coughs—which are far more probable to lead to death (whether from choking or critical pulmonary issues).In the Middle Ages, it was believed one’s breath interrupted could cause death—so a sneeze was believed to be fatal. Like countless others, the cultural anachronism remains.



Back to Munger: What I’ve observed is that Munger has three key factors to his success (not including knowing Buffett): being rational, inverting and collecting inanities. The first requires training and genetic luck to have the right disposition. The second draws from the mathematician Carl Jacobi, “invert, always invert”. And the third from Johnny Carson—who once returned to his high school to give a commencement speech called “How to Guarantee Misery” and tongue-in-cheek instructed listeners to have envy, resentment and ingest chemicals to alter mood and perception.. Anyway: the combination of these factors had me thinking of a corollary to Tolstoy’s famous opening of Anna Karenina ("Happy families are all alike, every unhappy family is unhappy in its own way").



So here’s an inverse corollary in business and politics. There are thousands of ways to fail and far fewer to succeed. Those who fall impale themselves upon the same sharp stakes of folly as those before them. But every ascending icon rich person got rich or lucky (or both) in their own way. The point is this: you can’t read biographies or playbooks and hope to copycat Bill Gates, Larry Ellison, Larry or Sergey, Richard Branson, Barry Diller or Michael Dell. Whatever they did through skill or happened upon by luck at the particular circumstance at that particular time was unique to them—it’s not repeatable. And the laws of capitalism (and profits reverting to the mean) insure that copycatting someone else won’t yield you success. But be sure, if they ever fall from grace it will be for the same fraud or vice or sin as many before them. See: Spitzer, Elliot. As Legg Mason’s Bill Miller quotes of securities, so too with reputations, “Many shall be restored that now are fallen and many shall fall that now are in honor.” It appears that throughout history, though the octaves may change, folly and ruin rhyme and resonate in key. And as someone said, every time history repeats itself, the price goes up.



Munger said he was a collector of inanities: of the foolhardiness and mistakes of others. The newspaper and the gossip pages, though in today’s times they’re indistinguishable are a rolling archive from which to study not for traits of success as much as avoidance of idiocy and failure.