Weekly Insider (Biofools, Commodidiots & Invitation)

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I’m rushing back from travels to be in New York because from this Sunday until Tuesday (May 4-May 6)—you’re invited to join me, Senator John Kerry, Congressman Bart Gordon and the who’s who of the nanotech sector 7th Annual NanoBusiness Alliance Conference www.nanobusiness2008.com Thanks to the tireless and tremendous efforts of my friend Vince Caprio and Sean Murdock this is one of the must-attend nanotech/cleantech events. Hope to see you there….



Meanwhile as I’ve been tirelessly quipping, the “biofools” and “commodidiots” are starting to feel pain. I’m hearing claims of biofool boondogglers having committing crimes against humanity for the poorly thought out unintended consequences and the resulting food crises their swindle has caused. And the latter have startups and investors chasing commodity markets that they mistook for technology problems (when they’re simply just US dollar problems). Most of the so-called ‘drivers’ justifying crazy startup valuations aren’t really a technology thing—it’s a dollar thing. The US government’s plan is clear: inflate our way out of debt crises. When you owe a fixed number of dollars to someone, that lender loses when those dollars become worth less in real terms. But be sure by year end 2008 interest rates will be higher. And remember the flood of speculative and easy money that's flown into 'green' could just as easily go from ‘green with envy’ to ‘green with nausea’. As I wrote three months ago:



“…So, what disasters loom? Start with what everyone takes as granted? What would take people by surprise? Will Gold, oil and every other commodity you can name continue their ascent? Is it more likely the Chindia demand narrative and gospel keeps people in the pews? Or do already high expectations and fewer incremental buyers on the margin mean vulnerability for surprise? Why is their virtually no media coverage of the rise in Oil as primarily a function of dollar decline and speculation? Over time, commodities approach their marginal cost of extraction. And being commodities: they’re undifferentiated and compete on price. When have VCs ever in history made money chasing ways to produce a commodity? Why do people keep insisting that solar is attractive when Oil is at $100 when we barely produce any electricity from oil? 50 years ago, sure—but oil is a declining piece of our energy pie as more and more things become electrified. What effect would an “unexpected” decline in commodity prices have on emerging markets?...”



Famed hedge fund manger Julian Robertson has a protégé Dwight Anderson who manages a commodity hedge fund. He’s baffled by the prices in the commodities market. Why? Because commodities are basically supply and demand. And the to-date accelerating price trends assume accelerating demand without a corresponding supply response. It’s shocking to me how the correlation between the dollar decline and commodities ascent is woefully (and soon to be painfully) underappreciated. Tread carefully and be sure to read this month’s premium issue and cover story that answer the question: How many environmentally friendly companies does it take to screw in a compact fluorescent light bulb? If the sheer (growing) number of TV & magazine ads--proclaiming how every company is now or has always been "green"--isn't enough to make you suspicious of "green washing", than you're just a sustainability-sucker for sad Polar bears adrift on floating ice. Accounting and accountability is what matters. Find out how it really is hitting the bottom line and ‘double bottom line’….

Weekly Insider (Cynic's Conference Guide to Cleantech & Nanotech)

Last week’s nanotech/cleantech event was phenomenally well-attended. Ira Ehrenpreis of Technology Partners makes a persuasive case for “cleantech” and advocated why “green” is the new red, white and blue. Ira was joined by some prominent industry executives. Most of the prior year high-profile investors and startups were busy at work—some with breakthroughs, other falling through.

Before I give a cynic’s playbook for making the most of such events, here’s some straightforward observations:

The cost of capital for any technology for which there’s sufficiently high enthusiasm is close to zero. The two are inversely correlated. This means the marginal entrant has low barriers—which means the number of entrants grows exponentially. This characterizes “solar” today. The ecosystem cannot support the sheer number of companies competing to turn sunbeams into electrons, along the same points of differentiation: cost per watt and efficiency. Companies that got public early will use their stock currency to acquire those with interesting technologies as they postpone their own IPOs, face investor fatigue and eventually falter. It is a predictable pattern in capital markets. And the four most dangerous words are “this time it’s different”. It never is.

The same is said of biofuels—at the event there was growing laments of this arena. And despite what critics say of “Mr. Ethanol” Vinod Khosla—if anyone figures this tough field out, my money would be on him. As a consumer, I absolutely applaud all the alternative approaches being tried and think we’ll be the better for it. As I’m fond of reciting from Jim Surowiecki, “In greed and avarice, lies the hopes for progress.”

Like nanotech a few years ago, the cleantech audience is a mix of investors and entrepreneurs swimming in a sea of service-providers. Year after year the battle of attrition rages fiercer as a few legal, lobbying, accounting and boutique investment banking firms vie for position and client dollars.  Today’s cocktail party for me is paid for by tomorrow’s client for them.

The good news for them: the early ones will benefit from client referrals and positive feedback loops. The bad news: the laws of competition don’t cease. The service-provider supply imbalance means only a few remain to pin next year’s shiny translucent name badge to their lapels-- fewer still will get the privilege of affixing the coveted fabric sticker elevating them above the undistinguished masses declaring them “Speaker” or “Sponsor”.  Behold.

If you’re a service-provider, here’s your attack plan for success for any new field: for the first two years, come in full force. Senior partners, associates, secretaries—even the janitorial staff. If they can move, dress them up and send them out with business cards. Get their names on the attendee list. Try to make up 10% of the attendees. But remember your competitors might do the same thing, so send people with unusual last names—they’ll stand out more. During breaks, establish position early. Move in a swarm formation, gather in circles and spontaneously laugh. It will attract curious onlookers. Remember: some of those onlookers have investors’ money to spend and it could be yours. Do this near bathrooms and coffee machines. If there is a plate of cookies, take as many as you can, pile them in a napkin, stick them in your pocket. Offer them out to people that look like potential clients. It’s called reciprocity—it works. And everyone loves sweetness.

Sponsor a table. Again, you must stand out. Give away something amazing: like mints—in a tin can. Put your name on it so that everyone knows you’re not just any old service-provider. Try a plastic pen—a good one screams out, “excellence”.

Have a few key lines to show you’re an expert and you know what you’re talking about. If its nanotech, try this: “we’re helping our clients with some major partnerships and helping them build a really strong IP portfolio.” If its cleantech try this: “the debate is over. We need to act.” If someone asks you what debate, look at them despondently and say, “don’t you have kids?” Pull out a picture of yours. If you’re childless, use a polar bear on an ice raft with sad eyes. Mention that you’re carbon neutral, have stopped exhaling and only wash your undergarments every other week to save water—which by the way is the Oil of the 21st century.

Show thought leadership through whitepapers and dole out some witty comments on panels. If the moderator asks you a question you don’t have a good answer for—just answer one you do. The audience only remembers what you look like and how loud you talk—not what you actually say.

When your assault team returns, immediately send emails to all the new contacts you made. Send them a PDF with images of windmills, solar cells, a water droplet and multicultural people shaking hands. It will show you when it comes to cleantech—you mean business. If someone writes to you, start your email message with “Thanks for your note.” Mention that you hope to find “ways to work together”.