Today's San Jose Mercury News had an interesting discussion on the softening economy and its impact on venture capital. This is a question which gets asked periodically and time and again the Valley comes up with yet another winning streak. First it was semiconductors, then the Internet, now in its second incarnation as Web 2.0, and maybe clean technology to come ? So, why the question now ? The Mercury News draws attention to the first quarter 2008 VC funding results and points out that poor returns are forcing a shakeout in the VC industry and money is flowing to the biggest firms. This, of course, is the essence of capitalism :-) Winner takes all.
What is most interesting is the chart they refer to while identifying the trend. They point to the dip in funding in Q1 '08. The chart, short as it is, from 2005 to 2008, has several dips in it already. I dare say that if the chart stretched back to 2000, there would quite severe dips from 2000 to 2003. :-) But, the Valley seems to come back with a bang. So, I would not count Silicon Valley out yet.
However, it is interesting to look at historical trends and see where the money seems to be flowing to. I really like the Money Tree reports. They let you slice and dice the data many different ways. Here you can see that Silicon Valley's lead is not going to be overtaken in the near term :-) The historical trend also does not show any recent sharp drop off, though, of course its not easy to match 1999-2000. :-) Where are the VCs who used to fund interesting projects like WebVan :-) ? It is rather interesing to watch the historical trends for VC funding for various sectors, like semiconductors , or software, or energy, or medical devices and equipment. Its easy to see what's hot and what's not over some period of time.
Naturally, the VCs seem to follow the money where the sectors are concerned :-) But, the regional dominance of Silicon Valley seems tough to beat in the near term. It does not hurt that the dominant VCs to whom the money is flowing, happen to be here either. However, it is true that globalization has had an impact. Many of the Silicon Valley VCs do have extensive operations and investments all over the world. In a sense, they go where the opportunity exists at any point of time, whether it is India, Israel, China, Korea or Vietnam. But, the Silicon Valley influence remains strong.
Madan
Sunday, May 11, 2008
Tuesday, April 15, 2008
California Clean Tech Open 2008 Launch
The California Clean Tech Open (CCTO) 2008 competition was launched at the San Jose City Hall Rotunda last Wednesday, April 9th afternoon led by San Jose Mayor Chuck Reed and David Rodgers from the US DOE. What was significant about the event was that this was the first time since its inception that the event was held in San Jose.
Maybe San Jose wants to show that the center of gravity for clean technology is in Silicon Valley. The venue was appropriate. It was the steel and glass rotunda of the gleaming new San Jose City Hall. This was my first visit to the new building and I must say it is quite stunning. You can check out pictures of the new City Hall here. There was a glittering reception with the usual Silicon Valley crowd of entrepreneurs, VCs, investment banker, attorneys and the like.
Mayor Reed issued a challenge to solar installers to enable zero upfront cost solar installations for homeowners within 60 days. Seemed like a tall order to me. But, SolarCity seems to have responded to the challenge with a proposal today which eliminates all up front payment for new installations in San Jose. But, unfortunately, the program only lasts for slightly more than 60 days, till the end of July :-) Solar City is funded by Draper, Fisher, Jurvetson and Steve Jurvetson was one of the speakers at the event. Its always interesting to listen to Jurvetson speak. His rapid fire delivery has a high content density and you can lose a lot in a minute if you are not listening. :-) In any case, he believes that the future is clean tech from a VC perspective.
Marc Gottschalk gave an overview of the 2008 competition. Eric Cummings of Cool Earth Solar talked about his company's success and his team's experience during the 2006 CCTO competition. Cool Earth Solar was the first runner-up in the Renewable energy category in the 2006 CCTO competition. They just raised $21M in Series A funding in February 2008. Gunther Portfolio has an even more detailed writeup on them from February. Hopefully, GP will be back in action with more interesting posts soon.
I had a chance to talk with Eric Cummings at the CCTO event. He remembered our meeting during one of the CCTO events in 2006. They have come a long way since then and the competition has helped them build a successful company. There was a poster at the Cool Earth Solar booth which implied that current renewable energy technology was inefficient and would lead to losses by the utility companies who invested in them. Eric seemed to imply that Dr. Borenstein's comments along these lines, a few months back were valid and more efficient alternatives were a few years out.
Overall it was a fun event to kickoff an exciting 2008 competition. Maybe this year's competition will breed more companies along the lines of Cool Earth Solar. The stakes are huge, if the latest award by PG&E to Brightsource is an indicator. The award is for 900 MW of electricity from five solar thermal plants to be built in the Mojave desert. If several of the other clean tech startups in the Valley start delivering on their promise, Silicon Valley will drive yet another global industry after semiconductors and the internet.
Madan
Maybe San Jose wants to show that the center of gravity for clean technology is in Silicon Valley. The venue was appropriate. It was the steel and glass rotunda of the gleaming new San Jose City Hall. This was my first visit to the new building and I must say it is quite stunning. You can check out pictures of the new City Hall here. There was a glittering reception with the usual Silicon Valley crowd of entrepreneurs, VCs, investment banker, attorneys and the like.
Mayor Reed issued a challenge to solar installers to enable zero upfront cost solar installations for homeowners within 60 days. Seemed like a tall order to me. But, SolarCity seems to have responded to the challenge with a proposal today which eliminates all up front payment for new installations in San Jose. But, unfortunately, the program only lasts for slightly more than 60 days, till the end of July :-) Solar City is funded by Draper, Fisher, Jurvetson and Steve Jurvetson was one of the speakers at the event. Its always interesting to listen to Jurvetson speak. His rapid fire delivery has a high content density and you can lose a lot in a minute if you are not listening. :-) In any case, he believes that the future is clean tech from a VC perspective.
Marc Gottschalk gave an overview of the 2008 competition. Eric Cummings of Cool Earth Solar talked about his company's success and his team's experience during the 2006 CCTO competition. Cool Earth Solar was the first runner-up in the Renewable energy category in the 2006 CCTO competition. They just raised $21M in Series A funding in February 2008. Gunther Portfolio has an even more detailed writeup on them from February. Hopefully, GP will be back in action with more interesting posts soon.
I had a chance to talk with Eric Cummings at the CCTO event. He remembered our meeting during one of the CCTO events in 2006. They have come a long way since then and the competition has helped them build a successful company. There was a poster at the Cool Earth Solar booth which implied that current renewable energy technology was inefficient and would lead to losses by the utility companies who invested in them. Eric seemed to imply that Dr. Borenstein's comments along these lines, a few months back were valid and more efficient alternatives were a few years out.
Overall it was a fun event to kickoff an exciting 2008 competition. Maybe this year's competition will breed more companies along the lines of Cool Earth Solar. The stakes are huge, if the latest award by PG&E to Brightsource is an indicator. The award is for 900 MW of electricity from five solar thermal plants to be built in the Mojave desert. If several of the other clean tech startups in the Valley start delivering on their promise, Silicon Valley will drive yet another global industry after semiconductors and the internet.
Madan
Thursday, March 13, 2008
A Parallel World
Today, Reuter's had an interesting article on Craig Mundie's vision of a parallel world. Craig Mundie is Microsoft's Chief Research and Strategy Officer and has inherited the mantle of Microsoft visionary from Bill Gates himself.
The article caught my eye for multiple reasons. I had the good fortune to work for Craig Mundie's company, Alliant Computer Systems (mentioned in the article) quite a few years back, doing what he suggests only a handful of people know how to do, mapping serial applications to parallel computers. It was an interesting experience. These were massive applications running into tens or hundreds of thousand lines of code which had to scale on multiprocessor systems to deliver performance and compete against supercomputers like Cray. The performance delivered could make or break the sale of multimillion dollar systems.
Yes, Craig is a visionary and always has been. To be picked as Bill Gates' successor in this role is acknowledgement enough. But, as he himself points out, having a vision is one thing, predicting when it will happen is another :-) I am sure those of us in the '80s and '90s who thought parallel computing was ready to take off can attest to that.
The current shift to parallel computing is born out of necessity, with single processors reaching capacity limits in terms of heat, power consumption and semiconductor process technology. Craig predicts the arrival of a new "killer app" to take advantage of the coming powerful parallel computing platforms and even a new programming language. He defines his challenge as taking Microsoft past its traditional strengths into new technology areas. This will be interesting to watch, because he has been an advocate of Microsoft's early participation in web based television and other leading edge areas, much before they were fashionable or profitable. It will be like Microsoft taking on some Silicon Valley attributes :-)
This would explain the rate of Microsoft's Silicon Valley acquisitions over the last decade. Dean Takahashi has an interesting take on Microsoft's recent bid for another Valley icon. Speaking of Dean, he has succumbed to the Valley's entrepreneurial lure and has ceased to write for the Mercury News. I am sorry to see him leave because he is one of the best technology columnists I have read and he captures the beat of the Valley so well. But, as always, endings mean new beginnings. I wish him well in his new venture.
Madan
The article caught my eye for multiple reasons. I had the good fortune to work for Craig Mundie's company, Alliant Computer Systems (mentioned in the article) quite a few years back, doing what he suggests only a handful of people know how to do, mapping serial applications to parallel computers. It was an interesting experience. These were massive applications running into tens or hundreds of thousand lines of code which had to scale on multiprocessor systems to deliver performance and compete against supercomputers like Cray. The performance delivered could make or break the sale of multimillion dollar systems.
Yes, Craig is a visionary and always has been. To be picked as Bill Gates' successor in this role is acknowledgement enough. But, as he himself points out, having a vision is one thing, predicting when it will happen is another :-) I am sure those of us in the '80s and '90s who thought parallel computing was ready to take off can attest to that.
The current shift to parallel computing is born out of necessity, with single processors reaching capacity limits in terms of heat, power consumption and semiconductor process technology. Craig predicts the arrival of a new "killer app" to take advantage of the coming powerful parallel computing platforms and even a new programming language. He defines his challenge as taking Microsoft past its traditional strengths into new technology areas. This will be interesting to watch, because he has been an advocate of Microsoft's early participation in web based television and other leading edge areas, much before they were fashionable or profitable. It will be like Microsoft taking on some Silicon Valley attributes :-)
This would explain the rate of Microsoft's Silicon Valley acquisitions over the last decade. Dean Takahashi has an interesting take on Microsoft's recent bid for another Valley icon. Speaking of Dean, he has succumbed to the Valley's entrepreneurial lure and has ceased to write for the Mercury News. I am sorry to see him leave because he is one of the best technology columnists I have read and he captures the beat of the Valley so well. But, as always, endings mean new beginnings. I wish him well in his new venture.
Madan
Monday, March 3, 2008
Making money off Social Networks
On Tuesday, February 19th I attended the MIT/Stanford Venture Lab event on Shaking the Money Tree of Multi-Platform Social Networks. Like the one on Green Tech for the consumer market in January, this one was also a sold out event. However, the similarity ends there, since they are two completely different markets. The panel was moderated by Jeremiah Owyang, a Senior Analyst at Forrester and consisted of panelists from two startups Social Media and Rock You and from more established players Bebo and Google, with Kevin Gullicksen from Morgenthaler Ventures giving the VC perspective. Jeremiah gives a nice summary of the event on his most excellent blog, with links to notes from others. As the post states, it was a most excellent event.
Jeremiah's introductory slides classifying the online community and showing the demographics of the creators versus spectators were very interesting. For those interested he has his slides posted on his blog. It would be pointless to reiterate the summary which Jeremiah and others have covered earlier. But, the two things which stood out to me were 1) the proliferation of competitors, perhaps due to the low barrier to entry and 2) the difficulty of monetizing the social networks in spite of a plethora of apps and widgets on sites like Facebook and others. Social Media did point to several of their app developers making some money, but clearly scaling revenue seems to be an issue at this point.
However, what was most striking was the energy and exuberance of the community. Its almost as if they did not care whether they made money as long as they had fun creating the networks and the applications. Perhaps that was the source of most of these networks and the making money part came as an afterthought. It will be most interesting to see which of these networks turn out to be profitable and why.
Madan
Jeremiah's introductory slides classifying the online community and showing the demographics of the creators versus spectators were very interesting. For those interested he has his slides posted on his blog. It would be pointless to reiterate the summary which Jeremiah and others have covered earlier. But, the two things which stood out to me were 1) the proliferation of competitors, perhaps due to the low barrier to entry and 2) the difficulty of monetizing the social networks in spite of a plethora of apps and widgets on sites like Facebook and others. Social Media did point to several of their app developers making some money, but clearly scaling revenue seems to be an issue at this point.
However, what was most striking was the energy and exuberance of the community. Its almost as if they did not care whether they made money as long as they had fun creating the networks and the applications. Perhaps that was the source of most of these networks and the making money part came as an afterthought. It will be most interesting to see which of these networks turn out to be profitable and why.
Madan
Thursday, February 28, 2008
Solar Seismic Shift prediction
Green Tech Media's Jennifer Kho has an excellent post on the chances of a shakeup in the solar power industry and what that might mean. Greentech Media's Solar Market outlook panel seems to think a shakeup is inevitable and the only remaining question is one of timing. It almost seems like yesterday that the buzz started :-) Some of the predictions show the shakeout lasting two to three years and being driven by the massive capacity addition and subsequent price competition. The general feeling is that the companies which can ride out the shakeup will be in a great position five or so years out.
Jennifer Kho's post also identifies some of the largest trends affecting the industry such as aggregation, partnerships/acquisitions, cost reductions, cross over from semiconductors to clean tech and others. The posts covering these trends make interesting reading, especially the one showing executive crossover from high tech to clean tech including such luminaries as Bob Metcalfe(inventor of Ethernet) and Vinod Khosla.
Speaking of Vinod Khosla, he is making bold predictions, (again?). He predicts that India will be the next greentech hub, due to the availability of a large pool of scientists and technologists and a potential large market for clean energy. Since India has very little oil and gas resources within the country, historically they have made early attempts at building nuclear power plants and quite a few hydroelectric power plants. In fact, my father was an engineer who was involved in the construction of three or four major hydroelectric projects. As a kid I remember living near those construction sites in the rainforests of Kerala, and visiting several of the dams and the first underground powerhouse in India which he helped construct.
However, India's energy needs are growing by leaps and bounds with the country's progress as also the environmental impact from fossil fuel use. India probably needs clean energy more than most other countries, but Khosla probably is right that mass adoption may not come till prices come down.
Madan
Jennifer Kho's post also identifies some of the largest trends affecting the industry such as aggregation, partnerships/acquisitions, cost reductions, cross over from semiconductors to clean tech and others. The posts covering these trends make interesting reading, especially the one showing executive crossover from high tech to clean tech including such luminaries as Bob Metcalfe(inventor of Ethernet) and Vinod Khosla.
Speaking of Vinod Khosla, he is making bold predictions, (again?). He predicts that India will be the next greentech hub, due to the availability of a large pool of scientists and technologists and a potential large market for clean energy. Since India has very little oil and gas resources within the country, historically they have made early attempts at building nuclear power plants and quite a few hydroelectric power plants. In fact, my father was an engineer who was involved in the construction of three or four major hydroelectric projects. As a kid I remember living near those construction sites in the rainforests of Kerala, and visiting several of the dams and the first underground powerhouse in India which he helped construct.
However, India's energy needs are growing by leaps and bounds with the country's progress as also the environmental impact from fossil fuel use. India probably needs clean energy more than most other countries, but Khosla probably is right that mass adoption may not come till prices come down.
Madan
Wednesday, February 20, 2008
Energy and the Future
Its been a while since I blogged and that has been, in part, due to a hectic schedule. Last Tuesday, February 12th, I helped put on an event on Energy and the Future with the MIT Club of Northern California Semiconductor Series. The speaker was Dr. Amit Kumar, CEO of Combimatrix, who did photovoltaic research at Caltech, Stanford and Harvard. I have written about a previous talk at PARC by Dr. Kumar in October 2007. He compares and contrasts various energy sources with a very analytical approach and presents a great overview of the global energy picture.
The talk was sold out and the enthusiastic audience posed several interesting questions. Since the data presented was very similar to the talk in October, I will not repeat it here. You can see my previous post in October, if there is interest. However, the questions the audience and Dr. Kumar himself posed and answered are interesting. Dr. Kumar feels that oil prices will continue to trend up in the future with some fluctuations as in the past decades. This is an interesting question in itself and I will look at it more closely in a future post, since much of the future of alternative energy sources may depend on the answer.
Dr. Kumar expects energy usage to double worldwide in 30 to 50 years from 15TW (Terawatts) to about 30TW. With fossil fuels as a primary source, cost goes up and carbon emissions increase with several complications. Solar energy provides a very viable way to address the whole energy issue, but several issues such as cost, storage and inverters have to be addressed with technological advances. The ultimate solution may be a combination of solar, hydro, wind and nuclear (fission and fusion). But, the effort required is bigger than the Manhattan or Apollo projects to effect serious change. Opportunities exist in solar in several areas - silicon supply or other materials, new types of cells, thin films, storage, catalysts for hydrogen evolution, inverters and electric vehicles.
Dr. Kumar sees plenty of employment opportunities in the Valley and beyond with the push for alternative energy, for both fresh graduates and experienced professionals.
But the Mercury News presents a dissenting view from the Director of the UC Energy Institute and UC Berkeley business professor, Severin Borenstein. Professor Borenstein is quoted as saying that we are throwing away money by installing current solar PV technology, especially on houses. He argues against Government subsidies and California's million solar roofs programs. As was to be expected, he met with a barrage of criticism from the solar industry :-) The post makes for interesting reading. But, the professor is not fazed and defends his views. You can find Professor Borenstein's bio here and his publications including the incendiary one noted above, "The Market Value and Cost of Solar Photovoltaic Electricity Production" here. Good to note Prof. Borenstein's MIT connections :-) (Thanks to Ed Gunther for suggesting I provide a link to the paper referred to ).
Regardless of the scientific or economic correctness of Professor Borenstein's views, I think the industry will be well served by all the activity and attention paid to alternative energy. Silicon Valley has always been characterized by risk and reward. Without the promise of reward, there would be very little risk taking. Just funding University or academic research in the hope of a scientific breakthrough eventually may make economic sense from one point of view, but, if you look at technology development in Silicon Valley, the industry and risk taking have pushed the edge much faster than traditional methods.
Madan
The talk was sold out and the enthusiastic audience posed several interesting questions. Since the data presented was very similar to the talk in October, I will not repeat it here. You can see my previous post in October, if there is interest. However, the questions the audience and Dr. Kumar himself posed and answered are interesting. Dr. Kumar feels that oil prices will continue to trend up in the future with some fluctuations as in the past decades. This is an interesting question in itself and I will look at it more closely in a future post, since much of the future of alternative energy sources may depend on the answer.
Dr. Kumar expects energy usage to double worldwide in 30 to 50 years from 15TW (Terawatts) to about 30TW. With fossil fuels as a primary source, cost goes up and carbon emissions increase with several complications. Solar energy provides a very viable way to address the whole energy issue, but several issues such as cost, storage and inverters have to be addressed with technological advances. The ultimate solution may be a combination of solar, hydro, wind and nuclear (fission and fusion). But, the effort required is bigger than the Manhattan or Apollo projects to effect serious change. Opportunities exist in solar in several areas - silicon supply or other materials, new types of cells, thin films, storage, catalysts for hydrogen evolution, inverters and electric vehicles.
Dr. Kumar sees plenty of employment opportunities in the Valley and beyond with the push for alternative energy, for both fresh graduates and experienced professionals.
But the Mercury News presents a dissenting view from the Director of the UC Energy Institute and UC Berkeley business professor, Severin Borenstein. Professor Borenstein is quoted as saying that we are throwing away money by installing current solar PV technology, especially on houses. He argues against Government subsidies and California's million solar roofs programs. As was to be expected, he met with a barrage of criticism from the solar industry :-) The post makes for interesting reading. But, the professor is not fazed and defends his views. You can find Professor Borenstein's bio here and his publications including the incendiary one noted above, "The Market Value and Cost of Solar Photovoltaic Electricity Production" here. Good to note Prof. Borenstein's MIT connections :-) (Thanks to Ed Gunther for suggesting I provide a link to the paper referred to ).
Regardless of the scientific or economic correctness of Professor Borenstein's views, I think the industry will be well served by all the activity and attention paid to alternative energy. Silicon Valley has always been characterized by risk and reward. Without the promise of reward, there would be very little risk taking. Just funding University or academic research in the hope of a scientific breakthrough eventually may make economic sense from one point of view, but, if you look at technology development in Silicon Valley, the industry and risk taking have pushed the edge much faster than traditional methods.
Madan
Tuesday, February 5, 2008
Super Tuesday in Silicon Valley
You can feel the excitement in the air. It was a crisp, cool and sunny day, and the excitement was palpable. Primary day is really big this time around. My son, who turned 18 last year, called home from UC Davis to find out our election views. It is a big day for him and many of his classmates who are voting for the first time. Though the Clintons visited UC Davis recently, the youth vote seems to be leaning in Obama's direction. Needless to say, California will have a big impact on the primary outcome. Its good to see the youth taking a serious interest in politics and the country's direction.
Regardless of who wins in the Democratic or Republican primary the outlook for technology support in the new White House seems to be strong. Who knows, we may see a resurgence of a technology boom in Web 2.0+ or clean technology. There seems to be strong support in both parties to re-energize the country by pushing for clean technology growth.
Speaking of Web 2.0, I have been getting a lot of questions recently on whether to NotchUp or not. NotchUp, of course, is the latest social networking/career development website which enables you to earn money to interview with companies. What's more, someone who refers you to NotchUp earns money on your earnings. Sound familiar ?
I have received several invitations to join the site and even more questions about whether one should join the site. The early reviews have been mixed. Here is a positive take on it, which is outnumbered by the negative takes on it. BusinessWeek has an even handed column on it. They note the spat brewing between LinkedIn and Notchup after NotchUp enabled quick connect to LinkedIn connections. However that turns out, NotchUp has attracted a lot of attention to itself very quickly and that in turn, attracts VCs and money. They seem to be using the tried and tested adage that there is no such thing as bad publicity :-) Life at a Silicon Valley startup is never dull :-)
Of course, the biggest news in Silicon Valley in the last week is the Microsoft bid for Yahoo last Friday and its impact on Google. Google stock took a dive on Friday, but is trending back up. The Mercury News has extensive coverage on the bid and one theory definitely seems to be that Microsoft wants more of a piece of the Valley action. Of course, they have had a relatively small Valley presence for a long time and have made some acquisitions over time, but this is a big one by any standards.
Much as we might want to think that its all about Valley technology and people :-), this appears motivated purely by ad dollars and Google competition, as Google probably realizes. There are interesting rumors that Google may counterbid or form an alliance with Yahoo and that Microsoft may raise the bid. We'll see how those turn out. The semiconductor industry took a while to get into a major acquisition and consolidation mode. The Internet business is relatively recent, if we take Netscape as the starting point in 1994. Perhaps, this is a sign that the rate of change of technology growth is accelerating.
Madan
Regardless of who wins in the Democratic or Republican primary the outlook for technology support in the new White House seems to be strong. Who knows, we may see a resurgence of a technology boom in Web 2.0+ or clean technology. There seems to be strong support in both parties to re-energize the country by pushing for clean technology growth.
Speaking of Web 2.0, I have been getting a lot of questions recently on whether to NotchUp or not. NotchUp, of course, is the latest social networking/career development website which enables you to earn money to interview with companies. What's more, someone who refers you to NotchUp earns money on your earnings. Sound familiar ?
I have received several invitations to join the site and even more questions about whether one should join the site. The early reviews have been mixed. Here is a positive take on it, which is outnumbered by the negative takes on it. BusinessWeek has an even handed column on it. They note the spat brewing between LinkedIn and Notchup after NotchUp enabled quick connect to LinkedIn connections. However that turns out, NotchUp has attracted a lot of attention to itself very quickly and that in turn, attracts VCs and money. They seem to be using the tried and tested adage that there is no such thing as bad publicity :-) Life at a Silicon Valley startup is never dull :-)
Of course, the biggest news in Silicon Valley in the last week is the Microsoft bid for Yahoo last Friday and its impact on Google. Google stock took a dive on Friday, but is trending back up. The Mercury News has extensive coverage on the bid and one theory definitely seems to be that Microsoft wants more of a piece of the Valley action. Of course, they have had a relatively small Valley presence for a long time and have made some acquisitions over time, but this is a big one by any standards.
Much as we might want to think that its all about Valley technology and people :-), this appears motivated purely by ad dollars and Google competition, as Google probably realizes. There are interesting rumors that Google may counterbid or form an alliance with Yahoo and that Microsoft may raise the bid. We'll see how those turn out. The semiconductor industry took a while to get into a major acquisition and consolidation mode. The Internet business is relatively recent, if we take Netscape as the starting point in 1994. Perhaps, this is a sign that the rate of change of technology growth is accelerating.
Madan
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