Greed Is Good, and Other Takeaways from Xconomy’s Cleantech Forum
Last Thursday, we hosted a fantastic event on energy innovation at K&L Gates in downtown Seattle. The panel discussion—moderated by Michael Butler of Cascadia Capital and featuring Mark Aggar of Microsoft, Jesse Berst of Global Smart Energy, Jeremy Jaech of Verdiem, and Linden Rhoads of UW Tech Transfer—did not disappoint in its edgy treatment of energy issues in the Northwest (you can read the previews here). The panel touched on Seattle’s software expertise, policy and funding issues, and the near- and long-term commercial opportunities in cleantech.
For my money, though, the short company intros at the tail end of the program stole the show. Kirt Montague of Prometheus Energy gave a rousing talk on how his company is capturing methane from landfills, gas wells, and wastewater treatment plants and converting it into liquid natural gas for fuel. Chris Wheaton of EnerG2 followed with the story of his startup (“My name is Chris and I’m a recovering IT addict”) and how it’s diving into the energy storage market with ultracapacitor materials technology. Finally, David Grieger of Vu1 used props to show how his company has reinvented the light bulb, making it cleaner and more efficient.
The Xconomy Seattle shop has been pretty busy lately, so I’m just getting around to posting my thoughts on the event. This will be the opposite of comprehensive, so if you want the details, you’ll have to show up next time. Here are my top five big-picture takeaways:
1. It’s not just about the Northwest.
A premise of the event was to come up with steps the Seattle community can take to build leadership in energy. But as UW’s Linden Rhoads pointed out, “We also need to look away from Washington state and think about what will make really disruptive things happen as a nation.” Mark Aggar added, “Microsoft is used to having a global partner network. Proximity has never been a barrier to collaboration.” (From this, I took away that if Microsoft decides to fully invest in cleantech, it could be a powerful ambassador for the sector.)
2. It’s not just about software—but in the short term, it is.
OK, all of the panelists came from (or are still in) the IT industry. They acknowledged the most disruptive technologies may come from materials, biofuels, or other areas. But in the next five years, Verdiem’s Jeremy Jaech said, “With IT, let’s start by capturing how much [energy] is wasted. It’s technology that’s all available today, and it’s an untapped market….Let’s start with conservation.” Jesse Berst of Global Smart Energy disagreed somewhat, saying, “Conservation and efficiency isn’t the next big thing. The electricity economy, that will be the big thing.”
“At the end of the day, it comes down to data, information, and knowledge,” Aggar said. “IT can help in that…Right now, IT is focused on reducing waste and driving up efficiency. But it’s not just about energy, it’s all other natural resources.”(My takeaway: software and smart-monitoring technologies will take us pretty far, but in terms of R&D, let’s think bigger.)
3. It’s not just about being capital-efficient.
Given the state of the financial markets, everyone wants fast, cheap solutions. But Rhoads said, “The nation and the planet have increasingly serious problems that we’re going to have to innovate out of… Many of the solutions society needs do lie in horrifically high capital. There is research that’s yet to be done, and innovation that has yet to be made.” She cited research at UW on “computationally intensive science and processing” that could give people real-time access to huge amounts of data. And 10 to 15 years down the road, she’s betting on “fuels entirely other than petroleum.” (My read: focusing on small startups and short-term exits is not going to get it done.)
4. Greed is good.
“I’d like to be in a world where the environment gets a little better every year,” said Berst, talking about his move into the energy sector. “Now I get a chance to act that out while being a little greedy.” Jaech cautioned, “Government research labs or universities, those types of institutions are great places for new technologies to emerge, and that could become big. But we have to stick to things we do particularly well. Frankly, Washington has not been an energy state. We have cheap hydro power, and that’s hard to scale. That’s a disadvantage. But we have a lot of software experts.” (My take: what will ultimately make a difference in cleantech are big, bold moves.)
5. Local VCs are not buying into cleantech yet.
While the panel did not talk about this directly, EnerG2’s Wheaton raised the point in his talk, and it’s clearly on the minds of entrepreneurs and researchers in the space. Maybe it’s a function of the investor community—almost everyone comes from software or wireless—or maybe it’s just because the cleantech sector is relatively young. But it seems to me if you have the resources and patience to make a big play, there are huge opportunities here.