Why Hubbert’s Peak May Not Happen, and Why That Misses the Point

I was asked by one of the executives at Idealab to comment on today's Wall Street Journal essay by Daniel Yergin, entitled "There Will Be Oil". I'm currently reading his book, The Prize now; unfortunately, I thought very little of his essay. Here's what I wrote:

What a disgraceful, sensationalist, condescending, collection of half-truths! The first half was inexcusable, and the second half was simply bad. The author is partially correct in some areas, but for all the wrong reasons, and his final conclusion is simultaneously wrong, and irrelevant.

Why Hubbert’s Peak May Not Happen, and Why That Misses the Point

Let’s keep something in the forefront of our minds – we care about the future price of oil. Hubbert’s analysis matters because it predicts rapidly escalating oil prices. Any conclusion which claims that massively increasing oil prices will prevent Hubbert’s peak, misses the point entirely, and is so bafflingly daft as to border upon willful intellectual fraud. We’ll be saved from skyrocketing oil prices as soon as the skyrocketing oil prices arrive and are here permanently. Hooray!

It's true that Hubbert's analysis ignored economics. He took his analysis simply from the geophysics of extraction. However, the economic analysis results in some curious results - literally the physical manifestation of the philosophical argument of "what happens when an immovable object meets an unstoppable force?". In this case, the immovable object is the oil supply and an unstoppable force is the demand for oil.

In both cases, neither force is truly unstoppable. Better technology, especially spurred by higher prices, will shift the oil supply curve. As oil gets more expensive, other means of supply become feasible. We can drill deeper and deeper (and expose ourselves to more Deepwater Horizon type accidents). We can turn a frozen mixture of tar and sand into oil by injecting steam and scrubbing like crazy (not too far removed from recovering oil from a Walmart parking lot in Wisconsin in January – see, two can play the sensationalist game). In the mid-90's I've worked in the oil fields in Canada doing what's called "tertiary recovery". Primary recovery is when the oil flows out of the ground. Secondary recovery is when water is injected into an oil field to push up the remaining oil. Tertiary recovery is when solvent (ie, soap) is injected into the field in hopes of scrubbing the last few drops of oil from the rock walls. Tertiary recovery is done when the value of oil recovered exceeds the cost of scrubbing. But let's not kid ourselves on what the value of oil needs to be for these processes to be economic.

On the other side is demand. People have been arguing strongly for conservation since Carter. Here too, we see oil prices at work. As oil prices rise there is a greater and greater incentive to implement conservation and efficiency efforts. These are now becoming fashionable and practical, but during the Reagan administration (and many times since), it was considered downright "un-American" to even consider conservation. However, the article makes the hilarious claim that increased efficiency, which has barely made a dent in the inexorable growth of oil consumption, will actual cause demand to "slacken" by 2020 - in light of booming growth from BRIC (Brazil, Russia, India, China) countries as well as existing first-world countries.

However, before I address the many fallacies in the article, let's examine what we've discovered. Skyrocketing oil prices will increase supply. Huge leaps in the price of oil will spur efficiency savings, "reducing" demand. So, as soon as we see massive increases in the price of oil, and we'll be saved!

Now, back to the argument that we will all be saved from the calamities of skyrocketing oil prices due to Hubbert’s peak through the benevolent gift of skyrocketing oil prices. What actually happens to oil production, and Hubbert's global peak, depends on the relative elasticity of oil supply and demand, relative to oil prices. Which immovable object and which unstoppable force is truly unstoppable? Which of these global titans will win - is it the Earth's relentless difficulty in providing oil, our our insatiable thirst of consumption?

If the supply-side proves to be stronger - if the Earth absolutely will not provide more oil, regardless of price, then we shall see Hubbert's peak occur. We will see oil production decline regardless of demand. Each new day of decreased production will see further escalating prices. Now, if the demand-side proves to be stronger. If people absolutely will not reduce oil consumption regardless of price. If people will pay any price for oil, then we will not see Hubbert's peak. We will see continued oil production, straining to match the daily rise of oil consumption. This oil production will come from further and further fields, and processes, which only become economic through increased oil prices (as we are seeing with the tar-sands, and tertiary recovery, and some other things the author mentions). We could see a production "plateau" that the author mentions.

So, let’s quickly examine the elasticity of oil supply and the elasticity of oil demand in order to determine which is more likely to bend. As a fun example of oil demand elasticiy, let’s look at one indicator of how strong our demand for oil is. Shown below is the total vehicle-miles driven on all US roads (data from DOT). It shows steady growth, almost doubling in amount, from 1985. The only remote dip occurs due to the greatest economic collapse this country has seen since the Great Depression. The consequences of this collapse? It set us back about 2~3 years. Oh, and we’re back to climbing again. So, we can conclude that oil demand is very inelastic, and unlikely to change much.

So, now we turn to our analysis of the elasticity of oil supply, and at the same time, let’s addess one of the author’s more heinous misdirections. Hubbert's analysis was done with the assumption that oil prices would be reasonably stable. This is why he neglected improved technological means of discovery. Since oil prices have been reasonably stable since the 1950’s the analysis has proven robust. However, with extremely high oil prices will come the economic pressure that drives further expansion. The author claims that

“Overall U.S. oil production has increased more than 10% since 2008. Net oil imports reached a high point of 60% in 2005, but today, thanks to increased production and greater energy efficiency (plus the use of ethanol), imports are down to 47%.”

Ignoring the hint that ethanol could save the day (the economic and thermodynamic policy disaster that corn ethanol has been), let’s examine this glorious increase in US production in historical context:

Excellent. So after West Texas Intermediate hit a record high of more than $130/bbl in 2007, the US managed to increase its production to match that of 2003. If only oil prices would hit $2000/bbl, then we’ll be back to the go-go times of the 1960’s and we can all drive cars with fins and big-block V8 engines! It’s pretty safe to conclude that oil supply is very inelastic and huge changes in price are needed to move the needle on oil production.

So, let's look at what has happened - in both cases we see that any increase in oil production, or any decrease in oil consumption require astronomical increases in oil prices, and that's all anyone cares about. I suppose there is a sense of smugness in watching Hubbert's peak not arrive while witnessing $200/bbl oil. But nobody cares about the shape of the curve, we care about oil prices and that's what the author has failed to address.

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Ok, I was planning on going through the article, paragraph by paragraph, and point out the half-truths, the misstatements, and the childish name-calling, but I’ve got pancakes to make. The only point of this article is, as I see it, to take regulatory pressure off of the oil industry, and to remove pressure (policy or otherwise) from developing alternative energy sources, because we can all realize that “everything will be just fine”. My advice? Buy oil futures. And invest in renewable energy.

What in the world is going on?

I gave a presentation to Idealab today. This was something I prepared when I was at the X PRIZE Foundation in 2009, for a group of manufacturing executives at an MIT conference. I updated the data for what's been happening these past two years.

I am really pleased with the opportunity I had to really dig into finding good data and case studies. I modeled it after Hot, Flat and Crowded by Friedman - a book I can highly recommend.

What in the world is going on web

View more presentations from afyke.

I should make one correction. When I first put this slide deck together, two years ago, the inputs that I provided to the model at www.climateinteractive.org resulted in a temperature increase of 2.6C by 2100. For some reason when I tried the model recently, I noticed some changes to their page, and the temperature increase was only 1.8C by 2100. This is a huge difference, and I'm going to contact them to see what changes they made to their model that resulted in this difference. What's interesting is that the CO2 concentration is similar in both cases, around 450ppm, so the change appears to be in the temperature calculation from the CO2 concentration.

House Renovation

I've been in the joys of house renovation for the past few months. It's been a great opportunity to start with a fresh sheet of paper and radically improve the efficiency of its subsystems (HVAC, insulation, lighting, etc). I've also taken to installing the network infrastructure for the house (which is interesting, given the obsolescence cycles of the computer/networking industry). I'm going to list good vendors that I've worked with, occasionally, in upcoming blog posts, but the first one is Optimized Cable Company (www.optimization-world.com). They were a handy source of cheap, quick networking components for the home.

Flipboard and Content Creation vs Consumption and the rebirth of Facebook

Thanks to my recent success at the Tech Coast Angels event, I find myself with a new iPad (version 1). I had been wanting an iPad for some time, but could never quite justify the purchase. Since I ended up with one, I've enjoyed using it. And, thanks to the iPad, I've discovered something remarkable.

I've been a Facebook user since mid-2007. I should write an entire blog post on my initial love affair with Facebook and then my slow decline. I remember my first purging of (non-)friends, my first set of rules for directing work-related invites over to LinkedIn, my first concerns over privacy, my concerns over Facebook's dismissive attitude of privacy, my long period of absence, where I still had my Facebook account, but never logged in, and then finally my eventual joining of the many others who either suspended, or canceled their accounts entirely. I haven't been a serious Facebook user since mid-2009.

So what caused me to come back? In a word - Flipboard.

Flipboard has solved a dilemma I have had with Twitter and Facebook for a while. That is, I like to use this blog to project information, but I like to use Facebook and Twitter to consume information. By placing this information in the format that Flipboard does, I find it far more engaging than the chronological scroll-information-dump format that either Facebook or Twitter defaults to.

Adding Reddit was a lot more involved (see link) but I really see this as a great tool. I can't remember where I read it, but laptops are great for content creation and iPads (and the like) are great for content consumption. Apps like Flipboard really show why this is so.

Energy Cache Triumphant at TCA Pitch Event

The company I've started, Energy Cache, came out with top honors at the recent Tech Coast Angels pitch competition.  Considered the "Best Investment Opportunity" of 2011, the award was granted to Energy Cache from a very competitive field of around 170 entrants.

It's great to be receiving this recognition from the Tech Coast Angels as this pitch event is a premier event in Southern California's technology scene. What's particularly gratifying is that the competition, at this level, was extremely talented, and so to actually take away the top prize is a real privilege.

Energy Cache is an early stage technology company, backed by Pasadena incubator, Idealab. Our extremely low-cost energy storage solution improves grid reliability, better manages the transmission network, and enables wide-spread adoption of renewable energy at the lowest possible cost to consumers.

Energy Cache was founded to provide a solution to the grid's problem of increased volatility. Mass adoption of renewable energy, the fact that peak demand continues to grow faster than average demand, and the fact that it is getting harder and harder to build transmission lines, is really driving the need for energy storage at a very large scale. Without storage, these problems will be solved the way the grid has always solved problems - by building more capacity and putting in greater capacity margins. This will result in far greater electricity prices than without storage. There are a whole bunch of other advantages for storage, which I'm pretty excited about, but this boils down to building the grid that we need for the future.

Idealab's mission is to create and operate pioneering technology companies. Founded in 1996 by entrepreneur Bill Gross, Idealab has founded more than 75 companies including eSolar, Inc., Energy Innovations, Overture Services, Inc., CitySearch, Picasa and Internet Brands. Current operating companies are providing innovative technology solutions in industries such as software, search, robotics and alternative energy fields.

So, congratulations to the other finalists in the competition, and thank you to the Tech Coast Angels for putting on the event!

Slow recovery?

Wow.  Back in March of last year I wrote about the dip in vehicle miles driven.

I went back to the source of the data, the DOT Traffic Volume Trends page, and got the new chart.

My point in my original post was that it seemed that nothing could stop the expansion of vehicle miles.  It seemed that the Great Recession really did.

It also seems that we are, indeed, having a very slow recovery - certainly in the context of the past 25 years.

Steven Lopez - Real estate

The Freakonomics blog has a section entitled, "Stuff We Were Not Paid to Endorse".  This is my version of this.  Steven does not know that I am writing this, nor has he asked for any feedback like this of any kind.

I am writing this because I feel it is my duty, in the grand universe of karma, to express my views about our recent real estate agent, Steven Lopez.  My wife and I recently purchased a home, after looking for almost a year and a half. 

I am hereby announcing to anyone looking at purchasing property in the Los Angeles area, that Steven Lopez is, hands-down, the single greatest real estate agent I have ever come across.  Period.

It is hard to even list all of the ways that Steven has helped us.  The primary difference between Steven and other agents we know of is that Steven's primary goal was to ensure the best outcome for us, rather than the best outcome for him.  This attitude pervaded everything he did, from the homes he suggested we pursue (and the ones he suggested we not pursue), to the valuations of the homes he provided, to the suggestions he made for home repairs, to advice on whether or not a given home was worth pursuing.  His attitude always was that he was looking out for us, like a true agent should, and not looking to simply close a sale.  This gave us tremendous trust in Steven and we were able to work with him as a partner in all of our transactions.

Steven is also extremely knowledgeable and intelligent.  Real estate is the amalgamation of finance, law, negotiation, aesthetics, construction and life planning.  Steven knew a substantial amount about all of these subjects and was able to give us clear guidance in many matters.
He provided incredibly detailed analysis for property values, and, as someone who's quite comfortable running multiple regression analyses, I was pleased to see his detail and rationale.  He went the extra mile to ensure our offer was well received by the seller.  Steven brought in the right professionals to help us assess the cost of repairs and upgrades.

As someone who as participated in a number of financial transactions with companies, I have always been dismayed that the real estate industry falls far short on the level of professionalism and skill for these transactions.  Steven far exceeds the crowd and I urge anyone reading this, who has extremely exacting standards in their own profession and are looking to hire someone with similar qualities, to contact Steven.

We have had the experience of dealing with, on some level, about ten different real estate agents over the course of our life (some from this home purchase, some from others).  I had long come to the conclusion that they all add incredibly little value, and the best agent one could hope for is one that was simply not evil or corrupt and wasn't going to backstab you.  There are a number of reasons that I have a terribly low opinion of the real estate industry, but I believe the biggest flaw is the lack of a "repeated game".  Real estate, by its very nature, involves people moving.  So, good real estate agents are very rarely rewarded, if their best customers are now in another city.  Likewise, terrible real estate agents are rarely exposed.  This blog post attempts to correct some of that.

Energy Storage - the next "next big thing"

I had a great time at the ESA conference in Charlotte. The energy storage industry looks, to me, like renewable energy did in 2002. I think people are starting to understand that in order to meet the RPS targets that many states have demanded will require massive deployment of storage resources.

However, in other ways, it's not clear that this is like 2002 at all. It's more like solar in 2004 or fuel cells in 1996. There is so much interest in different technologies and everyone is trying something new. Just like solar has concentrating thermal-2-axis fresnel, dish (2-axis parabolic), 1-axis fresnel, 1-axis parabolic, monocrystalline silicon, polycrystalline silicon, front contact, back contact, triple junction, CIGS, thin film, concentrating PV, and many others, and just like fuel cells had companies developing PEM, phosphoric acid, solid oxide, direct methanol, molten carbonate and alkaline cells (and others if you start getting into metal air batteries), storage is seeing the same explosion of choice.

The established players are the battery companies. NJK, in Japan, has been selling Sodium Sulpher (NaS) for years to firm renewable capacity (due to policy decisions). Recently IPO'd A123 is moving from its transportation focus to sell utility scale battery solutions. Several other battery companies were also there.

The newcomers included flow batteries and flywheels. Beacon Power, of course had a strong presence, but it was neat to see other developments in flywheels by other early stage companies present.

With the ARRA funding now deployed and the ARPA-e storage grants getting underway, it will be very exciting to see what happens in the next 12 months. Given how things have been over the last 18 months, finding a sector that looks like 2004 is welcome indeed.

The Hook -Part II

I must say, flying is a great time for reading and blogging. I've never been able to get a lot of work done on a plane. I find that there really isn't enough room for me to spread out with my reports, and Excel sheets, and notepad and the like. However, I've discovered that typing on an iPhone is really quite reasonable given the space available (and this time I've gotten smart-I'm writing this on the Notepad and then I will paste it into Blogger later). 

So, I'd like to finish off with the second of the two important items of any pitch - the hook. Last time I talked about being prepared for the questions that people will ask to quickly discount or discredit you. This is time-saving behavior on their part because if you are worthy of being discredited it is better to find out quickly. 

The hook, however, takes this the next step. Once it is established that you are no longer an obvious negative, you now need to quickly establish a positive. As I mentioned last time, although the temptation is great to dump everything you have ever done in front of someone to prove how great you are, the show-biz adage has never been more true: "Always leave them wanting more.". The purpose of the hook is to drive your audience's interest in your pitch and to make *them* want to find out more about you, and ideally make *them* want to drive the process (sale, funding, whatever you are pitching) to a successful close. While GGGR may say that ABC is "Always Be Closing", you'll be miles ahead if the other party is the one pushing for a close. 

To give an example of how this works, there was an early stage company called Velkess at the ESA conference. They had a really cool video that demonstrated their flexible flywheel. Part-way through the video, just as the flywheel was about to spinup, the video crashed. He couldn't get it started, and there was an actual groan from the audience, who wanted to see how it worked. So, he quickly described it, "well, what happens next is that I shake it and it remains perfectly stable". This just served to pique everyone's interest and he was mobbed for the rest of the evening as he sat at the reception showing the video again and again on his laptop to people. IronIcally, nothing creates demand like limited supply. 

Although what happened wasn't the hook, per se, it is like that. It is important to communicate a simple, easily memorable set of facts that people can quickly use to justify their further interest in your business. Communicate the excitement around this simple idea, be able to defend against quick discrediting attacks, and you will find yourself pushed to further meetings and due diligence to close the deal. 

Which is exactly what you want. 

The Hook

It's 5:40am and I'm lying here in the hotel, waiting to get up in 50 minutes after staying up all night due to jet lag. I'm listening to Genesis' "shapes" album and writing my first blog post on my iPhone (does Blogger have an app? Using Safari for this is a bit tedious!)

At any rate, I wanted to talk a little about pitching for fundrising, although this applies to many sales meetings as well. When I was visited by many companies at my old firm I was amazed at how many entrepreneurs would try to cram as much as they possibly could into their pitch. It reminded me of my first resume writing attempts in undergrad where, in a desparate attempt to look like I had more experience than I did, I would cram every part-time and afterschool job or activity onto the page. I assumed that people would view my worth as the literal sum of the activities listed. To remove one would be to lower my overall worth.

I now understand the purpose of a targeted message and I understand the truism of "always leave them wanting more". Your goal in any pitch is not to sell yourself to your audience, but, if possible, make your audience clamor to know more about you (and, ideally, think that it was their idea). As I said, this is true for fundraising as well as a sales demo. When doing this, prepare two things in mind. I call these, "the stick" and "the hook".

Busy people are usually looking to quickly resolve something and then move on. Even worse, whether you are talking to a hiring manager, a purchasing manager, or a VC, these people often have very little penalties for rejecting good candidates, but strong penalties for accepting bad candidates. An HR manager at Ballard once told me that everyone remembered if he recommended an employee who was a dud, but no one would know about a good employee that he passed up, so his incentives (especially if he had a large stack of resumes to get through) were to find ways to reject people as quickly as possible, and bias his filter towards rejecting people. This shouldn't necessarily be this way, but it is rational behavior. Purchasing agents do it, investors do it. Heck, Google acknowleges that they do it too.

So, what is "the stick"? "The stick" is the one question that a lazy/busy investor will ask, hoping to discredit a company as fast as possible so he can move onto the next one. It isn't fair, but it is quick and easy, and common. I call it this because when I was with a tracking solar startup, many investors would see the moving lens assemblies (they moved because they tracked the sun) and say, "aha! What happens if a stick get jammed in there?". Never mind the fact that most rooves didn't have sticks or trees nearby, and if they did then the shade from the tree would surely cause a problem for non-tracking solar, or the fact that a twig hitting one panel wasn't going to bring down the business. It was easier to wave it off and say, "it'll never work, sticks will just get jammed in the thing". Other famous paraphrases of "stick" statements are "So people are going to pay money to sell their used socks online?" (eBay). Or, "People are going to pay $4 for a commodity that they can get anywhere for 50c?" (Starbucks). It may not seem fair, but try to think of the easiest, most narrowminded question to discredit your business. That's "the stick". Be sure you've got an answer to it.

The second thing is "the hook". It's now 6:19, and I can say that writing on an iPhone is pretty bad for this sort of thing, so I'll talk about "the hook" in another posting.

Oh look, the sun is up! Yay.

Radio Silence

I haven't posted in ages. Apologies for this. Part of the reason is that after I left the VC world, I entered the not-for-profit space as the head of the X PRIZE Foundation's Energy prize efforts. It was pretty exciting to be working on developing potentially a future X PRIZE. However, I couldn't talk much about what I was doing, as I was developing a future open competition.

I have since left the X PRIZE and founded my own company, and I can't talk much about that either! So, I haven't posted much.

However, I can say that I'm learning a lot about utilities and how electricity markets work. I just want to say - they are confusing. I spent a few years serving military customers, but I haven't seen this kind of skill in wielding acronyms:

The CAISO procures A/S such that the total procurement volumes plus self-provision volumes meet or exceed the WECC MORC and NERC CPS.

Ok...
From the Market Issues and Performance 2008 Annual Report

Spam bombs

Sigh...I had been doing so well. I guess a symptom of a non-obscure blog is one where the spam bots descend. I may have to turn off comments for a while.

World Energy Council

The World Energy Council is the most representative body of the energy industry with members in more than ninety countries. Its mission is to promote the sustainable supply and use of energy for the greatest benefit of all. Every three years, the WEC holds the World Energy Congress, a major global energy event attracting 4,000+ delegates. The next Congress will be in Montreal in September, 2010 (from their website).

I had the privilege of representing Canada at the 1995 WEC Congress (thanks Canadian Gas Association!) I've set up a LinkedIn page for members of that congress to reconnect. If anyone of my readers would like to join and have attended a WEC event - either find the LinkedIn group, or email me.

Solar Grid Parity Calculation

I came across a post from a while back - April, 2008. In it the author describes the year at which residential rooftop solar reaches grid parity.


The post is brilliant in its simplicity. By taking NREL data, the average price of a solar module can be seen to be dropping at 6%/year. Extrapolating forward, while making the assumption that the installed cost will continue to be twice the module cost (which may not be true as improvements to module cost have seemed to be happening faster than installation improvements - but we can hope), as well as making a couple of other reasonable assumptions on interest rates and cost of electricity, he demonstrates through a pretty simple NPV analysis that by 2015, solar will have reached grid parity in Minnesota.

That's pretty striking, and he didn't provide what the solar resource was like in Minnesota (although, it might be pretty good - there is a latitude issue, but I bet that there aren't many clouds).


















I like this analysis because it is so simple, and it's fairly easy to change any assumptions that you might disagree with and see what there effect is. This graph from Solarbuzz shows that module prices have started to work through the silicon shortage (it had to happen sometime!) and prices have resumed their downward trek. This might push out the grid parity time an additional five years - or, due to the billions of investment dollars that have gone into solar in the last few years (and given First Solar's announcement of <$1/W manufacturing cost) the price reduction curve could accelerate from 6%/yr to 10%/yr or beyond. At any rate, this is exciting as I believe that since electricity is a commodity, there will be a sharp tipping point once the economics work out, and this is all foreseeable in the next few years.

NOAA Climate Change Report (and DocStoc)

NOAA, in conjunction with the National Science and Technology Council have recently released their report Global Climate Change Impacts in the United States. This report is very detailed, with lots of useful up to date graphs and charts. It's extremely data-heavy, which I like. I've seen snippets of it floating around the blogosphere recently.

If you'd like to have a read, I've included the embedded link.


Global Climate Change Impacts in the United States -

The second half of this post talks about the link and the service I used, called DocStoc. There are several file sharing websites out there - most of them focus on Powerpoint hosting (I've used Slideshare in the past). However, what I discovered I like about Docstoc is that it's really built a fantastic library of documents, beyond just presentations. I've used it to find technical documents, marketing brochures, legal templates, etc. Google can be great for finding a link to a published work, but you won't necessarily be able to get at the actual document. Whereas DocStoc's inventory is far less - anything you do find you have full access to, which is sometimes all you need. Having full access to a smaller pool of material can usually be more helpful than having partial access to a larger pool, and what they've put together is really neat.

Secretary Chu Announces Nearly $50 Million to Accelerate Deployment of Geothermal Heat Pumps

CleanEdge reported today on the DOE's commitment of $50m to Geothermal Heat Pumps.

Geothermal heat pumps are nothing new. In fact, I recall hearing about them way back in my first thermodynamics class in engineering. The idea is that you pump heat from the outside when it is cold and pump heat to the outside when it is hot is simple. Given that, you want your outside temperature sink to be as hot as possible when it is cold out, and as cold as possible when it is hot out. The temperature of the ground, several feet below the surface makes this a far more attractive reservoir than just the ambient air.

So what's the problem? Well, a big issue is the fact that installing a geothermal heat pump is a custom job, involving digging up and installing an underground network of plumbing. For many homeowners, the cost of installing isn't worth the payback period. Well, what about the initial builder? Surely it is much cheaper to install when the house is first being built? Well, yes, but as everything in the green building space, if the developer can't charge more for the building because of an installation, then it's not worth putting in the installation, no matter how cheap it is. This is the classic developer/owner market failure that plagues any kind of efficient building (ie, the developer isn't the one paying the utility bill, and yet can't capture the long-term value of putting in efficient systems).

So, could this spur innovation to reduce up-front costs of these systems? Let's hope so!

CafePress - Sign of the Times

I've known about CafePress for years. I think it's a genius way of running a "user generated content" business. They handle all of the logistics, manufacturing, customer relations and finance. You provide the content. I think it's a model of how to leverage a core competency of manufacturing, and I'd love to see similar businesses in other areas.

To try it out, I took a quote from a great artist and photographer friend of mine, Rob Shaer, and turned it into a collection of stuff. The quote, which I thought was a brilliant summation of how much things have changed in the past three years is:

"Is it possible to have work-life balance without the work?"

Overall the process is pretty smooth, although it was several hours of work to come up with a design, do all the Photoshop fiddling, make two version (depending on landscape or portrait mode), and then create the right sizes for each of the scores of items offered.

I thought about taking silly things down (like the intimate underwear), but it was going to be more work to filter everything, and besides, maybe someone will want them.

Overall, I was impressed with the process and big thumbs up to the CafePress team for putting together a great site. I'll track the performance over the next few months, but if you are interested, or know of some soul run over by the train wreck of this economy who might be cheered up, be sure to purchase something and I'll let people know how it turned out.

WTF? The baddest green machine out there.

This weekend I came across the ultimate in mixed branding - the Hybrid Escalade. With a hybrid option to the standard Cadillac Escalade, it is now possible to eek out an astonishing 20 MPG out of this 8 passenger transport. With a base price of $74k (as opposed to the base of $63k for the regular Escalade) this might master from Detroit certainly targets the upper income range for car purchasers. From a fuel consumption point of view, the improvement, as I understand it, is somewhere from 14mpg to 20mpg - or about 6mpg. At 15,000 miles/year, this is 321 gallons/year savings. At $3/gallon, that's $963/year, which would probably not make this justify the price premium.

But the real question is: does the "Hybrid" badge do anything, from a marketing point of view? Most hybrids have a halo effect (and, if you can drive in the carpool lane, a time-saving benefit as well). With the MANY "Hybrid" badges plastered on this vehicle, clearly the hybridization matters, but reaction from many indicates that this vehicle is more one of amazement and scorn.

Too soon

Kyle Swanson, a co-worker of mine from AeroVironment, passed away recently. He was 43 years old.

Aside from the terrible shock of one so young being taken from us, Kyle in addition was one of the instrumental players in launching AeroVironment's unmanned aerial vehicle product line. I had the privilege of riding the tsunami that was the growth of this division when I first joined AV, and helped start up their production facility, their Logistics organization and their Training organization.

He was incredibly energetic and enthusiastic, and passionate about what he did. The greatest thing for a person to have done is to have done something that mattered, and to have made a difference in the world. Kyle has done this, and all those who remember him, and thousands who never met him have been, or will continue to be, affected by all that he has accomplished.

I was struck at how someone whose enthusiasm could even exceed my own, how someone so full of life could now no longer be with us. My thoughts are with those who remain, who struggle with their loss. May they find comfort in the knowledge that those of us fortunate enough to have known Kyle are all the better for it.

Fusion! Creeping back?

Watch CBS Videos Online
60 Minutes recently ran a very interesting story about Nuclear Fusion. While the science of the video is very thin (hey, they only had 12 minutes!) the clear story is that it is slowly becoming acceptable to work on nuclear fusion technologies.

Recently I spoke with the CEO of General Fusion, a Vancouver based company. The founders come from CREO, a company with impressive technical pedigree, and they are working on an interesting fusion concept, shown here.

Basically, as I understand it, they have a spherical container with many pneumatic rams. The rams all fire simultaneously, creating a spherical shockwave that implodes upon itself. At the center of the sphere, the wave collapses, creating astronomical pressures, and fusion.

Unlike many crackpot energy stories I hear involving perpetual motion machines, what intrigues me about nuclear fusion is that it actually works. It's just that the engineering is really, really hard. However, the difference between "really hard" and "impossible" is non-trivial.

So, I for one remain interested in this space. However, I don't know if it is going to be always decades away. I hope not, however, I'd welcome others' comments on viability and practicality.