Climate Reality Leadership Corps - Pittsburgh Training

I'm proud to announce that today I was at Day 1 of the training for the Climate Reality Leadership Corps.  I first saw Al Gore speak in Australia in 2007 (when I co-invested with him and Kleiner Perkins into Ausra).  I have been wanting to officially take the training for years now, but I finally found the time.  It's been an amazing event so far!

MCGA

Climate Change is not a Chinese Hoax - but we're going to wish it were.  In the last ten years, share of global deployment for solar energy fell from over 80% to 7.5%.  China, however, has ballooned to now 46% (from, effectively, zero).

The manufacturing crown has been lost to China.  Most of the engineering talent is in China.  This isn't the loss of the textile industry - this is hardcore physics, material science, engineering and manufacturing (click to enlarge).

From Axios

Well, at least we're actively supporting coal.  We're bound to be the leader in that when everyone else dumps that fuel like a bad habit.

The tough road.

When watching the movie Lion, there is a scene, early on, where the little boy, lost in India, finds a caring woman. She gives him food, and a safe bed. He’s been lost and scared for so long, it looks like he’ll finally be safe. However, the next day, it is clear that he’s in danger, so as much as he doesn’t want to head back into the streets – he runs. He knows that the road is hard, but he has to keep walking it.

I stepped down as CEO of Edisun fourteen months ago. I’ve been on a long journey myself. I spent six months in Colombia, learning Spanish and meeting Latin American investors. I have spent significant time trying to forward my mission of venture investing in energy/food/water technology companies. Several times I thought I had reached my goal of returning to the investing side. It’s been a tough road, and recently, with my promotion to Managing Director of a local family office, I had thought I’d finally found my destination.

I’m passionate about venture capital investing. Ten years ago I was a young, junior partner at a firm in Australia. I led the firm’s biggest investment and biggest exit. I then returned to Pasadena to start several companies at Idealab, and co-found many others. I’ve been deeply involved in energy technology companies since 1993, and I know why many of the companies have struggled along the way. As founder/CEO of two energy companies, I know first hand why these companies struggle.

I respect the transparency of Brad Feld, Fred Wilson, and Mark Suster. I’m passionate about the opportunities in Southern California, and my home in Pasadena. I feel that technology, driven by world-class education and R&D, will pay off many times over. So, I’m putting myself out there on my blog to show my vulnerabilities. Along the way, I’ve taught a class at USC, helped a fuel cell company with their investors, and helped bring capital to a solar company that I deeply care about. The road has been rough, but the view has been worth yet.

Yet, I must acknowledge that I have not yet found my destination. As much as it pains me, I must pull on my boots again, and put on my wet, cold jacket and head back out into the rain. I am not yet where I need to be to grow, and to provide value to the world. Like so many fellow entrepreneurs, I know the value of this phase:

If you can force your heart and nerve and sinew 
To serve your turn long after they are gone, 
And so hold on when there is nothing in you 
Except the Will which says to them: ‘Hold on!’

And I shall.


Kipling, Rudyard. "If"

Comey's Shining Moment

James Comey was amazing to watch today - Joe Friday, through and through. However, I feel, that his best moment, and there were many, was in the short clip below. This isn't about scoring political points. This isn't about Republicans protecting their elected leader. This is about a foreign government undermining the rules of the game and the trust in the system.

US Leaving Paris - MIT and System Dynamics

So, many people have asked me what the effects will be if the US leaves the Paris Accord (as Trump has said that he will do). Right at the same time I sat in on a fantastic lecture from MIT's Professor John Sterman. It is a *tremendous* watch, and well worth the time.

Investment Thesis

Fred Wilson gave a really great talk at my alma mater, MIT.  I'm going to link the relevant bit below:

As someone who has lived through the "Cleantech" collapse since 2009, this is really enlightening and encouraging.  It's hard to believe, but yes, there was a time when a solid investment thesis in internet investing got laughed at.  I feel, by analogy, this now applies to energy/food/water investing (see, we can't even call it cleantech anymore - note the blog title).

I think the premise is brilliant - "The best time to invest in something is when nobody believes in it but you [snip], but you have to know why".

We're seeing the investment blues of energy investing starting to thaw now.  DBL, 1955, Obvious, Evok, and others are getting funds off the ground.  The fundamentals haven't changed (in fact, they've gotten stronger) and people better understand how not to repeat the excesses of 2004-2008. 

Refugees vs Immigrants vs Illegal Immigrants

President Trump doesn't seem to know the different between refugees, illegal immigrants, or just plain immigrants.

My friend Dorrian Porter made this video, which I think really highlights the America we would want, vs the one we have.

And, as far as refugees go, here's a song that I loved as a kid, which I think will always be relevant:

This is the tale of a little boy
Wandering far from his home
Most of his family were with him then
And nothing but life did they own
Tortured by war in their native land
Their only recourse was to flight
Tracing the path of the sun by day
And led by the north star at night
Onward they pressed to the promised land
Not knowing if that was the way
And none of the children could understand
And this little boy used to say
Hey, hey, hey

Mama , where do we go from here
Mamma, why can' t we stay
Mamma, is daddy very near
Mamma, why do you pray

Down came the winter, the food was scarce
The people were falling like flies
Disease helped starvation make matters worse
And parents resorted to lies
Hush, your mamma will soon be well
Though all they can do is to wait
And one little boy hears the doctor tell
The others he thinks it' s too late
It' s too late

Mamma, he whispers quietly
Mamma, you' re looking old
Mamma, why don' t you answer me
Mamma, your hands feel cold

He rushes out into the chilly night
He can' t beleive what he has been told
The tears in his eyes start to blur his sight
And freeze on his face with the cold
But in the next camp, ther is a mother mild
Who' s mourning a son passed away
And fate brings the cries of the little child
To her just as he starts to say
Hey, hey, hey

Mamma, she knows what she must do
mamma, she thinks of her
Mamma, I must take the place of you
And take him into my care

Mamma, oh oh...

 

How Obamacare is good for entrepreneurship

This post, from Reid Hoffman, is worth reading:

http://www.reidhoffman.org/474-social-impact-and-politics/1469-obamacare-is-more-than-a-safety-net-it-s-a-trampoline

The basic idea is that, by coupling employment and healthcare, most people cannot afford the risk of leaving their job (even if sub-optimal) to start a company.  I know that I have often done the COBRA dance before the ACA came out when starting a new company.  With the ACA, people aren't tethered to their jobs, allowing them to start new companies.

This is good for entrepreneurship, which is good for businesses, which is good for America.  Full stop.

Trump and Immigration

As someone who went through the US immigration system, I'm dismayed at Trump's mishandling of immigration.  As appalling as it is to shut the door on refugees (who certainly aren't here trying to "take-yer-jobs!") I think the more disastrous part has been shutting the door on *legal* green-card and visa holders.

There is a certain contract - you, the immigrant, will pay thousands in fees, be subjected to all sorts of paperwork and background checks, and will suffer with a life on hold (and possibly be trapped working in a company you don't like, but can't leave) and in exchange for that necessary evil, the US will process your application as quickly as it can and either accept or reject your stay.

However, to then take people who have gone through that process and to lock them out is a complete violation of that contract.

I'm pleased that the outrage has been this acute, and I'm pleased that the White House has backtracked on the green-card restriction.

Oh, and, not for nothing, I'm not at all surprised that Trump made sure the ban doesn't touch any countries that he does business with (from the left-wing rag Bloomberg).

Make America Great Again

This is an open letter to President-Elect Trump:

Mr. Trump,

You speak of making America great again.  In your campaigning, you've captured the frustrations and concerns of many members of American society who have been left behind by globalization and technological advances.

It is difficult to make America great by simply turning back the clock, closing the borders and pretending that it's 1955 again.  In many ways I thought your slogan was hollow.  After the last eight years of job growth and rebuilding America's image in the world, who's to say we aren't great now?

However, there is one area that I feel that America excelled at, back in the 1940s, 50s and 60s.  There is something that has been lost.  If you truly want to make America great again, you can start with this one thing.

We used to celebrate intelligence and science.  Remember that?  Remember when we sent rockets to space and landed on the moon?  Remember when Disneyland unveiled the promise of Tomorrowland?  Remember when the American future would be built by American ingenuity?

Remember when people watched the news?  People like Cronkite were revered for telling it "the way it is" - I imagine that you would have liked him.  People watched the news to learn and be informed - not to bicker and be entertained.  Citizenship mattered.  Contributing to the national discourse mattered.  Being ill-informed was not celebrated.

When I see that you've appointed climate change deniers to the EPA and the DOE I can't help but contrast that decision against our previous head of the DOE who held a Nobel Prize.  Climate change due to greenhouse gases is real and it will permanently ruin life on this planet for your kids, their kids, and the rest of this world unless we reverse it.  This is the type of moonshot thinking that America excels at - and yet we're timid, cowardly, and unprepared to show leadership.  We should demand the world reduce carbon emissions - we should lead the way - and then we can reap the economic gains of being the market leader - just as we have done time and time again in industries such as automotive, aerospace, computers, telecommunications and medicine.

Now, it isn't just the right wing that has embraced ignorance with regards to climate change.  The left has it's own shame in the anti-vaxxer movement, or the concerns about GMOs.  These concerns are also not founded in science, and should likewise be addressed.

America is great.  America has been great.  But if you really want to make America great again.  If you really want to turn the clock by 60 years - then I implore you to make leadership in science, and leadership in forward thinking in addressing climate change central to your position as President.

Sincerely,


Aaron Fyke

Paris Climate Summit

This quote is pretty apt at explaining our situation:

 Still, the rest of the world must be clear about the implications of the agreement shaping up in Paris. Calling 2.7 to 3.5 C of warming a success is akin to saying, when leaping a canyon 15 feet wide, that leaping only 10 feet is no cause for alarm. After all, 10 feet is farther than you’ve leaped in the past and represents undeniable progress towards the ultimate goal. 

 http://www.thenation.com/article/the-most-ambitious-emissions-pledges-on-the-table-in-paris-would-still-result-in-catastrophic-warming/

CREE Connected Bulbs

So, I'm jumping into the latest thing and dabbling with home automation.  After some effort, I've managed to get my Wink system talking to all of my stuff.

Highest marks goes to Nest and Ring for being the most seamless.  Well done!

One particular challenge (and the point of this post) was my CREE bulbs.  The help manual says to cycle the power 2seconds on and 2 seconds off in order to reset the bulb for pairing.

However, it is actually ONE second on, 2 off.  Then it worked just fine.

Here's Aloysius from Cree:

Hello everyone,
This is Aloysius from Cree's Connected Bulb support team. I apologize for the troubles some of you may be having. Please go ahead and try resetting our bulbs with the following procedure which should resolve all the issues.
Here is how to manually reset the bulb,
Our Cree Connected bulbs need to be turned on for 1 second and then off for 2 seconds over and over until there is a noticeable flash letting the user know the bulb has been hardware reset.
-Note: The (1-sec-on : 2-sec-off) iterations can be done with a stopwatch but it isn't an exact science. Basically you need to turn it off long enough for the power to become completely exhausted in the capacitor and then add power back to the capacitor and do process again. Bulb is meant to hardware reset after 4 iterations.
This procedure is most easily done with a regular light switch rather than screwing the bulb in and out of the fixture by hand. Most bathrooms are a good candidate since they generally have easy access fixtures with a light switch. Also, please don't use a 3 way switch for resetting.
I hope this helps,
Sincerely,
Aloysius
From Cree Support

Gas Volatility

Back when I was trying to make Energy Cache work, a big headwind that I ran into was the falling price of natural gas due to fracking.  The EIA reported that gas prices for electric power generation were hovering around $3.

I tried to make the argument that, long term, prices would go back up.  And by early 2014, they had - almost to $8/MMBtu.

However, I just checked recently and they are back to $3.  This is crazy.  Look at the Year on Year variability!

It's not that uncommon for the price of gas to be either 50% higher or 50% cheaper than the year prior.  Hedging this risk must be crazy expensive, and there has to be an opportunity in here somewhere.

Of course...we think there is - by moving your peaking and firming fuel from gas to the sun.  :-)

All data from:
http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_m.htm

Lean Startup and the Importance of Doing the Right Thing

I just watched a great video from the Lean Startup conference, by Dan Milstein:

It's 20 minutes long and worth watching.  However, before you run off and do that, I'll let you know why I thought it was interesting. 

In it he discusses the detriment of working on the wrong thing.  It's fascinating (but true), when he says that you are better off working on NOTHING at all, than working on the wrong thing.  This is a complete contradiction to the workplace biases and pressures that are so common. 

Secondly, he talks about how to determine what is the right thing.  In it, he gives an example of a teleportation technology, and a simple healthcare app (which reminded me a lot of my post on Type I/Type II companies).  If the technology is uncertain, but the market is guaranteed, then spend time on the technology, not the market.  If the technology is certain, but the market is not, then spend time validating the market.  Because so many IT/app companies really have little technology risk, so much of the Lean Startup movement focuses on market validation.  However, in the energy space, where I live, I think that the markets are known and regulated, and it is the technology risk that is the bigger piece.

However, as interesting as that was, his real point was that the greatest uncertainty (and therefore the greatest value for the company to understand) can shift several times in the company development.  It is the ability of the company to recognize the shifting risks and adjust what they are working on (to avoid working on the wrong thing), that is the greatest value to the company.

It's a great video.  Have a watch.

For all entrepreneurs

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

― Theodore Roosevelt

A good day

Today was a good day.  My prior best at Disneyland's Astro Blasters was around 800,000.  Today:

Yes, that's right.  2.7 million!  My new strategy of only going after diamonds and triangles paid off.  After getting my picture I was told that I was one of the top 10 for the day.  When I had a look to see where I ended up, I saw this:

Numero uno!  By a pretty healthy margin!

Sorry BF...

Why an exploding offer can blow up in your face

Today Y Combinator had a great post called "Exploding Offers Suck".  The key take-away is in the first line:

Exploding offers suck.  Founders should be able to choose the investor they want to work with, not have to make a decision based on time pressure.

I think this is a smart move on YC's part.  They are positioning themselves as being founder friendly, further strengthening the desire of good founders to be with them.  They then get the best founders and the positive cycle continues.  It's also smart for them to be very public about this because they want the perception of YC to extend their reach even ahead of anyone's actual experiences with their policies.

Exploding offers are pretty bad.  This can be common even beyond the accelerator stage.  VCs can and do provide term sheets with short fuses.  One very real reason for this is that the VC does not want to be used as a stalking horse.  If a VC is willing to put their neck on the line by making an offer, they don't want that simply to be used to get a higher offer somewhere else.  This is a completely fair position. 

On the other hand, decisions made by time pressure can backfire.  Back when I was finishing up at business school, a major car company that some of my classmates were interviewing with came up with the following strategy.  They took eight students from top business schools (two from MIT, two from Stanford, two from Harvard, etc) and brought them all together for interviews on the same day.  And the end of the day they announced to the group that they were happy with everyone and that they had two job offers, which would be made to everyone.  The first two people to accept would get the job.  Brilliant idea, right?  What a great way to implement competitive tension and ensure that they would be able to fill the positions!

Wrong.  Out of disgust (for being put in the position, for feeling like this is how they are valued, for feeling interchangeable with everyone else in the group) NO ONE agreed.  It is my understanding that the positions remained vacant for several months.

None of this, of course, addresses the obvious issue of how loyalty will be affected down the road by starting the deal this way.

So, the best approach is to build a strong relationship with someone (as an investor, accelerator, employer, what have you) and make someone WANT to be with you.  Be the VC firm of first choice, independent of valuation.  Make your new employees loyal and excited before they even sign for your company.  Foster a sense of transparency and openness, and that will pay dividends that overcome the stalking-horse problem.

Tax treatment of early-employee options

There is a great post from Sam Altman on Employee Equity.  I think it reflects many things that I've agreed with for quite some time.  The paragraph that I think is particularly salient is as follows:

With regard to tax treatment of options:

I think there are a lot of ways to fix this.  The easiest would be if the IRS would agree to not tax illiquid private stock until it gets sold, and then tax the gain from the basis as long-term capital gains and the original value as ordinary income.

Another might be to create a new class of employee stock.  Today, in an early-stage company, common shares are usually worth much less than preferred shares.  It might be possible to create a class of shares with less rights than common and thus worth even less.  The idea would be to convert these shares into common on an acquisition or IPO, but before that, they would be non-transferable and have no value.  If it were possible to create a class of stock that the IRS agreed had next to zero value, it might be possible to grant employees this sort of stock, have them owe a tiny bit of tax on it now, and then have normal long-term capital gains treatment years later when the startup goes public.

What about it IRS?  I think that it is high-time to fix the tax treatment for early employees of companies.  Right now, there is a huge divide between those employees wealthy enough to hang on to their options, and those that cannot.  This needs to be changed.

Green Power Report

I was interviewed recently on AM 590's Green Power Report and it was a pretty good show. Check out their back catalog of previous interviews; they have some good names on them. At any rate, the audio is attached. I speak about ocean power, California's energy policies, and Energy Cache.

Solve for X Talk

The conference was pretty interesting. Here's a link to the talk.