John Dessauer, editor of John Dessauer’s Investor’s World, is in the camp of those who are worried that alternative energy has become too popular among investors: “Alternative sources of energy, including ethanol, have already been fully exploited by Wall Street. Not much opportunity is left for us in that category.”
Knowing how soundbites work, I’m not going to take that quote at face value and will assume that there is context missing. Because if there is not opportunity left for us in that category (i.e. clean tech), there are going to be a lot of sad VCs, corporations and consumers in a few years. Fully exploited by Wall Street? There are hundreds of startups – many of which are still in stealth mode – who haven’t even come close to liquidation events. Leading VCs like Draper Fisher, Kliener Perkins, VantagePoint Venture Partners, Mohr Davidow Ventures are betting the farm on this industry.
I’d be willing to venture that the fun is just starting in alternative energy investing. Take solar for instance. There has been some industry consolidation, new players from the tech industry like Applied Materials are entering the game, and companies in China are becoming billion dollar players over night. If we haven’t come close to deciding who the industry leaders are going to be, how could there not be much opportunity left? That’s like saying the tech industry was dead in 1979 when Apple and Microsoft were a few years old.
Dessauer goes on to point out:
“Wall Street is ignoring what I see as an obvious and highly profitable profit opportunity” to exploit the move towards greater energy efficiency: Technology stocks.
Most of my time is spent working with some of the biggest technology companies so I definitely agree that there is tremendous opportunity for these companies to make a real and substantial impact, something that should be reflected in how investors view them. The article names a few: Cisco, Intel and Philips Electronics. The list goes on from here. IBM, Sun, the PC makers… they all are doing things to address the way energy is consumed, managed and distributed by businesses and consumers.
Getting back to “alternative energy investing is fully exploited.” If we take the short-term view that Wall Street has trained some of us to adopt, maybe Dessauer is right. Ethanol gets over hyped, investors flock to it, some stocks don’t perform, and then we call it exploited and move on to the next thing. Same could go for solar. Silicon supply finally catches up with demand. Some solar companies face a margin squeeze, and people only looking three to six months out ditch the market entirely and move on to something else. It could happen. But then you could look at the solar market differently, as Todd Woody’s “Big Solar’s Day in the Sun” did in the June issue of Business 2.0 that just hit the stands. He shows the deals happening today for “industrial-strength solar energy sold to public utilities in 20-year contracts measured in gigawatts.” This industry is starting to align for the long-term.
So investors could move on. Or, they can stick around and find the renewable energy winners in a market that is certaintly not going anywhere. Maybe we need to look again at how we define alternative energy. If a big technology company can come up with a much more efficient way to get solar or wind power to the power grid and into your home, could they be in the same circle as the company making the solar panels? If we take that view, renewable energy becomes a much bigger space and the investing opportunities are endless. I’d like to think that’s where we’re heading.
Work and parenting. I blame those two things for not having time to post to this blog lately. After all, how often do you get to see your son roll over for the first time? To be honest, five months ago I didn’t even know that babies couldn’t roll over right away. How hard is it to flip your head and turn? It looked easy this morning when my son’s brain told him it was time to do it.
So rather than write about all of the things happening in clean tech and green business — of which there are many — I’d like you to meet my little guy, Oliver Swain.
Todd Woody at Business 2.0 covered Steve Jobs’ open letter about Apple’s approach to green and concludes his post on Green Wombat with this question for me:
Why Apple left increasingly eco-conscious customers unenlightened about what appears to be years of work to remove toxic chemicals from its computers and gadgets remains a public relations strategy best plumbed by bloggers like David Swain at Clean PR.
I’m no Apple expert and I haven’t followed them in the press much more than the average person. That said, I’ll speculate a bit about why a company like Apple – with one of the most devoted and loyal user communities on the planet – would leave customers to debate the eco-friendliness of its fearless leader.
- The overflow of green coverage in the past 6-10 months makes it easy to forget that just a year or two ago, Apple and its competitors didn’t have to deal much with mainstream perception relating to environmental topics. Whether or not they were innovating internally, when it came to communicating to the outside, not much needed to be done other than showing that they were complying with industry regulations. Apple appears to be slow but in relative terms, are they that far behind?
- GE paved a path for big companies with its ecomagination campaign and it’s only a few years old. Their campaign has been a hit and it has given other companies the confidence to do something similar. Gauging from several of the big tech companies I’ve talked to, a lot of the best stories with the most history and depth have yet to be told. We’re just getting started and that’s a good thing. Many of these companies have the luxury to tell their story when they’re ready. Apple appears to have been pulled in to this — by its users, Greenpeace, etc.
- Like many companies with loyal communities of users, Apple’s priorities relating to this specific topic may have been more in-line with meeting the needs of its core audience than the broader public and shareholders. The response wasn’t overly speedy, but the community spoke up, and now Apple has issued its response. If you’re going to issue a highly anticipated response, what better way to do it than to show some transparency and go above and beyond the competition? Whether or not they actually went above and beyond I’ll leave for the community to decide.
- Most companies are still not aligned around sustainability and the environment which can lead to endless delays in getting a story out. Rick Walker of Siemens could be right suggesting that we need a Chief Sustainability Officer to bring all of the pieces together. I’ve talked about the full circle approach suggested by McKinsey. The business leaders need to partner with their communications teams on this. Maybe someone more knowledgeable about Apple’s organization structure can share what processes the Apple communications team had to go through to uncover and then share their story.
Apple has opened a door. Let’s see what comes through it next. They are clearly an innovative company. Innovation with the environment shouldn’t be a response to some bad publicity. Apple should show by example how companies in their industry and other industries can build more sustainable products and adopt better business practices. Hopefully they don’t silo this into a debate with the competition about who is doing it better – that won’t get us too far. And I expect Apple’s opinionated community won’t be too happy if Apple doesn’t step up and lead.