There are many solar energy collection methods that are competing for supremacy that include thin films, nano inks and particles, and crystalline silicon based materials. This is similar to the market for search engines during the dot-com era when Infoseek, Yahoo, Alta Vista and many others were vying for the largest audience.
So how does one spot the next “Google of solar”? While challenging, it may not be as mysterious as it seems. There are two things to consider about Google as they grew. First they did have a good technology. However whether Google’s technology was really that much better than Yahoo’s is not as important as the business model they brought to a sector that was entering maturity.
The key to finding the next Google of solar is to let today’s technologies battle and gain efficiency until one begins emerging as a standard, then find a company with a comparable or slightly better technology, whose business model is truly innovative.
If you are thinking in terms of timelines, business model maturity in an emerging market typically lags behind technology maturity, until a new entrant drives it a step forward. For example, Yahoo emerged as the winning “Search Engine 2.0”, but still relied on “Search Engine Business Model 1.0”, whereas Google entered the market as “Search Engine 2.5” while introducing “Search Engine Business Model 2.0”.
We are starting to see advances in solar energy business models, but they are still in the 1.x phase. One interesting example is the distributed power model used by companies like Recurrent Energy. Other solar business models range from financially focused (SunRun) to utility scale wholesaling (GreenVolts).
If we look further into the future, electricity itself may be traded as a consumer commodity, subject to auctions and reverse auctions. Consider the possibility that consumers one day may be able to ask different energy providers for their lowest price on 1,000 kilowatt-hours. The next Google in the solar space likely will have a business model that is a clear step in this direction.
Saturday, June 26, 2010
Wednesday, June 23, 2010
Today's Pain, Tomorrow's Value
In their recent paper, Market structure is causing the IPO crisis — and more, David Weild and Edward Kim state that the “market for underwritten IPOs, given its current structure is closed to 80 percent of the companies that need it.” They go on to point out that “companies are unable to expand and grow” because they “can no longer rely on the U.S. capital markets for an infusion of capital, nor can they turn to credit-strapped banks.”
It is true that capital has become less accessible to both large and small businesses, and is likely to drive several trends:
It is true that capital has become less accessible to both large and small businesses, and is likely to drive several trends:
- Greater innovation in how partnerships are sought out and structured. Businesses that lack access to capital will have to find other ways to obtain the resources they require for growth. They are likely to expand their definition of “synergistic” and seek partnerships outside of their traditional space that can provide resources they normally may purchase with cash.
- Increased need for services that can be shared or pooled across different types of businesses, including administrative functions, general HR and office space. Entrepreneurs with their own cash sources who can provide such shared services to a broad range of businesses will find that today's low access to capital works to their benefit.
- Demand for angel capital will increase, driving up returns demanded by the earliest investors. Angel investment networks will be able to gain greater ownership of new ventures for less cash. This will leave less for entrepreneurs, particularly after VC rounds. The benefit is that entrepreneurs will treat investor cash more carefully from the start, leading to better financial management as the company grows larger.
Saturday, June 19, 2010
It's "Search Wars" in the Solar World
Solyndra is in a risky financial position after trading its much anticipated IPO for mountain of debt, citing market conditions. However, one has to ask whether market conditions were the only factor.
There is a battle of solar technologies reminiscent of the search engine wars during the dot-com era, that will sort itself out over the next few years. Solar panels may rely on a variety of materials that include crystalline silicon, thin films and nano inks. At some point the tradeoff between manufacturing costs and power generation capability per unit area will determine which technology prevails.
The wildcard will be some of the emerging companies that build technologies to monitor and enhance the performance of solar panels, such as Enphase Energy and Solar Edge. Their enabling technologies will help determine whether the best, most efficient solar panels are necessary to generate large volumes of electricity, or whether less efficient panels with lower materials and manufacturing costs can win.
Is Solyndra really ready to engage in this battle? One has to wonder whether their cost structure will allow them to succeed and what role it played in their decision to pull their IPO. Regardless, they are in for a tough go.
There is a battle of solar technologies reminiscent of the search engine wars during the dot-com era, that will sort itself out over the next few years. Solar panels may rely on a variety of materials that include crystalline silicon, thin films and nano inks. At some point the tradeoff between manufacturing costs and power generation capability per unit area will determine which technology prevails.
The wildcard will be some of the emerging companies that build technologies to monitor and enhance the performance of solar panels, such as Enphase Energy and Solar Edge. Their enabling technologies will help determine whether the best, most efficient solar panels are necessary to generate large volumes of electricity, or whether less efficient panels with lower materials and manufacturing costs can win.
Is Solyndra really ready to engage in this battle? One has to wonder whether their cost structure will allow them to succeed and what role it played in their decision to pull their IPO. Regardless, they are in for a tough go.
Friday, June 18, 2010
Entrepreneurial Leadership: The Courage to Act
A number of years ago I was on a consulting engagement at a large and well-known financial services company. They were experiencing some painful symptoms of a problem that was baffling to the Executive Vice President (EVP) we were working with. She ran an organization consisting of both client-facing and back-office personnel.
Over time, the level of customer service had degraded and problems were taking progressively longer to resolve. Customer attrition and complaints had increased and the EVP wanted to know why. As we talked to people in the organization we learned of serious animosity between the client-facing and back-office teams.
The client-facing and back-office teams were led by two Senior Vice Presidents (SVPs), with whom the EVP was close. All three had risen up through the organization together and had at one time been friends, but now the SVPs were barely on speaking terms due a personal falling out. During our research we learned that the animosity between the SVPs had permeated their respective organizations, leading to dysfunctional behaviors that resulted in poor customer service and slow responses to problems.
Our advice to the EVP was to break down the two silos, remove both SVPs and restructure the organization to create integrated teams of client-facing and back-office personnnel. Her response was that the SVPs were professionals and just because they no longer socialized did not mean they were unable to manage their groups effectively. She insisted that removing her friends was not the answer and instead chose provide her organization with soft skills training. Within six months, the EVP and SVPs were gone.
Choosing not to act and hoping a problem will go away is more common amongst business leaders than one may expect. Although denial is easier than making a decision that could be perceived as politically incorrect or disruptive to the organization, the consequences of not acting almost always are worse. The is especially true in entrepreneurial organizations that are on a fast growth curve.
New companies often have only one chance to build their reputation and brand. When one failure can mean the end, having the courage to take an uncomfortable action is one of the most important traits of a successful entrepreneurial leader.
Over time, the level of customer service had degraded and problems were taking progressively longer to resolve. Customer attrition and complaints had increased and the EVP wanted to know why. As we talked to people in the organization we learned of serious animosity between the client-facing and back-office teams.
The client-facing and back-office teams were led by two Senior Vice Presidents (SVPs), with whom the EVP was close. All three had risen up through the organization together and had at one time been friends, but now the SVPs were barely on speaking terms due a personal falling out. During our research we learned that the animosity between the SVPs had permeated their respective organizations, leading to dysfunctional behaviors that resulted in poor customer service and slow responses to problems.
Our advice to the EVP was to break down the two silos, remove both SVPs and restructure the organization to create integrated teams of client-facing and back-office personnnel. Her response was that the SVPs were professionals and just because they no longer socialized did not mean they were unable to manage their groups effectively. She insisted that removing her friends was not the answer and instead chose provide her organization with soft skills training. Within six months, the EVP and SVPs were gone.
Choosing not to act and hoping a problem will go away is more common amongst business leaders than one may expect. Although denial is easier than making a decision that could be perceived as politically incorrect or disruptive to the organization, the consequences of not acting almost always are worse. The is especially true in entrepreneurial organizations that are on a fast growth curve.
New companies often have only one chance to build their reputation and brand. When one failure can mean the end, having the courage to take an uncomfortable action is one of the most important traits of a successful entrepreneurial leader.
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