The Jolly Green Bubble

Earth Day was yesterday. I my college years all that meant to me was that the band Green Day was coming to town to play. Now it means “save the planet, if it can make us money”.

“Greed, I mean Green is Good”

CNN, the New York Times, Business Week, Advertising Age, “Good Morning America,” the Sundance Channel, Reuters, the Discovery Channel, Marketplace radio, and a slew of local papers. Newpapers? You kill trees to create a huge insert about Earth Day. Is that not the stupidest thing you have ever heard. And a surprising number seem to have some variation of the same two questions:

“Is all of this focus on the greening of business merely a fad? When will the bubble burst?”

Green tech and marketing means green dollar signs for companies like GE, Disney and BP. NBC has created this load of crap called “green week” for their TV shows which is a thinly veiled attempt to sell their “green” products sold by their parent company GE. Disney announced a new “green movie” division which will capitalize on people’s concern with the environment so they can get more ticket revenues and DVD’s sold. BP is all about alternative energy these days and while they have been the most progressive when it comes to solar and natural gas they are really doing it to hedge their position as oil prices rise and people are ready for an alternative that must come within the next five years. I mean have you filled your tank lately? Bought a loaf of bread? It is crazy and things definitely must change.

There are motivating factors that support the argument that “Green is Good”. Here is the bullet list from a post by Joel Makower:

  1. The problems aren’t getting any better.
  2. The political will is finally emerging.
  3. Consumers are waking up.
  4. The supply chain is gaining power.
  5. The environment has become a fiduciary issue.
  6. The bar keeps moving.
  7. Companies are moving beyond “sustainability.”
  8. More companies are telling their stories.
  9. Clean technology is changing the game.
  10. There’s money to be made.

The bubble is growing

I am the farthest from a bleeding heart liberal, tree-hugging, save the polar bears person you will find. Although Polar Bears are just so darn cute I am not turning my air conditioner down during a heat wave in the DC area this summer to save them. I am also not a cold-blooded oil junkie who thinks that this global warming thing is a myth. I just think that the real intentions of being concerned for our environment has caused the investment community to pop its head out of its butt and see greedy potential to fund investments in everything “green”.

Since most of us survived the tech bubble we have learned our lessons and despite the Web 2.0 wave causing a mini investment bubble, we still have kept most of our sanity because the IPO market really hasn’t returned and the M&A wave is slowing down too. Most who couldn’t get jobs when the tech bubble burst left the industry and you guessed it, become real estate agents and mortgage brokers. As some people bounce from bubble to bubble, we will probably start seeing “Environmental
Consultants” and “Green Advisors” to, and pardon this one, “advise and recommend to companies how they can become more green and offset their impact on the environment”.

With the rising price of oil we are near a tipping point where many technologies are on par with the cost of traditional fuel so it will start to make economic sense in some cases. Where it doesn’t make sense is to stop growing wheat so you can grow corn for Ethanol (which takes 2/3 of a gallon of gas to produce a gallon of ethanol) causing wheat and rice shortages around the world. Right now in developed nations people spend 10% of their income on food and in developing nations it is around 80%. We have enough food to feed the planet but we just can’t afford to get it there. If we start diverting resources in the name of “green living” to make ourselves feel better the ramifications might be worse than we could imagine.

Oh crap, the Government is getting involved

The state of the government getting involved is a mess. I think Thomas Friedman sums it up well. “Some lawmakers are pushing corn ethanol from Iowa, either because they hail from that area and are looking to give more welfare to farmers by wasting money on an alternative fuel that will never reach the scale of what is needed, or because they plan to run in the Iowa caucuses. Others are pushing huge subsidies to turn coal into gasoline, because they come from coal states. Those who don’t come from Michigan want higher mileage standards imposed on Detroit, while those who come from Michigan prefer to continue their assisted suicide of the U.S. auto industry by blocking tougher mileage requirements.”

So you ready to call me “chicken little” yet?

You really call this “Green Investing”?

In the venture community we are seeing new funds popping up dedicated to “Green Investing” which in a diversified portfolio is good for funding innovations that will only help our world. What is really scary is many funds without the proper background to invest in this sector are jumping all over anything with buzzwords like “alternative energy”, “biofuels” and “eco-friendly”. VC’s like John Doerr cry when they talk about the environment and are dumping millions into companies that do things like nano-solar and grid optimization technologies. Hedge funds like Winslow Green Growth Fund are seeing their portfolios transform with the rush of new companies and new investments.

I hear a popping sound….

There are two popping scenarios:

1. Green will index within the mainstream and become ubiquitous.
It sticks. People keep pushing corporations to deeper levels of sustainability. Greenwashers fall on their face because it’s an unfulfilled promise, and then they mean it and real change happens. Green becomes ubiquitous. Smaller, plucky green companies struggle to regain any competitive advantage. When everything is green, green means nothing. (The study of green language is already there.)

2. It’s a fad and will vanish back to the margins of our society.
Green Fever goes away because it is a trend, a fad. News stories drop off, the chasing arrows shrink smaller on the back of packaging again, people stop bragging that their letterhead is 100% FCS Certified and Acid Free. Some small vestiges will still remain, and progress will have been made. New products were launched and the consumers will be more aware. But the trend died… popped.

Final thoughts…

I do believe we are economically in trouble as a country and I do believe that we are beginning to see the beginnings of a “green bubble”. However, as with bubbles like the tech bubble we saw massive innovation that benefits us to this day. So while there will be many bull**it artists and charlitans convincing investors they can solve the planets problems there will be innovation that will benefit us and the entire planet. I would just caution people on two things – don’t invest in every “Green IPO” when the fundamentals don’t work and don’t transfer your career into this field unless you are already in it or willing to passionately stay in it the rest of your life. We don’t need armies of unemployed “green consultants” trying to come back to tech in five years when the bubble bursts, because it eventually will.

Please leave your comments below, I want to hear from the evil oil people, the treehuggers and especially the Polar Bear lovers.

Venture Files Joins Technosailor

vflogo.jpgOver the weekend, we have been hard at work integrating Venture Files into Technosailor.com. As you know, Technosailor has largely been focused on business and technology with a focus on social media and the internet technologies we enjoy today.

As part of the continuing debate surrounding venture capital, particularly here in the District, the content of Venture Files and the enthusiasm of Steve Fisher in writing it is a strong complement to the content already produced here.

As part of this integration, you can expect to see regular venture related content from Steve as he provides his own analysis on the venture ecosystem from the perspective of an entrepreneur. Previous content can be seen here and you can subscribe to the Venture Files feed as well.

I am a particularly strong fan of Steve’s 7 part series on Business Plans.

Welcome Steve and Venture Files to the Technosailor family.

Valleyboys: It's All About the Money

Late last night I was finishing up a presentation for a class I’m taking when Jeremiah Owyang from Forrester made a statement on Twitter which made me cringe. The statement, though profound to someone living in the heart of Silicon Valley, is completely absent any reason to the observer outside of the Valley. Keep in mind the Parable of the Three Bloggers as I quote him.

Quote:

We work really hard in Silicon Valley, why? It’s not the money (only a few strike it ‘rich’) I think it’s the passion for creating new

Someone should remind Jeremiah of the 140 character limit of Twitter. ;)

I take a lot of exception to this statement because it is exceptionally wrong. Not only exceptionally wrong, but naive.

First of all, as an insider it’s easy to say everyone is just working to create and innovate. While that’s true to a certain extent, it was much more true two years ago. As the outsider to the Valley that I am, I’d say the Valley is one of four North American hotspots for money flow – Boston, New York, Canada (Toronto) and the Valley.

That places these four locations on the map as one of the four places every entrepreneur in North America wants to be. The reason why DEMO and TechCrunch 40 were so successful is because entrepreneurs want money!

Yes, they need money. This is true. But the drive for more money is beyond what it was when the interactive web was in its infancy and companies really were sprouting up because people wanted to work passionately on a project. They discovered some idea and the technology had matured enough that the idea could be pursued.

Today, we are talking about San Francisco-based Automattic valuating at numbers well in excess of $200M, Palo Alto-based Facebook (along with some fuzzy math) weighing in at some $15B. GigaOmniMedia, the parent company of GigaOm and the rest of Om Malik’s empire getting $1M+ for hardware, or something…

Everyday, new companies are being funded and it’s mostly in the Valley.

I love the Valley. I love the entrepreneurs in the Valley. I wish I was there living but no job has taken me there yet. But it’s a very introspective and naive thought to believe that the Valley is full of people who just are passionate. Yes, passionate people make the best companies. That I will not argue with. I think there is more passion to get the big exit than to build a solid product.

I could be wrong. Feel free to correct me. ;-)