Moving to WordPress!

My blog is making a move to a new location. It promises to be more user-friendly and easy to navigate. Please follow me:

http://bznotes.wordpress.com/

 

Dress code at work or not?

A friend just posted a note on his blog about a scandal brewing at a large bank in pakistan. Supposedly the bank managers posted a notice for all employees to comply with the "Western dress code" which meant not being able to wear the traditional Pakistani dress of Shalwar Kameez and/or trimming their beards. It was done to put up a 'professional image' for the Bank so its business would grow. In a divided society such as Pakistan, such an issue was sure to stir controversy and brew up a storm. It is important to state my personal opinion here that yes, it has often been quite a nuisance to show up to retain banking outlets and find grossness galore in how people dress and present themselves to customers.

However, the larger question still remains. Should the banks (and other service providing institutions in Pakistan such as hospitals, banks, even universities and schools) be able to enforce a dress code in order to infuse professionalism and discipline? And if yes, can they enforce it even if some parts of the society may consider such a dress code to be a slap in the face of local customs and traditions? Is there much that is said abut an organization and it sprofessionalism by what an employee wears? In the case of Pakistan, these discussions take on a different meaning all otgether. In a society where religion is so intimately tied up with society and even professional life, this may be an important discussion - one that has to be equally respectul towards the individual choices of the people involved (religious, cultural etc) as well as the professionalism and business savvy of their employers. Our greatest hero, Dr. AbdusSalam, wore a shalwar and a beard when he received his Nobel Prize in Physics (see picture), while our current head of state, General Musharraf, is equally comfortable and presentable in a modern wstern dress (see picture). Where should this society go next? And is this a totally pointless and useless discussion?

Which green sectors should entrepreneurs be watching -- and what determines VCs and angel investors' interest in a green startup?

JUNE 20, 2006

 

Small Biz

By Jeffrey Gangemi

 

Green Growth Areas for Entrepreneurs

Which green sectors should entrepreneurs be watching -- and what determines VCs and angel investors' interest in a green startup?

 

 

When technology entrepreneur Martin Roscheisen was looking for the next big thing in 2001, the Internet wasn't part of his plans. Instead, he looked to the field of solar photovoltaics (PV), specifically at work being done by a small, government-funded research company named Unisun Corp. Roscheisen recruited one of Unisun's main researchers, and in 2002, he and his newly incorporated five-person company, Nanosolar, sought funding in California's Silicon Valley. The pitch: thin-film solar cells that could be produced for less, more efficiently, and on a significantly larger scale than standard solar paneling.

 

After receiving seed funding from Google (GOOG ) founders Sergey Brin and Larry Page, Roscheisen shopped the idea around to the venture-capital community, but was met with skepticism. "They told us that no venture capitalists had ever invested in this—that this is something GE (GE ) should be doing and that we should speak with them," says Roscheisen.

 

Four years later, with more than $50 million in funding from a variety of VCs, and a fast-growing staff of 50, Roscheisen believes Nanosolar is onto the next big thing. His company, whose ambitious slogan is "A Solar Panel on Every Building," is currently building the largest thin-film solar-panel factory in the world in California's Bay Area.

 

MORE THAN SOLAR.  Roscheisen is not alone in his belief in solar. Last year, three of the five biggest IPOs were in solar photovoltaics. The industry is projected to grow from an $11.2 billion business in 2005 to a $51.1 billion business by 2015, according to the 2006 Clean Energy Trends Report by Clean Edge, a clean tech-focused research and consulting group. VCs put more than $150 million into U.S.-based companies like Nanosolar in 2005—double the amount of investment from 2004, according to the report.

The mood among investors, particularly within the venture community, has undergone a sea change in the past couple of years. Constant media attention surrounding global warming and hybrid vehicles has brought clean and green front and center because of its prodigious growth potential (see BusinessWeek.com, 5/8/06, "Ethanol Cars You Can Buy Now").

 

Clean Edge co-founder and principal Ron Pernick says other green technologies aren't far behind solar. "We're going to see a lot more in biofuels—ethanol and biodiesel—and also advanced lithium-ion batteries, as well as systems integration and packaging of these types of technologies," he says.

 

MORE THAN ENERGY.  Large-scale venture backing for clean tech is a relatively recent phenomenon. In 1999, clean energy technology made up less than 1% of the total venture capital. In 2005, it was at 4.2%, or $917 million out of $22 billion—a more than 25% increase from the previous year, according to the Clean Edge report. All of the largest venture capital firms have gotten into the act, joining a group of long-established specialist firms that had been around since the early 1990s.

 

But for apt entrepreneurs, green growth areas aren't limited to energy technology. Sales of organic foods are expected to grow 11% annually for the next four years, according to the Organic Trade Association's 2006 Manufacturer Survey. And the green building industry will grow to $38 billion, five times what it is today, by 2010, according to the National Association of Home Builders (see BusinessWeek.com, Summer 2006, "Do You Need To Be Green?").

 

So, how can entrepreneurs score the kind of financial backing that Roscheisen's Nanosolar received? BusinessWeek.com talked to fund managers at three major venture capital firms, and executives at two angel investor networks that fund small or early-stage companies to find out which green technologies they see as entrepreneurial hotspots now, as well as what are the green growth industries of the future.

 

Mohr Davidow Ventures (MDV), which currently manages a $400 million fund with interests in everything from software and systems companies to clean tech and life sciences, is one of the large VC firms that funded Nanosolar. MDV has made six investments over the past several years, three of which they've announced publicly: Nanosolar, Jadoo Power Systems, and Energy Innovations. The other three remain under wraps.

 

"SOLAR FARMS."  Erik Straser, a general partner at the firm, manages the clean tech area for the company. He says despite the flurry of solar-related activity, there's huge potential still left in it, since the problem of supply—which cannot keep pace with demand—hasn't yet been convincingly solved. More technology startups similar to Nanosolar's are in the works, but Straser says there's still a lot of money to be made in "solar integration," which includes the delivery, installation, and storage of energy produced by these systems.

 

Entrepreneurs can play a role in all types of solar development, says Straser. Besides improving the installation technology, "another business angle might be to buy lots of small installers and create a single large installer that could get better panel pricing and have other efficiencies of scale," he says, since solar-panel technology is supposed to become ubiquitous. "There's going to be solar farms at some point," he predicts. "Instead of growing wheat, the new farmers will grow energy."

 

Draper Fisher Jurvetson (DFJ), another large, mainstream venture capital firm, is dedicated to the clean technology industry. DFJ has been actively investing for about five years and has done approximately 12 deals. "We're probably the most active of the traditional venture funds," says Raj Atluru, DFJ's managing director.

 

BIOFUEL BONANZA.  What kind of deals is DFJ looking to do in the future? "If I was an entrepreneur, I'd jump all over the advanced fuel industry," says Atluru. He says techniques of cellulosic ethanol production, which uses disposable materials rather than just corn, are being perfected in university labs. Adds Atluru, "Advanced fuels are where solar was three or four years ago." He sees huge growth potential and IPOs in the offing.

 

The research backs Atluru's claims. The market for biofuels hit $15.7 billion globally in 2005, up more than 15% from the previous year and is predicted to grow to $52.5 billion by 2015, according to the Clean Edge 2006 report. Ethanol is a fast-growing sector, with a number of pending IPOs (see BusinessWeek.com, 6/12/06, "Should You Bet on Ethanol?"). Alternatives to corn-based ethanol, still underdeveloped in the U.S., make up a huge potential market, says Atluru.

 

Aside from the large venture firms like DFJ and MDV, there is a group of smaller, more focused funds that are more likely to fund smaller or earlier-stage projects. The group includes Nth Power, Enertech Capital, and Chrysalix Energy Management, and has funded clean energy startups for more than a decade. Nth Power, founded in 1993, focuses on energy and advanced materials and manages more than $250 million and an active portfolio of more than a dozen companies.

 

ENERGY OPPORTUNITIES.  Although Nth Power's main emphasis is energy production, its portfolio extends to other technologies and advanced materials. "We've funded companies in everything from sensor and sensor networks to batteries to advanced metering solutions," says Rodrigo Prudencio, one of the principals of the firm. Prudencio says it's critical for entrepreneurs interested in green energy technologies to ask: "Where are the pain points in the energy value chain as they affect oil, gas, and power companies, or how they affect consumers, and how can technology develop a business around that opportunity?" Prudencio says there is still great potential in developing smart metering systems that conserve energy in household and industrial environments.

 

But before pounding the pavement for funding, Prudencio also cautions today's entrepreneurs that not all opportunities are created equal, and thus, they don't all require large-scale venture funding. "If I'm in a business where accessing $5 [million] or $10 million will give me access to a $3 billion market, then pursuing venture capital makes sense. If I'm pursuing a $200 million market, it may make sense to bootstrap," says Prudencio.

 

[Copy, Please paginate, so that page 3 starts here] Indeed, venture capital is far from the only type of funding available to green startups. Angel investors who support small social ventures are a good source for early-stage green companies.

 

Investor's Circle, a 160-member group made up of socially minded investors, is one such example. Since 1992, Circle members have invested more than $107 million in 171 deals, ranging from renewable energy and organic food to health care, education, and media, says Woody Tasch, the CEO and chairman of the organization. Members team up to gather injections that range from $250,000 to $500,000 for projects that might be considered too early-stage or too small for traditional VC backing.

 

WHAT'S RIPEST FOR INVESTORS.  While many see trouble for smaller entrepreneurs in the organic food space with Wal-Mart's (WMT ) entrance (see BusinessWeek.com, 3/29/06, "Wal-Mart's Organic Offensive"), Tasch says he sees growth and opportunity. "I wouldn't say renewable energy or organics are the easiest way to make money—the big home runs are still in finding the next Google. But you've got huge, relatively predictable movements in these sectors, so if you're trying to create long-term shareholder value and do some real interesting work, this is the place to be," says Tasch. He points to organic beef production as one example of a great green growth business possibility.

 

Carol Sands, founder and one of the managing directors of Angels' Forum, a private group of 25 investors who invest in small corporate and family venture funds that in turn invest in green technologies, couldn't agree more. Sands points to four common segments that make up the bulk of green investing possibilities—energy, transportation, water, and other green sectors. Of the four, Sands says the other sectors, which include energy management, new sensor technology, agriculture, and chemicals, may be the most ignored and thus ripest for entrepreneurial innovation. "It's going to be relatively easy to develop these technologies and isn't going to take a long time to adapt them—it offers a reasonable time frame with a reasonable rate of return," says Sands.

 

Sands says there needs to be more communication between the entrepreneurial types and lab rats, since there's a glut of great ideas just waiting to be discovered. "There are a large number of entrepreneurs who are searching for the next business…to get involved in. My answer to them is look to clean tech," says Sands.

 

FERTILE FIELD.  The funding history of Light Engineering, a company supported by Angels' Forum, illustrates the boom in the industry. In 1998, when Matt Johnston, Light Engineering's CEO, was looking to fund his fledgling company, which could challenge traditional industrial manufacturing by producing cleaner, smaller motors and generators, both VCs and angels expressed little interest. Seven years later, Johnston says the industry is buzzing. "I gave a 15-minute presentation [on clean energy] just to help out a friend, and I was approached by about 30 people. It was pretty overwhelming. This is becoming a big topic again," says Johnston.

 

That level of interest signals to Johnston that it's almost time to sell Light Engineering, which he says he plans to do within two years. But just because some entrepreneurs are beginning to cash out, that doesn't mean green is anywhere near mature. With more and more funding possibilities, whether through venture capital, angel investing, or bootstrapping, opportunities for green entrepreneurs are rich.

 

--------------------------------------------------------------------------------

Gangemi is a reporter for BusinessWeek Online in New York

Amtrak

Took my first trip to NY on a train. The Acela Express was just great. Left Boston at 5:15 and was on time to arrive in NYC City at 8:45. I made it in time for my interview at the Swiss Consulate and was back in Boston before dinner. This post highly recommends the service to anyone who is not trying to compare its fare of $106 to a $30 ticket on the GreyHound.

In general, the ease with which I felt I coul dmove between NYC and Boston has me thinking again about mobility in the US an dhow it has positively impacted the growth of economies (especially in the coastal corridors). When would governments in developing countries start to realize the importance of laying down infrastructure that can ease th emovement of goods and people? It was only 2 weeks ago that a senior officer at Dell India advised me to stay away from manufacturing in India - why? Because the logistics there simply suck! That is bad news for people like myself who hope to one day start a company with part of their operations in the Middle East or Pakistan.

Disel Audi R10 TDI wins Le Mans 24 hour race

Excellent news for diesel – a demonstration of better performance and fuel economy of diesel, and a kick-ass victory for a friend I made while working in the Diesel Particulate Filter area!  As somebody noted: “A diesel engine's greater fuel efficiency makes for fewer pit stops. The winning Audi made 27, while the Pescarolo in second made 32”.

 

Audi R10 TDI Diesel Wins Le Mans

18 June 2006

 

An Audi R10 diesel (No. 8) won the Le Mans 24 Hours race this weekend—the first diesel-powered car ever to do so—with a four-lap lead over the second-place car. A second Audi R10 (No. 7) took third after having to replace a turbocharger earlier in the race, a delay that cost it 10 laps.

The Le Mans 24 is an endurance race—the winner is the car that covers the most distance in 24 hours; cars are driven by teams. The No. 8 covered 380 laps on a 13.65-km (8.48-mi) circuit in this year’s race.

The Audi R10 TDI is powered by a completely new all-aluminum, 5.5-liter, twelve-cylinder bi-turbo TDI engine that delivers more than 485 kW (650 hp) and more than 1,100 Nm of torque. (Earlier post.)

The V12 TDI used in the R10 is the first Audi diesel engine with an aluminium crankcase. The cylinder-bank angle is 90 degrees. The V12 TDI has, like Audi production car engines, four valves per cylinder and twin overhead camshafts. The common rail fuel injection system exceeds 1,600 bar. The V12 TDI is equipped with a pair of diesel particle filters.

Peugeot has announced that it will enter the 2007 Le Mans 24 Hours race with a new diesel car—the Peugeot 908—powered by a 5.5-liter V-12 HDi diesel engine equipped with a diesel particulate filter system. (Earlier post.)

The Le Mans 24 Hour race set an attendance record this year, with a total of 235,000 spectators.

Ups and downs of a venture.

Jeff Bussgang is well known to people in Boston, and certainly to the group that has association in the Boston VC community or with The Boston Consulting Group. I don’t know him personally but certainly have found people talking about him in my network. He recently wrote the following about the evolution of a company he helped found, UPromise. He is now a VC, but his thoughts about his experiences with UPromise are worth sharing. I just started my 3rd year into the startup world (with GEO2), and his lessons ring quite true. Every entrepreneur can show you his/her battle scars…

“I would be remiss if I didn't make note of last week's announcement that Sallie Mae is acquiring Upromise, a great outcome for the company I was privileged to co-found alongside Michael Bronner 6.5 years ago and serve as president and COO. One of my early investors called me and pointed out that for a height-of-the-bubble-era investment (we closed a $34 million series A in March 2000 with a very lofty pre-money valuation, despite being a handful of folks and some fancy Power Point slides), it is miraculous that he was able to make some money on the transaction.

I learned many lessons during my three years there and even beyond as I stayed close to the company's evolution after I left to join IDG Ventures. One important lesson is that no one person "makes" a company - it takes a village. My high school football coach had a favorite line: "Victory has a thousand fathers, but defeat is an orphan". Similarly in any successful entrepreneurial venture, there are a thousand people that "make" the company, and I got to see this in spades at Upromise.

Another important lesson is that every entrepreneurial venture is a winding journey with many ups and downs and many phases of life. There were times when we thought Upromise was going to be a world-changing company and there were times when we thought we would need to shut out the lights after burning through a hundred million dollars. In the end, the passion of the employees, partners and customers and the perserverance of the investors saw it through to a happy outcome for all. Congratulations to everyone involved.”

Jeff Bussgang (http://bostonvcblog.typepad.com/vc/2006/06/upromise_sale_t.html)

GM vs Thomas Friedman.

It is not always easy for me to agree with Thomas Friedman (yes, of the NYTimes fame), but this time I agree with him wholeheartedly. His take on GM’s $1.99 Gasoline rebate is absolutely on the spot. GM wants to sell its largest SUV’s and trucks – mostly because those are the vehicles it actually makes money on. And to incite customers to buy those gas-guzzling monsters, they are offering a gas rebate. In some ways re gas rebate, as Shakespeare may have said it, is a rebate by any other name. But in this modern world where fuel prices are sky-rocketing to $3.25 and beyond, and where wars are being fought and crazy invasion schemes are being concocted to secure oil reserves,, GM’s strategy is a dangerous play on American consumers’ minds. As a function of such a gas rebate, consumers will be misled into believing that fuel is not as expensive as it ‘really’ is, and once more young Americans are emotionally an culturally attached to the largest, most fuel-inefficient vehicles it will be hard to get them off the addiction.

 

GM has at least tried to portray a clean and green (aka ‘yellow’) image, but this time it once again fell on the wrong side of the argument. No matter how many blogs they publish to discredit Friedman, he is right and GM will eventually finds its face muddied once again. If it’s just a bad PR job (which may be the case in a company desperate to gain sales and revenue numbers), I hope it is corrected soon. I cannot imagine a company like GM instituting such ridiculous rebate programs as a part of a long-term strategy.

 

From his article (14 June 2006):

“I'm not a car expert, so let me leave the last word to Automotive News, the industry's top trade magazine. Its June 5 editorial said: ''General Motors' promotion that reimburses some buyers for gasoline purchases is ill-advised for an automaker that is trying to burnish its green image. The program should be dropped, not expanded. It's simply a subsidy for vehicles that burn a lot of gasoline. And it's one more example of G.M.'s tone deafness on environmental issues. Yes, G.M. can make vehicles that are as fuel efficient as anybody else's. But it acts as though its future depends on gas guzzlers.''

 

And on Flex-fuel vehicles:

“Ah, says Mr. Harris, but we offer nine vehicles that can run on E85 ethanol-gas blends, and have made 1.9 million such cars and trucks. Toyota makes none. The truth: The Big Three U.S. automakers started making flex-fuel cars in the mid-1990's after they were given a shameful federal loophole.

 

As the Des Moines Register explained in an article on May 26: ''The loophole works this way: A dual-fuel vehicle that can run on either gasoline or 85 percent ethanol, or E85, is credited with a much higher mileage rating than it really gets. That keeps the overall mileage of the cars and trucks that a company like Ford or General Motors makes in any given year within the government's mileage limits.''

 

By agreeing to build flex-fuel vehicles credited with phony mileage, Detroit gets to make many more bigger, heavier gas guzzlers, the paper explained, ''without having to pay fines for exceeding the federal mileage standards.'' For instance, the 2006 G.M.C. two-wheel-drive Yukon 1500 actually gets 15 m.p.g. city and 20 m.p.g. highway. But under this loophole it is rated as getting 33 miles per gallon for purposes of meeting the government's fleet fuel economy standards. ''The Union of Concerned Scientists calculates that the loophole increased U.S. oil consumption by 80,000 barrels per day in 2005 alone,'' the paper said.

 

If G.M., Ford and Chrysler really care about saving oil and the environment, why exploit this loophole? And by the way, even though G.M. has made 1.9 million flex-fuel vehicles, it and the other automakers for a long time did little to inform customers that their cars could run on ethanol -- because their real interest was the mileage loophole to make more big cars. Most people didn't know they were driving a flex-fuel car. ''Until recently, the only way to tell was by checking the vehicle identification number,'' the paper noted. Recently, General Motors has put yellow gas caps on its dual-fuel vehicles to alert customers.”

How to Be Silicon Valley?

Many people (and places) around the world wonder how to create the dynamic technology and entrepreneurship centers in their midst in order to bring greater economic benefit to their regions. There are numerous books and articles written on it – ideas that range from government funding of universities to startups and from liberalizing education to infrastructure development have been presented – but I think in the following piece, Paul Graham says it simply and clearly. It takes nerds and money. Vibrant city cultures attract the rich & wealthy who can invest, and smart intellectual hubs attract the nerds who can ideate, invent and innovate. Having one but not the other is not good enough. Now there’s a lesson for cities in developing countries, such as Pakistan. –Bilal

-----

All credits to: http://www.paulgraham.com/siliconvalley.html

(This essay is derived from a keynote at Xtech.) May 2006

Could you reproduce Silicon Valley elsewhere, or is there something unique about it?

It wouldn't be surprising if it were hard to reproduce in other countries, because you couldn't reproduce it in most of the US either. What does it take to make a silicon valley even here?

What it takes is the right people. If you could get the right ten thousand people to move from Silicon Valley to Buffalo, Buffalo would become Silicon Valley. [1]

That's a striking departure from the past. Up till a couple decades ago, geography was destiny for cities. All great cities were located on waterways, because cities made money by trade, and water was the only economical way to ship.

Now you could make a great city anywhere, if you could get the right people to move there. So the question of how to make a silicon valley becomes: who are the right people, and how do you get them to move?

Two Types

I think you only need two kinds of people to create a technology hub: rich people and nerds. They're the limiting reagents in the reaction that produces startups, because they're the only ones present when startups get started. Everyone else will move.

Observation bears this out: within the US, towns have become startup hubs if and only if they have both rich people and nerds. Few startups happen in Miami, for example, because although it's full of rich people, it has few nerds. It's not the kind of place nerds like.

Whereas Pittsburgh has the opposite problem: plenty of nerds, but no rich people. The top US Computer Science departments are said to be MIT, Stanford, Berkeley, and Carnegie-Mellon. MIT yielded Route 128. Stanford and Berkeley yielded Silicon Valley. But Carnegie-Mellon? The record skips at that point. Lower down the list, the University of Washington yielded a high-tech community in Seattle, and the University of Texas at Austin yielded one in Austin. But what happened in Pittsburgh? And in Ithaca, home of Cornell, which is also high on the list?

I grew up in Pittsburgh and went to college at Cornell, so I can answer for both. The weather is terrible, particularly in winter, and there's no interesting old city to make up for it, as there is in Boston. Rich people don't want to live in Pittsburgh or Ithaca. So while there are plenty of hackers who could start startups, there's no one to invest in them.

Not Bureaucrats

Do you really need the rich people? Wouldn't it work to have the government invest in the nerds? No, it would not. Startup investors are a distinct type of rich people. They tend to have a lot of experience themselves in the technology business. This (a) helps them pick the right startups, and (b) means they can supply advice and connections as well as money. And the fact that they have a personal stake in the outcome makes them really pay attention.

Bureaucrats by their nature are the exact opposite sort of people from startup investors. The idea of them making startup investments is comic. It would be like mathematicians running Vogue-- or perhaps more accurately, Vogue editors running a math journal. [2]

Though indeed, most things bureaucrats do, they do badly. We just don't notice usually, because they only have to compete against other bureaucrats. But as startup investors they'd have to compete against pros with a great deal more experience and motivation.

Even corporations that have in-house VC groups generally forbid them to make their own investment decisions. Most are only allowed to invest in deals where some reputable private VC firm is willing to act as lead investor.

Not Buildings

If you go to see Silicon Valley, what you'll see are buildings. But it's the people that make it Silicon Valley, not the buildings. I read occasionally about attempts to set up "technology parks" in other places, as if the active ingredient of Silicon Valley were the office space. An article about Sophia Antipolis bragged that companies there included Cisco, Compaq, IBM, NCR, and Nortel. Don't the French realize these aren't startups?

Building office buildings for technology companies won't get you a silicon valley, because the key stage in the life of a startup happens before they want that kind of space. The key stage is when they're three guys operating out of an apartment. Wherever the startup is when it gets funded, it will stay. The defining quality of Silicon Valley is not that Intel or Apple or Google have offices there, but that they were started there.
So if you want to reproduce Silicon Valley, what you need to reproduce is those two or three founders sitting around a kitchen table deciding to start a company. And to reproduce that you need those people.

Universities

The exciting thing is, all you need are the people. If you could attract a critical mass of nerds and investors to live somewhere, you could reproduce Silicon Valley. And both groups are highly mobile. They'll go where life is good. So what makes a place good to them?

What nerds like is other nerds. Smart people will go wherever other smart people are. And in particular, to great universities. In theory there could be other ways to attract them, but so far universities seem to be indispensable. Within the US, there are no technology hubs without first-rate universities-- or at least, first-rate computer science departments.
So if you want to make a silicon valley, you not only need a university, but one of the top handful in the world. It has to be good enough to act as a magnet, drawing the best people from thousands of miles away. And that means it has to stand up to existing magnets like MIT and Stanford.

This sounds hard. Actually it might be easy. My professor friends, when they're deciding where they'd like to work, consider one thing above all: the quality of the other faculty. What attracts professors is good colleagues. So if you managed to recruit, en masse, a significant number of the best young researchers, you could create a first-rate university from nothing overnight. And you could do that for surprisingly little. If you paid 200 people hiring bonuses of $3 million apiece, you could put together a faculty that would bear comparison with any in the world. And from that point the chain reaction would be self-sustaining. So whatever it costs to establish a mediocre university, for an additional half billion or so you could have a great one. [3]

Personality

However, merely creating a new university would not be enough to start a silicon valley. The university is just the seed. It has to be planted in the right soil, or it won't germinate. Plant it in the wrong place, and you just create Carnegie-Mellon.

To spawn startups, your university has to be in a town that has attractions other than the university. It has to be a place where investors want to live, and students want to stay after they graduate.
The two like much the same things, because most startup investors are nerds themselves. So what do nerds look for in a town? Their tastes aren't completely different from other people's, because a lot of the towns they like most in the US are also big tourist destinations: San Francisco, Boston, Seattle. But their tastes can't be quite mainstream either, because they dislike other big tourist destinations, like New York, Los Angeles, and Las Vegas.

There has been a lot written lately about the "creative class." The thesis seems to be that as wealth derives increasingly from ideas, cities will prosper only if they attract those who have them. That is certainly true; in fact it was the basis of Amsterdam's prosperity 400 years ago.
A lot of nerd tastes they share with the creative class in general. For example, they like well-preserved old neighborhoods instead of cookie-cutter suburbs, and locally-owned shops and restaurants instead of national chains. Like the rest of the creative class, they want to live somewhere with personality.

What exactly is personality? I think it's the feeling that each building is the work of a distinct group of people. A town with personality is one that doesn't feel mass-produced. So if you want to make a startup hub-- or any town to attract the "creative class"-- you probably have to ban large development projects. When a large tract has been developed by a single organization, you can always tell. [4]

Most towns with personality are old, but they don't have to be. Old towns have two advantages: they're denser, because they were laid out before cars, and they're more varied, because they were built one building at a time. You could have both now. Just have building codes that ensure density, and ban large scale developments.

A corollary is that you have to keep out the biggest developer of all: the government. A government that asks "How can we build a silicon valley?" has probably ensured failure by the way they framed the question. You don't build a silicon valley; you let one grow.

Nerds

If you want to attract nerds, you need more than a town with personality. You need a town with the right personality. Nerds are a distinct subset of the creative class, with different tastes from the rest. You can see this most clearly in New York, which attracts a lot of creative people, but few nerds. [5]

What nerds like is the kind of town where people walk around smiling. This excludes LA, where no one walks at all, and also New York, where people walk, but not smiling. When I was in grad school in Boston, a friend came to visit from New York. On the subway back from the airport she asked "Why is everyone smiling?" I looked and they weren't smiling. They just looked like they were compared to the facial expressions she was used to.

If you've lived in New York, you know where these facial expressions come from. It's the kind of place where your mind may be excited, but your body knows it's having a bad time. People don't so much enjoy living there as endure it for the sake of the excitement. And if you like certain kinds of excitement, New York is incomparable. It's a hub of glamour, a magnet for all the shorter half-life isotopes of style and fame.

Nerds don't care about glamour, so to them the appeal of New York is a mystery. People who like New York will pay a fortune for a small, dark, noisy apartment in order to live in a town where the cool people are really cool. A nerd looks at that deal and sees only: pay a fortune for a small, dark, noisy apartment.

Nerds will pay a premium to live in a town where the smart people are really smart, but you don't have to pay as much for that. It's supply and demand: glamour is popular, so you have to pay a lot for it.
Most nerds like quieter pleasures. They like cafes instead of clubs; used bookshops instead of fashionable clothing shops; hiking instead of dancing; sunlight instead of tall buildings. A nerd's idea of paradise is Berkeley or Boulder.

Youth

It's the young nerds who start startups, so it's those specifically the city has to appeal to. The startup hubs in the US are all young-feeling towns. This doesn't mean they have to be new. Cambridge has the oldest town plan in America, but it feels young because it's full of students.

What you can't have, if you want to create a silicon valley, is a large, existing population of stodgy people. It would be a waste of time to try reverse the fortunes of a declining industrial town like Detroit or Philadelphia by trying to encourage startups. Those places have too much momentum in the wrong direction. You're better off starting with a blank slate in the form of a small town. Or better still, if there's a town young people already flock to, that one.

The Bay Area was a magnet for the young and optimistic for decades before it was associated with technology. It was a place people went in search of something new. And so it became synonymous with California nuttiness. There's still a lot of that there. If you wanted to start a new fad-- a new way to focus one's "energy," for example, or a new category of things not to eat-- the Bay Area would be the place to do it. But a place that tolerates oddness in the search for the new is exactly what you want in a startup hub, because economically that's what startups are. Most good startup ideas seem a little crazy; if they were obviously good ideas, someone would have done them already.

(How many people are going to want computers in their houses? What, another search engine?)

That's the connection between technology and liberalism. Without exception the high-tech cities in the US are also the most liberal. But it's not because liberals are smarter that this is so. It's because liberal cities tolerate odd ideas, and smart people by definition have odd ideas.

Conversely, a town that gets praised for being "solid" or representing "traditional values" may be a fine place to live, but it's never going to succeed as a startup hub. The 2004 presidential election, though a disaster in other respects, conveniently supplied us with a county-by-county map of such places. [6]

To attract the young, a town must have an intact center. In most American cities the center has been abandoned, and the growth, if any, is in the suburbs. Most American cities have been turned inside out. But none of the startup hubs has: not San Francisco, or Boston, or Seattle. They all have intact centers. [7] My guess is that no city with a dead center could be turned into a startup hub. Young people don't want to live in the suburbs.

Within the US, the two cities I think could most easily be turned into new silicon valleys are Boulder and Portland. Both have the kind of effervescent feel that attracts the young. They're each only a great university short of becoming a silicon valley, if they wanted to.

Time

A great university near an attractive town. Is that all it takes? That was all it took to make the original Silicon Valley. Silicon Valley traces its origins to William Shockley, one of the inventors of the transistor. He did the research that won him the Nobel Prize at Bell Labs, but when he started his own company in 1956 he moved to Palo Alto to do it. At the time that was an odd thing to do. Why did he? Because he had grown up there and remembered how nice it was. Now Palo Alto is suburbia, but then it was a charming college town-- a charming college town with perfect weather and San Francisco only an hour away.

The companies that rule Silicon Valley now are all descended in various ways from Shockley Semiconductor. Shockley was a difficult man, and in 1957 his top people-- "the traitorous eight"-- left to start a new company, Fairchild Semiconductor. Among them were Gordon Moore and Robert Noyce, who went on to found Intel, and Eugene Kleiner, who founded the VC firm Kleiner Perkins. Forty-two years later, Kleiner Perkins funded Google, and the partner responsible for the deal was John Doerr, who came to Silicon Valley in 1974 to work for Intel.

So although a lot of the newest companies in Silicon Valley don't make anything out of silicon, there always seem to be multiple links back to Shockley. There's a lesson here: startups beget startups. People who work for startups start their own. People who get rich from startups fund new ones. I suspect this kind of organic growth is the only way to produce a startup hub, because it's the only way to grow the expertise you need.

That has two important implications. The first is that you need time to grow a silicon valley. The university you could create in a couple years, but the startup community around it has to grow organically. The cycle time is limited by the time it takes a company to succeed, which probably averages about five years.

The other implication of the organic growth hypothesis is that you can't be somewhat of a startup hub. You either have a self-sustaining chain reaction, or not. Observation confirms this too: cities either have a startup scene, or they don't. There is no middle ground. Chicago has the third largest metropolitan area in America. As source of startups it's negligible compared to Seattle, number 15.

The good news is that the initial seed can be quite small. Shockley Semiconductor, though itself not very successful, was big enough. It brought a critical mass of experts in an important new technology together in a place they liked enough to stay.

Competing

Of course, a would-be silicon valley faces an obstacle the original one didn't: it has to compete with Silicon Valley. Can that be done? Probably.

One of Silicon Valley's biggest advantages is its venture capital firms. This was not a factor in Shockley's day, because VC funds didn't exist. In fact, Shockley Semiconductor and Fairchild Semiconductor were not startups at all in our sense. They were subsidiaries-- of Beckman Instruments and Fairchild Camera and Instrument respectively. Those companies were apparently willing to establish subsidiaries wherever the experts wanted to live.

Venture investors, however, prefer to fund startups within an hour's drive. For one, they're more likely to notice startups nearby. But when they do notice startups in other towns they prefer them to move. They don't want to have to travel to attend board meetings, and in any case the odds of succeeding are higher in a startup hub.

The centralizing effect of venture firms is a double one: they cause startups to form around them, and those draw in more startups through acquisitions. And although the first may be weakening because it's now so cheap to start some startups, the second seems as strong as ever. Three of the most admired "Web 2.0" companies were started outside the usual startup hubs, but two of them have already been reeled in through acquisitions.

Such centralizing forces make it harder for new silicon valleys to get started. But by no means impossible. Ultimately power rests with the founders. A startup with the best people will beat one with funding from famous VCs, and a startup that was sufficiently successful would never have to move. So a town that could exert enough pull over the right people could resist and perhaps even surpass Silicon Valley.

For all its power, Silicon Valley has a great weakness: the paradise Shockley found in 1956 is now one giant parking lot. San Francisco and Berkeley are great, but they're forty miles away. Silicon Valley proper is soul-crushing suburban sprawl. It has fabulous weather, which makes it significantly better than the soul-crushing sprawl of most other American cities. But a competitor that managed to avoid sprawl would have real leverage. All a city needs is to be the kind of place the next traitorous eight look at and say "I want to stay here," and that would be enough to get the chain reaction started.


Notes

[1] It's interesting to consider how low this number could be made. I suspect five hundred would be enough, even if they could bring no assets with them. Probably just thirty, if I could pick them, would be enough to turn Buffalo into a significant startup hub.
[2] Bureaucrats manage to allocate research funding moderately well, but only because (like an in-house VC fund) they outsource most of the work of selection. A professor at a famous university who is highly regarded by his peers will get funding, pretty much regardless of the proposal. That wouldn't work for startups, whose founders aren't sponsored by organizations, and are often unknowns.
[3] You'd have to do it all at once, or at least a whole department at a time, because people would be more likely to come if they knew their friends were. And you should probably start from scratch, rather than trying to upgrade an existing university, or much energy would be lost in friction.
[4] Hypothesis: Any plan in which multiple independent buildings are gutted or demolished to be "redeveloped" as a single project is a net loss of personality for the city, with the exception of the conversion of buildings not previously public, like warehouses.
[5] A few startups get started in New York, but less than a tenth as many per capita as in Boston, and mostly in less nerdy fields like finance and media.
[6] Some blue counties are false positives (reflecting the remaining power of Democractic party machines), but there are no false negatives. You can safely write off all the red counties.
[7] Some "urban renewal" experts took a shot at destroying Boston's in the 1960s, leaving the area around city hall a bleak wasteland, but most neighborhoods successfully resisted them.

Thanks to Chris Anderson, Trevor Blackwell, Marc Hedlund, Jessica Livingston, Robert Morris, Greg Mcadoo, and Fred Wilson for reading drafts of this, and to Ed Dumbill for inviting me to speak.

Adil Najam's blog

Finally, the time has arrived for me to seriously follow an online blog on Pakistan. Reason is mostly because Adil will be authoring it. I have now known Adil for many years and I could not recommend a better blog to follow if you really want to read quality material. Here it is in all its glory:

http://pakistaniat.wordpress.com/   [ALL THINGS PAKISTAN]

Schumpeterian entrepreneurship

From “Civic Entrepreneurship, Global Synthesis, Vol I, 2002” (Eds: Tariq Banuri and Adil Najam). Thanks to SH for referring to this.

-Bilal

 

Second, and to put it as simplistically as possible, we have found that sustainable development is not a blueprint. It always involves newness, a new way of pulling things together, new ways of mobilizing resources, building legitimacy, engendering collective action, stimulating economic activity or adapting technology. In short, it involves entrepreneurship, in the manner that the great economist Joseph Schumpeter (1934) defined it. The Schumpeterian entrepreneur is not necessarily an inventor or manager or financier – he may just as easily be someone who adopts somebody else’s idea, borrows money from a bank and hires a manager to put the idea to practical use in a business or factory. Without entrepreneurship, ideas or inventions cannot impact development, sustainable or otherwise. The entrepreneur has the imagination to see the potential for profit from the innovation (i.e. the practical application of the technique), the initiative actually to carry out the task of introducing the innovation, and a willingness to take the calculated risk that the effort might fail and lead to a loss rather than a profit.

Schumpeter’s insight pertained mainly to entrepreneurship for business purposes. What we have found, however, is a form of entrepreneurship driven explicitly by the public interest, which seeks to create not necessarily a new way of making a profit but a new way of building social capital, a new way of showing how to harness existing ideas, methods, inventions, technologies, resources or management systems in the service of collective goals. It is, in short, civic entrepreneurship – hence the title of this series. As mentioned, civic entrepreneurship is not confined to the actions of civil society organizations; it includes the actions of visionary business leaders and government officials, whose work is driven by the civic motive.

This perspective on sustainable development can best be analogized to the growth process of a tree, starting from a single seed, rooted in the soil, dependent on its compatibility with the environment and, at least in its early years, requiring persistent attention and care. Every seed has the potential of becoming a tree, but not every seed will become a tree. Unlike the house or the river, its evolution is not predetermined by the dictates of the blueprint or the gradient. 

More importantly, the tree grows not only in itself but also through others, not only upwards but also outwards, by germinating new seeds, new saplings, and through links, networks, reproduction and adaptation. Trees die, but many live on through others who took root because of them. In short, our reading of the experience of sustainable development is as an organic process, which, although driven by its own inner logic, requires the investment of human will and agency both by individuals and through the broader social environment.

 

okay so I am not that tall myself, but my sis.....

Fun facts about biodiesel fuel

Biodiesel

·         Biodiesel can be used at 100 percent levels or mixed in any proportion with No. 2 diesel or No. 1 diesel.

·         Contains no nitrogen or aromatics

·         Typically contains less than 15 ppm sulfur. Does not contribute to sulfur dioxide emissions

·         Has characteristically low carbon monoxide, particulate, soot and hydrocarbon emissions

·         Contains 11 percent oxygen by weight

·         Biodiesel has the highest energy content (BTUs) of any alternative fuel and is comparable to No. 1 diesel.

·         Fuel efficiency is the same as diesel fuel

·         Fuel economy, power, and torque are similar to No. 2 diesel and vary linearly with the blend level

B2 biodiesel

B2, a blend of 2 percent biodiesel and 98 percent diesel fuel, is a fuel component to extend engine life through exceptional lubricity.

·         B2 can add core lubricity to No. 2 diesel, or enhance lubricity of a premium diesel fuel.

·         Can increase lubricity by up to 66 percent over No. 2 diesel fuel, which means:

·         Protection against fuel injector and injection pump failure

·         Longer equipment life

·         Lower maintenance costs

·         Less equipment downtime

·         Reduces friction so engine doesn’t have to work as hard

·         Virtually identical to No. 2 diesel in fuel consumption, power output and engine torque

·         In winter, virtually no difference in cold flow properties between B2 and No. 2 diesel.

·         Virtually no difference in cold flow properties between B2 and a 50/50 blend of No. 1 diesel and No. 2 diesel

B20 biodiesel facts

B20 is a blend of 20 percent biodiesel and 80 percent diesel fuel, which:

·         Provides optimum emission benefits for the lowest cost.

·         Keeps NOx increases small (1-4 percent) and within legal emission limits for engines. (NOx can be reduced further by changing engine timing.)

·         Offers excellent emission benefits by reducing soot, particulates, hydrocarbons, carbon monoxide, and carbon dioxide by more than 10 percent each.

·         Minimal increases in cloud and pour point levels can be easily managed by additives

·         Does not contribute to sulfur dioxide emissions

Economy

·         One bushel of soybeans can produce 1.4 gallons of biodiesel.

·         Since June 1999, biodiesel sales have grown to an industry estimate of 15 million gallons, or the equivalent of 10 million bushels of US soybeans.

·         A study completed in 2001 by the U.S. Department of Agriculture’s Office of Energy Policy and New Uses in conjunction with the Economic Research Services (ERS) found that an average annual increase of the equivalent of 200 million gallons of soy-based biodiesel demand would boost total crop cash receipts by $5.2 billion cumulatively by 2010, resulting in an average net farm income increase of $300 million per year.

·         In the last year, the price of wholesale delivered biodiesel has decreased significantly. Generally, a 20 percent biodiesel blend (with 80 percent regular diesel, known as B20) costs about 15-30 cents more per gallon than straight petroleum fuel. B2 blends generally cost only a couple of cents more than No. 2 diesel fuel.

Environment

·         Biodiesel is a renewable, biodegradable, cleaner-burning fuel. Unlike other fuel additives, biodiesel poses minimal risk to water quality.

·         A 100 percent biodiesel blend lowers carbon monoxide (CO) emissions by 44 percent, particulate matter emissions by 40 percent and sulfate emissions by 100 percent.

·         B20 lowers carbon monoxide (CO) emissions by 9 percent, particulate matter emissions by 8 percent and sulfate emissions by 20 percent. When B20 is used along with an oxidation catalyst, it reduces particulate matter by 45 percent, carbon monoxide by 41 percent and total hydrocarbons by 65 percent.

·         The ozone forming potential of the speciated hydrocarbon emissions for biodiesel was nearly 50 percent less than that measured for diesel fuel.

·         Biodiesel reduces air toxins by up to 90 percent.

·         Biodiesel has the highest energy balance of any fuel. For every one unit of fossil energy needed to produce biodiesel, 3.2 units of energy are gained.

·         Does not contribute to sulfur dioxide emissions

Performance

·         Biodiesel has the highest energy content (120,000 BTUs per gallon) of any alternative fuel.

·         Biodiesel has significantly improved lubricity, which can decrease maintenance costs and reduce engine wear.

·         A flash point of over 300 F makes it much safer to use, store and handle than diesel, gasoline, or other gaseous fuels.

·         More than 100 major fleets use biodiesel. Additionally, numerous biodiesel demonstrations, including three one-million-mile tests and more than 30 50,000-mile tests, have logged more than 10 million road miles with biodiesel blends. In these tests, performance, fuel mileage and drivability with biodiesel blends were similar to conventional diesel, but opacity levels were reduced and exhaust odor was less offensive. No adverse durability or engine wear problems were noted.

·         Biodiesel can be operated in any diesel engine with little or no modification to the engine or the fuel system. In blends over 20 percent, biodiesel has a solvent effect, which may release deposits accumulated on tank walls and pipes from previous diesel fuel. The release of deposits may clog filters initially and precautions should be taken.

·         Manufacturer warranties cover defects in material and workmanship, and those warranties extend to engines burning biodiesel. Using biodiesel will not void warranties.

Information courtesy of the Iowa State Department of Agriculture and Land Stewardship.