Thursday, February 16, 2012

Energy Leaders Breakfast Club

Energy Leaders Breakfast Club: Corporate sustainability and the “clean web”

Last month, the New England Clean Energy Council and Mass High Tech released the first of three transcripts from the December meeting of the Energy Leaders Breakfast Club. Last week we published the second part of that conversation, and this week we continue the conversation with a discussion on corporate sustainability and the “clean web."

The Energy Leaders Breakfast Club conversation does not reflect the views or positions of the New England Clean Energy Council or Mass High Tech. The Breakfast Club is designed to be a dialog and attempts to include representatives from different parts of the region’s clean energy cluster to get a range of perspectives in order to enhance awareness, communication, and collaboration. The opinions expressed here are those of the individuals involved and not those of the Clean Energy Council or Mass High Tech.

Present at the Energy Leaders Breakfast Club:

Peter Rothstein, President, New England Clean Energy Council
Mitch Tyson, Tyson Associates, New England Clean Energy Council Co-Founder and Forum Chair
Jim Cabot, Senior Vice President, Rasky Baerlein Strategic Communications
Rob Day, partner, Black Coral Capital
Marcie Black, CTO, Bandgap Engineering Inc.
Jim Matheson, General Partner, Flagship Ventures
Bilal Zuberi, Principal, General Catalyst Partners

Susan Hunt Stevens: We’ve got the knowledge base, the infrastructure, the experience etc., to be the leading supplier of technology into the sustainability movement that businesses are embracing. And it’s way beyond clean energy. It goes into everything about operation supply chain manufacturing, etc. And I think there’s a small cadre of companies starting to work on this. But it would be great to see the kind of really organization and support that has been brought to clean energy be brought to green technology and the community as well. Because I think that’s going to be a huge opportunity. And I think from a startup standpoint you don’t need the enormous investments that clean energy needs. They’re more capital efficient businesses in this. But you see a lot of them starting in California and it would just be great to see more of them here.

Bilal Zuberi: A quick thought on that. One, I thought a lot of companies were created to focus on that. This is 2008 and the 2010 time frame and investing in renewables was relatively out of favor. As it stands today still. When everybody walked into energy efficiency and energy analytics and I can’t tell you how many dashboards that I’ve seen that all start to look the same after a while. But I think the biggest problems that a lot of those companies have faced is that there’s obviously a lot of real work going on in a lot of real companies but separating out the real intentions and the real efforts from the rest has been difficult for them and navigating the maze of PR consultants that you have to walk through before you reach the CFO’s office has been pretty hard. And the second is that a lot of these companies, just from the venture perspective, a lot of these companies start to look like service companies. So they become consultants and that just doesn’t fit the traditional venture model.

Jim Cabot: Yeah, the green washing issue has been a significant issue.

Rob Day: But a really important point that you guys have made as well, and we’re sort of conflating two issues here. We’re conflating the corporate sustainability trend but also the software side of clean tech entrepreneurship and green tech entrepreneurship. I have a broader definition of clean tech so I sort of include both under the same term. But to your point, so this is something that really needs to happen and this would be my prediction is that we’re on the verge of seeing it happen a lot more than just dashboards. When times get tough in the clean tech venture industry and a lot of the investors started pulling back on the size check they would write we saw a proliferation of everybody trying to come up with some kind of software based solution for commercial office buildings or homes, all energy related. There’s a huge swath of natural resource-related tools and we’ve touched on some of them with sustainability. And one of the things that you guys said - you were talking about how you were at an event where the software community and the clean tech community, they really aren’t mingling here in Boston. And that’s to our detriment. On the west coast it’s happening. On the west coast we’re starting to see the emergence of the so-called “clean web.” Or more sort of IT based clean tech entrepreneurship and there’s starting to be a wild proliferation of it. Because look it, there are so many different ways to take IT-based, and software based and web based business models and apply them into these markets so that it’s really about the end market that makes it clean tech. It’s not the core technology that makes it clean tech. And that’s what we need to see a lot more of. But here in Boston those two communities still aren’t talking to each other very much. And that’s going to actually hurt us. There’s a really big opportunity for entrepreneurs in Boston to look at the intersection of IT and clean technology trends and get in front of it with some cool ideas. And yet I’m not seeing enough of them and where I see it, you’re right. It’s all dashboards and stuff aimed at those two small types of building markets. But there’s a whole wider raft of things that entrepreneurs could be doing. And they could be done on the cheap and you know what they don’t even have to deal with the big VC’s at that point.

Peter Rothstein: Well, one of the things that we do have regionally which I think is farther along than a lot of other parts of the country, some of the green communities efforts with cities and towns aggregating all the different sectors: residence, commercial, industrial with education, with bundling of services, with lowering the cost of projects. They can go across multiple facilities. That market creation activity is happening here. So that creates some pull for these kinds of capabilities.

Susan Hunt Stevens: The university community is a big buyer as well. The most common thing that’s said when I walk into a head of sustainability’s office and tell them what we’re doing is, “We were looking for something like this six months ago. Where were you?” You know?

Jim Cabot: It’s more than just getting the software people to talk to the kind of the building people and the users. The building space is kind of like the wild west in that you have startups, software development firms, but then you have large established companies, Johnson Controls, Honeywell, etc. They have proprietary systems and so you’ve got the range from software through to hardware and then the actual building owner conundrum itself, all making it really difficult to kind of scale and get critical mass in this market. So it’s more than just kind of “gee, we’ve got to wake up the software guys and sort of introduce them to this.” You’ve got a really challenging competitive landscape.

Peter Rothstein: This is the difference between the IT industries and the energy industry; a lot of it is regulation. So you look at how we’ve restructured and deregulated some parts of this industry. However, there are mandated energy efficiency programs and in Massachusetts they’re mandated to run through the utilities. So I think your comment about channels is a big part of the issue.

Bilal Zuberi: The question that I keep coming back to is that there is some of this activity happening in other parts of the country - quite a lot of it actually relative to what’s happening here. Software companies or entrepreneurs are finding their way into large corporations. There’s some local company that’s doing a lot of work for Dow. That’s their only customer but it’s channeling millions of dollars through them. Our Governor is making trips to Israel and Ireland or whatever else he’s gone to. I think he needs to be making trips to some of the U.S. centers of corporate activity as well. And I think make a case for both our companies but also to have their companies that have offices here to provide their sites as sort of the beta sites. Why should all of the beta sites for Oracle be based in California? I mean they have offices here. Microsoft has offices here. Even some large corporations that are in the IT sector that are moving into this geography. And we need to be making a case that as you move into this geography we want to welcome you and we want to welcome you with X. You know, I was just reading last week $600 million dollars is going to be spent by Novartis on upgrading their facilities in Cambridge. I mean this is like literally on MIT’s campus. If that’s not a prime example of energy efficiency and sustainability and what not I think we have a big miss on our hands.