Cleantech Group‘s Greg Neichin opened up Wednesday’s panel “Startups and Corporations: Bringing Clean Technology to Market” with an important observation. The cleantech market, and certainly the broader energy energy space, is a bit different when it comes to getting big companies in the same room with startups.
“For the most part, they tend to get along,” he told a packed session.
Nike’s Dan Cherian described its approach to working with startups, and dispelled the notion that its startup relationships are purely investment-oriented.
“We don’t just do investments, we’re involved in things like licensing, joint development agreements and strategic alliances, ” Cherian explained. “Not all of our innovation happens inside the company, we think of it as strategic partnering and investing,” he added. As Cherian summarized Nike’s view, it was clear the company sees sustainability as as a growth opportunity, with Cherian saying Nike is “heavily invested” in helping the company grow through sustainable business.
Intel’s Lorie Wigle, the company’s GM of Eco-Tech, said much of its startup work is focused on energy efficiency. Specifically, her team looks at the application of technology and how to grow revenue. Wigle mentioned a joint project with KLG Systal that tackled water management. Through KLG and other partners, Intel was able to see their technology implemented in different ways, underscoring the importance of tightening up your partner network before approaching larger corporations.
“Many startups make the mistake of thinking ‘we got the meeting’ and the ”number of meetings’ are a good metric for progress,” said Yusuf. His assertion was those elements have nothing to do with success . “It gets down to can the corporation sell more of their product because of what you do.”
Nike’s Cherian concurred, urging young companies to make their objectives very clear. “If your objectives are clear, we (Nike) have the right people in place for you to interface with”, he explained. He says Nike has three or four areas set up within the company to address various segments of innovation.
“Even if you talk to the business development group or venture unit, you have to realize they might not have the decision-making capability, ” he said. “When we get a message from a company, we apply that correspondence to whichever filter is the best fit.” Cherian added one other tidbit for the startup crowd: get a recommendation. He said even the slightest nod from a known partner or third-party can help startups in the early cycles with various corporate groups.
Another key discussion was the role large corporations can play in developing industry standards.
Streetline’s Yusuf mentioned their partnership with IBM, where they’ve integrated Big Blue’s Cognos platform. He stressed how important it was to understand the dynamics of the marketplace and who’s pushing open technology.
“Startups should know who leads the market and what products are innovating, ” said Yusuf. “IBM would love to sell us a bunch of their products, but we know which pieces of their platform help us solve our customers’ problems.”
Intel’s Wigle mentioned the company’s involvement in the Smart Grid Interoperability Panel and how much intelligence it’s captured from the ecosystem as technology is commercialized. Because Intel has some much infrastructure that startups need, the company established its own incubation program, of sorts. Technology Days brings together startups in Intel’s portfolio and allows them to make their pitch. Not only can Intel share its R&D practices and standards work, but young companies get a purview of what’s coming down the technology pipe.
The panel bridged some of the standards discussion with a few examples of where data and technology are currently coming together for disruption. All of them agreed the “internet of things” was shaking things up the most around cleantech innovation. With smart sensors, advanced levels of automation, and the move to open data, companies like Fitbit and Nest were cited as two companies capitalizing on the standards push.
If startups should come away with anything, it’s take the time to get your ship in order before approaching the big guys. If you’re focused, have the right partners, and understand protocol, they’re listening.
When a reminder about the upcoming Clean Energy Summit hit my inbox, I jumped at the chance to make the case for why Austin should be excited about this event. And while I’d be the first to advocate the benefits of a clean energy community, this isn’t a rah-rah session. Let’s look at what’s happening in clean energy to see why this year’s gathering should accelerate Austin’s clean energy future.
The Economic Climate
Clearly this isn’t the best of times for the economy. Unemployment is unfortunately unwavering, wages are stagnant, and now there’s even a potential poster child for clean energy failure with Solyndra’s collapse.
Even so, Cascadia Capital showed cleantech investments totaled $1.42 billion over 113 deals during Q2 2011. While that’s down 10 percent from Q2 2010, one thing to note was the shift to the “capital-efficient energy sector,” displacing investments in biomaterials and biofuels.
Big Fish Getting Involved A Good Sign.
A good barometer for clean energy is to also look at what established companies are doing to get a seat at the negotiating table. Fortune 500 companies are often a cleantech company’s first customer. And if they’re not a paying client, they often provide needed infrastructure or partnerships in key markets.
As an example, GE is aggressively investing in energy startups, telling the Wall Street Journal its deal flow for 2011 is already at 20, easily eclipsing its 2007 figure of 11.
That’s also consistent with data provided by UMASS economics Professor Nancy Folbre, who points out private venture capital has quietly moved towards the clean sector, rising to 16 percent in 2010 from 2 percent in 1995.
The other footnote to GE’s activity, and one startups should pay attention to, is its approach to cultivating its clean energy portfolio. Besides obvious industry partnerships, it created the Ecomagination program, aimed at spurring ideas to help the environment. And while there’s a PR veneer to it, GE is no doubt getting a leg up on what’s happening in the trenches, an innovation-driven sneak-peek if you will.
Where Are The Opportunities? How Is Austin Positioned?
Austin’s tech lineage is strong, particularly in software and semiconductors. A good start would be bridging that expertise. If we look at comparisons to the rise of information technology in the United States, the picture is clearer.
“The aggregate green economy, which includes jobs in the public sector and waste management, is just under half the size of the IT producing industry, but measured by jobs, “cleantech” is similar in size today as the computer manufacturing industry (162,000) and roughly half the size of the semiconductor industry (370,000).”
Those numbers are compelling for a few reasons. One, it shows cleantech isn’t as far behind as some pundits would have us believe. Not to mention the computer industry isn’t exactly tearing it up these days. Can you say Tablets? Heck, the most exciting innovation I’ve seen lately is proof that our computers are doubling their energy efficiency every 18 months. I’d also bet those semiconductor numbers decrease as processors increasingly move to smaller, more mobile devices. Unfortunately for some that might correlate to less manufacturing and fewer jobs.
Mr.Muro capped of his post with another important observation.
“..many solar producers are classified in the IT-sector as semi-conductor manufactures; smart-grid technologies are also heavily IT-based. It’s therefore not unimaginable that, with a few strong years of growth and innovation, cleantech could be large enough to fuel considerable increases in aggregate economic growth.”
One of the takeaways here is the breadth and potential depth of clean ecosystem and markets. Famously, many Silicon Valley companies have ‘pivoted’ to capitalize on other markets. The point is, Austin’s clean energy companies have plenty of ways to innovate in a sector that’s tied to so many converging forces. Today’s motherboard producer might be tomorrow’s solar fabricator.
Cities, Infrastructure Provide Opportunities
Getting more hyperlocal, there’s other reasons to pay attention to clean economy activity, not the least of which is better paying jobs. Here’s a few charts I pulled from the Brookings’ clean economy report. The first one is self-explanatory. There’s growth in our own backyard.
In the second image, you’ll notice that Austin ranks 36th when you compare the largest 100 metropolitan areas. But look at the growth. The growth metric moved Austin up a number of notches and also shows clean jobs grew more than 5% each year. Not too shabby.
And before you scoff at the annual wages, we’re looking at you Mrs. software engineer, it’s important to keep it in perspective. Wages are higher compared to all other Austin jobs Brookings analyzed.
One other notable piece in the Brookings report was the huge emphasis on energy efficiency. It was the largest category analyzed by Brookings, capturing 13 out of the 39 distinct segments. That’s called bulletin board material if you’re keeping score. (Sorry for the sports cliche, but it is football season)
It shouldn’t be that surprising. Old buildings, old schools, all of them could use some sort of energy upgrade. Couple that with new commercial and residential activity and it’s no wonder ABI Research projects cities will spend $39.5 billion by 2016 to become smarter. The other data point I like to point out is research from the University of Massachusetts that estimated roughly 15 jobs are created for every $1 million invested in energy efficiency.
City Mayors Get Behind Clean Energy And Efficiency
Another positive sign for CEVS is having the eyes and ears of local government. That was echoed in the form a recent letter to Washington from U.S. Mayors, entitled a “Common-Sense Jobs Agenda.” Local officials analyzed parts of Obama’s Jobs Act, emphasizing how the clean economy can spur job growth and stoke the economic fires.
The group (Mayors) has been vocal recently, penning an earlier report (June 2011) from its national conference, in which 86 percent of the 396 cities surveyed saw building retrofits and clean energy conversion as economic priorities.
So whether you’re a startup, an investor or you just want to see Austin continue to evolve, there’s plenty of reasons to get behind clean energy. Get out and support these companies, your grandkids will thank you.
“We connected the solar panel and the battery to put the energy together and give it more,” said Cinthia Ramirez, 10, one of three students on the Solar Flash team, pointing to the foam-and-tin-foil car with CDs for wheels.”