November 2007

Musings on Green Google, VC Investment, Energy Bill

Musings on this week's green news, as I try to distract myself from the Cyber-Monday v. Green Monday debate.....

The good, the bad and the ugly (i.e. my opinion) on three major topics that hit this week:

1) Google announces a major green initiative.

The good: Google is bringing oodles of money to markets that desperately need the attention, the funding and the lobbying might that a brand name company can bring. As I have mentioned in the past, First Solar is shaping up to be one of the first green market heavyweights solely focused on a green agenda, but Google's vast resources can only help.

The bad: Google is bringing oodles of money to the market which means increased competition and a boost to any of their "portfolio" companies or ventures that get the Google label.

Conclusion: I think this is a great thing for the market at large. While competition will surely get stiffer, the industry is at the point where they need a few heavy hitters leading the charge in the media and with governmental bodies.  

2) VC investment in green hits another all-time high.

The good: Again, it will help give cash to markets that need to funding to develop new technologies, improve existing ones and market at a level on par with traditional approaches.

The bad: I blogged earlier about the potential of a green bubble. It is not a good sign when National Venture Capital Association is commenting on that possibility as well. This is also bad news for all of those long-standing companies in the green market that have grown organically and don't want to take VC investment. For those folks, the competition is getting louder.

Conclusion: This is a good thing for the market as a whole, but will be bad news for companies that have grown to market leadership positions through conservative marketing and organic growth and wanted to continue down that path. 

3) The latest rev of the energy bill in Washington sets higher fuel economy standards for cars, but removes requirements surrounding renewable energy levels for utilities and leaves in tax breaks for petroleum companies.

The good: Any improvement in fuel economy is a good one, although people will say that 35 MPG by 2020 is not aggressive enough.

The bad: The removal of the utilities measure will slow the pace at which they will develop and adopt renewable sources. This type of legislation will likely land in the laps of the states in coming years. California has already passed a similar requirement, which PG&E says it supports in theory but is unattainable and unpractical. Let that debate rage into 2008.

Conclusion: The utilities measure is disturbing for solar, wind and other companies that are setting up energy farms and plants with plans to sell the energy to major utilities. Government legislation or industry mandates usually means a boon for some private industry, such as PCI compliance and SOX compliance in financial IT/information security, so any such measure would likely have accelerated R&D and investment in these technologies. The news is good for ethanol-based fuels supporters and other renewable options for automobiles.   

My final conclusion? The marketing hype around Cyber-Monday will eventually overtake Green Monday as the most popular online shopping day of the year.  

Posted by Jason Morris on November 30, 2007 at 10:23 AM
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Don't Just Choose an Analyst Firm, Choose an Analyst

Many clients turn to us when they are about to engage with their first analyst firm and ask for recommendations. The questions we in turn ask: "What are you looking for from your firm? Market sizing data for the next round of funding? Lead generation? Feedback on messaging and market strategy?"

Most of the discussion heads down that path about which firm is the perfect fit based on focus, cost, support and what the competition is doing. Is it Gartner? IDC? Burton?

Unfortunately, this where the client vetting process often stops. Companies often assume that all analysts at a firm are the same and that they, the client, will get the same level of service, expertise and support from every analyst at that firm. This is a bad, bad assumption.

Most of the time when we meet with a prospective client, they request a follow-up meeting with the entire proposed team. Why? Because most savvy marketing people realize that a firm's reputation is important, but that in a services business it is all of the people doing work on the team that matter. That is why repeatability is the single most important element in a successful services business. The comfort of knowing that whenever you go to that restaurant or hotel, fly that airline or work with that law firm, that you can expect a close facsimile of good service that you have experienced in the past.

This extends to analyst firms. The best analyst firms have a repeatable service model and have built a solid reputation by servicing a large percentage of their clients well. That said, I am sure that every company has worked with an analyst in the past who didn't meet the standard of the firm's reputation. This is not an indictment of big firms or brand-name firms, but of poor analysts at any size firm. So what do you do?

Every company should ask their PR firm to arrange a briefing request with the analyst that covers their space. During that initial conversation, the company should actually interview the analyst about their professional experience, past coverage areas, planned research for the coming year, how they support their clients and what they consider to be a successful analyst firm/client relationship. During the conversation or (preferably) in-person meeting, they should also get a feel for the personality and work style of the analyst. Is this someone who will be open to our view of the market? That's important. Are they willing to challenge our views at the risk of offending a prospective client? Even more important. "Yes man" analysts lose their credibility quick and with it, any return you may have gotten from that relationship. 

At the end of the day, you have to be confident that you will get a return on investment from that relationship because you work hard to get that budget. The firm name and reputation are important, but a dead weight analyst is dead weight no matter which firm they work for and it can seriously impact ROI.

Bottom line? Find what you want in an analyst and then focus on the firm. Weigh firm name and influence as one of many factors in the decision.

Posted by Jason Morris on November 26, 2007 at 10:30 AM
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Industry needs First Solar, Coopetition

Solar is an interesting market. On one hand it is the most mature of the renewable energy markets, with commercially available product and in-production technologies. On the other, it is very immature from the standpoint of market dynamics, public relations and its ability to influence regulations. Most interestingly, there still exists an "us against the world mentality" that leads some competitors to cooperate on initiatives to help move the industry forward.

With that coopetition concept in mind, the performance of First Solar as a stock and as a company is great news for the industry. It is bringing attention to the Solar market as one that is booming and ready to be taken seriously from a financial and technological perspective. It also gives the industry a heavyweight whose only focus will be advancing the use of solar technology, versus the large number of companies that have a solar arm with other interests mixed in. Most importantly, as more and more renewable energy companies grow and build war chests from IPOs and growing revenue, the industry's marketing, PR and political lobby will dramatically improve, more effectively battling the FUD pushed by old industries and raising public awareness around emerging legislation.

I know it is tough for companies in the trenches of competing with First Solar in deals or for attention to see a silver lining in another company doing well, but competition is not always a bad thing in emerging growth markets. Oh, and as a disclaimer, I do not represent First Solar and I don't own any of its high-flying stock. If anyone wants to split a share with me, let me know but not until after the holidays... 

Posted by Jason Morris on November 15, 2007 at 2:49 PM
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Green Bubble Brewing?

As I drive around the Bay Area, I see numerous signs that the world is moving more green. From the solar panels on a local Target to the wind farms in the far East Bay, it is apparent that the green movement has picked up a lot of steam. That said, there are plenty of signs that we ain't seen nothing yet.

The biggest indicator that the green movement is in its infancy? The fact that investment in green tech and renewable energy is reaching record levels. This investment will spawn a new generation of technologies that will eventually mature much the way solar has, with huge ramifications on transportation, architecture and overall resource reuse.

That said, it is a bit daunting. Every day, we hear about new and amazing advances that if brought to market, threaten to change the economics and ecologic impact of traditional markets. But in many markets most experts say only one or two approaches will ultimately win out. Are we setting ourselves up for Bubble 2.0? Not necessarily.

I think most VCs and investors learned a lesson from Bubble 1.0 (as did PR firms), in that it takes more than demo ware and a well-written business plan to make it in the post-bubble world. Bubble 2.0 will likely look more like a traditional maturation of markets signified by consolidation and reduced margins once some of the innovations go mainstream and see increasing amounts of competition. Other advances may be less viable commercial and go under altogether, but the green momentum will continue.

In the meantime, get ready for an even bigger flood of green marketing noise. Outside of solar and wind, a lot of the investment is going into R&D and manufacturing capacity, so the marketing phase that typically follows widespread venture investment is in its infancy.

Posted by Jason Morris on November 2, 2007 at 1:22 PM
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