Tuesday, October 31, 2006

Helping the African Farmer

First, a caveat. I have not been to Africa (yet).

Last night, Dr. Deborah Delmer of Rockefellar Foundation spoke at CSU about "Creating a Road Map for a Green Revolution in Africa," in which she laid out ideas for how to improve food production in Africa. Interesting to me, in that leaders like Deborah have clearly connected agricultural science with economics and business. That improvements in seeds, crop science, etc. need to also take into account downstream issues like markets, export policies, etc. As with our efforts at EnviroFit, it is the merging of appropriate technologies and appropriate business models that will enhance the chance of success.

From this summer's posts, Millenium Villages project is getting good results from this past season, which is very hopeful.

Interested in entrepreneurs working in this space? The guys at Kickstart are the best known, and I encourage you to read about them. And our fellow Colorado group, IDE has also been working on this for years. But this past week I met a new entrepreneur in this space at the Net Impact conference.

Andrew Youn just finished his MBA at Kellog last spring. Rather than join his classmates working with big companies, investment banks or consultancies, Andrew started his own company, the One Acre Fund. This comprehensive program has a systematic focus on eliminating hunger in a sustainable way. Andrew gave me a copy of his business plan, and I am impressed with the person, the idea and the implementation to date. In a few short months, he has the program going, and is working with over 100 families who have small farms. He has designed an organization that has a significant impact, a sustainable business model and is scaleable. He is attracting good talent.

Some highlights of his approach:
-don't give handouts
-provide a solution that is realistic for the extreme poor
-dream big
-remain 100% accountable

Please consider joining me in investing in the One Acre Fund (start by donating at least $20/month online).

Monday, October 30, 2006

Mind the Gap

"Mind the Gap"

... says the loudspeaker at the Heathrow Express Train last week, reminding me not to step into the gap between train and platform.

Well, this post is on a different type of gap. As entrepreneurs, we often deal with gaps, and gap filling, but an article in the NY Times today identifies the gap in research funding to come up with cleaner technologies.

From the article:

"Cheers fit for a revival meeting swept a hotel ballroom as 1,800 entrepreneurs and experts watched a PowerPoint presentation of the most promising technologies for limiting global warming: solar power, wind, ethanol and other farmed fuels, energy-efficient buildings and fuel-sipping cars.

“Houston,” Charles F. Kutscher, chairman of the
Solar 2006 conference, concluded in a twist on the line from Apollo 13, “we have a solution.”

Hold the applause. For all the enthusiasm about alternatives to coal and oil, the
of limiting emissions of carbon dioxide, which traps heat, will be immense in a world likely to add 2.5 billion people by midcentury, a host of other experts say. Moreover, most of those people will live in countries like China and India, which are just beginning to enjoy an electrified, air-conditioned mobile society.

The challenge is all the more daunting because research into energy technologies by both government and industry has not been rising, but rather falling."

This article refers to today's report from Her Majesty's Treasury (i.e. Tony Blair's administration). I haven't read it all yet, but here is a quote from Mr. Stern, the author:

"What are the costs and benefits of taking action? The costs of removing most of that risk, getting to 550 or below, are around 1% of GDP per year. The cost could be above or below 1% depending on policies, technological progress and ambitions but would be in this region. This is equivalent to paying on average 1% more for what we buy - the price rise for carbon intensive goods would be higher and for low carbon intensive goods would be lower – it is like a one-off increase by 1% in the price level. That is manageable; we can grow and be green."

OK, first, he is talking about getting to 550 ppm of CO2, which is an improvement over "Business as Usual" and, in their estimates, puts the earth in the position to have a 50:50 chance that global average temparature increases over the next century will be less than 3 degrees C above pre-industrial levels. We are currently at 430 ppm and if Business continues "as usual" then we could hit levels that give a 50:50 chance of over 5 degrees C. In the 550 ppm scenario, CO2 concentrations would peak in 15-20 years at that level, and then begin to fall.

Second, it is always wise to be wary of percentages, and mindful of where the money is supposed to originate. So, he says 1% manageable... but it is serious money. The world GDP these days is about $60 trillion (US is about $12 trillion). So 1% is $600 billion a year. That is twice the size of Wal-mart, and about the same size as the entire Australian economy. As Senator Dirksen supposedly said "A billion here, a billion there, and pretty soon you're talking real money. " The NY Times quotes John Holdren of Harvard as saying the US has a $12 trillion capital investment in then next 20-30 years. That, my friends, is real money.

Back to my original theme, now, of "minding the gap." So it is going to take $600 billion of investment/year to hit this target. How are we doing now? Well, the NY Times article says US is currently at $3 billion in federally funded research. If you take the 1% level for USA, it would be a $120 billion/year target. That looks like a pretty major gap we need to mind. The NY Times (remember who we are dealing with here) is not optimistic that private industry or entrepreneurs will solve the problem, although it lays out where some of the gains may be achieved (conservation, solar, etc.). The gist of the article is that we need a bold national program (and implicitly new leaders) to make this happen. Think the Space Program.

Maybe. I am not so sure. The big bold program certainly has emotional appeal (and is of course another way to avoid any real individual initiative or action). Just as I have articulated my concerns with Sachs's big plan to end poverty, I am also concerned about "big programs" here. What I think we need is lots of experimentation. Getting rid of perverse subsidies when they protect out moded and harmful industries. Encouraging conservation. Encouraging ordinary people to take action and giving them incentives to do the things that will have the most impact. Lots of innovation in markets around the world. If there is the political will to increase federal research on clean technologies, great. But lets not sit around waiting for the government to solve this.

Big programs tend to get run by governments. Sorry, I am skeptical. This is not a space race and we aren't trying to beat the Soviets. The enemies of our world are poverty, disease and pollution. "Think globally, act locally" is not a mantra for the big program. Progressive government policies are needed to modernize legal rules to reflect desired market outcomes (emissions trading, "take back" laws, health insurance coverage). Then government's job is to stay out of the way. I'd still rather have many bands of entrerpreneurs working on this than a big policy team lead by Al Gore. But if Al wants to invest in a clean tech venture fund or contribute to a microfinance institution, that's great. Maybe this too is an "inconvenient truth"... that we can't rely on government to mind the gap. We all must mind the gap, and apply our multiple skills, passions and assets to fill it.

Addendum 11/16: Paul Graham (of whom I am a big fan) recently posted an essay of the same title on his site. It is on a different "gap", but it is, as always, an interesting and provocative essay.

Friday, October 27, 2006

More on Entrepreneurial Education

In the interest of equal time, those interested in the debate over whether entrepreneurs are "born" that way (my post of Sept 23) ... Inc magazine has an article on a recent study. An interesting perspective on how this matters for entrepreneurship education. Here's a quote:

"The survey results indicate a major issue in academia today: institutions of higher education are not adequately preparing students for careers in entrepreneurship," Paul Zavracky, dean of School of Technological Entrepreneurship, said in a statement. "While entrepreneurship skills can be taught, the survey results suggest that the desire to be an entrepreneur usually is not." See Are Enterepreneurs Born or Made

Read the article... see what you think. I hope that when students take my class, they learn more about entrepreneurship. As a result, some may have their entrepreneurial instincts validated and sharpened, and others may become newly inspired to become entrepreneurs.

Tuesday, October 10, 2006

Is Solar PV Affordable Yet?

Today, Harish Hande, the founder of SELCO visited our lab and gave a lunchtime presentation at the CSU business school. I met Harish last fall at the TechAwards and was impressed by his comments on the power of light as a tool for poverty alleviation. We visited again in July when I was in India, and I was further impressed by his activites. No doubt, Harish is a BOPreneur.

SELCO is a for profit company. It sells household photovoltaic solar electric systems to those that make $1-3 per day. Yup, read that last sentence again. When asked, Harish said that the company was formed to dispel myths, one of which is that solar electricity is unaffordable. These solar PV systems replace kerosene lamps; a dirty technology is replaced with a clean technology, and at a lower cost!

How does he do this? We keep being told how expensive solar PV is, compared to other energy sources. Since this is India, the trick must be that they exploit cheap labor and manufacture cheap, low quality, PV systems, right? Not at all; in fact, solar pv panels are more expensive in rural India than in Europe. And they purchase the same panels used by the market leaders, but at lower quantities and sizes. So no economies of scale advantage either. And he offers his customers full warranties and 24/7 on site service.

Instead, Harish looked at changing several business processes to make his systems affordable to the poor. He learned an important financial lesson from a street vendor who told him "300 rupees a month is way too much money, but 10 rupees a day is very affordable.". So he established microfinance plans with the rural development banks that made his systems affordable.

In addition, part of the service he provides is that of a business and energy consultant for his clients; but these are not MBAs or McKinsey alums. His average technician is from the community and dropped out of school after 5th grade. Yet they often come up with creative ways that the economic benefits of their electrical power will exceed the cost to the client.

What type of system does SELCO provide? Usually a small system that powers 2-4 lightbulbs (7-10 watts each). The technicians work with the clients to evaluate their needs, and they often figure out how to sell a lower powered system- meeting the client's needs, but at a lower cost. In addition, microentrepreneurs have started to use the systems to charge several batteries, which they then rent to shops for the evening hours of operation.

SELCO has installed 65,000 solar PV systems in India, for basketweavers, midwives, clinics and churches. Harish is now working to expand his business by making it a "one stop energy shop" for the rural poor in India.

A lesson for aspiring BOPreneurs: if someone tells you that a technology is too expensive for the poor, remember SELCO, and make sure you check to see if you can redesign the processes to make it affordable. You may also find a sizeable, profitable market opportunity!

Saturday, October 07, 2006

AASHE- The Role of Higher Ed in Creating A Sustainable World

So, I am in Tempe, attending a conference on sustainability in what must be one of the least sustainable places on the planet. But I have made peace with this sustainabilty paradox. This has been a really good conference; and it is the "first", so maybe in a few years we can all be talking about it, and selling the organic cotton T-shirts on Ebay.

So, here are a few impressions of a diverse and excellent group of keynote speakers:

Lead off speaker- Bill McKibben. Quote: "Climate change is the defining issue of our time." OK, so I was coming from another meeting on infectious diseases, plagues and flu pandemics which was, actually, pretty optimistic about our chances for figuring out these problems. Bill's message is kind of gloomy (while not over in the "doomy" camp, yet, he's definitely moving in that direction). Citing NASA's Dr. Hansen, he is concerned that we may have less than 10 years to address climate change, or perhaps it is already too late. Maybe we have already hit some trigger points and and climate change will accelerate rapidly. Bill is a passionate speaker and talented writer, but little bells were going off in my head. After his dire warnings of rapid sea level rises of 60 feet, more earthquakes in Greenland, methane bubbles inSiberian swamps and thawing artic tundra, he concluded that we "have ten years to reorganize the economy of the planet".

Hmmm. I always like to observe whether those crying "fire" are running to get a bucket of water, or just yelling. As with Al Gore's movie, there seems to be an urgent call to action, but then not a lot of details about what we should do about it. Vote. Write a politician. Buy a hybrid. McKibben's personal actions seem to involve giving speeches, writing a lot of articles and books (and he is an excellent writer) and organizing a "sustainable journalism' club at Middlebury. They are working on implementing some cogen facilities and getting the students to turn the heat down to 68 degrees. Don't get me wrong, that is fine. It's all good work! He is a passionate speaker and he is spreading the word. And he is using his talents to catalyze change. But his personal actions imply that we probably have a bit more time than a decade to do something. I don't see the radical actions that so dire a predicament might require. I mean, if you really believe the world is going to end in 2015, what would you do?

So, props for the passion and story telling. But disappointing on several points. First, sustainability is not just climate change. There are legitimate arguments that other challenges are equally worthy of time and resources- poverty alleviation, disease, water pollution, oceans- I fear that these are being lost to many of the conference attendees. Second, I really question the use of fear as a motivator. It doesn't do much for me. It's a personal thing, but I prefer hope. It seems to be, well... more sustainable. Perhaps that is another dissimilarity between activists and entrepreneurs that we will need to work through together.

Next up: Ray Anderson. Quote: "Today's third graders will be college grads in 2020- what must they have learned to work for Interface?" While I was a bit disappointed with McKibben, I was really impressed with Anderson. He gave a great talk about his journey to becoming a true leader in sustainability. Humble, a southern gentleman, still in learning mode at age 72. Bill McKibben writes about it; Ray Anderson gets it done. He tells us "Educators have an awesome role of responsibility- do we want to teach our students how to make the next PCB? or how to practice petrochemically based agriculture?" Great examples of getting engineers and business people to rethink the way they work. An optimist, an activist in a dark gray suit, a leader of a company and a movement. Inspired by Hawken's book- Ecology of Commerce when he was 60- look at all he's done in 12 years. If I am in a battle for the future of the planet, I'd like a bunch of Rays on my side! Definitely deserved the standing ovation.

Interlude: cool students abound at this conference. Check out Mark Orlowski of Sustainable Endowment Institute, Billy Parish at Energy Action Coalition, Leti McNeil at Engineers for a Sustainable World, and Brandon Armstrong at the Southern Alliance for Clean Energy. Passionate, articulate, thoughtful, persistent... maybe our next Ray Anderson, Oprah or Bill Gates.

Next up: Beverly Wright. Quote: (oops, didn't take notes on this one... it was late). An interesting speaker on a topic that didn't get enough attention at this conference. The close ties between environmental degradation and poverty. The social aspects of sustainability. Society can't just aspire to be green, it must aspire to be just. Her work pre- and post- Katrina was inspiring.

And last, but not least, Hunter Lovins. Quote: "Hypocrisy is the first step toward real change."(discussing Wal-Mart's green initiatives). OK, this is the crack cowgirl of sustainability. Sincere, passionate, smart, funny as hell, frenetic and inspiring. She probably gets more done in a day than I do in a month. (And, in case she ever reads this, I am not bitter that her session earlier in the day was the same time as ours- it just made ours a more "intimate" workshop). Hunter is a systems thinker...drawing connections from disparate sources. She had a very well rehearsed, humorous and thoughtful presentation. A message of hope, innovation and belief that natural capitalism is the right path. I also liked the questions from the students that called Hunter out on a few topics: what about the social aspects of Wal-Mart's operations? Aren't the corporations the low hanging fruit- what about individuals? And, the best question of the conference as far as I'm concerned: "So, what does the sustainable future you envision look like?" Hunter couldn't answer that one, and I get the sense she is rarely at a loss for words. It is a very provocative question.

I will leave you with another impactful moment, and it also didn't come from any of the big name speakers. It came from Kai, in dreadlocks and a Seuss Lorax shirt, who shuffled up to the mike at the end of a session on university initiatives on "sustainability" (that had again focused heavily on climate change). "What about war- Isn't that a threat too?" he asks. "Good Question" says the speaker (they always say that here) but doesn't really answer (and the speaker was a boomer who presumably remembers something, dimly, about another war). I would urge sustainability folk to remember that there are 3 legs to the sustainability stool. They need roughly proportional attention. At this conference, environment and economy got the focus. The social leg came up short. Kai brought that home with his question.

There was much more. I took a whole pad of notes in various break out sessions. But, just like those old rock concerts, "you had to be there."

Kudos to the AASHE organizers and ASU for pulling this off. It was informative, fun, and energizing. I look forward to next year and seeing how much progress has been made.

Wednesday, October 04, 2006

Nails and Fat Tires

No... not nails and flat tires, but fat tires. This week was great, and much better than last year at this time!

First, our College of Business faculty uananimously approved the curriculum for a new masters program in Global Social and Sustainable Enterprise. This was a key step for our program and, more importantly, it was a great way to start working with a broader team in this area.

Now about those nails... on Tuesday, we were very fortunate to have Hernando DeSoto visit campus and give a talk about the role of private enterprise in alleviating poverty, as one of the kick-off activities for our program. He gave a wonderful talk to a full house at CSU. One of the interesting anecdotes he told was that Thomas Jefferson used to be proud of being a "nailmaker". Seems pretty mundane for a guy who was a founding father of our nation (and the University of Virginia) and a president (he was also a slaveowner, and it seems the slaves were really the nailmakers). But DeSoto said that in those days, nails were quite hard to make, and very valuable. So valuable, that when someone moved, they often burned down their house to recover the nails. So why was he talking about nails? Well, these nails represent what holds the house together, and DeSoto was talking about what holds a society together. For him, these "nails" include economic and legal freedoms, including private property rights and the ability to form business organizations. These "nails" may not be as obvious as the lumber and windows and roof... but without them, the house will not stand up over time. Much of DeSoto's work is devoted to figuring out what the important nails are, and then helping build stronger societies in the poverty stricken areas of the world.

Now DeSoto didn't mention that Jefferson was also a brewer, and that gets me to beer... which gets me to Fat Tire. In Fort Collins, we are lucky to be the home of New Belgium Brewing, which makes great beer (including Fat Tire), throws great events (Tour de Fat), and is one of the more progressive companies out there (the first wind powered brewery). Recently, I was asked to join their board, and last week I attended my first board meeting. I was impressed by the quality of the team as well as their business processes and systems. I think we will be seeing a lot more cool things come out of this company... and yes, we did sample the product at the end of the meeting.

And while I am on fat tires, I have to say the mountain biking (the sport that inspired the eponymous beer) in Fort Collins has been awesome recently. The weather has cooled a bit, the trees are bright yellow, and the trails are in great shape. Kudos to all the new trails we are getting open- Blue Sky is terrific, Shoreline has been rerouted, and Bobcat Ridge just opened 4 miles last weekend (with another 6 to come in the spring). There are very few cities with such great riding "right out of town" and our tribe should be very pleased with the results.

Lastly, I pause to give thanks. A year ago, my son was riding his bike back into Crested Butte, after finishing a century ride on a beautiful fall day. Another young man was not having such a good day, had too much to drink, got in his SUV, and hit my son from behind at over 60 mph. Luckily, Peter lived, but he was dinged up pretty bad, and spent the winter in our basement, instead of playing in winter's powder. I am not sure his ankle will ever recover, but his mind and attitude have definitely bounced back. In a few weeks, he heads back to Alta, and I hope they have an epic winter to make up for the one he missed. I am looking forward to his videos on UTube.