Monday, April 25, 2011

Kleiner Perkins' Bill Joy on cleantech and predicting the future

You have to be very careful (and honest) when making the"subsidized industry" jobs argument.
Bastiat's 1850 gem That Which Is Seen, and That Which Is Not Seen pretty much nailed the flaws in the jobs, economic growth etc. arguments.
That said, Joy is pretty sharp.
From Mass High Tech:
Bill Joy, partner at Kleiner Perkins Caufield & Byers, and former longtime chief scientist at Sun Microsystems, was in town last night to speak at the MIT Enterprise Forum of Cambridge about investing in cleantech. Kleiner Perkins’ cleantech investments include Altarock Energy, biofuels company Amyris Biotechnologies, Aquion Energy, FloDesign Wind Turbine, GreatPoint Energy, Lilliputian Systems, Mascoma Corp. and UpWind Solutions. Joy is also well known for his friendly feud with local technology veteran Ray Kurzweil over their competing visions of our future and technology’s role in it - hint: he’s not the optimistic one.

Mass High Tech news editor Rodney Brown caught up with Joy for a few question about cleantech investing, the New England science scene, and the Kurzweil-Joy debate.

Q: A number of VC firms seem to have backed out of cleantech investing. What is Kleiner Perkins’ view on investing in cleantech?

A: We have a lot of partners working in it and I think our approach is different. Historically, the best returns have been in IT and waves of the Internet and semiconductors. We don’t have Moores Law and we don’t have Metcalfe’s Law – we don’t the positive return economics like we have in the friction-free world of the Internet, of social media. But could there be some sort of economic phenomenon we could find that would let us have the kinds of legendary venture class returns in greentech? We have a thesis – it’s not proven yet in that we haven’t had enough liquidity to justify the approach – but we feel pretty good about the way were doing at least the portion of our greentech portfolio that is trying to hit these grand slams. It’s very science-based and it’s very deliberate. But I think if you approach it as simply a financial investor when you are investing in companies that actually make things that have atoms not just bits, it takes more capital and you can get your head handed to you.

We definitely do see that a lot of the venture firms, especially the ones on the East Coast – I don’t want to be coastal here, I live in Colorado – but especially the ones in the Eastern United States have really done the turtle routine and pulled their head into their shell. We see people in Europe and in Asia leaning forward and a few West Coast firms, but the number of people doing investing in green has gone down since the financial crisis. That’s difficult for us because we don’t have as many co-investors any more.

Q: If you figure out this thesis, can you share it with the government? What is the government’s role in helping the sector grow?

A: I think that the government funding can help across the chasm, once you have a commercializable technology, because the banks aren’t really willing to lend to projects. So how do you get to be bankable so you can get project finance? It is not a problem in China, it is not so much of a problem in Europe, it is not a problem if the companies are deploying behind the fence and are using their own balance sheets to adapt technologies. But if you want to do a public project, something that plugs into the grid, you need to do project financing. The government project loan facilities are very important, especially for creating jobs in the United States. That really is what it’s all about. Do we want to manufacture and install these things in the United States and create jobs? Without the project finance to cause these projects to happen here, they won’t emerge here. They’re doing it in China – the government’s the bank, they give essentially zero-interest loans. 
If we don’t have the project finance here we won’t have the jobs here. Why won’t the jobs be here if the projects aren’t here? It’s because the industries will grow up where the projects are and we won’t get the jobs, and we need the jobs. So we have to take out great new technologies and make sure they are used in America. They are not only created then in America, they can be manufactured in America and can be used in America. We don’t have a society that is doing a lot of building like they are doing in China. We’re not putting our grid up the way they are in India and China. So we have to encourage deployment of these new technologies in the United States....MORE