New Software Pathways

U.S. Labor Secretary Solis said yesterday that the unemployment rate had reached 9.5% in June, up from 9.4% in May. (Read statement here) These percentages stand for 467,000 men and women joining the ranks of the unemployed in June, up from 322,000 job cuts in May. Most academic and Wall Street economists expect the national unemployment rate to reach 10.5% before rates get better. The U.S., obviously, is still very much in the midst of a recession.

Now that we have passed the mid-point of 2009 Democrats and Republicans are arguing about the efficacy of the stimulus package and other economic and fiscal legislation intended to bring about a recovery. Some think tanks and analysts – like Paul Krugman – are calling for a second stimulus package.

You don’t have to be a Nobel Prize Laureate in economics to know that the US and world economy and financial system cannot be fixed in a six month period.

In the technology industry the recession persists and the rate of available jobs for this bellwether industry has not improved much from the past few months. According to the TechCrunch “Layoff Tracker”, while layoffs in the tech sector may be slowing down, a total of 340,000 jobs have been lost.

It’s important to note, however, that these job losses and the slow recovery are due, in part, because of both cyclical and structural changes. Fewer startups are being funded (here) and established startups have shed jobs in the fourth quarter of 2008 and first two quarters of 2009. They will not rehire the same number of employees because of the scarcity of venture capital; the level of operational sufficiency startups have achieved since their layoffs and new productivity technologies (Software as a Service/Cloud Computing, open source software, Ruby on Rails, etc.) which dramatically increase internal startup efficiency and make web-based marketing both easier and less expensive to reach customers.

Finally, the Obama Administration should not be so optimistic about millions of new jobs in the next year which will be generated by clean tech. While job growth will happen, new clean tech ventures are simply not forming and generating high employment that rapidly because, in part, they are dependent on proven science and customer traction – two things which take time to realize.

As the politics of job losses get hotter over time Ms. Solis should take solace from Bruce Springsteen’s lyrics from the song “Atlantic City”: “Well now, everything dies, baby, that’s a fact. But maybe everything that dies someday comes back.” Hopefully the ranks of the unemployed will diminish quickly, especially well in advance of the election in 2012 for her and our sake.

I’m an advocate and have used this blog in the past to support and promote a candidate (Baraq Obama), the General Public License v.3 and AGPL v.3, movies and music, etc.

With this blog post, gentle reader, I encourage you to do something for the future of our planet: To wit, please push your representative to vote for the American Clean Energy and Security Act of 2009 (H.R. 2454), aka “ACES” or the Waxman-Markey bill. (Read drafts here.)

This coming Friday (6/26) the U.S. House of Representatives will vote on Waxman-Markey. I am encouraging you to email, call and fax your representative concerning its passage. Among many things it includes – for the first time ever:

• A cap-and-trade global warming reduction plan designed to reduce economy-wide greenhouse gas emissions 17 percent by 2020.

• Incentives for building owners to make their homes and properties more energy efficient while respecting their historic character.

• A green bank that will create $150 billion in new investments and produce at least 75 gigawatts of clean energy.

• Funding for clean energy cluster development through which NewEngland and other regions could receive $50 million/year for energy research and early stage ventures.

This legislation is critical for the US’ success at the climate conference in December held in Copenhagen, Denmark. (Read more here.) This is our last chance to recover forward momentum on the climate change issue. We lost so much under the Bush Administration when the US did not vote for the Kyoto Accord. Let’s take a major step forward and stem the climate change tide with this legislation.

Please support this bill.

Today the Vilna Shul received an American Express/Partners in Preservation grant for $90,000 to restore the murals on the main wall in the woman’s section of the Sanctuary. This grant was conferred because the Shul is worthy but also, in part, because of a combined Twitter, Facebook and email campaign.

Read more about the Shul here. The article about the grant will be posted soon.

Also read about the latest Vilna Shul Speakers Series panel discussion on Cloud Computing here.

Congratulations to Steven Greenberg and Rachel Cylus for their efforts in landing this grant.

In September of last year I came to the conclusion that I wanted to do something to “give back” and maybe stem the b-school graduate tide moving to Silicon Valley. I approached a couple of prof’s at Harvard Business School and MIT Sloan who said that there were some students each term who wanted, mainly, startup-related and career advice from someone outside the business school’s walls. I agreed to serve as an adviser to some students and judge the business plan competition.

Over the course of this term (approximately the last 10 months) I provided advice to six 2^nd year students, all of whom will graduate this week.

To be clear: I gave “advice” and did not “mentor”. I feel that a mentor and mentee has to meet frequently on a face-to-face basis in order for the relationship to work. It is more intense than an advisory relationship. My advice to these students was sometimes communicated over the phone and often in a Starbucks for only an hour or so. We have irregularly scheduled meetings. Also, I believe very strongly that there’s only room for one mentor in one’s life and that it was a permanent relationship. I was not willing to engage at with these students at that level.

They were five males and one female. They came mostly from the US; one came from the Caribbean. All had significant work histories with brand name consulting firms and Fortune 500 companies before enrolling in b-school. Two of the students served in the military prior to enrolling in b-school.

These are some of my observations and realizations:

• All of these students were very smart, polite, somewhat naïve and somewhat entitled, and grounded with a very business sense.

• At times, all of these students had listening skills deficits. They were driven, often fatigued from school and anxious to enter the real world on their terms. They took my advise with respect but I often got the impression that they were thinking past what I was saying – even when it was clear that my experience and perspective was helpful. Was I like them at their age? Absolutely, probably worse. Will they get over their listening problems? Absolutely, yes or maybe.

• Sadly, half of them will go to Silicon Valley to pursue their dreams. According to them: The entrepreneurial environment and VC-culture is better out there than Boston. I cannot disagree with them; I feel like the victory was getting half to stay in Boston.

• Their skills are excellent except unproven. There is a high probability that their skills will develop robustly but the jury is out for another five years or so.

In one respect my advice has recently taken an interesting and radical change of direction. In the past I have encouraged 2^nd year b-school students to work for big companies after graduation and work on 5 things: (1) interpersonal communications, (2) professional network, (3) leadership skills, (4) corporate resume and (5) execution. This was based on the antiquated notion that they could always do a startup. I believed, very strongly, in the notion of honing basic skills early in one’s professional career and then doing a startup after establishing a very advanced skill base.

The state of the corporate world has disabused me of this notion. It’s not so much that these b-school grads will pick of these skills quickly; it goes without question that they will. My change in advice arose from some of the great business ideas these students were generating and because large companies are simply not offering the same training, support systems, resources and environments for skill gestation. Today many of these companies – ones that I have worked for or with – function more like dinosaurs than cheetahs.

It was a pleasure advising this group of students. I plan to do more of the same in the future, maybe with a slightly smaller group.

Yesterday was the beginning of Innovation Month in New England. The official Web site (here) lists about 20 events that bring together investors, entrepreneurs, and big thinkers during the course of June. It has already been covered in the press here, here and here. I would strongly recommend attending these events and lending your support to NE as a critical center of innovation activity.

Many poets use symbols, images, metaphors and similes, sometimes obscuring the meaning of their expression under layers. Leonard Cohen steers clear of complexity; he dwells in the kingdom of pure, existential minimalism.

Here are some snippets:

• “And the sun pours down like honey”
• “Freedom soon will come; then we’ll come from the shadows.”
• “There is a crack in everything. That’s how the light gets in.”
• “You live your life as if it’s real, a Thousand Kisses Deep.”
• “I miss you since the place got wrecked by the winds of change and the weeds of sex.”

In the Leonard Cohen catalog there are myriad expressions of love, liberty and life. Faced with a choice of one CD to delight in, I ache over the choice and end up opting for the whole catalog.

Last night I attended my first Leonard Cohen concert. Gentle reader, you should know that this concert was a performance not a show. You should also know that the man is humble, gracious, generous, gentle and powerful. He kept the audience spellbound for three (3!) hours. It was astonishing. You could not help but feel enchantment in his words, music and poems, and catalog in toto. Seeing him dance on and off the stage at the Wang Theater, for breaks and encores, in an impish, athletic matter was something you can only appreciate in concert. Leonard Cohen radiated a sense of delight and reverence in being there and then with the audience. What a gift.

Music informs your life. After last night, I feel well informed. Let me quote LC as a conclusion to this post:

I’ve told the truth, I didn’t come to fool you
And even though
It all went wrong
I’ll stand before the Lord of Song
With nothing on my tongue but Hallelujah

One of the challenges of changing industries is adopting and using new jargon and acronyms. The latter, in particular, can be vexing because almost all points of reference are new.

My favorite acronym from the new world is SEER. Sounds like “sear” as in “Sear each side of thinly sliced tuna for just 15 seconds in a scolding pan and encrust with roasted black pepper.” SEER actually stands for “Seasonal Energy Efficiency Ratio” – a rating system for air conditioners. You might be interested to know that the minimum standard for residential air conditioning (except window units) as set by the U.S. Government is “13 Seer”. This sounds like something Jack Bauer mutters on “24” before he kills 13 bad guys.

There are lots of acronyms in clean tech and the energy space, like GHG (Green House Gases), CTL (Coal to Liquid) and EOR (enhanced oil recovery). Looking at the acronym “EOR” how would you guess it has something to do with oil? I thought it came from Winnie the Pooh. Turns out there is a one page Wikipedia posting (here). (Sorry no picture.)

In recent years, the number of new acronyms have declined in enterprise computing, IT and, in general, software development. This shows the maturity of the sector. By contrast, clean technology is just taking off. Since starting my fellowship 3 weeks ago I read papers and books brimming with acronyms and extensive glossaries, bibliographies, footnotes and indexes. This reflects the complexity of the material and the inaccessibility to nubies like me.

With Web-centric technologies the numbers of technology descriptors (sin acronyms) have increased and now dominate. So we have “Cloud Computing”, “Social Networking”, “Mobile Applications”, “Social Media”, etc. Instead of complicated acronyms that only techies recognize and understand the descriptors make the technologies more accessible and increase the probability of acceptance. Now we have descriptors which are simple words without meaning. Can anyone simply explain “Twitter” in a single word, short paragraph or better yet in less than 140 characters?

So dig this baby: GWP (global warming potential) is here to stay no matter how effectively CDMs (clean development mechanisms) reduce HCFCs (hydrochlolorfluorocarbons), N₂O (Nitrous Oxide) and Indirect Emissions (no acronym).

In truth, I think we are going to solve global warning before I understand all these clean tech acronyms.

The data is stark and obvious: The number of startups founded, VC financings and M&A transactions today – as compared with January 2008 or the 1^st quarter of 2008 – is in decline.

Look at the graphs at TechCrunch’s Crunchbase here.

There are some questions which immediately come to mind:

• Are these trends related?
• Do these trends mark the technology industry’s final decline?
• Has the decline in the finance and VC sectors contributed to this decline?
  
• Will these trends reverse?

Gentle reader: You will be both relieved and horrified to know that the answers to these questions are all “Yes” with some qualification.

Startups, as we have defined them in the past, are in decline but will be defined differently in the future and return. Startups are smaller today, often bootstrapped and show the impact of the “Long Tail” on the technology industry. Many of today’s startups do not appear in the data.

VC financing is way off because the venture capital backed startup model is broken. The hope among VC is that the equity markets, M&A and IPOs will rebound and underperforming VC will be eliminated in a Darwinian final solution. Surviving VC hope the technology industry will return to a new normal.

Markets will return, there will be fewer VC sector and conventional startups will re-emerge but I think we have seen a permanent change in the quality, quantity and variety of large scale ventures. The permanent contraction in the number of acquirers will results in fewer high quality, large scale startups. This is a permanent structural change in the fabric of the technology industry. (This is not a “final decline”; this is a shift in the curve and starting a new curve altogether that has taken place.)

Smaller, more “life style”-oriented technology developers will be the norm of the future. This class of startup will enjoy smaller returns or may not exit, eking out a business life at a smaller, less demanding scale. There will be more small scale mergers. This shift will be driven by cultural shifts, government policy, demographic shifts among developers and the “maturing” of the technology industry. Finally, there will be a shift towards larger scale clean energy and life sciences projects from software centric technology startups. Alternative financing models – such as debt and government grants – will become the new norm for larger scale startups. In the end it will be harder than ever to build a thriving new venture and hit a home run or grand slam.

But one thing never changes: Those four-baggers will never completely disappear. Just like Big Poppi’s elusive home runs, they will be fewer and far between.

Scott Kirsner is many things but his column in the Boston Globe and blog makes him the foremost entrepreneurship, technology and venture journalist in the Boston area. I might also add that on balance he gets it right. (This is an achievement for a journalist and blogger and a win for entrepreneurs.)

Functioning like a community activist and in his role as a panel moderator, he is very involved in the organization and execution of the Nantucket Conference and Future Forward events, and many other Boston area activities and organizations.

One more activity that Scott has taken on is fixing New England’s brand image. This is a really interesting challenge when you consider that (1) New England is a five state region that everyone associates with Boston-related activities, (2) the name of the region has both good (the center of innovation, original colony, education capital of the world, cultural and sports hub, etc.) and bad (stepping stone to other places, ground zero of Puritanism and parochialism, the land of the yesteryear’s’ technology IPOs – DEC, Wang, Lotus, etc.) associations, and (3) the region has various dimensions and qualities which do not make it easy to create simple tag line or rendering.

So on Tuesday night Scott gathered together a group of entrepreneurs, marketing types, trade association representatives and venture capitalists from software, life sciences, clean tech, etc. The meeting was hosted by and held at Flybridge.

The goal of this meeting was simple: To insure continued prosperity in our region, a brand review and upgrade was necessary. Action items will follow.

Scott entreated the 20+ attendees to “think along new trajectories” about New England’s branding and we did. The event generated many new ideas and was successful in establishing a foundation for future discussions.

Read Scott’s event summary here. Kudos to Scott for putting together this important and necessary event. I look forward to doing more to address this challenge.

Today the New England Clean Energy Council announced the 2009 Clean Energy Fellows and I was among the 25 Boston and New Year area CEO’s and executives awarded a fellowship.

This program is designed for CEO’s and entrepreneurs to learn about clean technology, its business models and financing options. The objective is to develop the next generation of new ventures which address both environmental problems and large business opportunities.

Gentle reader: Please indulge me as I reflect for a couple of graphs…

Back in the day, as a teen, I read Rachel Carson’s book Silent Spring and participated in the first “Earth Day” (March 1969). I was heavily involved in the “ecology” movement in high school and as an undergrad. (Other biographical factoids: I campaigned for Gene McCarthy and George McGovern before I could vote, “streaked” as a college freshman and protested against the Vietnam War. (Oh snap! I’m just like Forrest Gump.) Since leaving grad school, I have maintained an active interest in environmental issues and the movement.

(During the oil industry-backed Bush-Cheney administration clean tech received lip service, nothing more. Hydrogen and ethanol powered cars … Really?!? Overriding the Clean Air and Water Acts – enough said. Integrating clean tech into my career was a non-starter for the last eight years.)

For years I have been considering a transition to clean tech entrepreneurship. In one corner of my mind clean tech was generating many new business and technology ideas. At several points I tried to school myself on several clean energy technologies and markets: Fusion – especially Cold Fusion – was a really interesting, highly regulated and misguided science experiment; solar and wind power was a really cool business but overfunded by VCs; smart grid was a totally logical problem to solve but incredibly expensive, and water was a ubiquitous long-term problem with a worldwide market.

It was Barack Obama’s victory last November and his inauguration speech that led me to take action. I asked myself: “Why not now?” and “Why wait?” The action-packed first 50 days of the Obama administration was a clarion call to me to serve the greater good.

But … (and this is a big but) … after 25+ years of software industry experience would I have to jettison my skills, network and knowledge and start over?

As it turns out the answer is no – I don’t have to start over. This program allows me to leverage and extend all those skills, experience, connections, knowledge, etc. The clean tech industry needs experienced CEOs and entrepreneurs from the software industry who can build new venture teams and solve problems. Clean tech is simply short of startup expertise and wherewithal.

So it became super-clear back in late January: Now is the time! The Clean Energy Fellowship is a way to enter a new and exciting technology industry with a higher purpose, extend my software business career while I maintain my software business experience, contacts and interests.

In sum, I’m thrilled to embark on this new, harmonious pathway.