Forget What You Know: Why Cleantech Entrepreneurs Need to Forget the Lessons from the IT Revolution
We have to reform our strategy if we're to build the clean-energy Googles, the green-business Amgens, and green-job Dells of the future. We will only do that with government at our side.
By Sunil Paul
Founder, Spring Ventures
Experience is a wonderful thing, but sometimes it leads to the wrong conclusion. We've all heard the chestnut about generals fighting the last war. Today in the cleantech world, the rules of government engagement that we learned from our proving grounds in information technology and biotech are hurting us. We have to reform our strategy if we're to build the clean-energy Googles, the green-business Amgens, and green-job Dells of the future.
When many of us built successful internet and computer companies we we avoided active government engagement. We didn't particularly want government as a partner or customer and certainly not as a regulatory agent. We thought government support was the kiss of death. When we did engage it was usually after our companies were large and profitable and then only after we perceived assaults like regulation, internet sales tax, export controls, intellectual property, and stock option accounting. Even today, if you are a software, computer, or internet startup, you can largely ignore the government other than obeying the law.
The biotech industry was only slightly more engaged. There we learned that while government rules were stringent and onerous, those same rules were stable over many years and administered by a few agencies at a national level. Most important, we didn't have to actively engage with government because we could trust that the incumbents (big pharma) had the same government agenda that we did. Both big pharma and biotech both wanted less red tape, faster approvals and more R&D, not to mention strong intellectual property enforcement.
Cleantech is different. There is no large, well-established industry whose advocacy work we can depend on. The rules change often and vary from region to region. The incumbents in fossil fuel industries don't just own the customers, they have decades of experience in using government to bludgeon their competitors. Every successful energy company -- renewable or not -- relies on government engagement and support to survive and grow. Wind, solar, geothermal, combined heat and power, and energy efficiency are all industries built on the back of government regulation, tax code, or procurement. The point is this: if you want to win the battle to build a massive company in this marketplace you must understand that government sets the landscape that makes it possible.
The high ground in this battle is political capital. It's not just from having the "right" argument, although that helps a lot. To carry the day when it comes to skirmishes on the hill and in other corners of civic leadership, we must have power in the world of votes, something cleantech does not currently have. As leaders in the cleantech community, we need to think about creating power in a strategic way. A member of Congress cares more about 60 jobs in his or her state or district than about 600 jobs in the next state. If cleantech is to be successful we need a compelling story to tell to every member of Congress, that means engaging in every community possible. And we need allies in communities organized around environment, security, religion, labor, and agriculture.
Once we gain the high ground we can fight for market-based mechanisms to encourage new, clean energy sources and more productive, efficient methods of using energy. We can fight for the good lessons of infotech and biotech like decentralization of power and empowerment of small groups. We can fight to defeat monopolies and oligopolies and fight for the opportunity for little companies to turn into big companies. We can fight against earmarks and special set asides for the current entrenched interests and fight for a fair weighing of the social, environmental, and security costs of the current energy regime.
The great thing about experience is that it is possible to unlearn the wrong lessons. Some in the cleantech community have witnessed the development impact of policies like the newly enacted investment tax credit (ITC) which is stable for at least eight years. We've also seen the impact of groups like Environmental Entrepreneurs and Cleantech and Green Business for Obama.
The way forward is for those of us who bring prejudice about engaging with government to stop and look at whether that's working in this new world. If we take a cue from those who have come before us in the energy industry we will make sure that we are present in every governmental chamber, we will build alliances with labor and energy security hawks. We will strengthen the sometimes uneasy partnership we have with the environmental movement. In other words, we will get over ourselves and our past experiences and we will create a whole new industry that creates jobs, creates wealth, and may help save the planet's health and security. We will only do that with government at our side.
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Sunil Paul is an investor and entrepreneur. He is Founding Director of Spring Ventures, which invests in cleantech companies. He is a successful internet entrepreneur, having founded several firms including Brightmail, the leading anti-spam software now part of Symantec after a $370M acquisition. He is also co-founder and national co-chair of Cleantech and Green Business for Obama, a highly successful constituency group of the campaign. He also currently directs a non-profit project, the Gigaton Throwdown, to encourage cleantech pathways that can grow to such a scale to change the global climate.
