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Energy Conversion Devices (ENER) Message Board

  • Ray_Bowman Ray_Bowman May 31, 2007 10:35 AM Flag

    snoz, farmboy, all -- a guessing game

    OK, let�s have a guessing contest.

    >>Au contraire, snoz. When you need to turn great ideas into great profits, some stultified, dogmatic, mundane business analysis IS reasonable and intelligent.

    Ray is right BOTH ways but he doesn't even know it.<< (hrfarmboy, from the ECD�s Product Timelines thread)

    Actually, hr, -- if I understand your drift correctly -- I do understand the need for good �business� in successfully entrepreneuring great ideas into great profits. And, this twist in the thread reminded me of a guessing game I partook in long ago. I think it�s worth repeating here.

    Colorado officials had stimulated a conference/meeting between would-be entrepreneurs and venture capitalists -- and there were related folk also, such as inventors and patent attorneys � and at least one writer of a book on game-changing techs. At one seminar I attended, the leader/teacher (a VC guy, as I remember) asked the group to name the one most important characteristic that would best assure a successful entrepreneur. As you can imagine, there were quite a few replies he did not agree with.

    That question is important to this MB � since ECD is perhaps the longest living entrepreneurial venture in history! So, give your answers. Snide suggestions are NOT welcome, but I suspect they will dominate. But, maybe you should sincerely try � the seminar group found the answer the leader sought and got to be worthwhile, and it led to much fruitful discussion, as he had anticipated � I hope it will here, also.

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    • Ray,

      << And, I am much more interested in the �number of other problems they have not solved� � since the *reasons* for such are what determine whether or not ECD management is performing well. >>

      The "problems" have been discussed many times. You and some others apparently feel they are either; 1) not really problems or, 2) not serious. At the risk of being repetitive I'll list a few and you will probably attempt once more to convince us they are not indicative of any serious shortcomings. ;-)

      1. Lack of focus. Too few resources chasing too many opporutnities. The problem is management and money is spread too thin. Consequently progress is slower than it could or should be on the near term opportunities. The recent example is the problems at AH2. Staffing and training was certainly a foreseeable and preventable problem. Mgmt told us they were focused on the near opportunities. No excuses... their planning and execution was below expectations. Same re: the missed sales the last two quarters at Uni-Solar. Two quarters is six months, I believe they could have sold the product elsewhere if they had a stong sales organization.

      2. Slow to recognize and react to problems and opportunties. Cobasys can't sell to the automakers if they aren't building HEVs but as soon as this "problem" was recognized they could have focused more attention on the stationary market. As I've mentioned a couple of times, Stempel at one time indicated this was a potentially huge market and could develop earlier than the HEV opportunity. According to Neslage's ASM presentation it will only represent about 1/3 of Cobasys business by 2010. Certainly Cobasys has its own management team but as a 50% owner of the business ECD certainly has influence. At the ASM Neslage barely mentioned the stationary market.

      3. Poor communication. This probably needs no further explanation.

      4. Succession planning. It is not especially unusual for the BOD to be involved but in well managed companies it is also not unusual to have some strong internal candidates who have been groomed to take over. This from an article on Warren Buffett and Berkshire Hathaway, "MYSTERY HEIRS. Buffett says he already has picked a successor--two of them, actually: one to manage the stock portfolio, the other to oversee the operating companies. Their identities have not been disclosed to shareholders or, for that matter, to the heirs apparent themselves, because Buffett reserves the right to change his mind. He says he might eventually settle on a single successor." The date on the article, July 5, 1999. Buffett is still in charge but clearly succession planning has long been on his mind.

      http://www.businessweek.com/1999/99_27/b3636001.htm

      5. Delays and disappointments can be expected but ECD seems to have more than its fair share and rarely a pleasant surprise to counter-balance them. The DVD business with GE was supposedly within a quarter of mass production when suddenly the plug was pulled. Years ago this board was excited about an anticipated public display of the ORFC - and years later we really haven't seen an impressive demonstration - to say nothing of a commerical product. The search for new partners for both Cobasys and OHS have been long and so far unsuccessful.

      This management team is just not getting it done. And to excuse them because ECD is complex and pursuing many different game-changing opportunities is not an excuse. Management has chosen to make it complex. They have chosen to pursue several opporutunities. And the fact is, they are getting old and it is increasingly unlikely they will have, or be given, the time to educate their successors.

      And frankly, investors have to ask whether this management team is interested or capable of educating and developing a strong succession team. They've had years to do it and from all appearances never made it a priority.

      Snoz

    • An NVR/ENER comparison/contrast is a poor one. I would not endorse an ENER stock buyback program at any price, but I would endorse any program where ENER stock could be purchased at $ 40 or less per share. (without taking into account any spin - offs)

    • Summary:

      Recognition of an opportunity, Vision, Enthusiasm, A plan
      The personal wherewithal to pursue the vision, The ability to sell the vision, Recognition that you may not be the best at everything � bullregardsmith (uh, -- bullregard -- ONE THING, remember? :-) I�ll just put that down under snoz�s guess. And, I�m going to take liberties in shortening some of the other suggestions, as well. Simplistic punch lines are adequate.

      Enthusiastic vision � snoz, bullegardsmith
      Ability to make things happen � farmboy
      Ability to create positive cash flow � ski.funk
      Focus on creating protection against competition � abstract dreamer
      Having an appropriately focused drive � hop a long
      Ability to adapt � zmorg
      Not giving up � post looks 10a
      Imagination/Passion/Persistence � bextrasick (triple-dipper! � for shame :-)

      OK � thanks for the responses. I guess the others have no opinions? Or afraid to speak � because this sounds like a test? :-) Just kidding, I imagine the others simply agreed with what had already been suggested. And, anyway, we have enough suggestions. And, each of them are very important � a lack can certainly be responsible for a failed company. However, none of them are the one the VC guy insisted was most important. (Maybe he was just a consultant for VCs � I can�t remember, and it does not really matter which. He was clearly experienced about business failures.)

      It�s important to remember that we are considering *entrepreneurial ventures*. That is, new businesses involving something substantially new � not simply some sort of copy-cat business or an expansion or spin-off for an existing business.

      Definitions of entrepreneur vary (some would not really distinguish the concept from an ordinary-business man � for which a better term might be �enterpriser�). I think this link is particularly clear (and it has some other interesting commentary that is pertinent background for ENERphiles):

      http://www.zeromillion.com/entrepreneurship/entrepreneurship-meaning.html

      <<Take for example, if someone starts another run-of-the-mill hot dog stand in the streets of New York, will he termed as an entrepreneur? According to Drucker�s definition, he will be seen as one. However, if the above definition by Schumpeter was used as a guideline, the answer is probably �NO�. Why? The core of the matter lies in what is so innovative about setting up another hot-dog stand which are in abundance in New York. On the contrary, if he is the first one to start a stand selling hot-dogs with Oriental Sweet and Sour sauce topping; he could be termed as an entrepreneur (even based on Schumpeter�s requirement) as he has done what others have not done before. In the context of entrepreneurship, creativity and innovation are key points in the whole scheme of things.>>

      OK, that innovative-hot-dog vendor does qualify as a simple-product entrepreneur. And, note that success, even for that very simple business, depends not only on his particular topping (maybe some �R&D� needed!) but on how clever his marketing is. A lot of additional creativity and innovation could well be necessary to develop a successfully-tasty �oriental hot dog� AND to successfully market that product. New products and the marketing of them involve a much higher level of uncertainty than for ordinary businesses � and uncertainty is truly hazardous re business success (more, later � as this is absolutely key to understanding ECD and its management).

      So, his view, and mine (then and now): ability as a problem solver (practical creativity) is the most important characteristic for success as an entrepreneur.

      • 2 Replies to Ray_Bowman
      • Ray,

        OK, I'm fine with that ansnwer: "ability as a problem solver (practical creativity) is the most important characteristic for success as an entrepreneur."

        One could argue that Stan has been better at generating ideas and providing partial solutions to problems than at actually solving problems.

        I think most here recognize that Stan is a creative genius and probably an exellent problem solver - if the problems are related to amorphous materials and technical in nature. But his track record and more importantly ECD's track record isn't that great when it comes to solving business problems.

        Stan's entrepeneurial skills have proven to be insufficient in delivering the kind of business success that rewards shareholders in a reasonable period of time. The same can be said of Stempel's management skills developed in a large corporate environment. And the same may be true of Metzger.

        Stan and Bob are at the end of their business management careers. Stan may have productive years remaining in R&D. Bob may have years remaining as a consultant/advisor. But as C-level managers they are about done. One of, if not the top priority for people in their positions is to attract and retain capable successors. The evidence suggests they haven't done a great job with this. And there are a number of other problems they have not solved.

        As a result you have large shareholders upset and assuming a more active management role. Lot of ideas. Lots of possibilities. But great problem solvers? Not IMO.


        Snoz

    • What will the shorts do if Cobasys is sold? That is the question I would like answered. If this happened I would like to see the BOD plow a chunk of the sales proceeds into a share buyback program.

      • 2 Replies to flyingunderradar2
      • flyingunderradar2,

        << What will the shorts do if Cobasys is sold? That is the question I would like answered. If this happened I would like to see the BOD plow a chunk of the sales proceeds into a share buyback program. >>

        It will depend on the price for Cobasys and what management says it will do with the money.

        Personally, I don't think a share buyback is a great use of cash at this time. There aren't that many shares outstanding and I think shareprice volatility would decrease if there were more shares rather than fewer. Last year with the share price north of $50 I was hoping management was considering a split to put more shares on the market and get the shares more widely distributed.

        IMO - the shorts will cover when it becomes clear that revenue and earnings growth will be robust for many quarters or years. That requires significant business success with one or more of Uni-Solar, Ovonyx or Cobasys.

        Selling technology generates some cash and hopefully helps managment convince investors that they are focused on near term opportunities that will result in sustained profitability. And it could provide some R&D funding for further out opportunities. But if it appears most of the cash will go to R&D for further out opportunities as opposed to using it to grow the commercial operations... the shorts tune and attitude won't change.

        Regards,
        Snoz

      • thats the kind of shareholder rewarding hardball corporate aciton we need around here! This ain't a charitable foundation or a University for crying out loud!

    • not giving up.

      imo.

      • 1 Reply to post_looks_10a_brass
      • Imagination-- Passion-- Persistence !Please name another person or company who/that has accomplished what ENER has for over 45 years? I'm not satisfied with the current situation,but 'without' the 'current' Entreprenour,this MB would'nt be here. I agree that Stan and Bob 'MUST' be replaced ""SOON"",but without Stan's Imagination,Passion,and Persistence,and Bob's ''contacts'',we would have been ""DEAD"",many years ago!!!!!! I am still looking forward to the ""ARUBA"" trip!! Anxiously awaiting meeting many of you posters on this board!!! Regards--- Bextrasick

    • RE At one seminar I attended, the leader/teacher (a VC guy, as I remember) asked the group to name the one most important characteristic that would best assure a successful entrepreneur. (Ray Bowman)


      The ability to adapt.

      Regards,

      Zmorg77

    • Focus on the creation of a wide-moat for his business (which can be created with innovation, scale, agreements, strategy, etc.)

      Rockefeller was able to create such a huge company in a commodity business because he was a very good and very aggresive negotiator, took risks, and was fast and efficient.

      • 1 Reply to abstract_dreamer
      • Focus on the creation of a wide-moat for his business (abstract dreamer)

        Sounds contradictory to me. How do you focus on a wide moat?

        I would say having an appropriately focused drive is key. You need to be driven through your vision, as Snoz notes, but that focal point needs to be aimed at the right target. This target may be quite far away and may require many intermediate targets to get to, and certainly some flexibility/adaptability is crucial as well. I believe Stan has a vision and a long-range target but I don't think he's been able to focus adequately on the intermediate targets in order to get there (within a reasonable time).

    • >>>>the one most important characteristic that would best assure a successful entrepreneur:

      Create positive cash flow.

    • A guessing game. Precisely the problem.

    • The ability to make things happen.

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