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Can Cleantech Produce "Ten Googles"?

Posted Jun 03, 2009 01:39pm EDT by Sarah Lacy in Venture Capital, M and A, IPOs, Clean Tech

Vinod Khosla, of venture capital firm Khosla Ventures, is an optimist. You show him a huge problem, and he sees only a huge opportunity. And, since he’s a VC, he sees lots of dollar signs around it too.

As a co-founder of Sun Microsystems and investor in companies like Juniper Networks, Khosla had a stake in the earliest days of the Internet build-out when it seemed like an impossibly hard task. Now, he sees the same—if not greater—opportunity in cleantech.

He says it’s less about individual technologies like ethanol and solar cells and more about “re-inventing the infrastructure of society.” He includes in that everything from light bulbs to cement. The opportunity is so vast that Khosla says “clearly” at least 10 “Googles” will be built. And as a former partner in Kleiner Perkins Caufield & Byers—one of Google’s first investors—he knows a thing or two about the search giant.

In a rare, sit-down interview at his Menlo Park office, Khosla explains why he’s invested in more than 30 cleantech companies since starting his own firm, and why other investors who say it’s too capital intensive and too risky are wrong. (Not that he minds them leaving him all the deals, he adds.) But Khosla also takes on idealistic environmentalists whose wacky ideas can’t scale or even make it to market without subsidies. Instead, he calls himself a “pragmentalist.”

Is there a lot of hype? Sure. There’s always hype with new technologies. In fact, Khosla has bad news for those who bought solar stocks at their peak—your investments will probably stay underwater. But look alive, because more IPOs are coming “faster than people think.”

49 Comments

you
Yahoo! Finance User - Wednesday June 03, 2009 01:55PM EDT

Beacon Power energy storage, is clean techology. A new power grid, a new America. With smaller energy cells supporting smaller energy grids we can finally get away from coal and fossil fuels. We just have to think smaller, it woun't make America smaller, just much cleaner.

Ryan
Ryan - Wednesday June 03, 2009 02:07PM EDT

Get away from coal . . . at what cost? The U.S. pollutes far less than any other country per GDP. When you are are heavily industrialized nation such as we are, it takes energy to move that economy. If you increase the cost of energy, we'll just get goods from other countries. Unless we regulate even more, and restrict imports, then consumer cost will just go up. But hell if your for growing government . . . . it is the way to go. This is by far the stupidest thing coming out of this administration. "Clean energy" is so OVERRATED

MattW
MattW - Wednesday June 03, 2009 02:35PM EDT

Ryan M, Please. You have to back up your statements with some facts. How much is "far less"? If you meant "per capita" instead of "per GDP", then your statement is patently false. Germany emits approximately 1/2 of what the US does per capita, and most other European countries are in that ballpark as well. If you in fact meant per GDP, then please reference the source of your information that shows the US ranked against other countries in this manner; that would be an interesting statistic and I have never seen it before. And your source has to be other than "I heard Rush say it".

you
Yahoo! Finance User - Wednesday June 03, 2009 02:44PM EDT

Hard to import energy...unless you talk about oil. And we know how oil is just a horn of plenty. "clean" energy has more possiblities for domestic production than just coal alone. Besides coal alone is insufficient for energy needs. Diversification of energy is more stable and will create more jobs than just coal. If you want to restrict imports and regulate more...you are growing government. Unless you are in control Ryan.

you
Yahoo! Finance User - Wednesday June 03, 2009 02:46PM EDT

Sorry Mr. Koshla...but there really is no problem (and therefore no opportunity) with cement and glass and plastic. And lightbulbs and engines and fuels are already being improved and refined by large multinational companies like GE, Esso/Shell, Honda/Toyota/Mercedes etc. I fear that your investments may prove to be futile.

you
Yahoo! Finance User - Wednesday June 03, 2009 03:02PM EDT

What about personal energy? Everyone in the US should bw aware of this by now. I really think Arctic Zero is going to take off. www.myarcticzero.com

__A_YAHOO_USER__
__A_YAHOO_USER__ - Wednesday June 03, 2009 03:02PM EDT

Clean tech overrated? It is critical in preventing further war and human suffering as we compete for limited resources, not to mention sea level rise from burning fossil fuel.

Wes
Wes - Wednesday June 03, 2009 03:03PM EDT

Sorry, but as of now coal is the way to go. I agree we should be working on cleaner ways but look at Spain. Their entire power infrastructure is a joke. They released their own study and had to admit that going "Green" has cost them 100K jobs not counting the businesses that have left the country because of the cost of electricity and that between 2000-2008 their CO2 emissions have increased 50%. Having green energy that no one can afford is not the way to go.

LegalizeMe
LegalizeMe - Wednesday June 03, 2009 03:04PM EDT

We are the Saudi Arabia of coal. We need to clean up our current coal plants and build more "clean" coal powered plants. We mine coal here, we have more than any country in the world, and all that money from mining and creating electricity stays in the US. Sounds like a win-win situation.

C
C - Wednesday June 03, 2009 03:07PM EDT

Just want to point out German buys a lot of excess electric power from the French who is 80% clean, non-polutting nuclear power. The green energy folks just don't seem to understand power consumption in USA is roughly 20% household, 40% commerical and 40% industrial use. Within all the talk of putting solar panels on roof tops, you are only addressing 20% of the total problem. People forgot you need massive cheap, reliable source of energy to maufacture goods or you can have China make all the things for you. France copy the US reactor designs and make good use of it. Rest of the world is moving ahead with nuclear power except the US because this country is hijacked by the lefties. China is building one coal fired plant a week and US is sticking its head in the sand. By the way, the French is reproceesing their spent fuel, so where is the waste??

HanO
HanO - Wednesday June 03, 2009 03:10PM EDT

Sarah Lacy is pretty cute. I do agree with Vinod that many "environmentalist" are just English majors with no clue on how to get to a solution.

toby
toby - Wednesday June 03, 2009 03:16PM EDT

Mr. Khosla gives an interview that is mostly sales pitch. So he has invested in a portfolio of 30 clean, green technologies. Many of these would seem to be competing technologies. Diversification and hedging aren't one in the same. Recognizing the importance of the doubling effect, he says that solar cell efficiency will soon double. From current levels, that could theoretically happen twice. I would like to see some who, where and when regarding this prediction. That would be investment news.

JoeW
JoeW - Wednesday June 03, 2009 03:17PM EDT

I'm having trouble understanding why we can't make electricity with 100% clean alternative energy sources, and deliver that to hydrogen fueling stations. There is enough wind, geothermal, tidal and solar to make it happen. Yes, it's all more expensive that carbon based products and the infrastructure has to be built out, but there's no environmental downside. You have to make sacrifices to do anything right.

you
Yahoo! Finance User - Wednesday June 03, 2009 03:19PM EDT

What are these cleantechs? I'd like to invest in some. If we truely want change, we might want to look with a differnt eye.

Jorden
Jorden - Wednesday June 03, 2009 03:22PM EDT

Fossil fuels are an out-moded hunter gatherer mentality that does not scale, are terribly inefficient to find, extract, and burn, pollute every corner of the world, and destroy the world's ecosystems. As we moved from being hunter-gatherers to farmers about 10,000 years ago, we can now do the same with energy. Solar, wind, geothermal, etc. can be farmed at a small fraction of the $16 trillion infrastructure that was put in place for fossil fuels. For under $1 trillion we can have energy independence and security forever, while generating and reinventing hundreds of industries. This is exciting!

korokmalfesio
korokmalfesio - Wednesday June 03, 2009 03:24PM EDT

Vinod Khosla is another leading edge thinker and investor who says we are "reinventing the infrastructure of society." The need to do so was caused by the collapse of the global financial systems. Sarah Lacy asks where the opportunities to make money are in the "new reality," suggesting that new technology will rebuild old economic paradigms. No one seems to think that established economic paradigms are kaput and the "new reality" will redefine distribution of wealth, sustainability, and self-esteem. After all, one's idea of self-worth is what provides substance to "infrastructure." Infrastructure cannot be reinvented without rebuilding foundations. Technology is a tool. It simplifies living, or provides entertainment. But having access to technology does not, in-and-of-itself, enhance self-esteem unless "owning" it is not assumed. Then it becomes a totem of personal worth. For example, how many people would feel good about themselves because they can ride a bullet train from SF to LA? Not many. How many people would feel good about themselves making the same trip in a Lamborghini? Quite a few. But the bullet train may actually be the greater technological achievement. So, what gives? Easy. Owning the Lamborghini implies exclusivity. It sits one apart from the crowd. So, perhaps "reinventing the infrastructure of society" should involve redefining what it means to be different and what is required to be held in esteem.

Joel
Joel - Wednesday June 03, 2009 03:31PM EDT

@geepafin53012... why does RyanM have to prove to you his fact (which you clearly would like to interpret in a way other than what he said)? Are you too lazy to just google it yourself? http://www.nationmaster.com/graph/env_pol_car_dio_fro_fos_fue_200_pergdp-fossil-fuels-2000-per-gdp p.s. that took me 27 seconds.

lisalipps
lisalipps - Wednesday June 03, 2009 03:31PM EDT

Hydrogen fuel cells will be America's future energy source years from now. Forget about wasting billions of dollars on worthless wind and solar technology that will be replaced eventually by fuel cells. In the meantime drill, baby, drill!

you
Yahoo! Finance User - Wednesday June 03, 2009 03:34PM EDT

I agree with that Nuclear Power is the way to go for large scale energy production. It is clean (no CO2 or other pollution produced) and it doesn't require any carbon-based fuel (coal, natural gas, deisel oil) to produce. France is a good example and role model for nuclear power.

Mulv-unit
Mulv-unit - Wednesday June 03, 2009 03:34PM EDT

--LegalizeMe Clean coal is a political term. The process of creating energy from coal creates CO2, you can't clean a chemical reaction... -- I agree above that there needs to be a diversification of energy supply and relaying on cheap energy now ( coal in cost, oil due to cost to change energy infrastructure for a new source) will only intensify the costs for the future when supply runs low... I agree with the Author from the point that low cost renewable energy will be the modern economic revolution much of what computers have done since the '70's. If you have money to make home run bets, then you stand the chance to make huge returns, and this author seems to have that kind of money.... For everyone else, you have to ask yourself "Is there something better I could be doing with my money now?" For myself paying down my debt and short-terming the market works for now, and hopefully in the future I will be in a position to invest in possible home run companies like Clean Tech

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