September 30, 2010
Vinod Khosla and Kevin Skillern on Green Energy
Both are known as green visionaries in the venture space, so Erick and the Techcrunch audience were all keen to know where they saw future trends and more importantly, billion dollar industries in the energy space.
As for hot sectors in green technology today, Vinod says, “disruption is just a fun game but it can occur everywhere. Everything can be reinvented in any area.
If people say it can’t, then it’s just a failure of imagination.” While it may be ten years to liquidate a company in this sector, he reminds the crowd that there are many technology start-ups that take that long as well.
Kevin, who runs venture investing for GE Energy, talks about GE’s role in the industry and its importance.
A third of the world’s power is run on GE’s equipment, so clearly they’re essential to the future of the energy industry. He said that when they started looking at what were the billion dollar markets in energy, they came up with 20 or 30 areas. In other words, there is no shortage of opportunities to be capitalized on.
So, what are the top five markets each of them are focused on?
“Clearly there’s something around fuels,” said Kevin. “When you get to a recessionary environment, a lot of things kick in and bio-fuels is a big one. Electrifying vehicles is another and if people start living on a smart grid technology system, they should be able to get a 20% oil reduction,” he adds.
Vinod adds a little perspective about companies looking to innovate in this area and how they should choose an investor. “You need to look at the individual at the firm who will be helping you,” he says.
“Ask yourself, how many billion dollar companies have they created? Can they help you through the hurdles along the way and creating a new market when the chips are down? There are lots of good VCs and good angels and lots of bad ones. Pick one who is passionate.”
Kevin talks about their investment in Consert from North Carolina, who is using 3 and 4G networks, which essentially turns a home into something that resembles a power plant. If you have a distributed network, you can manage the grid efficiently. There are big chunks of the world that don’t have the grid reliability, so apparently this is a no brainer for emerging countries.
Transportation and lighting are also huge. Vinod talks about solutions that can create crude oil. Calera is one company that Vinod brings up, which makes coal and natural gas power plants and cement plants cheaper and cleaner than solar and wind by reducing carbon by more than 100% in a scalable and economic way.
“Isn’t the goal to get off carbon fuels?” asks Erick.
“That’s conventional linear thinking,” says Vinod. He thinks environmentalists are doing more damage because they’re prescribing solutions without having a clue of how expensive they are. Below is an overview of some of the industry sectors and companies that Khosla Ventures is investing in today.
Kevin talks about missing incentives. He says, "if utility incentives were properly set up, and on the team, we could save a lot of energy but it’s currently not set up that way. Our objectives should be clean but also include tax benefits among other things. They need to be incentivized as well.”
Vinod pipes in, “if you stop believing the environmentalists, and start believing the scientists and the innovators, we’ll move forward. Owning a Prius is more expensive than a lot of other things we can do to save energy. You can reduce more carbon by painting your roof white. One costs $100 and one costs an additional $5K over what a regular car costs.”
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