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Power-ful Information: Efficiency in Energy

15 Nov

People are far more likely to take action when they have the necessary information to target their actions and measure their success. In the absence of high quality information, action becomes riskier, by for instance increasing the possibility of wasting resources on inefficient tasks.

PowerStationIt is with this in mind that I am particularly excited about a powerful new source of information that can help the world take smarter, better action in the fight to slow global warming and protect the environment. The Center for Global Development released yesterday CARMA (CARbon Monitoring for Action), a website and database of the carbon emissions of over 50,000 power plants and 20,000 power companies around the world. Using a combination of official information and computer models, they have captured the amount of electricity generated and resulting carbon output. With this information, they have been able to identify the worst polluting countries (USA) and most inefficient countries per capita (Australia).

The one thing which bothers me about CARMA is that they have failed to make efficiency the center of attention. Similarly, articles in Nature and BBC catch the significance of carbon emissions per capita, but fail to highlight the least efficient power stations, instead focusing on the worst polluting ones.

The city of Taichung in Taiwan is home to a power plant that emits more than 37 million tonnes of carbon dioxide into the atmosphere each year, the highest of any plant in the world.

Frankly I don’t care which power plant produces the MOST emissions, I care which ones are not only fouling the air, but doing so without producing a large amount of energy.

So what ARE the lease efficient power stations in the world? It is actually difficult to tell using the tools on their site, because you cannot easily manipulate the data. Without an easy filters for minimum size of plant, if you sort by “intensity” (tons CO2 per MWh Energy) you end up with a large number of very small power stations which, while inefficient, are producing relatively tiny amounts of emission. I can tell you this, however:

  • Of the top 10 largest power stations in the USA, Jeffrey Station in Kansas, Owned by WESTAR ENERGY INC is the least efficient, pumping out 16,300,000 tons of CO2 while producing only 13,900,000 MWh of energy (intensity = 2,355)
  • Abadie Station in Missouri is the most efficient of the top 10 in the USA, producing 16,400,000 tons of CO2 while generating 17,700,000 MWh of energy (Intensity = 1,849). Good work AMEREN CORP
  • By contrast, the worst of the top 10 in China is Tongliao Station, owned by CHINA POWER INVESTMENT CORP, producing 17,800,000 tons of CO2 and only 12,300,000 MWh of energy (Intensity = 2,902), nearly 25% worse than the worst offender in the United States

With more time, and the right tools, this database could yield some powerful insights. Here’s to hoping that those insights can lead to important changes in policy and investment.

Others have also been characterizing CARMA around the web.

E*Trade Crash a Boon for the Likes of Zecco?

13 Nov

News of E*Trade Financial’s stock collapse on Monday made me wonder if there is an opportunity for new up-and-comers in the stock brockerage market such as Zecco to poach fleeing customers.

If so, what are the best short-term tactics to attract them over?  Perhaps an easy “migrate your account” process with step-by-step guidance on the main page?

E*Trade Financial is a leader in the new generation of Internet-only lenders. But its stock got crushed Monday amid fears about a distinctly old-fashioned problem: a run on the bank.

Shares of E*Trade lost more than half of their value after the company said it expected additional asset write-downs and an analyst suggested that it might be forced into bankruptcy protection. While the bank assured customers that it remained “well capitalized by regulatory standards,” the analyst, Prashant Bhatia of Citigroup, theorized that a rush of withdrawals might leave the bank without enough funding to operate.

It also made me wonder if those firms were exposed to the same kinds of risks.  I don’t have any statistics, but my understanding and personal experience from the dot com bubble is that during a recession there is less interest in stock market investment.  Could that mean that some of the same E*trade challenges could affect the new shops?

Air France and Delta Trans-Atlantic JV

17 Oct

The International Herald Tribune reported today “Air France and Delta forming joint venture for trans-Atlantic flights.” This is yet another development in the airline industry as different players line up to take advantage of the impending change in regulation controlling flights between the United States and the European Union.

Many airlines are jockeying to take advantage of the “Open Skies” deal, which will allow airlines to fly from anywhere in the European Union to any point in the U.S. as of March 30.

The effect will inevitably play both to the favor of customers and airlines.

Customers will benefit from lower costs and more direct-flight options as more operators are allowed to cross the Atlantic, and to fly between markets which were previously not connected. Perhaps some intrepid airline will begin flying from San Francisco to Riyadh and make my life easier (yes, I realize Saudi Arabia isn’t part of the EU… yet).

With more possible destinations, airlines will be able to operate internationally at much lower cost (by, for instance, flying into London Luton rather than Heathrow or Gatwick). As different airports become viable options, airlines should have improved bargaining power when negotiating prices on landing slots and gates.

Could this be the way that US airlines break free from there historically abysmal profit levels?

Earn My Tweets

15 Sep

Pyramids_Mitch I am falling in love with “status messages” and “tweets.” These handy little messages tell me what my friends are up to, in a simple, usable way. It’s the best way for me to stay up to date on the day-to-day life of my friends and family (yes, even my mom is on Twitter). Plus, they help me keep track of where on earth all my friends are at any given time. This weekend, for instance, while in Cairo, I discovered a fellow Georgetown alum and colleague was also visiting for the weekend because of his Facebook Status message.

The shame of the current system of status messages is that they are incompatible. I have at least three places where I could / want to update my status – Facebook, Google Talk, and Twitter (most of you probably have 6 or more), but have to update each manually. Why don’t these services talk to one another? I should be able to set an automated import of my twitter messages to Facebook the same way this post will be imported as a Facebook “note” when it is published. My Google Talk status message should change every time I change my Twitter message, but if I update Google, Twitter should change.

Two players stand to benefit most from an increasingly “open” system of status messages (in my world, at least): Facebook and Twitter. Twitter is already wide open (For instance I can import my twitter messages via RSS into my personal blog at mitchellwfox.com) and is the natural host platform. If status messages are like ripples in my social network pond, spreading quickly to all networks, Twitter is well positioned to be the “stone.”

Facebook stands to benefit because status messages will be ever-more current, and more constantly changing. Because of the network effect of social networking, Facebook is the obvious place for me to go for “one stop shopping” of status messages. My profile will be more current, and my friends might even spend an extra second or two on Facebook before logging off to read what my status message is. Multiply that by hundreds of friends…

Anyway, I may be way behind the curve here. Is there already a way to do this? If so, tell me what it is!

The Gluten-Free Niche

5 Sep

GlutenTwo years ago, my friend told me she couldn’t eat bread or drink beer, but that corn-tortilla-wrapped tacos were just fine. I did my best not to look at her like she was crazy.

Then last year I met a coworker with a similar ailment, and then just this summer, a new flatmate. That trend is telling, and apparently in-sync with the growing trend in diagnosis of “Gluten Intolerance” throughout the United States. As with any ailment, increasing prevalence or diagnosis of previously inexplicable symptoms leads to new business opportunities for those willing to customize their service and products to cater to the afflicted.

In July, The New York Times wrote about Risotteria, a descriptively-named restaurant in Greenwich Village with a menu that caters to the needs of the gluten intolerant (“For the Gluten-Averse, a Menu That Works“). The success of that restaurant would seem to be a harbinger of opportunity for restaurants and food-product manufacturers looking for a new niche audience to target. Indeed, many producers have already started to move to the scene.

It has become a popular dietary villain. Gluten-free foods are popping up on grocery-store shelves and restaurant menus, including those of national chains like P. F. Chang’s and Outback Steakhouse.

The diagnosis of Celiac’s Disease (the scientific name), an autoimmune disorder wherein sufferers have an adverse reaction to Gluten, a protein found in wheat, rye, and barley (read: bread and other baked goods, beer, and a whole host of things that use wheat flour as a thickening agent) is on the rise in the United States. The New York Times wrote in May about this trend, comparing it to the similar rise in lactose-intolerance in previous times (“Jury Is Still Out on Gluten, the Latest Dietary Villain“)

The prevalence in North America was previously estimated at about 1 in 3,000, but several studies published in the last three years indicate that it is closer to 1 in 100 — and 1 in 22 for those with risk factors like having an immediate relative with celiac disease.

Two or three restaurants and a few packaged foods, however, would seem to barely touch the surface of the trend that could lie ahead. Wrong Diagnosis puts the disease’s prevalence rate at 1 in 250 Americans, and according to the University of Chicago’s Celiac Disease Center, prevalence among otherwise healthy adults may be as high as 1 in 133.

Businesses can cater to the gluten intolerant through a variety of means. For the majority of the restaurants in the world, the option will be as simple as ensuring one or two items are suitable for those with Celiac’s Disease, and labeling them appropriately in the same way vegetarian options often are. In places where populations where disproportionately many “alternative” or “healthy” diners reside, such as San Francisco and Chicago, or where a particularly aggressive diagnoser has a clinic, there is likely a large enough customer base to support a restaurant dedicated to gluten-free items. The place to start would be to contact local support groups and physician specialists to get a better feel for the size of the opportunity.

And best of all, especially for the friends of the gluten-intolerant, it turns out that the food can be quite tasty. I ate at Risotteria while in New York last year, and found my shimp, pepper, and spinach risotto to be excellent. The gluten-free beer made from sorghum, on the other hand, was another matter entirely.

Why Wal-Mart’s DRM-Free Tunes Will Change the Way You Buy Music

21 Aug

DRM-Free Music from Wal-Mart Great news was announced today for music fans, and from an unusual source: Wal-Mart. A time when we can purchase our music online and do what we like with it (share it, copy it, play it on whatever device we like) is finally about to become a reality. From Reuters:

Wal-Mart, the world’s largest retailer, said its new MP3 music catalog included thousands of albums and songs from major record labels like Vivendi’s Universal Music Group and EMI Group without copy-protection software, known as digital rights management.

Wal-Mart said it would sell the “DRM-free” MP3 downloads of music by artists like the Rolling Stones, Amy Winehouse and Maroon 5 for 94 cents per track or $9.22 per album. It said the new format let customers play music on almost any device, including iPods, iPhones and Microsoft Corp’s Zune portable media player.

The news from Wal-Mart is going to mean a big change for the industry, and for two important reasons:

  • Wal-Mart is such a powerful competitor, it virtually guarantees that other music retailers (e.g. iTunes) will have to follow suit and reduce their prices on DRM-free music in order to keep customers
  • Wal-Mart drives such sales volume, Sony BMG and Warner Music will soon realize that they are missing out on a large number of potential sales by not offering their music in DRM-free format as well, putting pressure on them and their artists to come to an agreement to join Universal and EMI

Until recently, the buyer of digital music was given fewer rights for the use of his or her music than the buyer of a traditional CD. Recording companies required that digital music be protected in Digital Rights Management (DRM) software, in an effort to combat the online piracy of music. This created the frustrating situation wherein music bought on Apple’s iTunes store [by far the largest with 80% market share in the US] could only be played on one type of MP3 player: the iPod. Apple justified this by saying that its DRM software would be compromised if it was shared with other hardware manufacturers.

The first major progress toward giving music buyers back their rights came several months ago when Steve Jobs and Apple advocated that music should be available to consumers in a DRM-free format, resulting a few weeks later in the advent of “premium” iTunes downloads without DRM for an extra $.20 per song. It was a move in the right direction, but many songs remain unavailable without DRM, and paying more for the identical song just to get the same rights you had if you had bought the CD seemed unfair.

Soon we will quickly see both a drop in the price of DRM-free music and the unlocking of music from more recording labels. Thanks Wal-Mart.

Read More:

[And thanks Engadget for the graphic!]

Why the VMWare IPO Doesn't Dispel the Possibility of Crisis, But May Signal a Shift

15 Aug

VMWareThe successful IPO yesterday of VMWare does little to concerns I have flagged in two of my recent posts about how the credit crisis and shifting economic conditions may be making the US a less attractive and successful center for entrepreneurship (“Buckle Up: Why Entrepreneurs Should Be Scared of the Shifting US Economy” and “Will a Debt Crunch Drive Smart Minds from VC, Entrepreneurship?”). The basic reason is that an IPO is an equity event, with investors buying up ownership of the firm, rather than a debt-leveraged buyout or credit-based investment that will be paid back.  It neither proves that talent is continuing to flow to the startup world, or that weak economic conditions are not affecting the chances of successfully launching a business.

I am writing today in response to a short message I received from Tony, a friend and reader of this blog, asking whether VMWare’s IPO changed my opinion about current conditions for entrepreneurship. VMWare’s first day of trading witnessed the stock spending most of its first day well above the opening price of $29 a share, closing in the mid $50s (See Alarm:Clock – “VMWare IPO Crushes It“).

While the VMWare IPO says little, if anything, about the credit crisis, it may indicate that the market for “exits” for entrepreneurs may be shifting back in the direction of equity markets. In recent years, private equity buyouts have become a credible exit option for startups, with large investment firms using significant debt leverage to purchase an entrepreneurial business. This is in addition to the more traditional exit for startups, through acquisition by another firm in its industry, which would typically involve a significant amount of debt to finance the purchase. If credit is tight, and the cost of borrowing remains too high, these options could well become more expensive, raising the bar that startups must meet before they have a chance to be acquired.

Therefore, an IPO may very well become the most attractive way for entrepreneurs to sell their businesses and “cash out” on their work.  It is not dependent on the credit market, and relies instead upon the perceived value of the company.

Declaring IPO as the clear path forward on the basis of a single exciting tech IPO would, of course, be premature. More evidence in the form of other successful IPOs, weaker acquisition and buyout numbers would help support the conclusion. In the meantime, however, it remains an interesting trend to be on the lookout for.

So what about the gloom and doom facing entrepreneurs that I described in my previous posts? It seems a successful IPO (of a company that was doing well and preparing for this event well before the credit crisis began last month) will do little to convince smart candidates that moving to an operational position in a startup is the right move to make in todays market. Nor does it mean that a weaker dollar and slowing US economy are any less of a threat to startups and their VC backers.

Buckle Up: Why Entrepreneurs Should Be Scared of the Shifting US Economy

9 Aug

Pinching PenniesEntrepreneurs, who might otherwise be somewhat anathema to worrying about macroeconomic trends, need to pay attention to what is happening in the US economy at the moment.  The changes that are just beginning to take shape in the form of a weaker dollar and tighter credit, will affect their ability to successful negotiate an “exit” for their business, and even more importantly, find customers for their products and services.

The New York Times editorial staff have outdone themselves today with an excellent analysis of the sticky situation in which the Federal Reserve find itself (“A Weak Dollar and the Fed“).

A declining dollar is a source of inflationary pressure because it can boost the cost of imports. So if the Fed tried to rev up the economy with a rate cut at the same time the dollar is falling, it could end up provoking even more inflation. That would be a drag on economic growth rather than a boost. In an extreme case, it could result in a toxic combination of weak growth and high prices that is a central banker’s nightmare.

How did the Fed lose room to maneuver? The answer is rooted in the Bush administration’s misguided economic policies.

The stage is set. Essentially, the US could find itself in the very difficult situation of having both a weak dollar (meaning that for you, the average customer, things like traveling abroad, buying imported cars, electronics, etc. is going to be more expensive) and rising inflation (meaning that your savings start to lose their value more quickly, because the things you like to buy are getting more expensive. This results in a net loss of incentive to save, because that car/laptop/iPod are going to be more expensive, and the value of your savings less, one year from now than the difference of those two today).

The only lasting way to fix the imbalances — and reduce that borrowing — is to increase America’s savings… It would also require revamping the nation’s tax incentives so that they create new savings by typical families, instead of new shelters for the existing wealth of affluent families…

Stymied by what it won’t do, the administration has gone for a quicker fix — letting the dollar slide. A weaker dollar helps to ease the nation’s imbalances by making American exports more affordable, thus narrowing the trade deficit.

But to be truly effective, a weaker dollar must be paired with higher domestic savings.

Just as I mentioned above, however, greater domestic savings is going to be hard to stimulate in today’s market. The choice the country faces, it seems, is to improve the incentives for domestic savings to overcome these growing challenges. That is because doing the opposite, or staying the course, has even uglier consequences:

Otherwise, the need to borrow from abroad remains large, even as a weakening currency makes dollar-based debt less attractive… Among other ills, it could lead to a deterioration in American living standards as money flows abroad to pay foreign creditors, leaving less to spend at home on critical needs. Or, it could lead to abrupt spikes in interest rates as American debtors are forced to pay whatever it takes to get the loans they need.

“Yes,” you’re saying, “we get it. The future looks grim. But what does it mean for me as an entrepreneur?”

It has an impact in two important ways:

  • Exits are going to be harder: The businesses that you were hoping would acquire your startup are going to have a harder time borrowing money (at a good price) to finance the deal. Private equity-style takeovers are attractive only when they can be properly leveraged (as in, they can borrow a lot of money cheaply, and invest only a small amount of their own cash). If US consumers are feeling a squeeze on their pocket books, they are less likely to be investing in the stock of your company at IPO, reducing your ability to do so.
  • US customers are going to start pinching pennies: As it becomes apparent to consumers that a weak dollar has real implications on what they can afford to buy, they may well choose to spend less, say, on things like social network premium memberships or bio-fuels and expensive eco-friendly cars, and more on the things that they need or enjoy, but now cost more: say, Chilean produce. Or Sony laptops.

There is one distinct upside to a weaker dollar: international exports.  If you are lucky enough to be in the position of producing a product or selling a service overseas, it will be easier to do so because the cost will be relatively lower for the customer.  Unfortunately, and I say this with no real knowledge or justification, my hunch is that the majority of US entrepreneurs are not currently in this position.

And if you believe what I was beginning to say in a post late last week (“Will a Debt Crunch Drive Smart Minds Away From VC, Entrepreneurship?“), it may well be harder for startups to find quality talent.

But what do you say? Is this view of the economy too dark? Is my projection on how these trends will affect entrepreneurs exaggerated?

The Hollow Echo of Second Life

8 Aug

Second LifeI do not have a Second Life. I have never built a property in Second Life, dressed my avatar in sexy clothing, visited Sears in Second Life, or converted Linden Dollars to US currency. I bet you haven’t either. Even if you have, you probably haven’t in quite some time (Second Life has less than 10% retention of users after 3 months).

We all HAVE, however, read about Second Life. Why? Because it’s got the digital media advertising world in a tizzy, and it’s the apple of every trend-watching journalist’s eye. It’s made the front page of BusinessWeek (Oct ’06) and been featured in at least eight New York Times articles.

Stephen Totilo at The Columbia Journalism Review wrote a very in-depth, interesting and analytical feature article (“Burning the Virtual Shoe Leather: Does Reporting in a Virtual World Matter?”) on journalism within Second Life. It’s an apt and appropriately timed article about something which is like the digital world’s celebrity: all gossip, glitz, and glamour, but very, very little content.

Totilo describes how journalism has evolved around this virtual world.

In the early days, Second Life reporters were stars of an experimental online culture, the Web-based town criers of a place where every innovation—the first gun, the first hug, the first recreation of Hiroshima as it was minutes after the bomb—was worth writing about.

In a second phase that began about a year ago, a new wave of reporters, representing big media outlets and with a somewhat different agenda from the pioneers, came in. They shined a spotlight, asked for real names, and were generally more interested in the phenomenon of Second Life—in the wow factor and the growing number of ways it mimicked real life—rather than the liberating possibilities of building a world from scratch.

With that second wave of “real world” media attention, Second Life attracted a whole cadre of advertisers and retailers, looking to establish a presence in this virtual haven. It seems to me, however, that Second Life is all spectacle and little substance. Call it a hunch [after all, I’ve never gotten past the registration page], but is Second Life a world populated purely with journalists, media buyers, and college students without anything much better to do with their time? Is it actually a place where businesses can find potentially lucrative customers? Is it really a place where value is being created, either for its “residents” or for the firms which have invested so much in creating their online presence?

The Inter Public Group released a polished, deep look at the business economics of advertising in Second Life for their media customers. Their report (“Should Second Life Be Your First Choice?”) is available for free online.

What is their conclusion?

Originally, many of the investments that real-world companies made in Second Life were justified as generating good first-mover PR, but those types of justifications tend to lose their validity as the investment cost increases above $50,000 and the hype surrounding Second Life begins to subside.

So maybe aside from the first few businesses who generated big buzz through their big moves into SecondLife, setting up a retail storefront may, in fact, be just a big waste of a company’s advertising budget. But who knows, maybe there’s somebody in Second Life who’s not a journalist or advertising analyst there to see it.

Maybe there’s not.

Thanks for the article reference, Mary! [at Valleywag] Also see Game Set Watch for their synopsis of the article.

Are Travel Agents the Future?

31 Jul

Travel agents will continue to evolve into niche players in the tourism industry. They will be most successful where they embrace specific types of travel (i.e. those seeking exotic adventures in the less-traveled regions of the world) and specific customer groups with high demand for travel assistance (i.e. businesses, or the elderly).

Robert Buckman’s post today on Fast Company’s Expert Blogs (“Innovation: Tired of DIY Travel Bookings?”), in response to a recent New York Times Article (“Happy Returns for Travel Agents”), analyzes the surprising continued success of traditional bricks and mortar travel agents, in light of the strong trend in DIY travel bookings seen in the last few years at sites like Orbitz, Expedia, and Travelocity. Buckman rightly predicts not only the continued existence of traditional travel agents, but describes them as becoming more successful as they adopt to a niche.

But travel agents have found a definite niche among travelers who are too time-pressed or impatient to deal with the vagaries of the Internet. Why not turn that chore over to the expert?

DIYism is great if you are not up against the clock and are persistent in resolving problems that inevitably crop up during a trip. But if you’re on the road and you need a solution quick, there’s no substitute for an experienced travel agent who has seen it all before.

TripologyWhere Buckman fails to take his analysis a step further, is to point to emerging startup businesses who are tailor made this this precise niche-targeting in mind. For instance, Tripology, a site which was recently covered in depth by VentureBeat last week after it raised a round of funding led by Ascend Venture Group, targets travelers with exotic destinations in mind. The articles by the NY Times and Buckman’s analysis provide the evidence that a niche play can be successful. VentureBeat points out the wisdom of Tripology’s particular strategy.

The problem for adventuresome consumers is that the best specialty travel agents are not always easy to find. The problem for specialty travel agents is that finding the adventuresome consumers is even harder. Sites like Specialty Travel and Travel Hub list specialty travel agencies, but the listings on those sites requires digging and guesswork, and is somewhat cumbersome.

Tripology addresses this: It asks intrepid travelers what they want to do on their trip and automatically finds three to four travel agents who know how to make that happen. For the consumer, finding the agents is free. For the travel agents, the qualified leads come for $5 dollars a pop.

Are travel agents here to stay, as Buckman predicts? Those which customize their service and target a niche (even a very large niche, as American Express Travel has done for corporate travelers) will be the true winners.