Building a Green Business:Building a Green Business:Lessons and OpportunitiesLessons and Opportunities

Martin TobiasMartin Tobias

January 2009January 2009

Tech nerd to Green and Tech nerd to Green and backback

Martin TobiasMartin Tobias• In the beginningIn the beginning

– Medford HS ‘82, Mensa, the other thing.Medford HS ‘82, Mensa, the other thing.– OSU ‘86, ASOSU Treasurer, Lambda Chi Alpha, Bus/CSOSU ‘86, ASOSU Treasurer, Lambda Chi Alpha, Bus/CS

• Accenture, Information systems consultingAccenture, Information systems consulting– Senior Manager, ‘87-’91, Microsoft, Sullivan Payne, Coopervision Silco, RR Senior Manager, ‘87-’91, Microsoft, Sullivan Payne, Coopervision Silco, RR

DonnelleyDonnelley• Microsoft Corp., Software Microsoft Corp., Software

– Program Manager, ‘91-’97, 4 years in EuropeProgram Manager, ‘91-’97, 4 years in Europe• Loudeye Technologies, Inc., Digital Media servicesLoudeye Technologies, Inc., Digital Media services

– Founder, Chairman, CEO, ‘97-’00, lead investor, $0-$12M revenue.Founder, Chairman, CEO, ‘97-’00, lead investor, $0-$12M revenue.– Grew from 1 to >400 people, senior mgt, board, 5 acquisitions.Grew from 1 to >400 people, senior mgt, board, 5 acquisitions.

• Ignition Partners, Venture CapitalIgnition Partners, Venture Capital– Venture Partner ‘02-present (active ‘02-’04)Venture Partner ‘02-present (active ‘02-’04)– Infrastructure software investments, Cloudmark, Inc.Infrastructure software investments, Cloudmark, Inc.

• Imperium Renewables, Inc., Biodiesel producerImperium Renewables, Inc., Biodiesel producer– CEO/Chairman ‘05-’08 first investor, $0-$89M revenue.CEO/Chairman ‘05-’08 first investor, $0-$89M revenue.– Scaled up tech from pilot to largest BD plant in world. Scaled up tech from pilot to largest BD plant in world.

• Kashless, Inc., ReCommerceKashless, Inc., ReCommerce– CEO/Founder ‘08CEO/Founder ‘08

• OtherOther– 27 personal venture investments27 personal venture investments– Founder Northwest Energy Angel Network.Founder Northwest Energy Angel Network.– Leading man, Biker Dreams the movie.Leading man, Biker Dreams the movie.– Blog www.deepgreencrystals.com, www.frombitstobarrels.com Blog www.deepgreencrystals.com, www.frombitstobarrels.com

From Bits to BarrelsFrom Bits to Barrels• 1982 Timex Sinclair, Kaypro, Basic1982 Timex Sinclair, Kaypro, Basic

• 1984 OSU Cobol, cards, Pascal on MAC1984 OSU Cobol, cards, Pascal on MAC

• 1985 Leading Edge, ASOSU Treasurer, 11985 Leading Edge, ASOSU Treasurer, 1stst lab in MU. lab in MU.

• 1987 RPG on S/38 Andersen Consulting, 2 patents1987 RPG on S/38 Andersen Consulting, 2 patents

• 1989 Microsoft, power to the PC 1989 Microsoft, power to the PC

• 1997 Loudeye, a/v on every computer, 3 patents1997 Loudeye, a/v on every computer, 3 patents

• 2001 Ignition Partners, fund next big thing2001 Ignition Partners, fund next big thing

• 2004 Bored with tech, need next big market2004 Bored with tech, need next big market

• 2005 CEO Imperium Renewables, Biodiesel for all2005 CEO Imperium Renewables, Biodiesel for all

• 2008 Surf2008 Surf

• 2009 CEO Kashless, Inc., ReCommerce2009 CEO Kashless, Inc., ReCommerce

The Scary StuffThe Scary Stuff

WE are the problemWE are the problem

THEY have the resourcesTHEY have the resources

Where is the Peak? We passed Where is the Peak? We passed itit

% of WW GDP for oil% of WW GDP for oil

Oil still relatively cheap

Dramatic Changes: An Ice-free Arctic? 1979-2003:

Progressive Loss of Arctic Ice

The big carbon emittersThe big carbon emitters

The Frequency of Weather The Frequency of Weather Related DisastersRelated Disasters

Data from Swiss Re 2005

Can we actually do Can we actually do anything?anything?

New York City circa 1950New York City circa 1950

New York City December 2001New York City December 2001

Diesel Grew Quickly in Diesel Grew Quickly in EuropeEurope

49.3%

0%

10%

20%

30%

40%

50%

60%

1990 1995 2000 2005

EU-15 Diesel-Fueled Vehicle Share of New Car Registrations

Source: ACEA www.acea.be

0%

10%

20%

30%

40%

50%

60%

1992 1996 2000 2004

EU-15 Diesel Share of LDV Fleet & New Sales

Share of Fleet

Share of New Sales

Yes we canYes we can

ReadingReading

• The Bottomless WellThe Bottomless Well, Peter Huber, Peter Huber

• The PrizeThe Prize, Daniel Yergin, Daniel Yergin

• Sleeping with the DevilSleeping with the Devil, Robert Baer, Robert Baer

• InfidelInfidel, Ayaan Hirsi Ali , Ayaan Hirsi Ali

• Energy at the CrossRoadsEnergy at the CrossRoads, Vaclav , Vaclav Smil Smil

Key InsightsKey Insights

• Oil crisis, not energy crisisOil crisis, not energy crisis

• Americans are lazyAmericans are lazy

• Solutions must be upgrades not Solutions must be upgrades not platformsplatforms

• Entrepreneurs will find the solutionsEntrepreneurs will find the solutions

23

• Corn Ethanol

• Biodiesel

• Solar PV

• Wind

• Geothermal

The Markets You Think OfThe New Green

• Engines ($200B)

• Lighting ($80B - US)

• Appliances ($10’sB+)

• Batteries + Flow Cells ($50B+)

• Gasoline ($500B+)

• Diesel ($500B+)

• Jet Fuel ($100B+)

• Cement ($100B+)

• Water ($500B+)

• Glass ($40B)

• BioPlastics ($10’sB+)

Generation - $250B - US

• Solar Thermal

• EGS

• Clean Coal

• New Nukes

Think big markets not Think big markets not ““greengreen””

Areas of promiseAreas of promise

• Software meets energySoftware meets energy• Next generation liquid fuels, esp Next generation liquid fuels, esp

feedstockfeedstock• Enhanced GeothermalEnhanced Geothermal• Unregulated water powerUnregulated water power• Captive energy markets (NE, Hawaii, etc.)Captive energy markets (NE, Hawaii, etc.)• Materials with strong IPMaterials with strong IP• Waste to energy, enhanced biomassWaste to energy, enhanced biomass• Consumer solutions today.Consumer solutions today.

How I decideHow I decide

• Early market with meta trends I believeEarly market with meta trends I believe

• Technology advantageTechnology advantage

• Personal advantagePersonal advantage

• Some kind of fundamental inefficiencySome kind of fundamental inefficiency

• Direct path to marketDirect path to market

• Minimal regulatoryMinimal regulatory

• Capitalization matches environmentCapitalization matches environment

Why Loudeye?Why Loudeye?

• Trend: Audio/video become standardTrend: Audio/video become standard

• 1997: 14.4 modem, Real Audio, QT CD only, 1997: 14.4 modem, Real Audio, QT CD only, MS Netshow, $100/minute encodingMS Netshow, $100/minute encoding

• Problem: multi-format, cost of encoding, Problem: multi-format, cost of encoding, software applications.software applications.

• Value prop: Scale multi-format input/output Value prop: Scale multi-format input/output encoding and mgmnt apps.encoding and mgmnt apps.

• Result: the first large scale digital media Result: the first large scale digital media deployments, Apple iTunes, XM Sat, etc.deployments, Apple iTunes, XM Sat, etc.

Why Imperium Renewables?Why Imperium Renewables?

• Trend: Peak oil, lack of drop in alts.Trend: Peak oil, lack of drop in alts.

• 2004: $45/brl oil, 25MG BioD, peak oil2004: $45/brl oil, 25MG BioD, peak oil

• Problem: scale of alternative liquid fuels.Problem: scale of alternative liquid fuels.

• Value prop: Scale up capacity, grow alts.Value prop: Scale up capacity, grow alts.

• 2007: $145/brl oil, 300MG BioD, peak oil.2007: $145/brl oil, 300MG BioD, peak oil.

• Result: the largest biodiesel Result: the largest biodiesel manufacturing in world, world wide plan, manufacturing in world, world wide plan, biojet, algae. biojet, algae.

Some lessons from Some lessons from ImperiumImperium

• The GoodThe Good– Technology and scale up workedTechnology and scale up worked– Right about petroleum prices, structural change.Right about petroleum prices, structural change.– Capital markets initially favorable.Capital markets initially favorable.– Biodiesel fundamentals WAY better than Ethanol.Biodiesel fundamentals WAY better than Ethanol.

• The BadThe Bad– Tech not enough when inputs rise faster than outputs.Tech not enough when inputs rise faster than outputs.– Long term debt for new build technologies VERY HARD.Long term debt for new build technologies VERY HARD.– When your comps tank (ethanol), you tank.When your comps tank (ethanol), you tank.– Don’t give your first big customer equity.Don’t give your first big customer equity.– Don’t change growth strategy in midstream.Don’t change growth strategy in midstream.

Biodiesel in IndonesiaBiodiesel in Indonesia

• $115K start up cost

• 1,500l/day coconut biodiesel plant.

•9,000Rp/l fully loaded production costs B100

• Diesel 13,000Rp/l delivered.

• diesel customer saves $, local economy keeps money on island.

Sumba Foundation and Tobias Foundation

Why Kashless, Inc.?Why Kashless, Inc.?

• Trend: Recession, climate change.Trend: Recession, climate change.

• 2008: 15M users, 60Mpv, CL, FS, <1%2008: 15M users, 60Mpv, CL, FS, <1%

• Problem: inefficient market for free, Problem: inefficient market for free, reuse and lack of marketing reuse and lack of marketing awareness.awareness.

• Value prop: eBay for free stuff, GHG Value prop: eBay for free stuff, GHG tracking, local, social net integration.tracking, local, social net integration.

• Result: ?Result: ?

CompetitionCompetitionKash Craig

All products Y Y Y - Y

Tax receipt Y - - - -

Adv. Search Y - - - Y

Reputation Y - - - Y

Scheduling Y - - - -

Points Y - - - Y

eComm integr. Y - - - Y

Multi notification Y - - - Y

Widgets Y - - Y Y

Delivery tools Y - - Y Y

Cost % of trans 0-2 0 0 2-5 9-20

$ $

features

features

craigslist

Kashless

Success in Green means…Success in Green means…

• Change Coal, materials, efficiency, or oil.Change Coal, materials, efficiency, or oil.• High capital effeciencyHigh capital effeciency

– Total raise to exit < $25MTotal raise to exit < $25M– Declining costs with scale.Declining costs with scale.– Short innovation cycle.Short innovation cycle.

• Clear, direct path to customer.Clear, direct path to customer.• Pricing power in value chain.Pricing power in value chain.• Low regulatory hurdles.Low regulatory hurdles.• Product can achieve unsubsidized competitiveness.Product can achieve unsubsidized competitiveness.

In the end…In the end…

• Do what you are passionate about.Do what you are passionate about.

• Look for ability to add unique valueLook for ability to add unique value

• Work is better than study.Work is better than study.

• martin@kashless.orgmartin@kashless.org

• We have internshipsWe have internships

• http://www.deepgreencrystals.comhttp://www.deepgreencrystals.com

Background slidesBackground slides

Recognized Renewable Energy Expert

Liquid fuels data dumpLiquid fuels data dump

Some fun with Oil numbersSome fun with Oil numbers

• +$60/barrel = + $735B for top 8 oil producers+$60/barrel = + $735B for top 8 oil producers• Russia is now leading oil producerRussia is now leading oil producer• 70% of oil futures are “financial” in 2007 up from 70% of oil futures are “financial” in 2007 up from

40% in 200540% in 2005• 95% production gains from spare capacity95% production gains from spare capacity• 1% oil demand increase = 40% price increase1% oil demand increase = 40% price increase• WW production essential flat since 2005WW production essential flat since 2005

Oil Infrastructure Rusting Away

• Almost every component of oil and gas systembeyond original design life and rusting away.

• If the system is not rebuilt,supply will artificially sufferacute drop in next decade.

• Rebuilding the industry infrastructure will cost$ trillions ($50 to $100 trillion?) (Simmons).

Time for Oil to go bye-byeTime for Oil to go bye-bye

GHG data dumpGHG data dump

U.S.: Emerging State-Level CO2 Regulation

Source: CO2e.com

www.azfoo.net