Murray Metcalfe: Personal Background
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Transcript of Murray Metcalfe: Personal Background
Murray R. Metcalfe, Ph.D.Visiting Scholar, Abe Laboratory
Department of International Development EngineeringTokyo Institute of Technology
How Innovative Technologies and Entrepreneurial Organizations
Can Generate Change in Developing Countries: Case Studies in Energy and Related Segments
May 29, 2008
2MURRAY R. METCALFE, Ph.D.
May 29, 2008
Murray Metcalfe: Personal Background
• Visiting Scholar in Professor Naoya Abe’s lab in the Department of International Development Engineering at Tokyo Tech, April through June 2008
• Educational background:
– Undergrad degree from the University of Toronto in Industrial Engineering
– Masters and Ph.D. from Stanford University in Engineering-Economics Systems (now Dept. of Management Science & Engineering)
• Began professional career as a management consultant at McKinsey & Company, a management consulting firm
• 20 year career in the financing of technology companies and systems:
– Managing Director, Private Equity, Lee Munder Capital Group, 2001 to present (currently on leave)
– Previous positions in venture capital, and in working with and building start up companies
– Focused on investments in information technology and software and more recently in alternative energy; have worked in various other technology-based industries
• Active at the University of Toronto, Faculty of Applied Science and Engineering – advisory boards; member of Dean’s Task Force on Globalization and Engineering; developing a course for the 2008-2009 academic year
• Chairman of Transform Capital, a small not-for-profit that supports innovative organizations active in international development. Examples include the Asian University for Women, a start up undergrad and grad university to be based in Bangladesh.
Introduction
3MURRAY R. METCALFE, Ph.D.
May 29, 2008
Technology Innovation and Entrepreneurial Organizations - This Model Has Worked Well in Developed Economies
TechnologyInnovation
Entrepreneurial FinanceThe Entrepreneur
• Development and deployment of new technologies in selected industries
• Improved standard of living for users and employees
Introduction
4MURRAY R. METCALFE, Ph.D.
May 29, 2008
The model has now been expanded to include environmental products and considerations
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Sustainability and
Environmental Protection
Sustainability and
Environmental Protection
• Development and deployment of new technologies in selected industries
• Improved standard of living for users and employees
• Improved environmental footprint
Introduction
5MURRAY R. METCALFE, Ph.D.
May 29, 2008
Our Central Question: How Can These Approaches Play a Role in International Development?
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Sustainability and
Environmental Protection
Sustainability and
Environmental Protection
• The reduction of poverty and disease
• Global development, in a sustainable manner
Introduction
6MURRAY R. METCALFE, Ph.D.
May 29, 2008
There is a recognized need for new models and approaches to development, to compliment existing government and NGO driven approaches
• Are current models broken? – arguments by William Easterly (formerly of the World Bank and now at NYU). Planners versus Searchers.
• Millennium Villages Project – a joint venture of UNDP, Columbia University and the not-for-profit Millennium Promise - seeks to implement Millennium Development Goals at the village level
• Progress by the Bill & Melinda Gates Foundation and others in mobilizing small scale projects
• The success of microfinance
• Success of cell phone penetration; interest in the MIT $100 laptop project
Introduction
7MURRAY R. METCALFE, Ph.D.
May 29, 2008
Our Central Question: How Can These Approaches Play a Role in International Development?
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Sustainability and
Environmental Protection
Sustainability and
Environmental Protection
• The reduction of poverty and disease
• Global development, in a sustainable manner
Entrepreneurship
8MURRAY R. METCALFE, Ph.D.
May 29, 2008
Technology Innovation and the Entrepreneur
TechnologyInnovation
Entrepreneurship
Technology Area Individual(s) Company
Aviation
Semiconductors
Transistor-based devices
Software
Internet & telecom
Internet search
Biotechnology
Steel
The Rockefeller family
Robert Noyce, Gordon Moore et. al.
Akio Morita and Masura Ibuka
Bill Gates
Masayoshi Son
Larry Page and Sergey Brin
Robert Swanson and Dr. Herbert Boyer
Lakshmi Mittal
Eastern Airlines
Intel
Sony
Microsoft
Softbank
Genentech
Arcelor Mittal Steel
Entrepreneurship
9MURRAY R. METCALFE, Ph.D.
May 29, 2008
The Model in Commercial Applications - e.g. Google
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Entrepreneurship
Backdrop of technology innovation - in this case Stanford University and Silicon
Valley
Larry Page and Sergey Brin –
motivated entrepreneurs with
understanding of the technology and the
end user
Kleiner Perkins and Sequoia Capital –
well known venture capital firms that invested $12.5 million each
10MURRAY R. METCALFE, Ph.D.
May 29, 2008
The Social Entrepreneur in Development
Entrepreneurship
Area Individual Organization
Micro Lending
Econ. Development
Rural Health
Building enterprises
AIDS Reduction
Muhammad Yunus
F.H. Abed
Dr. Paul Farmer
Multiple
Ashok Alexander
Grameen Bank
BRAC
Partners in Health
Ashoka, TechnoServe
Gates Foundation - India AIDS Initiative
Entrepreneurship
11MURRAY R. METCALFE, Ph.D.
May 29, 2008
Funding of a Commercial Venture – Flow of Capital
Investor
Venture Capital Fund Entrepreneur
Company
Entrepreneurship
$
$
$$
$
And to other companies
$
12MURRAY R. METCALFE, Ph.D.
May 29, 2008
Funding of an International Development Venture
Donor
Social VentureCapital Fund
Social Entrepreneur
Company/Project
Entrepreneurship
$
$
$$
$
And to other companies/projects
$
13MURRAY R. METCALFE, Ph.D.
May 29, 2008
Funding of an International Development Venture – Potential Next Stage
Donor
Social VentureCapital Fund
Social Entrepreneur
Company/Project
Entrepreneurship
$
$
$$
$
And to other companies/projects
Commercial Investor
$
14MURRAY R. METCALFE, Ph.D.
May 29, 2008
The Model in International Development – e.g. WaterHealth International
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Entrepreneurship
Approaches to drinking water
filtration at the village level; previous
approaches have had a dismal record; WHI’s technology licensed
from Lawrence Berkeley Labs
For profit; founded in 1996; motivated
entrepreneurs with understanding of the technology and the
end user
Acumen Fund – New York based social
venture capital firm focused on
international development; invested
and provided loan guarantees
15MURRAY R. METCALFE, Ph.D.
May 29, 2008
Funding International Social Entrepreneurship – Examples of Currently Active Organizations
• Grameen Bank
• The Rockefeller Foundation
• Ashoka
• The Gates Foundation, Google.org, The Skoll Foundation
• The Acumen Fund
• Kiva.org – online microfinance not-for-profit; works though local partners
Entrepreneurship
16MURRAY R. METCALFE, Ph.D.
May 29, 2008
The key strengths of the venture capital model still apply …..
• Work collaboratively with the entrepreneur
• Arrange follow on financings to ensure ongoing growth
• Vigilance versus fraud and corruption
• Experience across multiple portfolio companies over time builds a knowledge base within the firm
• Measure results – including social returns:
• Much more complex return considerations versus in commercial ventures
• Various approaches to devising models:
• Double bottom line, triple bottom line
• Social Return on Investment (SROI); Blended Value models; Best Available Charitable Option (BACO)
• Decide if/when to declare failure
• If the donors (investors) don’t like what you’ve done, your enterprise will not continue long term
Entrepreneurship
17MURRAY R. METCALFE, Ph.D.
May 29, 2008
Donor’s Return Expectations Over Time for a Social VC Investment Portfolio
Entrepreneurship
Time (years) Time (years)
Index
- 100%
0%
100
ROI(%)
20%
Financial Return: Fund versus Grant Social Return Index: Fund
*
= Realm of the commercial investor*
18MURRAY R. METCALFE, Ph.D.
May 29, 2008
Many, many issues remain - small and large ….
• Labor intensive process, conducted by highly trained personnel – is it scalable?
• Can you generate exceptional returns?
• Assessing the benefits – quantitative approaches
• Keep funding if the commercial funding sources are available?
• Combining these models, adding multiple partners - results in complex structures
• Some segments do not have strong return profiles
• Risk capital approaches in areas of life and death - the moral issues
Entrepreneurship
19MURRAY R. METCALFE, Ph.D.
May 29, 2008
Can these approaches play a role in international development?
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Sustainability and
Environmental Protection
Sustainability and
Environmental Protection
• The reduction of poverty and disease
• Global development, in a sustainable manner
Innovative Technologies
20MURRAY R. METCALFE, Ph.D.
May 29, 2008
Technology Change and Global Development
• “The World Is Flat” and the spread of modern technologies
• Recent challenge by Bill Gates to deploy more highly skilled personnel to work on the problems of the world’s poor
• Approaches to leapfrogging the use of new technologies:.
• Can advanced technologies be applied in development?.
• An iPod may not help – but what about a cell phone? What about RF-ID and a GPS system
• The MIT $100 laptop project
• Many types of technologies. Some can be used from a distance – e.g. modeling tools – which reduces barriers to adoption.
• The broad role of leading technology-oriented universities:
• Educating “The Global Engineer”
• Engineering practice courses on this topic – e.g. MIT, NYU
• Engineers Without Borders – multi-country student-driven organizations
Innovative Technologies
21MURRAY R. METCALFE, Ph.D.
May 29, 2008
Technology Innovation - Types
Innovative Technologies
Type of Solution Example Application in Developing Setting
“Point” or “Local” solutions • Any type of engineered device
• The electric bicycle • Water filtration systems• Pharmaceuticals
Information and communications technologies (ICT)
• Mobile phones, laptops • Cell phone banking
• Laptops in education, crop rotation planning
• Kiva – “PayPal meets Grameen Bank”
Large scale computer modeling
• Prof. Mark Jacobson modeling of wind energy substitution
• RETScreen
Logistics tools • Federal Express deliveries • Harry Potter delivery vs. malaria drug delivery
22MURRAY R. METCALFE, Ph.D.
May 29, 2008
Can these approaches play a role in international development?
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Sustainability and
Environmental Protection
Sustainability and
Environmental Protection
• The reduction of poverty and disease
• Global development, in a sustainable manner
Sustainability Considerations
23MURRAY R. METCALFE, Ph.D.
May 29, 2008
Sustainable Development – A Few Points
• Can we learn from past mistakes in the developed world?
• Rate of growth is sufficiently rapid in BRIC countries that pollution mitigation has to be applied simultaneously
• The global engineer will factor in sustainability considerations for all types of engineered products and services
• Energy use characteristics in particular will be central
Sustainability Considerations
24MURRAY R. METCALFE, Ph.D.
May 29, 2008
Returning to our Central Question - Can These Approaches Play a Role in International Development?
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Sustainability and
Environmental Protection
Sustainability and
Environmental Protection
• The reduction of poverty and disease
• Global development, in a sustainable manner
Case Studies
25MURRAY R. METCALFE, Ph.D.
May 29, 2008
Our Framework/Taxonomy
Categorize a number of case studies by:
Technology Type:
• Point
• ICT
• Systems
• Logistics
• Others
Ultimately fill out a matrix of case studies …
Stage of Development:
• Advanced countries
• Rapidly emerging – e.g. BRIC countries
• Less developed countries
Industry Segment:
• Energy
• Transportation
• Infrastructure
• Others over time
Case Studies
26MURRAY R. METCALFE, Ph.D.
May 29, 2008
Populating the Framework – Case Studies in Energy, Transportation, Infrastructure
Case A. Techn. Type B. Stage of Dev. C. Industry
“Blackout” Systems Advanced Energy
Solar cell leadership in China
Point Rapidly emerging Energy
Mark Jacobson models of wind vs. coal generation
Systems All Energy
MIT D-Lab projects Point Less developed Multiple
Harry Potter publication day delivery
ICT, Logistics Advanced Transportation
Logistical issues in world health
ICT, Logistics Emerging and Less Developed
Transportation
(continued ….)
Case Studies
27MURRAY R. METCALFE, Ph.D.
May 29, 2008
Populating the Framework – Case Studies in Energy, Transportation, Infrastructure
Case A. Techn. Type B. Stage of Dev. C. Industry
Electricity generation in Brazil
Systems Emerging Energy
Electrical equipment manufacturing in Brazil
Point Emerging Energy
The electric bicycle Point Emerging, Less Developed
Transportation
Cleantech venture capital Point Advanced Energy
Stationary fuel cells in Japan
Point Advanced Energy
WaterHealth International and the Acumen Fund
Point Emerging, Less Developed
Infrastructure
The car of the future in India and China
Point, systems Rapidly emerging Energy, Transportation
(continued ….)
Case Studies
28MURRAY R. METCALFE, Ph.D.
May 29, 2008
Populating the Framework – Case Studies in Energy, Transportation, Infrastructure
Case A. Techn. Type B. Stage of Dev. C. Industry
D. Light Point Less developed Energy
E + Co. Point Less developed Energy
RETScreen modeling system
Systems All Energy
Kramer Junction – Large scale solar generation
Systems Advanced Energy
……
…….
…..
……
Case Studies
29MURRAY R. METCALFE, Ph.D.
May 29, 2008
Assessing the Prospects and Likely Impact of the Approach
:
• Economic impact
• Social development impact
• Environment and sustainability impact
• Policy issues raised
• Viability of the approach and impediments to wider use
Case Studies
30MURRAY R. METCALFE, Ph.D.
May 29, 2008
Case 1 – D.Light Solar Lighting
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Case Studies
Financing from several for profit Silicon
Valley venture funds. Additionally funding
from social VC funds. Partnership to solicit donations to purchase individual lamps for
deployment.
CEO/Co-Founder is a former Peace Corp volunteer who also
holds a Stanford MBA. Small,
entrepreneurial teams. Local distribution
partners.
Simple LED lamp to displace use of
kerosene lanterns, initially in India.
Includes solar panel and battery. CTO is a
solid state optical engineer, with start up experience in Silicon
Valley
31MURRAY R. METCALFE, Ph.D.
May 29, 2008
Case 2 – E + Co
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Case Studies
Multiple funds, some invested
directly and some managed on behalf
of partner organizations. Combination of donor grants and
capital investments.
Founded by Phil LaRocco and a
small team. Work with local
entrepreneurs and business
partners.
“Technology neutral” - virtually every type of
renewable energy source and device,
from cook stoves and energy efficiency products, to wind,
biogas, geothermal, hydro & solar generation.
32MURRAY R. METCALFE, Ph.D.
May 29, 2008
Case 3 – The RETScreen Model
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Case Studies
Developed by Canadian
government agency; supported by
NASA, UN, World Bank and other
NGOs.
The “entrepreneur” in this case is a group of
10 scientists and support staff
employed by the Canadian government.
Software development began as a Master’s thesis by one team member.
Open source software tool for evaluating renewable energy systems. Used
worldwide. Available in 26 languages.
Substantial fraction of downloads are from
China and other Asian countries.
Question For Discussion:Is this a counterexample?
33MURRAY R. METCALFE, Ph.D.
May 29, 2008
Case 4 – Kramer Junction (SEGS III – VII) – Large Scale Solar Generation
TechnologyInnovation
Entrepreneurial FinanceEntrepreneurship
Case Studies
Carlyle Riverstone Renewable Energy Partners – a multi-
billion dollar investment pool for renewable energy
projects – and FPL, a major utility , are co-
owners
Evolution from small scale socially
conscious “green” entrepreneurs to large
scale commercial facilities. Power
“offload” contract with SoCal Edison
Combination of proven and more innovative
solar thermal technologies, plus grid
management techniques, to address high growth in
demand in Southern California. Located in the Mojave Desert. 150 MW capacity.
Question For Discussion: Economic and other barriers to building these arrays in other deserts worldwide?
34MURRAY R. METCALFE, Ph.D.
May 29, 2008
“Big Planet” Issues – Some Questions to Ponder
• Building local skills in less developed areas – historical precedents
• Risk capital approaches in areas of life and death - the moral issues
• What are the characteristics of the most replicable technologies for use in global development?
• The commercial investment world has seen a proliferation of private equity funds and their penetration of every investment type, industry niche and (developed and to some extent rapidly developing) locale. Could we see a future proliferation of social venture funds aimed at international development?
Conclusion
35MURRAY R. METCALFE, Ph.D.
May 29, 2008
A Few “Mild” Conclusions To Date
A. These entrepreneurial models may well have some merit
B. There are many types of technologies that can help in international development settings
C. We are in very early days
D. Engineering oriented institutions like Tokyo Tech have a lot to contribute
Conclusion
36MURRAY R. METCALFE, Ph.D.
May 29, 2008
Contact Information
Your comments are most welcome! …..
… as are interesting cases - in Japan or other countries - that you are familiar with and/or that we might examine together.
Murray Metcalfe
Building I-4, Room 103, Tokyo Tech
090-6094-9238 (Japan mobile, until 6/15/08)1-617-633-0041 (US mobile, after 6/15/08)
Conclusion