Wirec Revisited

I am still trying to digest all that I witnessed and heard at Wirec 2008. Here are few posts that I found quite interesting. There are two quite opposing points that were buzzing in the conference. BP had a pretty big presence. But all their show including sponsoring the tuesday reception were supplemented with the comment from CEO Tony Hayward that -

"Even though clean tech is growing fast, we all need to be honest," he said during a ministerial plenary session. "The scale that the industry is working at today is not going to have much impact."

I don't necessarily disagree with him. Conventional wisdom is consistent with this statement. But - well there was the counterpoint - Vinod Khosla who insisted that the costs have to come down. He presented at the ministerial panel (which I did not attend) - and highlighted how forecasts have been wrong in the past in predicting technology. In other words, if there are enough network externalities, the snowball effect of adoption of new tech generates the critical mass to lower costs of new tech and suddenly breaks all limits that analysts had predicted before.

His presentations are here. Great stuff!

So in a nutshell, my heart is with Khosla while my head still cannot argue against the BP chief.

@Wirec 2008

I spent the last couple of days in Wirec 2008. Personally, it is heartwarming to see so many people so enthused about energy all conglomerated under one roof. I went around attending few conferences - most notable was hearing GM speak about Chevy Volt. One of main mantras I heard over and over again was to release ourselves from traditional dependence on oil, plug-in vehicles have to come in as a mainstream commodity replacing cars that drive in gasoline. There is a bunch of statistics to prove that. This poses tremendous technical and commercial challenges in interfacing the cars with the grid. For the utility to treat the car as another appliance will not be a trivial matter. But this is indeed fascinating. Imagine automobiles becoming like your washing machine. Of course, unlike washing machine a car is mobile. This means that you will need easy availability of plug in to the grid from any meaningful place. Also, important will be how fast it can charge up. So, coming back to the grid - there will be a need for a new infrastructure. A new platform. A new marketplace. People should be able to come in and go out. How do we allow people to enter this marketplace? How do we gear the technology to support that? How do we make money? Do we create technical restrictions like - you have to have a certain kind of interface to plug in Texas as opposed to New York - or say other kinds of restrictions - electric Mercs or BMWs allowed only. These issues will take a lot of effort and lot of ink to resolve. Regardless, these are fascinating times. One message I take away - the big challenges are known, everyone agrees that something has to be done about it, and that we don't have a lot of time. I will keep probing these fascinating topics. I am excited that these days energy and grid are becoming sexy topics in cocktail parties again!

Ted and Bil

Following the popularity of TED talks, another conference called Bil has emerged. It states that it "loves" TED and wants to be like TED MINUS the $6000 tab that TED charges. It is an "open source" version. Will be interesting to see if this really can match TED.

"Optionality" in Private Equity Deals

This posts highlights how two recent private equity deals - Getty Images and CHC Helicopter are using reverse termination fee structures in their contracts. In other words, if the private equity sponsor refuses to complete the transaction the only recourse of either seller is to collect the reverse termination fee. This is a shift in practice from deals in the past when there was more "certainty" in the deal through specific enforcement on the buyer to actually execute the contract. With credit markets almost dead and financial markets in general having a tough time, raising capital has not been easy and in some sense this shift in PE practice in no doubt a direct fallout. What matters is are these firms valuing the optionality of the contract and if so, how much is that impacting the value of the company being acquired.