"Core Competence" and the Clean Energy Business
![](http://i708.photobucket.com/albums/ww83/craigshields/BTBusiness.jpg ""Core Competence" and the Clean Energy Business")
Each week, many people write into us at 2GreenEnergy from all around the globe wanting some sort of assistance with renewable energy ideas. Normally, “assistance” means “funding.” It’s certainly true that we are connected with a small team of carefully chosen boutique investment bankers in NY City, and that we routinely pass along the business plans that seem most solid to them.
But I have to admit that I have a morbid fascination with those business plans that don’t pass muster – that I consider to be fatally flawed (plans that, of course, I do not pass along). I’ve even developed a set of categories for them in my own mind.
First are those that are clearly specious in terms of basic engineering and physics, e.g., a wind turbine that supposedly captures two or three times more energy than the conventional three blades. Wrong. This is impossible, since the existing system already harvests about 60% of wind “flux,” i.e., the wind that passes through the circle defined by the tips of the turning blades.
Along these lines we have the perpetual motions machines, which seem to arrive here at a more-less constant pace. This category is composed, again – in the privacy of my own mind — of two sub-groups: “crackpots” (that is, people who seem to believe their story) and “charlatans” (people who don’t). I’m never nasty or condescending with anyone, but I DO ask to see a working model. Strangely, I get this response (uniformly): No, I don’t have a working model; I just need another few hundred thousand dollars, and I can produce one quickly. “Gosh, sorry,” I say, “I’m afraid I can’t help.”
The other broad category of “non-starter” plans are those who have obviously bitten off more than they can chew. Here we have inventors who seem to lack a sense for the idea that the hard work is just beginning – maybe a fellow with a legitimate breakthrough who somehow believes that all the R&D, manufacturing marketing, and distribution are simply unimportant afterthoughts.
I sometimes find myself explaining something to someone that I’m quite certain he’d rather not hear, for example, “Your idea could change the world — but there’s a problem. You have a vision …. but you’re neither a seasoned businessman, a financier, a patent attorney, a human resources executive, a manufacturer, nor a distributor. I ask you to consider a basic solution, one that has been employed by smart people all over the world: sell or license your idea. I can help you sell this concept to a fully funded corporate entity that wants to bolster its position technologically and gain an additional competitive advantage. Or maybe we could talk about setting up a meticulously protected licensing relationship with an enterprise that has already established manufacturing practices — along with existing distribution channels.”
In essence, it’s the concept of core competency that became fashionable in the 1980s. Simply do what you’re good at. Don’t rein in your success by converting a personal weakness into a stumbling block toward your company’s progress.
And this rule is even more applicable in the world of clean energy than it is elsewhere, as this industry is destined to soon be measured in the trillions of dollars annually. Cut a licensing deal for your technology that captures a millionth of that market. You’ll be doing just fine.
All good advice, Craig. We are currently re-writing our BP for about the third time and with some good advice from a respected financial advisor. Instead of pitching VC or Angels, we are simply going after trade credit with our manufacturing entities. In other words we are now learning to walk.
Craig,
I appreciate your comments about core competence. I strongly belive that is key in an organization to understand the issues involved to make something happen. People who have done what they are trying to start, before.
We are an early stage company that develops, markets and soon to start manufacturing an urban based electric Low Speed Vehicle. We have been self funded for 7 years. We established a partnership with a company making components for the renewable energy business in wind and solar. They have agreed to provide capital to set up their plant to assemble EcoV and provide our company with business services as well. They received in return some equity in the company. We are about 89% funded now to be a sustainable business. We have about 7M in equity today, we have $2M that my partner has contributed plus their ability to over our growth through inventory purchasing. In total we need $18M and all but $2M is covered. This is a critical early stage investment. It will be used to set up our sales and marketing team, finish the engineering design for production includiing some tooling, and build 12 more prototypes and then 50 pilot production vehicles.
Craig,
I appreciate your comments about core competence. I strongly belive that is key in an organization to understand the issues involved to make something happen. People who have done what they are trying to start, before.
We are an early stage company that develops, markets and soon to start manufacturing an urban based electric Low Speed Vehicle. We have been self funded for 7 years. We established a partnership with a company making components for the renewable energy business in wind and solar. They have agreed to provide capital to set up their plant to assemble EcoV and provide our company with business services as well. They received in return some equity in the company. We are about 89% funded now to be a sustainable business. We have about 7M in equity today, we have $2M that my partner has contributed plus their ability to over our growth through inventory purchasing. In total we need $18M and all but $2M is covered. This is a critical early stage investment. It will be used to set up our sales and marketing team, finish the engineering design for production includiing some tooling, and build 12 more prototypes and then 50 pilot production vehicles.
We have a running prototype that has been on the road doing testing and development for 5 years. We are currently updating EcoV to have a more production like appearance. This will be done in mid-February.
Great post, Craig!
You won’t get a request for assistance from me because the ideas I have only require my time to work on them, and you can’t fix my problems with time management…. 😉
The best inventions don’t need money to build a prototype. Especially if they are supposed to save energy. Money is basically the fly-ash of burning fossil fuels. People need to realize that schemes to make money usually involve someone, somewhere, burning up a lot of stuff so they can have money to ‘invest’ in something else that may not burn fossil fuels. If they can’t build it without money, it isn’t ‘green’.
If it’s a ‘job’, it isn’t green.
Many simply want ‘assistance’ to buy themselves a job other than the one they already have. They could just as well open a McDonalds franchise to run their car on vegetable oil to get to work at their (now) ‘green’ job in their ‘green’ car.
Yes, and I have to laugh at people with more education than brains. You must have received a good education. What we are DOING not thinking involves old economical solvents to exspensive problems, and we are going forward. Our new solar panel will be going through testing next week for pressure and extraction. It address’s the two major problems with todays panels, cost and % conversion. My Father with his 8th grade education would often solve problems created by engineers when building major power plants. You are not a solver but just a follower and you must be a democrat.
Thanking you,
Arthur P
Arthur — thanks for this. You gave me a good chuckle. I hope my mother sees this — (“you must be a democrat”).
Seriously, I’m interested in your solar panel ideas; I do hope you’ll include me.
Craig,
Yes, a vast majority of business plans are passed over. Many times, not because the ideas were bad, or even that the financials were ill-prepared, but rather because the language was not organized in a concise and strategic way. If a pitch does not grab the attention of those investors right off the bat, forget it.
If anyone would like to fix up their work and bring it to the level of a winning plan, please contact me – that’s what I do.
Bennett Marks
Astute observations and sage advice, Craig. Numerous individuals who have constructed electric vehicles have inquired about participating in the Southern Electric Vehicle Expo to be held on 29 – 31 Oct 2010 in Asheville, NC. Many of these devices simply are collections of commercially available parts. Yet they believe that their “invention” is patentable. However there are some that have original components which potentially will improve the efficiency, durability and/or reliability of future EVs. Hopefully the connections made and suggestions received at our trade show will be of value and encouragement to the exhibitng inventors.