Wednesday, December 08, 2010

Clinton & Wonder Inspire at Dreamforce '10

Today was one of those days, you are thankful that work comes together with inspiration. As a last minute decision, I decided to go up to the Dreamforce '10 event in San Francisco. I scheduled some client meetings and intended to walk the tradeshow flow before going to hear the scheduled President Clinton speech. Because of rain delays for the former President's flight, Salesforce CEO Marc Benioff brought in an unexpected treat - Stevie Wonder. He talked about many stories from his life from how he decided to perform again mother's death to his early experiences in school, but I think the one thing I'll remember is how he deals with adversity. He is an optimistic person who believes that his passion for people and music transcends and particular issue. Benioff is right when he says that everything happens for a reason.

Then President Clinton walked on the floor with an impromptu introduction by Stevie. Clinton made his opening comment about how as an amateur musician, this was the first time when a pro was the opening act. I've always admired Clinton's leadership skills and his desire to do good in the world. I've heard many speeches on TV, but nothing is like seeing him in person. He can go from the high level trends of interdependence to the detail of new discoveries in stem cells and disease recovery. After a successful Presidency where he left the country with 4 years of surplus, then making incredible money on the lecture circuit, he then chases big problems through the Clinton Global Initiative.

He is a master of making complex problems simple. In his mind, the central characteristic of nations is interdependence. What happens in halfway across the world is known instantly everywhere. Ideas, capital, and goods flow everywhere presenting all sorts of opportunities. However it creates 3 large issues: inequality, instability and unsustainability.

  • Inequality is increasing concentration of wealth to a few whether it's in the US or around the world. This concentration impedes broad based wealth creation because consumers will not be able to afford the new products or act in the creation of new innovation.
  • Instability is caused by this free flow of capital where a bubble in the US can impact the whole world. Similarly, terrorists or a rogue nation can significantly destabilize the world order.
  • Unsustainability speaks to the environment and energy. We are emitting more than the world can handle. The US is the only country in the world that has recently elected officials that believe the overwhelming science on man-made climate change is wrong. Luckily, the US is the only industrialized nation that has this uncertainly. The key is what will happen if the ice on Greenland melts and Europe goes into a new Ice Age.
So Clinton thinks about how his organization can address these issues in an economically advantageous way. As great as it is for the wealthy to give to NGO's, those firm should look for ways to serve while building the systems and institutions to put themselves out of business. People need to become self-reliant for help to be worthwhile.

On the mid-term elections, Clinton believes Democrats erred by not advertising their accomplishments on tax cuts (16 for small business), health care or in financial reform where there is a process to prevent future bailouts of large financial institution. The ad budget was there, but they decided to make elections local when the sentiment was national.

I love his thoughts about the history of society and how they fail by spending too much time in protecting the present. It goes to the notion of living beyond our means for this moment while not building for the future. For example, Germany and China have decided to dedicate significant resources to green energy whereas the US is potentially not renewing credits for green energy development. It is about not investing in education as US students fall behind the rest of the world in high school and college graduation rates. However, there is inspiration for the hi tech crowd. Unlike any of time in history, we can do work related to our interest, rather than needing to work to survive. There are great advances in hi tech, green energy and biotech that are making a new future. As long as we drive towards broad-based economic success, there is tremendous hope. The fact that we are in a place where becoming an entrepreneur is easier than ever before, means there is opportunity for disruptive innovation - the kind that creates new potential.

I came away encouraged because it took me out of the day to day drive to serve clients, acquire new customers and run the business. At Position2, we have been driving the leading edge for some time where there's uncertainty and great potential. Listening to great people like Pres Clinton, Stevie Wonder, and Marc Benioff helps you understand that we are fortunate to be in a place where we have an opportunity to create change. Wealth, political and living conditions are unequal, but intelligence is more evenly distributed. We should be thankful that our condition gives us an opportunity to express our full potential.

Thanks to the people for providing inspiration with an excellent event!

Tuesday, June 29, 2010

Tesla Unleashes Great Hope... and Doubt

June 29th was a momentous day for Tesla and the future of the electric automotive industry. The IPO was priced way above initial expectations of $14-16 a share at $17. After some fluctuation, the stock was up 40% to $23.89/share. The market value was over $2 billion driving up founder Elon Musk's portfolio value tremendously. This on a day where the Dow fell 268. As an entrepreneur, this was a day that filled me with hope, because here was an entrepreneur that put his heart, soul and money into a company and won. However, the press was having nothing of it. The day before many of the news articles were fairly negative. Most of them went something like this Wall Street Journal article, "Tesla Motors: IPO Fueled by Glamor":

"So far the company has accumulated $290 million in total losses, on $148 million in sales. It expects net losses at least until 2012. Anyone betting on Tesla stock is gambling on the success of the forthcoming Model S. But Tesla itself warns that car "is at an early stage of development" and will not be in production until 2012. It adds that it has yet to finalize the design, or complete the engineering, manufacturing or component supply processes for the new car."

Many articles and comments said the same thing:

-Tesla proof Wall Street still believes in fairy tales - Oakland Tribune
-Tesla IPO: False promises for clean tech - Fortune

However, the investor community had a different response. The positive energy was palpable. The Position2 Brand Monitor graph on Tesla shows the massive spike and positive sentiment differential.

The number of posts (tweets, news articles and blog posts) on the company exploded to over 2,700 today from an average of 25-30/day. There was a 4:1 difference in positive vs. negative sentiment. While much of it positivity in the sentiment algorithm related to the increase in share price, there were tweets and posts like this:

- The Future of Luxury - Tesla Model S beautiful design, 0 emissions, nearly affordable - @ThomasOhhh
- Something else that helped Tesla was having major strategic investments from Daimler Chrysler and a commitment from Toyota - WSJ Blog

An Entrepreneur's Take...
As an entrepreneur and technology geek, I find the IPO to be heartening. Elon Musk, successful PayPal founder, is a longtime entrepreneur who bet it all to bring Tesla to market. Previously, electric cars were considered doudy - for the granola set. They suffered from high costs, poor driving performance, long charge times and short driving range. The conventional thinking was that a car would have to be available for the masses first, so companies tried to shoehorn a high cost vehicle into a mass market or weird platform (GM EV1). Tesla, by contrast, utilized the typical technology lifecycle model. Original founders, Martin Eberhard and Marc Tarpenning understood that expensive technology needs to be sold to a premium market to move down the learning curve of product development and manufacturing efficiencies. So they built a sexy sports car on the Lotus platform that took advantage of the high torque range of electric motors, the low cost of electric car operation, strong lightweight materials like carbon fiber and a unique powertrain that gave a first-of-its-kind 200+ mile range.

While there are many sides of the Elon Musk story, he focused on building a great car. He focused on high quality materials, production quality and service. He did not compromise in creating a great brand experience from vehicle to showroom to post-purchase service. At the previous TiEcon, I remember my when Musk drove into the room with the Tesla Roadster. The car was stunning. Even more inspiring to me was that Musk was willing to bet it all to make Tesla and SpaceX successful.

The Model S has the potential to reach a wider market than the Roadster. With federal stimulus loan money for the factory and powertrain facility, Silicon Valley now has a new technology development and manufacturing opportunity.

There is more to the car than the actual vehicle. There is the technology behind it. There's an electric powertrain that has the interest of Daimler-Benz and Toyota. There's all the experience that Tesla has gone through to build the vehicle. All of these technologies have value beyond the economics of building a vehicle. Like Amazon's Z shops, the licensing of electric motor, battery and powertrain technology can provide a tremendous margin boost to the company.

It's my hope that the desolate winter of new IPOs is ending. Up until recently, the only way to get an exit event was to be acquired. This reduced valuations for entrepreneurs and made start-up investment more difficult because of the increased uncertainty. While risk adjusted rewards are still not entrepreneur-friedly, IPOs like Tesla, OpenTable and ReachLocal move the needle in the right direction.

So let's celebrate Tesla, Musk and his team. Let's hope the stock rises in value so that VantagePoint Partners and other investors can see a significant return. We want them to cycle their money into new innovative start-ups. We should want them to be the next Google. If Silicon Valley and America wants to lead the way in new job-creating, game-changing innovation, we want companies like Tesla to succeed.

Monday, February 01, 2010

Position2 Wins Lenovo Most Valued Partner Award

I just learned today that Lenovo granted our team their coveted "Most Valued Partner Globe" for our creativity and quality in supporting their online advertising campaigns. One of our top creatives received a special honor as well.

Take a look at the trophy. Our team is especially gratified by this honor. We look forward to a continued partnership and success between our firms. Great job!

Tuesday, January 19, 2010

Is Health Care Reform Over?

The Scott Brown win over Coakley in Massachusetts portends the end of the health care reform. The Senate is unlikely to play the game of delaying certification (though Republicans would with a straight face). Election year politics would make further delay difficult. Using the reconciliation process would mean another long perilous set of activities where the bill would have to be re-cut. Democrats are unlikely to end the filibuster rule. From a healthcare executive who has met with members of the House, there is significant opposition to the Senate bill.

That means more acrimony and indecision leading to a likely end of the move to fix an out of control system. The Democrats method of self-flagellation and delay hurts their ability to push things through. Republicans simply see blood and are playing the role of the opposition, regardless of logic.

Watch any of the Sunday news shows and what do you see? Republicans criticizing the President. That's become their job in this highly partisan environment. It's almost understandable. The Democrats are the surprising ones. They attack the bill for not doing enough here or there. They call it a flawed bill that's "better than nothing." They find a hundred holes rather than understanding that no one cares about their little nit or nat. It's hardly confidence building. People do not want a "passable" bill that reorders a huge system that brings a level of certainty for 80+% of Americans. They want to know they are getting huge significant value.

The battle over the public option was a play towards single payer - something that people were not ready for. Obama had very little time to push through the change agenda. The mandarins in Senate allowed delay to upend their ability to get things done.

Meanwhile, costs will keep exploding. My company saw 2 years of 40% quote increases even though we went the high deductible, HSA route. This was the consumer-driven healthcare initiative that leading experts were recommending. If I had a whole bunch of blue collar workers, it would have destroyed our cost structure. Health reform should be a Republican issues as well as a Democratic one. It is about American competitive and greater certainty for our population.

Meanwhile, the hidden secret is that there is universal healthcare in pockets of America. In San Francisco, for example, SF Health Plans integrates federal, state, local, and small business funds to provide universal healthcare to children and low income adults in a high quality, cost-effective way. They contract with local providers on a capitation or per person basis. The incentive is to provide quality care without upselling unnecessary tests or care. The more people are covered, the greater that can be treated in a preventative manner, and the fewer people going for emergency care. This reduces the need for health providers to drive up costs for commercial insurance.

The Senate healthcare bill would enable plans like San Francisco's to grow and make American competitive. The real question is whether Obama and Democrats will accede to Republican demands on a do-over or will they try to push this bill through the House. Already, Republicans have delayed or taken illogical positions over the bill. For example, last year the Grassley and Snowe group delayed negotiations. McCain started railing against cutting Medicare a year after he discussed "Medicare reform."

There's a great section in Winik's book, The Great Upheaval, about the French revolution. During that time King Louis XVI introduced a whole set of reforms that gave property rights and freedom of speech and representation to the Third Estate. He tried hard to compromise between what was an absolute monarchy and the growing movement towards representative democracy. Many times, decisions took a long time, exacerbating mistrust and tension between the haves and have-nots. Instead of being hailed as a great king, it was seen as a sign of weakness. Times were tough with bread shortages and repression of the populace. Revenue collection was problematic at a time when France was up to its eyeballs in debt over funding the American Revolution.

While no one is saying that there will be riots in the streets, there is palpable anger on the far right and left. With partisanship during tough economic times, the type of rapid change that Obama would like to make is difficult. While a number of Republicans would have voted for with a few Democrats voting against the Senate package, compromise in this environment is seen as weakness. Obama has already indicated that they need to start over. This means the status quo will remain.

Will this lead to the end of Obama's ability to make great change? After one year, is his ability to govern over? I'd love to hear what you think.