Yet2com Blog

Two Research Papers Highlighting yet2.com – from the University of Auckland and the EU

bendupont — Fri, 05 Mar 2010 17:48:41 +0000

I’ve been impressed by the research on Open Innovation and the reduction in transactions costs that platforms like yet2.com drive. We are in a new world. Once the US jobless claims come down (and they will), the global economic engine will start roaring again.

1) The Effects of Reduced Transactions Costs on Licensing – Published by the Economics Department of the University of Auckland

2) Open Innovation – and how it impacts the EU by the High Tech Innovation Platform Europe

Non-Obvious Idea #3 – “Looking Forward to; Albert, Charles and Isaac – The Consequence of the Baby Boom and Internet”

bendupont — Wed, 03 Mar 2010 15:12:59 +0000

For the past few years I’ve co-hosted an interesting dinner, where I ask each guest to speak for less than 2 minutes on a way they think the world will change in the next 5 years – that is not obvious.

In December I hosted 70 leaders in a wide variety of disciplines – from horticulture to economics. The guest list included; 2 Governors, 7 CEO’s of companies of more than $2 billion in revenue, Chief Investment Officers of more than $38 Billion, 11 venture capitalists, etc….so you get the idea.

The 70 ideas were then voted on by each table, and below is a finalist – on ways the world will change that are not obvious. Please share your ideas on other non-obvious predictions and your thoughts about this one.

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In the next 5 to 10 years there will be a ground breaking discovery. It is non-obvious that two significant changes over the last decade or so have set the stage for this event. Surprisingly, these factors have been working against such a discovery most of the 20th century.

For the last 50 years or so there has been significant growth and opportunity at the traditional institutions, think tanks, universities and other areas of higher thinking partly attributable to economic and population growth. If you were creative, bright and passionate, there was a place for you. “Hey come to do research at our University, you don’t even have to teach.”

These institutions, universities and etc. had huge competitive advantage due to economies of scale for ideas, access to resources and an environment to share ideas. If you weren’t within the system you were at a serious disadvantage because individuals could not get access to the necessary cutting edge information. These institutions have been effective moving technology and ideas forward step by step (i.e. string theory), but less successful at ground breaking discoveries.

The unintended consequence of this system has been to deter groundbreaking discoveries often proposed by young individual minds outside conventional structures. The young minds capable of making ground breaking discoveries were accepted into the existing system and comprised by conventional thinking. If they were outside the system they were cut off from the information necessary as a launching pad for ground breaking thought.

It is non-obvious that this structure has changed. Due to economic necessity and improved health, thought leaders will continue working creating less opportunity for new entrants. In addition, the flat lining of population growth in North America, Europe, Japan and even China means that opportunity provided by growth will be limited. This Baby Boom Log Jam (BBLJ) will be especially pronounced at institutions like universities and research centers where experience is valued and free market forces are less prevalent.

Because of the BBLJ, some of the new crop of the best and brightest will be forced outside the traditional path. However, they are no longer prevented from participating as in the recent past. They have access to information, people and ideas through the internet where even the most cutting edge thinking is available. In addition, it can be accessed without having to succumb to conventional thinking. “If you want tenure, job security or respect from your peers you have to think like us.”

Before these structures were in place some of the greatest scientific advances came from young individuals working alone – Isaac Newton, Charles Darwin and Albert Einstein. Why have there been few groundbreaking discoveries or theories on par with the Laws of Physics, Evolution or Relativity since Einstein?

The BBLJ and internet assures that some young great minds will take the unconventional path especially if he/she already has the proclivity to question the status quo and challenge conventional wisdom. Unlike the recent past, these folks will not be cut off from access to necessary information to formulate their ideas.

Managing disruptive technology is like this……except safer….

bendupont — Mon, 01 Mar 2010 17:12:45 +0000

Bloom Energy – Emerges from Stealth; Announces New 100KW Fuel Cell, for $750,000

bendupont — Sat, 27 Feb 2010 16:13:56 +0000

www.bloomenergy.com announced a new fuel cell that is being tested at 5 sites (Google, ebay, Walmart (2), and FedEx) in California. These ‘energy servers’ are abut the size of a parking space and can power 80% of a Walmart store. It takes almost any fuel from ethanol to biomass and turns it into electricity.

Fuel cells are nothing new, but Bloom has figured out a way to make them cheaply and efficiently. CEO and Founder, KR Sridhar claims that a Bloom box, which he calls an energy server, is twice as efficient as the electricity grid. “For the same amount of electricity, you need half the fuel,” he says. “If you use a renewable fuel you are carbon neutral. Use all the electricity you want and don’t feel guilty about polluting the environment.”

They cost about $750,000 for a 100 kilowatt system. A typical electricity cost for commercial customers is 8 to 10 cents per kilowatt-hour versus 13 cents for what they might pay a California utility.

Bloom fuel cells are based on a solid oxide technology, quite different than previous fuel cell approaches. It’s the result of $400M in venture funding.

60 Minutes, wont allow me to imbed their video, so there is the link:

http://www.cbsnews.com/video/watch/?id=6228923n&tag=api

The Likely Pace of the Recovery – Don’s Miss the Upside, by Being to Cautious on the Downside

bendupont — Tue, 16 Feb 2010 17:09:16 +0000

This is and excellent article from McKinsey Quarterly: http://www.mckinseyquarterly.com/newsletters/chartfocus/2010_02.htm?goback=.hom.mid_1813402136

Companies deciding whether to move forward now with acquisitions or capital projects should weigh the historical data on the timing of stock market recoveries. One common analysis calculates how many years must pass before the market returns to normal, assuming growth at the long-term average rate of 10 percent annually. In past recessions, however, the stock market came back from the trough much more quickly, with cumulative returns—over the two years that followed it—of 50 to 130 percent. If this pattern holds in the current downturn, companies waiting too long could miss the upside of the rebound.

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This has implications on Open Innovation, start placing your bets now.

Longwood Gardens Grows Giant Water Plants for Philadelphia Flower Show

bendupont — Sun, 14 Feb 2010 15:12:14 +0000

I’m lucky enough to be a director of Longwood Gardens. Longwood is the best display garden in the world, and the clever gardeners there continually push the edges of horticulture and science. Which is why nearly a million people a year visit.

In preparation for the Philadelphia Flower Show, they have produced something extraordinary:

Non-Obvious Idea #2 – “Inflation’s Impact on the U.S. Supply Chain” – and Open Innovation

bendupont — Thu, 11 Feb 2010 23:25:14 +0000

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My idea has to do with inflation, which many people are expecting, but specifically the effect of inflation on the U.S. supply chain, which will be very disruptive.

The U.S. supply chain is $1.8 trillion annually. For sake of comparison, the U.S. healthcare industry, changes to which have led to much ink being spilled, is $2.4 trillion. So this is massive, 13% of GDP. The trend over the last 20 years has been to embrace “just in time” inventory management. But JIT has an unexpressed premise: namely, deflation. In addition to its effects on cash flow, there’s a collateral benefit to pushing production out to be as close to the point of sale, when the costs of that later production are lower than today’s production because of deflation in labor and materials.

So my question is: what happens to that whole model, premised on deflation, and to the supply chain in general if we experience massive inflation?

The sharp spike in inflation many are predicting will erode that specific benefit of JIT. There are multiple sources of inflation: raw materials costs, fuel expenses, regulatory compliance costs and devaluation of currency through fiscal and monetary missteps. The greater number of these which hit, the worse the picture will be. Raw materials and fuel have been in a 20-year deflationary cycle and always rise significantly in periods of monetary inflation. The costs of operating trucks will go up rapidly even if fuel prices are stable, because of environmental compliance reasons. History shows no periods of rapid increases in money supply which are not followed by increases in inflation.

This will most likely play out in the area of transporting goods. Today, the cost to ship goods in anywhere from 5x-7x the cost to store them. As reluctant as companies are to hold any inventory, they will do so as an inexpensive hedge against a massively higher cost to transport. They will not greatly expand inventory but decentralize it by operating multiple regional and smaller footprint distribution centers in proximity to their major markets.

There are two sentinels of this change: One is Buffett’s purchase of Burlington Northern, which validates the idea of greater use of the rails. The interesting thing about this purchase was that he is known as a deep value investor, yet he paid a 30% premium to market. More interestingly, coal represents 40% of rail freight business, but it seems likely that it is not a fuel of the future. So stepping down coal revenues to Burlington over time only increases the size of Buffett’s premium. The other sentinel is JB Hunt’s initiative to move from being a long haul carrier to extreme short haul, or being the carrier of the final mile, which may mean they see operating costs of trucking spiking.

I predict that the drastic rise in shipping costs will lead to many smaller regional DCs with some uptick in inventory levels, an increase in market share of the rails, a meaningful reduction in the long haul trucking business, and that all of these can happen due to increased operating expenses and inflation even without a rise in the materials costs.

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What will this mean for Open Innovation or Venture Capital? Watch for transportation related technologies. Have a better way to track containers? Have a better way to increase transportation uptime? Have a better routing optimization approach? This could be your time.

Non-obvious Dinner – Digital Exahust Cures Cancer – Idea #1

bendupont — Thu, 04 Feb 2010 21:33:05 +0000

I’ve been blogging about the Implict Web for some time now. Specifically, I believe that as people conduct more of their life online, they leave a mountain of digital breadcrumbs (also called data exhaust). Historically, this data has existed in silos. Amazon knows what books I like. Netflix knows what movies I like. OpenTable knows where I eat. But as more websites adapt web services and build APIs, this data can be used in new and unexpected ways. I believe that tremendous value will be created when someone can “cross the silos.” Google’s PageRank, for example, is a perfect example of data exhaust. It’s a set of data (webmasters HTML links) that was created for one purpose, but adds a ton of value when used in a new way (search).

So, here’s my latest hypothesis: I believe that we’re rapidly reaching a point where we can learn as much about disease causation by leveraging internet breadcrumbs as we can from traditional medical studies.

For example, there has been an ongoing controversy over whether the use of antiperspirants/deodorants increases the risk of breast cancer. While there have been several studies done to date, the results haven’t provided conclusive data. Indeed, the National Cancer Institute has said: “Because studies of antiperspirants and deodorants and breast cancer have provided conflicting results, additional research is needed to investigate this relationship and other factors that may be involved.”

While I’m not a medical researcher or statistician, I’m amazed about the low sample sizes of these studies. For example, the most recent study cited by the NCI had just 104 people in it. The study before that had only 437 people in it.

What if we asked people to opt-in to participate in a Medical Data Pooling Project? Users would voluntarily contribute their data exhaust (without any personally identifying information) for medical research. Every year hundreds of thousands of people support the fight against breast cancer by walking/contributing to walkathons (the Susan G. Komen Walkathon, The Avon Walk for Breast Cancer). What if we asked them to join a linkathon — just link your data to this nonprofit medical data pool?

For example, CVS has 50 Million people who have enrolled in Extracare (their loyalty program). I sure bet a lot of them are women who buy deodorant at CVS. And if you don’t shop at CVS, you probably buy deodorant at a supermarket that has a loyalty program (most likely run by Catalina Marketing). What if a researcher was able access this global consumption data and target a segment of the population (say, 50,000 women above the age of 40 who buy deodorant 4 times a year or more, for example) and then survey them about their medical history? The ability to link to consumption to medical condition would be extremely valuable.

The power of this linkage could be immense. Take the debate over whether the chemicals used in dry cleaners (PERC) cause cancer. With over 600,000 users tracking their expenses, I’m sure that Mint.com would be an invaluable data set for medical researchers. Want to study if prolonged cell phone usage causes cancer? Skydeck collects your cell phone usage data.

Convincing users to anonymously part with their data and answer some medical questions is not going to be easy . . . BUT, it should be a lot easier than convincing them to participate in clinical trials. Current non-profits could be enlisted to get their membership to participate (i.e., it might be easier to get someone to donate their data exhaust than to give money or participate in a fundraiser). And I have to think that the database providers would love this — after all, this would (1) potentially encourage more consumers to participate, (2) benefit society and (3) provide them with a compelling argument to all those people who oppose database marketing.

yet2.com Asia – Obsevations From Last Week in Japan

bendupont — Wed, 03 Feb 2010 02:50:15 +0000

yet2.com's Tokyo Office - The 2nd Floor

I spend a lot of time in Asia, in particular Japan. yet2.com has had an office there for 10 years.

Why? 1) Because so much of the worlds technology and patents are created there; 2) Because so many of the worlds largest companies (buyers of patents and technology) are there and 3) Because it’s a great launching pad into to; Korea, Taiwan and broader China.

I made my first trip to Japan promoting Open Innovation and patent liquidity, in 1999. Since 2000 we have had the same team on the ground – managed by Fujii-san. I was in Japan in December and I was there again last week. Here are a few observations from my trip;

1) The economy is recovering – slowly – but it is happening.

2) Unemployment is still to high.

3) Patent acquisition budgets are growing – and turning back on

4) There is a surprisingly large pipeline of new technologies / product about to be launched.

5) Location based technologies and human/machine interface technologies are of high interest, among others.

6) There is a great 4 mile run around the Royal Palace that is perfect for jet lag.

Makino-san, Fujii-san, Me, Takeuchi-san on Friday 1/29/10

Signal to Noise Ratio

bendupont — Sun, 31 Jan 2010 05:15:29 +0000

Life is cluttered with noise; from pop up banners to drivle. In between all of this nosie, are the signals that really matter. The ballet recital of my 3 year old. The conversation about public policy with my Dad. The moment of technical clarity on a new biomaterial.

The art of life is optomizing the signal to noise ratio.