implications of 7 billion

Seven Billion: http://t.co/Yov7AKw6
— ShumanTalukdar (@stswww) October 25, 2011

technology transfer to latin america

Los abogados, enfrentan los expedientes de la mano de la tecnología http://bit.ly/erdbET #ediscovery #clearwell

— Clearwell (@clearwell) March 18, 2011

http://www.lanacion.com.ar/1356618-los-abogados-enfrentan-los-expedientes-de-la-mano-de-la-tecnologia

eDiscovery news - New York Times perspective

E-Discovery In The New York Times http://bit.ly/hOUu4g #ediscovery #nytimes

— Clearwell (@clearwell) March 17, 2011

Picking Green Tech’s Winners and Losers (SSIR)

Picking Green Tech’s Winners and Losers (SSIR)

Picking Green Tech’s Winners and Losers

Unless clean tech follows well-established rules of innovation and commercialization, the industry’s promise to provide sustainable sources of energy will fail.

By Clayton M. Christensen, Shuman Talukdar, Richard Alton, & Michael B. Horn | 7 | Spring 2011

On April 22, 2009, four months after he took office, President Barack Obama proclaimed that green technologies would be the linchpin of economic advancement. “We can hand over the jobs of the 21st century to our competitors,” he said at a wind energy manufacturing plant in Newton, Iowa, “or we can confront what countries in Europe and Asia have already recognized as both a challenge and an opportunity: The nation that leads the world in creating new energy sources will be the nation that leads the 21st-century global economy.”

Private sector investors in the United States have been similarly enthusiastic, investing a total of $8.9 billion in clean energy companies in 2009.¹ This is a sizable sum, but it does not guarantee that green technologies will provide a sufficient return on investment. Both the public and private sectors spent billions of dollars developing the market for corn-based ethanol over the past 20 years before a consensus emerged that ethanol would not solve the economic and environmental problems it targeted.

A similar story may be playing out in the solar cell industry, as evidenced by Massachusetts’s experience with Evergreen Solar. In 2007, the state invested millions of dollars to entice Evergreen to build a new plant near Boston. The plant did create 800 manufacturing jobs, but the excitement over the deal eventually soured. As solar cell prices plummeted from late 2008 onward, Evergreen faced mounting losses and saw its stock price crater from $15 to 80 cents. Then in January 2011, Evergreen announced it would close its factory and shift production to a joint venture with a Chinese company in central China—this after $43 million in assistance from the government of Massachusetts.²

Massachusetts’s experience should serve as a cautionary tale about investing in green energy. If governments pour large subsidies into green technologies, they run the risk of backing technologies that, like ethanol, are fundamentally flawed. Solar power is a similarly flawed technology if it is deployed in competition with the existing power grid.

We believe there is a better way to evaluate, invest in, and deploy green energy technology. Our research examines the drivers of successful innovation and illustrates how these drivers can yield a set of predictable rules that govern the success of new technologies. We also have developed a set of factors that predict the failure of a new technology. Green energy technologies, just like those that drive personal computers, mobile phones, and software, must follow the rules of innovation and avoid its pitfalls.

For our purposes, green energy technologies are those that either harness power from renewable, sustainable sources or seek to reduce adverse human impact on the environment. Many of these technologies also hold the potential to contribute to energy independence. We include such technologies as solar, wind, and geothermal power, biofuels, and smart power grids, as well as hydrogen and electric vehicle propulsion. In order for these new sources of energy to have the widest possible implementation, investors, technologists, and policymakers must understand not just their potential impact but also their commercial viability. Many technologies can be successful if they are deployed according to sound innovation theory.

WHY ADVANCED TECHNOLOGIES OFTEN FAIL

There are generally four reasons that advanced technologies fail to achieve commercial success: technical challenges, systemic complexity, head-on competition, and because customers don’t want it.

Technical Challenges

The first reason is obvious: The technological approach itself proves to be unworkable or unscalable. The plasmodium parasites that cause malaria, for example, evolve so quickly they have defied eradication by conventional immunological techniques. And similarly, the potential for generating energy from controlled nuclear fusion is still far away, because technological problems repeatedly defy techniques to initiate and control this reaction.

Most green energy technologies face some kind of significant technological hurdle. Solar cell technology has undoubtedly advanced, but it still faces technological hurdles to improving efficiency. Similarly, battery technology, which is critical for electric vehicles, is coming up against natural chemical boundaries. Fuel cells, elements of the smart grid, and wind turbines all run into technological problems.

Systemic Complexity

A second reason promising technologies fail is that they are rarely “plug compatible” with existing value chains. Hydrogen-powered fuel cells promise a means of powering vehicles with no emissions except a trickle of water out the tail pipe. But fuel cells face an extremely long and challenging road to commercial acceptance, as they suffer from extraordinary systemic complexity. The ubiquity of the gasoline filling station is one reason that fuel cells will have a difficult time achieving widespread adoption. The infrastructure required to refuel a hydrogen-powered car does not exist and would require the coordinated investment of billions of dollars. Existing gasoline station equipment cannot be adapted to store and dispense hydrogen. This entire stock of equipment would need to be replaced. Hydrogen-powered cars can catch on only if hydrogen filling stations are liberally sprinkled across our roadways. Unfortunately, such stations will not exist unless there are a lot of hydrogen-powered cars as well. It is a classic technological chicken-and-egg problem that can be overcome only through expensive government mandates and subsidies that would alter the fuel distribution infrastructure in a coordinated way. With such a large and thriving gasoline ecosystem in place, we are more likely to see adoption in technologies that either work with the existing system or bypass it entirely. Gas-electric and plug-in hybrid vehicles are examples of technologies that improve fuel efficiency while working within the constraints of the existing infrastructure.

The refueling station problem is a well-known barrier to hydrogen adoption, but the systemic problems associated with hydrogen production may be even more troubling. Hydrogen does not naturally exist on the earth in the form required for fuel cells. Ironically, the most common form of producing it is to separate hydrogen molecules from natural gas, which produces harmful carbon emissions. The other option to produce pure hydrogen is through electrolysis, which breaks down water into its constituent hydrogen and oxygen molecules. The problem with this method is that even if large-scale electrolyzers were technologically practical, such machines would require large quantities of electricity. With renewable electricity generation still limited, the only cost-effective way to power an electrolyzer would be from fossil fuels, again defeating the purpose of hydrogen-powered vehicles.

Without sufficient capacity of renewable electricity generation, hydrogen-powered vehicles will not solve any environmental problems. For fuel cells to make sense, the entire system of electricity generation must be substantially modified. And perhaps even more daunting: Should this feat be accomplished, every subsequent step in the value chain would require a wholesale redesign of its existing infrastructure. We are quite certain hydrogen fuel cells will find limited success in displacing gasoline-powered engines.

Head-On Competition

The third cause of the commercial failure of advanced technologies is head-on competition with established technologies. When a technology is forced into direct competition against an established foe, it will be adopted only if it is more cost-and performance-effective than the established technology in the markets where it is being used. This creates enormous barriers against commercial success. New technologies have much better success rates when they are aimed initially at nonconsumers—those who are not consuming the existing products or services because of lack of wealth, expertise, or access. These nonconsumers often embrace products with limited functionality or quality, because they are superior to the alternative: no product at all.

Consider the path that the transistor took in overthrowing the vacuum tube. Throughout the early 1950s, most electronics products were made with vacuum tubes—devices the size of a child’s fist that consumed a lot of power. The mass of these devices meant that the televisions and radios from which they were built had to be large. Radios were placed on tabletops and televisions stood on the floor. All of the vacuum tube companies—the giants of consumer electronics, such as RCA, Zenith, General Electric (GE), and Westinghouse— saw the potential of the transistor and spent hundreds of millions (in today’s dollars) trying to make the transistors good enough for the markets where vacuum tubes were used.

Meanwhile, some inventors saw the potential for transistors to create new markets altogether. The first commercial application for transistors was the germanium transistor hearing aid in 1951—an application where vacuum tubes weren’t feasible. Then in 1955 Sony introduced its first pocket radio, a simple, inexpensive, low-performance product. But Sony marketed its radio to teenagers, customers who were delighted to have a limited product because it was better than the alternative: no radio at all. While the vacuum tube companies continued to work on the technology, Sony introduced the world’s first portable transistor television in 1959. Again, it was a limited product. But by making a TV so much more affordable, a new population of customers whose apartments or wallets were not big enough to afford an RCA television now could have one. Again, because the simple Sony product was better than nothing, customers were delighted. New markets emerged as Sony wielded simplicity and affordability to compete against nonconsumption. By the late 1960s, solid-state technology had become good enough that Sony and Panasonic could begin building large televisions and radios. Within about five years, customers had switched over to solid-state electronics, and every one of the vacuum tube businesses vaporized.

Solar and wind power generation are green technologies that, at least in the developed world, are being deployed in competition with the existing electrical grid. As noted, whenever new technologies compete head-on with established systems, challenges loom due to the cost and performance gaps between the new technology and the old. Solar and wind power are no different. Both are more expensive than the existing grid, and both have performance deficiencies related to weather conditions. Even with significant government subsidies to encourage adoption, the percentage of total electricity derived from wind and solar in the United States remains tiny, illustrating the barriers these technologies face to displacing the existing grid.

Customers Don’t Want It

The fourth reason promising technologies fail commercially is that, although they provide technically sophisticated functionality, they do not help customers do a job they need to have done. By job, we mean a fundamental problem a customer needs to solve, including a specific result or outcome. If a technology helps users accomplish a job they are already trying to do in a superior way, it is far more likely to succeed. If a technology tries to solve a job with which a customer isn’t terribly concerned, it is likely to face headwinds.

The rise of digital photography offers an illustration of how consumers will change their behavior in response to new technology, but not the fundamental job they are trying to do. When prints were the only way to view photos, people had the best of intentions to arrange photos in albums, but the vast majority of prints were viewed once, then placed in a shoebox. Despite this tendency, most people would ask for double prints so they could mail the best photos to a family member, not knowing beforehand which prints would turn out well. Once digital cameras were fully adopted, consumers changed their behavior, but not the fundamental job they wanted to perform with photos. Now, the killer app for photos is e-mail. Despite all the systems for online photo albums, the dominant consumer behavior is to attach photos to an e-mail for sharing. The technologies for online photo albums were always going to be challenged as they tried to perform a job that most consumers weren’t trying to do. The challenge is not in changing consumer behavior, but in changing the job that consumers are trying to accomplish.

Although we believe the smart grid will be an important incremental innovation, certain aspects of it run afoul of the jobs-to-be-done concept. The term “smart grid” encompasses a set of technologies that allow both electricity producers and consumers to make better decisions about power use through real-time data. Portions of the smart grid system are necessary, evolutionary improvements to the existing power grid. For example, advanced smart meters benefit power companies by eliminating the need for manual meter reading, automating the billing process, and providing real-time detection of outages.³ We believe smart grid technologies that lower cost or improve performance will be readily adopted by power companies.

But smart grid enthusiasts may be disappointed as they find that the behavioral change from consumers is not as strong as they had anticipated. A subset of smart grid technologies are intended to provide electricity users with price signals to help people manage their power consumption more efficiently. These technologies envision a home in which a consumer, seeing the high cost of electricity from 2 p.m. to 4 p.m. in the summer, will turn down his air conditioning, turn off lights, and lower the temperature in the fridge. The potential savings from this technology could be substantial—as much as 30 percent of a typical consumer’s power bill.

Although smart grid technology makes it possible for consumers to achieve such savings, it does not ensure that consumers will change their behavior. Just as we saw in the photography example, consumers will change their behavior only if the technology helps them accomplish a job they were already trying to do. For frugal consumers who already monitor their power consumption to reduce their power bills, real-time price signals will be welcomed as a way to manage their bill more efficiently. Unfortunately, not all consumers fall into this category. Those who are not looking for a system to help manage electricity usage will probably have little interest in smart grid technologies. They will not change their behavior, because the technology does not help them do a job they already were trying to do.

Are green energy technologies doomed to failure for the reasons we’ve outlined? We don’t think so. What follows are recommendations on how to develop and deploy green energy technology to maximize its chances for success in the developing and the developed world.

GREEN ENERGY IN THE DEVELOPING WORLD

Solar energy is both less reliable and more expensive than traditional power generation, despite its desirable environmental impact. Given its limitations, would-be commercializers of solar energy should ask themselves: Where are there customers who would value a technology that generates unreliable electricity? The answer: the rural villages of India, Mongolia, Indonesia, Tanzania, and other developing nations. These are the locations where solar energy can be successfully commercialized, because solar will be competing against nonconsumption of energy rather than a reliable, inexpensive power grid. Just as Sony’s transistor radio gained acceptance among nonconsumers, green technologies will find enthusiastic reception in the unconnected villages of the developing world.

Commercializing green technology in the developing world has the added benefit of contributing to the fight against carbon emissions. Currently, nearly half of carbon dioxide emissions are from developing nations. According to the U.S. Department of Energy, by 2030 developing nations will produce nearly double the carbon dioxide emissions of developed countries if their energy sources develop along the same lines. So green technology can enable both greater energy consumption and a cleaner path to economic development.

Although competition with nonconsumption will greatly aid its commercial success, green technology faces unique challenges in the developing world. First, technologies succeed best when the business unit responsible for developing and deploying the technology is also located where its targeted customers are. That way, the business unit will have the cost structure and managerial incentives that make pursuing “good enough” products at lower price points an attractive proposition.⁴ For example, when the management of GE’s medical imaging business was largely located in the developed world, it focused on producing the most advanced and highest margin CT and MRI scanners possible. Once GE created an autonomous business unit in China, it was able to develop a low-cost ultrasound machine that had great benefits in rural China. Furthermore, as GE continued to develop these products, it began to find applications for them in the developed world, opening up large markets for its innovative products.

The second requirement for succeeding in the developing world is to sell a product that provides a full solution for a customer need. In the developing world, it may not be enough to sell solar panels. Such a product may be of little use to a village with no electrical infrastructure or appliances. Rather, it is important for companies to deploy a technology that is tied to an application. D.light design, which is based in India but was founded in Silicon Valley, illustrates the importance of understanding customers’ circumstances. Rather than just offer a lamp in a place with unreliable energy or offer a raw solar cell, D.light bundles its lamps with solar panels fit for consumers’ energy requirements, which are small—often around 0.5 watts. Their products are far better than commonly used kerosene alternatives, because they are significantly safer, are more durable, and provide far better light. D.light design has distributed 1.7 million lamps to rural Africa and India; it continues to develop its business.

The third requirement for the developing world is that companies may need to integrate their activities across a wider spectrum of the value chain. In many of these countries, a well-functioning sales and distribution infrastructure with wholesalers and retailers does not exist. As a result, companies that usually rely on partners to sell and distribute their product may find a similar strategy impossible in the developing world. In these regions, companies may need to take on sales and aftermarket servicing to develop their markets. One successful approach is the creation of a network of rural entrepreneurs who sell a company’s products to friends and family. D.light design has developed such a system to increase its reach.

GREEN ENERGY IN THE DEVELOPED WORLD

Green energy adoption faces more daunting challenges in the developed world. With a convenient, low-cost, and pervasive energy infrastructure in place, green technologies must prove themselves more affordable or better performing to displace their competitors. By and large, the only way green energy has been able to meet that standard is through government subsidies that bridge the gap between actual cost and grid parity. Although a small segment of consumers actively seek renewable energy sources out of concern for the environment, the battle to win the hearts and minds of hundreds of millions of developed world consumers will not be won quickly enough to solve our energy and environmental problems. We believe that there are some spaces in which green energy technologies can succeed and thrive in the developed world, but they must comply with the rules of innovation.

One of the green technologies that can find a market is the electric vehicle (EV). The EV contains certain limitations that will prevent it from winning in head-on competition with traditional vehicles. Remember, to win in head-on competition, a technology must be either less expensive or better performing, and the electric vehicle is neither. Despite undeniable progress, no manufacturer has succeeded in bringing the cost of EVs below that of traditional sedans. And even if EVs reach cost parity with gas vehicles, their performance limitations remain. Battery technology caps an EV’s range at 100 miles between recharges. Because a full recharge takes eight to 12 hours, EVs cannot be used for long trips, which make up an important part of the job-to-be-done for which consumers buy a car.⁵ Furthermore, most EVs accelerate slowly and have maximum speeds well below the 80 mph that consumers typically demand.

We believe there is a set of customers who would actively seek out a car with both limited range and acceleration. The parents of American teenagers have precisely the job-to-be-done for which an electric vehicle would be a perfect match. These parents want to allow their teenagers to transport themselves to and from school, work, and friends’ homes, but nowhere else. They would actually prefer a car that does not accelerate quickly or drive on freeways. To complete their appeal to this market segment, EVs need to be priced cheaply so that affluent families could plunk down cash to buy one. Again, this is good news for EV manufacturers, as they can offer a bare-bones version of their vehicles and not worry about their performance relative to standard sedans. Compounding the good news for manufacturers is the fact that by getting a product on the market, they will incrementally improve their EVs, slowly closing the performance gap with gas-powered vehicles. In this way, a low-priced EV could disrupt the predominance of the gas-powered vehicle, just as Sony’s transistor radios disrupted vacuum tube radios.

Although a real market for low-cost electric vehicles exists, it is unlikely that EVs will achieve substantial market share for some time. Disruption often unfolds at a glacial pace, especially in an industry like autos with high capital costs and long design-to-production cycles. For that reason, the primary mode of competition in the auto industry will continue to be a sustaining one. By sustaining competition, we mean that competitors will continue to try to best each other within the framework of well-established technologies, incrementally improving performance or reducing costs.

In industries where sustaining competition dominates, hybrid technologies are likely to be adopted. This is because hybrid technology enables exactly those incremental performance or cost advantages that allow companies to win a head-on competition while remaining within existing systems of use. In the automotive industry, we have already seen hybrid vehicles, such as Toyota’s Prius, make significant inroads as fuel efficiency becomes an increasingly important basis of sustaining competition. Such vehicles do not suffer from any of the problems of systemic complexity that hydrogen- or battery-powered vehicles face. They operate wholly within the existing automotive infrastructure, not requiring the infrastructure to bend to its needs. Hybrid vehicles also may compete very effectively in a head-on manner by being more convenient, if not eventually lower cost. Although current hybrid technology cannot yet win in head-on competition with gasoline vehicles, hybrids are far more likely to be adopted in head-on competition than are pure-play electric vehicles. We are particularly optimistic about the coming generation of plug-in hybrids, which will propel cars up to 40 miles on electricity before requiring the gasoline engine to kick in. This solution provides the vast majority of everyday driving needs on electricity alone, while preserving the flexibility to take longer trips. Early models will not be cost competitive, but as the technology improves and scale advantages arise, cost competitiveness may well be achieved, especially if gasoline prices continue to rise.

CONSERVATION IN THE DEVELOPED WORLD

So long as green technologies follow the rules of successful innovation, they will be adopted readily in the developed world. The problem is that the developed world’s existing energy infrastructure is so cheap and convenient that it creates large barriers to adopting new energy technologies. And with few nonconsumers of energy, they offer hardly any space in which green technologies can take hold organically. This is why governments in developed countries must play a large role in formulating and enforcing conservation mechanisms to reduce energy use.

The recent move by some governments to phase out the incandescent lightbulb is a good example of the kind of conservation measures that are required. The incandescent lightbulb traces its history back to Thomas Edison. These bulbs produce light by heating a filament until it glows inside a glass bulb. Although the technology has served the developed world well for more than a century, it is terribly inefficient in its use of energy. Up to 90 percent of all the energy used in a lightbulb is wasted as heat, with the bulb producing only 15 lumens per watt. By contrast, a compact fluorescent lightbulb (CFL) produces 50 to 100 lumens per watt, and the energy savings more than make up for a CFL’s increased cost ($3 per bulb vs. 50 cents per bulb for incandescents). If a consumer were to spend $90 on 30 CFLs for her house, total energy savings could range from $440 to $1,500 for the five-year life of the bulbs.⁶ The United States has now mandated that the incandescent lightbulb be phased out of the U.S. market in 2012. Experts have estimated that if everyone in the country switches to CFLs, it will eliminate the need for 30 coal-fired power plants, and will save an amount of electricity equivalent to that used by all the homes in Texas each year.⁷

Government-mandated conservation efforts succeed best when they align with the interests of entrenched stakeholders. In the case of the lightbulb, manufacturers find the mandate attractive as CFLs represent a higher priced, higher profit margin product than incandescent bulbs. Consumers also stand to benefit from the energy savings reaped from CFLs. By contrast, California’s attempt to establish quotas for electric vehicles in the early 1990s was challenged from the beginning. As the quotas applied only to California and EV technology was so expensive at the time, it would have been very difficult for automakers to earn a profit on vehicles produced in such low quantities. This ran counter to their natural interest to produce higher volume, higher margin vehicles. The resulting industry opposition eventually caused California to retreat from its proposal. We don’t argue that government should cater to powerful interests, only that it should be prepared for a much more difficult path if conservation mandates create large burdens for industry.

It is undeniable that the world needs cleaner and more sustainable sources of energy, and green energy technologies can contribute to that effort. Yet our research into innovation and technology commercialization cautions us that the development and success of these technologies must conform to well-established rules. It would be a mistake for governments to pour large sums of money into technologies that will have difficulty finding commercial acceptance. But that is precisely the path many governments appear to be following. A better way to develop and deploy green energy technologies is to incubate them in places where they can succeed commercially from the outset.

---

Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School. He is best known for his book The Innovator’s Dilemma: The Revolutionary Book that Will Change the Way You Do Business,a study of disruptive technologies and their impact on business.

Shuman Talukdar is a business development executive for Silicon Valley startups and a graduate of Harvard Business School (email: st at inspiredvc.com).

Richard Alton is a senior researcher at the Forum for Growth and Innovation at Harvard Business School.

Michael B. Horn is the co-founder and executive director of education of Innosight Institute, as well as the co-author with Clayton Christensen of Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns.

Notes

¹ Ernst & Young, "Venture Capital 2009 Investments in Cleantech Fall 1 50% to $2.6B as
Investors Shift Focus to Energy Efficiency," Feb. 8, 2010.

² Keith Bradsher, "Solar Panel Maker Moves Work to China," The New York Times, Jan.
14, 2011.

³ Michael McNamara, et al., "Clean Technology Primer," Jefferies & Company Research,  Sept. 2009. 

⁴ These institutional dynamics are more fully documented by Jeffrey Immelt et al., "How GE Is Disrupting Itself," Harvard Business Review, October 2009.

⁵ Shai Agassi's EV service provider company, Better Place, attempts to solve this problem through its network of battery switching stations, but this effort suffers from significant upfront capital costs. 

⁶ Marianne Lavelle, "FAQ: The End of the Light Bulb as We Know It," U.S. News & World Report, Dec. 19, 2007.

⁷ Steve Hargreaves, "The Fluorescent Light Bulb Boogeyman," CNNMoney.com, Sept. 3, 2009.

Tags

Social Enterprise, Sustainability

green-tech disruption thinking published on Stanford Social Innovation Review

Work I co-authored w/ Clay Christensen: Picking Green Tech’s Winners and Losers (February 16, 2011) | Stanford Social Innovation Review http://t.co/QRg4cUR

— ShumanTalukdar (@stswww) February 18, 2011

Clearwell 200+ and growing!

New Ventures in Emerging Markets - publishing on SSRN

Overcoming Challenges of New Ventures in Emerging Markets The Ebay-baazee.com Transaction: What are the Challenges and How Did They Overcome them?

Note:  Original paper written in the Fall of 2005 as part of International Financial Management coursework at the Harvard Business School.

Abstract:  

While the real GDP growth rate of the US is expected to slow from 3.6% in 2005 to 2.9% in both 2006 and 2007, the economic boom is set to continue in emerging markets like India where real GDP is forecast to expand by 7.6% in 2005 and 2006. Needless to say, there exists a strong case to pursue opportunities in these markets. However, as foreign entrepreneurs and investors based outside of these emerging markets look to participate in the rapid expansion, they are faced with the challenging task of pursuing entrepreneurial investments in an unfamiliar environment. The entrepreneur and investor now have the additional complexity of ensuring business models are successfully executed in a completely new context. In this paper we discuss why these two factors are important for an entrepreneurial venture and through the Bazee.com transaction illustrate some strategies to manage these issues.

National Geographic global warming quiz

http://environment.nationalgeographic.com/environment/global-warming/quiz-global-warming.html?source=sem_G2300_ESV&esvcid=S1258693790_ADOGOE_AGI3726434_CRE4217146097_TID332049108_RFDd3d3Lmdvb2dsZS5jb20%3d_RAWZ2xvYmFsJTIwd2FybWluZw%3d%3d&gclid=COfJ9OHnmJ4CFcNx5QodZzdjmw

As we make our way in 2009, I decided to share some of the wisdom I have accumulated so far as it relates to executing in emerging markets. To start, I thought I would include a link to a paper I wrote (many years ago) with a few other business-school colleagues around the topic of establishing new ventures in emerging markets.

In case you are interested, send me an email and I am happy to forward you details on how to get access to additional papers from that year's International Financial Management course. Stay tuned for more discussions on this topic.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1601113

earning venture returns with water technology

Through my experiences working on Stonybrook Purification, below are some perspectives on investing in water (clean) technologies.

why I care about cleantech

Recently I have had a number of conversations with VC's, angels, and entrepreneurs on why cleantech (broadly defined) is important. Often times, the conversation quickly shifts to global warming, etc.I wanted to take this opportunity to clarify why I care about cleantech, and why you should care as well, regardless of your current views on global warming.

To start, just to make sure we are all in the same page -- Cleantech, as a category, represents products that will increasinglybe adopted from the environmental challenges that the world is facing (climate change being one of the drivers). This product category includes solutions for cleaner energy, clean water, improving efficiency of basic materials, lighting, etc (see GreenTech Media Taxonomy). For a long-time a purely socially conscious mission was the driver of environmental pursuits -- organizations wanted to make sure we were not affecting our planet. However, the fact is that there were enough resources to fulfill the basic needs of the developed countries, and this included energy, water, food, etc.

Today, though, the situation is changing and we are moving to an era of scarcity of real-world resources. (This is quite ironic, given that for the last 30 years the innovations of Silicon Valley have created a digital infrastructure that has brought to us an era of abundance in the digital world). This scarcity is primarily driven by the accelerated growth and demands of emerging markets (China, India, Brazil, etc) whose populations are now looking to attain some of the living-standard luxuries that all of us in developed markets take for granted. As we fast forward over the next 50 years, these countries will become more powerful, commanding aggregate GDP levels equivalent to that of the U.S. and EU (I will run through some of my calcs in another blog). At an individual level, the consumers in these countries will be commanding better access to basic resources that will push their standards of living above of the menial conditions that most live in today (ex: majority of India lives at under $1 per day). Combining this grass-roots consumer push for a better quality of life, and the stronger political power from aggregate GDP levels, these countries will become stronger negotiators to receive their fare share of resources.

Now why does this hypothetical scenario matter and how does it connect to the need for cleantech? Well the fact remains that unless we do things differently, the world will not be able to sustain a path for development for these countries that follows the path of development using the same solutions for resources that worked in the U.S. and Europe (oil, energy intesive processing, always on, etc). We have to find new ways to assure economic development, otherwise the competition we are witnessing for basic resources will accelerate, and the existing negotiations may escalate to major conflicts (think about what 200 M people will be willing to do if they can't get access to clean water). So to me, the investment in clean technologies is necessary to assure sustainable development!

So where does the climate change discussion come into play? The changes from climate change will only make this situation bleaker. Climate change will impact the availability of resources in emerging markets, further escalating both the rate and the degree of competition for resources. A perfect example of this point is if we look at water. Countries like India and China already have a relative scarcity of water (with growing strains) and with truly drastic climate change scenarios, this scarcity will only become more severe.

To bring about another point, a lot of investors point to price of commodities as being the driver for cleantech investment. Although I agree that prices is the catalyst that makes most individuals in the mainstream market finally care, this is looking at the effect side of the cause/effect relationship. Prices for energy today are increasing because of growing competition for the known energy resource we have relied on for years (oil). Regardless on your views of what OPEC should do to the supply that they make available, the largest change in demand has been from increasing pull from emerging markets for this resources and continuing growth of energy in developed economies (see oil tracking chart). Even if they increase their supply of oil, this is not a sustainable approach for next 100 years (even dismissing the climate change argument). The national security point is important, especially when it comes to making sure that we have access to energy and aren't dependent on imports. Hopefully though, by helping other countries improve access to resources themselves, we help create generally more peaceful global context.

My perspective is that developers of clean technologies will be increasingly rewarded from the growing interest and customer spend for solutions that will allow for both (1) to increase availability of clean resources available and (2) assure efficient use of existing resources. Today, the market multiples and transaction comparables for some of these sectors are showing the value that the market demonstrates for innovations targeted at this space (ex: solar multiples, etc). However, for the majority of other sectors this has not been the case.

My hypothesis is though, that as people realize the magnitude of the problem (that there are just fewer basic resources available for consumption and that need for these resources is accelerating from rapid global development), the sense of urgency will rise. Innovators who today begin to identify solutions to help lower the cost curve of some of this solutions (and increase efficiency) in my mind will be increasingly rewarded for the economic value and social value they create.

If you ask my opinion on global warming, it is clear in my mind that there are significant environmental changes that have been created through increased development (including species extinction, habitat pollution, etc) from the consumption based habits we have chosen to embrace and reward as a population. CO2 induced temperature changes in my mind is just one of the most significant and impactful.

For related posts go to:

http://alwayson.goingon.com/permalink/post/27369

Stonybrook Purification

Stonybrook Purification

Stonybrook Purification, a spinout of Stony Brook University, announced the close of the first tranche of a $4.1 million Series A investment led by Battery Ventures. T2 Venture Capital (T2VC), the founding investor and early incubator of the company, also participated in this round, along with new investors Modern Water and TianDi Growth Capital. The company will bring to market a novel concept for increasing the performance of high flux membranes for a variety of purification, filtration, and desalination applications. The technology has the potential to significantly increase the performance of and reduce the costs of processing water on a large scale.

http://www.ereleases.com/pr/stonybrook-purification-secures-series-a-financing-university-spinout-aims-to-lower-cost-of-clean-water-10805

http://www.t2vc.com/news/2007/10/17/vcs-turn-on-spout-for-stonybrook-purification.html

http://www.dealipedia.com/deal_view_investment.php?r=5225

http://www.prnewswire.com/news-releases/stonybrook-purification-secures-series-a-financing-university-spinout-aims-to-lower-cost-of-clean-water-58697292.html

http://www.stonybrook.edu/research/otlir/technologies/Nanotechnology/R-7416.pdf

http://venturebeat.com/2007/10/17/stonybrook-raises-41m-for-water-purification/

personalization revisted - opportunity analysis

In the beginning of 2008, I led some major due-diligence in the personalization market and the emerging companies in the space.  Companies that I looked at in detail at the time included RichRelevance and Aggregate Knowledge.

disruptive cleantech - the beginning

Everyone is excited about cleantech. Everyone should also be concerned at the dramatic impact that our world will experience if we do NOT harness technology to help solve some our most fundamental challenges in reducing CO2 levels, finding cleaner ways to produce energy, regulate our water consumption, and reuse and recycle materials to reduce waste.

As we move forward into this nascent industry, I will focus on analyzing the NEW entrants in this space that are likely to make the most dramatic impact. Given that this space is so broad, I am planning to initially focus on companies which are pursuing disruptive approaches.

Now disruption is often a mis-used term so let me first define it so that we are all in the same page. In my mind, disruptive technologies are solutions that initially are lower performing than existing alternatives but are also at a lower-price point. Initially, these "less-for-less" solutions, as one of my HBS professors once quoted, are able to quickly penetrate a non-consuming segment (or individuals that for some reason or other decided to not adopt the existing technologies).

Now how does this relate to the broader theme of disruption. Today, most of the world is looking to invest in technologies that are making our existing infrastructures more environmentally sound. For us that live in the U.S., these solutions will still provide access to energy through our grid infrastructure or water through our pipes. What I am interested in, are individuals who are finding ways to bring power, water, and waste processing in radically different ways. These types of solutions have the potential to arise in emerging markets as much as in developed markets.

I am in the lookout for the "Google" of cleantech. Stay tuned to this blog if you are also interested.

For related posts check out the following:

http://www.news.com/8301-11128_3-9867655-54.html

http://blogs.greentechmedia.com/cleantechinvesting/2008/02/18/the-two-kinds-of-disruptive-clean-technologies/

more on our target themes

A recent article in the Stanford Social Innovation review captured some of our target "markets" effectively. They highlighted some major areas that deserve attention from the social, environment, and economic point of view. Consider them our"earth's current pain-points". Below is their top 10 list, one of my additions, and other general thoughts.

1. Treating human waste: To me this should include new approaches or technologies for recycling both organic and inorganic materials.
2. Cleaning the air: Examples are filtration devices for air and water for both industrial and consumer applications.
3. Harnesing the sun: I would expand this to say "Harnessing natural energy" and I would include technologies or services that help harness the power of the sun, water, and wind to people.
4. Enhancing nutrition: I think about the services or products that help bring more balanced nutrition to people around the world.
5. Educating the world: Services and products that make knowledge more accessible to everyone and help connect people to potential role models.
6. Fighting illiteracy: I would place this as a subset of education...
7. Crafting inexpensive vaccines: New types of biotechnology that helps speed the current drug development pipeline, or alternatively, provides alternatives to current drugs.
8. Helping people see: More broadly I would think of services and products allowing individuals across all socio-economic standings gain better health.
9. Reducing child labor: Services and new ways of conducting commerce that not only reduce unfair labor for children, but help promote fair trade.
10. Bridging the digital divide: Ideas that help bring technologies to those that are farthest from societies where leading technologies are being developed (one laptop per child comes to mind).
11. Enhancing democracy and connecting people: Anything that helps with the proliferation of information and allows people to more easily connect to each other. Some parts of the world still live in information silos.
    

Although each of these efforts are very different, my hope is that by connecting people who are aware of these problems and have noble intents, a community will form to bring more of right types of innovations to the world -- faster!

The organization assists its target audience by connecting them to a like minded community and increasing general awareness to their cause. In addition, we provide strategic advice and referrals to projects which are demonstrating greatest potential. To support the community, InspiredInnovators.org maintains its own professional network and publishing channels. To raise awareness project efforts we provide visibility to community of potentially interested parties in entrepreneurial and venture capital industry.

what is Google stock worth?

As business models related to the ubiquitous internet rely more and more on advertising, I thought that an interesting exercise would be to understand the implied growth rates in Google's stock. Afterall, Google is the gorilla of all advertising driven business models.

Assumptions:
- Current price per share of $369
- Earnings per share of $5.02
- Beta ranging from 1.25 to 3 (since it is such a new offering it's best to do some sensitivity around this value
- P/E ratio in 10 years between 20-80

Calculation:
- If you run through the numbers you come up with the following sensitivity table on implied growth rates of Google's stock assuming different Beta's and P/E ratio in 10 years:
1) Taking Beta constant at 2 and changing the P/E ratio growth rate varies from 25% to 9% (P/E ratio of 20 and 80 respectively).
2) Keeping the P/E ratio constant at 30 (Microsoft's multiple after 10 years), growth rate varies from 18% to 23% (Beta of 1.5 to 3 respectively).

Implications:
I would think that it is very unlikely that in 10 years Google will maintain its current P/E share of over 70, so assuming that it follows the record Microsoft has had (P/E of 30 after 10 years) and volatility somewhat more marked then the market (Beta value of 2) you are looking at implied double digit aggressive compound annual growth rate of 20%. So if you were to buy the stock today, it would have to grow at this rate in order for it to maintain its value, and it would have to exceed this growth rate for you to make any money. Now, earnings have grown 100% for Google in the last year, and with a few more years of such dramatic growth you might average out the less stellar results later in the lifecycle of the company to possibly still give you 20%. Note, however, that Microsoft ended up growing at rate of about 10%.

So the next question is whether Google's can capture revenue by diversifying into other offerings (subscription fees, wireless access, etc) and whether their current model of providing state of the art software supported through advertising revenue streams has more room to grow. To think about the second issue more precisely, you would need to consider the growth of the advertising market across the various segments that Google operates in (search) and growth in advertising from segments they are likely to expand into (mobile services, digital content aggregation, etc). You would also need to consider how this market is likely to be divided among other incumbents (Yahoo, Ebay, Microsoft) and new upstarts. Look for my thoughts on this market analysis in one of my future posts.

Related article:
http://online.wsj.com/article/SB114114129311685373.html?mod=home_whats_news_us

podcasting advertising market

As business models related to the ubiquitous internet rely more and more on advertising, I thought that an interesting exercise would be to understand the implied growth rates in Google's stock. Afterall, Google is the gorilla of all advertising driven business models.

Assumptions:
- Current price per share of $369
- Earnings per share of $5.02
- Beta ranging from 1.25 to 3 (since it is such a new offering it's best to do some sensitivity around this value
- P/E ratio in 10 years between 20-80

Calculation:
- If you run through the numbers you come up with the following sensitivity table on implied growth rates of Google's stock assuming different Beta's and P/E ratio in 10 years:
1) Taking Beta constant at 2 and changing the P/E ratio growth rate varies from 25% to 9% (P/E ratio of 20 and 80 respectively).
2) Keeping the P/E ratio constant at 30 (Microsoft's multiple after 10 years), growth rate varies from 18% to 23% (Beta of 1.5 to 3 respectively).

Implications:
I would think that it is very unlikely that in 10 years Google will maintain its current P/E share of over 70, so assuming that it follows the record Microsoft has had (P/E of 30 after 10 years) and volatility somewhat more marked then the market (Beta value of 2) you are looking at implied double digit aggressive compound annual growth rate of 20%. So if you were to buy the stock today, it would have to grow at this rate in order for it to maintain its value, and it would have to exceed this growth rate for you to make any money. Now, earnings have grown 100% for Google in the last year, and with a few more years of such dramatic growth you might average out the less stellar results later in the lifecycle of the company to possibly still give you 20%. Note, however, that Microsoft ended up growing at rate of about 10%.

So the next question is whether Google's can capture revenue by diversifying into other offerings (subscription fees, wireless access, etc) and whether their current model of providing state of the art software supported through advertising revenue streams has more room to grow. To think about the second issue more precisely, you would need to consider the growth of the advertising market across the various segments that Google operates in (search) and growth in advertising from segments they are likely to expand into (mobile services, digital content aggregation, etc). You would also need to consider how this market is likely to be divided among other incumbents (Yahoo, Ebay, Microsoft) and new upstarts. Look for my thoughts on this market analysis in one of my future posts.

Related article:
http://online.wsj.com/article/SB114114129311685373.html?mod=home_whats_news_us

related

Characterizing the business opportunity associated with the introduction of a new product is one of the most important tasks required of any entrepreneurial organization. The assessment of each specific opportunity sets the expectations of investors, employees and partners. An assessment performed objectively will help guarantee that you don't invest energy and capital commercializing the wrong product or one for which a market does not yet exist. It may even prevent you from starting an effort that may be destined for failure.

I've specialized in understanding what we think are the most important issues to consider during the assessment of any product's commercial potential. These include:
- estimate the available market and market access
- customer needs and bias analysis
- help with product definition
- pricing and costs
- competing technologies

Having a goal of being your entrepreneurial wing-man, please do reach out if I can provide helpful perspectives on developing your commercial hypothesis, exploring opportunities, and generally pursuing your new ventures.

tracking an always connected future

Since the advent of the browser and widespread proliferation of broadband, we have experienced the dramatic impact the internet has made in our lives. We find, capture, and share information and entertainment radically differently then previous generations. The development of mobile computing and wireless technologies will continue to propel such radical changes creating lucrative opportunities for new ventures that capitalize on the concept of an ubiquitous internet.

Moving forward, I will track and analyze the markets, technologies, customer segments, products, companies, and regulatory changes related to innovations in this area. Stay tuned as I post any research, thoughts, and insight relevant to the due diligence of any ideas you think will define an always connected world..

beginnings of personalization

Trusted Consumer Intelligence
Executive Business Plan

The future of personalization

Concept

Personalization is an undelivered promise from the internet revolution.  Responding to this need, Innovai is creating the first trusted consumer intelligence service. This service is a trusted 3^rd party available to all marketing channels for truly one-to-one interactions with the consumer.  It uses proprietary statistical and artificial intelligence based datamining solutions to derive information from consumer purchasing histories across distributed sources, filtering and focusing all marketing interactions.  This cutting-edge technology enables improved recommendation capabilities to proprietary merchant channels as well as bulls-eye targeting through existing marketing providers. With better technology and more data about the consumer, our trusted consumer intelligence service will dramatically improve marketing across all channels, changing it to become a continuous and intelligent conversation with each individual consumer.

To have a sustainable competitive advantage and execute through the initial hurdles, it is crucial to create the latest proprietary recommendation and predictive technologies, build the platform to market this capability, and continue to commit resources to improve and innovate these assets for next generation technology.  Innovai is creating this improved proprietary data mining technology, helping businesses search through their existing consumer purchase data for recommendations of future purchases.  Current players operating in the personalization market have been slow to move to new forms of delivery of their technologies, and alter their present business model.  However, as previously noted, there is a growing demand for businesses of all types and sizes to have access to the latest state-of-the art personalization capabilities as a service, allowing merchants to continuously improve their relationship with the consumer.  Fulfilling this need is the first step in Innovai’s plan.

However, Innovai has a greater vision for the future.  Its emerging technology capability targets access to a large number of independent merchant repositories.  With the consumers' permission, purchase information across merchants are combined together, enabling a unified prediction capability that benefits both the consumer and participating businesses. In turn, Innovai is creating the first personalized “google” of marketing.  Its proprietary technology,  SmartPredict, focuses on this vision through features that automatically help it learn and improve its predictive functions as more data becomes available.  Combining SmartPredict with datawarehousing infrastructure our  “trusted consumer intelligence” is provided to parties owning the advertising distribution channels such as internet service providers, cellular providers, and direct marketing players.  The consumer indirectly benefits from this service because he/she receives more accurate recommendations on proprietary merchant channels and more relevant offers across existing marketing channels.

Opportunity

Although both pure Internet and traditional retail companies have embraced the web and soon the wireless web as a sales channel, personalization technologies are not being used at the same level of sophistication as they can be created.  Among the reasons for this discrepancy is that much of the technology is overpriced and its integration cost expensive.  Further, personalization as it applies to advertising, specifically for one-to-one marketing is an undelivered capability.  However, many technologies have now converged to create a window of opportunity to deliver these features together in a seamless manner through a new type of service.

Both the personalization and advertising markets are set to grow dramatically.  According to Datamonitor, the global personalization market will grow from the present $500m to $2.1 billion by 2006.  Datamonitor emphasizes that personalization technologies dramatically enhance the understanding a business has of its customers while improving their experience online. These capabilities will become an increasingly crucial competitive differentiator across all channels of communication and distribution with the customer.  Additionally, Jupiter Media Metrix predicts that although online ad spending in the United States will increase only 5 percent this year, it will rebound and grow at a compound rate of 22 percent over the next five years—reaching a total of more than $15 billion by 2006.  At the same time, Jupiter also forecasts, that spending on digital marketing initiatives such as coupons, promotions, and e-mail will surpass spending on advertising, reaching more than $19 billions during the same time period.    Through sustained pursuit, merchant adoption, and commitment to engineering unique enabling technology, Innovai will seize the opportunity from both these markets to create the first trusted consumer intelligence service.

Technology

Innovai's proprietary SmartPredict Technology powers this vision with cutting-edge predictive capabilities.  Combining statistical and artificial intelligence based approaches, the technology is on the path of creating a trusted consumer intelligence for intelligent marketing.  Our proprietary technology will work together with our own datawarehousing capabilities to deliver on the long-term proposition.

Our SmartPredict Technology allows predictions of consumer response to any type of marketing offer.  Its features include making recommendations on items that a given consumer is likely purchase and predicting which consumers would most likely be interested in a product, service, or marketing offer.   SmartPredict can mine distributed merchants' consumer databases to discover the latest product and consumer correlations.  Through it a merchant gains the ability to engage a consumer in a more personal manner during the sales and marketing process, offering and highlighting products which this particular individual is most likely to purchase. As our technology makes use of all available data, it continually adapts, improves, and becomes increasingly accurate as more data is available.  Both the features of recommending products for a consumer and the targeting of a product to the most likely consumers are part our current SmartPredict version.

Currently being developed, is the ability to effectively combine and normalize data from multiple sources to power  inter-merchant data mining.  This will result in better predictive capability through both the increased volume and variety of data.  In order to accurately process data from these different sources, an Advanced Classification System (ACS) is being developed.  In addition, with the ability to combine and normalize data from multiple sources using ACS,  SmartPredict will enable inter-business datamining to produce more accurate results.  This will result in even greater predictive capability through both the increased volume and variety of data. The goal of ACS is to enable the automatic categorization and association of products based upon their descriptions, attributes, availability, and consumer appeal. Prediction of market demand for unreleased products, as well the accurate targeting of newly released products is then enabled.  Combining it with it identity mechanisms working with marketing channels, SmartPredict enables a one-to-one targeting service to reach consumers individually with the advertising that they will be most interested in.    Patents are pending on methods and components encompassing our technologies.

Strategy

Innovai has a clear strategy to execute on the vision and take advantage of our technology assets.  After raising our first round of funding, optimally of $3 million, we plan to hire the required personnel and buy the necessary hardware and software infrastructure to maintain our own datawarehouse.  With these resources we plan to productize our current SmartPredict technology and create the delivery platform to sell our current predictive capabilities as a service.  We will give our product away at first to attract an initial customer base, and then charge additional clients in the future to use our data mining services.  Providing our advanced personalization technology to merchants as a service at a discount to the current competition enables us to quickly gain merchant customers that have not adopted this type of technology because of its cost.  Within a year we plan achieve our first goal which is to secure an initial number of merchants using our personalization technology and having varying types of consumer product purchase histories.

Plans for the next phase are focused more in our goal to become a trusted consumer intelligence provider.  With an additional round of funding we plan to ramp up our technology capability to productize the next generation of SmartPredict.  There would be a new focus, of gaining access to a large consumer base through existing marketing channels and emerging digital “passport” capabilities.  This would enable us to discover trusted targeting information about the consumer based upon the information we derived from their purchasing information across merchants.  This consumer intelligence would enable one-to-one targeting for both marketing campaigns across current communication channels as well as product and service recommendations through proprietary merchant channels.  With a critical consumer base, and growing access to merchant purchasing information, Innovai’s trusted consumer intelligence service would be so effective that a second wave of merchants, advertising channels, and consumers would seek our one-to-one targeting intelligence for marketing. Our roadmap for execution is a clear path to market domination.

Return on Investment

The return from investing on Innovai is immense, as defined by the large market for personalization technologies in addition to long-term vision to improve marketing targeting.  Competitors in the personalization market currently provide overpriced capabilities.  Embracing the web services adoption, Innovai positions itself to quickly provide leading edge analytic and datamining capabilities to merchants.  The risk of this proposition is justified given the lucrative profit generating opportunities from charging both merchants for improved personalization technology and marketing providers for one-to-one consumer targeting through a single delivery infrastructure. 

                The benefits of having personalization technology for merchants, such as retailers has already been studied.  According to a survey of 25 top online merchants by Jupiter Communications, Jupiter found that customization at 24 consumer e-commerce sites boosted new customers by 47% in the first year while revenues rose 52%.  Some of the documented benefits gained from two past business cases are:

·       BMG - BMG Music Service's site transaction volume increased tenfold after introducing a personalization service based ATG's Profile Station software.

·       N2K - Sell-through jumped at least fivefold during an early test at N2K's Music Boulevard, zooming from 2-4% to 10-30%. N2K uses a collaborative filtering system supplied by NetPerceptions.

The enabling personalization software cost in these cases varied greatly. BMG's site development fees rose from $200,000 to $2 million (PC Week).  In contrast, artuframe.com, which uses a NetPerceptions system, reports spending only $100,000.  Amazon.com is another well-known company that owns and uses personalization and recommendation capabilities.  By providing such capabilities as a service, merchants are assured that they will always be up to date with the latest personalization solutions, while minimizing the infrastructure and maintenance costs.  Combining the revenue generated from integration work derived from strategic partnerships currently being pursued with implementation partner, this is by itself is a great business.  

                The greatest opportunity is from the trusted consumer intelligence aspect of the proposition.  Table 1 (below) summarizes our financial projections based on this capability.  In the first year, the service generates little revenue since we provide our personalization technology (SmartPredict) to merchants at a significant discount.   Slowly as we begin charging for this feature, we make more revenue from merchant service fees, ranging from 100k to $1 mill per customer.  As our technology evolves it is applied for consumer targeting based upon inter-business datamining, and a more lucrative business emerges from additional revenue generated from fees charged to marketing channel customers such as internet service providers and direct marketing companies to use our service to enable one-to-one marketing.  Finally at the end of the 5^th year, as we have more merchant customers and have better consumer targeting/intelligence capabilities, we gain momentum attracting a larger array of marketing channels paying us a premium to provide intelligent one-to-one marketing to all of their customers.  Our costs are controlled, since much of the infrastructure is reused, but the added value is in the form of software enabling the intelligence.  In a short period of time, Innovai delivers on the vision of a “trusted consumer intelligence” provider, creating a very lucrative business, and capturing all the monetary rewards derived from enabling one-to-one marketing.

Trusted Consumer Intelligence Metrics	2002	2003	2004	2005	2006
Total Merchant Customers	2	8	20	40	60
Marketing Channel Customers	0	2	5	8	10
Total Participating Consumers (thousands)	0	2000	10,000	50,000	80,000
Expenses (millions)	3	20	30	35	50
Revenue (millions)	0	2	10	81	203
Profit (millions)	(3)	(18)	(20)	46	153

Table 1:  Innovai Financial Projections

Future

The future is bright and full of opportunities for Innovai, as the leading trusted consumer intelligence provider, personalizing the interaction with the consumer across mass-marketing channels and enabling improved recommendation services across proprietary merchant channels.  Developing state of the art technology that will find strategic marketing correlations, we plan to help science better guide the creative aspects of advertising.   Additionally, our technology will mine varying types of data to discover information providing insight into the effectiveness, depth, and efficiency of any marketing campaign—potentially right down to an individual advertisement.  With the growth and success of Innovai, personalization will no longer be accessible to a select few, and will make the visions of one-to-one marketing reality.

The TeamThe Innovai team is an energetic group of individuals planning to change the way marketing is done.