The CEO Who Said Too Much
March 12, 2010
A Short Story
March 12, 2010

A Trip To The Science Fair…

Green energy is a trend for the future. I always like investments when you can make money and feel good about helping the world as well. However, after years of searching, I still cannot find a way to really invest in the technology. What will be the trend for the future? Even if you knew which method would be dominant, could you profit from that knowledge? So many of these companies just seem overvalued.

After a lot of searching, I came to the conclusion that biomass may be one viable technology. Firstly, algae can rapidly multiply and new genetic science allows us to create algae that have certain attributes. Do you want protein for livestock? What about algae which are high in lipids that can be easily refined into jet fuel? The science isn’t quite there yet, but it’s close. What makes this so much more exciting is that to create lots of algae, your inputs involve things we are trying to eliminate in the first place. Algae need carbon dioxide and a nitrogen source, which is present in many industrial and municipal waste streams. It seems like an ideal solution to two of our biggest problems.

I did some research, read a few articles online and then emailed a few people that came up in the articles. They sent me more information and finally one of my analysts set up a number of meetings. When we showed up at the lab, we saw ponds of green stuff and lots of tubes. We got a two hour dissertation on what the company hoped to achieve. The powerpoint looked sexy. The lab looked clean. Somewhere in one of these beakers was gasoline, another beaker had jet fuel and all of it had been created by algae. Amazing! Finally, they told us they’d be in touch. They were looking to raise a bit of money.

I went back to my hotel. Had a few beers and we thought about it. It all made sense, we were going to be rich! We didn’t understand half the stuff that anyone had said, but that’s why they wear the lab coats and not us. We were going to be rich! That night, I dreamed of a world powered by algae. Acres of ponds next to coal powered plants. The CO2 would be pumped from the power plant’s smoke stack into our ponds. Municipal waste would bubble through another hose. Silly chemists, they don’t know how to run a business. They forgot to even mention the carbon credits they could earn.

Then it all hit me—I woke up. Silly chemists, they don’t now how to run a business. This was like going to my high school science fair. It all looked interesting, but they were light years away from having profits. Five more years of test tubes, another five years while they go through small scale commercial trials—then what? Do you power a jet plane? Do you just end up with more tubes full of goo? This wasn’t an investment; this was charity in the guise of making money.

I sure hope it works. It would be great for mankind. It will be great for the environment. It will lower the price of energy. It will be great for these scientists—whom I really liked. I hope it IPOs at a huge valuation for them. It will not be something that I invest in.  Leave it to someone else. I don’t invest in fancy technology hoping that someone else will pay an even fancier price in an IPO. I invest in REAL businesses with REAL profits.

Categories: General
Positions Mentioned: none

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