Archive for category Backbone Business

So You Don’t Like Toffee?

Who doesn’t like toffee?  Seriously, who doesn’t like Enstrom Toffee?

We don’t generally push products here on View, but State Speaker of the House Mark Ferrandino clearly needs some education on the matter, since he thinks that toffee is, “fruitcake of the confectionery world.”

As it happens, in December 2010, I interviewed the current owners of Entrom Toffee, Doug and Jamee Simons, for Backbone Radio, for an hour on retail business.  Here’s the segment; the interview with the Simonses starts at 2:00 in.

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Slipshod Reporting on Rare Earths & Solar

The Denver Post this morning reports that a lack of rare earths may be inhibiting the domestic solar cell industry.  How this is so, they never quite describe.  There’s no calculation, for instance, of what percent of a solar panel’s production cost comes from rare earths.  Possibly, this is because rare earths aren’t actually used in the production of solar cells.  According to a DOE study on strategic materials, solar cells use indium, tellurium, gallium, and maybe soon, selenium, none of which is in the lathanide series of rare earths.  A briefing by the Rare Earth Industry Trade Association on the importance of rare earths to green energy applications doesn’t mention solar at all.

By coincidence, the New York Times this morning ran a piece on why solar panel manufacturers are relocating to China, and it seems that the reason has nothing to do with rare earths, which aren’t mentioned at all, and everything to do with our willingness to take the place of Germany and Spain in directing massive subsidies to the panels’ production.  And in spite of our increasing mandates on so-called renewable energy as a source of electricity, it’s also not clear that we’ll be willing to force utilities to pay the exorbitant rates necessary to make large solar arrays profitable.

That, not the absence of a local rare earth supply, is what’s threatening a domestic solar industry.

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Another View on Bubbles

One of the topics we didn’t get around to on the air was the topic of today’s bubbles.  Eric Janszen’s article for Harper’s mentions what he thought at the time were a couple of possibilities, China and Alternative Energy/Infrastructure:

There is one industry that fits the bill: alternative energy, the development of more energy-efficient products, along with viable alternatives to oil, including wind, solar, and geothermal power, along with the use of nuclear energy to produce sustainable oil substitutes, such as liquefied hydrogen from water. Indeed, the next bubble is already being branded.

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Since then, Janszen has backed off on that suggestion, believing that there hasn’t been enough self-generated investment to justify the term, “bubble.”  However, some VCs in the industry, also with Internet experience, beg to differ:

“There will be many decades of bubbles ahead,” he said. “There are people out there trying to outlaw them, particularly the sore losers. But they are accelerators to technology innovation.”

He argued that the history of technology is marked by bubbles of overinvestment, from the PC to the Internet, voice over IP, and others.

The same is happening in global warming. Concerns over global warming have spurred billions of dollars in investment from venture capitalists and government research to create low-polluting alternatives to fossil fuels.

“There is definitely a global warming bubble and one of the ways I know that is because the name Al Gore (is present),” Metcalfe joked. “Al Gore inflated the Internet bubble and now he’s inflating the global warming bubble.”

This was also about two years ago, but Metcalfe repeated the Gore joke at a recent VC conference in Boston, so it’s clear his thinking hasn’t changed on this issue.

The idea of bubbles as accelerators to technology and innovation is probably true, especially if they’re limited to equity bubbles.  (Debt bubbles are much more dangerous to the economy.)  Of course, remember that VCs, especially those who get in and out early, are usually among bubble winners, so there’s the issue of perspective in Metcalfe’s bubble boosterism.

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