How Google and Friends Are Killing Cleantech Startups (Without Even Trying)
First of all, if you haven’t read Michael Liebreich’s recent column on the connections between shifts in the energy industry and in society, please do so. It’s very well done.
Now, onto this column’s topic at hand.
If you were to think of big companies from outside the energy industry that could be poised to radically disrupt the electric utility industry, Google (and its big-tech peers) would have to top the list. Google has, over the past decade, invested in early-stage energy tech, toyed around with legally establishing a utility structure, acquired home-energy automation company Nest, put hundreds of millions of dollars into renewable energy projects and project pools, and introduced a few online tools for potential use. It has the talent and the resources to do this at scale.
And yet, I find myself increasingly feeling like Google and these big players are asphyxiating cleantech entrepreneurs. Not on purpose, perhaps, but through “the dampening effects of dabbling,” as Gregor Macdonald called it in response to a tweetstorm of mine recently. These tech giants talk a good game. But they’re not taking it seriously, and so they’re not playing the traditional “tentpole” role that such tech giants have played in creating ecosystems.
If Google et al. were really serious about deploying data, IT, etc., to reinvent the utility market, there’s so much they could do. Imagine a Google-sponsored “utility of the future” with integrated end-to-end intelligence and controls on both sides of the meter, an aggressive embrace of distributed generation and distributed storage and automated demand response, and a utilization of that utility-customer relationship to drive lots of revenue-acquisition opportunities for other letters of the Alphabet, for massive economic synergy.
Is this a crazy vision, that Silicon Valley’s tech giants could lead the reinvention of the electricity industry? Not according to their own rhetoric. Many of the tech giants are supposedly looking to this set of markets as a growth opportunity, worth encouraging and investing in. Cisco has proclaimed that renewable energy is a good investment and a key enabler of the “internet of everything.” HP is getting into renewable energy because it is a “good business opportunity.” And strongest of all, Google has declared that “we see renewable energy as a business opportunity and continue to invest in accelerating its development.”
This is not just “we think being green is good” rhetoric (in which they would be joined by nearly all the other tech giants including Apple, Microsoft and Intel, among many others). In these cases, it’s a declaration of strategic intent.
Well, if the strategic intent is to invest into growth or at least enhanced profitability through cleantech, the follow-through is starkly lacking. At Google, the company’s previous early-stage energy tech investing has been pulled back, and Google Ventures hasn’t been asked to fill the void. While Nest is doing some interesting things in energy, it’s been made clear that the major strategic push for that business is in general home automation (fire detectors, cameras, etc.), and that most of the team there isn’t focused on working the energy-savings angle. They’re putting money into project investments that make money, but not into the startup platforms themselves. And their consumer tools (such as the recent rooftop solar assessment tool that’s gotten a lot of press; more on that below) have been mostly pursued by individual engineers who are given some latitude by the company to follow their personal passion, rather than via any kind of strategic initiative.
If they were serious about “accelerating its development,” Google et al. would be actively partnering with and even acquiring energy tech startups, at least on the service and data side. Instead, when I talk with such entrepreneurs, it’s clear that most of them (unless they’re already part of the Elon Musk related community) can’t even get a meeting with the giants. This frustration is palpable, even from startups that have tens of millions of dollars in revenue. It’s just not a real priority for the tech giants, despite the rhetoric. Or, alternatively, perhaps people somewhere within these behemoths are working on this business opportunity — but if so, they’re trying to do it all internally, instead of engaging with and building the broader ecosystem. Because they’re certainly not talking with any of the entrepreneurs I talk to. And I talk to a lot of them.