Krugman Joins The Chorus Urging The Return Of Big Ideas In Technology and Venture Capital

Following my recent blog posts on Reid Hoffman, COP21, and an apparent resurgence of Big Ideas in technology, a growing group of venture capitalists are resurrecting their original mission in industry and the economy. Paul Krugman of the New York Times has also noticed and offers his hope that this trend continues.  Max Marmer, who wrote his now legendary 2012 Harvard Business Review article, “Reversing the Decline in Big Ideas,” has stimulated a broad rethinking on what we should be focusing.  The successful landing of Space X’s Falcon 9 is a hopeful early indication that Elon Musk is one of those on the right track.

Things to Celebrate, Like Dreams of Flying Cars

Reblogged from The New York Times, Opinion Page

Paul Krugman DEC. 25, 2015

In Star Wars, Han Solo’s Millennium Falcon did the Kessel Run in less than 12 parsecs; in real life, all the Falcon 9 has done so far is land at Cape Canaveral without falling over or exploding. Yet I, like many nerds, was thrilled by that achievement, in part because it reinforced my growing optimism about the direction technology seems to be taking — a direction that may end up saving the world.

O.K., if you have no idea what I’m talking about, the Falcon 9 is Elon Musk’s reusable rocket, which is supposed to boost a payload into space, then return to where it can be launched again. If the concept works, it could drastically reduce the cost of putting stuff into orbit. And that successful landing was a milestone. We’re still a very long way from space colonies and zero-gravity hotels, let alone galactic empires. But space technology is moving forward after decades of stagnation.

And to my amateur eye, this seems to be part of a broader trend, which is making me more hopeful for the future than I’ve been in a while.

You see, I got my Ph.D. in 1977, the year of the first Star Wars movie, which means that I have basically spent my whole professional life in an era of technological disappointment.

Until the 1970s, almost everyone believed that advancing technology would do in the future what it had done in the past: produce rapid, unmistakable improvement in just about every aspect of life. But it didn’t. And while social factors — above all, soaring inequality — have played an important role in that disappointment, it’s also true that in most respects technology has fallen short of expectations.

The most obvious example is travel, where cars and planes are no faster than they were when I was a student, and actual travel times have gone up thanks to congestion and security lines. More generally, there has just been less progress in our command over the physical world — our ability to produce and deliver things — than almost anyone expected.

Now, there has been striking progress in our ability to process and transmit information. But while I like cat and concert videos as much as anyone, we’re still talking about a limited slice of life: We are still living in a material world, and pushing information around can do only so much. The famous gibe by the investor Peter Thiel (“We wanted flying cars, instead we got 140 characters.”) is unfair, but contains a large kernel of truth.

Over the past five or six years, however — or at least this is how it seems to me — technology has been getting physical again; once again, we’re making progress in the world of things, not just information. And that’s important.

Progress in rocketry is fun to watch, but the really big news is on energy, a field of truly immense disappointment until recently. For decades, unconventional energy technologies kept falling short of expectations, and it seemed as if nothing could end our dependence on oil and coal — bad news in the short run because of the prominence it gave to the Middle East; worse news in the long run because of global warming.

But now we’re witnessing a revolution on multiple fronts. The biggest effects so far have come from fracking, which has ended fears about peak oil and could, if properly regulated, be some help on climate change: Fracked gas is still fossil fuel, but burning it generates a lot less greenhouse emissions than burning coal. The bigger revolution looking forward, however, is in renewable energy, where costs of wind and especially solarhave dropped incredibly fast.

Why does this matter? Everyone who isn’t ignorant or a Republican realizes that climate change is by far the biggest threat humanity faces. But how much will we have to sacrifice to meet that threat?

Well, you still hear claims, mostly from the right but also from a few people on the left, that we can’t take effective action on climate without bringing an end to economic growth. Marco Rubio, for example, insists that trying to control emissions would “destroy our economy.” This was never reasonable, but those of us asserting that protecting the environment was consistent with growth used to be somewhat vague about the details, simply asserting that given the right incentives the private sector would find a way.

But now we can see the shape of a sustainable, low-emission future quite clearly — basically an electrified economy with, yes, nuclear power playing some role, but sun and wind front and center. Of course, it doesn’t have to happen. But if it doesn’t, the problem will be politics, not technology.

True, I’m still waiting for flying cars, not to mention hyperdrive. But we have made enough progress in the technology of things that saving the world has suddenly become much more plausible. And that’s reason to celebrate.

What the Paris Climate Meeting Must Do

Le Bourget airport just north of Paris is the place where Charles Lindbergh landed the Spirit of St. Louis. That event 88 years ago could now be interpreted as foreshadowing the era of globalization. Tomorrow, the world’s nations will meet there under the banner of the UN Framework on Climate Change (UNFCCC).  COP21, also known as the 2015 Paris Climate Conference, will, for the first time in over 20 years of UN negotiations, aim to achieve a legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C.

Read More: COP21: What’s It All About?

THE NEW YORK TIMES

By THE EDITORIAL BOARD NOV. 28, 2015

In 1992, more than 150 nations agreed at a meeting in Rio de Janeiro to take steps to stabilize greenhouse gases at a level that would “prevent dangerous anthropogenic interference with the climate system” — United Nations-speak for global warming.

Many follow-up meetings have been held since then, with little to show for them. Emissions of greenhouse gases have steadily risen, as have atmospheric temperatures, while the consequences of unchecked warming — persistent droughts, melting glaciers and ice caps, dying corals, a slow but inexorable sea level rise — have become ever more pronounced.

On Monday, in Paris, the signatories to the Rio treaty (now 196), will try once again to fashion an international climate change agreement that might actually slow, then reduce, emissions and prevent the world from tipping over into full-scale catastrophe late in this century. As with other climate meetings, notably Kyoto in 1997 and Copenhagen in 2009, Paris is being advertised as a watershed event — “our last hope,” in the words of Fatih Birol, the new director of the International Energy Agency. As President François Hollande of France put it recently, “We are duty-bound to succeed.”

Paris will almost certainly not produce an ironclad, planet-saving agreement in two weeks. But it can succeed in an important way that earlier meetings have not — by fostering collective responsibility, a strong sense among countries large and small, rich and poor, that all must play a part in finding a global solution to a global problem.

Kyoto failed because it imposed emissions reduction targets only on developed countries, giving developing nations like China, India and Brazil a free pass. That doomed it in the United States Senate. Copenhagen attracted wider participation, but it broke up in disarray, in part because of continuing frictions between the industrialized nations and the developing countries.

The organizers of the Paris conference have learned a lot from past mistakes. Instead of pursuing a top-down agreement with mandated targets, they have asked every country to submit a national plan that lays out how and by how much they plan to reduce emissions in the years ahead. So far, more than 170 countries, accounting for over 90 percent of global greenhouse emissions, have submitted pledges, and more may emerge in Paris.

Will these pledges be enough to ward off the worst consequences of global warming? No. Scientists generally agree that global warming must not exceed 2 degrees Celsius, or 3.6 degrees Fahrenheit, from preindustrial levels. Various studies say that even if countries that have made pledges were to follow through on them, the world will heat up by 6.3 degrees Fahrenheit by the end of this century. That would still be much too high, and it would be guaranteed to make life miserable for future generations, especially in poor low-lying countries. But it would at least put the world on a safer trajectory; under most business-as-usual models, temperature increases could reach 8.1 degrees or higher.

Eventually, of course, all nations will have to improve on their pledges, especially big emitters like China, India and the United States. If the Paris meeting is to be a genuine turning point, negotiators must make sure that the national pledges are the floor, not the ceiling of ambition, by establishing a framework requiring stronger climate commitments at regular intervals — say, every five years. This should be accompanied by a plan for monitoring and reporting each country’s performance. Earlier meetings have done poorly on this score.

Other important items dot the agenda. One is how rich nations can help poorer ones achieve their targets. Another is stopping the destruction of tropical forests, which play a huge role in storing carbon and absorbing emissions. The meeting also seeks to enlist investors, corporations, states and cities in the cause. Michael Bloomberg, who made reducing emissions a priority as mayor of New York, will join the mayor of Paris in co-hosting a gathering of local officials from around the world.

The test of success for this much-anticipated summit meeting is whether it produces not only stronger commitments but also a shared sense of urgency at all levels to meet them.

Are Venture Capitalists And Big Ideas Converging Again?

My biggest complaint with venture capital and the current entrepreneurial landscape is the lack of Big Ideas— the superficiality of the technology sector. “We were promised flying cars and we got 140 characters” –Peter Thiel. We also got corporate greed masquerading as “the sharing economy.”

Many other well-known observers of this industry share my complaint. Some argue that these Big Ideas are too big for private investment, and can only be funded by governments with the resources and vision to accomplish such large long term projects. I disagree. The semiconductor industry, on the bleeding edge of quantum mechanics, was funded almost exclusively by private venture investors.  Another example may be nuclear fusion.  Large-scale projects, like ITER, funded by the European Union at the Cadarache facility in southern France, and the National Ignition Facility in Livermore California, funded by the U.S. Department of Energy are being seriously challenged by Canadian and U.S. startups funded by private venture capital, and seeking to beat the large projects to the goal of renewable solar energy.

Tim Draper of Draper Ventures at General Fusion

Start-Ups Take On Challenge of Nuclear Fusion

REBLOGGED FROM THE NEW YORK TIMES

By DINO GRANDONIOCT. 25, 2015

Michl Binderbauer of Tri Alpha Energy, a fusion start-up.

A group of start-ups is promising a new and virtually unlimited source of power, one that produces none of the gases scientists say contribute to global warming.

The only problem? A way to harness the energy source, nuclear fusion — the reaction that gives birth to sunlight — still needs to be invented.

Such an achievement has long evaded government scientists and university researchers, despite decades of work and billions of dollars in research. But backed by hundreds of millions in venture capital and some of the wealthiest people in the technology industry, a handful of young companies say they can succeed where government has fallen short.

Nuclear fusion is one of many areas of science and energy now getting the backing of venture capitalists. The investor dollars coming into fusion start-ups, like those in many areas of science, still pale in comparison with the money spent by governments. But signs of progress, including some results that have eclipsed government projects, have generated hope among some scientists that the companies could help develop a fusion reactor within their lifetimes.

Photo

The C-2U machine at Tri Alpha Energy

At the very least, they talk a confident game — even though the history of fusion science is littered with frustration and false starts. Some fusion scientists, unable to evaluate the start-ups’ unpublished scientific results, doubt the companies’ chances.

“The fusion era is here and coming,” said William D. Lese, a managing partner at Braemar Energy Ventures, a venture capital firm with a stake in General Fusion, one of the leading start-ups in the field. “The increase in activity in this space is perhaps a sign of that.”

Nuclear fusion occurs when two atoms are squeezed together so tightly that they merge. That single, larger atom releases a tremendous amount of energy.

This happens naturally at the center of the sun, where gravity easily crushes hydrogen into helium, spewing forth the sunlight that reachesEarth. But on Earth, making hydrogen hot and dense enough to sustain a controlled fusion reaction — one that does not detonate like a thermonuclear bomb — has been a challenge.

The potential upsides of the power, though, provide a huge incentive. Fusion reactions release no carbon dioxide. Their fuel, derived from water, is abundant. Compared with contemporary nuclear reactors, which produce energy by splitting atoms apart, a fusion plant would produce little radioactive waste.

The possibilities have attracted Jeffrey P. Bezos, founder of Amazon.com. He has invested in General Fusion, a start-up in British Columbia, throughBezos Expeditions, the firm that manages his venture capital investments. Paul Allen, a co-founder of Microsoft, is betting on another fusion company, Tri Alpha Energy, based in Foothill Ranch, Calif., an hour south of Los Angeles, through his venture arm, Vulcan Capital.

Peter Thiel — the co-founder of PayPal, who once lamented the superficiality of the technology sector by saying, “We were promised flying cars and we got 140 characters” — has invested in a third fusion start-up,Helion Energy, based near Seattle, through Mithril Capital Management.

Government money fueled a surge in fusion research in the 1970s, but the fusion budget was cut nearly in half over the next decade. Federal research narrowed on what scientists saw as the most promising prototype — a machine called a tokamak, which uses magnets to contain and fuse a spinning, doughnut-shape cloud of hydrogen.

Today’s start-ups are trying to perfect some of the ideas that the government left by the wayside.

After earning his doctorate from the University of California, Irvine, in the mid-1990s, Michl Binderbauer had trouble securing federal funds to research an alternative approach to fusion that the American government briefly explored — one that adds the element boron into the hydrogen fuel. The advantage of the mixture is that the reaction does not fling off neutrons that, like shrapnel, can wear down machine parts and make them radioactive.

Mr. Binderbauer, along with his Ph.D. adviser, Norman Rostoker, founded Tri Alpha Energy, eventually raising money from the venture capital arms of Mr. Allen and the Rockefeller family. The company has raised over $200 million.

“We basically said, “What would an ideal reactor look like?’ ” said Mr. Binderbauer, who is now the company’s chief technology officer. Mr. Rostoker died late last year.

General Fusion is pursuing an approach that uses pistons to generate shock waves through the hydrogen gas. Compressed hard enough, the hydrogen atoms will begin to fuse. General Fusion has raised about $74 million from private investors and another $20 million from the Canadian government.

Its reactor concept, like that of Tri Alpha Energy, would yield power plants much smaller than a commercially viable tokamak, which would need to be larger than many stadiums are in order to work. General Fusion’s idea to compress a ball of hydrogen, too, is borrowed from a government project aborted decades ago. The company’s innovation on that approach is to use cannon-size pistons for the compression.

Critics in the nuclear physics field say it is unlikely start-ups will succeed with these alternative approaches.

“They just keep pounding on the same dead horse,” said Edward C. Morse, a nuclear physicist at the University of California, Berkeley. “What happens in fusion is that the same ideas pop up every two decades. It’s like a game of whack-a-mole.”

In addition, private funds cannot match those of the most ambitious government fusion energy project, the International Thermonuclear Experimental Reactor, or ITER, a stadium-size tokamak being built in France by the European Union, along with the United States and five other nations, for about $14 billion. The United States is committed to funding about 9 percent of the project.

Still, the Energy Department is also hedging its bet, granting $30 million to alternative fusion projects, including Helion Energy, which received $4 million.

“In all of our selections, it’s not about a start-up versus something else,” said Eric A. Rohlfing, deputy director for technology of the Advanced Research Projects Agency-Energy, the government agency that made the grants. “It’s about the quality of the idea.”

The start-ups counter critics by saying that they can be more efficient than government projects.

When Tri Alpha Energy’s panel of outside advisers visited the construction site of the company’s lab in 2007, the concrete was still being poured. Some advisers doubted the company would be conducting experiments within a year, as Mr. Binderbauer said they would.

But by the following year, the machine was ready. “When I walked these guys out there to see that, their jaws dropped,” Mr. Binderbauer said.

“I do recall being surprised by how fast they said they would get the facility ready,” said Burton Richter, a professor emeritus at Stanford and Nobel laureate in physics who advised Tri Alpha Energy.

This past June, Tri Alpha reached a new milestone: Its machine superheated a ball of hydrogen to 10 million degrees Celsius and held it for five milliseconds — much longer than government projects achieved using the same method.

“You may ask: ‘Five milliseconds? That’s nothing.’ Certainly, that’s the blink of an eye to a layperson,” Mr. Binderbauer said. “But in our field, that’s half an eternity.” His next goal is to increase that temperature tenfold.

Other fusion efforts have set even more ambitious goals. When Lockheed Martin announced its own fusion project last year, the company said it expected to build a prototype within five years.

But history would suggest that struggles lie ahead. For example, the American government’s other major approach to fusion, used by a California lab that fires 192 giant lasers at a container holding hydrogen to compress and fuse it, missed a 2012 deadline for producing more energy than the lasers put in.

That checkered past is not stopping the start-ups.

“We’re moving very quickly,” said Michael Delage, vice president for strategy at General Fusion. “Is it two years away? Three years away? Four years away? Maybe. We’ll let you know when we get there.”

Canada’s Entrepreneurship Dilemma: Decades Of Anemic Research Investment

UPDATE: May 21, 2015.  As if to drive home the Canadian economic crisis, Goldman Sachs has just released an oil price forecast suggesting that North Sea Brent crude will still be $55 in 2020, five years from now.  As Alberta Western Canadian Select (WCS) bitumen is valued lower on commodity markets this is extremely bad news for Canada. Further, the well-known Canadian economic forecasting firm, Enform is predicting that job losses across all of western Canada, not only Alberta, could reach 180,000. 

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This issue has driven me absolutely nuts since I first arrived in Canada from Silicon Valley.  It did not take me long to figure out that things did not work they way they did in California, and that there wasn’t much of a true entrepreneurial economy here.  Since then, I have also been appointed to the Canada Foundation for Innovation grant process, providing me with insight into how R&D funding works in Canada. I have seen many issues in Canada that have impaired the nation’s ability to develop an entrepreneurial culture,  among them is the inherent Canadian conservatism and short term horizon of investors unfamiliar with technology venture investment.  But none has been worse than Canada’s decades-long neglect of adequate funding for research and development nationwide.  A review of the OECD data on Canada’s investment in R&D compared to other industrialized nations paints a sorry picture.  This has led directly to a poor showing in industrial innovation and productivity. This is further compounded by the current government’s myopic focus on natural resource extraction, Canada’s so-called “natural resource curse.” The result now is an economic train wreck for Canada.  The fossil fuel based economy has collapsed and is not forecast to recover anytime in the near future.  During the boom time for fossil fuel extraction, there has been essentially no rational strategy to increase spending on R&D and innovation, and hence no increase in economic diversification.  Now the problem is nearly intractable, and may take decades to reverse.

 ASLEEP AT THE WHEEL, by Bruce Smardon, McGill-Queens University Press

ASLEEP AT THE WHEEL explains that since 1960, Canadian industry has lagged behind other advanced capitalist economies in its level of commitment to research and development. Asleep at the Switch explains the reasons for this underperformance, despite a series of federal measures to spur technological innovation in Canada. It is worth noting that Arvind Gupta, President of The University of British Columbia, and former head of MITACS, the organization at UBC tasked to promote R&D, has also been an outspoken proponent for increased R&D, at one point editorializing in the Vancouver Sun, that Canada needed an innovation czar, to promote innovation in the same manner as the 2010 Seize the Podium program to enhance gold medal performance for Canada.

Also, as a member of the 2012 Canada Foundation for Innovation Multidisciplinary Assessment process, and the University of British Columbia 2015 CFI grant preparation process, I can say without reservation that the Canada suffers from inadequate R&D funding and its consequences.

ANALYSIS From CBC News

Canada’s research dilemma is that companies don’t do it here

Ten-year study says repairs needed for rebound will be costly and difficult

REBLOGGED: By Don Pittis, CBC News Posted: May 15, 2015 5:00 AM ET Last Updated: May 15, 2015 6:31 AM ET

Northern Electric was a domestic Canadian technology success story that became the telecom equipment giant Nortel Networks. But when Nortel failed, the lack of an R&D hub meant there were no startups to replace it. (The Canadian Press)

As Stephen Harper handed out more tax breaks for Canadian manufacturers in Windsor, Ont., yesterday, you might ask, “With that kind of support, why is Canada’s industrial economy in such bad shape?” Political economist Bruce Smardon thinks he has the answer.

Smardon says companies operating in Canada just aren’t spending enough on domestic research and development, and the Harper government is only the latest in a long line of governments, stretching back to that of John A. Macdonald, that have contributed to the problem.

As China’s resource-hungry economy goes off the boil, taking Canada’s resource producers with it, everyone including Bank of Canada governor Stephen Poloz, has been waiting for a rebound in Canada’s industrial economy.

But there are growing fears such a Canadian rebound is not on the cards. As the Globe and Mail’s Scott Barlow reported last week (paywall), despite having the top university for generating new tech startups, Canada has repeatedly failed to become a hub for industrial innovation.

Best in North America

Interviewed by the New York Times, the president of the startup generator Y Combinator, Sam Altman, called the University of Waterloo the school that stood out in North America for creating new ideas that turned into companies.

But as Barlow reported, there is statistical evidence that Waterloo’s success has not translated into R&D success, as Canadian industrial innovation continues to decline.

After 10 years of research, Smardon thinks his recent book, Asleep at the Switch — short-listed this year for one of Canada’s most prestigious academic book awards — provides the answer.

Political science professor Bruce Smardon’s book, Asleep at the Switch, examining Canada’s R&D failure, has been short-listed for one of Canada’s most prestigious academic prizes. (McGill-Queen’s University Press)

And, believe it or not, Smardon traces the chain of events back to Canada’s first prime minister and his tariff policy of 1879. Paradoxically, those rules were put in place to protect Canadian manufacturers from cheap U.S. goods, that were in turn protected by U.S. tariff walls.

Central Canadian boom

For the industries of central Canada, the tariff barriers worked. In the years before the First World War, says Smardon, Canada was second only to the United States in creating an economy of mass production and mass consumption, where workers could afford to buy the products they produced.

However, prevented by tariffs from exporting U.S. goods to Canada, American companies did the next best thing. They started, or bought, branch plants north of the border, wholly- or partly-owned subsidiaries that used U.S. technology in Canadian factories.

Smardon says that started a trend that continues today. The majority of R&D was being done in the home country of the industrial parent, not in the Canadian subsidiaries. And in the Mulroney and Chrétien era of free trade, he says, relatively high-tech branch plants, such as Inglis and Westinghouse, started to close as products were supplied more efficiently by the U.S. parent factories.

There were Canadian R&D stars such as Nortel and Blackberry, says Smardon. But they were exceptions. And when those stars began to set, the lack of a traditional R&D hub in Canada meant there were few young research-based companies ready to come up and replace them.

Tax credit paradox

The paradox, he says, is that Canadian taxpayers have spent a fortune on R&D tax credits. The 2011 Jenkins report showed that as a percentage of GDP, Canadian R&D tax incentives were higher than anyplace else. But as Barlow showed, Canadian R&D still lags behind.

The reason, Smardon concludes, is that while taxpayers fork out for R&D, industrial R&D doesn’t happen here but in traditional R&D hubs abroad. He says that free trade agreements and a longstanding view by Canadian governments that business knows best mean it’s very difficult to put conditions on how that money is spent.

“If we are concerned with developing a manufacturing base in the more advanced research intensive sectors, we’re going to have to have incentive programs at the very minimum, that are clear in insuring that any incentives are used to develop products and processes in Canada,” says Smardon. “They’ve got to think through how that can be done.”

But Smardon is not optimistic. He says that free trade and the free market philosophy has become so entrenched in Canadian thinking that it’s impossible to change.

Market rules

He says that is why the Harper government became so enamoured with the business of pumping and exporting unprocessed oil and gas while the Canadian industrial economy crumbled. It was exactly what the global free market wanted.

It may indeed be that global market forces decide Canada is an icy wasteland that is best at producing raw materials. It may decide that the best way to use our brilliant young people is to send them to California to develop their business ideas there.

But if we want more than that, perhaps handing out ineffective tax incentives is not going to be enough.

Canada’s “Natural Resource Curse” Will Wreak Economic Havoc For A Decade

Oil’s “new normal” will be global oil prices at or below $70 per barrel, say John Mauldin of equities.com, and many other analysts.  Western Canadian Select (WCS) closed at $55 per barrel this week. The impact on the Canadian economy will be ugly and prolonged. Fasten your seatbelts.

Suncor’s Fort McMurray Facility

Those following international events have probably already seen the stories on Putin’s Russia, and the combined impact international economic sanctions, and now, the unexpected and unwelcome plummet in World oil prices. The Russian economy in 2015 will likely see a budget deficit of $20 Billion or more as the ruble collapses and oil prices plummet. The problem is global and expected by analysts to persist for the foreseeable future. Lesser developed countries like Venezuela and Nigeria, which are more dependent on their oil economies, are expected to see even greater impacts.  Economists commonly refer to this as the “natural resource curse.”  Put simply, it means that national economies that elect to depend on their natural resources for economic prosperity, have consistently underperformed economies that emphasize greater economic diversity and prepare for the wild swings of commodity prices. A key missing element in these economies is a lack of investment in innovation which causes a deterioration of productivity.

Canada’s involvement in this same scenario is getting limited attention.  As the other major industrialized country with a “natural resource exploitation” based economy, fueled by the support of the current federal government which includes known climate change skeptics, Canada is running into the same buzz saw as Russia.  The Prime Minister is keen to put a brave face on all of this, which to many seems to have the feeling of “whistling in the graveyard.”  Last week, the government announced a program to allegedly fight the higher prices many Canadians pay for goods priced much more cheaply in the United States. Long a thorn in the side of Canadians, the move is seen as political arm waving with no teeth. The declining Canadian dollar and economic impact of our “natural resource curse” will make Harper’s plan to eliminate higher Canadian prices a sad joke on Canadians. The full impacts of these economic realities will be far wider: significant loss of jobs, chronic government budget deficits, a decline in industrial investment. Canada’s OECD productivity has fallen sharply behind the other industrialized countries. There will most certainly be a further decline in productivity due to Canada’s decades long failure to invest in innovation, preferring instead to offset poor productivity with windfall dollars from natural resource exploitation.

There is one industrialized nation that has recognized the reality of this Doomsday scenario: Norway. Norway has taken bold national action to protect the nation from the whipsaw impacts of the “natural resource curse.”  I have previously written about Norway’s plan to protect its economy, as has The Globe & Mail, while the Harper government prefers to do nothing.

READ MORE: Norway Confronts Its Natural Resource Curse

A new push for fusion power here in Burnaby: General Fusion’s Michel Laberge at TED2014

General Fusion is our own UBC startup venture in Burnaby. Founder Michel Laberge was a keynote speaker at today’s TEDTalk in Vancouver.

The Other “Big Idea” Taking Root in Greater Vancouver: Nuclear Fusion

California venture capitalist, Steve Jurvetson, Riding the General Fusion Containment Vessel

Maybe three years ago, I recall hearing something about a “nuclear fusion” company starting up in Burnaby.  In my mind, the thought of a nuclear fusion company in Burnaby was outlandish and preposterous.  Growing up in southern California, and later northern California, I had been “up close and personal” with the Space Program, and nuclear physics at UC Berkeley Lawrence Nuclear Labs and the super secret Lawrence Livermore National Labs.  My next door neighbor in Moss Beach, California worked at Livermore Labs. I learned of this only because an FBI agent called on me to politely inquire about him (just a routine update of their files, apparently).   My notion was that something like nuclear fusion might “someday” be real, but would  require the scale of a Manhattan Project,  probably after I was long gone.  Nuclear fusion was pure Star Trek, so beyond current science as to be completely fantastical.

As it happens, there has already been an enormous amount of work on nuclear fusion, at enormous expense.  The United States has been working on a project at Livermore National Labs, known as The National Ignition Facility (https://lasers.llnl.gov/#), which even uses the Star Trek imagery on their website. The other major project is a United Nations sponsored project, involving many nations, at the largely secret French nuclear research facility in Haute Provence, Cadarache.  I happen to know the Cadarache nuclear research site extremely well, because it is situated on the main road to my wife’s home village, we know people who work there, and there are almost always Greenpeace demonstrators at the main gate. Known as the International Thermonuclear Experimental Reactor (ITER) project, it is expected to be operational in 2022, but only after the expenditure of multiple Billions of Euros, at a time when Euros are in short supply.

Unfortunately, as often happens in such visionary research and development, both the U.S. National Ignition Facility and the Cadarache ITER projects have run into major technical and financial problems that are threatening their futures.

But then we have General Fusion, a very small startup company in Burnaby, on an infinitesimally smaller budget than the United States or the United Nations. apparently competing with the U.S. Department of Energy and the United Nations ITER project at Cadarache. How can this be?  Why does this also sound like the other Big Idea startup in Burnaby, D-Wave, perfecting quantum computing, despite the enormous odds against it?

This is not to say that General Fusion is going to necessarily change the World. What it does say is that enough informed people and brave investors believe that it is possible, that they are willing to risk their careers and that major institutional investors are prepared to risk their capital on it.  That is the Big Idea in action. That is what innovation in Canada needs more than anything. Money and bravery.

Ryan Holmes, CEO of Hootsuite in Vancouver, another of the shining new companies, has recently posted on LinkedIn that Canada is creating a “Maple Syrup Gang” of promising startups that are redefining entrepreneurship in Canada, his company being prominent among them. The “Maple Syrup Gang” is an amusing analogy to the real-life hijacking of millions of dollars of maple syrup by a criminal gang in Quebec. Holmes has also gone on to rhetorically ask the question, “Is Silicon Valley‘s Heyday Over?”  Regrettably, Holmes articles are embarrassing hyperbole.  Vancouver has had earlier promising high tech booms that have fizzled and died.  Unfortunately, the complex matrix of issues affecting Canadian innovation and the potential success of Canadian startups are still daunting.

I am very encouraged by the early successes of General Fusion and D-Wave in Vancouver, for many reasons.  But it is extremely premature to declare victory over Silicon Valley.  I came here in 1987 to join a promising startup, pioneering wireless data.. The company died from mismanagement, when it could have been a World power in wireless data. It is a case study in how Canada has historically shot itself in the foot, or is unable to capitalize,  every time it gets a good idea.

Let’s celebrate General Fusion and D-Wave and continue working to help Canadian Big Ideas succeed….here in Canada.