Integration of AI, IoT and Big Data: The Intelligent Assistant

Five years ago, I wrote a post on this blog disparaging the state of the Internet of Things/home automation market as a “Tower of Proprietary Babble.” Vendors of many different home and industrial product offerings were literally speaking different languages, making their products inoperable with other complementary products from other vendors. The market was being constrained by its immaturity and a failure to grasp the importance of open standards. A 2017 Verizon report concluded that “an absence of industry-wide standards…represented greater than 50% of executives concerns about IoT. Today I can report that finally, the solutions and technologies are beginning to come together, albeit still slowly.

The Evolution of These Technologies Is Clearer

The IoT Tower of Proprietary Babble Is Slowly Crumbling

The Rise of the Intelligent Assistant

Five years ago, I wrote a post on this blog disparaging the state of the Internet of Things/home automation market as a “Tower of Proprietary Babble.” Vendors of many different home and industrial product offerings were literally speaking different languages, making their products inoperable with other complementary products from other vendors. The market was being constrained by its immaturity and a failure to grasp the importance of open standards. A 2017 Verizon report concluded that “an absence of industry-wide standards…represented greater than 50% of executives concerns about IoT.” Today I can report that finally, the solutions and technologies are beginning to come together, albeit still slowly.

One of the most important factors influencing these positive developments has been the recognition of the importance of this technology area by major corporate players and a large number of entrepreneurial companies funded by venture investment, as shown in the infographic above. Amazon, for example, announced in October 2018 that it has shipped over 100 Million Echo devices, which effectively combine an intelligent assistant, smart hub, and a large-scale database of information. This does not take into account the dozens of other companies which have launched their own entries. I like to point to Philips Hue as such an example of corporate strategic focus perhaps changing the future corporate prospects of Philips, based in Eindhoven in the Netherlands. I have visited Philips HQ, a company trying to evolve from the incandescent lighting market. Two years ago my wife bought me a Philips Hue WiFi controlled smart lighting starter kit. My initial reaction was disbelief that it would succeed. I am eating crow on that point, as I now control my lighting using Amazon’s Alexa and the Philips Hue smart hub. The rise of the “intelligent assistant” seems to have been a catalyst for growth and convergence.

The situation with proprietary silos of offerings that do not work well or at all with other offerings is still frustrating, but slowly evolving. Amazon Firestick’s browser is its own awkward “Silk” or alternatively Firefox, but excluding Google’s Chrome for alleged competitive advantage. When I set up my Firestick, I had to ditch Chromecast because I only have so many HDMI ports. Alexa works with Spotify but only in one room as dictated by Spotify. Alexa can play music from Amazon Music or Sirius/XM on all Echo devices without the Spotify limitation. Which brings me to another point of aggravation: alleged Smart TV’s. Not only are they not truly “smart,” they are proprietary silos of their own, so “intelligent assistant” smart hubs do not work with “smart” TV’s. Samsung, for example, has its own competing intelligent assistant, Bixby, so of course, only Bixby can control a Samsung TV. I watched one of those YouTube DIY videos on how you could make your TV work with Alexa using third-party software and remotes. Trust me, you do not want to go there. But cracks are beginning to appear that may lead to a flood of openness. Samsung just announced at CES that beginning in 2019 its Smart TV’s will work with Amazon Echo and Google Home, and that a later software update will likely enable older Samsung TV’s to work with Echo and Home. However, Bixby will still control the remote. Other TV’s from manufacturers like Sony and LG have worked with intelligent assistants for some time.

The rise of an Internet of Everything Everywhere, the recognition of the need for greater data communication bandwidth, and battery-free wireless IoT sensors are heating up R&D labs everywhere. Keep in mind that I am focusing on the consumer side, and have not even mentioned the rising demands from industrial applications. Intel has estimated that autonomous vehicles will transmit up to 4 Terabytes of data daily. AR and VR applications will require similar throughput. Existing wireless data communication technologies, including 5G LTE, cannot address this need. In addition, an exploding need for IoT sensors not connected to an electrical power source will require more work in the area of “energy harvesting.” Energy harvesting began with passive RFID, and by using kinetic, pizeo, and thermoelectric energy and converting it into a battery-free electrical power source for sensors. EnOcean, an entrepreneurial spinoff of Siemens in Munich has pioneered this technology but it is not sufficient for future market requirements.

Fortunately, work has already begun on both higher throughput wireless data communication using mmWave spectrum, and energy harvesting using radio backscatter, reminiscent of Nikola Tesla’s dream of wireless electrical power distribution. The successful demonstration of these technologies holds the potential to open the door to new IEEE data communication standards that could potentially play a role in ending the Tower of Babble and accelerating the integration of AI, IoT, and Big Data. Bottom line is that the market and the technology landscape are improving.

My IEEE Talk from 2013 foreshadows the development of current emerging trends in advanced technology, as they appeared at the time. I proposed that in fact, they represent one huge integrated convergence trend that has morphed into something even bigger, and is already having a major impact on the way we live, work, and think. The 2012 Obama campaign’s sophisticated “Dashboard” application is referenced, integrating Big Data, The Cloud, and Smart Mobile was perhaps the most significant example at that time of the combined power of these trends blending into one big thing.

READ MORE: Blog Post on IoT from July 20, 2013

The term “Internet of Things” (IoT) is being loosely tossed around in the media. But what does it mean? It means simply that data communication, like Internet communication, but not necessarily Internet Protocol packets, is emerging for all manner of “things” in the home, in your car, everywhere: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. It has also been called home automation. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so-called machine to machine or M2M communication. The data communication can also terminate in a compute server where the information can be acted on automatically, or made available to the user to intervene remotely from their smart mobile phone or any other remote Internet-connected device.

Another key concept is the promise of automated energy efficiency, with the introduction of “smart meters” with data communication capability, and also achieved in large commercial structures via the Leadership in Energy & Environmental Design program or LEED. Some may recall that when Bill Gates built his multi-million dollar mansion on Lake Washington in Seattle, he had “remote control” of his home built into it. Now, years later, Gates’ original home automation is obsolete. The dream of home automation has been around for years, with numerous Silicon Valley conferences, and failed startups over the years, and needless to say, home automation went nowhere. But it is this concept of effortless home automation that has been the Holy Grail.

But this is also where the glowing promise of The Internet of Things (IoT) begins to morph into a giant “hairball.” The term “hairball” was former Sun Microsystems CEO, Scott McNealy‘s favorite term to describe a complicated mess. In hindsight, the early euphoric days of home automation were plagued by the lack of “convergence.” I use this term to describe the inability of available technology to meet the market opportunity. Without convergence, there can be no market opportunity beyond early adopter techno geeks. Today, the convergence problem has finally been eliminated. Moore’s Law and advances in data communication have swept away the convergence problem. But for many years the home automation market was stalled.

Also, as more Internet-connected devices emerged it became apparent that these devices and apps were a hacker’s paradise. The concept of IoT was being implemented in very naive and immature ways and lacking common industry standards on basic issues: the kinds of things that the IETF and IEEE are famous for. These vulnerabilities are only now very slowly being resolved, but still in a fragmented ad hoc manner. The central problem has not been addressed due to classic proprietary “not invented here” mindsets.

The problem that is currently the center of this hairball, and from all indications is not likely to be resolved anytime soon. It is the problem of multiple data communication protocols, many of them effectively proprietary, creating a huge incompatible Tower of Babbling Things. There is no meaningful industry and market wide consensus on how The Internet of Things should communicate with the rest of the Internet. Until this happens, there can be no fulfillment of the promise of The Internet of Things. I recently posted “Co-opetition: Open Standards Always Win,” which discusses the need for open standards in order for a market to scale up.

A recent ZDNet post explains that home automation currently requires that devices need to be able to connect with “multiple local- and wide-area connectivity options (ZigBee, Wi-Fi, Bluetooth, GSM/GPRS, RFID/NFC, GPS, Ethernet). Along with the ability to connect many different kinds of sensors, this allows devices to be configured for a range of vertical markets.” Huh? This is the problem in a nutshell. You do not need to be a data communication engineer to get the point. And this is not even close to a full discussion of the problem. There are also IoT vendors who believe that consumers should pay them for the ability to connect to their proprietary Cloud. So imagine paying a fee for every protocol or sensor we employ in our homes. That’s a non-starter.

The above laundry list of data communication protocols, does not include the Zigbee “smart meter” communications standards war. The Zigbee protocol has been around for years, and claims to be an open industry standard, but many do not agree. Zigbee still does not really work, and a new competing smart meter protocol has just entered the picture. The Bluetooth IEEE 802.15 standard now may be overtaken by a much more powerful 802.15 3a. Some are asking if 4G LTE, NFC or WiFi may eliminate Bluetooth altogether. A very cool new technology, energy harvesting, has begun to take off in the home automation market. The energy harvesting sensors (no batteries) can capture just enough kinetic, peizo or thermoelectric energy to transmit short data communication “telegrams” to an energy harvesting router or server. The EnOcean Alliance has been formed around a small German company spun off from Siemens, and has attracted many leading companies in building automation. But EnOcean itself has recently published an article in Electronic Design News, announcing that they have a created “middleware” (quote) “…to incorporate battery-less devices into networks based on several different communication standards such as Wi-Fi, GSM, Ethernet/IP, BACnet, LON, KNX or DALI.” (unquote). It is apparent that this space remains very confused, crowded and uncertain. A new Cambridge UK startup, Neul is proposing yet another new IoT approach using the radio spectrum known as “white space,” becoming available with the transition from analog to digital television. With this much contention on protocols, there will be nothing but market paralysis.

Is everyone following all of these acronyms and data comm protocols? There will be a short quiz at the end of this post. (smile)

The advent of IP version 6, strongly supported by Intel and Cisco Systems has created another area of confusion. The problem with IPv6 in the world of The IoT is “too much information” as we say. Cisco and Intel want to see IPv6 as the one global protocol for every Internet connected device. This is utterly incompatible with energy harvesting, as the tiny amount of harvested energy cannot transmit the very long IPv6 packets. Hence, EnOcean’s middleware, without which their market is essentially constrained.

Then there is the ongoing new standards and upgrade activity in the International Standards Organization (ISO), The Institute of Electrical and Electronics Engineers (IEEE), Special Interest Groups (SIG’s”), none of which seem to be moving toward any ultimate solution to the Tower of Babbling Things problem in The Internet of Things.

The Brave New World of Internet privacy issues relating to this tidal wave of Big Data are not even considered here, and deserve a separate post on the subject. A recent NBC Technology post has explored many of these issues, while some have suggested we simply need to get over it. We have no privacy.

Stakeholders in The Internet of Things seem not to have learned the repeated lesson of open standards and co-opetition, and are concentrating on proprietary advantage which ensures that this market will not effectively scale anytime in the foreseeable future. Intertwined with the Tower of Babbling Things are the problems of Internet privacy and consumer concerns about wireless communication health & safety issues. Taken together, this market is not ready for prime time.

https://www.slideshare.net/mayo615/ieee-talk-integrated-big-data-the-cloud-smart-mobile-big-deal-or-not/mayo615/ieee-talk-integrated-big-data-the-cloud-smart-mobile-big-deal-or-not

The Internet of Things: The Promise Versus the Tower of Hacked Babbling Things

The term “Internet of Things” (IoT) is being loosely tossed around in the media. But what does it mean? It means simply that data communication, like Internet communication, but not necessarily Internet Protocol packets, is emerging for all manner of “things” in the home, in your car, everywhere: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. It has also been called home automation. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so called machine to machine or M2M communication. The data communication can also terminate in a compute server where the information can be acted on automatically, or made available to the user to intervene remotely from their smart mobile phone or any other remote Internet connected device.

But this is also where the glowing promise of The Internet of Things (IoT) begins to morph into a giant “hairball.” The term “hairball” was former Sun Microsystems CEO, Scott McNealy‘s favorite term to describe a complicated mess. In hindsight, the early euphoric days of home automation were plagued by the lack of “convergence.” I use this term to describe the inability of available technology to meet the market opportunity. Without convergence there can be no market opportunity beyond early adopter techno geeks. Today, the convergence problem has finally been eliminated. Moore’s Law and advances in data communication have swept away the convergence problem. But for many years the home automation market was stalled.

Is everyone following all of these acronyms and data comm protocols? There will be a short quiz at the end of this post. (smile)

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.

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.

Vinod Khosla writes a scathing response to 60 Minutes’ ‘Cleantech Crash’ report

Originally posted on Gigaom:
Venture capitalist Vinod Khosla has written a 2,000-word open letter to 60 Minutes and CBS in response to their recent “Cleantech Crash” report, which featured lengthy interviews with Khosla and a tour of one of Khosla’s portfolio companies. He asserts that there are numerous errors in the piece, that the journalists…

Vinod Khosla gives CBS News 60 Minutes another major black eye on their bias and lack of investigative depth, as with the lightweight report on the NSA. Just consider for a moment the absurdity of 60 Minutes story in the light of recent major strategic initiatives by Cisco Systems, Intel, Qualcomm on clean tech and the “Internet of Things. Add to that this week’s announcement of Google’s acquisition of Nest, a major energy efficiency company, for $3 Billion. Khosla’s entire open letter to CBS is shown below.

Vinod Khosla writes a scathing response to 60 Minutes’

‘Cleantech Crash’ report

Venture capitalist Vinod Khosla has written a 2,000-word open letter to 60 Minutes and CBS in response to their recent “Cleantech Crash” report, which featured lengthy interviews with Khosla and a tour of one of Khosla’s portfolio companies. He asserts that there are numerous errors in the piece, that the journalists who made it were practicing “agenda-driven bastardization of news reporting,” and that the story “grossly misrepresented the state of the sustainable energy industry.”

You can read the entire letter here. He also says in the letter that Khosla Venture’s “cleantech portfolio is profitable.” Here’s my take on the 60 Minutes piece; here’sNRG CEO David Crane’s response; and here’s clean power entrepreneur and investor Jigar Shah’s take.

Open Letter to 60 Minutes and CBS

January 14th, 2014

To: 60 Minutes and CBS

Attn: Lesley Stahl, Jeff Fager, David Rhodes, Leslie Moonves

On January 5, 2014, CBS’ 60 Minutes aired a segment titled, “The Cleantech Crash” that grossly misrepresented the state of the sustainable energy industry.

At Khosla Ventures, we are focused on finding real solutions for energy independence, rather than just pontificating. The pontificators at 60 Minutes, with their agenda-driven bastardization of news reporting, failed to do the most elementary fact checking and source qualification, as was the case with your Benghazi reporting. No wonder one major media outlet wrote that you have been “widely criticized for leaving out crucial information about the state of the clean tech sector.” Is this the new CBS standard?

The errors in your story are numerous.

Fact: I have not invested over a billion dollars of my own money into cleantech. It is substantially less, and a simple query to us would have corrected this error. We manage a balanced portfolio, and it has not “crashed” nor is it “dead”. In fact, our returns are significantly above the venture capital average.

Fact: Contrary to your assertion, the U.S. Department of Energy (DOE) Loan Guarantee Program has created 55,000 new cleantech jobs.^[1]

Fact: The DOE loan program, despite your implications, has a 97% success rate.^[2] The former program head, Jonathan Silver, expects it to make money, not be a subsidy.

Fact: There is $51 billion remaining in DOE loan money.^[3] The amounts in the CBS report are far from “spent” or allocated. You seem to want to cite big numbers, whether they are true or not!

Fact: A substantial portion of DOE loans is allocated to nuclear energy^[4], not just cleantech segments like biofuels, solar or wind, a fact conveniently left out despite your being aware of it.

Fact: The U.S. spent $502 billion subsidizing fossil fuels in 2011. This is the result of directly lowered prices, tax breaks and failing to properly price carbon’s negative externalities.^[5] You ignored the fact that energy is far from being a level playing field. Many other subsidies are hard to account for like MLP partnerships, accelerated depreciation and below-market royalties that are never categorized as fossil fuel subsidies that disadvantage cleantech.

Fact: According to a senior U.S. Navy official, last year alone, $80 billion of taxpayer money was spent patrolling just the oil sea-lanes in the Arabian Gulf. There are many sea-lanes we patrol. Globally and over time, the U.S. has spent $7 trillion patrolling them.^[6] Such “protection spending” of U.S. taxpayer dollars for the oil industry is a much larger subsidy than any amount spent to support the cleantech industry, a fact CBS chose to overlook despite my statements on camera. This may be the largest U.S. subsidy in history, and it was purposely ignored because it is inconsistent with your agenda. Cleantech subsidies are a miniscule fraction of one-percent of these amounts.

The Department of Energy said it themselves, “Simply put, 60 Minutes is flat wrong on the facts. The clean energy economy in America is real, and we are increasingly competitive in this rapidly expanding global industry. This is a race we can, must and will win.”

There were many opportunities for you to showcase cleantech successes such as the dynamic glass company, View, with whom you met and visited as part of your research. You also had knowledge that View raised $60 million in private funding in early 2013, and weeks before your program aired, View secured an additional $100 million in private funding. These dollars will go toward ramping production efforts in its Mississippi-based manufacturing facility, which will in turn create scores of new American jobs. Sustainable energy is the way forward for this new era of American manufacturing. Already, the Brookings Institute reports that the clean economy employs over 2.7 million workers despite your implications to the contrary!

You chose to ignore other success stories like energy storage company, Lightsail, which we also shared with you. In fact, you did not even want to visit the solar, engines or agriculture success stories, among others. You chose to ignore these FACTS, because it did not jive with the story you wanted to tell. Is your job reporting all the facts or merely pushing “angles”?

You fundamentally do not understand how innovation works with platitudes like, “for every 10 startups, nine go under”. At Khosla Ventures, we invest in companies that have high failure probabilities, but the wins far outweigh the losses. I clearly explained that we expect 50-percent of our portfolio companies to make money and today, our overall cleantech portfolio is profitable; however, CBS chose to air sources who have never looked at the details of a quality venture portfolio. In fact, their so-called experts are only expert pontificators who have never produced any biofuels themselves. One always can find a “source “ to throw mud at anything to get on-air; CBS appears to want the same standards for sourcing as the National Enquirer.

You falsely implied that our companies have received disproportionate taxpayer money, despite my repeatedly telling you otherwise. While these numbers are hard to accurately calculate, to the best of our knowledge, a substantial amount of funding (greater than 90%) for our cleantech portfolio has come from private sources. When our companies have received funding from the DOE, the dollar amounts represent a small fraction of the investment from private dollars. It is naive to believe that we can subsidize energy on a large scale; this kind of thinking would bankrupt any government, and yet CBS seems to imply that all our investments are based substantially on taxpayer money or are dependent on ongoing subsidies, a statement that is simply untrue.

In fact, the former head of the DOE loan program, Jonathan Silver, stated publicly that some of the projects cited as failures by CBS never even got loans in the first place. You also failed to note that while Range Fuels took federal loan money, we strongly opposed their decision to do so. Because these are independent companies, we seldom control these decisions. Repeatedly, your story reinforced the 60 Minutes thesis rather than objectively reporting the facts.

According to Silver, the DOE loan program was actually designed to make a profit in the long term even taking into account the failures, which represent a remarkably small portion of the portfolio (less than three percent). Any loan program, private or public, has both losses and gains. When the investment cycle is complete, Silver expects the government will actually make a profit on the portfolio. Interests are below market (just as in the oil leases that oil companies receive) but the terms are restrictive enough that our portfolio companies, Kior and Stion (our solar company) and others refused the loans even after they were awarded. CBS also failed to distinguish between federal loans that were designed to be profitable (the bulk of the money), research grants (billions spent on private universities and companies in and outside cleantech), work-for-hire (do we list Lockheed Martin, which receives billions of dollars annually in work-for-hire government revenue, as a subsidy?) and other programs.

You misleadingly hyped the “$150 billion” allocated to cleantech without noting that, while it has been allocated, much of it has not been spent. Further, to the best of my knowledge, much of such project spending goes to larger incumbents, not entrepreneurs.

Your naïve reporting also failed to account for the other setbacks we have gone through in the last five years, such as the economic crisis, which, while unrelated to cleantech, has substantially hurt the ability to fund cleantech research or projects. Many projects — be they chemical, oil sands or cleantech — have failed to meet their expectations because of the recent financial crisis.

At scale, new technologies must compete with conventional fossil fuels on both price and performance – in the U.S., as well as in India and China. Energy incumbents have incredible advantages embedded in our tax code, government regulation and public infrastructure; therefore, new competitive efforts must be nourished and encouraged to maintain a more competitive environment and a level playing field. Subsidies should be used to introduce new competition to markets against the embedded advantages granted to incumbents. We must reform America’s energy policy before companies become dependent on the existing subsidy regime. As context, Chinese solar, wind, LED and other companies get substantially larger government loans to compete against U.S. producers, even without technology differentiation. In fact, we risk losing technology to China because there is simply more government support there. U.S manufacturing suffers as a result. The 1950s and 60s saw the moon race. Today, we are in a new race for sustainable energy, but we risk losing because of irresponsible reporting like that of CBS!

Khosla Ventures does not believe in subsidy-dependent markets. Reaching unsubsidized market competitiveness five to seven years after a commercial start is an abiding principle for all of our investments. Subsidies are a crutch: they force innovation into a niche and create dependence on financial incentives that will eventually disappear. I have publicly stated that I am against corn ethanol and wind subsidies, among others, and in favor of reducing solar and biofuel subsidies over time. I also have written about the criteria for good subsidy programs elsewhere. We need to level the playing field in order to create new competition for fossil energy. Currently, there is an unfair advantage for fossil fuels with favorable tax legislation like Master Limited Partnerships, accelerated depreciation and below market royalties, and of course the aforementioned IMF-calculated subsidies as well as free transportation protection services provided by the federal government. It all adds up to massive numbers, much larger than for cleantech, and it has been going on for decades!

New industries are created by entrepreneurs who don’t necessarily have subject matter expertise when they get started, yet they are still responsible for most of the innovation we see in society. Did Google know much about media? Or Amazon about commerce? Tesla about cars? SpaceX about rockets? EBay about classifieds? Juniper about telecommunications? What did I know about computing when I started Sun Microsystems? We should celebrate these entrepreneurs, not pillory them for fighting entrenched incumbent industries that have political influence and money. And yes, they often fail, but they also create more positive change than incumbents who, in general, are only responsible for incremental improvements. The oil industry has probably spent more money advertising their environmental efforts with the likes of CBS than on real research in green technologies.

Your so-called “experts” pontificate about the hard problem of energy; we heard similar things about the difficulty of telecommunications with trillions invested in infrastructure. Then, the Internet came along, despite the indifference of every major telecommunications carrier, and upended the industry. Looking back through history, we can easily find common shortsighted attitudes when evaluating new technologies. When Alexander Graham Bell invented the telephone, it was dismissed out-of-hand by the incumbent telegram service, Western Union. “The idea is idiotic on the face of it…. we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.” Venture capitalist, Ben Horowitz, describes this naysaying attitude in an article titled, “Can-Do vs. Can’t-Do Culture”. As he so aptly points out about the naysayers, “They focused on what the technology could not do at the time rather than what it could do and might be able to do in the future.” This cynicism is exactly what CBS has proliferated in its unbalanced and unfair coverage of the cleantech industry. Today, the stakes are higher than ever as the world’s population increases and resources are limited. Our can-do attitude must overcome the naysayers.

To get to the energy-independent future we need, we must continue to try and sometimes fail, but the consequence for not trying is guaranteed failure. We will keep accepting intelligent and selective failure. Even oil prospecting has a greater than 55-percent failure rate, and yet we still do it. In the venture industry, we make risky bets all the time because that’s what it takes to innovate.

The future will run on energy. At Khosla Ventures, we are focused on making big bets to ensure a sustainable future even if some of them fail. It is unfortunate that stories like yours employ Benghazi-style reporting standards that overshadow the truth. I will continue to try and make the future happen and, when it does, hopefully someone else will do a better job reporting it.

As Robert F. Kennedy said, “Only those who dare to fail greatly can ever achieve greatly.”

— Vinod Khosla

Gigaom

Venture capitalist Vinod Khosla has written a 2,000-word open letter to 60 Minutes and CBS in response to their recent “Cleantech Crash” report, which featured lengthy interviews with Khosla and a tour of one of Khosla’s portfolio companies. He asserts that there are numerous errors in the piece, that the journalists who made it were practicing “agenda-driven bastardization of news reporting,” and that the story “grossly misrepresented the state of the sustainable energy industry.”

You can read the entire letter here. He also says in the letter that Khosla Venture’s “cleantech portfolio is profitable.” Here’s my take on the 60 Minutes piece; here’s NRG CEO David Crane’s response; and here’s clean power entrepreneur and investor Jigar Shah’s take.

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Stanford B School Guest Lecturer Tony Seba, October 10th, 2:30PM EME 2181

Stanford Graduate School of Business Lecturer in Entrepreneurship, Tony Seba, will be our MGMT 450 Guest Lecturer, Thursday, October 10th, at 2:30PM in EME 2181, speaking on “Entrepreneurship Opportunities in Clean Tech.” Tony Seba is also an entrepreneur, author, speaker, executive, management consultant and business architect. Tony will be appearing via live video conference from Stanford University to the MGMT 450 classroom.

Stanford Graduate School of Business Lecturer in Entrepreneurship, Tony Seba, will be our MGMT 450 Guest Lecturer, Thursday, October 10th, at 2:30PM in EME 2181, speaking on “Entrepreneurship Opportunities in Clean Tech.” Tony Seba is also an entrepreneur, author, speaker, executive, management consultant and business architect. Tony will be appearing via live video conference from Stanford University to the MGMT 450 classroom.

Tony Seba: Clean Energy, Economics and Entrepreneurship

May 24th, 2013

Tony Seba is the author of “Solar Trillions – 7 Market and Investment Opportunities in the Emerging Clean-Energy Economy” and “Winner Takes All – 9 Fundamental Rules of High Tech Strategy“. He is a lecturer in entrepreneurship at Stanford University where he teaches entrepreneurship, disruption, and clean energy. He has created and taught the following courses: “Understanding and Leading Market Disruption”, “Clean Energy – Market and Investment Opportunities“, “Strategic Marketing of High Tech and Cleantech“, “Finance for Marketing, Engineers, and Entrepreneurs“. and “Business and Revenue Models Innovation“, He teaches at top business school around the world such as The Auckland University (New Zealand) Business School. and in-company at some of the world’s top high tech companies such as Google, Inc..

Tony Seba brings 20+ years of solid operating experience in fast-growth high tech and clean tech companies. He was Vice President, Corporate Development at “Utility Scale Solar, Inc.” where he helped the company grow from the garage-stage through growth strategy, fundraising, business development with plant developers and partners. He was previously founder and CEO of PrintNation.com a B2B ecommerce site which he established as the undisputed leader in its market segment, winning such top industry awards as the Upside Hot 100 and the Forbes.com B2B ‘Best of the Web’. Seba led two venture capital rounds raising more than $31 million in funding from well-known venture funds, hired a complete management team, 100+ employees, and managed the development of strategic partnerships with some of the world’s top companies.

Prior to PrintNation, Mr. Seba worked in business development and strategic planning at Cisco Systems and RSA Data Security. Seba has been responsible for the architecture, development, and commercialization of more than two dozen products including Java security, electronic payment technology, sales force automation, computer-aided software engineering and ecommerce infrastructure.

Seba speaks frequently at clean energy, clean tech, entrepreneurship and high tech conferences and company events. He has been featured inComputerWorld, Business Week, Investors Business Daily, Forbes, Fast Company, Success and other media and holds entrepreneurship awards such as BridgeGate’s Top 20 Difference-makers.

Seba is a Global Cleantech Advisor at Global Technology and Innovation Partners, and is on the advisory boards of Medifirst Systems, and Stanford Society for Entrepreneurship in Latin America. He has recently been on the Board of Directors of the Stanford Alumni Consulting Team and the San Francisco Jazz Organization. He has worked on ACT projects for organizations such as Stanford Office of Technology Licensing, Yerba Buena Center for The Arts and Girls Scouts USA.

Tony Seba holds an M.B.A. from Stanford University Graduate School of Business and a B.S. in Computer Science and Engineering from the Massachusetts Institute of Technology.

More On The Tower of Babbling Things: Honeywell Smart Thermostat

This article from Gigaom serves to further underscore The Tower of Babbling Things….Competitors battling each other over control of The Internet of Things over the means, methods and, most importantly, the dozens of competing data communication protocols. Honeywell has now entered the battle, realizing the a number of small, entrepreneurial startups are eroding their market for traditional thermostats. Previous to this development, Intel and others had promoted the concept of home tabletop display consoles for energy efficiency management. The display console concept is now officially dead, as reported in the Gigaom post. Recently, Gigaom also showcased three competing home automation systems, all of which were “closed” proprietary systems.

This article from Gigaom serves to further underscore The Tower of Babbling Things….Competitors battling each other over control of The Internet of Things over the means, methods and, most importantly, the dozens of competing data communication protocols. Honeywell has now entered the battle, realizing the a number of small, entrepreneurial startups are eroding their market for traditional thermostats. The glaring problem with Honeywell’s entry is the $250 price point. Previous to this development, Intel and others had promoted the concept of home tabletop display consoles for energy efficiency management. The display console concept is now officially dead, as reported in the Gigaom post. Recently, Gigaom also showcased three competing home automation systems, all of which were “closed” proprietary systems.

Read more: The Tower of Babbling Things

Reblogged from Gigaom

The battle over the smart connected thermostat rages on

by Ucilia Wang

August 2, 2013

SUMMARY: In the face of growing competition from startups, Honeywell has launched a Wi-Fi-connected, smart thermostat, and the device may one day control more than just the heating and cooling systems.

The battle to control how people heat and cool their homes is heating up in a way that is reminiscent of the fight over which company gets to lord over the home’s media and entertainment systems.

Honeywell recently launched a fancy $249 Wi-Fi thermostat and an online energysavings calculator that aim to re-invent the company’s long-standing product line, and compete with younger, nimble upstarts like Nest and Radio Thermostat Company of America. Some of these startups are moving aggressively — despite only launching the learning thermostat in 2011, Nest has gotten it into big retail chains such as Lowe’s and Apple’s online store.

But temperature control isn’t what makes the technology development of these so-called smart thermostats interesting to watch. With more built-in sensors, software and wireless communications, these devices could become the brains of home energy networks, which will include not only the heating and cooling systems but also appliances and other energy consuming gizmos.

The assumption here is that consumers will want greater control and automation of their energy use in order to keep utility bills in check. But how much time they are willing to spend tinkering with various settings and monitoring their energy use is still a big question.

We know that high-end energy dashboards were essentially flops. Doling out the same advice when consumers are paying their utility bills, on the other hand, seems to work better because you are getting their attention when they are about to fork over part of their earnings to keep their homes lit and comfortable.

But thermostats are no longer the only devices that are vying for control. With the emergence of rooftop solar panels and batteries to store home-grown energy, we are seeing control systems emerge that are designed to manage all of the energy created and consumed for the home.

The space for home energy control could be a tremendous market and has no dominant players so far. It’s like the early days when consumer electronics makers were trying to figure out whether it’d be the game console, TV, set-top box, computer or some other stand-alone devices that will the hub to connect the living room and deliver entertainment and other content throughout the house. After all these years, that fight remains unsettled.

Honeywell’s Wi-Fi thermostat play

Honeywell introduced the Wi-Fi Smart Thermostat just over a year after suing Nestover patent infringement in February 2011. The lawsuit remains in place, though it’son hold at Nest’s request.

Honeywell is using technology it previously engineered for industrial-grade thermostats for the new model, said Mike Hoppe, senior product marketing manager. The Wi-Fi thermostat lets homeowners key in daily temperature preferences and program their heating and cooling settings remotely by smart phones.

The device shows indoor and outdoor temperatures and alerts its owner when the home becomes too hot or cold and a new temperature setting might be needed. It also notifies the homeowner when the thermostat’s Wi-Fi connection is broken or when the home loses power.

The core technology that Honeywell is proud of lies in the sensors and software that accurately reads the room temperature and communicates it promptly to the heater or air conditioning system, Hoppe said. The company says the accuracy margin is plus or minus 1 degree, unlike competing thermostats that could err as much as 4 degrees.

The company is sticking with the traditional rectangular look rather than the round shape that has defined Nest’s thermostat even if Nest wasn’t the first to make it round. But since style is now an important feature, Honeywell’s take on that is to build in a palette of background colors for the thermostat’s touch screen — you can change it to match the color of the wall or your mood.

The thermostat comes with a “utility mode” in which a homeowner would key in utility rates and other data. The device crunches those numbers to display a range of temperature choices, which let the homeowner decide whether to stick with the temperature she wants or to forego comfort in varying degrees in order to save money.

There is a fair amount of data input in the initial set up. The thermostat asks you when you get up in the morning, when you go to sleep, what time you leave and return to your home and what temperatures would you want for all these blocks of time each day. There is also a vacation mode.

Honeywell makes it clear that its new offering is not a “learning thermostat” like Nest’s, which has a motion sensor and algorithms that are supposed to figure out a homeowner’s heating and cooling patterns and recommend changes to save energy.

Honeywell contracted with GreenOhm to create the online energy savings calculator as a sales tool. With your zip code, information about your heating and cooling systems and your daily temperature preferences, the calculator can spit out an estimated annual monetary savings for using the new thermostat. You can also find out local utility rebates and other incentives for installing more intelligent thermostats.

The Wi-Fi thermostat is designed to provide a much finer control of your home’s comfort. But it also requires more work to get it set up and put it to work. While it’s interesting to see manufacturers put some thought and fashion into the long-neglected device, the thermostat may just remain as a tool to create a comfortable home. People may not care much more about it beyond that.

The Internet of Things: The Promise Versus the Tower of Babbling Things

The term “Internet of Things” is being loosely tossed around in the media. But what does it mean? It means simply that data communication like the Internet, but not necessarily Internet Protocol packets is emerging for all manner of “things” in the home: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so called machine to machine or M2M. The data communication can also terminate in a home compute server where the information can be made available to the homeowner to intervene remotely from their smart mobile phone or any other remote Internet connected device.

The term “Internet of Things” (IoT) is being loosely tossed around in the media. But what does it mean? It means simply that data communication, like Internet communication, but not necessarily Internet Protocol packets, is emerging for all manner of “things” in the home, in your car, everywhere: light switches, lighting devices, thermostats, door locks, window shades, kitchen appliances, washers & dryers, home audio and video equipment, even pet food dispensers. You get the idea. It has also been called home automation. All of this communication occurs autonomously, without human intervention. The communication can be between and among these devices, so called machine to machine or M2M communication. The data communication can also terminate in a compute server where the information can be acted on automatically, or made available to the user to intervene remotely from their smart mobile phone or any other remote Internet connected device.

But this is also where the glowing promise of The Internet of Things (IoT) begins to morph into a giant “hairball.” The term “hairball” was former Sun Microsystems CEO, Scott McNealy‘s favorite term to describe a complicated mess. In hindsight, the early euphoric days of home automation were plagued by the lack of “convergence.” I use this term to describe the inability of available technology to meet the market opportunity. Without convergence there can be no market opportunity beyond early adopter techno geeks. Today, the convergence problem has finally been eliminated. Moore’s Law and advances in data communication have swept away the convergence problem. But for many years the home automation market was stalled.

The other problem is currently the center of this hairball, and from all indications is not likely to be resolved anytime soon. It is the problem of multiple data communication protocols, many of them effectively proprietary, creating a huge incompatible Tower of Babbling Things. There is no meaningful industry and market wide consensus on how The Internet of Things should communicate with the rest of the Internet. Until this happens, there can be no fulfillment of the promise of The Internet of Things. I recently posted “Co-opetition: Open Standards Always Win,” which discusses the need for open standards in order for a market to scale up.

Is everyone following all of these acronyms and data comm protocols? There will be a short quiz at the end of this post. (smile)

Celebrate Earth Hour Tonight March 23rd @ 8:30PM: Lights Out For One Hour

Celebrate Earth Hour tonight @ 8:30PM. Turn off all lights for one hour.

My undergraduate and graduate students in Strategy will recall the World Wildlife Fund case study we discussed. The question embedded in the WWF case study and the challenge was how the WWF could refocus and improve its organizational strategy. With the launch of Earth Hour in Australia in 2007, to its unquestionable global reach and impact today, do you think WWF made a good strategic decision?

Celebrate Earth Hour tonight @ 8:30PM. Turn off all lights for one hour.

The Humble Thermostat: Another Strategic Web Battle

The Ecobee Smart Thermostat, fully Internet capable

For years thermostats have been ugly and downright stupid devices that sit neglected on our walls. But over the past 18 months the connected thermostat has morphed into a gadget that has been drawing the attention of some of the most cutting-edge software startups, which are looking to use it to connect with utilities and consumers.

Unbeknownst to many, a Canadian company in Ontario, Ecobee, has been at the forefront of the smart thermostat market for quite awhile. The Ecobee device is fully integrated with the Internet, and does all of the things you might expect an Internet connected thermostat to do, using your smart phone while away in Zanzibar to monitor your home. I quite like Ecobee. But it would be another Canadian innovation tragedy if Ecobee got run over in this growing global battle, as has happened with so many Canadian companies. I would be happier to see Ecobee begin acting like the global market player it is, attracting major capital and Big Dog strategic partners.

But the market has been heating up for some time and many major technology players and lots of big Silicon Valley money are now in the fray. A BC Hydro trial of advanced Smart Grid, solar heating, and Smart Meter (called Advanced Meter Initiative or AMI in BC) technologies has been going on quietly for some time on Vancouver Island. Another FortisBC trial is due to begin in the Okanagan sometime in the near future. Home energy management networks are set to grow from being in 2 percent of U.S. households in 2011 to 13 percent, or about 16.2 million households, by 2015.

Intel Intelligent Home Management Console, a reference design for OEM’s

Cisco Systems, General Electric, Google, Honeywell, Microsoft and Intel, along with a host of other companies are now focused on this home energy management market, developing new products and technologies that will be in our homes shortly. Siemens spin-off startup, EnOcean, and the EnOcean Alliance are also part of this complex market mix. EnOcean is the current leader in a related technology, “energy harvesting”, which will likely be one of the future major drivers in energy efficiency. Many home appliances are already “Internet ready.” This is obviously an area of major global corporate competition.

So take another look at that ugly thermostat on your wall. Things are about to change.

For the record, I am not impressed with all of the Luddite hype opposed to smart meters. One of BC’s environmental celebrities (not David Suzuki) is an opponent of wireless smart meters, citing anecdotal research on the health dangers of radio waves generally, but not on smart meters specifically. On the one hand, this person decries climate change deniers who refuse to accept science, while he simultaneously denies science on radio signal propagation. I follow this area of research fairly closely and have yet to see any convincing study that points to health problems with the radio signal propagation of smart meters. I am a follower of Nikola Tesla, the recently resurrected “father of electrical energy generation and distribution”, who endeavored to dispel superstitions about electricity. Unfortunately, many of those superstitions persist.

A Khosla Ventures-backed energy analytics startup called Bidgely is the latest to go after the next-gen smart thermostat, and it has told us that it has an agreement with thermostat maker Emerson to commercialize a thermostat in the coming months that syncs with Bidgely’s energy software. Bidgely’s algorithms can take home energy data and section out which appliances in the home are consuming what amount of power, without having extra hardware or sensors on each plug or appliance.

Consumers that can get that type of data can see, for example, if their pool pump is consuming too much energy in the winter time, or if their air conditioning unit is sucking down much more power than the average (see itemized bill). Utilities could offer such a smart thermostat to customers in their areas that want to be included in energy efficiency programs. Emerson’s thermostat wirelessly connects to smart meters or a home router with a Zigbee connection.

The deal between Emerson and Bidgely isn’t all that unique in the rapidly growing energy software sector. Emerson is also working with other software startups like EcoFactor, EnergyHub, and Calico Energy to have its thermostat sync with their software, too.

Next week at a major utility conference called Distributech, all of the energy software startups and large energy giants will be touting their smart, connected thermostats; including both new thermostat models and new services. The thermostat is a unique device. It’s an object that can provide demand response services for utilities, or the collective turning down of utility customers’ energy use during peak times (like a hot summer day in Texas). Software startups like EcoFactor can create algorithms that can do this, without making the climate of a home uncomfortable for the inhabitant.

The thermostat is also the latest device to become part of the growing world of the Internet of Things. In this always-on connected ecosystem, everything gets a connection, all devices are made smarter with software and data and these devices can make human lives easier, more interesting or more efficient.

Nest is one of the few that’s aggressively targeting consumers. Most of the energy startups are aiming for the utility market. One of the better known collaborations around a thermostat maker and an energy software company is between Opower and Honeywell. Honeywell is the giant in the thermostat maker market, and Opower is the leading energy software player.

Make sure to watch the buzz around smart thermostats and the entire market area defined by energy efficiency monitoring and management, in both commercial and home applications.

The Evolution of These Technologies Is Clearer

The IoT Tower of Proprietary Babble Is Slowly Crumbling

The Rise of the Intelligent Assistant

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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

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Open Letter to 60 Minutes and CBS

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