Orders of Magnitude

Like most people in the energy world, I constantly find myself trying to explain numbers with large orders of magnitude. This is an issue when trying to describe any kind of energy technology: “This system has 600kWh of storage” or “This power plant  capacity is 250MW”. Clearly, and unapologetically so, a random person on the street is not going to “get” those values. At first, this looks like a units problem. Joe Smith does not have any idea what a MW is or how it relates to his life.

In the energy industry, the common thing to do is to convert this unit into something that everybody can relate too, like number of homes powered. This is a great first step, but I think it leaves out the other side of the problem: orders of magnitude. Humans, in general, are terrible at grasping and comparing large numbers. So simply converting the number is not enough.

More Brains

We all know the current VC structure used to fund cleantech companies is broken. One major aspect of this is the more rigorous technical challenges of the cleantech world. The VC structure, formed by funding tech companies, places very little emphasis on the idea and, as such, just isn't capable of accurately assessing the technological challenges and potential of cleantech companies.

If this is true, biotech VCs should face the same challenge as biotech startups face at least similar levels of scientific and engineering intricacies. Looking into the status of biotech VC funding, the trend is starkly similar to cleantech. Looking to move their model into new areas, VCs went crazy in the biotech field and now are scaling back as their startups fail to meet returns under the tech paradigm.

How can VCs change their structure to accommodate cleantech and biotech? The best place to start is at the beginning: pick better companies to fund. To do this VCs need to re-prioritize what they look for in startups. But even with a higher priority on the idea VCs will be in a tight spot. When being exposed to  hundreds or even thousands of ideas a year, how can a VC with possibly no technical background make the right call?

The failure of Cleantech VC

For those looking for VC Cleantech funding, these are rather dark days. While sad, there is a reason VCs are jumping the Cleantech ship: the returns over the past 10 years have really sucked really bad. The question is why? Why have VC IRRs dropped from 40 during the days of tech to <10 in the days of Cleantech?

Although nobody knows the right answer, two things are clear: Cleantech does not appear to be capable of producing the explosive returns that tech companies can and something is fundamentally wrong with the process that VCs are using to decide what companies to fund and what companies to reject. Lets look at both these issues.

Why don't we site Wikipedia

Wikipedia, weather you will admit it or not, it is probably the first place you go when you want to learn something about a new topic you are unfamiliar with. It is hands down the most useful site on the Internet for people looking for knowledge. And as the 6^th most popular website in existence, it is clearly everyone’s go to site for learning. So why is there still a taboo about siting Wikipedia as a source of information?

In short, I think the reason is that people believe that, given Wikipedia’s nature, some of the information on the site may be wrong. Since the site is technically not peer-reviewed, mistakes may carelessly slip through the cracks and be portrayed as truth. This clearly is possible, but I think, as usual, human perception is holding us back. Wikipedia, from my own anecdotal standpoint, is significantly more trustworthy then peer-reviewed journals.

Occam's Razor Examples Part 2: The Jet Engine

Part two: Occam's Razor and the jet engine

Part one of this two part series focused on the idea that some of the central tenants of the "simple is better" mantra are not always correct. Part two will hopefully get back to the heart of why Occam's Razor is an inappropriate way of deciding what technology is "good" or "bad". Through the post we will look at a technology that today, is the standard to wich all new energy technologies are compared against: the jet engine. Weather it is used for propulsion (jet engine) and energy production (natural gas turbine), the well understood simplicity of this technology makes it a tempting target to compare new systems against. 

If you are a thermal engineer (and who isn't), you are probably very familiar with the Brayton Cycle and the idea of the jet engine. If you are not a thermal engineer (and who is) then you may only be casually familiar with them. They are, in simple terms, the things that propel airplanes. They do this by first compressing a gas, heating it up by burning kerosene, extracting some of the energy to run the compressor and then letting the remaining hot high pressure gas shoot out the back through a nozzle. If you have never read through the entire jet engine wikipedia page then you are in for a real treat. 

Today jet engine technology is used not only to provide power for nearly all commercial air traffic, but it also provides 20% of our electrical energy via natural gas plants. In other words, this technology has been a great success. It has transformed the way we produce energy both in the air and on the ground.  Today, the simplicity of the system is well understood: air is compressed, fuel is burned, exhaust is expanded, exhaust is expelled. The straight shot, once through, one major moving part construction of modern turbines is especially compelling. It is tempting to use this technology as an example the power of Occam's Razor. It would appear that the simplest technology has won.  However, the history of the technology tells a very different and compelling story.

Occam's Razor Examples Part 1: The Automobile

Recently I was talking with my good friend, when they made the mistake of bringing up Occam’s Razor. After 30 minutes of rousing debate, we arrived at two concrete examples that we both thought proved our argument. In the interest of friendship and the sanity of the folks sitting around us at the coffee shop, we decided to agree to disagree. However, I think they are both so interesting, that I decided, with the permission of my friend, to write up a two part post about both examples. Here is part one:

Part one: Occam’s razor and the automobile

One of the key tenants of the social construct we call occam’s razor is that simpler systems will have better reliability then complex ones. This seems obvious as more complex systems will have more points of failure and therefore, will fail more often. This self explanatory belief is what drives many of the incantations of Occam’s razor during pitches and brainstorms. “The reliability of that system is going to be terrible because its too complex”.

In previous posts I have tried to show how any incantation of Occam’s razor is flawed and destructive. I wont dwell more on the irrationality of Occam’s razor here. Instead, I want to analyze the relationship between complexity and reliability. Can we always fall back on the idea that apparent complexity leads to more failures? In short, no. In fact, when it comes to technology many systems with higher levels of complexity have better reliability. The changes in automobiles over the past 20 years can help us.

Creativity is a skill, not a mystery

As a society, we still treat creativity and idea generation as a mystery. New ideas come from "creative", or "non-linear" people. Under this understanding, people are either gifted with creativity or they are not in a very binary way. This statement is so widely believed to be correct; it is hard to overstate how wrong it is.

Occupied Ideas

If you were alive last year, you probably remeber the Occupy Wallstreet movement. Although the movement never had a clear set of demands, one thing was clear, people were (and still are) very angry about the distribution of wealth in the country.  Clearly this blog is not about debating social issues or political groups. People tend to have very strong opinions about Occupy, and I don’t really want to change anybody’s mind. I do however, want to bring up one aspect of the movement that I think has been completely overlooked and is well aligned with the blog’s purpose. The extremely uneven wealth distribution of the United States hampers technological development, especially disruptive development.

Catchy Tech by Carly Rae Jepsen

If you follow it, you may have noticed that “Call Me Maybe” by Carly Rae Jepsen was the number one downloaded single on iTunes this week. If you have never heard this song, it falls squarely in the catchy pop musical category. It is not good pop, or even bad pop; it is the worst kind of pop. It’s the type of pop song that you just can’t seem to completely convince yourself has no musical quality and will be forgotten in 6 months.

This is why the word catchy describes it so well. Nobody justifies its popularity with a “oh hey, that song is really well composed”, or “that song is really incorporating a new sound”. No, it’s a catchy pop song and just like a cold, it’s in our nature to be susceptible.

Catchy pop is far worse then terrible pop because terrible pop can be ignored. We can change the radio station, visit someone else’s website, or give it the thumbs down when it comes up.  Most importantly, we don’t need to buy the single. When a catchy song comes up on Pandora though, you find yourself drawn in. It is engrossing and sounds like the next big thing. Before you know it, 2 months pass without hearing anything else but this song: its everywhere.  During this period, the song sucks up all the time that we could be spending listening to good pop, or even newer types of music currently disrupting pop.

In the end though, the song just disappears without a lasting impression. If you return to the single later, it sounds just like every other pop song you have ever heard. It does not move the pop genera forward by introducing something new; it simply exists, absorbs our time and money, and then vanishes.

It is hyperboli to say that this is dangerous. But it is a great analogy to something that really is: catchy technology. Just like music, technology can be irrationally seductive. To those listening, catchy technology sounds like the next big thing. It is engrossing and seems to hold the solution to boundless problems. We see countless startups appear touting their tech and we see large companies start their own internal development efforts or make huge acquisitions to get in on it. But then, 5 or 10 years pass and people look back and ask “why were we investing in that?” or “how does that improve on the state-of-the-art?”.

Misled by Experts

Recently I had an opportunity to learn about how technical experts interpret the term disruptive. I did not plan for this opportunity, nor did the experts know they would be compared or assessed in anyway, but the result was surprising. Here is what happened. 

REbound recently submitted a grant application to raise R&D money. Each reviewer received the same grant containing roughly 20 pages of detailed technical description. They were all independently asked to review the merits of our application and were specifically asked to assess the impact the technology would have. After each had completed their review, the funding agency was kind enough to send us their comments and allow us to reply directly to any issues or confusions that the reviewers had before the funding agency makes their decision next month.

What was interesting about the comments was that, when asked how disruptive our technology was, each expert came back with a very different and contradictory answer. There responses were so disparate that if you saw them you would think that they had colluded to give the most inconsistent comments possible. 

Venture Capitalism = Socialism?

If there is one group of people who believe in capitalism, it’s venture capitalists. If you need proof just take a look at the last word of their name. However, with all this talk of food stamps recently, and my involvement with the VC system we depend on to bring us the disruptive technological development that we need, something occurred to me. Under their current approach VCs perform a huge amount of wealth redistribution. 

 Could it be that, in fact, the current VC system we use is one of the largest sources of wealth redistribution in our society? In all honesty, the answer is probably no; and it certainly is not so dramatic, but it is an interesting characteristic of the system that it takes a massive amount of wealth from the super rich and re-distributes it to the not super rich. Here is how.

Information integration

We are approaching problems using a singularly focused, categorical, and outdated problem-solving method. This method was not always outdated and as recently as 20 years ago it still made sense. Even though our access to information has dramatically changed during that period, our approach to technology development and problem solving remains the same: minimize the scope of the problem until you isolate something you can control and utilize.

For an example of this let’s look to the power industry. If we look at the technology in this sector we see very singularly focused systems developed under this regime.  Take a combined cycle gas turbine, this technology uses a single fuel (natural gas), to drive a single type of technology (thermal power cycles), to deliver electricity to a single market (shouldering electricity), governed by a single forcing function (the price of electricity).

This is not, per say, a bad technology, but it was developed under a system where the scope of the technology was minimized as much as possible. If you look at the availability of information 20 years ago this approach makes sense. The groups that developed the technology had limited access to published works outside the realm of gas turbines; they had gone to school where they participated in categorical narrowly focused curriculums, and they were led by technical and business experts with experience with the previous generations of the technology.

Under this set of circumstances the only plausible way to develop a technology is by reducing the scope you are willing to consider. If you don’t have access to information about other technology, markets, fuels, etc. you will try to remove them as variables and isolate out a system that you can fully predict and control. In general, these decisions force you to accept increased system complexity in order to reach better system performance at constant (or decreasing) technical scope.

In the last 20 years, the availability of information has increased faster than ever before. Now, with little more than a macbook and an internet connection a resourceful engineer can learn more or less anything they want for free. My wife and I can get in our car and in the time it takes to drive to the whole foods across town I can (sitting in the passenger seat of course) download hourly solar insolation data for Bakersfield CA, search a prominent, but unrelated peer-reviewed journal for articles that may apply to my technology, and read about a new bill incentivizing the use of some new feedstock in my state.

bad idea + good pitch >? good idea

Anyone who is involved with entrepreneurship, small companies, or funding startups will tell you how important your 2 min elevator pitch is. Above all else this short snippet must capture the attention of your audience. This memorized bit has become one of the most important part of getting your new company off the ground.

In the face of our technical society’s full acceptance of Occam’s Razor, these pitches must be leave the audience with an honest understanding of why your solution is better and how you will bring that technology to market all within a few minutes of talking. For technologies that have the potential to solve big problems like clean water, food and energy, this is absolutely impossible.

Being the resourceful people they are, entrepreneurs have made one small change to the requirements of the pitch.  Instead of an honest understanding of why our solutions are better, we are now only required to provide a perceived understanding. That is to say, we are forced to give half-truths about what our technology really does in order to make it seem simple and obvious.

Path Functions

A warning: this post starts with thermodynamics, but it will end with disruptive development. There are many compelling analogs between the two, but this post will focus on the idea of state and path functions.

From a thermodynamic perspective, a state function is a property of a system that exist at a moment in time. There are many properties like this: mass, temperature, etc.

On the other hand, there are properties known as path functions that represent the transition of the system from over a period of time. These properties include: heat transfer, work done by or on the system, etc.

Lets highlight the difference with an example: We take two cups of water both open to the atmosphere (at a pressure of 1 atmosphere). Cup A starts at 85°C and Cup B starts at 95°C. We heat each of the cups up 10 degrees so that Cup A is now at 95°C and Cup B is at 105°C. Up until this point we have only discussed the state functions associated with the system and, let’s be frank, it has been pretty boring.

However, if you are familiar with the Celsius scale you will realize that the water in Cup B at a temperature of 105°C has completely boiled away and is now steam. It turns out when we look at the heat transfer path function, we put roughly 50 times more energy into Cup B than Cup A to accomplish what appeared at first to be the same state function process. What an interesting, if not totally unforeseen, outcome.

The reason we may have been caught off-guard in the previous example is that we did not anticipate the path function of water. In thermodynamics we inherently are drawn to state functions and feel more comfortable using them. As a fairly firm rule, we try to force path functions to act like state functions whenever possible, and we (me especially) are chronically hampered when developing new thermal systems by our dependence on them.

Occam's Razor

You may not know it, but one single principle dominates the way that our society invents things. This principle is know philosophically as Occam’s Razor but you may be more familiar the abstraction that the simplest answer is always right or the even more distorted less is more concept. If you are an engineer, you may also be familiar with the keep is simple stupid (K.I.S.S) approach to decision making. However you slice it, this approach now presides as the dominant way we decide what ideas should move forward and which should be killed.

In short, this approach is crippling the way we solve problems and generate disruptive change. It creates an unconscious bias towards incremental improvements leaving us unable to address problems requiring disruptive innovations like clean water, energy and sustainable food.