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.