Saturday, December 29, 2012

2012 Gangrene Awards - Wall Street Journal Finally Gets It





Four years after the green machine first reported how the Silicon Valley VCs were thermodynamic neophytes who hyped pure BS companies, the Wall Street Journal finally reported the story I broke when Obama was just about to take office in his first term as president.

Ian a lifetime friend sent me the WSJ article on Silicon Valley’s Green Energy Mistake.   The article actually takes Al Gore and his partner John Doerr as well as their VC firm Kleiner Perkins to task.  The WSJ should have added old Colin Powell to the list of gangrene elements at KP.  The article should also have addressed the biggest thermodynamic bust in the Valley of the Gangrene Dolls.  He is the ex Kleiner Perkins partner Vinod Khosla who brought us Calera, Range, Amyris, and KIOR.  The article could also have included the VC firm Draper Fisher Jurvetson who brought us Tesla but they are a minor bit part player in the green Astroturf arena. 

The WSJ article was good start for the main street media to finally debunk the myth of the economic and social value the green junk that has been hyped along Sand Hill Road.  I have referred to Sand Hill Road as making Lombard Street in San Franciso look perfectly straight.

Talking of Tesla, John Petersen, has blogged that come December Tesla will again be close to having zero working capital.  We know they were technically insolvent on September 29th 2012 before Goldman Sachs came to their rescue with an equity infusion.  If John Petersen is correct that Tesla actually blew through the money they recently raised it could be an exciting time early next year when their 4th quarter results are made public. 

I really wish John Petersen would opine on Kior the company that is starting up their wood-to-diesel plant in Mississippi.  I rate the probability of success of this plant yielding the claimed quantity of diesel as being less than 10%.   Just as I opined in early 2012 that A 123 would be gone by the end of 2012 I am now opining Kior will be a history major by the end of 2013.  Amyris, Solazyme, Gevo, and Codexys will linger on but will continue to hemorrhage cash.  The whole nonsense story of advanced bio transportation fuels will pretty much be over by year end 2013.

In 2013 I anticipate that the total number of plug in vehicles that will be sold in the US might climb to 120,000 of which 90,000 will still have a primary propulsion system of an internal combustion engine.  The full electric battery vehicle will remain an expensive joke played on the 99% that sells approximately 30,000 units.   I also predict that by the end of 2013 Tesla will ship less than 10,000 of their “low cost” smallest battery Model S that Stevie Chu gave them a half billion dollars to purvey the “people’s electric car”.   Tesla will continue to increase the price of their cars to remain “in business”.

I also predict that in 2013 the US will produce more shale gas than ever before and that CNG vehicle sales will exceed pure battery vehicle sales.  My wish for 2013 is that Fisker and Bloom are exposed by the Wall Street Journal and that Al Gore is stripped of his ill-deserved Nobel Prize.  I don’t think Big Al will be as vocal in 2013 as he was in 2009 and the world will be a “Better Place” for this reason alone.  Ah in 2013 Better Place will be out of space as I have oft opined.  It is interesting how Shai Agassi become Shy Agassi after he was booted from Better Place.  Charlie Rose did not invite him on his show again to explain the hype and BS Charlie let him pontificate two years back.

The poster child of the gangrene greenwashing of pure junk is Calera.  This was to be the “jewel in the crown” of Khosla’s green portfolio.  The company claimed to sequester CO2 in cement it made from power plant emissions.  Bechtel said it was great, Peabody Coal was an investor, the US Government gave it money.  All the company could do was turn expensive chemicals into less expensive ones,  They added Calcium Chloride and Sodium Hydroxide two expensive chemicals to the stack gas to yield Calcium Carbonate and Salt two much less expensive chemicals.  Had anyone simply looked at the cost of the reagents and the value of the products they would have said “wow we are making sawdust out of a mahogany table”. 

It does not bother me that Vinod Khosla lost his or his friends money but that the US Government gave them a grant for this utter junk that a high school chemistry student knows is making sawdust out of wood is pretty pathetic.   The Stanford professor who founded Calera should come to the green machine for a lesson in chemistry.  Interestingly he is no longer with Calera.  It is also interesting that the founder of Kior is also out of that Khosla controlled company and the founder has dumped more than 320,000 of the shares he owns in the past two months. 

I have to give Sand Hill Road the Green Machine’s Gangrene Award for 2012.  Steve Chu and his Department of Entropy came in a close second, the boys who backed Better Place were third.   Khosla should receive the award on behalf of the Sand Hillians.  Maybe just maybe the fiscal problems in the US will mean an end to the Department of Entropy backing nonsensical green companies and that in the future we all try to make furniture out of wood, lemonade out of lemons, and good paying jobs out of natural gas.

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