Wirec Revisited

I am still trying to digest all that I witnessed and heard at Wirec 2008. Here are few posts that I found quite interesting. There are two quite opposing points that were buzzing in the conference. BP had a pretty big presence. But all their show including sponsoring the tuesday reception were supplemented with the comment from CEO Tony Hayward that -

"Even though clean tech is growing fast, we all need to be honest," he said during a ministerial plenary session. "The scale that the industry is working at today is not going to have much impact."

I don't necessarily disagree with him. Conventional wisdom is consistent with this statement. But - well there was the counterpoint - Vinod Khosla who insisted that the costs have to come down. He presented at the ministerial panel (which I did not attend) - and highlighted how forecasts have been wrong in the past in predicting technology. In other words, if there are enough network externalities, the snowball effect of adoption of new tech generates the critical mass to lower costs of new tech and suddenly breaks all limits that analysts had predicted before.

His presentations are here. Great stuff!

So in a nutshell, my heart is with Khosla while my head still cannot argue against the BP chief.

@Wirec 2008

I spent the last couple of days in Wirec 2008. Personally, it is heartwarming to see so many people so enthused about energy all conglomerated under one roof. I went around attending few conferences - most notable was hearing GM speak about Chevy Volt. One of main mantras I heard over and over again was to release ourselves from traditional dependence on oil, plug-in vehicles have to come in as a mainstream commodity replacing cars that drive in gasoline. There is a bunch of statistics to prove that. This poses tremendous technical and commercial challenges in interfacing the cars with the grid. For the utility to treat the car as another appliance will not be a trivial matter. But this is indeed fascinating. Imagine automobiles becoming like your washing machine. Of course, unlike washing machine a car is mobile. This means that you will need easy availability of plug in to the grid from any meaningful place. Also, important will be how fast it can charge up. So, coming back to the grid - there will be a need for a new infrastructure. A new platform. A new marketplace. People should be able to come in and go out. How do we allow people to enter this marketplace? How do we gear the technology to support that? How do we make money? Do we create technical restrictions like - you have to have a certain kind of interface to plug in Texas as opposed to New York - or say other kinds of restrictions - electric Mercs or BMWs allowed only. These issues will take a lot of effort and lot of ink to resolve. Regardless, these are fascinating times. One message I take away - the big challenges are known, everyone agrees that something has to be done about it, and that we don't have a lot of time. I will keep probing these fascinating topics. I am excited that these days energy and grid are becoming sexy topics in cocktail parties again!

Ted and Bil

Following the popularity of TED talks, another conference called Bil has emerged. It states that it "loves" TED and wants to be like TED MINUS the $6000 tab that TED charges. It is an "open source" version. Will be interesting to see if this really can match TED.

"Optionality" in Private Equity Deals

This posts highlights how two recent private equity deals - Getty Images and CHC Helicopter are using reverse termination fee structures in their contracts. In other words, if the private equity sponsor refuses to complete the transaction the only recourse of either seller is to collect the reverse termination fee. This is a shift in practice from deals in the past when there was more "certainty" in the deal through specific enforcement on the buyer to actually execute the contract. With credit markets almost dead and financial markets in general having a tough time, raising capital has not been easy and in some sense this shift in PE practice in no doubt a direct fallout. What matters is are these firms valuing the optionality of the contract and if so, how much is that impacting the value of the company being acquired.

Likelihood of Carbon Trading Increasing

If you believe in - where the big boys of Wall Street invest is an indicator as to what the expectation of future growth is - then the likelihood of Carbon Trading has got another yeah. Goldman Sachs announced $14 million investment in APX, a Silicon Valley company that certifies carbon and emissions offset certificates. Read here. It seems like APX will act as middleman which may grow into a NYMEX or another futures type trading market as the emissions trading takes off. It has also got funding from Bechtel Enterprises Holdings, Kinetic Ventures, ONSET Ventures, Technology Partners and Woodside Fund. The space is very small as it is still in infancy. But when cap and trade takes off, there seems to be immense opportunity.

Virgin flight on Biofuel

Virgin Atlantic's flight from London Heathrow to Schipol is a fascinating story. Watch the video here. Now how much coconut or corn or babassu oil do we need? Looks like we would have to hope for a green revolution or pay record prices for our bread in future.

Tax structure in India

1) Qus. : What are you doing?
Ans. : Business.
Tax : PAY PROFESSIONAL TAX!

2) Qus. : What are you doing in Business?
Ans. : Selling the Goods.
Tax : PAY SALES TAX!!

3) Qus. : >From where are you getting Goods?
Ans. : From other State/Abroad
Tax : PAY CENTRAL SALES TAX, CUSTOM DUTY & OCTROI!

4) Qus. : What are you getting in Selling Goods?
Ans. : Profit.
Tax : PAY INCOME TAX!

Qus. : How do you distribute profit ?
Ans : By way of dividend
Tax : Pay dividend distribution Tax

5) Qus. : Where you Manufacturing the Goods?
Ans. : Factory.
Tax : PAY EXCISE DUTY!

6) Qus. : Do you have Office / Warehouse/ Factory?
Ans. : Yes
Tax : PAY MUNICIPAL & FIRE TAX!

7) Qus. : Do you have Staff?
Ans. : Yes
Tax : PAY STAFF PROFESSIONAL TAX!

8) Qus. : Doing business in Millions?
Ans. : Yes
Tax : PAY TURNOVER TAX!
Ans : No
Tax : Then pay Minimum Alternate Tax

9) Qus. : Are you taking out over 25,000 Cash from Bank?
Ans. : Yes, for Salary.
Tax : PAY CASH HANDLING TAX!

10) Qus.: Where are you taking your client for Lunch & Dinner?
Ans. : Hotel
Tax : PAY FOOD & ENTERTAINMENT TAX!

11) Qus.: Are you going Out of Station for Business?
Ans. : Yes
Tax : PAY FRINGE BENEFIT TAX!

12) Qus.: Have you taken or given any Service/s?
Ans. : Yes
Tax : PAY SERVICE TAX!

13) Qus.: How come you got such a Big Amount?
Ans. : Gift on birthday.
Tax : PAY GIFT TAX!

14) Qus.: Do you have any Wealth?
Ans. : Yes
Tax : PAY WEALTH TAX!

15) Qus.: To reduce Tension, for entertainment, where are you going?
Ans. : Cinema or Resort.
Tax : PAY ENTERTAINMENT TAX!

16) Qus.: Have you purchased House?
Ans. : Yes
Tax : PAY STAMP DUTY & REGISTRATION FEE !

17) Qus.: How you Travel?
Ans. : Bus
Tax : PAY SURCHARGE!

18) Qus.: Any Additional Tax?
Ans. : Yes
Tax : PAY EDUCATIONAL, ADDITIONAL EDUCATIONAL & SURCHARGE ON ALL THE CENTRAL GOVT.'s TAX !!!


19) Qus.: Delayed any time Paying Any Tax?
Ans. : Yes
Tax : PAY INTEREST & PENALTY!

20) INDIAN :: can i die now??
Ans :: wait we are about to launch the funeral tax!!!

(Courtesy - Mohit Jain)

Investing in energy stocks

caminoenergy.com tracks energy stocks. It uses some interesting indices - check it out.

Market Reforms in China and India

Much of the growth stories of China and India are attributed to free-market reforms by many. To get a different perspective, here's an interesting article by Prof Bardhan. If you wonder that my Chicago influence will automatically indicate where I stand, then that would be as flippant as reading with the understanding that the author is from UC Berkeley. But jokes apart, some very important issues have been brought forth which are typically lost in popular disourse. Talking about China, he says -

"...socialist control and regulations undoubtedly inhibited initiative and enterprise in both countries, the positive legacy of reforms undertaken in the ‘70s and ‘80s cannot be denied, particularly in China’s recent pattern of state-controlled capitalist growth. China’s earlier socialist period arguably provided a good launching pad for market reform. That foundation provided wide access to education and health care; highly egalitarian land redistribution that created a rural safety net and thus eased the process of market reform, with all its wrenching disruptions and dislocations; increased female labor participation and education that enhanced women’s contribution to economic growth; and a system of regional economic decentralization"

India fares poorly in China's comparison - in equality in land owership, education, and health care. Prof Bardhan attributes this to - "... Chinese are better capitalists now because they were better socialists then!"

Interesting read overall.