New bubble forms in Silicon Valley; Entrepreneurs from all backgrounds invest billions in energy startups
SAN FRANCISCO -- Silicon Valley's dot-com era may give way to the watt-com era.
Out of the ashes of the Internet bust, many technology veterans have regrouped and found a new mission in alternative energy: developing wind power, solar panels, ethanol plants and hydrogen-powered cars.
It is no secret venture capitalists have begun pouring billions into energy-related startups.
But that interest now is spilling over to many others in Silicon Valley -- lawyers, accountants, recruiters and publicists, all developing energy-oriented practices to cater to the cause.
The best and the brightest from leading business schools are pelting energy startups with resumes.
And, of course, there are entrepreneurs from all backgrounds -- but especially former dot-comers -- who express a sense of wonder and purpose at the thought of transforming the $1 trillion domestic energy market while saving the planet.
&It's like 1996,& said Andrew Beebe, one of the remade Internet entrepreneurs.
Frenzy builds
In the boom, Beebe ran Bigstep.com, which helped small businesses sell online. Today, he is president of Energy Innovations, which makes low-cost solar panels.
&The turret of the Valley has found a new hot spot.&
Beebe said the Valley's potential to generate change was vast. But he cautioned that a frenzy was mounting, the kind that could lead to overinvestment and poorly thought-out plans.
&We've started to see some of the bad side of the bubble activity starting to brew,& Beebe said.
The energy boomlet is part of a broader rebound that is benefiting all kinds of startups, including plenty that are focused on the Web.
But for many in Silicon Valley, high tech has given way to &clean tech,& the shorthand term for innovations that are energy-efficient and environmentally friendly.
Less fashionable is &green,& a word that suggests a greater interest in the environment than in profit.
The similarities to past booms are obvious, but the Valley always has run in cycles. It is a kind of renewable gold rush, a wealth- and technology-creating principle that always is looking for something around which to organize.
In this case, the energy sector is not so distant from other Silicon Valley specialties as it might appear, say those involved in the new wave of startups.
The same silicon used to make computer chips converts sunlight into electricity on solar panels, while the bioscience used to make new drugs can be employed to develop better ethanol processing.
More broadly, the participants here say their approach to building new companies and industries is easily transferable to the energy world.
Words of caution
Critics wonder whether this is just an echo of the misguided optimism of the Internet boom.
And even those most involved in the trend say the size of the market opportunity in energy is matched by immense hurdles.
Starting a clean technology firm is ¬ like starting an online do-it-yourself legal company,& said Dan Whaley, chief executive of Climos, a San Francisco company that is developing organic processes to remove carbon from the atmosphere.
&Scientific credibility is the primary currency that drives the thing I'm working on.&
Just what that thing is, he would not specify. For competitive reasons, Whaley declined to get into details about his company's technology.
His advisory board includes prominent scientists, among them his mother, Margaret Leinen, the head of geosciences for the National Science Foundation.
In the last Silicon Valley cycle, Whaley's help came from his father.
In 1994, he did some of the early work from his father's living room on GetThere.com, a travel site. It went public in 1999 and was bought by Sabre for $750 million in 2000.
This time around, entrepreneurs say they are not expecting such quick returns.
Those drawn to the alternative-energy industry say they need time to understand the energy technology and to turn ideas into solid companies.
After all, in contrast to the Internet boom, this time the companies will need actual manufactured products and customers.
&There are real business models and real products to be sold -- established markets and growing economics,& said George Basile, who has a doctorate in biophysics from the University of California, Berkeley, and specializes in energy issues.
Basile has just stepped into the fray. In January, he became the executive adviser for energy issues at Bite Communications, a San Francisco public relations firm with scores of technology clients that is working to attract energy startups.
Chasing dreams
The sudden interest of lawyers, accountants and other members of the wider valley ecosystem strikes some as opportunistic.
&There's a large amount of bandwagon-jumping right now,& said Mark Hampton, chief executive of Blanc & Otus, a technology-oriented public relations firm whose clients have included TiVo, Sybase and Compaq.
Still, he understands the interest of relative newcomers: &There's a huge opportunity.