The Long Tailpipe - Shai Agassi's Blog

Hybrid boat

Since I am in a bit of humerous mood this morning, and I found this great story related but amazing none the less, I figured I should share it with you all under the conversions theme of the week. This time though it is not a car, but a giant boat...and the hybrid is a giant kite. In a sense this is an oil wind hybrid - a piece of art that can only exist in the water.

Check out the following six pictures to believe it - Theoretically this combination saves up to 30% of the fuel reuirement and emissions - better than a prius!

"He expects SkySails to cut the $7,500 daily fuel costs of his cargo ship by up to $1,500. And he said the positive impact on the environment was a welcome dividend. "

You got to love it...

where do 'big ideas' come from

I was asked by Benjamin Bakhshi a great question related to today's posting. while I replied in the talkback section I realized it was worth to post it in the "Nature of Business" (NoB) section although just to start the conversation with other corp readers as to their experiences.

"Shai, here is a question: Do you think 'big ideas' in the world manifest because of large corporations, or because of smaller entrepreneurial businesses?"

My answer read pretty close to the following (I came up with the parallel metaphor to evolution theory after my original answer):

Benjamin,

From my experience in large corporate environment the big ideas usually start along one of three paths pretty much like evolution theory:

• Emergence of market demand (usually manifested through one of your smaller competitors proving that the market wants a new product) - see Prius. In some cases this is the equivalency of one species eliminating another one by being more adapt - Think of the effect of refrigiration on the ice shavers service providers. In general any business that replaces people with an appliance wins.

• Bottom up innovation - a few engineers (usually a handful at most) come up with a breakthrough idea, and build it in their after hours. If they have enough momentum to survive, the idea gets viewed by corporate leaders who are either strong enough to approve it or strong enough to protect it until approval. This is the beauty of emerging traits - re-combination of the current organizational genome that produce a super-baby. As a general rule of thumb the bigger the market share you have in the segment where the innovation happened the lower the exec support you would get for disruption

• A disruptive technolog that meets a strong visionary leader who knows how to apply the technology to solve an age old problem the company struggled with in the past. Once the problem is re-addressed and solved the big question the corporation needs to solve is how to scale production and go-to-market - which is where the large corporation can beat the small up and comers, even if they have a time advantage over corporate. In this case we are looking at bio-engineering - an understanding of the function of a certain new gene that allows us to create a superspecies through applied science. As a general rule of thumb here - the closer the leader is to a founder the higher the probability he picks the right choice.

finally, if you allow me to cheat, one of the main path through which innovation happens in large corporate is through acquisitions - either of ready products or of 'big idea' people...scaling from there is pretty easy for corporate - all you need is to integrate well and let the start up thrive inside while slightly reducing chaos over time. I used to call this a retro-virus, which was the role I played at SAP - re-awakening the great genetic material in a body that is much larger and much smarter only slightly dormant for a while. I guess in this experiment the body is very much awake, even smarter but the retro-virus has been pushed out of the body after it is no longer percieved as needed...At least I am free to infect other domains again.

what do you guys think? have other experiences? better metaphor?

Executive Conversion

Speaking about converting cars, one of the fascinating conversions that happened in recent weeks is the conversion of some of the car industry's key executives. It seems as though some fundamental shift happened beyond just popular pressure related to climate change research - and my speculation is the shift has to do with the amount of Toyota Prius cars sold in car dealerships around the world. Just to give you a bit of sampling from a great article by Greg Hoffman -

Ford Motor Co. CEO Alan Mulally said Monday that global warming is real, man made and caused in part by auto emissions - in an email to Ford employees he said

"I firmly believe we are at an inflection point in the world's history as it relates to climate change and energy security. The time for debating whether climate change is real has past It is time for a conversation about what we, as a society, intend to do to address it,"

General Motors Corp. Vice Chairman Bob Lutz said the U.S. government needs to take a Manhattan Project-like approach to creating a national energy policy, bringing the best minds in the country to bear on the issue of energy sustainability and independence. GM's spokesperson, Greg Martin, said

"As we've said from L.A. to Capitol Hill, we see it as both a business necessity and as our obligation to society to develop advanced technologies that run on diverse sources of energy to lessen the automobile's impact on the environment."

To complete the Big 3 American car makers, you have to really go to the source - Lee Iacocca himself. He just released his new book on lack of leadership in American business.  While I have not read the book, so don't take this as a recommendation to read it, but he had a great quote in Fortune on a topic that I can relate to

Iacocca says "...I live in L.A. now. [Former DaimlerChrysler chairman] Jürgen Schrempp asked me to come work for him, and I said, "Where do I have to live?" When he said, "Stuttgart," I said, "Forget it."..." [sorry, I went on a tangent]

but the real quote he has is about the solution for the car industry

[Fortune] What can the auto industry do?

[Iacocca] Plug-in hybrids. I think they're virtually here now. We've still got to get better batteries, of course, but hybrids are good. Expensive and complex, but they do the job and get good gas mileage. That's the wave of the future.

[Fortune] Some people are betting on hydrogen-powered fuel cells.

[Iacocca] I think that's way off. Where are you going to get all that hydrogen? How are you going to store it in the car? How are you going to distribute it? That's a long-term problem.

Given that the car industry seems now to convert into the hybrid wave that generated a lot of consumer demand, It probably means that the next wave of technology is right around the corner - which is great news for the environment. If the next step gets closer to zero emissions - we are going to be in great shape.

Productized conversion

One of the most talked about intermediate solutions between a full electric and today's cars is the plug-in Hybrid Vehicle (PHEV). Depending on the distance the driver goes, these plug-ins can go a significant part of their drive (mostly) on electric power, engaging the negine only after the battery is drained or when needing special performance boost. Since there is no "experience degredation" for the driver, they can load up on gas and go when they have no electricity, it is fairly simple to adopt - at a higher cost. Think of it as the missing link between neanderthals and Homo sapiens of cars...

The easiest way to get to a plug-in hybrid is not to wait for your dealers to get one (although many car makers are actively talking abou their upcoming releases) - the shortest way is to convert an existing hybrid. One such company that productized the conversion is Hymotion of Toronto, Canada. They converted a few of the leading hybrids in the market, including the Prius and Ford Explorer.

This is one of the simplest conversions you can imagine - basically this is done by adding a new battery pack (Lithium-Ion Polymer) at the back of the car (in the Prius it is done by removing the spare tire). They end up modifying the software in the hybrid to change behavior slightly knowing that the battery is more powerful, sort of what you'd do to a Tivo when you put a bigger disk drive. The result you get is a very nice number right next to the mpg indicator - going into three digits. If you had no infrastructure modification, living only with fuel tanks and gas pumps - that combination is probably the only way to reduce gas consumption.

If you think of the xB to eBox as a complete makeover (100% Fuel -> 100% electric), this conversion is the other end of the conversion spectrum (Fuel based hybrid to electric+fuel hybrid). There are others that do this conversion, first of them was the California Cars Initiative (known as CalCars). These guys used Standard Prius, Which they originally loaded iwth Lead-Acid batteries in the back - to prove their point. Their story is fascinating so go read it on the site. Their picture standing in front of the first conversion is now a cult classic in the PHEV community...