Obama, Wal-Mart, and the Changing Face of Cleantech
When it was announced that President Barack Obama’s west coast swing would conclude in Mountain View, CA (home of Google, LinkedIn, and a variety of other tech starlets), the location of his speech took a lot of people by surprise – Wal-Mart. Despite being in the heart of Silicon Valley, 40 minutes away from the bustle of San Francisco, and a stone’s throw from Stanford University, Obama chose the Mountain View branch of a behemoth retailer which is far from representative of Silicon Valley and seems like an odd choice for a speech centered on energy efficiency.
Or was it? As it turns out, Wal-Mart is a great example of the huge role that large corporations are playing in the clean energy economy. The branch in Mountain View has replaced many of its in-store lighting fixtures with ultra-high efficiency LEDs, added two electric vehicle charging ports in its parking lot, and installed solar arrays on its roof. Wal-Mart, in fact, has more solar installed than any other company in the United States, and has 335 renewable energy projects in operation or development, generating over 24% of the electricity that its stores consume. Wal-Mart, like many other corporates, is quietly yet aggressively investing into a future of decentralized, clean energy, showing yet again that renewable energy is as much about the bottom line as it is about the environment. “It will be good for the economy long-term,” the president said. “And if we don’t [mitigate climate change], that will be bad for the economy. Rising sea levels, drought, wildfire, more severe storms – those are bad for the economy. So we can’t afford to wait.”
As mentioned above, Wal-Mart is not the only corporate investing in cleantech. A week before the Obama appearance, Apple acquired LED-maker LuxVue Technology, presumably to help produce longer-lasting, more efficient lighting for its products. Ten days later, General Electric acquired Vancouver-based Wurldtech, which specializes in cyber-security mechanisms designed to protect smart grids and energy sites. A browse through our i3 platform would reveal many more stories such as these, as investment into and partnership with cleantech companies are involving more and more corporates, a shift from the VC-heavy trends of years past.
It is this movement away from the typical “disruptor vs. disruptee” mentality that is defining the changing face of cleantech. And it makes a lot of sense – startups and corporates have much to gain from one another, and a successful partnership presents an attractive win-win opportunity.
Cleantech startups often face an uphill battle when trying to bring their product to market, with the two biggest challenges being adoption and scale. Many of these hardships were highlighted upon the VC-funded “first generation” of cleantech companies falling short of potential in the early 2010’s, leading to a reassessment of expectations. It’s becoming clearer now, though, that the funding model was likely part of the problem as the two key challenges outlined above are minimized when startups rely more on corporates and less on venture capital, and when startups don’t always view their lumbering, giant counterparts (corporates) as the bad guy. Corporates are able to provide validation and brand notoriety to a startup’s products or services, greatly bettering a startup’s chances of achieving larger-scale adoption. Similarly, corporates are able to provide access to customers, distribution channels, and supply chain assets that allow the startup to scale effectively upon gaining traction.
As mentioned above, the relationship is symbiotic, as corporates have much to gain – and learn – from startups as well. A tangible example is a corporate’s ability to expand its offerings to customers by adding a startup’s innovations to its product/service portfolio. Partnerships lead to intangible benefits as well, which present themselves in the form of insight and culture. By engaging with a company in its early stages, a corporate can have a voice in the development and shape of the company, which could prove to be helpful if the corporate ever chooses to invest further into or acquire that company. This deep insight into how the startup operates and scales also gives the corporate context within the startup’s ecosystem of competitors, and in doing so provides further insight into potential acquisition fits. Additionally, this insight into a startup’s innovative and agile culture inspires internal innovative thinking within the corporate’s organization. Much in the way that a parent may be reminded of their younger days by a fun-loving child, partnering with a startup can help demonstrate the necessity to move fast and innovate and positively influence company culture.
Wal-Mart and Barack Obama are somewhat unlikely sources to shed light on the nuances of today’s cleantech landscape, but the subject of the president’s talk on May 9th was a great reminder that progress is being made. Corporate interest in cleantech is critical to the expansion and adoption of the technologies which will fuel our future, and corporates seeing eye to eye with startups is an awesome alignment of resources and vision. Making mistakes a la the bonanza of 2008 is disappointing, but learning from these mistakes, regrouping, and succeeding is truly refreshing.
