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Olson’s Observations

Technology. Innovation. Science. VC. Media. :: by Eric Olson

Archive for December, 2006

Who Killed the Electric Car?

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GM EV-1This was going to be another simple movie review but I think it needs to be much more. Therefore, I will start out by saying that you should see “Who Killed the Electric Car?” as it is a great documentary. I never heard much about the GM EV-1 prior to this documentary and had always thought electric cars never made it back in the mid to late 90s because they took too long to charge and the technology wasn’t up to par. After watching “Who Killed the Electric Car?” I think I may have been very wrong.

Turns out that the battery technology was up to par and could take cars from 60 - 100 miles on one charge (nickel metal hydride batteries). Charges also took about four hours and could be done overnight when electricity is cheapest. In fact, in the film it is said that estimates state that 20 - 30 million cars could be charges in a given night without having to increase capacity at all. What I thought was even more interesting was that the car could be charged to 85% capacity within an hour which is pretty convenient.

No, you won’t be going cross country in an electric vehicle but for everyday driving 90% or more of the population would be set with an electric. However, with the advances in battery technology that have been made since the EV-1 was killed, the original EV-1 could now go more than 200 miles on one charge (lithium ion batteries) making electric vehicles even more compelling. Mix that with the fact gasoline is over $2.50 a gallon in most areas and the equivalent amount of electricity to one gallon of gas costs just $0.60 you can start to see why people are upset that the car manufacturers killed their electric vehicle programs.

What really upsets me about the killing of the electric car is that powerful organizations like the car companies and the oil companies combined with the government to kill an advance in technology. This country was built on innovation and if we start killing innovation we won’t remain the top nation in the world.

What’s worse is that the electric car was killed and we have since dumped a lot of money into the research and production of cars powered by hydrogen fuel cells. By most accounts hydrogen fuel cell technology won’t be ready for decades and is far less efficient than powering a car with batteries (the electric car’s power source). It looks like hydrogen fuel cells are a step back in technology from the battery powered cars.

There are a lot of conspiracy theories that make up the lore of the electric car and, as much as a love a good conspiracy theory (or two), I don’t want to get into any of them. (Seriously though, why did they have to shred the EV cars that they made when people were willing to buy them? That move was super shady at best.) I also don’t want to get into the environmental implications or the dependency that we have on foreign countries’ oil (which is a large national security risk) even though they are a big part of the story.

The bottom line and the point of this piece: A fantastic technological innovation that would have been very beneficial to the human race was killed and was then replaced by a lesser technology that won’t be ready for decades and even then may not be feasible.

That type of thing should not happen in America and all citizens should be outraged by it. There is good news though. Hybrids have picked up speed with the Toyota Prius leading the charge. Demand for hybrids has been high as well which seems to refute GM’s claims that there was no demand for the EV-1s (GM didn’t market them very well). Hybrid technology is also moving forward.

Plug-in hybrids are on the horizon which will significantly change the game. Fuel efficiency will be increased to around 150mpg since the first 60 miles of any given day will be completely powered by electricity. These cars will also offer the flexibility consumers want since the car will fail over to gasoline once the electricity is gone (i.e. if you forget to charge the car overnight or simply run out of charge you are covered).

There are also some really interesting companies that have jumped into the mix and aren’t large car manufacturers. Tesla Motors is one of these companies. They manufacture slick roadsters that are powered by electricity and are as sleek as any gasoline powered roadster you can buy. They are also just as fast and get about 250 miles to the charge). Look for more disruptive innovators like Tesla to come out and challenge the large car manufacturers.

For those of you that aren’t ready to give up the gas just yet I urge you to try TerraPass. TerraPass allows you to calculate your CO2 emissions over the course of year and offset them by sending some money to TerraPass which they will invest in clean energy projects. Most people can get away with a year of guilt free driving for only $50.

The future of alternative fuel sources for automobiles is still looking bright regardless of the murder of the electric car. We should all focus on fostering innovation and creating a better electric vehicle and forget about who did the killing. Ultimately the consuming public will decide what happens so if a good product can be produced at a fair price and we can educate the public about the benefits cars will be sold and in large numbers (most consumers won’t buy just because you tell them to hate GM or that there are evironmental impacts - they need to see the value).

For GM’s side of the story please check out “Who Ignored the Facts About the Electric Car?” by Dave Barthmuss of GM Communications over on the GM FastLane Blog. It seems like a lot of PR spin and Mr. Barthmuss admits to never seeing the film but it is worth a read and I do applaud GM for joining the conversation. Perhaps Mr. Barthmuss or someone from GM will comment on this piece and start a dialogue. Its wishful thinking but you never know!

Side Note: I have started a petition aimed towards Fuji Heavy Industries (the parent of Subaru Motors - my favorite car company). The petition asks Subaru to make a plug-in hybrid available. I would prefer an Impreza plug-in hybrid but would be psyched if they would make any model available as a plug-in hybrid. Please sign the petition if you feel so inclined.

Written by Eric Olson

December 26th, 2006 at 7:57 pm

FF Class Stock - Partial Founder Buyout is Alive

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Founders Fund LogoMy friend Noam Wasserman (check out his blog for more great founder research) sent me a note last night with a link to a piece about a new class of stock called FF stock that the guys at the Founder’s Fund have started to work into their term sheets. Noam sent the article my way because we have talked a lot about the idea of partial founder buyouts as a way to better align the interests of VCs and entrepreneurs and FF class stock is an attempt at making partial founder buyout a reality.

Soon after I saw Noam’s note I caught my friend Fraser Kelton’s piece on FF stock and knew I had to put some of my own thoughts together so here we go!

First off, it is great to see innovation in early stage investing starting to become more commonplace. It is no surprise to me that the Founders Fund is leading the charge on this. The Founders Fund, for those who don’t know, is a VC fund in which all the investment professionals were entrepreneurs and in some cases still are. The Founders Fund team is responsible for founding companies like LinkedIn, Facebook and Paypal.

The latest innovation the Founders Fund has implemented is the idea of FF class stock. The basic idea is this: FF stock is convertible to any future class of stock during a new issuance of stock. Let’s say there is a new issuance of stock in a company due to a funding round. At that point the founders can convert their FF stock, if they choose, and sell it to investors. I am sure there is more legalese involved (a lot more no doubt) but that’s the basic idea (check out VentureBeat for more).

FF stock allows entrepreneurs to partially cash out early on to make their lives a little more comfortable. I would argue that partial liquidity early on affords entrepreneurs the ability to focus more on the company and go for the big win which is exactly what VCs want to do. Interests are aligned. Case closed, right?

Well, as I have talked about in the past there are some investors who don’t like the idea of partial founder buyout/FF class stock. Their main argument, from what I have seen, is that entrepreneurs will be less hungry if they are able to partially cash out early. That may be true for some but I think most entrepreneurs are in the game to see their baby succeed and are able to keep their eye on the prize regardless of what else is going on.

What other issues could investors have? It seems that investors may not like that fact that entrepreneurs would be able to cash out before them. It also looks like investors don’t see upside for themselves in the PFB equation. These thoughts were expressed in comment on this post. The comment, shown below in full, was written by an angel investor.

The reasons why founders are jazzed about FF class stock are obvious, but so are the reasons why investors are opposed to them. As an angel investor, I think it is ridiculous to allow even a small liquidity event for founders before investors with cash in the deal receive anything.

Founders, by the way, take salaries and benefits along the way. If investors have to wait on an exit for some “comfort”, why should founders or management be relieved early? Ah…yes, greed.

I do think that there are clear benefits to investors especially in the new age of web start-ups where companies don’t need a lot, or any, outside capital to get things moving. The example I go to time and time again is Flickr.

VCs were looking to put money to work in Flickr previous to the Yahoo! acquisition and we all know that some money was left on the table by the founders. Can you blame them though? These were their options (simplified of course):

  1. Let a VC or VCs take a bunch of the company away from us, sit on our board and decide where our baby should go and, since they’ll push us to a huge exit, we may possibly never make it and walk away with $0 (while the VC still has a number of portfolio companies and is diversified).
  2. We can pocket $20+ million and get nice jobs at Yahoo! as well.

However, if a fund came in and allowed them to have some of their stock set aside and available to convert in a later round/issuance of stock for a small amount of liquidity they may have went for the big win and taken the VC money. In that case the founders would have probably made more and the VCs would have had a winning investment.

With more companies able to start up with no outside investment VCs will need to start innovating and providing incentives to entrepreneurs to get the best deals. However, entrepreneurs should be careful as there are implications for them as well.

Fraser points out the million-dollar-Saturn incident and I’ll quote the VentureBeat anecdote as Fraser did to illustrate the point.

The founder of Viaweb, a Paul Graham company, cashed out in order to buy his wife a Saturn car. It became known later as the “million-dollar-Saturn,” because of the worth that stock would have been had he kept it.

There are always pros and cons to any innovation and they come from both sides of the fence but, all in all, I love to see innovation happening in early stage investing. I can’t wait to see how FF stock plays out over time and whether or not it finds its’ way into more term sheets.

Written by Eric Olson

December 20th, 2006 at 1:59 pm

The VC Snowman

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I had to post about this as soon as I saw it on VentureBeat this morning. The guys at Blueprint Ventures have put together a holiday video starring Gary the Snowman. In the 2005 video Gary was an entrepreneur but now he’s decided to be a VC. You have to hand it to the guys at Blueprint for their sense of humor especially in the wake of their site being hacked. Nice job guys! The VC lifestyle piece with the dual blackberries (below) is priceless.

Written by Eric Olson

December 20th, 2006 at 10:06 am

Posted in VC

Nice Guys Finish First

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HandshakeBen Casnocha posted a few days ago about his Silicon Valley junto group and their discussion on whether or not nice guys finish first in business. The post is thought provoking and worth a read so I won’t summarize it here but two of the key points I took away were:

  1. The increasing transparency caused by the internet is causing/will cause nice guys to finish first more often.
  2. Jerks will win at times but that’s life.

Two great points. The post got me thinking about a book I am reading now called “Secrets of Closing the Sale.” The book was written by Zig Ziglar, one of, if not the guru on selling. In the very beginning of the book Zig imparts some wisdom that I want to share with all of you. He says:

If you help enough people get what they want in life, you’ll get what you want.

I definitely subscribe to that philosophy and I try to live it every day. When all is said and done it’s all about helping people. If we can all help each other we’ll all get what we want and need out of life and business.

Another great quote I heard the other day came from Om Malik. Om said his dad (I believe it was his dad) used to tell him to:

bank friends, not money.

Great advice. Friends will always be there to help you no matter what while money, like fame, can be fleeting. I think this may be especially true in the entrepreneurial world since starting a business is very hard. If you have made a lot of friends over the years they will be there to support you and lend a hand during the bad times and celebrate during the good.

The moral of the story? Be nice and help people in business and in life. If you do, odds are success will come to you in spades (oh, and success isn’t always measured in dollars).

Written by Eric Olson

December 18th, 2006 at 11:46 pm

Posted in Business

Olson’s 2006 Holiday Gift Guide

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I know this is a bit late but I thought it would be fun to put together a holiday gift guide. I will also keep in mind that if you are looking to get anything on this list that you’ll need to do it last minute. However, just remember that can always put a picture of an item in a card if you’re stuck and mail the gift later. It may even be better since the person you are giving the gift to will have something to open after the holidays (that bonus won’t sell everyone so be prepared for blowback). Here it goes!

The Ultimate Holiday Gift for 2006 - Nintendo Wii

WiiI am dying for one of these things. I haven’t been this excited about a game system since the original xbox and I wasn’t overly excited for that. If you can get your hands on one and aren’t tempted to keep it for yourself than you will be able to make someone in your life incredibly happy. Still aren’t convinced - check out Rick’s Wii - eally good time. Still not convinced… seriously? You move the controllers in space and it controls the game. How cool is that? (Answer: Unbelievably cool. Mindblowingly cool would also be accepted.) Oh, make sure to get Super Monkey Ball. It was one of the best gamecube games hands down.

The Best of the Rest

Nokia N91 (very close to the Wii for best gift)

N91I have had an N91 for about three months and I could never go back to a regular phone. The N91 contains a 4GB hard drive and comes with headphones so you can add all of your music to it and use it instead of an iPod. It also has a built in podcast client and feedreader. You can use GPRS to download the podcasts but I would recommend finding a wifi signal (yup - the N91 can pick up wifi).

The N91 also syncs all of your appointments from your computer to your phone and allows you to shoot 2mp pictures and video. This is one heck of a phone for all the media junkies on your list. The one downside I have found is that it doesn’t not have a qwerty keyboard so the blackberry devotees won’t be too happy.

Western Digital Passport Portable USB Hard Drive - 120GB

PassportJust got one of these myself since they are marked down from $150 to $99 and they’ll knock the price down to $79.99 if you use Google Checkout to pay. That’s only $0.67 a gig. Not bad especially considering that the passport is a sleek little drive you can throw in your bag. It also runs off of the power from your USB port and needs no other power supply. If you’re a mac guy, no worries, the passport is compatible with macs and pcs. Give the gift of data security and portability to someone you love.

The Ktrak

KtrakFor the overly aggressive/crazy cyclist in your life there is the Ktrak. It’s half track, half ski and 100% mountain madness. With this bike you could bike commute across the tundra in Alaska without any problems. On top of that the thing just looks slick. It’s the tank of bikes no doubt about it.

No Touch Alarm Card

No TouchFor the paranoid among us there is the No Touch Alarm Card. It will sound as soon as light hits it meaning if a pickpocket snags your wallet the alarm will sound. Seems pretty cool until you realize that it’ll go off every time you take out your wallet. But hey, that’s a small price to pay for piece of mind. My suggestion: if the person on your list likes gadgets than get this. If they like to keep their money and credit cards safe get a front pocket wallet.

Puzzle Alarm Clock

Puzzle ClockGot someone in your life who just can’t get up on time and is constantly late. This will do the trick. I know because I own one. I hate the thing but it’s very effective. The idea is this: the alarm goes off and puzzle pieces are simultaneously launched out of the clock. Until those pieces are put back into the clock the alarm can’t be turned off. Take it from me, part of the fun is actually finding the pieces after they have been launched across the room. At $12.99 you can’t go wrong. It’ll get you up every time.

Home Pro Racing Simulator

Just look at this thing - enough said. $4k

Racing Sim


H-Racer: Hydrogen Fueled Toy Car

H-RacerThis thing is awesome and at $80 bucks it is pretty affordable too. The car runs on hydrogen and even comes with its’ own solar-powered hydrogen refueling station. The vehicle is emission free and a working replica of the technology being developed for full size cars.

Arrested Development: Seasons 1 - 3 (Complete Show)

Arrested DevelopmentThis is the funniest TV show that has come out in a long time and it is a shame it was cancelled after only three seasons. My friend Rick got me into the show recently and I am hooked. Right now you can get seasons 1 - 3 (the complete show) on DVD for $54.99 (free shipping) at amazon.com. Let me tell you, it is worth every cent. Give someone the gift of laughs with Arrested Development. They won’t be disappointed.

TomTom

TomTomLast, but not least, is the Tom Tom. I definitely need to get one of these. I am sick of getting lost and trying to use Google maps mobile or actual hard copy maps to figure out where I am. If you know someone like me the TomTom is a good gift. Every time they need to find a new place or get lost they will remember you and think - wow, what a great person!

Well, that’s it for my first ever holiday gift guide. I hope you all enjoyed. Love to hear some other sweet gifts you have found this season in the comments. Happy Holidays everyone!

Written by Eric Olson

December 18th, 2006 at 11:19 pm

Posted in General Thoughts

Movie Review: The Shawshank Redemption

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The Shawshank RedemptionLaura and I were looking for a movie to watch the other day so I took a look at the old collection which includes classics like Beverly Hills Cop, Back to the Future, Raiders of the lost Ark and many others. What surfaced was The Shawshank Redemption. We hadn’t watched that movie in a while and it just seemed to fit our Saturday afternoon mood.

About 10 minutes into the movie Laura and I looked at each other in amazement as we had forgotten how great the movie was. From Andy’s (Tim Robbins) sentence and jailing, to the time where Andy first shows his financial expertise and solidifies his role in the prison all the way through to his final redemption the story engrosses you. Of course with Stephen King behind the story I would expect nothing less.

The Shawshank Redemption is truly a classic piece of film and it got robbed at the 1995 Oscars by Forrest Gump. Sure, Forrest Gump was a great movie too but it beat out Shawshank in every category and I think Shawshank deserved to win at least a couple of the seven Oscar’s they were nominated for. That said, if you are looking for a good movie head back ten years or so and check out The Shawshank Redemption. You won’t be disappointed.

In Theaters Now: I don’t want to give anything away so I won’t say much other than go see Apocalypto. It’s a great film, visually stunning and it makes a lot of parallels, whether intended or not, to our current society. Two thumbs up for sure.

Written by Eric Olson

December 18th, 2006 at 9:57 pm

Posted in Movie Reviews

The Big Move: Domain Change & Redesign

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EOI was planning on moving domains and launching the redesign after the holidays but I couldn’t wait. It turns out that moving a WordPress install from one domain to another is very easy and not as time consuming as I thought. In fact, the most time consuming part was setting up permanent redirects for all of the archives but even that took well under an hour.

Well, without further adieu I welcome you to Olson’s Observations at EricJohnOlson.com (yes, olson.com, ericolson.com and eolson.com were taken…). I made the move mainly because I wanted the site URL to be more meaningful and to grow with me as I move along in my career and life. The title of the blog just came to me but I am definitely open to suggestions if anyone has any.

Along with the move I thought it was time for a new look. I knew I wanted to choose a design with two right columns rather than one so I can better display my sidebar information. After searching for a while I found the Vertigo theme by Brian Gardner and decided that was going to be the new look. I planned on putting all of the usual info in my sidebar before launching the site but I decided to launch tonight and then fix up the sidebars and tweak the design a bit over the holiday break.

I hope you all enjoy the redesign and, as always, I would love to hear some feedback. Also, I would love if all the feed readers could check out the site when they get a chance (no need to worry, the feed address is the same so all of you don’t have to do anything to keep receiving my content).

Side Note: I am thinking about disbanding “Deal Flow” each week in favor of writing more about deals and new companies I find interesting. What do you all think of that?

Written by Eric Olson

December 17th, 2006 at 10:20 pm

Posted in General Thoughts