In my last post, I discussed why venture capitalist Steve Westly says he’s so bullish on the smart grid space.
Another speaker at the same conference was not so bullish, though he stopped far short of skepticism. For Vinod Kholsa, caution is definitely a watch word with regard to what he described as the “hype of the smart grid”.
Kholsa, a former CEO of Sun Microsystems Inc., went on to begin his venture career at Kleiner Perkins Caufield & Byers before launching Kholsa Ventures five years ago. “I’m not skeptical about investing in the grid; I think there are some good opportunities,” he told the crowd in San Mateo in mid-November. “Let’s not get caught up in the hype of the smart grid. Hey, how much money is it going to save the consumer? Now that’s something I can buy. Opportunities have to be based on economic opportunity, not hype,” he said. “Real value is new value for the consumer, or something that makes economic sense.”
And Kholsa says there are some good opportunities in the smart grid space. One example: “If there’s a storage facility available, it’s far better for the grid than demand response.”
Companies that have “real products with real economic benefits” will be successful, Kholsa said – but they have to be first off the starting blocks. “Just because one smart grid company is successful doesn’t mean there’s going to be a wave…the second, third, fourth startup doesn’t make sense. Nobody who tried to copy Google found Facebook or Twitter.”
The successful company, he added, is “not somebody who’s going to clone somebody who’s got a successful opportunity – go and find a new one!”
And while Kholsa agreed with Westly that there is a place both for startups and for the big companies in the smart grid space, he says not all of those startups are going to make it: “There will be 100 startups, and five years later, nobody will care about the 95 that didn’t make it.”
On the other hand, the current push towards a more open-standards network provides better opportunity for innovation than closed networks, he said.
And as for giant Google? Khosla predicts: “I wouldn’t let Google scare you guys, but they are going to be a player.”