262ventures.com

There has been obvious concern with recent financial bubbles: the internet, private equity, housing, food, energy, the list goes on and on.  Indeed bubbles represent the communal manifestation of human thought processes.  As humans, we take a few data points and extrapolate them into the future, and create predictions predicated on these assumptions taken to their often illogical end.  This cognitive process probably arises from the need to avoid a sabre-toothed cat or to prepare shelter for the coming winter months.

But nature works on much more diffusive or mean-reverting processes.  After all vacuums get filled, temperatures equilibrate, and there are substantive effects that drive processes that are often occluded from our immediate view.  For example that sabre-toothed cat might arrive at the top of that hill everyday at sunset, because it’s being chased by a group of hunters from the village downstream, not because it’s hungry for you or me.

We are working on some cool technologies and products to help our world wean itself off of petroleum based energy (a carbonified form of solar energy).  This is a great space to be in: there is significant investor, customer, and political interest, it carries the banner of the environment, and seeks to provide new opportunities to billions of people around the world  But we need to remind ourselves that energy from our sun isn’t the only big deal in town.  We should not build energy into yet another bubble at the expense of other opportunities.   We need to think of our other precious natural resources: our water, land, our wind.  The ancient view of our world as earth, wind, water, and fire should serve to remind us that all these ‘forces’ work in concert, and we should nurture them even handedly.

The August 2008 issue of National Geographic reminds us that our soil needs care and constant attention.  We’ve become so far removed from the basic source of our food that the bulk of the population neglects the need to reinvest in our earth.  We are driven by our idealism, but we are assured by result.  Don’t get us wrong, there is serious opportunity here to make our world better for future generations, and to create powerful businesses serving this undertapped need.

I’m curious to see how much volume the gas bank mygallons receives and how much success they enjoy a few years down the road.

I distinctly recall standing in the lobby of building 66 in 2004 or 2005 with RDB discussing the, then unheard of, gas price of $2.75/gallon.  He had just read an article about a gas bank in the midwest which offered “gas forwards” to consumers and hedged their position on the CME.  The concept was really simple: you sell small forward contracts on oil to consumers, who do not have the capital or access to participate in oil forward contract markets, aggregate those positions and hedge them on the CME, and extract a small fee in the form of annual account fees and small premiums on gas prices.  The bank could hold its exposure to practically zero,  or could even speculate on the price of gas, while earning pure profit from the premium that the consumers pay.

I haven’t heard anything about that gas bank concept since, until today.  Gasoline has hit a price point which is causing a change in consumer behavior.  It would seem that the gas bank concept would have significant traction in today’s economy as consumers fear the upward ticking prices at the pump.  From books such as Predictably Irrational, we expect that the human brain tends to misprice the effect of recent trend.  Mygallons cleverly provides useful links to articles with titles like “$200 oil” or “$11 gas”, promoting that fear.  I would guess that there would be a lot more customers at mygallon’s website today than at the anonymous gas bank, RDB and I discussed, three years ago.

Final thought on this concept: There is no perfect gasoline hedge, only a correlated hedge through contracts on oil.  The airline industry had similar problems in hedging their costs of jet fuel.  Will this affect mygallons?

So Clint Eastwood gets canned from the California State Parks Board, presumably for his opposition to the creation of a new toll road that would run through San Onofre State Park.  The governator argues that the toll road would do much to relieve the congestion in the OC.  He’s probably right.  But here in Southern California where it takes an hour to get twenty miles sometimes (according to Bill Simmons), additional bandwidth may not be the answer.  Indeed some predictions have indicated the population of Los Angeles may double over the next few decades.  I doubt that a six-lane tollway will do much to accomodate the approximately new 3.5 million people from LA on their way down to Huntington Beach.

Los Angeles and the surrounding counties may prove to be an experimental playground for urban planners and landscape architects over the next fifty years.  The proposals ring of bold and forward thinking regarding how spaces should interact and connect.  Combine these developments, which may shorten average car rides, with novel technologies for transport management, such as an integrated system of sensors and controls governing traffic and we may get the congestion relief we need.

I’m all in favor of improved infrastructure and greater efficiencies.  But focusing on what most definitely is a short term solution is myopic.  Keeping San Onofre a little more pristine will be just a side benefit to a well thought out long term plan.

Who doesn’t like clever thinking?  There are a bunch of ideas which, upon retrospective analysis, you kick yourself for not having thought of first.  Recently an osmosis based power generator has been commissioned in Norway by the utility company Statkraft.  Osmosis based power generation is essentially to flip the process of desalination via reverse osmosis (RO) membrane filtration.

In RO membrane desalination, salt water is pushed through a membrane which prevents the passage of salt.  On one side of the membrane you have clarified water and the other brinier water.  The system does not prefer this non-equilibrium state and accordingly the clear water and salt water want to mix back together (this is what is known as a difference in chemical potential on the two sides of the membrane and gives rise to what engineers call osmostic pressure).  Because water can flow back through the membrane to remix with the salt solution, energy in the form of pressure must be input to the system to prevent water from flowing back.

In osmotic energy generation, clean water is brought in through the membrane to the salty side.  Water easily flows through the membrane to mix with the salty side and generate work.  Simple right?  Clean, no emissions, and abundant salt water and …

Oh wait… clean, clarified, fresh water is already a challenge to obtain for billions on this earth.  You can’t get it everywhere.  And if sea level rise, low lying fresh water will become brackish.

The point is that you can’t get something for nothing.  This is the lesson that we took from grad schoool in Jeff Tester’s Introduction to Thermodynamics 10.40 class at MIT.  In real-world application, there is no such thing as a reversible process.  In RO desalination, we fight entropy using work.  In osmotic power generation we leverage entropy to create work.  It sounds like a perfect strategy if you can create one site to do both the forward and reverse operations (generate energy or clean water when one or the other is required) But between those two steps, we’ll always lose to real-world losses.

I’m really excited for two potential collaborations that are brewing up now.  One involves potentially working with a professor at MIT (my little sister) and a professor at Stanford (buddy from Stanford).  This is the sort of thing I dreamed about when I was in college - working with friends and family.  As we all started working/going to graduate school/doing research and saw our fields start to intertwine, the possibility began to solidify.  So we’re giving it a shot and we’ll see if this project can come together.  The project should involve energy distribution.  More on that later.

The other collaboration is coming together with a couple buddies from graduate school.  We’re putting some tools together to address some health related problems and I think this could have a strong potential impact in improving the distribution of information and health care.

Scientific debate should be exactly that - a debate. Correspondingly there should be sufficient room in the discussion for both proponents and opponents of the global warming thesis. Indeed many of the major points offered by the counterpoint seem valid - for example why risk economic prosperity for reasons unproven in real scenarios?

Underlying the scientific process is belief. You have a hypothesis that you believe in and then, as a scientist, you attempt to observe the event in a controlled manner, in the absence of interfering effects. Theoretically, if you can isolate the dominant factors for an observation in a logical manner, your belief is validated and accepted by the scientific community.

The difficulty in analyzing the phenomenon of global warming in the context of human  generated carbon dioxide is that the Earth’s climate is indeed complex. The data is often fuzzy because the timescale for effects to manifest typically outlast generations. Thus changes in temperature from year to year may lie within the noise. Climate change skeptics have hopped on this, in addition to the notion that predictive climate model prediction have not adequately reproduced reality, to assert that climate change is merely a blip in the road. This is what they believe and what could be true. I disagree, but it may be true.

However we must be careful of what the noise tells us. As scientists, we should aggregate what we know from controlled experiments, extend them to their logical conclusion, and assign probabilities for those events to occur. In the case of global warming the probability is reasonable that there maybe cataclysmic consequences for the environment - not just global warming but changes in oceanic conditions.  We should prepare for those consequences. Just because earthquakes occur _unpredictably_ does not mean that we don’t store extra water and food here in southern California. And sure the current physics in our models have not told us everything about climate change. But can’t the same can be said for our econometric models which now all corporations, governments, and populations treat as beacons of light during recessions?

After all scientists, as all humans, make mistakes of belief all the time. Galileo was the right voice dissenting against the beliefs of the geocentrists. But so was Einstein when he argued against the quantum mechanical model.  Beliefs have been proven and disproven through experiment and logic.  But while we could dawdle and enjoy the ivory towers in those situations, it seems we must move to counteract global warming.  While the notion that the world was the center of the universe was important for belief, its impact on the world was slight.. not so with global warming.

[disclaimer: I (Ben) believe that human generated carbon dioxide poses a huge risk for our world and environment: it has been in demonstrated in the lab to be a heat trapping gas and a factor in the acidification of the oceans (anyone getting milliQ DI water will attest to that, noting a pH of 4.7 after a few minutes in air).