A major player in this approach is solar. Solar energy panel creators, investors, installers, etc. are endless, and it appears everyone is getting into the business. Solar looks and feels nice: it is, literally, clean, generates no polluting byproducts (except in the creation of solar panels themselves), and the Sun is available nearly everywhere on the planet. In a recent discussion, the questions as to whether or not the Sun could ever generate all or the majority of energy requirements for the human race. I decided to perform some basic research and make it available here.

In order to simplify the issue, we need to understand several issues.

First, there are actually two parts to energy: generation and location.

• Generation: This is how you turn latent (or potential) energy into actual energy that can be used. Examples include solar cells in Arizona converting the Sun’s rays into electricity; a hydro-electric dam in Beaumont, Quebec, converting the flow of water (mechanical energy) into electricity; the Indian Point nuclear reactor in New York converting the energy connecting the protons and neutrons of a uranium atom into electricity; and, the classic example, an internal combustion engine in a car converting the chemical energy connecting atoms and molecules in petroleum into mechanical energy to move the car.
• Location: Location is getting the generated energy to the point of usages. If we generate energy in Beaumont, but need it in Albany, it is useless unless we can transport it from Beaumont to Albany. Similarly, we may have a wonderful solar field in Arizona, but it is useless if it cannot be somehow stored and transported to an Acela express train currently speeding from Washington, DC, to Boston.

For the sake of simplicity, we will completely ignore location. In other words, we will assume that any energy we generate – in the case of solar, almost exclusively electricity – can be properly stored for extended periods, and properly transported. Somehow, the electricity from the Texas solar field will make its way to a battery in a car that will travel from London to Manchester.

Second, the amount of solar energy hitting the earth is not the same at every location, nor is it the same at all times of day or year. For the sake of simplicity, we will assume that every location on the earth will receive 12 full hours of Sun, and equatorial (i.e. maximum) Sun at that, every single day. We are ignoring clouds, rain, wind, haze, sunrise/sunset, elevation/azimuth, north/south, and all those other pesky factors that reduce the amount of solar energy hitting a single spot, and assuming we are simply blessed with the most we can get.

Third, we are going to assume that our solar cells are 100% efficient. In other words, our magical solar cells can capture every single joule of energy that the Sun provides to a given spot. Obviously, this is a very big fiction: nothing engineered is ever 100% efficient, and current commercial solar cells technology is around 10-12%, expensive commercial technology is ~22%, some research equipment has gotten into the 40%+ range. Obviously, produced, commercially viable, high-efficiency cells are a very long way off. Nonetheless, we will ignore all of these factors and assume we are 100% efficient.

Fourth, and last, we will ignore commercial viability. We do not care if our solar fields can operate at a profit or break even, or even at a massive loss. We only care whether or not it is scientifically feasible to capture enough solar energy to power civilization’s needs.

What Are Our Needs?

Surprisingly, this is a difficult question. To simplify it, I will focus solely on the United States. The US is a large, continent-wide country, with a population of ~300MM and a surface area of 9.8MM sq km. It is an advanced Western society, with high energy needs. Most countries in the world – politics notwithstanding – aim to emulate at least the United States’ economic position. According to Lawrence Livermore National Laboratory, US energy usage in 2008 was a total of 99.2 quadrillion (or quad) BTUs (British Thermal Units).

How Much Sun?

How much energy is actually hidden in those rays of light (actually photons) that hit the earth? The question depends on whether we are looking at the surface of the earth, or the edge of the atmosphere, a great distance up. According to NASA and most scientists nowadays, energy making it to the edge of the atmosphere, is 1.368 kW / sq m. For every square metre of atmospheric surface, 1.368 kilowatts of energy – of all forms of radiation – bombard it. About 30% of that is reflected by the atmosphere itself, so about 958 watts of energy per square metre make it into the atmosphere. However, another 20% is lost to clouds, atmospheric obstruction, etc., so about 51% (NASA) reaches the earth’s surface. Thus, with perfect 100% efficiency, no clouds in the way, no thinking about angles of the Sun and other effects, 697 W/sq M reach the earth’s surface. One Watt is 1 joule / second, so, over an entire year with 31.5MM seconds, with perfect conditions, 22MM joules of energy hit a square meter. We already saw that the US used 99.2 quads of energy in 2008. Each quad BTU is 1.06 quadrillion kilojoules, so the US used 105 quadrillion kilojoules. Since each square metre produces, under perfect conditions, 22MM joules, we would need 4,776 MM square metres, or 4,776 square kilometres, of surface to power the United States. According to the CIA Factbook, the US has a surface area of 9.8MM sq km. In other words, under perfect conditions, the US would need to cover less than 1% of its surface area to supply its energy needs.

This looks very promising… until we start to account for efficiencies, weather, Sun declination, and all the other factors. Realistically speaking, the US, even with 50% efficiency solar cells, is unlikely to capture more than 5% of the solar radiation hitting its surface. The Sun is not directly overhead all day, anywhere; much of the US is northern and thus subject to much sharper angles of the Sun in the winter; large river and lake concentrations, as well as mountainous and populated areas, make placing solar cells impractical. Economics, of course, always enter the picture. Given this fact, we must multiple by 20 the surface area that would need to be covered. With perfect energy efficiency cells, the US would need to cover ~1% of its surface area. Suddenly, it is not that simple. Now, we return to dealing with today’s cells. Given the maximum (and very expensive) efficiencies of 22%, with these cells, the US would need to cover 4.4% of its surface area. That is a lot of land, larger than all of California!

Summary

In sum, given today’s best technology (which will change), and the weather (whose uncertainty, if the specific characteristics, will not), the US would need to cover an area the size of California to supply its energy needs, even before considering challenges of storage, transportation and cost-effectiveness. As much as I would like to be bullish about solar, I believe solar will remain a niche service, at least for the foreseeable future.

Our perspective was to give ownership to the student upon graduation, creating a Personal Electronic Academic Record (PEAR). When the student graduates, s/he receives, by email, CD or thumb drive, an digital academic record (the PEAR), digitally signed by the institution. When applying to a new institution, the applicant would simply submit (on a Web site or by email) the PEAR s/he received as is. The admissions office could then check the original digital signature on this new venture’s Web site (or that of the original school), validate it, and be done. At first blush, this seems great, as it gives control to the student, not the institution.

On deeper research, though, we realized that it did not make sense. The graduate applies to schools a maximum 4-5 times in their life, and for most once or twice. It is a very rare process. Given the choice between needing to hold on to and keep track of this digitally signed PEAR for the next several decades, or dealing with the fairly low digital pain of asking for a transcript online when it happens, nearly everyone will go for the latter. Carrying this PEAR for years is just not worth it.

This is a classic example of knowing your market. It is easy to come up with good technology ideas, harder (but not that much) for smart people to come up with good market ideas. It is way too easy to get entranced by what technology can do, and buzzwords (such as ownership of data, democratizing information, etc.) that speak to them. In the end, though, the ability to succeed in a venture means the ability to sell, and the ability to sell depends on human behaviour, psychology and sociology. In this case, everything pointed in the right direction, except what real, live people want to do.

We abandoned the venture; let the existing players have it.

Of course, every new business model creates new business opportunities. For years, CIOs worried about “vendor lock-in.” If I use an Oracle database, how painful is it for me to move to MySQL or MS-SQL if business dictates I need to? If I use ADP to process payroll, how difficult and expensive will it be for me to migrate to Paychex? Every vendor decision a business makes, and especially one in the IT realm, comes with a certain amount of loss of control. The level of difficulty in and cost of switching vendors to perform the same service or process, is what is known as vendor lock-in.

With the advent of cloud computing, wherein entire chunks of my infrastructure may be running on Google App Engine, Amazon Web Services, SoftLayer or any of dozens of cloud players, CIOs are, justifiably, concerned about vendor lock-in. In order to address this problem, several companies have either expanded their offerings to include or been formed explicitly to offer “cloud virtualization,” and become, in my own words, “cloud abstractors” or “cloud virtualizers.” In short, these companies will become your interface to cloud providers. You contract with them, they will “abstract” out for you  from the cloud providers. You deal with them, they will handle your back-end, whatever your provider. Want to move from Amazon EC2 to SoftLayer? They will do it. Prefer Joyent over SliceHost? They will take care of it. Some even offer to migrate on the fly, in real-time. Essentially, these companies are offering to virtualize the virtual world, adding one more layer of indirection or abstraction. A significant player in this space is RightScale, the cloud management software and service company, who now have a “Cloud Portability” offering.

The question is, will they make it? Will cloud customers move en masse, or at least in large enough scale, to make these offerings viable? I believe that they will not, for two key reasons.

1. Downline Lock-In: Let us say I buy a Cloud Abstractor’s offering so that I am “liberated” from Amazon Web Services. Sure, I am no longer locked into AWS, but now I am tied into that Abstractor. Now, in theory, I could avoid it by dealing with two Abstractors, but then I am doing all the engineering and business work anyways, so I might as well go to the source and deal directly with AWS and one other. Additionally, if I am going to get locked into any one vendor, I certainly would prefer it be a solid, stable, committed company like Amazon than some other smaller player. This is somewhat reminiscent of how load balancers, like those F5 market for tens of thousands of dollars, were first deployed. First, you had one Web server, serving data. All was great, until it crashed, so you put in two of them. That is great, except one is doing all of the work, while the other sits idle, a pretty expensive waste of resource. Along came F5, sold you a load-balancer, and now you have protected yourself from one Web server crashing, and you had both serving data, a pretty good scenario… until the lone F5 load-balancer crashed. Easy to solve, they say, just buy two (very expensive) F5 boxes. So now you have two F5s and two Web servers. All you have really done is push the “vendor lock-in” (or, in the Web server case, point of risk) further down the line. It would be much better to solve it at the source, with your Web servers. None of this is to dump on F5, who have some pretty good products, but rather to point out that sometimes solving a problem with another solution just pushed it down the line. Same thing with Cloud Abstractors and vendor lock-in: if you solve it by pushing it down the line, you have just locked into a different vendor, when you might have been better off at the source.
2. Timing of Expense: In order to avoid vendor lock-in, if it is desired and possible, requires ongoing expense. By contrast, if you want to move and already have vendor lock-in, it requires a much higher one-time conversion expense. Most situations of vendor switch, especially of locked-in products, are likely to occur infrequently, at most once every several years, and in many cases never, since by the time the switch occurs, new technology – infrastructure and applications – are likely to replace the old that was locked into the vendor. Given the infrequent costs and the even greater likelihood of technology refresh by then in any case, very few businesses are likely to invest in an expensive service or product that reduces vendor lock-in in the cloud computing space.
3. Compensation: CIOs are compensated for what they deliver, not what they do not. Vendor lock-in, in a cloud computing situation (or almost any long-term investment), is not a problem for today, but rather one for several years down the line, at best. The CIO will get paid for delivering performance at a good price to his business, enabling the business to grow profitably. Cloud computing gets him/her there; worrying about lock-in just increases today’s costs without bringing any short- or medium-term benefit to the business. Higher expense today to avoid a possible challenge in the future is a recipe for negative IT budgets, and thus works directly against the firm’s – and the CIO’s – direct financial interest.

In summary, I believe most CIOs will complain about vendor lock-in, wish it weren’t so… and then move ahead anyways, for very good reasons.

The meat and potatoes of the mobile carrier industry – charging for calls and, secondarily, for text messages – is about to start a precipitous decline. Last year US growth in mobile minutes talked was 3% to 2.2 trillion minutes, the slowest growth ever. It is widely expected that 2010 will be the first year of decline. This, combined with competition and political pressure to keep per-minute and plan prices low and reasonable (with “reasonable” defined in odd and political ways), is the main reason that so many carriers are pushing subsidized expensive phones, including smartphones, with multi-year commitments. The money they make on data, and especially the margins, can often exceed what they make on basic voice. But this is just delaying the inevitable. MetroPCS and similar companies, including new players like the one for which I advocate in my earlier article, will eventually commoditize mobile service, with each company selling access to digital pipes, and competing on bandwidth, latency, availability (bits per cubic meter, as Linquist discusses in the Forbes article), and of course, customer service… an area where mobile carriers are not generally highly regarded (understatement here).

For the executives at AT&T Wireless, Verizon, Vodafone, Orange and the rest, this is pretty bleak; for those of us who use the service – i.e. everyone – and the entrepreneurs and executives smart enough to drive the trend rather than be driven by it, like Roger Linquist, this is a very rosy future indeed.

The one exception to this has been in cleaning products, where Dyson and iRobot have really created innovative products. Dyson’s vacuum cleaners are vastly more efficient than a typical Hoover, and do not lose power as time goes on. Further, Dyson created it using basic mechanics, physics that has been around for a very long time, not some new innovation in optics, chip design or software. iRobot, on the other hand, uses modern technologies to remove the bulk of cleaning effort from the hands of individuals in the first place. Dyson makes cleaning more effective; iRobot makes cleaning less labor-intensive.

There is one area that (despite Whirlpool’s protestations to the contrary) has had nearly zero innovation in a very long time, but should be subject to a very simple form: clothes washers and dryers. Sure, there are models that are more energy-efficient, more water-efficient, use electronic cycles, but in the end, clothes washing (agitated or tumble) and drying (tumble or “baking” in the European style), is essentially done the same way it has been for decades. The veritable trusted name-brand in washers and dryers, Maytag, was acquired by Whirlpool for $2.7BN back in 2005.

I believe that clothes dryers are a simple area to innovate, and are a classic case study in learning from your market. The average clothes wash cycle time for a top-loader or high-speed front-loader washer, American-sized 10kg machine, is 25 minutes. The average dry time for a similar full dryer is 60 minutes. If you watch anyone doing washes, you will see that they load the wash, when it is finished they load the dryer and another load in the wash. The wash finishes after 25 minutes, and the clothing sits there for another 35 minutes, waiting for the dryer to finish. Yesterday, for the first time, I saw someone who put two dryers in his house to avoid exactly this problem. Those of us in the operations business look at the model and instantly recognize that the dryer is the bottleneck in the process. While my colleague of yesterday had a workable, if expensive, solution, and I am sure Whirlpool appreciates his throwing an extra $1,000 their way, this is hardly the right way to go about doing it. Interestingly, the latest front-load high-efficiency washers on a normal cycle take closer to 45 minutes. While this may be necessary to save water, I am not wholly convinced it is not at least partially a ploy to distract those doing loads of the lack of innovation (and slow time) of dryers.

I believe that there is room for innovation if someone could invent and patent a dryer that efficiently and effectively dried a full load of clothes in the same 25 minute cycle, or at least close, they would quickly take a commanding position in the market or, alternatively, be able to quickly sell to a large existing player.

I believe that current trends will create new forms of wireless carriers that are likely to spell the death of the old ones, unless they find the ability to innovate and cannibalize their own market. Of course, their track record is not exactly enticing.

• Short-term: In the short-term, there is room for a carrier that will provide global free roaming, unlimited data, no contracts (= no subsidized phones), and excellent customer service. A company like this will have to draw its executives from the Internet sector, one where change is a given and customer service is a right, not a privilege granted by the company. This carrier will operate as Virtual Mobile Network Operator (VMNO), lease bandwidth in multiple countries (initially US and UK), will sell plans at a price that is below current standard plans but without the phone subsidy, and thus no commitment. Customers will be able to purchase a direct in-dial phone number in any country where the carrier operates (or even those where it does not), all of which will ring the mobile phone wherever the customer is. When the customer dials out, it will show the local number as caller ID. All calls will be local. If the customer dials a UK number, it deducts minutes from his/her 1,200 minute plan, but not long-distance charges; if the customer lives in the US but is in the UK, each minute is deducted from his/her 1,200 minute plan, but no roaming charges. With current VoIP technology and the ability to buy tower capacity as a VMNO in multiple countries, this carrier is viable right now. It will need to market directly to mobile (pun intended) traveling customers, such as executives, pilots, and consultants, and will need to price out correctly. Nonetheless, with sufficient capital, this is achievable at this very moment. The primary challenges are: sufficient capital to form the company; successfully leasing tower capacity from companies whose business model you are trying to disrupt; and a large enough initial market to sustain the company through growth.
• Long-term: In the long-term, 4G is coming. Whether LTE or WiMax, within a few years all mobile services in modern developed countries will be 4G. In the 4G world, voice and data are not 2 distinct mobile services; voice will only be VoIP, running over 4G data. In that world, your voice carrier could be your mobile carrier, or it might be Vonage, Skype, or some other, new mobile VoIP company. If you get off the plan at Heathrow, London, your voice is not roaming; it is just connected to the Internet and giving you voice. In many ways, this simplifies matters. Given the mindset of wireless carriers, it is to be expected that they will block all VoIP except those that they sell, at contracts, lock-in and premium. Again, we can expect data roaming charges to more than offset any lost voice roaming. However, for our mobile carrier disruptor, this world is even easier. Our upstart disruptor can focus solely on leasing data bandwidth, and leave it open to the Internet. Because it is data, much of the cost of roaming disappears. No longer does a call need to route through the local carrier, back to the home country, and then back again. As soon as you are online locally, you are online globally.

If someone could raise sufficient capital (several million dollars just as seed), hire the right executives, customer service people (love to see the ones from Tony Hsieh’s Zappos), engineers and dealmakers, this could start right now.

First, from the marketing perspective, I believe this device’s name is awful. Jokes abound on the Internet within a day of the release – and having spent almost a decade on Wall Street, I suspect it took less time than the fastest trade-processing system for the jokes to hit the trading floors – about whether it is an Internet device or a 21st century sanitary napkin. Apple has been very successful with its iMac, hugely successful with its iPod, and beyond all expectations with its iPhone. However, there is a concept of brand overuse, and there are appropriate extensions and inappropriate ones. Anyone with half life experience should have seen the associations coming; this is especially true for a master of marketing like Steve Jobs. It was always hip to walk around with an iPod – “oh, cool iPod” – and an iPhone, but most people tend to keep discussions of their bodily functions outside of the hip and cool space. “Is that an iPad?” “(blush) Oh, no, just a tablet computer” is not a good sequence for generating demand. Microsoft ran afoul of this in a minor sense with its Zune. Zune sounds very close to the Israeli Hebrew slang word for intercourse. The irony is that an enormous percentage of Microsoft’s R&D is performed in the major Microsoft R&D Center in Herzliya Pituach, Israel. This should have raised a red flag. Nonetheless, Microsoft either didn’t notice, or decided that a 7MM person market is not worth the trouble of changing the name. In any case, Zune has hardly been a smashing success, for reasons that make its crude-sounding name a minor element.

In the issues of larger long-term strategy, I believe Apple may be suffering from a mixture of envy, technical limitations and confusion.

1. Envy: Apple owns and dominates the digital music market. By selling an MP3 player that was easy to use, hip and cool, Apple placed itself precisely where it needed to be to become the prime retailer of music, upending the decades-old music distribution system. For all that Amazon and Wal-Mart have done in this space, as well as other minor players, Apple deserves full credit for finding the way to disrupt the music market using the Internet; kudos to Steve & Co. However, in the book market, an existing retailer, Amazon.com, managed to successfully sell an eReader with an attached store, essentially grabbing a page straight out of Apple’s playbook. Further, with Amazon’s existing relationships with publishers, they became the perfect channel for it. Amazon is no technical upstart in the book distribution business; they are a dominant player in the business, and they moved into digital distribution by using Apple’s model. I believe Steve Jobs saw Jeff Bezos do this and went green with envy.
2. Technical Limitations: The Kindle is limited in many ways: it cannot do video, general documents, really surf the Web, work in many other countries, etc. However, at buying and reading books, the Kindle is superb. In the old Unix systems administration world, the software design philosophy was to do one thing, and do it extremely well. In that respect, the Kindle follows this philosophy. Buying books is easy; battery life with wireless on is now up to a week; the pages are crisp and clear, thanks to eInk technology. The iPad, on the other hand, uses colour and audio, with multiple wireless connections, which makes for a great multimedia environment, but tires the eyes and has a limited battery life of 10 hours. Granted, this is much better than most laptops or even the iPhone, but it is pathetic for long-term use. Most people are willing to curl up with a good book or two on the beach for days, but to have to go charge it? Definitely not.
3. Confusion: Apple seems to recognize its limitations, and thus seems to position the device midway between a reading revolution and a laptop revolution. In politics, this is called triangulation; in marketing, we call it confusion. If you go to Apple’s iPad page, the title is “the best way to experience the web, email and photos.”

With all of that, there is no question that the iPad (I cannot even write the name without wondering if StayFree is going to sue them or partner with them) is a very cool device. However, Apple has gotten quite confused and possibly envious. After a great run of iMac, MacBook, iPod and iPhone, I am concerned they are about to flop.

Two areas that have, frustratingly, followed evolutionary, and at times very slow evolutionary, paths are transportation and portable-power.

• Transportation: Transportation has undergone enormous changes since a hundred years ago. In World War II, barely 70 years ago, a major method of moving materiel and men was still horse-drawn, at least in the early years of the war. The first jet engines were invented in 1910-1930s, essentially immediately prior to World War I through immediately prior to World War II. Nonetheless, since the arrival of the commercial jet aircraft  with the De Havilland Comet immediately after World War II and the popular Boeing 707 in the 1950s, essentially jet travel has remained the same. People gather together at major airfields (now called airports), hand their luggage, check in, sit on a plane that may or may not have the range to make it to their destination without refueling, and fly at somewhat under 600mph. The only real attempts to improve on that model – the Concorde series which could reach speeds 30-50% faster than general commercial jet aircraft – went down in flames after one of its models, unfortunately, went down in flames, and after years of unprofitable services to its operators. Other efforts in recent years have included many predictions about private jet taxis or air taxis, which are really structured around resolving mid-range travel issues. Commercial transportation, on the other hand, still gets on boats that ply the same routes as the British Navy in the 1700s and still goes at less than 30 knots (nautical miles per hour). A person still ships from New York to London in 7 hours, while his large-scale cargo goes in a week or two. While information has democratized, decentralized and diffused, transportation remains as slow as ever. I do not know where the next revolutions will come from in transportation, but it is ripe for a revolution. We might be concerned for all of the poor TSA employees who will no longer have the pleasure of smelling our shoes and seeing us naked through full-body scanners, but it is a price we are willing to pay. On the other hand, the increased (and increasingly inane) so-called security measures foisted on the public will only drive innovation in transportation. In that respect, there may be an upside. It is also worth noting that, in most years, airlines have lost money, and lots of it. The number of airline bankruptcy over the years is quite large. A new model may not only improve everyone’s lives; it would also need to be much more economically viable.
• Portable-power: Also known as batteries, this is how we carry around power with us for usage in small and large objects, whether electric cars, iPhones, laptops, or everything in between. While power usage has improved over the last several years (and decades), this is largely due to improving efficiency in the devices themselves combined with minor evolutionary improvements in batteries. Batteries are improving on the order of single-digit to, sometimes, double-digit percentage improvements, over one to several years, in their ability to store power, while demand, driven by the systems that use them, are doubling in accordance with Moore’s Law. A number of researchers and firms are struggling with creating revolutionary battery (really portable-power) systems. Some are focused on hydrogen fuel cells, or micro-fuel cells; others are focused on biologic cells, for example, ones that use sugar or other biological fuel sources; an interesting research project is the air force’s work in betavoltaic cells, which use the decay of certain isotopes to generate power.

I believe both of these sectors are far underfunded and overdue for major revolutions that will affect almost every other sector there is.

For those aware of the underlying languages, the choice of language and their development is often the subject of fierce debates among technologists. Whether to develop a project in Java or .Net, client-side in Flash or JavaScript/Ajax, can lead to wars that are called religious. The latest trend in Web development is an interesting language called Ruby, developed by a Japanese programmer who was displeased with his choices, and the development tools and framework around it called Rails, developed by a small company called 37Signals, the company behind Basecamp, Backpack and other highly popular Web 2.0 applications. Nonetheless, advances in languages have had a significant impact on the ability and ease with which developers build and maintain applications. Of course, anything that is easier to build and maintain, means less effort, which equals lower cost and less time to get to results. These matter greatly to businesses, who focus on return on investment. The right technology can lead to lower costs, faster delivery, and a much better profile for investment and success.

However, from the side of the language itself, it is interesting to note that very few organizations have actually made money on the languages themselves. There really are only three types:

• Language Service Organizations: These are organizations that build up expertise and then sell that expertise. These are primarily consulting firms and training houses. Every time a new language comes along that has demand, those organizations smart enough to see which one will have broad adoption gain early expertise and a name, and leverage it to sell training and consulting.
• Proprietary Owners: The specific example here is Microsoft, which owns .Net (and various “Visual” languages before it). I cannot think of another firm that has owned a language and made money on it in a similar manner. Even Sun, which largely owns Java, has never made serious money directly off of it. Certainly, it has leveraged its ownership to develop commercial products around it, but little to no direct financial benefit.
• Tools Providers: These are organizations that sell tools to help in development, whether Integrated Development Environments (IDEs), testing tools, debuggers, and similar tools that assist developers.

Proprietary Owners has existed in rare circumstances. Most of the languages in use today have no one getting direct ownership benefit: C/C++, Java, Perl, PHP, Ruby, etc. There is some money in debuggers and IDEs, probably a reasonable amount of money in training and consulting, but nothing in direct language leverage. Further, many of the critical infrastructure elements, like application servers and frameworks – think Rails for Ruby, JBoss or Tomcat for Java, Cake or Kohana for PHP – are open-source. In other words, real money, the kinds of high-growth firms that investors like, are hard to find directly around a language. There have been what would largely be called “arbitrage plays,” where commercial software takes a lead before open-source fills in – WebSphere and WebLogic for Java before JBoss – but they are few and far between.

Given this background, the growth of a new language is important and interesting, critical to understanding where to invest your labour, but it is hard to see how to make scaling money off of them.

Why bring this up now? Arguably, the single most well-known language in the world is not Java, .Net, C/C++, Perl, PHP or even Ruby. Since there are far more Web developers than programmers – Web pages are easier and require less structured engineering thinking, in most cases, than server programs, and developers may sometimes develop complex Web pages – the language of choice on Web pages likely has the single highest knowledge and adoption rate: JavaScript. Until recently, JavaScript was relegated primarily to client-side Web pages, running in your local browser – Internet Explorer, Firefox, Opera, Safari, Chrome, etc. Lately, a concerted effort has been made to put in place the missing elements that would allow JavaScript to run properly on a server. These projects – almost entirely open-source – include CommonJS, NodeJS, SpiderMonkey, Rhino, Jaxer, Helma, mod_js, the list goes on and on, and are spreading at a tremendous rate. Further, serious JavaScript conferences have begun to take place, both focused on a particular set of tools and, notably, general JavaScript, like the JSConf that occurred in 2009 in both the US and Europe.

This leads to an interesting question. A lot of effort is being put into JavaScript as a server-side language, essentially a competitor to Java/.Net/Perl/PHP/Ruby/etc. Clearly much of this effort is in open-source. I am not interested in whether or not JavaScript should succeed, from a technical perspective; lots of technology products that should fail from a technical perspective succeed in the market, and vice-versa (VHS vs. Betamax, anyone?). From a market perspective, having the same language on client and server has enormous financial benefits for Web application developers. I am not advocating for or against this or any other language. I am, however, interested in:

1. Will JavaScript be the next hot language?
2. If it does, other than becoming an expert firm and offering training and consulting, where is there real money to be made?

The answers could be interesting.

Bo’s proposition is interesting. I have always found social media very interesting, but primarily from an operational perspective. Quite simply, they need to burn oodles of cash getting very big – and thus taking advantage of the “network effect” as it is know to economists – running massive bandwidth and server operations, along with significant (and expensive) expertise. The challenges inherent in growing a business to that scale at that speed are fascinating. Nonetheless, I have always largely avoided getting involved with them from an equity perspective. I love using social media: Facebook, LinkedIn, Twitter, they all provide invaluable services… but not necessarily valuable services. I am skeptical that anyone would use them if they had to pay, which is why they rely on advertising, which does not pay off in the majority of instances. The exceptions are those sites that provide niche services – nice in terms of either target audience or purpose – like LinkedIn. Thus, these sites are a social good, but an investment waste. The challenge, of course, is whether or not anyone would have gone to the trouble of founding these sites and inventing the ideas – and sometimes the technology – without the hope of serious payoff (a.k.a. exit).

In some ways, this is similar to work I have been doing on ice skating rinks. I spend a lot of time in Israel. Israel, a tiny (about 20,000 sq km), semi-arid country, with hot summers and mild winters, has a population of 7MM, and exactly one regulation-sized ice skating rink. Over the last decade, an enthusiastic hockey and figure skating movement has grown in Israel, comprised of US & Canadian expats, Russian emigres, and some natives. Indeed, Israel is about to hold its third international ice hockey tournament, with six teams, half of whom are traveling from overseas. The tournament is being covered by European and North American news networks, including the Canadian Broadcasting Corporation (CBC), and will include two NHL Hall of Famers, Darryl Sittler and Paul Henderson. The problem is that 70% of Israel’s population lives in the center of the country, but the one regulation-sized rink is at the country’s near-northernmost point, the town of Metulla, on the border with Lebanon.

It is clear that ice sports will not take off substantially in Israel until facilities are built within a reasonable driving distance of the 70% of the population, somewhere around Tel Aviv or between Tel Aviv and Jerusalem. As such, over the last 5 months, I have explored the economics of building and managing a facility. The net result is that building an ice rink is good for society, but bad for business. Because of economies of scale, no commercial rink is built with fewer than two sheets of ice, i.e. two facilities in one building. The cost of such construction, fully loaded, is $8-10MM USD. In the best of years, such a facility will generate around $2MM in revenue and incur around $1.3MM in operating expenses. Essentially, $10MM in investment leads to pre-tax free cash flow of $700,000, or a 7% return on investment… in the best of years. Most sane investors can find somewhere else to put their money, and do. This is why most facilities in the US, Canada and Europe are built as single sheets by a municipality, which is in the business of providing social goods that don’t make sense for businesses to provide. They view the investment as a community investment, not a financial one, and as long as the facility does not lose money each year, or at least not too much, they are satisfied (and the mayor gets re-elected).

From this perspective, social networking may be very similar to ice rinks: they provide an important social good, but are financially a waste.

As for the Israeli ice rink? I am still looking for a group of investors who love Israel, love ice sports, and are willing to donate to both at the same time.