An eco-designer eyes clean tech

William McDonough brings his eco-intelligent perspective to clean technology investing. Can he make the world listen?

William McDonough is an eco-innovator.

The renowned architect and designer has made the notion of sustainability central to everything he builds. He's behind the Ford Rouge Factory, which uses a "living roof" made of plants to clean storm water and cut down on energy costs. He designed a Swiss carpet factory that avoids hazardous chemical dyes and emits water clean enough to drink. He's also active in China where he has been designing entire Chinese cities for millions of inhabitants.

Now, McDonough has also become a venture capitalist, one of a growing cadre of investors and entrepreneurs developing so-called clean technologies to make more efficient use of natural resources.

McDonough's big idea, summed up in his book Cradle to Cradle, is that products can be designed to benefit the environment, as well as people and businesses. So instead of creating a sneaker that uses toxic plastics like PVC and ends up as landfill material, McDonough and colleagues worked with Nike on "sustainable design" practices that reduce waste and energy use.

Better yet, according to McDonough, a product--a shoe, car, building or carpet--should be made of materials that become "nutrients" to other products at the end of its life.

CNET's Martin LaMonica moderated a discussion with McDonough about clean technologies at the Cleantech Venture Forum in Washington D.C. in October where McDonough spoke to investors. What follows are edited excerpts from the panel.

Q: How do you incorporate your ideas (on ecologically intelligent design) into your role as a venture capitalist?

McDonough: There are three fundamental aspects to this that really excite me in becoming a VC. I see it as the fastest form of R&D, because we can make lots of bets. A lot of the big corporations I work with can't make lots of bets. They make one or two huge bets and if they're wrong, it's a really big bad bet.

Another is I believe that commerce is the engine of change. I really think it is not regulations that will change the way the world moves to cradle to cradle. It will be commercial high-speed activity.

I built the first solar-heated house in Ireland in 1977, which is a signal of my optimism because there's no sun in Ireland. But it worked great and it still does.

And the third thing is scale. One of the things I learned working with my (venture) partners is that we're looking for velocity but we're also looking for scale.

I can make introductions within companies, but the use of it is relatively small. So I created a "green roof" business with Ford. It creates a new kind of business, but it's going to take a while to incubate the green-roof business. I conceived of it for Herman Miller company in 1992. Slow.

What are technologies that you see as promising? Do you focus specifically on building-related technology, or just broadly tech?

It's broadly tech. There are a lot of control systems that are going to be used that we are looking at.

But one of the things that we are looking at on the "scale" question is if you look out in the future of fuels and energy (it's clear) the future of energy if go out a couple hundred years is coal. It's going to be the cheapest and most ubiquitous. So we'll be burning a lot of coal--"gasifying" coal.

The real issue in the clean tech, and the energy sector in particular--and we also got water and materials which we are looking at large scale --is we have to get solar energy below the price of coal.

If you look at the Chinese, they understand that. If the Chinese take solar to scale--I'm sure they will, we're involved in this--it will drop the price of solar dramatically.

And anyone in the States who complains about it--"It's the Chinese getting all the work again"--will realize that for every job making a solar collector, there are four jobs deploying solar. So the Chinese will be giving us a huge gift when they drop the price of solar below the price of coal by going to scale because it will give us our own indigenous energy and massive job creation. And I can promise you that the Chinese will never be able to capture American photons. But they may own the companies that do (laughs).

The main thesis in your book is that there are different ways of designing things so that they are ecologically friendly. What reception do you get to these ideas? Do you find skepticism? Do you always have to make an economic argument? How do you sell these ideas?

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