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Tech vets making leap to green tech

Clean-tech companies are hiring IT veterans as they look to bring Silicon Valley-style entrepreneurship to slow-moving industries.

Like a lab scientist tweaking a chemical formula, clean-technology start-ups are trying to create management teams with the right blend, mixing scientific know-how and high-tech business savvy.

The clean-tech sector, covering everything from solar technology to biofuels, is awash in venture capital money. Many people from the IT industry, either following the money or eager to make a positive environmental impact, have been streaming into the clean, or green, tech area for the past two years.

For those making the transition, the jump often means a completely different technology and customer. But converts say that even people who have plied their trade in hardware and software for years have something valuable to offer clean-tech companies, namely speed.

"Most executives on the energy side aren't necessarily entrepreneurial," said Mitch Mandich, the CEO of cellulosic ethanol company Range Fuels and a former Apple executive. "They're just not conversant in...this notion of velocity and time-to-market."

The formula investors and entrepreneurs like Mandich are betting on is a combination of core engineering in a particular domain, such as solar power, coupled with the management expertise that seasoned high-tech executives bring.

The reasoning behind this blend goes back to investors: venture capitalists looking for a good return want start-ups to focus on rapid growth in order to beat out an increasingly crowded field.

In many cases, clean-tech companies cater to industrial firms or utilities with strict product quality standards, which means that buggy products delivered at "Internet-time" speed are inappropriate.

Still, bringing Silicon Valley-style entrepreneurship to energy and related fields represents a dramatic injection of new blood in industries that have historically been dominated by corporate behemoths, say executives.

"It does take a little bit longer time to get products to market, but the notion of innovation and driving down costs through scale--that's all here now," said Mandich. "The IT side of the world is going to have a large impact on energy across the board."

What was your major?
David Cope, the CEO of water and food treatment company Novazone and an "ex-software start-up guy," said finding the proper mix of high-tech skills and domain expertise is his biggest challenge.

The key is finding people who have shown a willingness to reinvent themselves, either by switching from hardware to software in previous job transitions or by leaving IT to work in another industry altogether, said Cope, who joined the company last fall.

Because many clean-tech companies involve chemistry or engineering disciplines outside IT, investors and CEOs are digging deeper into candidates' backgrounds.

"We get guys who spent the last 20 years in software or networking and found that they did an undergraduate in environmental engineering," said Paul Holland, general partner at Foundation Capital who coordinates the firm's clean-tech practice. "They couldn't get a job in that 20 years ago so they went into IT. Now they are coming back."

The motivations for seeking out clean tech start-ups range, but a growing concern with climate change and the desire for energy independence in the U.S. play into many peoples' decisions, say executives. Others are eager to learn a new technology or simply pursue job openings at funded companies after being laid off.

Another factor in the IT talent crossover is that Silicon Valley venture capitalists are tapping into their familiar network of contacts as they move into clean tech, said Range Fuels' Mandich.

In general, people who have worked in the semiconductor industry or at hardware companies are the ones who have successfully made the transition, said Ray Fortney, president and managing partner at Cleantech Search, which recruits for clean tech companies.

Enterprise software company veterans are less common among those making the jump, except in fields that are very software-intensive such as smart grids or hosted applications related to energy efficiency, he said.

But that's not for lack of interest. Fortney said that he has seen a lot more people exploring energy-related technologies in the past two years.

"Five or six years ago when we talked about (energy technologies), it was hard to get people to comprehend what it was even about," he said. "It's amazing the effect that $60-per-barrel oil and $4-per-gallon gasoline has had."

In many cases, the combination of IT people at clean tech companies makes perfect sense from a technical point of view.

Novazone, for example, has designed a system that uses sensors and wireless networking, combined with the application of ozone, to purify water and preserve food. Similarly, smart grid start-ups, like Silver Spring Networks, are applying software and Internet networking to power grids.

As businesses, clean tech start-ups can make use of the latest IT advances to run their business operations.

Even consumer-facing green companies are tapping Internet executives. TerraPass, which provides an online service for consumers to buy carbon offsets , earlier this month hired Erik Blachford, the former CEO of online travel site Expedia.

"When I first encountered the (carbon credits field), it was thick with acronyms and hard to follow, but as I get deeper into it I found that it's not any more confusing than the travel industry," Blachford said. "If you squint a little bit, (TerraPass) looks a lot like an e-commerce company...it's not so different from people booking reservations online."

Good marketing or hype?
One downside to the influx of venture investing into the clean-tech arena is the creation of what many people consider an investment bubble and, potentially, overinflated expectations, which is a steady pattern in the high-tech industry.

To some degree, company failure and some hype are to be expected with every technology investment wave, executives said. On the other hand, many of these new fields require marketing--something that's highly tuned in high tech but not typically applied to energy-related technologies or science.

"There are whole new categories being created," said Novazone's Cope. "There is a tremendous amount of brand equity and corporate value in defining terms. That takes aggressive marketing and communication skills."

Who will be dominant players in the different segments of clean tech has yet to play out, but the initial public offerings this year of two energy efficiency companies--EnerNoc and Comverge--indicate that marrying IT and the energy industry technology and people can pay off.

"This is a marketplace that will reward a lot of first movers like a lot of emerging markets," said Foundation Capital's Holland. "We want this fast clock rate executive--to use a chip industry term--who has worked in the IT environment...and to marry that with people who have expertise in industries like agribusiness that historically have had much longer cycle times for new products and innovations."

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