Prize Capital, LLC - Innovative Financing Techniques to Facilitate Radical Environmental Breakthroughs

Prize Capital Report Profiles 90 Unconventional Carbon Capture Technologies

Tue, 31 Jan 2012 12:32:34 -0800

Prize Capital, LLC today released a supplement to its groundbreaking Carbon Capture and Recycling (CCR) Industry Overview report that profiles emerging technologies that capture carbon dioxide (CO2) from industrial facilities. This captured CO2 can subsequently be used by CCR technologies as a feedstock in the production of valuable products such as fuel, building materials, animal feed, specialty chemicals, and plastics, among others, providing end-to-end solutions for industry members.

This new Emerging Carbon Capture Technologies report focuses its examination on “post-combustion” carbon capture technologies, given that this existing power generation infrastructure is where CCR technologies are most applicable. The report is an aggregation of information, data, and developments in the field of carbon capture, with a particular eye towards the targets of recent government funding, given that the government has been by far the industry’s largest funding source.

Carbon capture technologies support efficient carbon recycling

“In our first report, we examined the carbon mitigation option in CCR,” said Matt Peak, Prize Capital’s director of clean technologies and the report’s author. “Yet many CCR technologies and approaches aren’t able to utilize raw flue gas and instead require a relatively pure stream of CO2. In cases such as these, breaking through the challenges associated with conventional carbon capture is essential.”

As the report outlines, current carbon capture technologies have focused on amines and chilled ammonia. These approaches were developed decades ago for use in other industries, such as synthetic ammonia production, H2 production, and limestone calcination, where they have served these industries well given the relatively low volumes of carbon captured and high price points. Yet now that the power industry is examining carbon capture approaches and experimenting with scaling up these existing technologies to meet their volumetric needs and price-points, the industry is realizing that these traditional technologies are falling short. Furthermore, the current requisite hundreds of millions of dollars of investment required to capture and separate CO2 must be radically reduced for carbon capture from power plants to be viable.

Seven technology categories receive significant federal funding

In order to spur advancements, governments around the world have provided billions of dollars in funding to support the development of carbon capture breakthroughs. In the United States, the Department of Energy (DOE) has been actively funding technological development of advanced technologies for a decade, and has dramatically increased its level of financial support in recent years, largely through its National Energy Technology Laboratory (NETL) and Advanced Research Projects Agency-Energy (ARPA-E).
The new report profiles breakthrough technologies that have been targeted by these agencies in the areas of solvents, enzyme-based systems, physical sorbents, precipitated calcium carbonate, ionic liquids, gas separation membranes, and metal organic frameworks (MOFs).

Electric utilities seek end-to-end solution

Tri-State Generation and Transmission Association, a consumer-owned, not-for-profit wholesale power supplier serving 44 electric cooperatives in four western states, sponsored the report to help identify the range of carbon capture technology opportunities that could work with the emerging CCR technologies and in turn assist the power supplier to cost effectively manage carbon emissions.
“We seek an end-to-end solution,” said Ken Anderson, Tri-State’s chief executive officer. “A solution that can plug in to power plants and convert carbon that is currently emitted or thrown away into a product that creates value, and can help ensure cost-effective solutions to keep electric power affordable and reliable.”

As the new report outlines, arriving at an end-to-end solution will require cross-pollination between the CCR and carbon capture industries and a significant level of experimentation to determine which combination of CCR and carbon capture technologies perform best. Given that there are 136 (and counting) emerging CCR entities and 90 emerging carbon capture entities presented in this new report alone, simply providing a platform to allow these various entities to experiment with each other leaves the door open for nearly 13,000 possible end-to-end solutions.

The report concludes that the key to realizing the reality and potential of end-to-end solutions is constructing the platform that allows for and encourages just such experimentations, promoting collaborative competition resulting in the diversification of innovation.

The report is available as a supplement to Prize Capital’s Carbon Capture and Recycling (CCR) Industry Overview report, which is available via the Prize Capital website: http://www.prizecapital.net

About Prize Capital, LLC Prize Capital, LLC was established by entrepreneur and environmentalist Lee Stein to provide capital to environmental start-ups worldwide while reducing risk for investors. Its proprietary methodology diversifies risk and widens market access, enabling Prize Capital to deliver capital to innovators from early-stage companies not served within current financial markets. Prize Capital’s parallel investment funds mitigate risk through a unique option equity strategy and create additional leverage through the prize mechanism. For additional information, visit www.prizecapital.net

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CONTACTS – Prize Capital, LLC
Matt Peak, Director of Clean Technologies Mobile: +1 (213) 327-8935 Email: matt@prizecapital.net

Prize Capital Chairman Lee Stein Speaks at TEDMED

Tue, 17 Jan 2012 10:03:08 -0800

Stein talks about how his son's 150-foot fall led to a unique and urgent interdisciplinary medical collaboration, leading to accelerated breakthroughs in medical imaging.

Prize Capital Report Identifies Emerging “Carbon Capture and Recycling” Industry; Profiles 136 Different Entities

Tue, 13 Sep 2011 15:48:52 -0700

Prize Capital, LLC today released a comprehensive Carbon Capture and Recycling (CCR) Industry Overview report detailing an emerging industry whose technologies are using carbon dioxide (CO2) as a feedstock in the production of valuable products such as fuel, building materials, animal feed, specialty chemicals, and plastics, among others.

The report takes an initial look at this industry and the innovators within it. It examines the rationale for CCR, current CCR approaches, the forces shaping such approaches, and focuses the majority of its content on providing snapshots of the innovators leading the creation of this new industry, including their respective stages of development as they march towards commercialization.

“While carbon capture and sequestration (CCS) is the most frequently discussed approach to carbon mitigation, we’ve discovered another potential option and complement in CCR,” said Matt Peak, Prize Capital’s director of clean technologies and the report’s author. “With the right catalyst, this nascent industry could be spurred to not just reduce carbon emissions, but also to enhance operators’ bottom lines.”

As outlined in the report, the industry’s technologies fall into three categories: Biological, chemical and catalytic, and mineralization. The report identifies, profiles, and provides contact information for 136 different entities working on various CCR approaches: 37 biological, 63 chemical and catalytic, 23 mineralization, 1 blended approach, and 12 uncategorized entities.

In addition to 136 CCR entities, the report recognizes the attention that the biological category has received in recent years by not only profiling the 37 biological entities that are either applying or have applied their technologies to the utilization of power plant flue gas, but also providing names, descriptions, and contact information of an additional 260 biological companies, universities, and laboratories in an appendix that have the potential to utilize flue gas but aren’t known to explicitly do so at this time.

Tri-State Generation and Transmission Association, a consumer-owned, not-for-profit wholesale power supplier serving 44 electric cooperatives in four western states, provided funding for the report to help identify the range of CCR technology opportunities that could assist the power supplier to cost effectively manage carbon emissions.

“The innovation in the CCR space will be revolutionary for our industry,” said Ken Anderson, Tri-State’s chief executive officer. “Turning carbon liabilities into assets is a significant shift in thinking that could help ensure cost-effective solutions to keep electric power affordable and reliable.”

Altogether, the CCR entities vary in size from unfunded concept to over $50 million in funding received. They’re being developed within private companies as well as at universities and laboratories around the world. They have received government and private funding totaling approximately $1 billion. Some are offering full spectrum solutions from capture to reuse, while others focus only on reuse and need viable capture solutions to realize their potentials.

As the report outlines, the challenges associated with commercializing and deploying CCR technologies include: being able to recycle carbon year round, in various climactic conditions; thermodynamic and thermochemical logistics and efficiencies; scalability; proximity to necessary resources; as well as others.

With the emerging array of technologies and producers, as well as the current slate of technological challenges, the report states that investors and other interested parties, as well as the CCR industry itself, would benefit from models that promote diversity of innovation as well as financial diversity, rather than placing “bets” on single technologies and producers.

The report concludes that in the near-term, this new industry represents a paradigm change that could avert the need to resolve complex issues associated with CCS and prompt renewed action on carbon mitigation. Such action is essential as a carbon-constrained world emerges.

The report is available for $10,000 via the Prize Capital website: http://www.prizecapital.net

About Prize Capital, LLC Prize Capital, LLC was established by entrepreneur and environmentalist Lee Stein to provide capital to environmental start-ups worldwide while reducing risk for investors. Its proprietary methodology diversifies risk and widens market access, enabling Prize Capital to deliver capital to innovators from early-stage companies not served within current financial markets. Prize Capital’s parallel investment funds mitigate risk through a unique option equity strategy and create additional leverage through the prize mechanism. For additional information, visit www.prizecapital.net

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CONTACTS – Prize Capital, LLC
Matt Peak, Director of Clean Technologies Mobile: +1 (213) 327-8935 Email: matt@prizecapital.net

Change the World, and Win Fabulous Prizes

Sat, 21 May 2011 10:45:50 -0700

By Steve Lohr, The New York Times

The Internet is revitalizing an old stalwart in the innovation game: the prize as incentive.

Every few weeks, some big new contest arrives. This month, Overstock.com, the online retailer, announced that it would sponsor a competition paying $1 million to the person or team who comes up with new technology that most improves its product recommendations. And Qualcomm and the X Prize Foundation — a group known for its huge prizes for grand challenges, like private space flight — announced a $10 million competition for a smartphone application that could diagnose health problems as accurately as human physicians could.

Last month, the Heritage Provider Network, a medical group in California, supplied details and data for its $3 million prize. It will go to the team with the best algorithm for predicting which patients are most likely to be admitted to hospitals in the next year.

Perhaps the most far-reaching effort, however, comes from the federal government. Legislation passed in December, the America Competes Act, gives government agencies far greater freedom to sponsor prize contests with purses of up to $50 million. Last September, even before the legislation, the Obama administration put up a Web site, challenge.gov, listing government challenges, some with prize money and some without, as part of its goal of tapping innovative ideas from citizens.

The proliferation of prizes, says Josh Lerner, a professor at the Harvard Business School, is part of the larger trend of opening corporations and government to wider networks of people with fresh ideas by using the Internet. Crowdsourcing and open-source software — computer programs developed and debugged by far-flung groups of contributors — are other examples of the “open innovation” approach, he says.
“But while the current popularity of prizes is facilitated by the Internet, the prize model goes way back — long before computers,” Mr. Lerner observes.

The prize model does indeed have a long, rich history. In 1714, Britain offered a prize of £20,000 — nearly $4.5 million today — to anyone who could invent a way to accurately determine a ship’s longitude. That prompted John Harrison to create the marine chronometer, an invaluable tool of seafaring navigation. In 1795, the French government created a sizable prize for the inventor of a way to preserve food, because provisions for Napoleon’s armies were spoiling in transit. So Nicolas Appert devised a technique for canning food. In 1919, Raymond Orteig, a New York hotelier, announced a $25,000 prize — more than $300,000 today — for the first person to fly nonstop between New York and Paris. In 1927, Charles Lindbergh picked up that prize, opening the door to transoceanic air travel.

Those contests point to the power of incentive prizes to attract ideas and skills from unlikely sources. Harrison was a watchmaker, not an astronomer or scientist. Appert owned a candy shop in Paris. Lindbergh was not a leading aviator of his day; he was a 25-year-old pilot of mail-delivery planes.
Today’s prize sponsors are hoping that their contests can encourage bright outsiders to generate breakthrough ideas. Dr. Richard Merkin, chief executive of the Heritage Provider Network, said he would like to see his $3 million prize lure experts in Internet software, as well as nanotechnologists and astrophysicists. “We want to bring in brilliant people not necessarily steeped in health care, but steeped in data analysis,” Dr. Merkin says.

The contest will run for two years. Once the ability to predict which patients are most at risk for hospital admission is improved, the knowledge can be used to tailor treatment to at-risk patients, he says, often those with chronic conditions . The idea is to help them stay out of hospitals, where care is most costly. Studies estimate that at least $30 billion is spent in America each year on avoidable hospital admissions.

“If this works, a lot of the money that goes for hospital care could go for other things, like cures,” Dr. Merkin says.
Privacy is a challenge in handling large data sets that include personal information, even when names and other identifying details have been stripped off. Netflix ran into that problem after it paid $1 million in 2009 to a team of computing wizards that most improved its online movie recommendations.

The competition was hailed as a success both for the company and for spurring new techniques of data analysis. But Netflix canceled a planned second prize contest, responding to protests when researchers showed that supposedly anonymous data in the first competition could be used to identify customers. The advisory board for the Heritage prize includes one of the researchers who made that discovery. That, Dr. Merkin says, should help Heritage keep the patient data anonymous.

In government, prize advocates are optimistic about the potential payoff in both innovation and efficiency. “You can access a whole universe of innovators, and you only pay for the result, unlike the usual procurement system,” says Todd Park, chief technology officer of the Department of Health and Human Services.

Government agencies have run big prize contests in the past. In 2005, the Pentagon paid a $2 million award to the team whose robotic car won a 132-mile race in the Nevada desert, a feat in the design of driverless vehicles. But such projects have been exceptions.

THE new legislation opens the way for prizes to become a mainstream tool in the government’s efforts to encourage innovation. In health care technology, for example, the agency is beginning an “Investing in Innovation” program that will include up to 15 prize contests a year that pay as much as $100,000. The purpose is to pursue ambitious goals like seamlessly exchanging health information among hospitals, clinics and physicians, or to find imaginative new designs that make the presentation of health data in electric health records easier for doctors and patients to understand and use.

But the health agency, Mr. Park says, will also continue with smaller prizes of a few thousand dollars. Even the smaller amounts, he says, can be effective. Especially in low-budget contests, Mr. Park says, “these innovators are not really competing for the prize money, but for the recognition and future opportunities, like attracting investors.”

Research strongly suggests that prizes really can stimulate new inventions — and not just help harvest them in fields already ripe for innovation. Yet contests, by definition, are transitory incentives. “Prize bounty hunter” is hardly a career path, and prizes are no substitute for sustained investments in people, education and research.

In the innovation game, the prize model may be becoming a more significant tool, but it’s no silver bullet.

http://www.nytimes.com/2011/05/22/technology/22unboxed.html?_r=1

Foreign Policy’s Steve Levine on Prize Capital and the Carbon Capture and Recycling Prize

Wed, 15 Sep 2010 13:59:44 -0700

Posted By Steve LeVine, Foreign Policy Magazine

Prizes are a much-ballyhooed notion for how to produce big technological breakthroughs. Most recently, the federal government last week launched Challenge.gov, a website posing cash challenges from government agencies.

Tomorrow, the X Prize Foundation (above) will announce the winners of a $10 million contest for a 100-mile-per-gallon car. With all the hoopla and celebrity surrounding the idea, it couldn't have been long before venture capitalists sought a way in on the action. So it is that today a fellow named Matt Peak dropped by the office to discuss a new venture fund seeking to do just that. It's interesting for our purposes because the first prize Peak is talking about offering is $10 million for recycling the carbon emissions of coal-fired power plants.

Peak works for Prize Capital, a San Diego-based firm run by an entrepreneur named Lee Stein, whose idea is to leverage the motivations and requirements of the world's inventor class: Big Cash. In a nutshell, a $10 million prize sounds sweet, and garages have been oh-so-poetic ever since Hewlett and Packard (I wrote The Oil and the Glory next door to their garage, by the way, on Addison Avenue in Palo Alto). But these days how does one realistically finance an expensive experiment, such as recycling coal emissions? Prize Capital plans to offer up investment money to competitors in prize competitions in exchange for a passive share (meaning no voting rights) in any resulting business enterprise. (Here is an embarrassingly fawning profile of Stein from the Daily Transcript.)

As of now, the idea is in its embryonic stage. The firm is partnering with the X Prize Foundation to run the carbon-recycling competition -- in an email exchange, X Prize chairman Peter Diamandis told me that he's working with Stein on "selected projects" -- with a target launch date in 2012. Stein has raised the $10 million prize money (Peak asked me not to reveal the name of the sponsor). Now comes the tricky part: figuring out the contest rules. This is where the rubber hits the road -- competitors will vie for a prize only if the rules are compellingly intriguing, and the aim seems ultimately reachable.

In this case, the most publicized idea for reducing coal-fired pollution is to sequester it underground. Last week, Energy Secretary Steven Chu went to West Virginia to talk about such potential technology in a public forum with Sen. Jay Rockefeller. But this is politics. Big Coal is mighty powerful in Washington, and so we get these mollifying events while forces elsewhere attempt to develop clean-energy technology that actually has a fighting chance to work.

One notion, which the algae crowd has bandied about for some time, is not to bury the carbon -- which raises a host of skepticism and fearsome questions -- but transform it into something else that can be reused. For instance, the algae folks suggest capturing carbon emissions in algae, then burning the algae again, followed by another round of algae capture.

http://oilandglory.foreignpolicy.com/posts/2010/09/15/eyes_on_the_prize

Read more on the Carbon Capture and Recycling Prize here.

Prize Capital Chairman Lee Stein Profiled in San Diego’s The Daily Transcript

Fri, 9 Jul 2010 08:42:47 -0700

Close-up: Lee Stein
Serial entrepreneur changes focus toward environment

By REBECCA GO , The Daily Transcript

When the solution is obvious to Lee Stein, he acts. He doesn't just sit there; he does something about it, and he does it in a big way.

For example, when Stein and his wife of 34 years, June, tired of train horns blaring insistently past his Del Mar home office, signaling their approach to a railroad crossing, Stein started looking for an alternative. He researched federal railroad law, involved the city manager, the North County Transit Board and the Del Mar City Council, and formed a Quiet Zone Committee.

Before a year was up, the group had tested the viability of installing a quieter, stationary wayside horn that could be signaled remotely by an approaching train and was working on securing an exact cost estimate by mid-July.

Stein "is the fellow that's the spark plug," Quiet Zone Committee chair Hershell Price said. "He's a born leader."
Compared to some of Stein's other projects, however, the wayside horn -- although certainly of consequence to Del Mar's ocean-view residents -- seems to be small potatoes. Now in his mid-50s, Stein has moved through his career with a decisiveness and foresight that some would call almost prescient.

Educated as an accountant at Syracuse University and an attorney at Villanova University, Stein began his career as a Beverly Hills accountant to the stars, with a client list that included Journey, Men at Work, Gene Hackman, Matthew Broderick and Rod Stewart.

He then worked in real estate finance and development, investing in Seaport Village and developing the Ramada Main hotel at Disneyland -- and then selling his real estate interests before the market bottomed in 1990 to "retire" at 37. In 1993, within two days of being introduced to an Internet modem -- in a chance airport meeting with Internet pioneer Einar Stefferud -- Stein co-founded Internet commerce company First Virtual Holdings, which offered PayPal-like services before PayPal even existed. He eventually took First Virtual public and later sold the patents to eBay.

The Rancho Santa Fe resident shrugs it off, for the most part.

"I can see around corners," said the mild-mannered Stein, who seems to prefer multi-tasking to sleeping and says he tracks 172 blogs. "I've always had the ability to see things early. I don't know how to describe it better than that."
Today, Stein's focus is on environmentalism -- for its economic opportunities as well as its commitment to preserving the planet.

His latest creation, Prize Capital, aims to attract capital to fund green prize competitions. Contestants will develop technology that will solve the planet's problems and vie for a prize of $10 million in cash.

The contests are modeled on those run by the X Prize Foundation, which will facilitate some of Prize Capital's contests as well. X Prize Foundation is the nonprofit behind the Ansari X Prize that sent a three-passenger vehicle 100 kilometers into space twice within two weeks.

The first of Prize Capital's contests will focus on capturing carbon and recycling it -- "solving the coal problem," as Stein puts it, by turning carbon emissions "into an asset instead of a liability." Prize Capital will act as an incubator, providing office space, research labs and access to a stream of flue gas for experiments and research.

Flue gas is gas that is produced through the combustion of fuel. Prize Capital plans to partner with a Midwest power plant for the flue gas, Stein said.

The competition relieves both capital market and regulatory burdens, Stein said. Most investors are not prepared to fund ideas that are early stage and unproven, and Prize Capital will provide incentive as well as capital for research and development.

Also, regulators would probably be reluctant to approve an individual's request to use or create a flue gas source for experimentation. A large group and a prize competition are much harder to deny.

"Prizes have to get it done when there are other impediments," Stein said. "The great thing about the prize is that there are four or five different things that won't necessarily win the market share or win the prize, but the prize gives them publicity."

Stein has spent the last four years developing a risk mitigation strategy involving options and honing in on the contest theme of carbon capture and recycling. He recently secured a sponsor as well as funding, but declined to provide details as the agreement is still being finalized.
Stein expects to announce the specifics, including the contest rules, in December.

For Stein, his work in the environmental space is obvious, even logical. There are business opportunities and job creation opportunities in optimizing a reliable but inefficient energy system, Stein points out.

Beyond that, however, companies, individuals and governments need to start implementing industry "best practices" and take into account what Stein and others are calling "natural capital." An Earth depleted of its resources is not good for humanity, let alone business.

Stein, who tends to speak in stories and anecdotes, uses fishing as an example: Going fishing and selling the fish creates economic growth. Fishing to maximize growth kills off the natural capital and halts growth entirely in the long term.

"I think anthropologists will find that our definition of GDP (gross domestic product) was improper," said Stein, who terms the present time a "resource depletion age." "We have dead zones (of ocean) around the planet. Why do we tolerate one square foot of dead space? I don't understand."
Outside of the prize competitions, Prize Capital is also working to promote sustainable business -- such as ecotourism -- on the Osa Peninsula in Costa Rica, a country whose president has committed to making it a petroleum-free zone. Stein is often part of delegations supporting various environmental initiatives and speaks at events around the world.

Stein's foray into green projects began earlier in the decade, when he became active in trying to bridge the gap between business professionals and environmentalists. He co-founded the Southern California chapter of Environmental Entrepreneurs, or E2, and played a role in helping state Sen. Fran Pavley pass a "clean cars bill" that would aim to reduce greenhouse gas emissions from passenger vehicles.
"You have a lot of people who do not talk to each other. I like to get them around the table and help them find a solution," Stein said. "The easiest way to find consensus is to get people talking to each other."

Those who know Stein well or who have worked with him say he has an uncanny ability to make connections between seemingly disparate ideas and bring talented people together to work toward a common end.

"When I think of Lee, the word that always comes to mind is 'Rolodex,'" said Bob Epstein, who sat on the board of First Virtual in the mid-1990s and is the co-founder of E2 and a green bank in San Francisco. "He's the master of maintaining relationships and knowing when to use them."
Stein agrees that he's not afraid to "cross-pollinate" between different groups of people. His early experience solving a myriad of problems for rock stars helped him become a "general contractor of special services," Stein quipped.
He admitted his approach has only gotten better with time. He is far more process-oriented; he has a handbook for his administrative assistant. He likes to "build concentric circles" when solving a problem: Stein starts with a core group and then reaches out to include more and more people to achieve the best solution.

The event that changed Stein's life, however, was when he learned at 37 that he had an inoperable cerebral aneurysm, in which an artery in the brain swells due to weakening in the vessel walls. Stein had an 85 percent chance of dying or having a stroke at any moment. The aneurysm inexplicably healed, but the situation forced Stein to re-evaluate how he spent his time.

"It was the ultimate concept of living in the moment," Stein said. "I wouldn't wish it on anybody, but it was life-defining."
So, where will Stein spend his time next? He sees wireless health as an exciting opportunity, but says he prefers to be "monogamous" in his projects. Whatever the case, Stein is sure that his insatiable curiosity will lead him to new ideas, information and people, and his need to improve upon the status quo will see him offering up another solution once again.

http://www.sddt.com/Finance/article.cfm?SourceCode=20100709tbe#

http://m.sddt.com/article.cfm?SourceCode=20100709tbe

Lee Stein to Participate in Prestigious Panel Discussion of Clean/Green Industry

Wed, 3 Mar 2010 16:07:01 -0800

Prize Capital Chairman and CEO Lee Stein will participate on a panel of experts on Friday March 26, 2010 at The University Club in San Diego to discuss the importance of the clean/green industry.

Joining Stein on the panel will be Irene Stillings, CEO Center for Sustainable Energy, and Lisa Bicker, CEO, Clean Tech San Diego. The moderator for this event is Stephen Mayfield, Associate Dean, Kellogg School of Science & Technology.

More information can be found at: http://www.clubcorp.com/club/scripts/calendar/view_club_calendaritem.asp?CID=771867&GRP=10&NS=PCH&MFCODE=UCAST&src=w

Prize Capital Speaking at and Sponsoring the 3rd Annual Algae Biomass Summit

Mon, 5 Oct 2009 21:08:27 -0700

Prize Capital will be speaking about the Algae Fuel Prize and the opportunities it presents at the 2009 Algae Biomass Summit, on October 7 at 5:30 PM at the Marriott San Diego Hotel in San Diego, California. Prize Capital is also sponsoring the opening night reception, which immediately follows its presentation, and serving as an overall Silver Sponsor of this three-day event.

The Algae Biomass Summit is the official conference of the Algal Biomass Organization (ABO) and the algal industry's premier global conference. The ABO is expecting to draw more than 800 attendees for this event, which lasts between October 7-9, exploring the development of algae-based solutions to global energy, environmental, and economic issues.

For more information and to register to attend this event, click here.

Build a Better Bulb for a $10 Million Prize

Thu, 24 Sep 2009 10:11:03 -0700

By ERIC A. TAUB and LEORA BROYDO VESTEL
The New York Times

The ubiquitous but highly inefficient 60-watt light bulb badly needs a makeover. And it could be worth millions in government prize money — and more in government contracts — to the first company that figures out how to do it.

Right now, that company could be Philips, the Dutch electronics giant. The company announced on Thursday that it had submitted the first entry for the L Prize, an Energy Department contest that will award up to $10 million to the first person or group to create a new energy-sipping version of the most popular type of light bulb used in America.

As the first entrant, Philips will win the prize if its claims hold up. Testing of the Philips lamp will take close to a year to complete as the department independently evaluates the company’s claims.

“Philips is confident that the product submitted meets or exceeds all of the criteria for the L Prize,” Rudy Provoost, chief of Philips Lighting, said in a statement.

The $10 million is almost beside the point. More important, the contest winner will receive consideration for potentially lucrative federal purchasing agreements, not to mention a head start at cracking a vast consumer marketplace.

The L Prize has garnered significant attention in the lighting industry because 60-watt incandescent lamps represent 50 percent of all the lighting in the United States, with 425 million sold each year. The Energy Department says that if all those lamps were LED equivalents, enough power would be saved to light 17.4 million American households and cut carbon emissions by 5.6 million metric tons annually.

For decades, incandescent light bulbs continued to bear a strong resemblance to Thomas Edison’s creations, but new energy standards that go into effect in 2012 — and would effectively outlaw today’s incandescent bulb — have brought about a period of fertile innovation in the lighting industry.

One of the first attempts at greater efficiency was the now-maligned compact fluorescent bulb, but there have also been efforts to modify incandescent technology to conform to the new standard. LED bulbs are now available in stores, but those models have limited output and high prices. A faithful reproduction of an incandescent bulb’s light from an inexpensive and efficient source has been the industry’s ultimate goal.

Philips has delivered 2,000 prototypes of its bulb to the Energy Department for testing. The company says the bulbs meet all the criteria of the contest, which specifies a bulb that reproduces the same amount and color of light made by a 60-watt incandescent bulb, but uses only 10 watts of power. The bulb must also last for more than 25,000 hours — about 25 times longer than a standard light bulb. In a nod to economic concerns, at least 75 percent of the bulb must be made or assembled in the United States.

If the new bulb passes the department’s testing regimen, it will be an even more efficient, longer-lasting lighting device than today’s compact fluorescent bulbs. The department considers the introduction of compact fluorescents, today’s alternative to standard bulbs, to have been a debacle.

At first, the department set no standards for compact fluorescent bulbs and inferior products flooded the market. Consumers rebelled against the bulbs’ shortcomings: the light output from compact fluorescent bulbs was cold and unpleasant, their life was much shorter than claimed, many were large and undimmable, they would not work in cold environments and they contained polluting mercury.

By setting rigorous criteria for the L Prize, the department hopes LED bulbs can avoid a similar fate. That also means rejecting current LED bulbs that can claim some technical similarities, but fall far short of the L Prize’s goals.

“We’ve probably eliminated almost 25 products that were horrible,” said James R. Brodrick, manager of the Solid State Lighting Program of the Energy Department. “We test LED bulbs today that claim on the package that they’re equivalent to 40 watts, but are really like 20-watt bulbs.”
“This will be the most publicly tested bulb ever,” Mr. Brodrick said.

The Philips LED lamp represents “a significant energy savings,” said Nadarajah Narendran, the director of research at the Lighting Research Center at Rensselaer Polytechnic Institute. “This has now leapfrogged what C.F.L.’s can do.”

The Energy Department will also award $5 million to the creator of an LED reflector lamp (no entries have yet been made) and a new, “21st-century lamp,” the specifications of which are yet to be defined.

General Electric — along with Philips and Osram Sylvania, one of the world’s biggest lighting suppliers — said that it would introduce a new LED module next month that would make it easier to replace traditional light sources with LEDs. Osram had no comment about its plans.

The first certified products, due in about a year, will not be cheap. Today’s LED-based bulbs cost up to $100 each, and while there is plenty of optimistic talk about reducing that price, a clear path to affordability remains elusive.
To lower the cost, Mr. Brodrick has enlisted 27 utility companies around the country as L Prize partners, with the hope that utility subsidies, along with mass production, will help cut the cost. One such utility, Southern California Edison, will both test the bulbs and offer rebates to consumers, according to Gregg Ander, the company’s chief architect.

“There’s a potential for LED lamps to be much more acceptable to the consumer than compact fluorescents,” Mr. Ander said. He said he expected that eventually, an LED substitute for a 60-watt bulb would cost the same as its compact fluorescent equivalent, factoring in its longer life.
Kevin Dowling, vice president for innovation at Philips Solid State Lighting Solutions, is confident that the LED light bulb can become an affordable option. “Over the long term, we can absolutely get the cost down to the $20 to $25 range,” he said.

http://www.nytimes.com/2009/09/25/technology/25bulb.html?_r=1&th&emc=th

A $1 Million Research Bargain for Netflix, and Maybe a Model for Others

Mon, 21 Sep 2009 10:41:30 -0700

By Steve Lohr
The New York Times

Even the near-miss losers in the Netflix million-dollar-prize competition seemed to have few regrets.

Netflix, the movie rental company, announced on Monday that a seven-man team was the winner of its closely watched three-year contest to improve its Web site’s movie recommendation system. That was expected, but the surprise was in the nail-biter finish.

The losing team, as it turned out, precisely matched the performance of the winner, but submitted its entry 20 minutes later, just before the final deadline expired.
Under contest rules, in the event of a tie, the first team past the post was the winner. “That 20 minutes was worth a million dollars,” Reed Hastings, chief executive of Netflix, said at a news conference in New York.

Yet the scientists and engineers on the second-place team, and the employers who gave many of them the time and freedom to compete in the contest, were hardly despairing.
Arnab Gupta, chief executive of Opera Solutions, a consulting company that specializes in data analytics, based in New York, took a small group of his leading researchers off other work for two years. “We’ve already had a $10 million payoff internally from what we’ve learned,” Mr. Gupta said.

Working on the contest helped the researchers come up with improved statistical analysis and predictive modeling techniques that his firm has used with clients in fields like marketing, retailing and finance, he said. “So for us, the $1 million prize was secondary, almost trivial.”

Indeed, since it began in October 2006, the Netflix contest was significant less for the prize money than as a test case for new ideas about how to efficiently foster innovation in the Internet era — notably, offering prizes as an incentive and encouraging online collaboration to tap minds worldwide.
The lessons of the Netflix contest could extend well beyond improving movie picks. The researchers from around the world were grappling with a huge data set — 100 million movie ratings — and the challenges of large-scale modeling, which can be applied across the fields of science, commerce and politics.

The prize model is increasingly being tried on work like new science and freelance projects in design and advertising. The X Prize Foundation, for example, is offering multimillion-dollar prizes for path-breaking advances in genomics, alternative energy cars and private space exploration.
InnoCentive is a marketplace for business projects, where companies post challenges — often in areas like product development or applied science — and workers or teams compete for cash payments or prizes offered by the companies. A start-up, Genius Rocket, runs a similar online marketplace mainly for marketing, advertising and design projects.

“The great advantage of the prize model is that it moves work away from the realm of the beauty contest to being performance-oriented,” said Michael Schrage, research fellow at the Center for Digital Business at the Sloan School of Management at the Massachusetts Institute of Technology. “It’s the results produced that matters.”
The emerging prize economy, according to some labor market analysts, does carry the danger of being a further shift in the balance of power toward the buyers — corporations — and away from most workers.

Thousands of teams from more than 100 nations competed in the Netflix prize contest. And it was a good deal for Netflix. “You look at the cumulative hours and you’re getting Ph.D.’s for a dollar an hour,” Mr. Hastings said in an interview.

Netflix, Mr. Hastings said, did not do a crisp cost-benefit analysis of its investment in the contest. But several crucial techniques garnered from the contest have been folded into the company’s in-house movie recommendation software, Cinematch, and customer retention rates have improved slightly. Better recommendations, Netflix says, enhance customer satisfaction.

“We strongly believe this has been a big winner for Netflix,” Mr. Hastings said.

The prize winner was a team of statisticians, machine-learning experts and computer engineers from the United States, Austria, Canada and Israel, calling itself BellKor’s Pragmatic Chaos. The group was actually a merger of teams that came together late in the contest.

In late June, the team finally surpassed the threshold to qualify for the prize by doing at least 10 percent better than Cinematch in accurately predicting the movies customers would like, as measured against actual ratings. Under the contest rules, that set off a 30-day period in which other teams could try to beat them.

That, in turn, prompted a wave of mergers among competing teams, who joined forces at the last minute to try to top the leader. In late July, Netflix declared the contest over, and its online leader board showed two teams had passed the 10 percent threshold: BellKor and the Ensemble, a global alliance with some 30 members.

Netflix said the contest was too close to call, and the leader board showed a slight edge to the Ensemble. However, the teams’ software had to go through two data sets — one public, which was the basis for the leader board, and another hidden one, which determined the outcome of the contest.

The second data set was there to ensure that the winning solution really was the best at making better movie recommendations in general, and was not just tailored to get the best score from the public data set.

Win or lose, researchers agreed that they entered the contest in good part to get access to the Netflix data. “It was incredibly alluring to work on such a large, high-quality data set,” said Joe Sill, an independent consultant and machine-learning expert who was a member of the Ensemble.

Chris Volinsky, a member of BellKor, who is a scientist at AT&T Research, said Netflix “made a brilliant move by realizing that there was a research community out there that worked on these kinds of models and was starving for data.
“Netflix had the data, but only a handful of people working on the problem.”

Netflix was so pleased with the results of its first contest that it announced a second one on Monday. The new contest will present contestants with demographic and behavioral data, including renters’ ages, gender, ZIP codes, genre ratings and previously chosen movies — but not ratings. Contestants will then have to predict which movies those people will like.

Unlike the first challenge, the contest will have no specific accuracy target. Instead, $500,000 will be awarded to the team in the lead after the first six months, and $500,000 to the leader after 18 months.

The winners of the first contest said the money would be split seven ways, according to a formula they declined to disclose. The amounts each received, they said, would certainly help with a car, house payments or children’s college educations — but were not life-changing.
When asked if he planned to take on the second Netflix prize, Bob Bell, a scientist at AT&T Research, said, “I like the notion, but I think I’m too tired.”

http://www.nytimes.com/2009/09/22/technology/internet/22netflix.html?_r=1&th&emc=th

Interest in algae's oil prospects is growing

Thu, 17 Sep 2009 21:39:27 -0700

By Tiffany Hsu
The Los Angeles Times

Firms and scientists are racing to figure out how best to separate the oil produced in the organisms for biofuel. The San Diego area has become a hotbed for these efforts that are drawing investors.

To many, algae is little more than pond scum, a nuisance to swimmers and a frustration to boaters.

But to a growing community of scientists and investors in Southern California, there is oil locked in all that slimy stuff, and several dozen companies are racing to try to figure how best to unleash it and produce an affordable biofuel.

The companies and several research labs have set up shop in the San Diego area, many of them in an area nicknamed Biotech Beach. There, about 200 biotech companies of all kinds are clustered near La Jolla on the mesa above Torrey Pines State Beach.

Together, the firms and organizations conducting algae research employ nearly 300 people with more than $16 million in payroll and bring $33 million annually into the local economy, according to the San Diego Assn. of Governments, and local officials see the potential for much more.

"It's a critical industry, and it's kind of exploded," San Diego Mayor Jerry Sanders said. "There's a long pattern of huge companies being spawned out of [UC San Diego] and our other research centers, and it's going to create a tremendous number of jobs."

National energy companies are converging on the fledgling industry. Exxon Mobil Corp. announced a $600-million partnership with La Jolla biotech company Synthetic Genomics Inc. in July. San Diego companies General Atomics and Science Applications International Corp. have received nearly $50 million from the Defense Department for algae fuel research.

Last year, $176 million was invested by venture capitalists to develop biofuel from algae, according to industry publication Biofuels Digest in Miami.

With the region's proximity to the ocean and its history with biotech businesses, San Diego is a familiar spot for clean-energy investors, Biofuels Digest editor Jim Lane said.

"It has all the magic conditions for the emergence of business life," he said. "San Diego wants to be associated with algae, while other cities have other fish to fry and think of algae as just one of many things."

Supplementing the research is experimental aquaculture, as farming in fresh- and saltwater is known. The arid Imperial Valley to the east is now home to several massive algae farms, one with nearly 400 acres of ponds in all shades of green being swirled by paddles to expose the organisms to more sunlight.

All of this activity has drawn its share of doubters.

Skeptics say that it's a beachcomber's fantasy, that it's too costly to cultivate any significant amount of algae, that fuel inside -- whether in the form of oil, ethanol, gas or hydrogen -- is too expensive to extract or produce on a large scale.

But in recent years, San Diego, along with Silicon Valley, St. Louis, Seattle and a few other cities, have disregarded the skeptics and emerged as hotbeds of algae biofuel research.

One of the nascent industry's major annual events, the 2009 Algae Biomass Summit, is headed to San Diego next month. It is put on by the Algal Biomass Organization, a Preston, Minn., group that seeks to promote commercial uses of algae products.

Seeking to unite and enhance much of the algae work underway in San Diego County is a new research consortium. It aims to help clear barriers to commercializing algae biofuels by identifying new algae strains and harvesting methods.

The San Diego Center for Algae Biotechnology was launched in 2008 with 16 founding partners from UC San Diego, the Scripps Institution of Oceanography, Salk Institute for Biological Studies, biofuel companies and more.

Until recently, "algae has been this complete backwater of scientific research," said the center's founding director, Steve A. Kay, who is also dean of biological sciences at UC San Diego.

"But we've all woken up with the realization that we are junking the planet."

Known as "nature's solar panels," the "amazingly clever little chemical factories" soak up carbon dioxide and sunlight, which is converted into oil through photosynthesis, Kay said.

Algae, he said, can be harvested more often and at greater yields than many other potential biofuel crops such as soybeans or grasses.

Unlike food and several other biofuel sources, algae is being eyed because it can thrive in difficult environments such as salty or polluted water or in the desert, freeing up valuable agricultural space.

Fuel from the microorganisms has already been tested in airplanes and is being groomed for use at NASA test facilities and in the Navy. Last month, San Diego-based biofuel gorilla Sapphire Energy unveiled its Algaeus plug-in hybrid vehicle, which will run on an algae-based renewable gasoline.

Scientists also envision using algae for more than just fuel, tapping it instead for fish or livestock feed, antibacterial products, foams for windmill blades and, in one futuristic vision, in cancer therapies.

In the 1990s, early research into algae biofuels stagnated as oil prices dropped and funding was siphoned off to cancer, AIDS and bioethanol studies, Kay said. Algae is now making a comeback, buoyed by the eco-friendly movement and concerns about dependence on traditional fuels. But the slimy stuff is no magic wand, experts say.

Expecting algae to make a meaningful dent in fossil fuel usage is still a tall order, experts said. The algal biofuel production process is often lambasted as inefficient by other biofuel competitors.

"We can certainly come very close, but we're not there yet and I'm not sure when we'll ever get there," said John R. Benemann, an algae biofuel consultant with Benemann Associates in Walnut Creek. "It's a significant challenge to get down to the price point, or even just the ballpark of fossil fuels."

The problem is translating successful lab experiments to an industrial scale. Mass algae biofuel production could require enormous pools or photobioreactors while growing a proportionally small amount of algae. Technology needs to be developed to systematically extract the oil from the organisms.

Algae-generated oil currently costs $20 to nearly $33 a gallon to produce, with some estimates soaring to $60. Conventional gasoline costs less than $5 a gallon.

"There's a valley of death between research and development and commercial development," said Lisa L. Mortenson, chief executive of Community Fuels in Encinitas.

Add California's heavy regulations, and algae biofuel production becomes an even more difficult business proposition, some complained.

Biofuel companies often have to wade through a tangle of permits, taxes and compliance measures in California. Aquaculture alone requires more than 15 permits, with more for waste disposal and water use.

The intensity of the algae hype is making some investors wary.

"The majority [of the efforts] are a gigantic hassle of time and capital because they're trying to make coal out of diamonds," said David Andresen, a clean-tech investment banker at Oracle Capital Securities. "There's such a high level of scientific illiteracy in the investment community that you can really wow investors."

Still, even Andresen is an investor in the industry, working with Kai BioEnergy Corp., a San Diego company named after the Hawaiian word for "ocean."

Although Kai can produce only about 20 gallons per minute while it needs 300 gallons a minute to be commercially viable on a large scale, Chairman Mario C. Larach is optimistic.

"It's just a matter of scaling at this point," he said. "If nature can do it, we can do it."

tiffany.hsu@latimes.com
Copyright © 2009, The Los Angeles Times

http://www.latimes.com/business/la-fi-algae17-2009sep17,0,7803416,full.story

Prize Capital Presents at the California Energy Commission’s Workshop on Renewable Fuels

Tue, 15 Sep 2009 10:00:05 -0700

At the invitation of the California Energy Commission (CEC), Prize Capital’s Matt Peak presented on algae-based renewable fuels at the CEC’s Staff Workshop for the 2010-11 Investment Plan. Peak sat on a panel with Steve Mayfield, professor at the University of California San Diego and founder of Sapphire Energy, and Matthew Frome of Solazyme.

The Prize Capital presentation discussed the status of algae technology, and what is required to establish in-state algae fuel facilities.

Specifically, Peak outlined why Prize Capital is focusing on California-based algae fuel companies, specifically through its development of the Prize Capital Algae Fuel Prize. The presentation conveyed Prize Capital’s interest in investing in companies that are poised to produce (rather than simply research) algae-based renewable fuels while maintaining the highest of environmental standards (in a landscape where such standards don’t yet exist), and how the Prize Capital Algae Fuel Prize provides a mechanism to source such companies.

The uniqueness of the Prize Capital venture finance model – as it would be applied in the Algae Fuel Prize – was also discussed as a pioneering way to leverage prizes and direct more investment in algae producers who set up production facilities in California to chase the prize. The Algae Fuel Prize presents a very powerful and winning package for the state, for competitors, and for investors.

The purpose of the Investment Plan Workshop was to obtain specific information and data on market, technology and policy issues related to the production, distribution and sales of biofuels in California. The outcome will assist CEC staff in the preparation of the 2010-2011 AB 118 Investment Plan for the Alternative and Renewable Fuel and Vehicle Technology Program.

More information on the Algae Fuel Prize can be found here.

Watch a WebEx recording of Prize Capital’s testimony at the California Energy Commission’s Staff Workshop for the 2010-11 Investment Plan by clicking here.

Eyes on the Prize

Sat, 1 Aug 2009 10:26:00 -0700

By David Strom
David Strom’s Web Informant

The news last month that two groups of computational researchers have qualified for the $1 million Netflix Prize got me thinking about how other prizes have had a very influential role in technology development. For those of you that missed this nugget, several dozen different computer scientists and mathematicians have tried over the past year to improve upon the algorithms that Netflix uses to recommend new videos to its subscribers. The teams that could get better than a 10% improvement (defined very precisely by Netflix) would qualify to win the prize purse.

This is only the latest in a series of prize-motivated developments. For the past three years, a group of southern California investors have been working on a venture called Prize Capital. The effort grew out of the work of the Ansari X PRIZE Foundation that awarded a $10 million prize in 2004 for the first private spaceflight.

Prize Capital combines old-fashioned greed with socially conscious investing on a grand scale. Their concept is thrilling, with a simple idea at its core. An investment firm creates a fund that will be used to invest in the total field of competitors in a single niche market. The complexity comes about in its execution, which may be why no one has ever tried to do it on the scale that they envision before now. The first prize effort is underway to develop better biofuels.

Unlike traditional venture funds that invest in multiple companies or sector funds that serve particular markets, the prize capital model starts with this “matrix fund”. The genius behind the idea is that this fund drives an entire ecosystem for directing high-return innovations. The largest and most noticeable element is a very public science contest that all of the funded companies take part in, going after a ten million dollar prize purse and racing to be the first to establish a particular invention, task, or medical cure.

The Prize Capital notion is revolutionary and differs from existing venture or sector funds on several different dimensions. First, the combination of the matrix funding model with the prize competition is a brilliant deal-discovery mechanism. The allure of the challenge and the chance to be in the spotlight, not to mention the actual cash prize itself, can help to locate and identify potential technology solutions in a particular market niche. Because the prize is a public one, the bright light of worldwide publicity associated with the contest can help bring about all sorts of benefits to the competing companies, including attracting additional investors and management talent.

Second, “the matrix model permits investors to bet on every horse in the race,” says Lee Stein, one of the founders of Prize Capital and an early leader in the Internet payments industry in the mid-1990s. “A lot of times VCs don’t make investments because they have a short list of companies in a particular niche but can only invest in one. The matrix model enables them to play the full field and spread their risk.”

Traditional venture capital funding is not structured to take positions in direct competitors, while the matrix concept relishes this situation. Prize Capital leverages its relationship with the prize management industry to take positions with everyone in a given field. As long as the competition is attractive enough to cause everyone in a given field to enter a particular competition, the result is a new opportunity for investors to become involved with cutting edge technology. Spreading the investments across the matrix can create additional leverage and reduce the risk of the investors.

A third difference is that Prize Capital will own a royalty stream on the intellectual property generated by the teams in the competition. Even if a given company fails to win the prize, the fund has the ability to succeed.

Fourth, the prize mechanics are important part of the deal, and here is where the groundbreaking work on the Ansari X PRIZE has paid off. These mechanics have to be carefully scripted and innovation targets clearly defined. The competition also requires that the ultimate science must be repeatable and independently verifiable. This was done on the Ansari X PRIZE and is an essential element of any planned future competitions.

The prize is only awarded when a positive report comes back saying everything works. This process is more stringent than that is typically required by peer-reviewed academic journals, the current prestige venue for scientific results. Prize Capital thus could be in an interesting position of being able to set a very high bar here for how basic research is conducted in the future.

While the traditional VC trades capital for equity positions in their portfolio companies, Prize Capital can use other kinds of benefits, including the additional influence from the publicity and activities of the competitors as they work hard to meet the particular goals to win the prize, to secure stakes in the innovation on favorable terms.

Most science competitions have been funded through philanthropic means. Prize Capitalism leverages the large jumps in technology innovation and uses it to fuel an entire ecosystem of investments to take advantage of these innovations.

Look at what happened with the original X PRIZE. That initial $10 million prize purse was leveraged into over $100 million into work being done to develop two spaceports in the New Mexico and Arabian deserts. This isn’t just a lot of dot-com sock puppets or social networking startups depending on ad click-throughs. This is hard-core real estate development, new job creation and engineers building real assets on the ground.

The Prize Capital model has something for everybody. It could bring a ray of hope for many people that are looking at ways to dramatically increase basic research and kick start medical cures. It can co-opt the heavy publicity surrounding the whole prize itself and the take advantage of the spirit of invention and innovation that so often goes hand-in-hand with the best American capitalists. It has universal appeal across nations and cultures too, and can play as well with the new generation of Asian proto-capitalists and with the old crew along Sand Hill Road too. And it has some Hollywood glitz on the order of “American Idol” and yet still appeals to button-down Wall Street bottom-line sensibilities. It is an intriguing mix of investors, capitalists, non-profit charities and philanthropists working hand-in-hand, all in the name of advancing science and fostering innovation. I wish them well and hope to see the fruits of their labors soon. In the meantime, keep your eyes on other prizes.

http://strom.wordpress.com/2009/08/01/prizecapital/

The Crowd Is Wise (When It’s Focused)

Sun, 19 Jul 2009 11:19:29 -0700

By Steve Lohr
The New York Times

FEW concepts in business have been as popular and appealing in recent years as the emerging discipline of “open innovation.” It is variously described as crowdsourcing, the wisdom of crowds, collective intelligence and peer production — and these terms apply to a range of practices.

The overarching notion is that the Internet opens the door to a new world of democratic idea generation and collaborative production. Early triumphs like the Linux operating system and the Wikipedia Web encyclopedia are seen as harbingers.

In the new model, innovation is often portrayed as a numbers game. The more heads, the better — all weighing in, commenting, offering ideas. Collective knowledge prevails, as if a force of egalitarian inevitability.

But a look at recent cases and new research suggests that open-innovation models succeed only when carefully designed for a particular task and when the incentives are tailored to attract the most effective collaborators. “There is this misconception that you can sprinkle crowd wisdom on something and things will turn out for the best,” said Thomas W. Malone, director of the Center for Collective Intelligence at the Massachusetts Institute of Technology. “That’s not true. It’s not magic.”

The Netflix Prize is a stellar example of crowdsourcing. In October 2006, Netflix, the movie rental company, announced that it would pay $1 million to the contestant who could improve the movie recommendations made by Netflix’s internal software, Cinematch, by at least 10 percent. In other words, the company wanted recommendations that were at least 10 percent closer to the preferences of its customers, as measured by their own ratings.

(Cinematch analyzes each customer’s film-viewing habits and recommends other movies that the customer might enjoy. More accurate recommendations increase Netflix’s appeal to its audience.)

The contest will end next week because a contestant finally surpassed the 10 percent hurdle on June 26, and, according to the rules of the competition, rivals have 30 days from that date to try to beat the leader. The frontrunner is a seven-person team, and its members are statisticians, machine learning experts and computer engineers from the United States, Austria, Canada and Israel. It is led by statisticians at AT&T Research.

The leading team is a very elite crowd, indeed, but it is also one that was made possible by the Internet. The original three AT&T researchers (one has since joined Yahoo Research, but remains on the contest team) made good strides in the first year of the contest. But to make further progress, they went looking for people with other skills and perspectives. So they reached out eventually to a pair of two-person teams, who were among the leaders in the rankings posted on the contest Web site.

“The leader board was right there,” said Chris Volinsky, director of statistics research at AT&T. “It was pretty obvious who the top teams were.”

Though leading, his team may not win. But the teams in close pursuit are similar collaborations of skilled researchers and engineers.

The Netflix contest has lured experts worldwide not only because of the prize money but also because it offered a daunting challenge. The contestants’ algorithms must find patterns nestled in a collection of more than 100 million movie ratings. What is learned in tackling such a large-scale data analysis and predictive-modeling problem could well be applied in many industries, like Web commerce or telecommunications. “It made sense for us both from the perspective of AT&T and scientific research,” Mr. Volinsky explained.

In the Netflix contest, the winning idea is simply the one with the highest score. But often, companies rely on a contributing crowd for ideas, though management then chooses. I.B.M., for example, conducts online brainstorming sessions it calls Jams — 13 over the last seven years.

I.B.M. used one session to guide its strategy for investing in new growth fields, starting in 2006. An estimated 150,000 employees, clients, business partners and academics participated. Management sifted through the ideas and committed $100 million to invest in several opportunities to apply technology innovations to energy saving, health care and smart electricity grids.

“It starts out as crowdsourcing and it is culled to a set of action items,” said Jeffrey T. Kreulen, a researcher at the I.B.M. Almaden Research Center in San Jose, Calif.

Open-innovation models are adopted to overcome the constraints of corporate hierarchies. But successful projects are typically hybrids of ideas flowing from a decentralized crowd and a hierarchy winnowing and making decisions. In Linux’s case, anyone can submit code, but Linus Torvalds and a few lieutenants decide what code will be included in the operating system, noted Mr. Malone of M.I.T. Even Wikipedia — produced by collaborating clusters of contributors focused on particular areas of interest — relies on administrators to make final judgments on whether to delete a challenged article, he added.

“Most of the interesting examples of collective intelligence contain many different design patterns,” Mr. Malone said.

In a recent paper, “Harnessing Crowds: Mapping the Genome of Collective Intelligence,” Mr. Malone and his two co-authors, Robert Laubacher, a research scientist at M.I.T., and Chrysanthos Dellarocas, a professor at the University of Maryland, use a biological analogy in calling the design patterns of collective intelligence systems “genes.” They studied the genelike building blocks in more than 250 examples of collective intelligence enabled by the Web. The intent, they write, is to provide a systematic framework for thinking about collective intelligence, so “managers can do more than just look at examples and hope for inspiration.”

OPENING the corporate doors to ideas and inspiration from the collective crowd holds great potential, but there are pitfalls, warns Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley. To succeed, Mr. Chesbrough said, a company must have a culture open to outside ideas and a system for vetting and acting on them.

“In business, it’s not how many ideas you have,” he observed. “What matters is how many ideas you translate into products and services.”

http://www.nytimes.com/2009/07/19/technology/internet/19unboxed.html?_r=1&th=&emc=th&pagewanted=print

Exxon Sinks $600M Into Algae-Based Biofuels in Major Strategy Shift

Tue, 14 Jul 2009 17:53:56 -0700

By KATIE HOWELL
Greenwire

Oil giant Exxon Mobil Corp. is making a major jump into renewable energy with a $600 million investment in algae-based biofuels.

Exxon is joining a biotech company, Synthetic Genomics Inc., to research and develop next-generation biofuels produced from sunlight, water and waste carbon dioxide by photosynthetic pond scum.

"The world faces a significant challenge to supply the energy required for economic development and improved standards of living while managing greenhouse gas emissions and the risks of climate change," said Emil Jacobs, vice president of research and development at Exxon Mobil Research and Engineering Co. "It's going to take integrated solutions and the development of all commercially viable energy sources, improved energy efficiency and effective steps to curb emissions. It is also going to include the development of new technology."

Exxon Mobil's collaboration with Synthetic Genomics will last five to six years, Jacobs said, and will involve the creation of a new test facility in San Diego to study algae-growing methods and oil extraction techniques. After that, he said the company could invest billions of dollars more to scale up the technology and bring it to commercial production.

"We're not claiming to know all the answers," said Craig Venter, founder and CEO of Synthetic Genomics, which has so far done early work on algae strains. "There are different approaches to what is truly economically scalable, so we're testing things and giving a new reality to the timelines and expectations of what it takes to have a global impact on fuel supply."

Jacobs and Venter are mum about the specific technology the collaborative effort would employ. They said the team would investigate all options, including growing organisms in open ponds and in closed photobioreactors.

They added that they were likewise uncertain what end-product fuels would result from the collaboration. Other startup companies have announced that they were producing both synthetic crude and biodiesel using photosynthetic algae (Greenwire, April 28).

"As far as products to expect from this program, our intent is to make hydrocarbons that look a lot like today's transportation fuels," Jacobs said. "We want to produce hydrocarbons that look like today's refinery products, that can go into a refinery to be processed along with other petroleum streams and then used in the transportation fleet or even jet fuel. And we think we've got a good chance of doing that."

Exxon Mobil launched the partnership after years of being publicly opposed to investing in renewable energy. Privately, though, Jacobs said the company has been investigating the sector for years.

"It's fair to say that we looked at all the biofuels options," Jacobs said. "Algae ended up on top."

Others in the algae-biofuels industry say Exxon Mobil's investment validates the sector.

"A couple years ago, the petroleum institute said there's only a couple of years left for oil, and now they're really finally acting on that," said Riggs Eckelberry, president and CEO of OriginOil Inc. "Algae is the feedstock to overtake petroleum. It's the real alternative to petroleum."

Environmentalists were more cautious in their appraisal of the Exxon Mobil-Synthetic Genomics plan.

"They've never done anything like this before -- invested real money in the renewables sector," said Kert Davies, research director at Greenpeace. "We've always said [the oil industry] has to be part of the climate change solution. We can't solve anything without companies like Exxon helping."
He added, "I'm guarding my optimism."

Exxon Mobil's timing is noteworthy, Davies said, because of the ongoing energy and climate legislative fight.

"It's interesting timing as the oil companies are struggling to find a place at the table," Davies said.

Renewable fuels standard

While Exxon Mobil's investment marks a sea change in activity in the sector, significant challenges remain in place to achieve wide-scale commercial development.

Next-wave biofuels that could reduce carbon emissions and displace oil imports are politically popular but have not moved into commercial production as fast as supporters would have hoped. Biofuels overall got a boost through a 2007 law that expands the national renewable fuels standard, or RFS, to reach 36 billion gallons by 2022.

But Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) said the RFS expansion is too restrictive and could freeze out emerging technologies -- including algae-based biofuels. He is calling for changes that would make it more "technology- and feedstock-neutral" to accommodate fuels that could ultimately prove superior in several respects.

"Algae-based fuels are the most obvious example, which, despite having characteristics superior to any renewable fuels in commercial production today, have no home in the RFS," Bingaman said in a column about the standards published in the Politico newspaper.

Senior reporter Ben Geman contributed.

http://www.nytimes.com/gwire/2009/07/14/14greenwire-exxon-sinks-600m-into-algae-based-biofuels-in-33562.html

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