I attended the third annual Cooley Clean Energy and Technologies Conference November 2 in Redwood Shores, and there were several interesting speakers and discussions. The event focused on innovative models in business, financing, policy and regulation. Some of the highlights:
There is a huge potential for the reduction of emissions in global shipping using dozens of existing technologies—the estimate is a reduction of 500 million tons of carbon annually by 2020.
The solar industry globally is way down: global leaders Spain and Germany have reduced spending, a worldwide surplus of equipment has driven down prices, and smaller companies have merged or gone under. Now energy efficiency is the strongest cleantech growth engine.
One panel discussed the need for more creative ideas for funding to help start-ups gain cash flow to make it through the “valley of death” that follows the first round of angel funding, to get them to the next stage of additional VC or PE funding.
Another interesting comment, which most of the panel members agreed with, is that the government provides initial funding from grants and loan guarantees, but there isn’t a long-term policy commitment to see it through to fruition.
The panelists also believe that more government money should go to clean energy projects (such as infrastructure and the smart grid) and not just new technologies. This is where the jobs will come from in greater numbers. Personally, I think this is on target. The current national grid was designed many decades ago, and upgrading it is critical. This investment in our infrastructure would have an immediate effect on job creation and energy savings; it is also critical for our national defense.
Speaking of jobs, Clint Wilder from Clean Edge presented the annual jobs report for the industry. There are 3 million cleantech jobs globally, and 500,000 of those are in California. In fact, the Bay Area is ranked No. 1 in the country, followed by L.A. at No. 2, San Diego at No. 7 and Sacramento is No. 15. Four out of the top 15, that’s not bad!
The bottom line seems to be that to make an impact on the environment and creating more jobs, now and in the future, there should be more focus on using existing technologies, more project-based funding, and a long-term policy plan from the government and industry.
Strange comfort: someone, somewhere, is watching—and rating—your accounting policies
Forbes, in conjunction with a quantitative analysis firm called Audit Integrity, recently ranked the most trustworthy publicly traded companies in America. Audit Integrity uses a quantitative metric score to assess the risk of a company’s accounting policies and corporate governance practices that they call the Accounting and Governance Risk rating. The assessment uses data from income statements and balance sheets along with more than 100 qualitative factors to create the rating.
We all love lists, but is a single-risk measure a good thing? And, while I like to think that there are useful consolidated metrics that could be used for assessing risk, the synthesis and interpretation of metrics still requires an experienced hand and qualitative judgment.
But even so, I guess we can take strange comfort in knowing that someone, somewhere, is crunching our rev rec policy into a statistical model.
What’s the big deal about blogging?
When RoseRyan made the decision to initiate a company blog and asked for volunteers, I found my hand going up of its own volition. After all, I knew something about blogging—I had watched Julie and Julia. Twice. Then, in a panic, I immediately did some research on blogs so I wouldn’t look entirely clueless. Did you know that blog stands for web log? As part of my preparation, I read all kinds of blogs and found they ran the gamut of technical communications to online diaries. Some were great sources of information and some were just embarrassing.
So what’s the big deal with blogs, and why do we do them? I have found that they are a great way to provide information and to communicate with those who are like minded; it’s a way for us to voice our opinions to this interconnected world. In this day and age of social media (Facebook, Twitter, MySpace and LinkedIn) we have to continue to move with the times or be left behind.
More important, I think that for you, the reader, blogs not only provide information, they also provide a view into the company, or person, writing them. They provide you with a look at our collective brain, our interests and values, and insight into what makes us, and our company, who we are. Looking at the posts of my colleagues, I am impressed by the breadth of technical content, the willingness to share our knowledge and the ability to provide straight forward analysis of the accounting issues facing companies today. We blog about the joys of flexible work hours, the ability to provide solutions to our clients, and the reasons we would rather be consultants.
Our Gurus Unaudited blog clearly reflects who we are, both as people and as a company: communicators, problem solvers, analyzers of technical issues, and a team that is there for our clients. The big deal about blogging is staying current, finding another way to make a connection, to show you who we are, and to provide you with answers about issues and about us. I can’t begin to assess what you think about blogs, but raising my hand to volunteer has certainly opened a whole new set of doors for me.
Who says finance pros don’t have a sense of humor?
We’re pleased to report that the RoseRyan Finance Pro Personality Quiz is an unqualified success. We sent the quiz—a tongue-in-cheek assessment—as our New Year’s gift to clients, partners and others on January 4. Lots of people have taken it, and they’re not only getting insight into their true finance personality, they’re laughing. Out loud. What could be a better way to start 2011?
In the first three days, the quiz increased traffic to our website by 400 percent over the average. The e-mail announcing the quiz is our most popular ever. (But then, most of our other e-mails alert recipients to our Intelligence reports, like the page-turners “Rev Rec’s Apples and Oranges” and “Make a Match Made in Heaven,” an M&A guide. We think these are fun too, but we are geeks.)
The quiz has taken hold with folks from FEI, Digital CFO and the Finance Leaders Association—organizations we love and belong to, but they’re not known for their stand-up routines. “I love this!! Who says financial people don’t have a sense of humor!!” was one of the many unsolicited responses we received. Another: “Whoa!!! Everyone needs to take this quiz—it’s great fun with incredible insight into ‘you’!”
Long way to say, if you haven’t taken the quiz yet, you still can. Just go here. If you like it, let your friends know.
New York Times’ flextime article is heartening
FASB & IASB: a match made in heaven or a recipe for disaster?
The lofty goal: To develop a single set of high-quality, international accounting standards that companies worldwide would use for both domestic and cross-border financial reporting.
Last month the FASB and IASB issued a progress report on their convergence projects. Although the boards have made a commitment to issue final standards for the items they consider to be most critical (financial instruments, revenue recognition, leases, fair value measurement and statement of comprehensive income), they have put four projects on hold—the most notable being the financial statement presentation project.
Exposure drafts have been issued for all of the priority projects, with revenue recognition currently getting the most attention. Why is this? Of the exposure drafts that have been issued this year as a part of the convergence effort, the proposed standard on revenue recognition from contracts with customers could arguably have the biggest impact on the most companies.
This exposure draft proposes a single principles-based model (we’ve heard it a million times—we’re getting away from a rules-based model!) under which revenue is recognized as the performance obligations in contracts are satisfied. The obligations are deemed satisfied when control of the promised goods or services is transferred to the customer. The final standard would replace all existing guidance, including all industry-specific guidance. Thirty-six technology companies provided comment letters to the boards during the commenting period deadline. In general, they support the proposed single revenue recognition model.
The following concerns, however, were noted:
Last month the IASB and FASB held four public roundtable discussions, both in the United States and abroad, to further understand the concerns about the items presented in the exposure draft. We should expect a final standard on revenue recognition by June 30, 2011.
This seems like quite a task for the IASB and FASB to undertake, and there are four other areas for which final standards are due to be issued during 2011 (financial instruments, leases, fair value measurement and statement of comprehensive income). Will the two boards be able to compromise? Will they listen to the concerns of the public? Will the convergence of the IASB and FASB be a perfect marriage?
Only time will tell! We’ll keep you posted.
XBRL tagging: lessons from the first wave
This past fall I attended a panel discussion presented by the SEC Professionals Group on detailed XBRL tagging. Overall it was very helpful and provided great insight into what other companies experienced for their first experience with detailed tagging.
The incredible workload surprised all of the panel members, who were primarily SEC reporting managers and controllers from high-tech companies that were part of the Group One XBRL. This first group had to prepare detailed tagged financial statements and footnotes (versus block tagging), so the panel included some of the first companies who experienced the joys and the trauma of detailed XBRL tagging.
Common pain points for these companies: the huge volume of work involved in the detailed tagging (an average of ~250 hours in prep/review/validation) in addition to their normal filing process; incredibly long turnaround times for changes from the printers (six to seven days in some cases); many errors in tags chosen by the printers; and subpar quality on work outsourced by the printers.
The lessons learned reflect my own work with XBRL: start the process early, and leave plenty of time for review; don’t rely on printers’ accounting expertise (you know your financials and footnotes better than they do); the responsibility for the accuracy of the XBRL filing resides with you, not the printer; and have a really solid methodology for tracking changes. Finally, do a test run to make sure the results meet your expectations.
Keep these things in mind, and things will go a lot more smoothly.
Two days, 18 business plans and the winner is…
The week before last I participated as a judge for the finalists in this year’s 2010 Cleantech Open national competition. At first, the daunting task of reading 18 business plans (20+ pages each) in less than one week had me asking myself “Why I am doing this?” But once I started to delve into the plans, it became incredibly interesting to read about the various ideas and technologies that some very bright people have been working on.
A little history—18 finalists competed in the following categories: energy efficiency, air, water and waste, renewable energy, transportation, smart power and green building. Competitors came from five regions in the United States: California, Northwest, Rocky Mountain, Northeast and North Central. Each company was allotted 15 minutes to present their pitch to the 12 judges. Judges were then allowed 15 minutes for questions and answers. Finally, the judges gave five minutes at most of feedback to each company regarding their presentation and business plan. Times were strictly adhered to due to the packed two-day schedule.
Judging the finalists was much more difficult than assessing the semifinalists. All contestants were well prepared. Several have already sold products to customers and were able to demonstrate their products to the judges, including the electric vehicle! Many had products that can be used by people in their day-to-day lives such as the water purifying system from Puralytics (winner of the contest) and the automatic tire inflation system from Pressure Sentinel.
The judges were amazing and represented a variety of companies and backgrounds, including investors (VC and corporate), attorneys, finance, banking and government. All had extensive experience in the cleantech arena and brought that depth of experience to the judging. Criteria in judging included the opportunity for significant business return; exciting, potentially disruptive or “game-changing” sizzle; and sustainability.
All in all, the two days were fun and well worth the time and effort in judging. Go to www.cleantechopen.com for a list of winners and more information about each of the finalists.
Tough choices: top cleantech finance pros
Last week we published the list of top 20 cleantech finance pros to watch in the coming year. I created the list after careful consideration and with great input from industry sources—but it was difficult to narrow the field due to ever-changing business models and wide expanse that cleantech covers, such as water, energy efficiency, solar, wind, biofuels, building materials, smart grid, transportation and energy storage.
These finance executives and their groundbreaking companies are making a big impact on cleantech, in California and beyond. We’re keeping an eye on them, and if you’re working in cleantech you will most likely be impacted by what these pros and their colleagues are doing. If you have any comments, please let me know at cvane(at)roseryan.com.
Clean energy needs federal policy commitment, project funding
I attended the third annual Cooley Clean Energy and Technologies Conference November 2 in Redwood Shores, and there were several interesting speakers and discussions. The event focused on innovative models in business, financing, policy and regulation. Some of the highlights:
There is a huge potential for the reduction of emissions in global shipping using dozens of existing technologies—the estimate is a reduction of 500 million tons of carbon annually by 2020.
The solar industry globally is way down: global leaders Spain and Germany have reduced spending, a worldwide surplus of equipment has driven down prices, and smaller companies have merged or gone under. Now energy efficiency is the strongest cleantech growth engine.
One panel discussed the need for more creative ideas for funding to help start-ups gain cash flow to make it through the “valley of death” that follows the first round of angel funding, to get them to the next stage of additional VC or PE funding.
Another interesting comment, which most of the panel members agreed with, is that the government provides initial funding from grants and loan guarantees, but there isn’t a long-term policy commitment to see it through to fruition.
The panelists also believe that more government money should go to clean energy projects (such as infrastructure and the smart grid) and not just new technologies. This is where the jobs will come from in greater numbers. Personally, I think this is on target. The current national grid was designed many decades ago, and upgrading it is critical. This investment in our infrastructure would have an immediate effect on job creation and energy savings; it is also critical for our national defense.
Speaking of jobs, Clint Wilder from Clean Edge presented the annual jobs report for the industry. There are 3 million cleantech jobs globally, and 500,000 of those are in California. In fact, the Bay Area is ranked No. 1 in the country, followed by L.A. at No. 2, San Diego at No. 7 and Sacramento is No. 15. Four out of the top 15, that’s not bad!
The bottom line seems to be that to make an impact on the environment and creating more jobs, now and in the future, there should be more focus on using existing technologies, more project-based funding, and a long-term policy plan from the government and industry.
Great clients + good food and wine = success
I’m happy to report that a great time was had by all at RoseRyan’s annual client appreciation party. More than 70 clients and RoseRyan folks gathered to toast success, network and enjoy being appreciated and pampered at Spalti’s in Palo Alto. Local wines were tasted, delightful appetizers were consumed, and good friends enjoyed catching up with one another. Thank you to everyone who attended, and we look forward to seeing you at next year’s celebration!