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Posted: November 02, 2012

Filtering out hype to arrive at true value

Colorado Cleantech Industry Association Special Section

David Lewis

The Gartner Hype Cycle has been around since 1995, when it helped make sense of what became the Internet bubble.

You know the Hype Cycle, it’s the pattern of events that follows the invention of a new technology, such as clean technology.

The Gartner Hype Cycle "was originally adopted for technology innovations and companies, but it really is equally applicable for green technology," says Josh Green, general partner of Menlo Park, Calif.-based Mohr Davidow Ventures.

Greentech has "gone through the classic elements of the hype cycle," Green says. "We went through the hype that created unrealistic expectations of the last seven or eight years and now we have gone down the other side of it, which is what we’re experiencing now, which is the trough of disbelief. The key at this point is that what ends up happening is, as we say in Silicon Valley, a lot of the tourists have left town because it’s not so friendly here any longer.

"As an investor I’d say we’re facing some significant headwinds," says Green.

Once greentech pulls itself out of the trough, what’s next?

"The people who are really stalwarts are continuing to chip away and create true value through creating greater productivity, lower costs and all the traditional metrics of what you find in a really good business," Green says.

Yet, even at this market, there is money to be made.

"I absolutely believe there is," Green says. "An investor needs to know where to look.

"I’ve been in Silicon Valley for 32 years so I’ve seen a number of these hype cycles in different industries over that time," Green says. "And when everyone else is losing their wits around you it’s most important to hunker down and work on the things that are really important and really valuable. That’s true when you’re at the top of the curve and when you in the trough as well. It’s most important to realize that you’ve got to build something that’s fundamentally sound, because that’s where real progress comes from."

Not every expert observer believes the hype cycle necessarily is a hype cycle.

"Some people hear the word hype as a negative, so I might recast it as what we might call a very normal pattern for the adoption of innovations" says Charles "Chas" Eggert, president and CEO of OPX Biotechnologies and chairman of Colorado Cleantech Industry Association.

"When we have an innovation, we see its potential; we get excited about the possibilities of that new invention. Then comes the difficult work; the challenging work."

Hype often is an obstacle to progress.

"Once we get through that euphoria, what can really be done to turn this into a real business?" asks Eggert. "Then you get on a more solid footing and you start moving forward along the rest of that curve in that model, and begin to really focus on converting the probabilities into realities.

"It’s a very natural phenomenon in the world of invention, innovation and commercialization," he says. "Many times it’s all about the adoption of new inventions and the natural process of filtering through from the possibilities to the probabilities to the realities."

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