What Do We Want From China?

One of the most ludicrous things I’ve heard work its way into the American political discourse recently is the notion that understanding is akin to appeasement and weakness. It seems to me that the real reason behind the reluctance to engage in more diplomacy is the offspring of a national strategy bricolage of lobbyist handiwork and strawman positions offered up by politicans trying to get elected.

Nowhere is this more evident than how America deals with China. We need a clear (and dare I say strategic!) understanding of what we want from their government, citizens, and institutions as a starting point for understanding. We’re sadly not there, and there is an increasing perception in China that the west is impossible to please. In reading this post by blogger Elliott Ng and commenter CninDC at CN reviews, I’ve begun to understand this lack of focus is even taking its toll on the Olympic games. CninDC writes:

“If you watch news in China you’ve probably already noticed that the China’s domestic Olympic propaganda has been dramatically toned down from wanting a most successful Olympic to a merely safe one. The reality is there, that a most successful Olympic is already beyond our reach. The people they wanted to impress the most, the western media and the general public from the western countries, are impossible to please. So they go for the next best one, that at least it’s safe, no ugly scenes (or at least not a major one), and the Chinese can enjoy the party all by themselves.”

The larger point is that if we Americans don’t have a strong sense of what we want, the Chinese will eventually come to a collective “oh, fuck it”, and stop reaching out. Many of the Chinese already feel like the west is impossible to please.

Both sides need to bridge-build, of course. A large part of the problem is Chinese misconceptions about what “the west” is and is not. I’ve come to roll my eyes a bit when I hear the term from some of my friends, since the west doesn’t speak with one voice but instead is a chorus of many voices. Lumping so many different nationalities, objectives, ethics, religions, and languages will almost certainly make that group impossible to please. They’ll have to make the leap of understanding that we’re not a homogenous “west”, which in time I’m convinced will happen.

We in turn need to define our priorities as a nation and communicate them clearly (both to them and to ourselves). To that point, I’ll reproduce below a moment of zen courtesy of a cbc forum poet without further comment:

What do you want from us?

When we were called “sick man of Asia”, we were called peril.
When we billed to be the next superpower, we’re called the threat

When we closed our doors, you smuggled drugs to open markets.
when we embrace free trade, you blame us for taking away your jobs.

when we’re falling apart, you marched in your troops and wanted your fair share.
when we’re putting the broken pieces together, “Free Tibet” you screamed! “it was invasion.”

So we tried communism, you hated us for being communist.
So we embraced capitalism, you hate us for being capitalist,

Then we have a billion people, you said we’re destroying the planet.
Then we limit our numbers, you said it was human rights abuses.

When we were poor, you think we’re dogs,
When we loan you cash, you blamed us for your debts.

When we build our industries, you called us polluters.
When we sell you goods, you blamed us for global warming,
When we buy oil, you called that exploitation and genocide.

When we were lost in chaos and rampage, you wanted rule s of laws for us.
When we uphold law and order against violence, you called that violation of human rights.

When we were silent, you said you want us to have free speech.
When we were silent no more, you say we were brainwashed.

Why do you hate us so much? We asked. “No”. You answered, “we don’t hate you”.
We don’t hate you either Bud, do you understand us?? “of course we do”, you said, “We have CNN, BBC, and CBC”.

But why, we still feel, your western people are not happy with us.

What do you really want from us??

My friend, What do you really want from us??

Overnight Successes Never Are

I was recently in front of the television (a rare occurance) watching a documentary on Pixar’s humble origins and its jaw dropping string of successes since its inception.  To casual observers, it seems like the studio came out of nowhere to redefine their market. The reality is quite different – they’ve been working at it since the 1980s. I was struck by something Steve Jobs said about Pixar’s rise to fame, which I’ve paraphrased in this blog post’s title. He should know – it took him a quarter century to build his legacy. The same will be required to developing our national energy strategy, and Jobs’ turn of phrase also brought back to mind President Bush’s stated goals for a rapid switch to E85 ethanol. His statement during the 2006 State of the Union address: ” to make this new kind of ethanol practical and competitive within six years.”

Let’s dissect current energy consumption and extrapolate what it would take to switch to E85 ethanol using some back-of-napkin type math. The U.S. consumes 388.6 million gallons of gasoline per day for transportation, according to Energy Information Administration. Since 1 bushel of corn can produce 2.5 gallons of ethanol, the U.S. would need 132 million bushels of corn per day, or 48 billion bushels per year, to produce sufficient quantities of ethanol to displace 85% of petrol use. Compare that figure to U.S Department of Agriculture projections that U.S. corn production is expected to be 11.715 billion for the 2008/2009 period. This is before we adjust for a growing economy and thus increased demand for fuel. In other words, it isn’t going to happen. The theoretical maximum we are able to produce is about two thirds of what we’ll need, and that’s before we actually consider the fact that we have to use corn for trivial uses like say, food.

Which brings me to what I really want to talk about in this blog post: Brazil.

Brazil’s policymakers understood all too well during the 1973 oil shocks that they need to be ready for the next shock. They also understood that apparent “overnight successes” are actually the culmination of many years of hard work, as Steve Jobs notes. After 30 years and billions of dollars worth of incentives, the country is now beginning to execute on a plan which will lead to the complete energy independence. In 2003, Flex Fuel Vehicles (FFVs) were introduced which can run on 100% ethanol or gasoline or a combination of both fuels. The result of careful planning and methodical progressis starting to create critical mass in the retail market. Figures from Brazil’s National Petroleum Agency (ANP) for September showed national gasoline prices at an average of Brazilian reais (R) 2.49/liter ($5.20/gal). That compares with R1.33/liter for ethanol in the same month, according to the ANP. In states such as Sao Paulo, the country’s ethanol powerhouse, the biofuel in September was available at an average of R1.09/liter versus R2.37 for a liter of gasoline. It simply doesn’t make sense for retail customers to purchase imported energy any longer.

Now I’m not advocating we try to import our way out of the fossil fuels trap by swapping Brazil for the gulf states, nor are the Brazillians interested in obliging. From the New York Times..

“We are not interested in becoming the Saudi Arabia of ethanol,” said Eduardo Carvalho, director of the National Sugarcane Agro-Industry Union, a producer’s group. “It’s not our strategy because it doesn’t produce results. As a large producer and user, I need to have other big buyers and sellers in the international market if ethanol is to become a commodity, which is our real goal.”

Ideally, we would develop an efficient mass transit system which would displace our current automobile culture, but let’s be realistic – Americans love wide open spaces as much as we love our cars. Instead of hoping for an idealistic solution or a silver bullet, I’m instead hoping we can hold the next President and congress accountable for the kind of long term planning we’re seeing south of the border. One other thing is clear from the Brazillian example; even if we move decisively, any shift to national energy independence is going to take some time, and we should be prepared to ride out the short term.

Ok, that’s the end of my rant.. I hope it was thought provoking!

Why AT&T’s IPhone 3G Launch Failed.

Like everyone else who is afflicted with gadget fever, I rushed out to buy an iPhone 3G on the friday release date. I spoke with an apple store friend and was told there were plenty of phones in stock, but I took a brief swing around a nearby AT&T wireless store on my way to the Apple store. While fulling expecting the AT&T store to be out of stock, it doesn’t hurt to ask of course. My 2 minutes spent with the AT&T sales rep left me absolutely flummoxed.

Apple Store in Palo Alto, CA

(photo courtesy of Elliot Ng)

A little context first, as there’s something to be learned from this. You’ve no doubt looked up at the header and noticed “Sales 2.0″ at the top there. It’s not just a cute phrase. To me, Sales 2.0 is sales and business development as it exists today in a world of network effects. For those new to this, Web 2.0 is all about network effects: when you upload a picture to Flickr, you’re not only creating a value by sharing pictures with your friends, you’re indirectly creating value (network value) for Flickr, whose repository of pictures and associated metadata (tags) is now larger (and thus more valuable). The full story of how Tim O’Reilly and others started this is beyond the scope of this post and even this blog, but you can read all about it if you like.

The point here is that in a network effects world, crowdsourcing becomes your primary sales lead generator. This is just common sense – most people making a big ticket purchase scour the web to take the collective temperature of existing owners.I’d go so far as to say that if you work for a sales VP who believes in buying lists and cold calling, then you need to find a new job.

So when blogger Chris Pirillo tells anyone reading that he feels stupid for trusting AT&T wireless sales reps, the network effects immediately and permanently act against AT&T’s sales success. Which brings me back to why I was flummoxed when I spoke to the AT&T wireless sales troglodyte yesterday. Here’s an impressionistic transcript of my exchange with an AT&T sales troglodyte:

Me: “Hi, I’m here for the same reason everyone else is.. are you out of stock?”

Troglodyte: “Yes we are…”

Me: “Ok thanks, bye.”

Troglodyte: “Wait! By now every store in town is likely sold out completely. We’re are already taking orders for the remaining shipments, and we’ll reserve those for folks who sign up. If you don’t sign up, I’m afraid it may be a month or more before you get one, as even the manufacturers are depleted at this point. Trust me, there’s no faster way to go.”

Me (incredulously): “Umm.. I’ll go to the Apple store, thanks.”

This is laughably transparent self-interest on his part, and has generated sales-stalling network effects for AT&T. Sure enough I picked up a phone from the Apple store, who had plenty in stock. So guess where I’m taking my wife when she’s ready to switch to an iPhone?

Now I submit this is what should have happened:

Me: “Hi, I’m here for the same reason everyone else is.. are you out of stock?”

AT&T guy: “Yes we are…”

Me: “Ok thanks, bye.”

AT&T guy: “By the way, you might get lucky with the Apple store up the road. Check with them or with Apple’s availability website if you’d like.  Their lines may be long, however. If you would prefer to not wait in line for hours, I’ll personally order one for you and get it to you instead as soon as possible. Here’s my number in case you strike out over there.”

Now granted Apple probably sent AT&T smaller shipments, and their running out couldn’t have been avoided. However, the point here is not availability but relationship management. Had AT&T sales management trained its staff to be sensitive to the network effects of linked customers, the result would have been trust gained, possibly a relationship developed. They’re not dealing with isolated consumers here. They’re dealing with a smart mob.

Are you listening AT&T?

U.S. Issues Moratorium on Energy Independence?

I don’t know about you, but I feel like there’s a palpable sense for moving forward on energy independence and cleantech these days. Advances in CLFR technology have made commercial solar utilities a legitimate option and Oil tycooons are talking about commercial windmill power, and so are the Dutch.

To quote the NY Times, the U.S. Bureau of Land Management “says an extensive environmental study is needed to determine how large solar plants might affect millions of acres it oversees in six Western states — Arizona, California, Colorado, Nevada, New Mexico and Utah.

But the decision to freeze new solar proposals temporarily, reached late last month, has caused widespread concern in the alternative-energy industry, as fledgling solar companies must wait to see if they can realize their hopes of harnessing power from swaths of sun-baked public land, just as the demand for viable alternative energy is accelerating.”

The U.S. BLM has dominion over some primo resources of sunbaked earth in the American southwest, and locking out commercial solar operations could stunt their development. Spokesmouths for both Solel and Ausra have come out swinging:

““The problem is that this is a very young industry, and the majority of us that are involved are young, struggling, hungry companies,” said Lee Wallach of Solel, a solar power company based in California that has filed numerous applications to build on public land and was considering filing more in the next two years.

On the other hand, there are a number of conservation groups who praised the decision. Afterall, several states require solar developers often hire environmental experts to assess the effects of construction on the desert tortoise and Mojave ground squirrel.

Let’s inject some common sense into the discussion with a few simple questions here:

1. How do we adequately study the environmental impact of large scale solar facilities, since we’ve never really built them?  I’m in favor of conservation of resources like everyone else, but in the absence of actual experience, the process might as well be a bunch of voodoo.

2. How much enviornmental assessment was done on the Gulf of Mexico prior to drilling off the Louisiana coast? Just saying.

3. The bureau says it will continue processing more than 130 applications for development, but how big a backlog is this? If the process is already bottlenecking, it might make sense to slow things down if we won’t lose steam.

Thoughts?