Musings on the State of the Art

Paul Kedrosky – The tilt thing…

Entrepreneurship is and should be irrational. You are taking on huge risks, showing immense ego, and trying something with an absurdly high failure rate. But it at these moments when it feels like you’re nuts not to try being entrepreneurial — the Valley being on “tilt” — that we have an outside chance of resetting the base rate at which companies get created in this country. While I tease people about it on a regular basis, especially journalists-turned-entrepreneurs, I wouldn’t have it any other way. Other than maybe the Harvard MBAs. (I kid. Mostly )

Steve Blank at SXSW… to a roomful of future entrepreneurs. I’m paraphrasing.

You’re all insane. There are ten of you that will exit for about 10 MM Dollars. There’s 2 of you that will exit for more than 100 MM Dollars.

He paused for a beat, and then continued.

Right now, every one of you is feeling sorry for the other 385 people in this room.

The manager of what was once the most profitable investment firm in the world tells the story of his life, and through it the life of his lawyer, and business in Russia. More importantly, I quote him as saying it is the story of “unbelievable bravery and integrity”.

On October 11, 2010, a Bloomberg Business Week article titled Schwarzenegger Says Russia is Gold Mine for Investorssaid that Governor Schwarzenegger met Russian President Dmitry Medvedev for the second time in half a year and has embraced the Russian leader’s plan to recreate a Silicon Valley in a suburb outside of Moscow. Governor Schwarzenegger compared Russia to a gold mine of economic opportunity as he led a trade mission to Moscow.

But there is price for the opportunity. Zealous government oversight and corruption continue to plague even the most stable developing market.

This is the price.

Click here to watch the entire video – it is 40 minutes long, but it is worth watching.

Emerging markets and the symptoms of a larger disease :

Here’s some key quotes regarding India’s energy needs, and why they’re having some difficulty

Premier Manmohan Singh told India’s energy firms on Monday to scour the globe for fuel supplies as he warned the country’s demand for fossil fuels was set to soar 40 percent over the next decade.
The country of more than 1.1 billion people already imports nearly 80 percent of its crude oil to fuel an economy that is expected to grow 8.5 percent this year and at least nine percent next year.
Demand for hydrocarbons — petroleum, coal, natural gas — “over the next 10 years will increase by over 40 percent,” Singh told an energy conference in New Delhi.

In this same time period, the amount of arable land has reduced from 0.35 hectares per head to less than 0.15 hectare. Obviously, there have been dramatic increases in both production and efficiency in agriculture in that time, but that is driven on the back of available energy – whether the manufacture of fertilizers, machines to harvest etc.

That makes this need for energy even more important. Here’s why there’s a problem –

Singh’s call comes as India is locked in a race with emerging market rival China for fuel supplies to feed their booming economies in which analysts say Beijing has taken a strong lead.
India faces “immense competition from China which has been far quicker to react when an asset becomes available,” Kalpana Jain, senior director of global consultancy Deloitte, told AFP.

Why are they quicker to react?

India has been struggling to catch up with China in the race for fuel in Africa, Latin America and elsewhere. Everywhere, China — with its deep pockets and energetic diplomacy — has been beating bureaucratic India to the punch in the quest to lock in long-term supplies abroad, analysts say.

This is a symptom that shows up across several industries, not just energy.
BTW – for more of this particular problem, check out : http://farmlandgrab.org/

[hat tip to gregor.us for some of the data]