Smart grid plateau: Why the current stall may signal a rebirth

Editor's note: My friend Michael Butler is Chairman & CEO of Cascadia Capital, a national investment banking firm for emerging growth companies and one that has participated in numerous cleantech and smart grid financings. He sent the short editorial below to his clients. I thought it had an important lesson for the smart grid sector. Although we never saw a recession, we are starting to see a plateau, with growth slowing to more reasonable levels from the ultra-rapid growth brought on by the stimulus funding. As Michael implies, this plateau will end. When it does, the companies that make it through the slow period will be the stronger for it. – Jesse Berst

By Michael Butler

We all remember the Internet boom in the late 1990s and early 2000s. New companies sprung up seemingly overnight. The word “new economy” was all anyone ever heard. These “new economy” companies didn’t have revenue much less profits so new metrics like “eyeballs” and “page views” were devised to justify astonishing valuations. Companies in the “old economy” quickly moved to embrace the Internet or risk becoming obsolete. Many companies added “.com” to their name to increase the value of their companies. Many companies flocked to the public markets where they were greeted with astonishing, seemingly “unreal” valuations based on hype and momentum as opposed to sound fundamentals. 

Then the madness came to an end as the economy went into a recession and the vast majority of the new Internet companies went out of business. The Internet became an area to be avoided by investors as capital flowed back into “old economy” companies.

However, a funny thing happened – a few bright and determined entrepreneurs, executives and investors remained in the sector and devised better business models and better companies. Google, Facebook, Amazon and eBay emerged during this period and are now household names. Today the Internet is prevalent in our daily lives albeit without the hype. Sound familiar? It should.

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