Although e-commerce destroys some intermediaries, it creates a greater dependence on others, as well as on some brand new intermediaries. Some of the intermediary services that may entail the cost of e-commerce transactions include advertising, secure online payments, and shipping. The relative ease of becoming an e-commerce seller and building stores leads to such a huge number of transactions that consumers can easily get lost. This increases the importance of using advertising to create a brand and thus increase consumer awareness and trust. For new e-commerce companies, this process can be costly and entail significant transaction costs. The openness, global reach and lack of physicality inherent in e-commerce also make it vulnerable to fraud and thus increase some of the costs for e-commerce enterprises compared to traditional stores. New methods are being developed to protect the use of credit cards in e-commerce transactions, but the need for greater security and authentication of users requires higher costs. An important feature of e-commerce is the ease of direct delivery of purchases. In the case of tangible goods such as books, this leads to shipping costs, which in most cases lead to higher prices, negating significant savings in e-commerce and dramatically increasing transaction costs.
With the advent of the Internet, e-commerce is growing rapidly and becoming an open and rapidly changing global market with an ever-increasing number of participants. Due to the open and global nature of e-commerce, the market is likely to expand and change the structure of the market, both in terms of the number and size of players and the way players compete with each other in international markets. Digitized products can cross borders in real time, consumers can shop 24 hours a day, 7 days a week, and companies are increasingly facing international competition online.
Under our collective radar are IBM’s first flexible disk drive, the world’s first email from Ray Tomlinson, the launch of the first Xerox PARC laser printer and Cream Soda Computer by Bill Fernandez and Steve Wozniak (who together with Steve founded Apple Computer. Jobs a few years later).
Times haven’t changed much. We live in 2011, and many of us are going through a similar break in the events that surround us. We are in the equivalent of 1986, the year before the advent of personal computers and the Internet, which are fundamentally changing our world. 1986 was also the year of the beginning of a serious financial transition to new markets. Venture Capital (VC) had the biggest fundraising season – about $750 million, and NASDA’s was formed to help these companies create a market.
Kleiner Perkins Caulfield and Beyers (KPCB), a firm that has turned technical expertise into perhaps Silicon Valley’s most successful venture capital firm, was in charge. The IT model was looking for a percentage of big gains to offset losses: investments such as $8 million in Cerent, which were sold to Cisco Systems for $6.9 billion, could offset many of the great ideas that didn’t. Not to the end.
Changing financial models
But the venture capital model, which has so well established itself in the field of information and telecommunications, will not work in the face of a new revolution. The scale of funding for the clean technology revolution is not only an order of magnitude greater than the previous one, so early on in the game, even analysts are struggling to look to the future.
Steven Milunovic, who attended the BofA Merrill Lynch Global Research dinner, noted that each revolution has an innovative phase that can last up to 25 years, followed by a 25-year implementation phase. Most of the “money is made in the first 20 years.” so the real players want to play early. But here’s the question: where, for how much and with whom will you go?
There is still scepticism and market uncertainty about the long-term power of the clean energy revolution. Milunovic believes that many institutional investors do not believe in global warming and take a wait-and-see attitude, complicated by the government’s energy security impasse.
Valley of Death
Any new technology requires new funding. In the sixth revolution, when the budget is ten times larger than that of IT, the task goes from idea to prototype and commercialization. Death Valley, as outlined in a recent Bloomberg New Energy Finance official document, “The Crossing of the Valley of Death,” represents a gap between technological development and commercial maturity.
But some investors and politicians continue to hope that private equity will fill the gap, as did the previous one. They are concerned about the debt of government programs, such as the Recovery and Reinvestment of America Act, which invested millions in new technologies in the clean energy sector and which helped states rebuild infrastructure and other projects. They wonder why the traditional financing models that have made the United States a world leader in information technology and telecommunications cannot work today unless the government backs down.
But analysts at many sponsors believe that government support in any form is the key to advancing projects, as clean technology and biotechnology projects require much greater investment to achieve commercialization. This gap affects not only commercialization, but also investment in new technologies, as financial interests fear that their investments will not be realized on a commercial scale.
How new technologies are radically different from the computer revolution.
This revolution largely depends on the existing but aging energy infrastructure. Nearly 40 years after the start of the telecommunications revolution, we are still struggling with fragmented, redundant and inefficient communications infrastructure. Integrating new sources of energy and making better use of what we have is an even more difficult and important task.
According to the official Bloomberg New Energy Finance document, “Crossing the Valley of Death,