Maturation of the Sustainable Industries: How it Parallels the Dotcom Boom, Bust…and Rebirth

During the internet boom in the late 1990’s and early 2000’s, new companies sprang up seemingly overnight and the words “new economy” became a common turn of phrase in touting the business environment born of this innovative climate. These “new economy” companies didn’t have substantial revenue, much less profits, however, so new metrics like “eyeballs” and “page views” were devised to justify the outrageous size of their estimated valuations.

Companies in the “old economy” were forced to either adapt and embrace this new internet economy, or risk becoming obsolete. Many corporations added dot-com to their name in order to increase the value of their brand. These dot-coms quickly flocked to the public markets where they were embraced with staggering — and what many saw as unrealistic — valuations based on hype as opposed to the traditional criteria that historically had been used to judge a company’s value.

The momentum of internet innovation came crashing to a halt in the early 2000s as the economy went into a recession.  As a result, the vast majority of these new internet companies went bankrupt and capital began to flow back into “old economy” companies as the internet became a pariah among investors and acquirers.

Despite the recessionary backlash to the internet boom, when the dust settled, a select few companies we left standing amid the rubble.  Built on superior business models by determined entrepreneurs with the acumen and persuasiveness to select and retain top tier executives and investors, the survivors of the bust became more efficient and sustainable.  Some of the most prominent internet corporations, such as Google, Facebook, Amazon and eBay, all emerged during this period, re-imagining not just the commercial possibilities of the internet, but the role it plays in our lives.  While the internet rose to prominence in the American cultural consciousness during the dot-com bubble, today it pervades nearly every aspect of our daily existence, from our social interactions to our daily shopping needs to our business connections. 

If this boom, bust, and resurgence sounds like a familiar story, that’s because it is.  The renewable energy sectors are going through a re-birth process nearly identical to the experience of the internet industry. Clean energy exploded with popularity in the 2005-2008 time periods. During that time, the “green” economy was a hot topic of conversation.  Money, entrepreneurs, and executives flocked to this sector in droves, but the business models were not fully developed, the ecosystem was not fully fleshed out, and when the recession hit, many did not survive. Press, investors, entrepreneurs, executives and service providers alike left the sector for what they thought would be greener pastures.

Similar to the internet industry’s downfall, dedicated investors, entrepreneurs, and executives remained in the sector, working to improve business models and technology. Large corporations such as Boeing, Wal-Mart, and Schneider Electric, have recently joined these industry pioneers, through investments and acquisitions.  Drawn to the clean tech sector by growing customer demand for sustainable initiatives and offerings, as well as high profit potential, these major investors will help propel the sector into a new era of innovation and longevity.

Moving into the next year, the renewable energy markets will see superior companies emerge, as the wave of second-generation technologies continue to function at a higher capacity, with much greater efficiency than their predecessors. As these companies get closer to commercialization, the industry will become increasingly active and capital will flow back into the sector.

As the co-founder of Cascadia Capital, Michael Butler leads the firm and is an emerging thought leader in the New Energy Economy. His recent focus on sustainable technology has helped propel Cascadia into some of the most important transactions in this market.

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The co-founder of Cascadia Capital, Michael Butler leads the firm and is an emerging thought leader in the New Energy Economy. His recent focus on sustainable technology has helped propel Cascadia into some of the most important transactions in this market. Prior to co-founding Cascadia Capital, Butler served as a Managing Director at Lehman Brothers responsible for global equity sales and equity syndicate. He also served on the firm's Equity Commitment Committee, Equity Syndicate Committee and Private Equity Commitment Committee. Before joining Lehman Brothers, Butler was a Principal with Morgan Stanley & Company, where he was responsible for divisional global product and risk management and was a member of the division's Operating Committee. He has been involved in numerous equity financing transactions for both public and private companies. Butler holds a B.A. in Political Science from the University of Washington and an M.B.A. in International Finance from the Wharton School of the University of Pennsylvania.

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