Field Trip: A visit with Storm Ventures

One of the great things about this job is that you can walk into someone's office and get them to talk. Publicity is a great motivator.

So in that spirit, we're going to be going on tour more often in Silicon Valley, dropping in at start-ups and VCs to get a pulse of what people are thinking about.

And Ryan Floyd of Storm Ventures, which specializes in early stage companies, says his firm is not interested in making investments in cleantech.

Why? For one thing, the capital costs are extremely high, making investments risky. Alternative energy products, such as ethanol and solar power, are also expensive and require subsidies to remain competitive with conventional fossil fuels. Thus, "all of these markets are political," he said.

The biggest problem, however, lay in timing. The world has to move to alternative energies, but it's not certain when the conversion away from petroleum will actually occur? Five years from now? Twenty?

"VCs get burned by being ahead. You don't have the luxury to wait ten years," he said. "Look at Net2Phone."

Net2Phone was an early VoIP company. But somehow Skype has turned out to be the dominant force in VoIP. Skype came later, when broadband had permeated the globe better and the public had become use to the concept. Globalization also meant a lot more people had to make overseas calls.

"Skype had better timing. And marketing," Floyd said.

So what is Storm investing in?

--Virtualization. Although VMware has locked up a good part of the market, and Microsoft has put virtualization in Vista, there's still room for start-ups. Storm has put money into 3Leaf Networks, which makes software that lets IT managers exploit hardware resources in different servers for a single task. A beta comes out in the first quarter.

The firm also put money into Kidaro, which lets you create virtual shellos on your desktops. Kidaro essentially creates a shell so that all of the fun applications--such as iTunes--you put on your corporate PC won't interfere with everything else.

--Memory. Intel and AMD have cornered the processor market, and input/output devices are coming along well. Thus, the best way for start-ups to improve the performance of servers lay in improving memory. Adding memory can also add thousands to the cost of a server.

It's risky. Most memory manufacturers periodically lose money and start-ups that have tried to participate, namely Rambus and Tessera have had to resort to sue people to make money. Storm has a company in stealth mode right now that will combine packaging and better throughput for server memory.

--OLED TVs. Organic light emitting diodes make for thin bright screens. Sony is experimenting with some now. It's too bad the picture quality, historically, has declined over time. Blue colors go first. NueLight, out of South Korea, has created a driver that prevents OLED TVs from degrading. It is currently shipping samples to TV manufacturers.

--Digital Media Infrastructure. "It consumes a tremendous amount of bandwidth. There are a ton of problems to deal with," he said. So expect to see Akamai -like companies to emerge in the relatively near future to impose some sort of order and efficiency in the entertainment world. Expect to see a lot of companies flogging wireless home networks and broadband-over-power lines so that people can swap video files more easily.

--When in doubt, go to South Korea or Israel. "South Korea is interesting in that it is sort of like this Petri dish for broadband," Floyd said. Plus it helps that one of the firms partners comes from there. He's also a fan of Israel. There's a scrappy, can-do ethos among the start-ups and everyone speaks English.

"It's probably the most interesting place outside of Silicon Valley," he said.