I always love talking to powerful innovators who really don’t have a full sense of their power yet. It is fascinating because they are so caught up in what they are doing, they may not fully grasp the impact of what they have already done. Such was the case Thursday when I interviewed Kenneth Westrick, CEO and Founder of 3Tier, the company thrust into the spotlight recently by T. Boone Pickens, who uses their wind maps (like the ones below) to explain the wisdom of his $2 billion plan.
Ken is a scientist/CEO. But he is also a true entrepreneurial hero who deserves to be recognized for what he has already achieved.
Rewind the clock to last summer.
What Ken and His Investors Did That Was So Great
It is the summer of 2007, Ken has investors, employees and a company known mainly to big companies or faraway governments. He sees the need for his fellow Americans to better understand the vast natural resources we have in solar, wind and hydro power. But the market just isn’t there. The US government is doing some interesting things to help Americans figure it out, but they are customarily too slow and he doesn’t believe we have the time to wait. So what does he do? He goes to his investors and he does the unthinkable. He explains the need to spend critical company funds on educating America, his potential customers, and then hoping they respond.
For those of you who have ever tried to explain to a board or to investors why you should spend their money educating a market on why they actually need your product, you can appreciate the vertical climb Ken must have faced. Can you imagine making that speech to your investors and essentially saying, “I know our potential customers are addicted to the competition and have been for decades, but I really think we need to spend our small business capital to persuade as many of the 300 million as will listen, and to unhinge the government that has been bought and paid for by big oil since before I was born.” I don’t think that is exactly how he put that pitch, but you and I both know if we made the same pitch to the average investor group, that is exactly how they would hear it.
But when I asked him about those moments he surprisingly responded, “I am so fortunate to have the investors I have. They really understood and yes, I pushed for it, but they got it and we all agreed that the greater risk was in not doing it.”
Yep. You read that right. His investors and he agreed to spend precious capital on creating the data they could give away free to whoever might use it, just so they could prove the point that the US is completely rich in natural renewable resources. And that is exactly what they did. On the 3Tier dime, they mapped the renewable wind power for the world and put it up on the Internet for anyone to see, and hoped the right fish would bite.
Along swims T. Boone Pickens. Mr. Pickens did not order the study or pay for it to arrive at the answers he wanted ahead of time. He and his people found 3Tier’s wind maps on the Internet, confirmed the underlying science behind the graphics and requested permission to use them in the Pickens Plan campaign. The rest, as they say, is history.
Personally, I find this whole story worthy of the business equivalent of the Academy Awards Oscar. Why? Because when they elected to spend their capital to educate an entire nation who (1) had never heard of 3Tier; (2) didn’t collectively even understand our need for wind, solar or hydro; and (3) is collectively addicted to oil in a worse way than Amy Winehouse loves trouble, they did so with zero guarantee it would work. T. Boone Pickens was not there at the board meeting to say, “Hey, if you do this, I’ll make you a household name.” There was nothing like that at the time. They did it out of vision, out of belief it was best for society, for their customers and for their business.
And, for all of the strengths the US market has, accepting a re-education in a multi-decade old belief system is not one of our most flexible character qualities. He had better odds reintroducing the pet rock and making it a fad again than taking us towards a new energy policy. Good thing he didn’t play the odds.
Ken and his board/investors are nothing short of heroes. They deserve to be on this blog because I set out to find the unsung heroes who make the world a better place. If innovativeeconomy.com had an Oscar to award, these guys would get it. They made the tough call when no one cared, there was no guarantee and there were any number of valid arguments to be made against doing it.
What Their Actions Did For T. Boone Pickens and The Rest of Us
In fairness to Mr. Pickens, he apparently was on the wind power road before or around the time 3 Tier made their decision, but like any good product he needed a message that would not only convince us of the problem but also one that would convince us a solution is possible. He needed a message Americans could embrace. 3Tier’s wind map provided that message. Like many of you who have already contacted me, I was literally in shock over the amount of wind power available in the US. When I first saw the 3Tier map on Pickens’ video my jaw dropped. The center of the US was lit up like a log in the Christmas fireplace, and that signifies strong wind power.
I can’t help but think Pickens had to do very little convincing for the more than 100,000 people who joined his force, and I am one of those who signed up. Why was his job so easy? Three visual aids helped: (1) The day I saw the presentation I paid over $4.00/gallon in gas; (2) $700 billion is a lot of money to send to any country, let alone the ones that don’t like you; and (3) this wind map picture (see below) was worth more than a thousand words, because in one glance I could see we already have this resource at the ready. Put that wind map with $2 billion and I believe we have at least a start at a solution. I believe in American ingenuity. I believe Americans can solve problems and overcome challenges they face together. I saw that map and his $2 billion and said, “I’m in.”
I certainly don’t want to diminish what Mr. Pickens said. I thought he was very articulate and intelligent. But with those three factors in his favor he could have had a Geico caveman give that presentation and I would have connected the dots - and so would you. He lined up unmistakable experiential information. And where did he get the map? From the guy who, a year earlier, convinced his investors it would be a good idea to invest in educating a stubborn nation addicted to the competitive alternative on why we should think about something else.
And the Academy Award for visionary courage beyond all reason goes to…..[sound of envelope nervously opening]….
That research helped Mr. Pickens commit to a record setting, society-changing investment of $2 billion. Would Pickens have done it without the wind maps from 3Tier? I really don’t know. You’ll have to ask him that question.
The real question is not whether he would have done it, but whether we would have thought him nuts for doing it. I believe the map helped us see what he saw. It helped us accept the message - the message that a solution is possible.
Even Mr. Pickens knows the power of his movement is not entirely in the $2 billion, it is also in the people who believe he is dead on right, not nuts. Thanks to 3Tier for helping us make that distinction more easily.
Behind The Scenes
During the interview, Ken shared some great insights from behind the scenes that I think everyone will appreciate.
He started the company in his bedroom seven years ago. He quit his university job as a scientist, hocked the house, bought the first big computer to get the job done and put it all in his bedroom. His goal then: be the source of core information companies rely upon to bring renewable energy to the world. There is a Don Quixote joke in here somewhere - windmills, lofty goals that sound over the top, crazy ambition and risk, yes, this has it all. But Ken didn’t know that and as he put it, “I just did the things everyone has to do at that stage to get through the lean times.”
To me, that ‘aw shucks’ humility just makes the story better.
Today, 3Tier has 60 employees, of which 70% have advanced degrees and 25% are PhDs. This company is the leader in wind, solar and hydro power information for the companies that build those products and infrastructure anywhere in the world.
Ken advocates communities and developers learn to integrate all three power sources - hydro, wind and solar - because each takes advantage of the natural resources around it, and each has qualities that offset any intermittency of the other. His observations are powerful: “You better understand the characteristics of the fuel (wind/solar/hydro). The fuel source is free, but all the money in the world won’t create more fuel. Legislators have power but not the power to mandate more wind. You can’t order more wind.”
Gosh, I can see why Pickens likes this company; that is simple west Texas logic right there.
When I asked Ken about the challenges he faced, he spoke of how the government will create decisions and policies that attempt to regulate Mother Nature, and how She really doesn’t listen to the government. He spoke of the need to design policies around nature, rather than try to command its obedience.
How It Works
For those of you wondering about the underlying science behind those maps, here is a layman’s explanation, with apologies to the scientists who could do a better job of explaining it.
1. One way of getting the info would be to use what scientist refer to as “ground truth” methods, meaning putting tools out on the prairie and measuring the actual results. Problem: The results you get today may or may not resemble the overall trend over the last 30 or 40 years, so your readings may not reflect what you should expect.
2. Numerical weather modeling: the use of mathematical computer models to input many years of data and create a predictive picture about what you can reasonably expect in a given place at a given time. Results: Ken says they are within a very small margin of error - negligible really. That does not mean their methods replace ground truth tools, but more accurately helps determine where best to use them so that more reliable results are obtained faster. The wind maps we see in Boone Pickens presentations are derived from this method, which takes its data from satellites, historical weather data, etc.
The scientific community appears to collectively accept 3Tier’s approach without reservation. The controversy is not over the science, it is not over the availability of wind, and it is not over the reliability of wind capture strategies that overcome intermittency problems, it is over the politics and financing of how you harness and deliver it.
I brought up the question by Blake Windham, one of the Innovativeeconomy.com readers, regarding whether it would be better to focus on each home having its own power plant consisting of a combination of wind and solar, and to use the traditional grid as a back up. And if that is better, why not push for tax credits in that direction rather than the big grid system? Ken’s answer was instructive and animated.
He strongly believes the reality ahead is closely aligned with what Blake suggests, and that even the big power companies will love it, because the home-based power plant will shave off the peak load that strains the grid system. He further suggested that the grid will likely evolve into a system that evens out the uneven power supply inherent in a renewable power structure. The grid may help move power to a part of of the state where the wind and solar are not so strong that day, or for certain hours. However it gets there, Ken sees a society where power is derived from our homes and from the bigger grid, all of which are using some form of integrated system of solar, wind and hydro.
He notes the order of investment priorities and tax programs emerges out of commercial product development. In other words, when the consumer level products are made more affordable, the science is there to support its adoption, but the next move has to occur at the consumer product development level and consumer adoption. That sounds like a great case for tax credits in that direction too, for those companies and customers willing to take the first step.
Looking For A Tip On An Entrepreneurial Opportunity?
A couple of ‘insider tips’ that I think our readers will want to know: (A) Oil-rich countries are taking the money we pay them for their oil and investing in renewable energy systems for themselves. What does that tell you? (B) Ken is really bullish on micro-hydro power for small municipalities. He describes them as ‘under-exploited opportunities’ for business development. So for you investors and inventors looking for the next ‘green technology’ to consider for investing, there is your tip - look at micro-hydro. Ken notes that water has 1,000 times the density of wind, so it takes far less water to create much more power than wind, and there are some technologies emerging in that space that make it even more attractive.
What can Innovativeeconomy.com readers do to support 3 Tier?
1. Become familiar with the Production Tax Credit (PTC). This is a tax credit given to those who invest in renewable energy. It has been repeatedly defeated in Congress throughout 2008. Ken states they are seeing a drop in domestic business because of the reluctance investors have surrounding this issue. Contact your legislators and encourage them to vote for it, if they are not already supporting it.
2. Become familiar with renewables and get involved in the cause. Ken’s view is that it doesn’t matter whether you are motivated by a concern over climate change or if you are more concerned about energy as a matter of national security, the facts supporting renewables are the same in both motivations: (1) It is domestic; (2) It creates jobs; and therefore (3) It creates economic independence.
Congratulations To Kenneth Westrick and 3Tier
Look for more posts from me on some of these issues. For now, I completely applaud the work and leadership of Kenneth Westrick, his Board of Directors, investors and employees. This site was created to find the unsung heroes who would not be limited or defined by the status quo, and who would allow their imagination and money to come together to make our world a better place. If we come up with an Innovativeeconomy.com Oscar statue, they’ll get one. They deserve it.
Note To Readers: If you happen to find yourself seeking money, and a potential investor happens to disclose that he/she is one of the core investors in 3 Tier, you probably want to accept their Term Sheet. There are very few investors that want to see their money spent on educating a market when the customers don’t know they need a product and are addicted to the competitive alternative. If you have one of those investors, my advice: make sure they feel the love and take the deal. You’ll be glad to have them on your side.
For more information, visit http://www.3tiergroup.com.
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