It's not what you know…

The morning papers report the news that Hulu hopes to IPO this fall and raise $2 billion. (The story was first reported in the NY Times on Monday.) As with a lot of tech IPOs, the company is seeking to go public without a lot of revenues.

The company is not a tech startup in the normal sense. Its raison d’être is not its technology, but its connections, specifically its corporate founders — Disney, NBC Universal and News Corp. (who later sold a minority stake to a private equity firm.)

In other words, anyone could have done the technology: what mattered was that it had direct access to three of the four major TV networks: ABC, NBC and Fox. Hulu succeeded — in true Web 2.0 style as measured by traffic rather than profits — not because of its entrepreneurial spunk, but because of its guanxi. (This seems appropriate since supposedly the name was chosen for its Chinese rather than Hawai’ian meaning.)

Because of its connections, Hulu got favorable content deals as the anti-Apple, the distribution channel that Hollywood loves to hate. It is a lot like Orbitz, founded in 2000 by five of the biggest airlines to compete with Travelocity (a venture of the Sabre reservation service) and Expedia (founded by Microsoft).

In these sort of oligopolistic (or oligopsonistic) industries, the opportunities for success are based on industry connections — or in this case, entry by intrapraenurship rather than entrepreneurship.

Still, no alliance is forever. Some wonder if NBC content will remain on Hulu once it’s acquired by Comcast, which would like to destroy the open Internet (at least for video content) and lock everyone into their premium cable TV subscriptions.

Finally, Hulu’s business model has always been hamstrung by the competing goals of the media giants: take market share away from portals they don’t control (iTunes, YouTube) while not cannibalizing the existing TV offerings. As with newspapers, the online per-user revenues are a fraction of the 20th century traditional distribution channel.

So in the end, what will retail shareholders be getting? Is this more or less secure than the IPO of a pure startup like Tesla or Facebook or some solar panel maker? Thanks to its great connections, there is only one Hulu, but that’s no guarantee it will be able to come up with a viable revenue odel.

VCs and green entrepreneurs

At the Academy of Management (#AOM2010) conference this week in Montréal, one of the more lively sessions was a “caucus” on Monday entitled “ Venture Capital Investments in Cleantech: An Act of Passion or Another Bubble In-The-Making?”

As the title suggested, the audience of about 30 academics argued about the rationality of VC investments, how they might be studied by academics, and of course the underlying industry dynamics.

It was an interesting albeit disjointed discussion. Imagine 15 smart (but perhaps undisciplined) people having a series of a stream of consciousness monologues (while the other 15 sat and watched). Still, this was probably the most concentrated grouping of management academics interested in cleantech entrepreneurship anywhere at the conference. Since most of the VC (at least by $) has gone to solar, this was also a RE/EE discussion.

Not all of the discussion was about VC. (Since I don’t personally study VCs, I only think about them in the context of the availability of funds for startups.) Some of the discussion was about more basic questions of studying cleantech startups.

My own question was about how SIC/NAICS doesn’t capture cleantech industries — the so-called “cleantech sector” — nor will it until the next revision of NAICS. (Cleantech seems no more a sector than nanotech.) The answer seemed to be that various “experts” have made databases by hand that they claim capture the entire industry. (Desiree Pacheco of Portland State seemed to be the most knowledgeable here, and had clearly been down this road before.)

The session was organized by Eva Yao (Colorado), Antoaneta Petkova (SF State), Sanjay Jain (Santa Clara) and Anu Wadhwa (EPFL). They have an (in progress) study that shows that high status VCs invested first in cleantech, and the room offered a bunch of possible explanations (such as the bigger VCs have more scale, more status and more slack).

In addition to Toni and Sanjay, the Bay Area was also represented by Geoff Desa of SFSU, Gregory Theyel of GreenVisions and CSU East Bay and of course yours truly. Colorado is a hopping place for renewable energy entrepreneurship, but my hunch is that overall California has the rest of the country beat.