TIP Strategies was engaged by the Prosperity Partnership, a coalition of over 300 government, business, education, labor and community organizations serving the Seattle area, to update the region’s economic strategy. The foundation for this work is an occupation-based cluster analysis that matches regional workforce strengths with innovative assets. Our talent-based approach provides a new way of looking at the region’s economy and understanding its opportunities.

Why Talent?
The decision to use talent as a framework for economic analysis is a response to two things:

(1) The relationship between labor productivity and regional competitiveness. The presence of a skilled workforce continues to be a critical site location issue for businesses and economic developers.

(2) The limitations of current approaches to understanding industry competitiveness. Industry cluster analysis has become an important tool for economic developers; however, a fundamental flaw of this approach is the implicit assumption that the “health” of an industry is reflected by its employment levels. Manufacturing is a prime example; the sector has seen a steady decline in employment at the same time long-term gains in output have been achieved.

Typical workforce analyses focus on describing the available labor pool: the number of available workers, educational attainment levels, commuting distance, wage rates, and so on. The concept of talent goes a step further by considering the question of skills. As a result, a talent-focused approach adds a dimension not revealed by standard labor market data. When talking about the vitality of a region, this distinction can be instructive. Skill levels typically correlate closely with wages. The presence of a skilled workforce can also be an important driver of capital investment and innovation.

In other words, traditional approaches to cluster analysis overlook a fundamental aspect of a long-term strategy, namely whether or not a given region has the workforce necessary to support its industry clusters.

Methodology
The primary task for a talent-driven cluster analysis is devising a process for grouping occupations together. Existing approaches for clustering occupations—such as the Standard Occupational Classification (SOC) system used by federal agencies to organize data collection or the U.S. Department of Education’s Career Clusters Framework—do not fully capture the distribution of skills in the workplace. Businesses include a mix of occupations pulled from across the SOC system and industry needs are not necessarily aligned with the career paths of individual workers.

TIP’s methodology for defining talent clusters was formulated to serve the following objectives:

(1) Reconcile local policy goals and aspirations with broader national and global economic trends;

(2) Inject new conceptual thinking about evolving competitive challenges; and

(3) Preserve and utilize the region’s existing framework for addressing industry issues.

For our Puget Sound analysis, we used a three-step process to identify regional talent clusters:

1) Employment trends. First, TIP identified occupational strengths and examined relevant trends. For example, to understand which types of jobs were growing in the region, we examined changes by major occupations during the recent recession.

2) Occupational filtering. TIP filtered the region’s occupations to arrive at an occupational “short-list” for each cluster. The objective of this task was to devise a simple approach that focuses on critical mass, earning power, and opportunity.

In light of our objective, we placed the highest emphasis on two criteria: job quality (evaluated in terms of wages) and the presence of a “critical mass” in the region, awarding 70 percent of the possible 100 points for these criteria. For occupations that received full credit on these two criteria, the remaining 30 percent was distributed among the six additional criteria which considered factors such as the occupation’s strength relative to the nation, projections for growth, and the stability of the occupation over time.

3) Innovation and assets. Because of the strong connection between talent networks and business retention and formation, our next step was to consider the capital investment trends driving innovation nationally and in Washington State. Since venture capital (VC) is used to fund new ideas and business models, data on VC investments was used as a proxy for investment in innovation. We also considered how the region’s tangible and intangible assets were related to both the existing occupations and capital flows.


Linking clusters to strategy
In the central Puget Sound Region, both direct and indirect talent clusters emerged from this analysis. The direct occupational clusters align with the areas of innovation that emerged from this process: aerospace, logistics & infrastructure, information technology (IT), and life sciences. The remaining occupations that met our evaluation criteria fell into two key areas of support services: social development and business services. These two support clusters provide a foundation for the innovative clusters.

This cluster framework will form the basis for our work in the region. Talent clusters have been matched with industries, providing a new lens through which to understand the needs of the region’s businesses. Occupations have been linked with available training in the region to highlight potential gaps in the higher education network. The talent framework was used to drive the selection of peers, which will be used to document the region’s competitive position.

Concurrently, the consulting team is coordinating five working groups to formulate strategies and actions addressing key economic foundation issues in the region: higher education and workforce, business climate, physical infrastructure, entrepreneurship and innovation, and aerospace. The result will suggest strategic responses to enhance the region’s talent base; help align economic development, workforce, and education activities; and leverage regional opportunities for growth.

The Geography of Jobs data visualization we first created in the spring of 2008 has been updated through November 2011. The animated map shows the net change in jobs over a rolling 12-month period in the top 100 metropolitan areas (by population). In layman’s terms, the size of the bubbles on the map represent the net change in jobs from April ’09 to April ’10 (for example), and so on.

About the Map
This animated map provides a striking visual of employment trends over the last business cycle using net change in jobs from the U.S. Bureau of Labor Statistics on a rolling 12-month basis. The animation highlights a number of concurrent trends leading up to the Great Recession, as well as evidence of a recovery.

The Dot-Com Bust & Recovery
The timeline begins in 2004 as the national economy recovered from the bursting of the dot-com bubble. At first, broad economic growth was apparent across most of the country. Two notable exceptions are the Bay Area — the hub of the tech boom that drove job growth during the prior decade — and several metropolitan areas within the Midwest. The map reveals that much of the industrial Midwest never fully recovered: manufacturers shed jobs while other parts of the country were adding them.

The Housing Bubble & Hurricane Katrina
The nation’s appetite for new homes is also evident. During the middle of the decade, job growth related to construction and real-estate occurred in Sun Belt states, such as California, Florida, Georgia, and Arizona. The map also captures dramatic job losses in New Orleans in 2005 as a result of Hurricane Katrina, as well as the city’s slow recovery driven largely by construction-related employment.

The Downturn Begins
By 2007, regional evidence of the coming economic downturn began to appear. Employment growth in California and Florida waned, with actual losses becoming evident in Los Angeles and Tampa. Layoffs also accelerated in the nation’s manufacturing heartland. By the first quarter of 2008, job losses in the Southeast and Midwest spread, setting off a chain of losses in neighboring areas. The same pattern was seen on the West Coast, with the epicenter in Los Angeles marching eastward to the Front Range of the Rockies.

Manhattan is an Island. Or is it?
As much of the nation was showing clear signs of entering a recession, New York City continued to boom as the flow of easy credit stimulated employment growth in the nation’s financial center. In late spring 2007, however, the financial bubble burst and New York experienced severe losses. Texas benefited from the run-up in oil prices through the middle of 2008, but began to recede by January 2009 as the energy and construction sectors weakened.

The Great Recession
Through early and mid-2009, job losses intensified across the country with layoffs peaking in August. At that time, the nation’s largest metropolitan areas New York, Los Angeles, and Chicago had also shed the greatest number of jobs from the previous year. For example, the Los Angeles metropolitan area had seen a net decrease in employment of 426,000. None of the top 100 MSAs had been immune to mass layoffs. The map shows that the bleeding had begun to stop in the fall of 2009.

A Reticent Recovery
In early 2010, the first signs of over-the-year job expansions emerged along the Texas-Mexico border and in Central Texas. By May, gains were seen along the I-95 corridor in D.C., New York, and Boston, and momentum spilled over the Appalachians into the nation’s industrial heartland in June. Net increases also appeared in San Jose and San Diego that summer. Most of the nation’s major metro areas were enjoying net job gains for the first time since before the recession that fall.

As of January 2011, only a few metros, including Atlanta, Memphis, Las Vegas, Sacramento, and Albany were still experiencing net job losses. Notably, many of the remaining red bubbles are in state capitals where budget shortfalls are having a negative impact on their recovery.

Are We There Yet?
While it is encouraging to have visual evidence of our national economic recovery, this does not indicate that all jobs lost during the course of the recession have been regained. Nor does it mean that all those seeking employment can get a job. In the chart below, we see that the total number of unemployed workers remains near a record high as more than 13 million Americans are seeking work.

Chart: Total unemployed in the US (in millions), seasonally adjusted

Source: US Bureau of Labor Statistics (Current Population Survey)

The bad news: six million more people are seeking jobs than at the start of the recession.

via The Heritage Foundation
China’s investment overseas is increasingly important to the United States and the international community. The China Global Investment Tracker created by The Heritage Foundation is the only publicly available, comprehensive dataset of large Chinese investments and contracts worldwide beyond Treasury bonds. Details are available on well over 400 attempted transactions — failed and successful — over $100 million in all industries, including energy, mining, transportation and banking.

Download the data set here.



Chinese investment and business contracts now span the globe. There is a clear effort to diversify across countries and regions but the Western Hemisphere has become especially prominent.

China’s investment total could be higher. Over $160 billion in proposed spending has been rejected by foreign or Chinese regulators or has failed due to mistakes by Chinese firms. However, there are also clear signs that Chinese firms are learning to be better investors.

Chinese Outward Investment: More Opportunity Than Danger

Chinese investment is not taking the world by storm financially, nor will it do so in the near future. It does not pose a major threat to the U.S., either in terms of the purchase of American assets or the expansion of Chinese influence around the globe. At home, American policy concerning Chinese investment should be more transparent. Overseas, the best reply to expanding Chinese commercial influence is to expand American commercial influence—for instance, through free trade agreements. These steps will help create more economic opportunities in the U.S., enhance America’s global position, and pose no threat to national security.

Where China Invests, And Why It Matters

The PRC has hundreds of billions of dollars available for investment and a desire to lock up resources; the U.S. has several trillion already invested and a bigger, more multi-dimensional economy. Concerns about increased Chinese investment and business activity should be addressed by expanding American activity, from investment in Ivory Coast to trade with Taiwan.

China’s Investment Overseas in 2010

The dominant feature of Chinese outward investment in 2010 was a rush to South America, particularly Brazil. Overall investment grew only modestly. The energy and power sectors continued to be the most attractive for Chinese enterprises. Troubled or failed investments – a huge problem in 2009 – were much less prominent in 2010. An obvious implication for American policy is to expand trade and investment ties to South America and around the world.

via Atlantic

Everyone knows the legendary tech birthing ground of Silicon Valley in California. Situated near Stanford and the port city of San Francisco, it emerged in the middle of the 20th century as the preeminent place to start a technology business, thanks to the hybrid vigor of military research money and countercultural big thinking. A distinctive culture emerged that’s led to the creation of thousands of businesses including Fairchild Semiconductor, Intel, HP, Apple, Applied Materials, Cisco, Oracle, Adobe, eBay, Google, Facebook, Twitter, and many more. Today, kids still stream towards the San Francisco Bay dreaming that they will start up next big thing.

Silicon Valley seems to argue for the primacy of place for innovation. It matters where you are, it would seem. But there are countervailing trends. Open source tools, diffusion of programming skill, and the Internet itself mean that you no longer need to live near the people you work with. As importantly, ideas spread more easily than they ever have. If you have an Internet connection, you can follow the latest trends in Internet businesses from the comfort of your home in Omaha or Key West. Not only that, but starting a company in Silicon Valley is expensive and your best people are constantly hunted by poachers.

The obvious synthesis here is to take the lesson of Silicon Valley — place matters — and marry it with the new reality that the place can be anywhere. Perhaps other regions can recreate the success of Silicon Valley at a smaller scale, bringing together researchers, young talent, lots of ideas, a risk-taking culture, and venture capital to drive economic growth.

That’s the big idea behind The Atlantic’s road trip through the South looking for startups and technologies below the Mason-Dixon line. Long caricatured as precisely the kind of place where tech companies could not be born, we’re betting that the territories from Richmond to New Orleans are already fertile ground for innovation. Beginning Sunday October 23, we’ll be driving through seven cities and bringing you stories from several others that highlight just how much is going on in the South.

We started this project on a hunch. I heard Chattanooga had made gigabit Internet available citywide. What were people doing with that kind of speed? Suddenly, Chattanooga seemed like the future of Internet service. Then Tumblr opened up a second office in Richmond. Richmond? I asked myself. What’s going on there? Finally, Moonbot Studios (along with Twin Engine Labs) created my favorite book app The Fantastic Flying Books of Morris Lessmore. I started poking around for startups all over the South and almost everywhere I looked, I kept finding interesting ones.

So, we put out a call for southern startups a couple weeks back, noting that Sarah Rich (a seasoned journalist and my fiancee) and I were going to drive through the region beginning October 23. We were flooded (rewarded, really) with hundreds of emails from eager entrepreneurs, local development officials, and just plain helpful people. Now we’ve got dozens of companies on our itinerary as we explore what it takes to create a company far outside one of the traditional hotbeds of techdom.

We’re just beginning to understand all the drivers for startup creation in the South, but I was struck by what Meghan Rosatelli told us about a Richmond company she co-founded with several members of her family, Optimal Sample Management Solutions.

“I think that you may find that your article is less about people wanting to start business in the South and more about people who never thought they could start a tech-y business in the first place finding that they can do it in their hometown pretty easily,” Rosatelli emailed us. It’s that kind of story that reminds me of the power of the Internet. It doesn’t make place go away, but it does let you choose where you’re going to make your mark.

We hit the road October 23 and will be bringing you stories from Richmond, Raleigh, Durham, Savannah, Atlanta, Chattanooga, Shreveport, and New Orleans. (Our route is available.) But we know that we don’t have enough time to explore all the cool things going on in southern tech, so we’re hoping that you help us out in three ways.

First, if you’re an entrepreneur with a company in the South, we’d like to invite you to record your “Creation Story” as an audio clip. In 90 seconds or less, explain how and why you started your company. Then upload that audio to our Soundcloud dropbox. We can’t promise we’ll highlight all of them here on the blog, but we’ll certainly call attention to a bunch.

Second, if you represent a region, say the Greater Bossier Economic Development Foundation, and you want to make a pitch for your area, whether or not it’s on our route, you can write us 300 words and submit it through this Google Form.

Third, if you just want to get your startup on our literal map, it’s available here and editable by all (unless it gets trolled). Feel free to add your company.

by ALEXIS MADRIGAL – Alexis Madrigal is a senior editor at The Atlantic. He’s the author of Powering the Dream: The History and Promise of Green Technology.

via NYTimes

PARMA HEIGHTS, Ohio — The poor population in America’s suburbs — long a symbol of a stable and prosperous American middle class — rose by more than half after 2000, forcing suburban communities across the country to re-evaluate their identities and how they serve their populations.

The increase in the suburbs was 53 percent, compared with 26 percent in cities. The recession accelerated the pace: two-thirds of the new suburban poor were added from 2007 to 2010.

“The growth has been stunning,” said Elizabeth Kneebone, a senior researcher at the Brookings Institution, who conducted the analysis of census data. “For the first time, more than half of the metropolitan poor live in suburban areas.”

As a result, suburban municipalities — once concerned with policing, putting out fires and repairing roads — are confronting a new set of issues, namely how to help poor residents without the array of social programs that cities have, and how to get those residents to services without public transportation. Many suburbs are facing these challenges with the tightest budgets in years.

“The whole political class is just getting the memo that Ozzie and Harriet don’t live here anymore,” said Edward Hill, dean of the Levin College of Urban Affairs at Cleveland State University.


This shift has helped redefine the image of the suburbs. “The suburbs were always a place of opportunity — a better school, a bigger house, a better job,” said Scott Allard, an associate professor at the University of Chicago who focuses on social welfare policy and poverty. “Today, that’s not as true as the popular mythology would have us believe.”

Since 2000, the poverty roll has increased by five million in the suburbs, with large rises in metropolitan areas as different as Colorado Springs and Greensboro, N.C. Over the decade, Midwestern suburbs ranked high; recently, the rise has been sharpest in communities the housing collapse hit the hardest, like Cape Coral, Fla., and Riverside, Calif., according to the Brookings analysis.

Nearly 60 percent of Cleveland’s poor, once concentrated in its urban core, now live in its suburbs, up from 46 percent in 2000. Nationwide, 55 percent of the poor population in metropolitan areas is now in the suburbs, up from 49 percent.

Poverty is new in Parma Heights, a quiet suburb of cul-de-sacs and clipped lawns, and asking for help can be hard. The Parma Heights Food Pantry, which began serving several dozen families a month in 2006, and now helps 260, draws a stream of casualties from the moribund economy. Many never needed food relief before.

Like Mary W., 59, who has worked all her life, most recently at a tire company in Cleveland, and was always the one to remind colleagues to donate to charity. Now she is the one who receives it.

When she first came to the pantry, “I cried my eyes out,” said Mary, who asked that her last name not be used because she did not want her children to know about her financial troubles.

At Vineyard Community Church in Wickliffe, another Cleveland suburb, Brent Paulson, the pastor, said he had to post an employee in the driveway the day the church’s food bank was open to coax people inside, they were so ashamed to ask for help.

In a sign of just how far the economic distress had spread, one volunteer saw his former boss come to the pantry, Mr. Paulson said.

The Cleveland Food Bank, which serves six counties, doubled its distribution between 2005 and 2010. “There’s this sense of surprise,” said Anne Goodman, the director, “this feeling that this has got to be a mistake. It has got to be a bad dream.”

Calls to the United Way social services hot line from suburban areas in northeast Ohio more than doubled from 2005 to 2010, outstripping the increase in cities. “We are seeing a rise in need in places we never expected it,” said Stephen Wertheim, director of the hotline, First Call for Help.

Poverty has been growing in the suburbs for years — along with the population. But the 53 percent increase in poverty far outstripped the 14 percent population increase in the past decade, speeding the change in their status as upper-middle-class enclaves. They have been attracting immigrants following construction jobs and families from cities seeking inexpensive housing as suburbs aged.

Federal vouchers to get poor people into private housing also contributed, Ms. Kneebone said. Cleveland was No. 15 among the country’s top 100 metropolitan areas for increase in suburban share of vouchers.

Urban problems have appeared. In Penn Hills, a suburb of Pittsburgh where people have always driven, poor residents walking near yards and bus stops have created trouble with litter, said Alexandra Murphy, a Princeton doctoral student studying suburban poverty.

Warrensville Heights, a suburb southeast of Cleveland, was pristine when Fran Matthews moved there in 1987, with good schools, manicured lawns and middle-class neighbors, she said. Now for-sale signs dot overgrown yards. Break-ins are on the rise, though crime is still far lower than in the city. Over all, the suburban poverty rate — 11.4 percent in 2010 — is still far below the city rate of 20.9 percent, according to Ms. Kneebone.

“Now when you come home, you have to look around before you get out of the car,” Ms. Matthews said.

The changes have affected the school system, she said, and her grandson now attends a charter school in Cleveland.

The double punch of the recession and the foreclosure crisis — which hit Cleveland and its suburbs particularly hard — has dragged middle-class people down the income ladder. As defined by the Census Bureau, the poverty line for a family of four was $22,314 last year.

“This community is middle class, but right on the line,” said Brad Sellers, a retired professional basketball player who grew up in Warrensville Heights and is running for mayor. “Any dramatic downturn can send you over the edge.”

The unemployment rate among black Americans was 16 percent in September, according to the Bureau of Labor Statistics — nearly double the national rate, a painful statistic in a suburb that is majority black.

“Where’s that 9 percent?” Mr. Sellers asked. “Not here.”

Some communities resist the idea that poverty exists. When Ann George, who runs the Parma Heights pantry with stalwart volunteers, speaks at churches and community gatherings, “I see the skepticism on people’s faces,” she said. “They say, ‘This is Parma Heights, not Cleveland.’ ”

Other suburbs are adapting. In Maple Heights, Mayor Jeffrey Lansky embraced the idea of a food bank, setting aside a space for it in 2008 and having the Fire Department help renovate it. The Cuyahoga County Public Library now runs after-school homework centers with snacks from the food bank, aimed at the growing population of poor children.

Edward FitzGerald, the executive of Cuyahoga County, argued that the increase in the suburban poor population could help lead to a fundamental change in local government. For years Cleveland had most of the population — and resources — but policy should reflect the flip in favor of the county, he said.

And with the state slashing funds, counties and the suburbs they contain will have to ramp up social services and economic development on their own, many for the first time.

“You’re talking about governing systems that have never really done this before,” Mr. FitzGerald said.

SHELBY CLARK, the founder of a start-up called RelayRides, was honored last week as a rising star in clean technology. But as he took the stage alongside companies creating new kinds of energy, he felt out of place.

RelayRides is a car-sharing start-up. Since when did encouraging people to drive carbon-spewing cars qualify as clean tech?

In Silicon Valley, where venture capital dollars nurture fledgling technology companies, clean tech is getting a makeover. Many investors are shying away from the high risks and costs of creating new forms of energy. Instead, they are doing what they do best — using software to cope with problems, in this case caused by climate change.

RelayRides, which lets car owners rent their vehicles to others, takes cars off the road because people can avoid owning them and the service’s users drive less than other people, Mr. Clark said.

“You can have a major impact on an individual’s carbon footprint by re-creating business models or behaviors without inventing a new energy,” he said.

This strategy has been percolating among some in Silicon Valley for a couple of years. But for many investors, doubts about alternative energy were confirmed last month when Solyndra, which made solar panel arrays and had raised more than $1 billion in venture capital and $528 million in government loans, filed for bankruptcy protection.

“A lot of people see it as a symbol of what they do not like in green investments or government involvement in tech,” said Nathan E. Hultman, director of the environmental policy program at the University of Maryland and a fellow at the Brookings Institution. “If the V.C.’s pull back, then a lot of these companies are going to have to fold, or at least put their plans on hold.

“This is a very familiar stage in the energy industry called the valley of death,” he said.

Green tech investing had been declining even before Solyndra. Venture capitalists invested $891 million in 80 such start-ups in the third quarter, an 11 percent decline from $1 billion in 88 companies in the second quarter, according to the National Venture Capital Association.

Investors, accustomed to financing low-cost Web start-ups, had grown wary of spending the money needed to pay for basic research and build factories to produce energy. Adding to their caution is uncertainty over whether Congress will exact a carbon tax, an increase in natural gas production in the United States and the difficulty of competing with the established energy industry.

But the Solyndra bankruptcy further spooked venture capitalists and particularly the pension funds, endowments and foundations that invest in venture capital, said Mark Heesen, president of the National Venture Capital Association.

Investors, he said, would continue to shift from investing in alternative energy to investing in companies that cope with climate change by, for example, using software to make buildings and cars more efficient.

Venture capitalists are on track to invest $275 million this year in start-ups that make software and other technologies that conserve energy or manage its use, up from $234 million last year and $104 million in 2009.

“Capital-intensive companies that take long cycles to create things, whether they’re solar voltaic cells or giant wind turbines, are not very scalable, so those are really tough businesses to imagine as venture-funded opportunities,” said Bill Maris, managing partner at Google Ventures.

His firm has invested in RelayRides and other start-ups that stretch the definition of clean tech investing. They include the Climate Corporation, for extreme weather insurance; Clean Power Finance, which runs an online marketplace for financing residential solar panels; and Transphorm, which makes tools that reduce power loss when electricity is converted in data centers or industrial motors.

“It’s tech companies that are applying their technology to this industry,” Mr. Maris said. “Those are the kinds of companies we tend to really understand and like.”

At first glance, companies like the Climate Corporation, which insures rural farmers, seem to have nothing to do with either technology or climate change. But David Friedberg, a Google veteran who is the company’s co-founder and chief executive, said its goal was “to help all the world’s business adapt to and understand climate change.”

For farmers, that means analyzing “crazy big data,” Mr. Friedberg said, from weather stations, government data feeds, soil moisture models and Doppler radar images. The Climate Corporation simulates the weather for the next two years and runs a Web site where farmers can enter their location and crop, buy insurance coverage and automatically receive payments for bad weather.

Soybean farmers in the Dakotas were recently paid for delayed planting because of an unusually rainy spring, and wheat farmers in Oklahoma and Texas were covered for a intense drought.

The Climate Corporation this month changed its name from WeatherBill, and Mr. Friedberg said he worried that the connection between his software and climate change was too vague for the new name to make sense.

“We were a little concerned about changing the name for fear of farmers thinking we’re a bunch of hippie Californians,” he said. “But the farmers said, ‘Yeah, it’s the climate that’s totally messing with us. The weather today is not the weather of my pappy or grandpappy.’ ”

FirstFuel Software is another company using computers to cope with climate change. It analyzes a building’s electric use based on data, without visiting the building, and produces an energy-saving plan. It raised $2.4 million from Battery Ventures and Nth Power in September.

Opower, which has raised $66 million from venture firms like Accel and Kleiner Perkins Caufield & Byers, gives electric and gas companies tools to communicate with customers, like text-messaging them midmonth if their electric bill is running particularly high.

Despite the interest in these types of companies, some venture capitalists are still betting on big alternative energy experiments.

Khosla Ventures announced this month that it had raised a $1.05 billion fund, one of the biggest this year. About 60 percent will go into clean tech and the rest into Internet and mobile start-ups.

“We’re not changing strategy,” said Vinod Khosla, the firm’s founder. “We’re sticking to our guns.”

The firm has invested in companies that make engines and biofuels and one that is trying to turn carbon emissions and seawater into cement. Mr. Khosla said he believed that start-ups that built efficiency software did not do enough to address climate change.

“They do the 5 to 10 percent improvements here and there,” Mr. Khosla said. “What we need is the 100 percent or 400 percent improvements.”

The problems brought on by climate change will not be solved without venture capital, he said. But what if Silicon Valley continues to recoil from tackling experiments like creating alternative energies?

“It’s the survival-of-the-species question,” said Eric Wesoff, a senior analyst on energy and venture capital at Greentech Media, a research firm. “If the V.C.’s are not willing to take that risk and the innovation slows, who’s going to fill that gap? Is it going to be China?”

Already, the bulk of the innovation is coming from India, China and Europe, Mr. Heesen said.

“We have been behind,” he said, “and we’re just going to get further and further behind in an area that is one of the few that can actually create jobs in the next 10 years.”

via NYTimes