Avoiding A Cleantech Bubble

Julia Wu
5 min readFeb 22


From an underrated chapter in Zero to One


Zero to One by Peter Thiel and Blake Masters is likely the most commonly read book in the startup ecosystem and often the first title in the Silicon Valley Syllabus™.

I’ve read the book a handful of times, but a chapter that I previously didn’t pay as much attention to is “Seeing Green,” which describes the Cleantech bubble of the 2000s. At the start of the 20th century, investors poured $50B into cleantech startups — but instead of a healthier planet, we got a bubble and a handful of bankruptcies. I went back to extract the insights from this particular chapter, which are consistent with the broader themes of the book. We are at the cusp of another cleantech “boom,” with a lot of talent entering the space and investors seeking and funding companies working on decarbonization, electrification, carbon credits, storage/batteries, EVs, and much more. This time around, there is an additional tailwind from President Biden’s Inflation Reduction Act. The war in Ukraine also led to a global energy crisis, which elevates the need for alternative sources of energy. The International Energy Agency expects the world will add as much renewable power in the next five years as it did in the past two decades. Reviewing the lessons from this book, published in 2014, may be helpful in avoiding the same graveyard of green companies as the last cycle.

The book makes it clear that there is nothing wrong with cleantech, and we saw examples of successful companies that are still thriving today, such as Tesla. The main idea behind cleantech, which is that the world needs new sources of energy — and that energy is the master resource — is unquestionable. But the massive wave of companies that were started during the bubble lacked feasible business models and the answers to a few key questions.

The Key Questions

…and some reactions

  1. Engineering: Is your technology a significant advancement or only an incremental improvement? It is worth striving for a 10X, or order of magnitude improvement against the nearest solution. Most cleantech companies did not have this.
  2. Timing: Is this the right time to sell this technology? Current “why now” arguments include the dramatic decrease in the price of PV cells, as well as the Inflation Reduction Act. From 2009 to 2019, the price of electricity from solar declined by 89%. Clean energy can now be cheaper than fossil fuels. And the IRA brought in an almost $1T federal budget to (cleanly) electrify the country and create jobs. But even though legislation cultivated fertile ground for new entrants to capitalize on tax incentives, it may be wise to design models that are sustainable in the long run, even after the tax breaks phase out (build cleantech, not IRA-tech).

3. Monopoly: Are you targeting a big share of a small market? In the 2000s, prominent VCs announced that green is the new red/white/blue, and that energy markets are in the trillions. While that’s true, this large market also invites competition. The book argues that cleantech entrepreneurs should shrink their market to seem differentiated. Based on the current landscape, however, while there are big players, there doesn’t seem to be a small number of “incumbents.” For example, in solar energy alone, there are a handful of developers, PV cell manufacturers, and community solar providers — all bringing in net new customers.

4. People: Do you have the right people on your team? Energy problems are engineering problems. A lot of the companies that failed in the 2000s were run by non-technical teams — salesmen executives that were good at raising money, but not at building products. In a classic bold statement, the book claims that “real technologists wear t-shirts and jeans. Never invest in a tech CEO that wears a suit. If he looks like a salesman, he’s probably bad at sales and worse at tech.” From my limited time learning about this industry, however, I noticed it’s one where policymakers, executives, salespeople, large financial institutions, and startups cross paths.

5. Distribution: Do you have a plan to sell your product? The cleantech bubble startups apparently forgot about customer focus and acquisition.

6. Durability: Will you dominate your market in the next 10 to 20 years? Every entrepreneur should plan to be the last mover in her market. What will the world look like 10–20 years from now and how will my business fit in? Evergreen Solar closed its US factories as solar manufacturers in China received government support. Currently, China is the largest manufacturer of PV cells and lithium-ion batteries. It’s worth asking ourselves, “what will stop China from wiping out my business?”

One caveat on this is that the Inflation Reduction Act assigns tax credits specifically targeting domestically-manufactured EVs, and is ushering in a substantial amount of investment in PV cell production such as a $2.5B plant in Georgia.

7. Secret: Have you identified a unique opportunity overlooked by everyone else? 🤫



  1. Start by finding a niche and dominating a small market. “The challenge for the entrepreneurs who will create energy 2.0 is to think small.”
  2. Offer a superior, 10x better solution to a specific energy problem.
  3. Differentiation: ​​The best problems to work on are often the ones nobody tries to solve.

The book makes a bold statement that social entrepreneurs end up being neither philanthropists nor entrepreneurs. My view is that the “sustainability premium” where customers pay extra to use clean energy is unlikely to work at scale. It only works if clean energy products are better and sexier than their dirtier counterparts. We are better off assuming that, while there are altruists, most consumers are selfish and lazy — and that the desire to be sustainable comes with the ability to flex or profit from it.

I remember hearing the CEO of a solar company say that the #1 reason why people install solar panels is not that they care about the environment, it’s not because they’re saving money, but because their friends were doing it.

This can be applied to corporations as well — once the companies in your industry are flexing their sustainability and ESG numbers (and now everybody is actually being held accountable for it), you have no option but to do the same.

Perhaps the best players in cleantech will be able to capitalize on the financially opportunistic, approval- and entertainment-seeking tendencies of humans towards a better energy future.

Altruism should be paired with pragmatism, and it might just be the companies that combine a missionary mindset with paranoia that pave the foundation for energy 2.0.



Julia Wu

Building something new. Prev. eng at Brex, Apple, MSFT. More at juliawu.me