Perhaps the search giant should have called it Google Drama? The controversy over Google’s latest social media product continues.

Our initial review of Google Buzz concluded that it was a worthy effort in theory but that the brand and execution were lacking. With only a week’s worth of hindsight, we can say that it was quite the understatement.

The tech blogs have been buzzing at a fever pitch over the myriad privacy concerns and potential violations. Meanwhile, Google is scrambling to address them amid threats of an FTC investigation. Two of the more recent articles from Michael Arrington and FastCompany capture the essence of the issue and largely support our position.

FastCompany compares Google Buzz to Facebook Beacon. Indeed, somewhere Mark Zuckerberg is ROFLHAO:

The issue is that Google’s coders seem to have put zero thought into the secondary effects of this automated social grouping–the biggest concern of which is that your friends list was exposed for all to see, and that communications which you may have been having with some people in private suddenly became public. There are other issues too, and most recently it’s been revealed that there’s an issue with phishing scams via the Buzz-Twitter link, and a big privacy/security loophole that exposes your geolocation if you Buzz, whether or not you want to reveal this info.

The biggest consumer barrier for geolocation is that most people won’t feel comfortable sharing their location in real time. This much is obvious. But even those who share their mobile locations via Foursquare and Brightkite probably aren’t too keen on publicly sharing their home location. Yet that is what Google Buzz does without adequately informing you about what you’re doing it. In this sense, it’s much worse than Beacon.

Arrington also compares Google Buzz to Beacon and draws the parallel to Blippy, which is a Beacon-like product for sharing purchases that offers complete and fully-informed user control. In a couple words, it’s idiot proof. Arrington’s critique aligns with ours regarding the poor execution:

Google would have been far better off launching Buzz as a standalone application. Make it invite only to start, and every single one of the early adopters would be begging to get it. A couple of weeks later give them an option of adding Buzz to their Gmail flow, and most would probably do it and call Google brilliant for thinking that one up. Then slowly bring other users on board over time, as they hear about it and want in. Fast forward a year from now and tens of millions of people may happily be using Google Buzz in their Gmail.

Google has tremendous resources at its disposal. The company should have acted like an incubator of sorts and treated this new product like its own startup, because it truly has that much potential. As with the Nexus One mobile phone, it could have taken the radical step of promoting it on the Google homepage. The company could have put the consumer at the center and executed accordingly. Instead, it took short cuts and the path of least resistance.

The jury is still out on whether Google Buzz will make it or not. One thing is for certain, though. The ill-conceived launch of Google Buzz will cost the company in reputation value and brand equity. The Google halo has been compromised.

Note: Max Gladwell founder Rob Reed was interviewed for the following American Express Open Forum story on the emerging geolocation trend. It reflects our evolved positioning and the direction we’ll be taking with our coverage and consulting.

by Leah Betancourt

Small businesses stand to increase their local audience and further their market reach through geolocation platforms, which attach real-world locations to mobile phones. Here are a few ways companies can become part of the location tagging world of social media.

Late last year, Twitter launched geolocation for tweets. The microblogging service also recently rolled out Local Trends, which makes geolocated tweets trending topics.

Other location services such as BrightKite, Gowalla and Loopt allow users to check in at locations, and the ability to share that activity among a network of friends.

On February 9th , Google announced its new social media platform Buzz that is tied to a user’s Gmail account and has location-tagging options. For example, the Buzz nearby mobile feature serves up a list about places, and users can read Buzz info about those places from others who are both in and outside their networks.

Foursquare allows for check-ins and has a gaming element in which users earn badges and can work their way to become the “mayor” of their favorite locations. MyTown also allows for check-ins and rewards as a gaming element.

Dina Meek, owner of a social media consulting firm for small businesses called Big Buzzness said these types of platforms are essentially cheap or free for small businesses – for the moment, at least.

“It’s absolutely something they can tap into and be ready (for),” she said.

Become familiar and aware of location tagging networks.

Meek said small businesses should sign up and start using these location-tagged services. She recommended finding a comparable business in a nearby town that is on Foursquare and seeing how it is using the platform.

“For small businesses, if you can put the time in to get the buzz in and get the word out, it doesn’t cost anything,” she said.

What if your town is small, or isn’t as savvy on geolocation services as Silicon Valley? Then be one of the first to start building that location-tagging presence in that area. Meek suggested talking to the local chamber of commerce to see what kinds of incentives they might offer to attract consumers who are on geolocation networks.  Figure out how to draw people in from nearby cities and think about banding together with other local businesses to do cross-promotion that might benefit your area.

Make sure your business is already discoverable on geolocation apps.

First, check to see if your business is there and if it isn’t, add it or contact that site to find out how to get your business added, said Rob Reed, who authors the blog MaxGladwell.com and is the vice president of marketing at the paperless postal system Zumbox.com.

He pointed out that businesses are going to have to be search engine optimized, social media optimized, and geographically optimized.

There’s a big distinction between the kinds of interaction going on and content being generated in these location-based app spaces. Reed said businesses can say they’re already on GPS services such as Garmin or TomTom, but all that content is static. He said the difference is that social geolocation content is in real-time.  “It’s more about the conversation,” he said.

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When a business proposition tries to do too much for too many, it can tend to do very little for very few.

There are a number of principles we apply in shaping business ideas, models, and strategies. We’ve written about the importance of focus in terms of marketing. It’s also essential that the model and value proposition to be equally focused.

Quite simply, the best business models do one thing. They have a narrow offering with a broad appeal. You’re looking for the one thing that just about everyone needs or can benefit from. Flickr is a place to store, organize, and share all of your photos online. That’s the one thing it does, and it’s valuable to pretty much everyone. It’s not a one-stop-shop for all of your digital photography needs.

Then there’s Google. It does this one thing—search—that everyone needs. Yes, Google does many things and recently made another push into social media, but it only expanded after it’s search engine redefined the search market. Plus, Google only makes money on search, and most people who use Google only use search. In fact, there is a small percentage of the online population that has no idea what “search” means because they’ve come to know it as Googling.

The power of doing one thing that everyone (or a large percentage of everyone) needs is that you’re message is easily communicated, the market potential can be quite large, and you can establish deep and lasting brand affinities.

The way we organize brands is quite simple and inflexible. When you do one thing and do it well, that brand association can become deeply embedded in a consumer’s mind. This is the psychology behind first-mover advantage. It is an opportunity to create a unique barrier to entry for would-be competitors because you’re brand (and the one thing it represents) becomes embedded in the minds of the people in your market. It then becomes quite difficult to dislodge this brand once it’s been established. This process is currently unfolding in the social geolocation space.

A number of companies are fiercely competing for the “check-in”. That’s what Foursquare, Gowalla, Loopt, and others do. They enable you to check in to a specific location. Everything else about the experience revolves around this one thing. The winner will be the company that ends up owning the term “check-in” in the same way that Coke owns cola and Google owns search. It appears that Foursquare is on its way to becoming synonymous with the check-in, and it’s anyone’s guess whether this market will tolerate a second- and third-place player. So if you want to start a business in the geolocation space, it doesn’t make sense to go after the check-in at this point. But there are many other opportunities.

For example, Plancast enables users to broadcast their plans, complete with geographic coordinates. This startup is clearly in the social geolocation space, but Plancast’s one thing is sharing your plans with friends or anyone else who happens to be listening, such that they can easily join you by knowing the time, place, and nature of those plans. It’s not about checking in, nor is Plancast a one-stop-shop for event planning.

Are there exceptions to the one-stop-shop rule? Yes, but they are rare. Apple is a one-stop-shop. However, unless you’re Steve Jobs, the likelihood of success is much greater when you do just one thing that appeals to a lot of people.

So that’s the question you should ask about your business proposition: What’s the one thing?

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Stewart and Colbert double team climate change deniers with a satirical approach that ends in a world of eternal darkness.

Our most popular post by traffic criticized both sides of the climate change debate for faulty reasoning. The logic typically goes like this: It’s unseasonably cold and snowing, therefore global warming is a myth. Or, it’s unseasonably warm and this particular weather event is extreme, therefore we’re experiencing climate change in real time. Both positions are absurd.

Jon Stewart and Stephen Colbert took on the issue in an uncharacteristically redundant way. When both shows “cover” a story, it’s typically from much different angles. In both cases, the fake news hosts point out that one could just as readily conclude that night would become a permanent state after the sun had dropped behind the horizon.

Let us know who you think did a better job of illustrating the absurdity of denying (or supporting) climate change based on a single day or weather event.

Incidentally, do you think waning support for climate change action is partly the result of its complexity and the difficulty of communicating the nature of the threat in simple sound bytes? Is the science too complicated to inspire enough people to take the threat seriously? Do we need a different approach in addressing the core problem of climate change without relying on the highly politicized nature of climate change?

Google’s new foray into social media and geolocation is cool and innovative, but the Buzz probably won’t last.

Have you tried Google Buzz? This new social media and geolocation product integrates with Gmail and works much like Twitter or FriendFeed as a way to share or broadcast status updates. You can also use it on mobile devices through a Web-based application that uses GPS to locate you and tag your updates with location data. When these updates are shared publicly, they appear on a Google Maps interface, both in the mobile and full Web versions. If you happen to use Google Latitude, there is now a Buzz layer. It’s a cool product, but we’re not sold on the execution or Google’s ability to “be” this product.

There are a number of reasons why Google, Yahoo!, Microsoft, and AOL have failed at social media. Despite having huge audiences, talented developers and boatloads of cash, none of them have made significant inroads to the social web. One of the reasons is the futility of brand extension. As consumers, we tend to associate a brand with one thing and one thing only. Google is search. Yahoo! is homepage. Microsoft is Windows. AOL is email or instant messaging. It’s tough to break out of these pigeonholes. By the same token, tremendous brand loyalty and market dominance can be built around this one thing. When a company tries to leverage and expand its brand, though, failure typically follows…if not immediately then in the long term.

Granted, Google has been successful with non-search products. Maps, Gmail, and Reader come to mind. But these are also core competencies. These products are basic Web services and utilities. They are consistent with the Google brand and how we understand it. Google makes life easier. It doesn’t make life more social.

It also appears that Google’s brand folks phoned this one in. Doesn’t Yahoo! already have a Buzz product? And doesn’t buzz subside by definition? Instead, Google should have taken the Orkut route. It’s no coincidence that the one social media success Google has does not carry the Google brand.

As many bloggers have pointed out, Google Buzz is just an odd fit for Gmail. It’s a square peg in a round hole. The people we email are often quite distinct from the people we Facebook or Twitter. Plus, only a small percentage of the people we email actually use Gmail. There is no synchronicity on any level. Google would have been better served to launch with an original brand and prompt users to notify or pull in their Facebook friends and Twitter followers. This is standard launch procedure for any new social application. Because these are our social networks. Google could still use all of its marketing horsepower to promote this new brand, at which point consumers would uniquely associate it with this new product and experience rather than having to sub-categorize it with Google.

With regard to the mobile version, which has the most potential, Google is deploying it as a mobile Web app, just as it did with Google Voice (which was rejected as a native iPhone app). This presents some inherent limitations for Google Buzz, such as taking a photo or video from within the app, and for some reason it appears that the location information (GPS) isn’t as accurate through the browser as it is with a native app.

The good news, however, is that Google Buzz (like FourSquare and Gowalla) is location-based by design. Geolocation is part of the product’s DNA. This is where Twitter and Facebook will have the greatest challenge in becoming true geolocation platforms. They have to compel their users to opt-in by enabling geotagging of Tweets and (eventually) mobile Facebook updates. Most won’t even realize these features exist. Plus, the broad nature of Twitter and Facebook content isn’t inherently geographic, so it amounts to a lot of noise for those seeking real-time information about a location or geographic area. Google Buzz has the potential to guide users toward creating content with geographic relevance. Shared publicly on a large scale, it has the potential to provide some measure of geospatial awareness.

If only it wasn’t called Google Buzz.

As the social web evolves, so do we. Max Gladwell will now incorporate geolocation as a fundamental part of its brand, coverage, and M.O.

The geolocation trend is simply too big to be a mere topic or category. The more we consider its implications for social media and green living—its implications on how we live—the more we realize that geolocation merits a deeper integration with the Max Gladwell brand. It is now the proverbial third leg of the Max Gladwell stool: Social Media, Geolocation, and Green Living.

Location-based technologies put everything into geographic context. This context leads to greater relevance, value, and action. After all, our first principle of social media is to Be a Beacon. Physical location adds a very literal layer to this marketing approach. Whether it’s commerce, social networking, activism, politics, entrepreneurship, or recreation, location adds an vital new dimension.

Mathew Honan of Wired Magazine describes it succinctly:

Simply put, location changes everything. This one input—our coordinates—has the potential to change all the outputs. Where we shop, who we talk to, what we read, what we search for, where we go—they all change once we merge location and the Web.

Our first geo-driven trend post was titled Welcome to the New and Improved Matrix. It was written in March of last year, and there were two primary points. First, the state of being “offline” has become increasingly rare because we are now perpetually connected through WiFi and 3G/4G. Second, the Web and physical world are merging in a Matrix-like fashion. Much of this has to do with mobile devices and smartphone technology, which is transforming the World Wide Web into the Local Narrow Web. In that post, Twitter signaled its push for geolocation:

“When [Twitter CEO Evan Williams was] asked about possible future features for Twitter, he reportedly said that one of the things being considered is an extension that lets people know what’s happening in their immediate vicinity. That would basically mean that Twitter could actively ping users about local events that are going on in their neighborhood, in real-time, based on the location they’ve indicated.”

This is currently being realized through the debut of Twitter’s geolocation API, it’s acquisition of GeoAPI, and the introduction of Local Trends. There is clearly much more to come on this from Twitter and its developer community.

As we’ve speculated, most any company can integrate geolocation strategies just as they can integrate social media or sustainability strategies. In many cases, these decisions are business-changing and drill down to a company’s DNA. It can change how we market and do business. Broadly speaking, geolocation technologies are world-changing, and this is what drives the nature of our coverage.

While the social media component of geolocation is fairly obvious given the companies who are leading the trend, the relevance for green living is more implied, and we think this will evolve quite naturally. There is tremendous potential in the smart grid space to integrate both location and social media. The “shop, buy, and eat local” movements are fundamental to sustainability, and new technologies to support these efforts can only accelerate them. Greenopia, GenGreenLife, and 3rd Whale are pioneering geolocation in the green space. Likewise, geolocation applications can help address the dubious practice of localwashing.

We’re currently running a poll about which geolocation applications you are currently using (upper left column). If you don’t see it, check our poll archive. We’ve also added a dedicated link section to our blogroll (right column). There you’ll find two new blogs dedicated to covering the this space: LocationMeme and CheckinBlog. Both focus on the social element of geolocation, which is exemplified through Brightkite, FourSquare, Gowalla, Loopt, and many others. These blogs will certainly to have plenty of material.

We look forward to exploring this new frontier in technology, anthropology, entrepreneurship, and marketing. In the meantime, the following is a list of stories that has influenced our thinking about geolocation over the past few months. These are also a great way to get up to speed on this quickly evolving trend:

• Cost Per Check-in: Has Foursquare Initiated A New Ad Model?

• The Future of Geo-tagged Marketing, Now

• Why Geolocation Services Are Exciting For Poets, Musicians, Educators & Comedians

• Foursquare Passes 1 Million Check-Ins A Week. Rate Doubled In The Past Month.

• Location is Hot: Foursquare Traffic up 3X in 2 Months

• The Era of Location-as-Platform Has Arrived

• Check-In For Charity: Loopt Giving To Haiti If You Visit Chipotle, Panera, Or Whole Foods

• Gowalla Aims To Raise $20,000 For Haiti Through Check-Ins

• Yahoo! Files for Patent on Geo-Located, Social, Augmented Reality

• ‘Here I Am!’ GPS Location Apps Have Limited Appeal

• Apisphere Raises $4.6 Million For Geolocation Apps

• Get Ahead of the Location Game

• Echoecho: Locating Your Friends Made Easy

• Foursquare’s New Frontier: Newspapers

• Why Twitter Wants to Know Where You Are

• MyTown 2.0 Evolves The Gaming And Monetization Of Location

• Bing Maps Adds Two New Silverlight Apps For Events And Customized Directions

• Hyperlocal Business Directory MerchantCircle Signs Up Millionth Merchant

• 5 Ways Foursquare is Changing the World

• Yelp Challenges Foursquare, Adds Checkins to iPhone App

• Twitter and Foursquare Become the New Loyalty Program at Tasti D-Lite

• BlockChalk: An Anonymous Message Board for Your Neighborhood

• Notify Your Neighbors: EveryBlock Launches User-Contributed Announcements

• Location, Location, Location: 5 Big Predictions for 2010

• The Great Location Land Rush Of 2010

• Twitter Buys Mixer Labs to Boost Location Features

• CauseWorld Launches: Do Good Deeds Simply By Walking Into A Store

• Whrrl, Still Trying To Find Its Way In Location, Focuses On “Footstreams”

• Stalqer: Aggregated, (Almost) Live Location Data on the iPhone

• Rally Wants To Bring Location Back To Its Core, With Only Your Real Friends.

• Lonely Planet Launches Augmented Reality Apps

• Google Adds Spatial Search to Maps API

• Location’s Social Paradox

• Gowalla Gets $8.4 Million Series B For Geo-Networking. Attracts All-Star Investors.

• GeoAPI Adds User Creation, Foursquare, YouTube, And Weatherbug Data

If you’re using geolocation for fun, business, or as part of an entrepreneurial venture, let us know in the comments.

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Twitter’s latest geolocation feature, Local Trends, starts us in the direction of geospatial awareness.

How relevant or useful are Twitter’s trending topics to you?

There was a time when the Twitter ecosystem was more contained and trending topics was generally useful or at least interesting. As this screenshot shows, it’s become useless. The mainstreaming of Twitter on an international scale has had an adverse effect on this data-driven feature.

It stands to reason that the personal relevance for trending topics will be inversely proportional to the size and volume of the aggregated input, which means the value is diminished as Twitter gets more popular. As of this writing, the only real-time info we can glean from trending topics is that none of them are relevant to us.

This week, Twitter started rolling out a geographic filter for trending topics called Local Trends. We’re eagerly awaiting for it to be activated on Max Gladwell’s account. You’ll find the new feature in the sidebar with Lists and Trending Topics when it’s enabled.

It will function by manually setting your location (city) as the default. Local Trends will then list the most popular topics for all geo-tagged Tweets in that city (as we understand it). You will also be able to view Local Trends for other countries/cities. It appears that the city level will be as deep as you can go at first, but it should get more granular over time with the possibility of selecting a custom area according to a neighborhood, county, or perhaps multiple cities. This data will be incredibly valuable on a micro as well as macro level.

What does it mean for you? First, it adds local context and relevance to Twitter. It helps you cut through the noise and filter the fire hose that is Twitter in a very meaningful way. As we discussed in our geolocation trend piece, it contributes to the goal of geospatial awareness i.e. access to a lot of real-time information within an immediate geographic radius. This is really what geolocation is about. Foursquare, Gowalla, and geo-tagged Tweets are all means to this end, and that’s where most people miss the point and potential of the trend.

If your assumption is that geolocation will be niche because only so many people will be willing to share their location and use these services, then you’re missing the big picture. Geolocation doesn’t need mass participation to be valuable for pretty much anyone, and you don’t need to actively participate to realize its value. Twitter’s Local Trends is a prime example. You don’t have to enable Twitter’s geotagging feature to use Local Trends. You don’t even need a Twitter account because this information can be available through search and the Twitter API. What type of information?

It can range from concerts, political rallies, and nightclubs to traffic jams, amber alerts, and natural disasters. It can reflect the current sentiments or political leanings of a neighborhood, town, or entire region. It can become a huge boon to anyone looking to organize flash mobs and Carrot Mobs. Local businesses can also benefit from this in many ways, so there is tremendous commerce potential.

Granted, a critical mass of Twitter users have to activate geo-tagging for this to be broadly useful. According to TheNextWeb, only 0.23% of Twitter users have done so, and many clients don’t yet support the feature. When this reaches 1%, we’ll start to see some real value, and achieving 10% (by our estimation) will deliver universal value.

How can Local Trends and geospatial awareness further sustainability and positive change? Let us know your thoughts in the comments.

The first decade of the new millennium ushered in new versions of just about everything.

Long ago the software industry established a simple versioning protocol to mark the progress and development of its products. These are expressed as versions 1.0, 1.1, 2.0, 2.1, etc.

Over the past decade, the world borrowed this successive, numeric method to mark significant, often revolutionary advancements in other areas: government, communications, activism, business, and charity to name a few. More so than in decades past, the progress made in these last 10 years across so many parts of society has been so great that we were compelled to view them as fundamentally new—as versions 2.0.

Although technology served as a primary enabler of these 2.0 transitions—and Web 2.0 both coined and drove the 2.0 trend—technology did not entirely define the dawning of the 2.0 era. Rather, it was a unique mix of psychology, philosophy, and innovation together with a healthy measure of humanity that broke down the barriers to the next version of just about everything.

To be clear, the 2.0 designation is not meant to imply that versions 2.1 or 3.0 will follow any time soon. This is where the software analogy ends. The 2.0 designation simply marks a fundamental shift in thought, principles, and overall modus operandi. It deliniates the past from the present and future. Not coincidentally, it aligns with the first decade of the new millennium.

Following are a few of the 2.0 highlights from the past decade.

Dawn of the 2.0 Era

Web 2.o: We are all too familiar with the original 2.0, so we won’t go into too much detail. Quite simply, it is marked by a series of C-words (with the notable exception of one): community, collaborate, cooperate, control, connect, communicate, create, contribute, collect, content, and crowdsource. If we missed any, feel free to comment.

Environment 2.0: We’ve written before about the meaning and significance of Environment 2.0 and how it evolved quite rapidly from the first version starting around the turn of the century. In many ways the distinction is as simple as being for environmental solutions as opposed to being against environmental destruction. This has enabled politicians, corporations, and pretty much anyone to participate and support sustainability and green living simply because it’s a positive and reasonable thing to do. And while this has opened the door to greenwashing, this second version of environmentalism is still far superior to the first.

Politics 2.0: Howard Dean’s 2004 presidential campaign demonstrated the power of the Web for political organizing and fundraising. You might say this was the beta version for what President Barack Obama accomplished in 2008. Obama’s campaign approach is now the gold standard in Politics 2.0, which leverages networks and empowers supporters in distributing your message and attracting new supporters.

Government 2.0: In principle, American democracy is a government “of the People, by the People, and for the People.” The reality is that we have representative democracy, which tempers the direct power (and whims) of said People. The Web has gotten us closer to the ideal through open government initiatives, increased citizen participation, and greater accountability while maintaining the representative structure. In short, Gov 2.o enables a more perfect union.

Nonprofit 2.0: The leading edge of the nonprofit world adopted a new ethic and way of doing business. Yes, business. Just because an organization doesn’t have shareholders and a profit motive doesn’t mean it shouldn’t be run as if it does. Nonprofit 2.0 is about achieving measurable, bottom-line results and return on investment (ROI). These returns are measured not in dollars but rather positive change and fulfilling a stated mission as efficiently as possible. Social entrepreneurship, hybrid companies, B-Corporations, and the fourth sector all emerged in concert with this 2.0 trend.

Generation 2.0: Also known as the Millennial Generation and Gen-Y, this demographic powerhouse rivals the Baby Boomers in both size and idealism. Their potential to change the world is magnified, however, by the networked environment in which they came of age. Gen 2.0’s first major achievement was electing America’s first black president. And though they’ve had to tough out the greatest economic disaster since the Great Depression, precisely at a time when so many were graduating college and looking for work, it should only serve to build character and strengthen the connections between them. We have high hopes for them in the twenty-teens.

Entrpreneurship 2.0: The ethos of Entrepreneurship 2.0 encompasses many things including social ventures, triple bottom line thinking, and utilizing the social web to engage and involve customers in your business. The rules of business have change, and savvy entrepreneurs are taking advantage of this to compete with established companies of the previous era. If there is a poster child for Entrepreneurship 2.0 in the 2000s, it’s Tony Hsieh of Zappos.com. Sure, Tom’s Shoes founder Blake Mycoskie might appear more relevant, but Mycoskie’s company didn’t sell to Amazon for close to a billion dollars.

What are your favorite 2.0 trends of the past decade? Where will version 2.0 strike next in this decade? Leave your thoughts in the comments.

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Fox News recently did a feature story on Zumbox, the paperless postal system. The story was syndicated nationally and internationally through Fox television affiliates (TV and Web).

The piece focuses on municipal adoption of Zumbox in San Francisco, which was spearheaded by the City’s forward-thinking Mayor, Gavin Newsom, and its Department of the Environment. The objective is to save taxpayer dollars on printing and postage costs while reducing waste and communicating more efficiently with residents.

Max Gladwell founder Rob Reed is interviewed for the story, serving in his capacity as VP of Marketing and Government Relations as well as designated spokesperson.

“The potential for Zumbox is to build and strengthen communities by enabling electronic communication that didn’t exist before,” said Reed.

The biofuel industry went through a boom and bust not unlike the dot-com era. Can Biofuels 2.0 revitalize the broken industry in the twenty-teens?

The previous decade will be remembered for giving birth to the clean tech movement and more specifically the business opportunity in green technology. When we look back, the 2000s will be credited for launching countless companies in solar, wind, geothermal, electric vehicles, smart grid, and biofuels. The latter is unique in that the biofuels industry experienced a roller coaster ride much like the dot-com era of the ’90s. We rode the wave from 2005 to 2007 and have been keen observers ever since. There is definitely a book to be written about the great biofuel boom and bust of the 2000s. This was our first-hand experience.

In early 2005, we were engaged as consultants for Earth Biofuels, a biodiesel startup based in Dallas, Texas. As you can imagine, building a vertically integrated energy company is highly capital intensive given the tremendous infrastructure involved. Fortunately, the economy appeared to be quite healthy at the time, and the investment environment for such things was quite favorable. By the fall of that year, the company was in a position to complete a reverse merger and go public. Concurrently, Earth Biofuels acquired Willie Nelson’s small biodiesel distribution company, complete with the BioWillie brand, and both Willie Nelson and actor Morgan Freeman joined the company’s board of directors.

Earth Biofuels entered 2006 with multiple biodiesel refineries either under construction or in the planning/acquisition stages. The BioWillie B20 biodiesel brand was being distributed at a handful of independent truck stops around the country. The press couldn’t do a story on biodiesel without referencing BioWillie, and the company was quickly expanding into the corn ethanol business. Goldman Sachs had already forecast $100 oil (though it wouldn’t be realized until 2008), which made a clear business case for biofuels.

Indeed, the case for biofuels was compelling across the political spectrum. Renewable, domestically produced fuels supported local and rural economies while reducing our dependence on foreign energy, and they were good for the environment by reducing both toxic and greenhouse gas emissions. Having personally conducted the market research and written the business plan for Earth Biofuels, we also realized the inherent limitations of soy-based biodiesel and corn-based ethanol. We didn’t believe these fuels represented a long-term solution but rather one of many ways to transition away from petroleum. We knew that second-generation biofuels such as algae-based biodiesel and cellulosic ethanol would be necessary for biofuels to be truly scalable, viable, and sustainable as fuel alternatives. We weren’t alone, however, in backing the first generation.

Looking back on the biofuel boom, there were a number of key moments and key players that made it what it was. In 2005, Bill Gates invested $84 million in Pacific Ethanol, taking a 27% stake in the company. Perhaps the most credible and passionate proponent of ethanol was legendary venture capitalist Vinod Khosla of Khosla Ventures, Kleiner Perkins, and Sun Microsystems fame. His PowerPoint presentations and white papers were widely distributed, and he made a compelling case for how corn-based ethanol would provide the necessary bridge to cellulosic. Sir Richard Branson himself entered the fray by funding Virgin Fuels, now rebranded as the Virgin Green Fund.

By the summer of 2006, the industry was firing on all cylinders (if you’ll forgive the pun). Ethanol producer VeraSun energy made its successful public offering, rising 30% above its IPO price and raising $421 million.

Riding a U.S. push toward ethanol as a substitute for imported oil, VeraSun is the first of three producers of the corn-based motor fuel to go public this summer. Still to come are Aventine Renewable and Hawkeye Energy.

The peak for Earth Biofuels occurred at roughly the same time, as this brief period marked the peak of the biofuel boom.

Following the reverse merger and stock split in November of 2005, Earth Biofuels shares traded at around 60 cents. By the summer of 2006, prices had risen to more than $6/share and reached an interday high above $7/share. The market cap exceeded $1 billion for several weeks, and on July 18th, Earth Biofuels announced that actress Julia Roberts had joined the company’s advisory board and would serve as spokesperson for a new clean school bus initiative. The announcement added roughly $200 million to the company’s market cap over a seven-day period.

This was a relationship we developed in an effort to drive awareness about the health risks posed by diesel-powered school buses and how biodiesel presented an easy and cost-effective solution. Regardless of how biodiesel is grown or produced, its emissions are non-toxic and, therefore, dramatically improve the air quality for students who ride them. Julia promoted the initiative on The Oprah Winfrey show, which prompted California State Senator Dean Florez to inquire about supporting our efforts. We worked with the Senator and his staff to draft a seven-bill package of biodiesel mandates and tax incentives during the 2007 legislative session. The fate of those bills, though, was consistent with that of the biofuel industry as a whole: a bust, thanks in no small part to opposition from Big Oil.

Having moved on from Earth Biofuels at the end of 2006, were were focused on two new startups. The first was a search and discovery learning technology designed specifically for healthy-green living, which is still in development. The second was Conserv Fuel, a green filling station in the heart of Brentwood, CA. It would become the first station in LA to sell both B99 biodiesel and E85 ethanol. Then-Senator Barack Obama used the station as a backdrop for a clean-energy campaign speech in 2007, and Men’s Vogue did a feature story on our efforts to develop Conserv Fuel into a franchise model for green filling stations nationwide. As the only source of E85 in LA, the station also enjoyed support from General Motors.

This was the period of the boom when GM and other auto manufacturers were pushing FlexFuel vehicles while urging us to Live Green and Go Yellow, a reference to E85 corn ethanol. In the fall of 2007, however, things started to unravel rather quickly for the biofuel industry. In truth, the industry had always been plagued by competing forces ranging from the economic and academic to the social and political.

The industry itself was competing for limited resources. There were only a few companies that could build biorefineries, so not only were they booked years in advance but they could charge whatever they wanted and renegotiate contracts as they saw fit. Since biofuels couldn’t be transported through traditional pipelines, they required rail cars and trucks. During the peak of the boom, no rail cars could be found. Most importantly, the primary biodiesel feedstock (soybean oil) was in short supply given the unprecedented demand. Producers couldn’t produce and those that could weren’t profitable. In the end, though, biofuels had trouble living up to the green hype.

In writing the business and marketing plans for Earth Biofuels, we relied on data from USDA studies and others that showed a positive energy balance for biodiesel of more than three to one (3:1). In other words, for every unit of petroleum energy you invested to bring biodiesel to market, you’d get more than three units of biodiesel energy in return. This contrasted with petroleum diesel and gasoline itself, which often yielded a net energy loss.

In terms of the food issues, we were  skeptical of the charge that biofuels were responsible for boosting food prices because there were much more powerful forces at work, namely rising energy prices across the board and unprecedented demand from developing nations. Neverthless, as the biofuel boom waned, the industry steadily lost support from one of its key constituencies: environmentalists.

The use of genetically modified soy never sat well with this group (for good reason), and the whole energy balance question had never sufficiently been addressed. The increased use of imported palm oil as a feedstock, which necessitated the clearing and destruction of rainforests, started turning the tide in 2007. The Sustainable Biodiesel Alliance emerged to address some of these concerns, but the biofuel industry had already passed the point of no return.

One of the defining moments of the biofuel bust—the beginning of the end—was an article published on February 8th, 2008, in the New York Times entitled Biofuels Deemed a Greenhouse Threat:

Almost all biofuels used today cause more greenhouse gas emissions than conventional fuels if the full emissions costs of producing these “green” fuels are taken into account, two studies being published Thursday have concluded.

This was a huge blow to the industry’s green credibility and its viability as a truely renewable fuel. We remember feeling grateful that we didn’t have to deal with this blowback. We can only assume that everyone involved in the biofuel industry was in full crisis mode. To use a war analogy, this article was the Tet Offensive of the anti-biofuel shift.

Later that year, VeraSun and several others filed for bankruptcy. Pacific Ethanol’s Chapter 11 followed in May of 2009 and a month later the California State Water Resource Control Board made it illegal to store high biodiesel blends (above 5%) in underground tanks. This effectively put Conserv Fuel out of the retail biodiesel business.

Alas, the industry’s coup de grâce arrived on New Year’s Eve 2009, at the dawn of this new decade, when Congress blithely allowed the $1/gallon biodiesel tax credit to expire. This was the industry’s lifeblood. The credit gave producing and selling biodiesel a fighting chance at profitability. Without it, there is no biodiesel industry. And if you’ve read this far, it’s clear how this could make for an interesting book on the great biofuel boom and bust of the last decade.

Now that we’re into a new decade, it’s possible that the biofuel industry will reinvent itself just as the Internet did in the previous decade with Web 2.0 and social media. We’re ready for Biofuels 2.0. Are you?