Problem number one will disappear if problem number two is adequately addressed. There are about 100 billion reasons that Facebook will want to put considerable creativity and brainpower into doing just that.

Of course, tech company’s are not the only and best innovators. One can look at companies that gave been successful in reinventing themselves – IBM as a service provider versus a hardware manufacturer, for example. Those that succeed are able, not only to innovate in the product space, but in the market space as well. Additionally, they are able to develop or transform business models to properly address the above.

Apple’s track record, of late, may not put it into fast company, but at the top of the heap, in the least.

There is another saying that “if you spend money like water,” you are spending too much.  The European Union and the IMF would be wise to understand this concept.  This is especially true now, as Greece is literally on fire.  Rioters are throwing Molotov cocktails, burning buildings, and destroying historic treasures in a temper tantrum over the loss of entitlements as part of austerity measures proposed by the European Union.  In exchange for strict austerity actions on the part of the Greek government, the EU has agreed to bail out Greece.  The problem is that the fire is burning literally and figuratively out of control.  Greek citizens are not keen on austerity.  Yet, the EU plans to throw lots of water (money) on it. It is predicted that the fire will just burn hotter; So much so, that a literal meltdown is predicted.

In fact, it is almost a surety that the current Greek government, which is supportive of austerity measures, will be ousted in favor of a socialist, anti-austerity government. This will, almost certainly, lead to default on the debt and Greece’s exit from the Euro. The impact on the Euro and the fragile European economy will not be nominal.  Likely such a default will lead to runs on banks in Greece, as well as in Spain and Italy, with depositors attempting to move their money to Germany.  Massive borrowing from the European Central Bank will take place to keep the Italian and Spanish banks from collapse.  Germany will have to decide whether or not to shoulder the additional debt or allow the Euro to collapse.  The latter is a strong possibility.

The bills, aimed at stopping copyright infringement, have been supported by media companies, including record labels, TV networks, movie studios, and book publishers. Opponents come from the tech sector. An open letter to Washington, speaking out against the legislation, was signed by founders of Craigslist, eBay, Google, Mozilla, Twitter, and Wikipedia, among others.

Why the opposition against a, seemingly, just cause? The answer is that the bills are punitive in nature, and provide the means for the government to shut down legitimate businesses, without proper safeguards.

It seems that Congress, simply, wrote poor legislation. Punitive actions, aimed at modifying behavior in today’s tech-savvy marketplace, don’t stand up to innovative business models for the managing and protection of content and associated copyrights. The bills may not see the light of day until such consideration is given.

After overtaking Microsoft in market capitalization last year, it passed Microsoft in quarterly revenue last fall, and now has surpassed Microsoft in net revenue.  Technology companies, including Microsoft, Research In Motion, and Nokia, all have become victims of superior innovation and marketing. 

It is notable that, in the case of high technology, disruptive innovation is paramount to continued growth.  If paradigms are considered to be unchangeable and exploitation of “cash cows” is pursued too long, more nimble and innovative companies (Apple and Google for example) can and will take over leadership in the marketplace.

Taco Bell fought back aggressively, from the moment that the law-suit was announced, spending between $3 million and $4 million in advertizing to explain that its seasoned beef was 88 percent USDA-inspected meat, and the other 12% consists of water, spices and a mixture of oats, starch and other ingredients that contribute to what it calls the “quality of its product.”

Taco Bell CEO, Greg Creed, said that his company made no changes to its food or its advertizing and that no money was paid to the lawyers or plaintiffs.

Today, the chain ran the ads in The Wall Street Journal, The New York Times and USA Today as well as in publications in Chicago, Los Angeles and in Alabama, saying “Would it kill you to say you’re sorry?”

Some brand experts would say that the continuous barrage of defensive ads, from Taco Bell, since the suit was filed in January, may have caused customers to wonder about the product.  Most brand experts would disagree and would concur that waiting, until the suit was settled to address damage to the brand, would have been costly.  Here are several maxims for defending a brand:

• Deal with the challenge/problem head-on.  It is cheaper work to stop damage to the brand than to try to fix it later (remember our discussion about Tylenol.)
• DO NOT LET OUTSIDERS DEFINE/REDEFINE YOUR BRAND.
• Honesty in defining the brand is crucial

Taco Bell’s parent, Yum Brands Inc. said, today that Taco Bell, their most profitable U.S. chain, hasn’t recovered from the impact of the lawsuit.  But shares of the fast-food company, which also owns the KFC, Pizza Hut, A&W and Long John Silver chains, rose on the basis of an overall profit rise 10 percent for the quarter. 

Taco Bell executives believe that sales will recover as they have a loyal clientele.  Positive press as a result of their “win” in the lawsuit will draw back the occasional customers. 

 Where’s the beef you ask?  It’s in the honest representation of the product in defining the brand.

These emerging economies are seen as the engine for global growth (China is expected to grow by 9.5 percent a year for the next five years and India is expected to grow at more than 8 percent a year. Russia and Brazil anticipate growth of more than 4 percent) and their leaders are demanding a greater voice on the world stage.  Their final statement said, “The governing structure of the international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries.”  The group also called for “a broad-based international reserve currency system providing stability and certainty.” This was directly aimed at the U.S. dollar and Washington’s monetary policy, which they think has allowed the dollar to depreciate.

Last November, we wrote that China and Russia had made a pact to denounce the dollar and to transact their bilateral trade in their own currencies.  Similarly, the five countries agreed to have their development banks provide credit to one another, denominated in their local currencies and not in U.S. dollars.

The movement away from the dollar as the world’s reserve currency gained some clout as, today, Standard & Poor’s downgraded the outlook for the United States to negative, “because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable.”  The move to a negative outlook means S&P believes there is a 30% chance that Treasury bonds could be downgraded from their AAA rating, the ratings agency said.

Should the U.S. lose is reserve currency status the following would be likely:

• Commodities will skyrocket – they are already well on their way
• Fuel prices will increase drastically
• Lifestyles will be negatively impacted
• Interest rates will rise sharply
• Housing prices would drop even further than they already have
• The stock market would fall
• Unemployment will see double digit increases
• Inflation will rise substantially

The U.S. is being given a warning, by S&P, to initiate austerity measures to address its deficit immediately.  A delay may well cause the current house of cards (built on monetized debt) to come tumbling down.

KiOR’s process utilizes fluid catalytic cracking (FCC) technology to create a crude oil (they call it re-crude) from biomass (wood chips in this case.)  Its resultant product has less oxygen and is less corrosive than other biomass-based fuel alternatives.  KiOR claims that its gasoline and diesel blendstocks are projected to reduce direct lifecycle greenhouse gas emissions by over 80% when compared to fossil-based gasoline and diesel.  Most importantly, the KiOR product is able to utilize existing processing technology and distribution infrastructure.

The details of the technology are not readily available, so an assessment of the risks associated with this IPO is not possible.  Khosla seems to understand the risks, as he has stated a willingness to make investments in technology with a 90% chance of failure with the belief that, while many investments will fail, ultimately, one will be a huge winner.  KiOR could well be that winner.