WEBVTT - What a venture capitalist does when climate tech loses its shine

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<v Speaker 1>Hey, it's sucksha. Each week you lend me your ears,

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<v Speaker 1>and now I'd like to hear from you. Do you

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<v Speaker 1>have a burning question about climate, green tech or the

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<v Speaker 1>future of the planet. Please send your questions to us

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<v Speaker 1>in writing or as a voice memo to zero pod

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<v Speaker 1>ad Bloomberg dot net and we'll make an episode answering them.

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<v Speaker 1>Please do include your name and where you're based. Thank you.

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<v Speaker 1>Welcome to Zero I am Akshatrati. This week inside the

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<v Speaker 1>Mind of a Climate BC. Climate tech is not the

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<v Speaker 1>hot investor thesis it was just a few years ago.

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<v Speaker 1>After several record breaking years and billions of dollars being

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<v Speaker 1>poured into climate startups, venture capital investments are way down

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<v Speaker 1>lower than they were in twenty nineteen. According to PwC.

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<v Speaker 1>Much of the hot money has now moved to AI.

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<v Speaker 1>In all that time, though, the importance of investing in

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<v Speaker 1>climate solutions has only grown, and so has the number

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<v Speaker 1>of people working on them, bringing in skills and expertise,

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<v Speaker 1>often from other industries, into the climate solution space. Mike

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<v Speaker 1>Shrepfer is one of them.

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<v Speaker 2>Energy access has become a boardroom conversation in a way

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<v Speaker 2>that wasn't true, like literally four years ago. If I

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<v Speaker 2>don't have access to energy, I can't build the compute

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<v Speaker 2>power I need. I can't build the data services, the

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<v Speaker 2>AI models, and I may lose out to my competition.

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<v Speaker 1>From twenty thirteen to twenty twenty two, Mike Shrepfer was

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<v Speaker 1>the chief technology officer at Meta, the company behind Facebook, Instagram, WhatsApp,

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<v Speaker 1>and Oculus. There he helped build out Meta's data centers

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<v Speaker 1>globally and led the integration of manufacturing the Oculus virtual

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<v Speaker 1>reality headset. After leaving Meta in twenty twenty three, he

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<v Speaker 1>founded Gigascale Capital, a VC firm specializing in climate tech.

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<v Speaker 1>Gigascale has invested in a wide range of companies, from

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<v Speaker 1>those trying to create green steel and crackt nuclear fusion

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<v Speaker 1>to ones trying to vaccinate cattle to reduce methane verbs.

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<v Speaker 1>Mike also founded Additional Mentors, a philanthropy that focuses on

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<v Speaker 1>early stage research in biomedical and climate science. So I

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<v Speaker 1>wanted to ask Mike how does he see the climate

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<v Speaker 1>tech landscape in twenty twenty five, What are the challenges

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<v Speaker 1>of manufacturing in the US versus China, And how does

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<v Speaker 1>data center demand lead to innovation in energy? Mike Welcome

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<v Speaker 1>to the show.

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<v Speaker 2>Thank you, glad to be here.

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<v Speaker 1>So you've come to investing in climate from a different

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<v Speaker 1>background than most people coming to investing in climate have.

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<v Speaker 1>You've come from scaling companies in the software sector, working

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<v Speaker 1>at large software companies, but now you're doing something that

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<v Speaker 1>is much more hardware focused. Most of climate tech solutions

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<v Speaker 1>tend to be building things in the real world. What

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<v Speaker 1>have you found that's different thinking about companies that do

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<v Speaker 1>hardware rather than software.

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<v Speaker 2>Well, I want to correct one thing, which is most

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<v Speaker 2>people think of Facebook as a software company. But three

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<v Speaker 2>years into the job, in twenty eleven, I started building

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<v Speaker 2>data centers. So I built ten million plus square feet

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<v Speaker 2>of data centers and seventeen regions all around the world,

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<v Speaker 2>you know, over a decade or something. And then a

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<v Speaker 2>few years after that, we bought this little company called Oculus,

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<v Speaker 2>which I ran the integration of, and we started shipping

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<v Speaker 2>consumer hardware. So if you've ever used an Oculus Quest

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<v Speaker 2>or Rayman Meta smart glasses, you've used one of our products.

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<v Speaker 2>And so I've you know, I've had all the joys

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<v Speaker 2>and pains of building enterprise hardware and industrial scale and

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<v Speaker 2>the double challenges of scaling consumer hardware, all the fun

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<v Speaker 2>and pain of doing that, and trying to make margin

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<v Speaker 2>on a product that consumers can return to the store

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<v Speaker 2>if they don't like a wider scale of things. I

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<v Speaker 2>think than most people when they think of Facebook, think

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<v Speaker 2>about so the jump to climateech, which part of the

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<v Speaker 2>appeal of it was actually taking those learnings. You know,

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<v Speaker 2>I've shipped millions of devices and a built scale from

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<v Speaker 2>scratch that very few people have, and so I think

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<v Speaker 2>all of those apply. If you look at a portfolio.

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<v Speaker 2>We have consumer hardware products, we have consumer software products,

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<v Speaker 2>we have enterprise hardware products, and I think it's all

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<v Speaker 2>stuff I've worked on before.

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<v Speaker 1>But in terms of what you need to do in

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<v Speaker 1>climate it tends to be products that are either just

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<v Speaker 1>greener versions of existing things, or they are in going

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<v Speaker 1>into a market where the margin is not that high,

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<v Speaker 1>whereas tech hardware products tend to have the capacity, at

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<v Speaker 1>least not initially, but when they're scale to have a

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<v Speaker 1>large margin. So it's still a harder challenge or a

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<v Speaker 1>different challenge.

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<v Speaker 2>Right, Well, everything is different, every market is different, and

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<v Speaker 2>I'd say that generally I'm looking for products to begin

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<v Speaker 2>with that have some sort of massive advantage the right

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<v Speaker 2>to win as a startup means you're coming in with

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<v Speaker 2>a five x or more. Why is this product uniquely

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<v Speaker 2>good or uniquely different?

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<v Speaker 1>You know.

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<v Speaker 2>I'll just give you the example of Mill, which is

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<v Speaker 2>a one of our investments. It's a home composting device.

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<v Speaker 2>So it looks like a trash can, but you throw

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<v Speaker 2>your food waste into it, and then overnight it grinds

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<v Speaker 2>it and dehydrates it and sort of shrinks it down.

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<v Speaker 2>So a normal family, after a month's worth of food waste,

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<v Speaker 2>gets something about the size of a shoe box that

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<v Speaker 2>looks like coffee grounds and doesn't smell.

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<v Speaker 1>You know.

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<v Speaker 2>The pitch consumers is pretty simple. It's like, do you

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<v Speaker 2>enjoy taking out your trash? Do you like it when

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<v Speaker 2>your trash smells? The answer to most people know it's like, great,

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<v Speaker 2>your trash doesn't smell. You have to take it out

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<v Speaker 2>a lot less. Oh and by the way, we're massively

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<v Speaker 2>reducing methane emissions from food waste. And this is the

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<v Speaker 2>sort of product that once someone gets one, you'll know

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<v Speaker 2>about it because they will tell you multiple times how

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<v Speaker 2>awesome the mill is. They have a what's called a

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<v Speaker 2>net promoter score higher than having shipped consumer products and

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<v Speaker 2>know how hard it is to get those higher than

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<v Speaker 2>most I've seen, and so that that was the first unlock,

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<v Speaker 2>was like, wow, this is something people really like. The

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<v Speaker 2>very next question said how much does this thing cost

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<v Speaker 2>to make? So they showed me the bill of material,

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<v Speaker 2>so like, okay, to make this profitable, we have to

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<v Speaker 2>get the bomb from X to Y, and I just

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<v Speaker 2>went through the thing and said, like, yep, we can

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<v Speaker 2>do that. And in between the investing window of when

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<v Speaker 2>I invested in now they've made massive progress. It's going

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<v Speaker 2>to be a great business, going to be profitable. They've

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<v Speaker 2>done twenty million in revenue in the last twelve months.

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<v Speaker 2>And then there's opportunities to do bigger commercial engagements, you know,

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<v Speaker 2>with offices and other people who have massive food waste problems. So,

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<v Speaker 2>you know, I think it's an example of like trying

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<v Speaker 2>to take some of those skills and learnings and apply

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<v Speaker 2>them in these spaces.

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<v Speaker 1>Well, most of the tech products that you've shipped that

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<v Speaker 1>are being shipped today tend to be made in China,

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<v Speaker 1>whereas mill made.

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<v Speaker 2>It's got a diverse supply base. You know, I think

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<v Speaker 2>they haven't disclosed exactly where it's made. But it's a

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<v Speaker 2>diverse supply base and they're doing just fine with the tariffs.

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<v Speaker 2>So I'll just say that much.

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<v Speaker 1>If you think about the moment that we are in,

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<v Speaker 1>is there anything about policy changes, the directions tariffs that

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<v Speaker 1>have made you rethink your own climate investing, not just principles,

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<v Speaker 1>but areas that you would like to invest in going forward.

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<v Speaker 2>Yeah, I mean I think that I sort of got

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<v Speaker 2>to investing almost by accident. I didn't start out saying

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<v Speaker 2>I want to be an investor, I want to be

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<v Speaker 2>a climate investor. I start out saying, like, I want

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<v Speaker 2>to start dedicating my time, expertise, and resources towards the

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<v Speaker 2>climate crisis. And I you know, I started on the

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<v Speaker 2>filanthropic side with with funding science and funding policy, and

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<v Speaker 2>then realized that, like, you know, the way a lot

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<v Speaker 2>of these markets get transformed is through businesses. You know,

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<v Speaker 2>if you think about like where would we be in

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<v Speaker 2>the electric car without Tesla, Where would we be in

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<v Speaker 2>space without SpaceX, Where it would be of the vaccines

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<v Speaker 2>without Madarna on others? And looking at that and thinking

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<v Speaker 2>about investing coming from this angle made me from the

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<v Speaker 2>very beginning say, look, you can call it climate. You

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<v Speaker 2>can do these are companies. They need to make money.

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<v Speaker 2>That's the definition of a company. They need to sell

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<v Speaker 2>a product that people want for you know, less than

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<v Speaker 2>what it costs for more than what it cost them

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<v Speaker 2>to make It is the basics of a business. Having

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<v Speaker 2>not gone to business school, that's my one a one

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<v Speaker 2>for business and so it caused us to really focus

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<v Speaker 2>on areas where that was possible, and there were some

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<v Speaker 2>technological edge, some change in the market sort of opened

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<v Speaker 2>a window. And having been a tech a long time,

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<v Speaker 2>what I like is exponential trends in your favor. So

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<v Speaker 2>what's been powering AI, for example, is like increase in

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<v Speaker 2>data and increase in compute power, and those are things

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<v Speaker 2>that happen, you know, whether I go to work every

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<v Speaker 2>day or not. So that's awesome. I think you see

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<v Speaker 2>the same trends at the same scale for battery prices,

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<v Speaker 2>for example, battery pack, battery sell prices. So if I'm

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<v Speaker 2>trying to build a new business that's based on batteries,

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<v Speaker 2>like my input costs are going down without me doing

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<v Speaker 2>any work, and that's amazing. That means that I'm getting

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<v Speaker 2>more and more competitive, you know, day by day, and

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<v Speaker 2>so we look for businesses like that where you have

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<v Speaker 2>some tailwind that's like driving you into a cost advantage,

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<v Speaker 2>or some technological leap that gets you there, or you're

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<v Speaker 2>breaking into some massive market for which you know if

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<v Speaker 2>it may be a high risk, but once you get there,

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<v Speaker 2>it's it's just incredible how much sort of you can

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<v Speaker 2>drive in terms of revenue.

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<v Speaker 1>But if you look at the mega trends in climate

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<v Speaker 1>tech that have enabled that kind of cost reduction, whether

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<v Speaker 1>that's solar wind batteries, those have happened because manufacturing has

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<v Speaker 1>scaled somewhere else, mostly in China, Whereas if you look

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<v Speaker 1>at what has America contributed in terms of bringing down

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<v Speaker 1>the cost of climate tech, you could bring up an

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<v Speaker 1>example like Tesla, but it could never crack a thirty

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<v Speaker 1>thousand dollars ev as Elon Muskett promised. So if we

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<v Speaker 1>go into this world as we have in the past

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<v Speaker 1>six months, where we start to disintegrate relationships with China,

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<v Speaker 1>move supply chains back to America, things will become more expensive.

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<v Speaker 1>They won't have the same mega trends that have continued

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<v Speaker 1>over the past two decades. They will come later if

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<v Speaker 1>the manufacturing setup sticks around for that period. But in

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<v Speaker 1>the intervening period, things are going to get more expensive,

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<v Speaker 1>harder to build. How are you thinking about operating as

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<v Speaker 1>an investor in that environment?

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<v Speaker 2>Yeah, I mean, I think globalization brings efficiency and deglobalization

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<v Speaker 2>is going to increase cost of everything going around the world.

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<v Speaker 2>So I think that's just true. You know, I equible

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<v Speaker 2>with one point, which is you know, first of all,

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<v Speaker 2>particularly the US is often the source of many of

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<v Speaker 2>the actual innovations. So LFP batteries invented in the United States,

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<v Speaker 2>commercialized and scaled in China. Yep, we like missed that one.

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<v Speaker 2>And there are places where, in particular, and I'll call

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<v Speaker 2>out SpaceX has a very local supply chain and has

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<v Speaker 2>built most of their stuff. They're not really relying that

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<v Speaker 2>much on overseas supply chain for what they're building, and

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<v Speaker 2>they've built an expertise and talent. Now they have a

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<v Speaker 2>low production, high cost product, so that works better for that.

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<v Speaker 2>There are other businesses that look like that too, where

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<v Speaker 2>you have a relatively low production, high cost product that

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<v Speaker 2>you can do in sort of series production. And we're

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<v Speaker 2>seeing an incredible disporora of companies literally in El Segundo, California,

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<v Speaker 2>mostly with SpaceX alumni. We're sort of taking the same

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<v Speaker 2>playbook of a vertically integrated supply chain exceptional engineering to

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<v Speaker 2>attack a premium product that can compete. You know in

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<v Speaker 2>today's world. You know, there's a company called Arcbo that's

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<v Speaker 2>building electrified started with a pleasure boat and then a surfboat,

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<v Speaker 2>and now they're working on fishing boats, and now they're

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<v Speaker 2>moving to their electrifying tugboats. They make hundreds or thousands

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<v Speaker 2>of them a year. It's not fifty thousand, but they're

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<v Speaker 2>able to do so at reasonable costs. In Los Angeles,

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<v Speaker 2>they're manufacturing the vehicles there. You have another company out

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<v Speaker 2>there called Lightship that's doing this for RVs, recreational vehicles.

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<v Speaker 2>It's a massive market. Turns out a lot of people

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<v Speaker 2>in the United States have an RV, and they can

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<v Speaker 2>build one that is electrified and better. You're not running

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<v Speaker 2>a generator when you're sitting there trying to camp and

0:11:30.720 --> 0:11:33.800
<v Speaker 2>be out in nature, which sucks. And then you go

0:11:33.880 --> 0:11:38.080
<v Speaker 2>into big technological leaps like fusion, Commala Fusion and Devn's

0:11:38.080 --> 0:11:42.120
<v Speaker 2>Massachusetts sets the world record for magnet strength. They've got

0:11:42.120 --> 0:11:44.560
<v Speaker 2>a magnet that, as Bob likes to say, the founder

0:11:44.640 --> 0:11:47.960
<v Speaker 2>CEO can lift an aircraft carrier. It's that powerful. And

0:11:48.040 --> 0:11:50.920
<v Speaker 2>so really that is dependent on like a massive technical

0:11:51.000 --> 0:11:54.600
<v Speaker 2>leap innovativeness, which I would argue the United States as

0:11:54.720 --> 0:11:57.160
<v Speaker 2>historically been the leader in and if we can make

0:11:57.160 --> 0:12:00.760
<v Speaker 2>fusion work. I mean, just to put this in perspective

0:12:01.000 --> 0:12:03.680
<v Speaker 2>to power or here in London, London's about call it

0:12:03.720 --> 0:12:06.040
<v Speaker 2>four gigawatts of consistent power about one hundred gig abot

0:12:06.040 --> 0:12:08.040
<v Speaker 2>hours a day. So we kind of did some rough

0:12:08.080 --> 0:12:10.280
<v Speaker 2>math on the way here to like power this with fusion,

0:12:10.800 --> 0:12:13.600
<v Speaker 2>you need a couple of kilograms of fuel a day,

0:12:14.000 --> 0:12:16.880
<v Speaker 2>so like two MacBooks, I could fuel the plant and

0:12:16.920 --> 0:12:19.320
<v Speaker 2>carry it my backpack each day. You know, it's about

0:12:19.360 --> 0:12:23.640
<v Speaker 2>a million plus maybe ten million more energy dance than coal.

0:12:23.760 --> 0:12:26.640
<v Speaker 2>So like if we can crack that, Yes, energy is

0:12:26.640 --> 0:12:29.760
<v Speaker 2>a commodity, but I'm like showing up with a totally

0:12:29.760 --> 0:12:32.160
<v Speaker 2>different solution to that commodity, which is this like super

0:12:32.240 --> 0:12:35.280
<v Speaker 2>energy dance process that really relies on massive innovation. And

0:12:35.280 --> 0:12:37.760
<v Speaker 2>that's a place where I think betting on startups, betting

0:12:37.800 --> 0:12:39.440
<v Speaker 2>on the West is tractable.

0:12:39.640 --> 0:12:42.640
<v Speaker 1>Yeah, I mean, there is no doubt there's a whole

0:12:42.720 --> 0:12:45.440
<v Speaker 1>bunch of innovation that has happened in the US that

0:12:45.600 --> 0:12:47.880
<v Speaker 1>is now climate tech for the rest of the world.

0:12:48.240 --> 0:12:50.160
<v Speaker 1>You didn't go all the way back to the nineteen

0:12:50.160 --> 0:12:53.240
<v Speaker 1>fifties with the silicon Footobell take cell was invented in

0:12:53.280 --> 0:12:55.840
<v Speaker 1>Bell Labs in America. You didn't go to the nineteen

0:12:55.840 --> 0:12:58.200
<v Speaker 1>seventies when the lithium and pattery itself. Even before we

0:12:58.280 --> 0:13:04.360
<v Speaker 1>come to up cathered that does specific things. The first

0:13:04.360 --> 0:13:06.480
<v Speaker 1>setup of Aliti mand matterio is invented in the next

0:13:06.480 --> 0:13:10.960
<v Speaker 1>on mobile lab. So there is not saying America can't innovate,

0:13:11.040 --> 0:13:13.400
<v Speaker 1>and we'll come to what's happening with science funding and

0:13:13.400 --> 0:13:16.280
<v Speaker 1>how that might affect climate in tech investing. But it

0:13:16.400 --> 0:13:20.000
<v Speaker 1>is true there is an ecosystem to innovate. There is

0:13:20.080 --> 0:13:26.400
<v Speaker 1>the brain power to bring these ideas into commercial opportunity,

0:13:27.120 --> 0:13:31.439
<v Speaker 1>but then grabbing that opportunity and actually scaling companies has

0:13:31.480 --> 0:13:33.719
<v Speaker 1>been rare. So you brought up an example, which is

0:13:33.760 --> 0:13:37.520
<v Speaker 1>SpaceX really good example in the Space Arena. A lot

0:13:37.559 --> 0:13:41.920
<v Speaker 1>of that has been possible because it had government contracts

0:13:42.400 --> 0:13:45.480
<v Speaker 1>big ones initially, which required it to have a local

0:13:45.920 --> 0:13:49.599
<v Speaker 1>domestic supply chain because that's the requirement from NASA to

0:13:50.000 --> 0:13:53.160
<v Speaker 1>be able to put on American astronauts into the space station.

0:13:53.679 --> 0:13:57.240
<v Speaker 1>But then it's been able to use that tailwind to

0:13:57.400 --> 0:14:01.120
<v Speaker 1>actually become a commercial entity that does work for everybody

0:14:01.200 --> 0:14:03.760
<v Speaker 1>and anybody. You know, there are Indian satellites that get

0:14:03.920 --> 0:14:08.360
<v Speaker 1>launched by SpaceX, but you needed that initial support from

0:14:08.400 --> 0:14:10.959
<v Speaker 1>the US government to bring the company to a point

0:14:11.000 --> 0:14:15.320
<v Speaker 1>where it is commercially now the leader America is not

0:14:15.400 --> 0:14:18.640
<v Speaker 1>doing that for any other sector. So LFP is a

0:14:18.720 --> 0:14:21.560
<v Speaker 1>very good story of that. Right. LFP was invented in America.

0:14:21.880 --> 0:14:23.760
<v Speaker 1>A one to three was the company that was going

0:14:23.760 --> 0:14:27.680
<v Speaker 1>to scale up the battery chemistry, and then it got

0:14:27.720 --> 0:14:30.360
<v Speaker 1>bought by China. And we know the story. This gets

0:14:30.400 --> 0:14:34.040
<v Speaker 1>repeated multiple times. So as a climate tech investor going

0:14:34.080 --> 0:14:37.400
<v Speaker 1>into an early stage company, how do you think about

0:14:37.440 --> 0:14:40.120
<v Speaker 1>scale when it comes to becoming a SpaceX.

0:14:40.560 --> 0:14:43.400
<v Speaker 2>Yeah, this is where I like, I actually don't describe

0:14:43.400 --> 0:14:45.360
<v Speaker 2>myself as a climate tech investor because I think that

0:14:45.360 --> 0:14:49.240
<v Speaker 2>that is a ill posed frame of what this is. Like,

0:14:49.480 --> 0:14:52.600
<v Speaker 2>these are hardware companies typically, and so if you zoom

0:14:52.600 --> 0:14:54.760
<v Speaker 2>out a little bit and talk about hardware and say, like,

0:14:54.800 --> 0:14:57.040
<v Speaker 2>all right, what are the big interesting new hardware companies

0:14:57.040 --> 0:14:58.840
<v Speaker 2>that's shown up in the last twenty or thirty years.

0:14:59.160 --> 0:15:01.160
<v Speaker 2>Just talked about how I I went to a company

0:15:01.160 --> 0:15:03.240
<v Speaker 2>that went from zero to tens of millions of square

0:15:03.240 --> 0:15:05.720
<v Speaker 2>foot of operating facilities all around the world in a decade.

0:15:05.880 --> 0:15:09.240
<v Speaker 2>You've seen similar things happen at Microsoft at Amazon in

0:15:09.280 --> 0:15:11.800
<v Speaker 2>both with data centers and in their case and warehouses

0:15:11.840 --> 0:15:14.120
<v Speaker 2>and fleets of planes and trucks and other things. So

0:15:14.640 --> 0:15:17.000
<v Speaker 2>you just look at the largest companies in the world,

0:15:17.080 --> 0:15:20.680
<v Speaker 2>they are predominantly American companies, and so I think there

0:15:20.760 --> 0:15:23.080
<v Speaker 2>is an opportunity to grow and scale these things. It

0:15:23.120 --> 0:15:25.840
<v Speaker 2>requires having a business model. You know, in Videa's case,

0:15:25.880 --> 0:15:29.200
<v Speaker 2>they have Silicon and Chips are the most extreme example

0:15:29.320 --> 0:15:31.120
<v Speaker 2>of the companies that I think have a chance, which

0:15:31.160 --> 0:15:33.600
<v Speaker 2>is you concentrate a tremendous amount of human R and

0:15:33.680 --> 0:15:35.720
<v Speaker 2>D into a product that I can put in the

0:15:35.720 --> 0:15:38.320
<v Speaker 2>palm of my hand and I can sell by the millions.

0:15:38.320 --> 0:15:41.600
<v Speaker 2>We had very hard margins. That is an incredible business, right,

0:15:41.640 --> 0:15:43.680
<v Speaker 2>that is as good as it gets. And like, look

0:15:43.720 --> 0:15:45.800
<v Speaker 2>at everyone in the world chasing out you know, for

0:15:45.840 --> 0:15:48.440
<v Speaker 2>five years it's been obvious this is this amazing business.

0:15:48.480 --> 0:15:51.400
<v Speaker 2>Everyone's throwing money at it and they can't catch Jensen, right,

0:15:51.760 --> 0:15:54.560
<v Speaker 2>And so once you get scale it's like really hard

0:15:54.920 --> 0:15:57.560
<v Speaker 2>to catch, and so I think there are very few

0:15:57.560 --> 0:16:00.560
<v Speaker 2>businesses that are like silicon think that you know, on

0:16:00.600 --> 0:16:03.560
<v Speaker 2>the other extreme, you have just baseline commodities that are

0:16:03.640 --> 0:16:06.880
<v Speaker 2>very hard, things like steel, concrete, cement, and those sorts

0:16:06.880 --> 0:16:09.320
<v Speaker 2>of things. And there's like a big space of stuff

0:16:09.440 --> 0:16:12.560
<v Speaker 2>in the middle there that I think is really really

0:16:12.600 --> 0:16:15.440
<v Speaker 2>quite interesting. As a very specific example, so I'm not

0:16:15.600 --> 0:16:18.400
<v Speaker 2>just talking in generality, is you know a bunch of big,

0:16:18.440 --> 0:16:20.680
<v Speaker 2>boring equipment that you talked about in a show two

0:16:20.720 --> 0:16:23.280
<v Speaker 2>weeks ago as transformers. You know, these things that take

0:16:23.320 --> 0:16:25.560
<v Speaker 2>one voltage to another voltage, and they're been built the

0:16:25.560 --> 0:16:28.320
<v Speaker 2>same way, roughly speaking, for the last hundred years or

0:16:28.440 --> 0:16:31.280
<v Speaker 2>right now on a cost curve down on solid state transformers,

0:16:31.440 --> 0:16:33.520
<v Speaker 2>and you know, they are getting down cost down about

0:16:33.560 --> 0:16:36.160
<v Speaker 2>ten to fifteen percent every year. They're increasing sort of

0:16:36.160 --> 0:16:38.440
<v Speaker 2>in their efficiency, and so I think we're just at

0:16:38.440 --> 0:16:40.400
<v Speaker 2>the cycle now where you know, I'm going to be

0:16:40.440 --> 0:16:42.960
<v Speaker 2>able to build a transformer at a tenth the size

0:16:43.120 --> 0:16:46.200
<v Speaker 2>of an existing transformer. There's immense demand for these things,

0:16:46.200 --> 0:16:48.200
<v Speaker 2>so we're going to like sell everyone. There's a company

0:16:48.200 --> 0:16:51.360
<v Speaker 2>we just funded called Heron, with an exceptional founder from

0:16:51.480 --> 0:16:54.120
<v Speaker 2>eighteen years of Tesla DRUBEGL. You know, I think that's

0:16:54.120 --> 0:16:56.000
<v Speaker 2>an amazing market. They are not going to be able

0:16:56.040 --> 0:16:58.040
<v Speaker 2>to make enough of their product to meet demand in

0:16:58.080 --> 0:17:00.000
<v Speaker 2>the early days, and they're going to build a hugely

0:17:00.000 --> 0:17:03.240
<v Speaker 2>differentiated product thanks to an innovation which is sort of

0:17:03.240 --> 0:17:05.880
<v Speaker 2>power electronics and solid state, which is relatively new.

0:17:06.400 --> 0:17:09.000
<v Speaker 1>There's one way to think about why energy innovation in

0:17:09.040 --> 0:17:14.719
<v Speaker 1>America hasn't quite scaled, which is, for the past thirty years,

0:17:15.200 --> 0:17:19.080
<v Speaker 1>energy demand has been roughly flat. And that is true

0:17:19.119 --> 0:17:23.200
<v Speaker 1>of all energy demand. That's true of electricity demand specifically,

0:17:23.440 --> 0:17:26.520
<v Speaker 1>which is now starting to change the demand, especially in

0:17:26.560 --> 0:17:30.480
<v Speaker 1>the West with Europe and North America looking to build

0:17:30.560 --> 0:17:34.640
<v Speaker 1>data centers but also electrifying their fleet, adding heat pumps.

0:17:35.240 --> 0:17:40.440
<v Speaker 1>And there is something that growth does to the need

0:17:40.480 --> 0:17:47.200
<v Speaker 1>for innovation and the need for market developments that steady

0:17:47.520 --> 0:17:50.600
<v Speaker 1>or a declining market does not do. Right.

0:17:50.800 --> 0:17:52.560
<v Speaker 2>Yeah, I think that's a really great point. And the

0:17:52.560 --> 0:17:55.119
<v Speaker 2>way I would actually plus one that and say it

0:17:55.160 --> 0:18:00.000
<v Speaker 2>even stronger, which is energy access has become a boardroom

0:18:00.119 --> 0:18:03.720
<v Speaker 2>conversation in a way that wasn't true like literally four

0:18:03.800 --> 0:18:07.240
<v Speaker 2>years ago. So it is a top ordering conversation because

0:18:07.280 --> 0:18:09.600
<v Speaker 2>if I don't have access to energy. I can't build

0:18:09.600 --> 0:18:12.360
<v Speaker 2>the compute power I need. I can't build the data services,

0:18:12.400 --> 0:18:15.240
<v Speaker 2>the AI models, and I may lose out to my competition.

0:18:15.680 --> 0:18:18.120
<v Speaker 2>And you're seeing large companies. You know, Meta just announced

0:18:18.200 --> 0:18:21.359
<v Speaker 2>yesterday a deal for geothermal XGS. It was the second

0:18:21.400 --> 0:18:24.399
<v Speaker 2>geo thermal deal after Sage. Obviously Google has been doing

0:18:24.440 --> 0:18:26.560
<v Speaker 2>the same with Fervo. You've got most of the hyperscalers

0:18:26.920 --> 0:18:31.200
<v Speaker 2>being contracts for, you know, fission plants. It is categorically

0:18:31.200 --> 0:18:32.600
<v Speaker 2>different to say I need more of it or I

0:18:32.600 --> 0:18:35.680
<v Speaker 2>can offer it a better price. And like, getting access

0:18:35.680 --> 0:18:38.440
<v Speaker 2>to this thing is the difference between my business succeeding

0:18:38.520 --> 0:18:40.919
<v Speaker 2>or not. And so I'm willing to pay more. I'm

0:18:40.920 --> 0:18:43.600
<v Speaker 2>willing to take risks on new innovative technology and that

0:18:43.720 --> 0:18:47.000
<v Speaker 2>is a pull through, particularly on the energy side, that

0:18:47.200 --> 0:18:49.200
<v Speaker 2>like didn't exist even a few years ago, that I'm

0:18:49.359 --> 0:18:51.720
<v Speaker 2>incredibly excited about and I think it's enabling a lot

0:18:51.760 --> 0:18:52.480
<v Speaker 2>of new innovation.

0:18:56.119 --> 0:18:59.640
<v Speaker 1>After the break, are funding cuts in the US breaking

0:18:59.680 --> 0:19:03.440
<v Speaker 1>the innovation pipeline. And Hey, if you're enjoying this episode,

0:19:03.480 --> 0:19:05.320
<v Speaker 1>please take a moment to rate and review the show

0:19:05.320 --> 0:19:09.040
<v Speaker 1>on Apple Podcasts and Spotify. Your feedback really matters and

0:19:09.160 --> 0:19:21.399
<v Speaker 1>helps new listeners discover the show. Thank you. So a

0:19:21.400 --> 0:19:25.640
<v Speaker 1>lot of your investments are at early stage companies, and

0:19:25.760 --> 0:19:29.440
<v Speaker 1>the pipeline of innovation that is America that creates these

0:19:29.440 --> 0:19:33.720
<v Speaker 1>early stage companies is really strong. But we are going

0:19:33.760 --> 0:19:36.400
<v Speaker 1>to see, and we are starting to see already heavy

0:19:36.480 --> 0:19:41.880
<v Speaker 1>cuts to science funding, to health funding, to energy technology funding.

0:19:42.440 --> 0:19:47.160
<v Speaker 1>How do you think that changes your ability to think

0:19:47.200 --> 0:19:51.080
<v Speaker 1>about investing not next year, not in two years, but

0:19:51.160 --> 0:19:52.880
<v Speaker 1>in five or ten years. Yeah.

0:19:52.920 --> 0:19:56.040
<v Speaker 2>I mean, I'm a deep believer in the power of

0:19:56.359 --> 0:19:59.400
<v Speaker 2>you know, science and research to sort of accelerate our

0:19:59.600 --> 0:20:03.080
<v Speaker 2>ability to build interesting things and solve problems. So, you know,

0:20:03.320 --> 0:20:05.800
<v Speaker 2>I don't really know how this is all going to

0:20:05.800 --> 0:20:07.280
<v Speaker 2>shake out, but if it does, you know, if we're

0:20:07.320 --> 0:20:09.359
<v Speaker 2>doing less of that, then it is slowing down the

0:20:09.359 --> 0:20:11.840
<v Speaker 2>pipeline of things. You know, I would say five plus

0:20:11.960 --> 0:20:17.680
<v Speaker 2>years out. You know, there's a I was talking yesterday

0:20:17.840 --> 0:20:20.359
<v Speaker 2>and you know, someone was sharing some research they had

0:20:20.400 --> 0:20:24.040
<v Speaker 2>done which you know, said that most things to go

0:20:24.119 --> 0:20:26.800
<v Speaker 2>from a lab discovery to say one hundred million dollar

0:20:26.880 --> 0:20:29.240
<v Speaker 2>commercial deployment, you know, it's on the order of ten

0:20:29.280 --> 0:20:32.119
<v Speaker 2>to twenty years, and so it's probably not a five

0:20:32.200 --> 0:20:34.080
<v Speaker 2>year problem. It's more like a ten or twenty year problem,

0:20:34.119 --> 0:20:36.400
<v Speaker 2>but it's still a problem we do as a society,

0:20:36.440 --> 0:20:39.040
<v Speaker 2>as humanity, need to be investing sort of at all

0:20:39.080 --> 0:20:39.920
<v Speaker 2>stages of innovation.

0:20:40.359 --> 0:20:40.600
<v Speaker 1>You know.

0:20:40.720 --> 0:20:42.879
<v Speaker 2>My part of why I you know, I've been working

0:20:42.920 --> 0:20:46.520
<v Speaker 2>in technology in some form for twenty five plus years,

0:20:46.520 --> 0:20:48.720
<v Speaker 2>and I sort of asked myself sometimes like why am

0:20:48.760 --> 0:20:50.400
<v Speaker 2>I keep doing this? And you know, whenever I'm having

0:20:50.400 --> 0:20:52.199
<v Speaker 2>a bad day or bad week, you know, I just

0:20:52.240 --> 0:20:54.879
<v Speaker 2>sort of like try to look back and one hundred

0:20:54.880 --> 0:20:56.720
<v Speaker 2>plus years ago or a little a little more, like

0:20:56.760 --> 0:20:59.080
<v Speaker 2>it wasn't safe to drink the water in London because

0:20:59.080 --> 0:21:03.040
<v Speaker 2>we didn't really understand and how to disinfect it. Technology

0:21:03.080 --> 0:21:06.639
<v Speaker 2>has fundamentally improved the human condition, and it is the

0:21:06.720 --> 0:21:10.520
<v Speaker 2>vehicle by which we take difficult zero sum problems. Can

0:21:10.520 --> 0:21:12.439
<v Speaker 2>we fund this or can we fund that? And we

0:21:12.480 --> 0:21:14.159
<v Speaker 2>come up with a solution that's half the price, and

0:21:14.160 --> 0:21:16.960
<v Speaker 2>we say, guess what we can do both? And that

0:21:17.080 --> 0:21:19.080
<v Speaker 2>is sort of where I have dedicated my life, and

0:21:19.320 --> 0:21:22.119
<v Speaker 2>I'm hopeful. I'm concerned about this, and I'm hopeful we

0:21:22.119 --> 0:21:24.720
<v Speaker 2>can find ways to sort of get back to funding

0:21:25.320 --> 0:21:28.119
<v Speaker 2>the basic research that is the sort of early fuel

0:21:28.280 --> 0:21:32.920
<v Speaker 2>in this pipeline of incredible technologies to advance human prosperity.

0:21:33.119 --> 0:21:36.080
<v Speaker 1>So I've been covering venture capital investing in climate tech

0:21:36.119 --> 0:21:39.000
<v Speaker 1>for a while now, and a lot of the money

0:21:39.160 --> 0:21:42.320
<v Speaker 1>that goes into these companies tends to be American. A

0:21:42.359 --> 0:21:45.120
<v Speaker 1>lot of the companies that are in this space tend

0:21:45.119 --> 0:21:49.040
<v Speaker 1>to be American. What's happening on science funding? We are

0:21:49.200 --> 0:21:54.320
<v Speaker 1>seeing places like Europe but also China, Japan, even India

0:21:54.440 --> 0:21:57.600
<v Speaker 1>looking to boost science funding, looking to either attract some

0:21:57.640 --> 0:22:01.320
<v Speaker 1>of the scientists who left those parts to come back

0:22:01.320 --> 0:22:05.040
<v Speaker 1>home or to just give I mean, these are words

0:22:05.080 --> 0:22:08.440
<v Speaker 1>that politicians have used refuse to American scientists who want

0:22:08.480 --> 0:22:12.679
<v Speaker 1>to do work. Would you start to see opportunities to

0:22:12.720 --> 0:22:16.000
<v Speaker 1>invest more in those regions as climate tech investor? Because

0:22:16.359 --> 0:22:19.920
<v Speaker 1>are you tied to wanting an American company or are

0:22:19.960 --> 0:22:20.719
<v Speaker 1>you agnostic?

0:22:20.960 --> 0:22:24.119
<v Speaker 2>I will go where the great innovation happens. My current

0:22:24.280 --> 0:22:27.640
<v Speaker 2>thesis and continues to be that, you know, and it's

0:22:27.640 --> 0:22:29.840
<v Speaker 2>not exclude one of our companies as a French based company,

0:22:29.840 --> 0:22:33.399
<v Speaker 2>dic Cycle, and I think they're amazing producing clean chemicals

0:22:33.480 --> 0:22:36.760
<v Speaker 2>using electro chemistry, and so I'm not dogmatic about it.

0:22:37.080 --> 0:22:40.440
<v Speaker 2>I do think having built teams internationally all over the world,

0:22:40.560 --> 0:22:43.679
<v Speaker 2>built things all over the world. That America still is

0:22:43.800 --> 0:22:47.119
<v Speaker 2>particularly and particularly the West Coast and Boston, you know,

0:22:47.240 --> 0:22:50.360
<v Speaker 2>is particularly unique in its ecosystem and ability to start things.

0:22:50.400 --> 0:22:52.320
<v Speaker 2>I mean, I'll tell you when I started doing this work,

0:22:52.440 --> 0:22:54.040
<v Speaker 2>I live in the Bay Area in San Francisco area,

0:22:54.040 --> 0:22:55.439
<v Speaker 2>and I had a question of like, am I on

0:22:55.440 --> 0:22:57.639
<v Speaker 2>the wrong spot? Should I be in Houston, Should I

0:22:57.680 --> 0:22:59.760
<v Speaker 2>be in Boston? Should I be somewhere else? And so

0:22:59.840 --> 0:23:01.679
<v Speaker 2>I had sort of a point of reflection, maybe I

0:23:01.720 --> 0:23:03.720
<v Speaker 2>need to move to be where the action is. And

0:23:03.760 --> 0:23:06.320
<v Speaker 2>it just turns out that the Bay Area, in particular

0:23:06.520 --> 0:23:11.040
<v Speaker 2>in Los Angeles are still the epicenter of startups. You

0:23:11.080 --> 0:23:13.920
<v Speaker 2>can walk down the street and find someone who understands AI.

0:23:14.080 --> 0:23:16.080
<v Speaker 2>You can find an IP lawyer, you know, you can

0:23:16.080 --> 0:23:18.600
<v Speaker 2>find a CFO. It just like has the density of

0:23:18.640 --> 0:23:20.560
<v Speaker 2>talent you need. And that people have been trying to

0:23:20.600 --> 0:23:23.040
<v Speaker 2>recreate Silicon Valley and we call them, you know, Silicon

0:23:23.080 --> 0:23:25.200
<v Speaker 2>Alley or whatever it may be. And it's just hard

0:23:25.200 --> 0:23:27.800
<v Speaker 2>because you're recreating an entire ecosystem. Now you can screw

0:23:27.880 --> 0:23:30.200
<v Speaker 2>that up. You can you can mess it up over time.

0:23:30.800 --> 0:23:33.119
<v Speaker 2>And you know, I really hope America doesn't because I

0:23:33.119 --> 0:23:36.040
<v Speaker 2>think it's it's a huge engine of innovation and productivity

0:23:36.080 --> 0:23:38.440
<v Speaker 2>for the world, but it will, you know, for now,

0:23:38.480 --> 0:23:40.440
<v Speaker 2>I think it is the pre eminent.

0:23:40.119 --> 0:23:40.680
<v Speaker 1>Place to do it.

0:23:40.760 --> 0:23:42.760
<v Speaker 2>But again I'm not dogmatic. We see a great company

0:23:42.840 --> 0:23:44.200
<v Speaker 2>somewhere else in the world. I think there are a

0:23:44.200 --> 0:23:46.639
<v Speaker 2>billion people all over the world. I think India in

0:23:46.640 --> 0:23:49.359
<v Speaker 2>particular is investing a lot, as is China and others. So,

0:23:49.760 --> 0:23:51.159
<v Speaker 2>you know, I hope we see a lot of innovation

0:23:51.240 --> 0:23:51.879
<v Speaker 2>all over the world.

0:23:52.119 --> 0:23:55.560
<v Speaker 1>Looking over the next three to four years. What are

0:23:55.720 --> 0:23:59.200
<v Speaker 1>the things that you are seeking companies to bring solutions

0:23:59.200 --> 0:24:03.680
<v Speaker 1>in the climate text space that you would like your

0:24:03.720 --> 0:24:04.840
<v Speaker 1>capital to go towards.

0:24:05.160 --> 0:24:07.560
<v Speaker 2>So we invest in everything, industrials, you know, land use,

0:24:07.600 --> 0:24:09.159
<v Speaker 2>car removal, all the rest of it. We have a

0:24:09.160 --> 0:24:11.240
<v Speaker 2>pretty balanced portfolio of those things. But I would say,

0:24:11.280 --> 0:24:13.399
<v Speaker 2>if you, if you like, made me be focused. The

0:24:13.480 --> 0:24:16.280
<v Speaker 2>two things I'm obsessed with are very simple. It's energy

0:24:16.560 --> 0:24:20.880
<v Speaker 2>and it's AI for acceleration of atoms and so energy

0:24:20.920 --> 0:24:23.000
<v Speaker 2>is pretty straightforward. As you know, are there new ways

0:24:23.000 --> 0:24:26.600
<v Speaker 2>to produce slow carbon energy cheaply distributed store it? I

0:24:26.600 --> 0:24:29.520
<v Speaker 2>think there's just a tremendous amount of innovation, whether it's fusion,

0:24:29.640 --> 0:24:32.919
<v Speaker 2>advanced geothermal, battery storage. I think there's a ton of ways,

0:24:32.920 --> 0:24:35.040
<v Speaker 2>a ton of places where we can put batteries and

0:24:35.119 --> 0:24:37.919
<v Speaker 2>things because it's you know, cheaper, better, faster. You can

0:24:38.080 --> 0:24:39.840
<v Speaker 2>you can do it in induction stoves, you can do it,

0:24:39.920 --> 0:24:41.560
<v Speaker 2>lawn care equipment, you can do it in r v's.

0:24:41.640 --> 0:24:44.399
<v Speaker 2>Like we're just kind of getting started replacing all the

0:24:44.480 --> 0:24:48.960
<v Speaker 2>gas stuff, all the diesel generators with batteries. In fact,

0:24:49.040 --> 0:24:51.560
<v Speaker 2>we just recently did an investment in a fishing company

0:24:51.600 --> 0:24:54.960
<v Speaker 2>that's building a microreactor called Radiant, and their target market

0:24:55.000 --> 0:24:57.480
<v Speaker 2>is diesel generators. It's a small reactor, it's one megawatt,

0:24:57.880 --> 0:24:59.600
<v Speaker 2>but you know in regions where it's hard to get

0:24:59.600 --> 0:25:03.520
<v Speaker 2>to to ship diesel fuel there and it's incredibly expensive

0:25:03.520 --> 0:25:05.640
<v Speaker 2>to do so, so you can actually build a cost

0:25:05.640 --> 0:25:08.159
<v Speaker 2>competitive product, you know, by shipping a container that just

0:25:08.160 --> 0:25:11.439
<v Speaker 2>produces energy for five years straight. That's that's exciting. So

0:25:11.480 --> 0:25:14.239
<v Speaker 2>I think energy broadly is super exciting. And then you know,

0:25:14.800 --> 0:25:18.080
<v Speaker 2>we've been seeing a lot of really interesting applications of

0:25:18.920 --> 0:25:21.680
<v Speaker 2>advances and AI for I would say accelerating the scale

0:25:21.720 --> 0:25:25.200
<v Speaker 2>out the first wave of these companies. We're trying to

0:25:25.240 --> 0:25:29.200
<v Speaker 2>accelerate discovery, so trying to use materials discovery or you know,

0:25:29.280 --> 0:25:34.200
<v Speaker 2>chemistry discoveries. And I was honestly like struggling with those companies,

0:25:34.200 --> 0:25:36.920
<v Speaker 2>mostly because I think, as you rightly pointed out, it's

0:25:36.920 --> 0:25:39.080
<v Speaker 2>the scale out that's the really hard part of this.

0:25:39.200 --> 0:25:41.280
<v Speaker 2>And like is I think ninety plus percent of the

0:25:41.320 --> 0:25:43.159
<v Speaker 2>work and energy, and so it's like you got to

0:25:43.160 --> 0:25:45.440
<v Speaker 2>go attack that problem. So we started poking on that problem,

0:25:45.680 --> 0:25:48.399
<v Speaker 2>and we're just seeing a really interesting crop of companies

0:25:48.440 --> 0:25:51.280
<v Speaker 2>whose thesis is how do we get from sort of

0:25:51.320 --> 0:25:56.440
<v Speaker 2>like idea to production faster and get through iteration, reduce

0:25:56.520 --> 0:25:59.800
<v Speaker 2>testing cycles. We need to build a lot of stuff anyway,

0:25:59.800 --> 0:26:01.840
<v Speaker 2>you can it five x the grid in the United States.

0:26:02.119 --> 0:26:04.239
<v Speaker 2>How do we just do that faster? And I think

0:26:04.280 --> 0:26:06.720
<v Speaker 2>that that's actually a really really interesting problem to solve.

0:26:07.400 --> 0:26:11.640
<v Speaker 1>We have seen a decline in climate tech investments broadly

0:26:11.800 --> 0:26:14.520
<v Speaker 1>over the past three years. Now this is before Trump.

0:26:14.520 --> 0:26:18.280
<v Speaker 1>Even a lot of those investors came in because climate

0:26:18.280 --> 0:26:21.119
<v Speaker 1>tech investing was hot, and now many of those have

0:26:21.200 --> 0:26:24.640
<v Speaker 1>gone to AI because AI is hot. When you're thinking

0:26:24.640 --> 0:26:28.480
<v Speaker 1>about investing in companies, you always invest with other investors.

0:26:28.960 --> 0:26:31.960
<v Speaker 1>How have you seen this decline play out. Is it

0:26:32.600 --> 0:26:35.760
<v Speaker 1>going to be catastrophic because there are companies that are

0:26:35.760 --> 0:26:38.320
<v Speaker 1>going to go bankrupt? Or is it a good thing

0:26:38.359 --> 0:26:41.840
<v Speaker 1>because people who really weren't very serious about climate are

0:26:41.920 --> 0:26:43.440
<v Speaker 1>now not there. Yeah.

0:26:43.480 --> 0:26:45.560
<v Speaker 2>I mean, i'd say, first of all, the data I've

0:26:45.560 --> 0:26:48.320
<v Speaker 2>seen at least is that overall funding in VC is down,

0:26:48.480 --> 0:26:50.480
<v Speaker 2>and so if you like look at climate tech related

0:26:50.480 --> 0:26:53.840
<v Speaker 2>to overall VC, it's actually down less than over all VC.

0:26:54.119 --> 0:26:55.720
<v Speaker 2>But in practice, what I'm seeing in the market is

0:26:55.760 --> 0:26:58.520
<v Speaker 2>the more interesting question. And what I'd say is there

0:26:58.600 --> 0:27:01.160
<v Speaker 2>was a time twenty two on twenty twenty one where

0:27:01.200 --> 0:27:03.920
<v Speaker 2>we were like seeing deals come through with like very

0:27:03.920 --> 0:27:06.800
<v Speaker 2>fast markups, very short diligence, what i'd call sort of

0:27:06.880 --> 0:27:09.800
<v Speaker 2>non ideal sort of conditions to do a rigorous diligence

0:27:09.800 --> 0:27:12.239
<v Speaker 2>for an investing process that I didn't like. We're now

0:27:12.280 --> 0:27:14.000
<v Speaker 2>seeing sort of more ractionality. We have more time to

0:27:14.000 --> 0:27:16.199
<v Speaker 2>look at deals and understand them, really get to know

0:27:16.240 --> 0:27:19.040
<v Speaker 2>the founders, you know, understand the economics and the technology.

0:27:19.560 --> 0:27:23.640
<v Speaker 2>But we're seeing many many companies getting over subscribed grounds,

0:27:23.920 --> 0:27:26.640
<v Speaker 2>meaning that they have more investor interest than they need.

0:27:26.840 --> 0:27:28.680
<v Speaker 2>And I think it's almost a bifurcation where you see

0:27:28.720 --> 0:27:31.800
<v Speaker 2>companies in the market struggling to raise because they maybe

0:27:31.800 --> 0:27:34.560
<v Speaker 2>had too high evaluation or maybe the economics weren't as

0:27:34.560 --> 0:27:36.400
<v Speaker 2>favorable as they thought for their business. And I think

0:27:36.440 --> 0:27:39.320
<v Speaker 2>the ones you're seeing do really well are you know,

0:27:39.400 --> 0:27:43.040
<v Speaker 2>exceptional founders with a product that has an entitlement of

0:27:43.080 --> 0:27:45.480
<v Speaker 2>a better, faster, cheaper and people just want it, and

0:27:45.520 --> 0:27:48.000
<v Speaker 2>those those rounds are going real fast. So it's a

0:27:48.200 --> 0:27:50.320
<v Speaker 2>it's a kind of tale of two companies. In many cases,

0:27:50.320 --> 0:27:52.880
<v Speaker 2>I'm sure there's founders listening to this struggling to fundraise.

0:27:52.920 --> 0:27:55.359
<v Speaker 2>And look, I started my first company in two thousand. I

0:27:55.400 --> 0:27:57.280
<v Speaker 2>remember what that like. It sucks, so I like, my

0:27:57.320 --> 0:27:59.239
<v Speaker 2>heart goes out to you. But I think there is

0:27:59.520 --> 0:28:03.520
<v Speaker 2>there is still appetite and capability to fund companies out there.

0:28:04.000 --> 0:28:07.280
<v Speaker 1>And then the other thing that venture capitalists tend to

0:28:07.320 --> 0:28:10.000
<v Speaker 1>say most of the time is that, look, we invest

0:28:10.000 --> 0:28:13.680
<v Speaker 1>in companies because they're great ideas and not because they're

0:28:13.720 --> 0:28:19.280
<v Speaker 1>getting policy support or government incentives. And so, you know,

0:28:19.400 --> 0:28:22.480
<v Speaker 1>whatever happens with the government, we're trying to not be

0:28:22.520 --> 0:28:26.600
<v Speaker 1>affected by it. But that is only half true because

0:28:26.680 --> 0:28:28.760
<v Speaker 1>a lot of the markets that need to be created

0:28:29.200 --> 0:28:33.400
<v Speaker 1>with climate tech products need to be created by producing

0:28:33.400 --> 0:28:36.320
<v Speaker 1>stuff that is initially expensive has to become cheaper by

0:28:36.480 --> 0:28:39.760
<v Speaker 1>giving people incentives in the form of government subsidies to

0:28:39.840 --> 0:28:41.880
<v Speaker 1>make that product cheaper so that people can use it.

0:28:42.560 --> 0:28:45.760
<v Speaker 1>That policy is certainly in the US going away. And

0:28:45.800 --> 0:28:48.480
<v Speaker 1>so you've got these two tracks, I would say, in

0:28:48.520 --> 0:28:52.840
<v Speaker 1>climate tech, where there's mature industries. We talked about solar

0:28:52.880 --> 0:28:56.120
<v Speaker 1>wind batteries, electric cars that will continue to grow because

0:28:56.120 --> 0:28:59.040
<v Speaker 1>they're mature, because the price point is where it is

0:28:59.520 --> 0:29:03.480
<v Speaker 1>and companies are going to make profits making them. And

0:29:03.520 --> 0:29:05.560
<v Speaker 1>then there are a whole bunch of immature technologies we

0:29:05.600 --> 0:29:09.760
<v Speaker 1>talked about fusion, but also you know hydrogen or carbon capture,

0:29:10.080 --> 0:29:14.040
<v Speaker 1>point source carbon capture or carbon removal, which requires companies

0:29:14.080 --> 0:29:18.800
<v Speaker 1>to actually buy offsets, which you know, at a voluntary

0:29:18.800 --> 0:29:20.720
<v Speaker 1>scale they can buy somewhat, but like if you have

0:29:20.760 --> 0:29:23.240
<v Speaker 1>a regulatory market like here in Europe, then you actually

0:29:23.320 --> 0:29:26.520
<v Speaker 1>have scale and you have actually a market. Poll So

0:29:26.960 --> 0:29:29.880
<v Speaker 1>with policy going away in the US, what do you

0:29:29.920 --> 0:29:30.920
<v Speaker 1>stop investing in?

0:29:31.120 --> 0:29:33.760
<v Speaker 2>Well, it's not I think going away, as I would say,

0:29:33.840 --> 0:29:36.440
<v Speaker 2>is too big a statement. It's changing and aspects of

0:29:36.480 --> 0:29:39.040
<v Speaker 2>it are going away. And I think you know, what

0:29:39.160 --> 0:29:41.680
<v Speaker 2>we had was a fairly broad set of programs like

0:29:41.720 --> 0:29:44.000
<v Speaker 2>investing in a lot of stuff across the board, and

0:29:44.040 --> 0:29:46.160
<v Speaker 2>what you have from the government's perspective, and what you

0:29:46.160 --> 0:29:49.080
<v Speaker 2>have is a much more tailored, targeted set of things. So, yes,

0:29:49.160 --> 0:29:51.920
<v Speaker 2>hydrogen is challenged. I think carbon removal is challenged. I

0:29:51.960 --> 0:29:54.080
<v Speaker 2>think if you look at the fission market, it's actually

0:29:54.080 --> 0:29:56.239
<v Speaker 2>turbo charged at this point that the administration is like

0:29:56.280 --> 0:29:59.000
<v Speaker 2>making room for regulatory approval on others in a way

0:29:59.040 --> 0:30:01.280
<v Speaker 2>that didn't happen before. So I think it's quite simple

0:30:01.280 --> 0:30:02.959
<v Speaker 2>as that. You know, we've got to do our homework

0:30:03.000 --> 0:30:05.000
<v Speaker 2>in terms of the conditions of the market, and if

0:30:05.040 --> 0:30:07.520
<v Speaker 2>the market is being supported by some sort of policy

0:30:07.640 --> 0:30:10.560
<v Speaker 2>or regulatory sort of tail when we just do an

0:30:10.600 --> 0:30:14.680
<v Speaker 2>analysis on like how stable is that right and how

0:30:14.760 --> 0:30:17.400
<v Speaker 2>how likely is that going to be to continue, we don't,

0:30:17.480 --> 0:30:20.480
<v Speaker 2>you know, typically invest in anything that's dependent on legislation

0:30:20.520 --> 0:30:23.840
<v Speaker 2>that hasn't already passed. So you're really only just looking at, okay,

0:30:23.960 --> 0:30:25.719
<v Speaker 2>are you depending on things that are on the books today,

0:30:26.080 --> 0:30:27.400
<v Speaker 2>how stable are those?

0:30:28.440 --> 0:30:28.600
<v Speaker 1>You know?

0:30:28.680 --> 0:30:31.720
<v Speaker 2>I tend to be skeptical of, for example, even things

0:30:31.720 --> 0:30:34.000
<v Speaker 2>that are on the books where we haven't really felt

0:30:34.040 --> 0:30:36.840
<v Speaker 2>the impacts like it's going to create an economic burden

0:30:36.880 --> 0:30:39.239
<v Speaker 2>on people, because those things tend to get pushed out

0:30:39.280 --> 0:30:41.960
<v Speaker 2>when you get real close to them because people, you know,

0:30:42.240 --> 0:30:45.000
<v Speaker 2>people don't want to pay and so so I still think,

0:30:45.080 --> 0:30:47.880
<v Speaker 2>you know, it's a much more nuanced sort of analysis,

0:30:48.640 --> 0:30:51.120
<v Speaker 2>you know, of all of these things. But fundamentally, if

0:30:51.120 --> 0:30:52.920
<v Speaker 2>I'm you know, back to our you know, there's massive

0:30:53.000 --> 0:30:56.760
<v Speaker 2>energy demand. If I'm producing electrons faster or cheaper, I've

0:30:56.760 --> 0:30:59.600
<v Speaker 2>got a great business. It's usually one company that transforms

0:30:59.640 --> 0:31:02.640
<v Speaker 2>an industr, Like I think fusion is going to happen

0:31:02.680 --> 0:31:06.560
<v Speaker 2>because one or two companies, you know, I think I

0:31:06.560 --> 0:31:09.160
<v Speaker 2>think Hearen's going to transform you know, power electronics. I

0:31:09.200 --> 0:31:12.000
<v Speaker 2>think mill is going to solve more food waste problems

0:31:12.000 --> 0:31:15.000
<v Speaker 2>than any company ever in history. Like, I think you

0:31:15.080 --> 0:31:17.320
<v Speaker 2>got the shot that like when it works, you like

0:31:17.440 --> 0:31:21.600
<v Speaker 2>kind of replay history without Nvidia, right, or that without Intel, Like,

0:31:21.720 --> 0:31:23.320
<v Speaker 2>and you're just like, what would it look like? We

0:31:23.360 --> 0:31:24.880
<v Speaker 2>don't have to get them all, right, We just have

0:31:24.920 --> 0:31:26.360
<v Speaker 2>to get a couple of the ones that are sort

0:31:26.400 --> 0:31:29.760
<v Speaker 2>of world changing and that I'm hoping will be the

0:31:29.840 --> 0:31:32.960
<v Speaker 2>co alignment of like massive climate impact and some interesting

0:31:33.000 --> 0:31:34.440
<v Speaker 2>financial returns for our investors.

0:31:34.880 --> 0:31:37.040
<v Speaker 1>So we talked a bunch about climate investing, but you

0:31:37.440 --> 0:31:41.680
<v Speaker 1>started with climate philanthropy. Yeah, and you continue to do that.

0:31:42.240 --> 0:31:45.120
<v Speaker 1>Where do you see the difference between investing in an

0:31:45.200 --> 0:31:48.479
<v Speaker 1>idea that'll make money versus investing in an idea because

0:31:48.520 --> 0:31:49.560
<v Speaker 1>it needs to exist.

0:31:49.800 --> 0:31:51.560
<v Speaker 2>That's a great question. I mean, I think there's a

0:31:51.560 --> 0:31:53.720
<v Speaker 2>fairly clear line, at least in my mind, and the

0:31:53.720 --> 0:31:55.640
<v Speaker 2>way I think of it as quite simple. I think philanthropy,

0:31:55.680 --> 0:31:59.240
<v Speaker 2>at least for me, is really effective at early stage science.

0:31:59.280 --> 0:32:01.840
<v Speaker 2>You know, we talked about the early innovation and sort

0:32:01.840 --> 0:32:04.160
<v Speaker 2>of policy work. It's a place where you don't even

0:32:04.200 --> 0:32:05.680
<v Speaker 2>know if it's going to work, you don't know how

0:32:05.680 --> 0:32:08.000
<v Speaker 2>to make money on it. You're just trying to increase

0:32:08.040 --> 0:32:11.760
<v Speaker 2>our understanding of different things. So there's some really promising

0:32:11.760 --> 0:32:15.520
<v Speaker 2>carbon removal pathways, one called ocean acclinity enhancement, which is

0:32:15.520 --> 0:32:18.120
<v Speaker 2>a way to sort of supercharge something that happens naturally

0:32:18.400 --> 0:32:21.400
<v Speaker 2>in the ocean chemistry. And the first question is like

0:32:21.680 --> 0:32:24.040
<v Speaker 2>is it safe, is it effective? And how much does

0:32:24.040 --> 0:32:28.000
<v Speaker 2>it cost? And the answers to that are like frustratingly broad.

0:32:28.360 --> 0:32:31.040
<v Speaker 2>But in that broad range, if you hit some parts

0:32:31.040 --> 0:32:32.880
<v Speaker 2>of the target, it may actually be the cheapest, most

0:32:32.920 --> 0:32:35.560
<v Speaker 2>scalable form of government removal. I think it's a great

0:32:35.560 --> 0:32:37.840
<v Speaker 2>place for us to go do science and say like, well,

0:32:37.920 --> 0:32:40.520
<v Speaker 2>let's go try to answer those questions and like let's

0:32:40.560 --> 0:32:43.640
<v Speaker 2>answer them with rigorous and inteligence without trying to worry

0:32:43.680 --> 0:32:45.680
<v Speaker 2>about whether're go to make money on it, and let's

0:32:45.720 --> 0:32:47.640
<v Speaker 2>like try to write some papers. That's a good use

0:32:47.640 --> 0:32:49.880
<v Speaker 2>of philanthropy, I think for a lot of things we're

0:32:49.880 --> 0:32:52.520
<v Speaker 2>talking about where it's like, you know, solid state transformer,

0:32:52.560 --> 0:32:56.120
<v Speaker 2>solid state electronics, that's just at the point now where

0:32:56.160 --> 0:32:58.880
<v Speaker 2>like I think it is crossing the commercially competitive line.

0:32:59.040 --> 0:33:01.520
<v Speaker 2>It was too expensive and not reliable enough, and I

0:33:01.520 --> 0:33:04.160
<v Speaker 2>think we're like just getting at the point, so we're

0:33:04.160 --> 0:33:06.040
<v Speaker 2>about a year or two out from I think major

0:33:06.040 --> 0:33:08.680
<v Speaker 2>commercial deployments. That's a great place for a company because

0:33:08.680 --> 0:33:11.320
<v Speaker 2>you're like trying to scale something out and trying to

0:33:11.320 --> 0:33:13.320
<v Speaker 2>make money doing it. That's that's where I think industry

0:33:13.360 --> 0:33:14.360
<v Speaker 2>works really really well.

0:33:14.560 --> 0:33:18.200
<v Speaker 1>And you've also given money to ideas in philanthropy to

0:33:18.360 --> 0:33:21.920
<v Speaker 1>try and deal with impacts that are coming our way.

0:33:22.040 --> 0:33:24.600
<v Speaker 1>So we're going to see sea level rise, you're looking

0:33:24.680 --> 0:33:27.120
<v Speaker 1>to give money to ideas that will help us deal

0:33:27.200 --> 0:33:29.560
<v Speaker 1>with a problem that is kind of baked in. You know,

0:33:29.600 --> 0:33:32.880
<v Speaker 1>the models are quite uncertain, but we do know even

0:33:33.040 --> 0:33:36.280
<v Speaker 1>if we meet our climate goals, sea levels will continue

0:33:36.320 --> 0:33:40.280
<v Speaker 1>to keep rising for hundreds of years to come. Why

0:33:40.400 --> 0:33:43.920
<v Speaker 1>is that a problem that you are putting money in

0:33:43.960 --> 0:33:49.480
<v Speaker 1>as a philanthropy rather than stuff that governments are supposed

0:33:49.480 --> 0:33:53.200
<v Speaker 1>to do. This is basic research, This is good for society,

0:33:53.320 --> 0:33:55.440
<v Speaker 1>This is good for all countries, not just for one

0:33:55.480 --> 0:33:59.400
<v Speaker 1>specific country. So every government should really be keen and

0:33:59.440 --> 0:34:00.360
<v Speaker 1>investing in right.

0:34:00.480 --> 0:34:02.360
<v Speaker 2>The honest answers. I don't know why other people aren't

0:34:02.360 --> 0:34:03.920
<v Speaker 2>doing it. I think one of the things I'm pretty

0:34:03.920 --> 0:34:06.040
<v Speaker 2>good at is finding the white space. And so why

0:34:06.240 --> 0:34:08.600
<v Speaker 2>ended up here is like, for whatever reason people weren't

0:34:08.680 --> 0:34:10.360
<v Speaker 2>And you know, as you start kind of peeling the

0:34:10.360 --> 0:34:12.400
<v Speaker 2>onion on it, it gets worse, not better. Which is

0:34:12.520 --> 0:34:15.160
<v Speaker 2>our models for sea level rise are pretty pretty rough.

0:34:15.640 --> 0:34:17.600
<v Speaker 2>You're talking hundreds of years. Let's talk in the lifetime

0:34:17.640 --> 0:34:20.000
<v Speaker 2>of our children. That's twenty one hundred. It's not that

0:34:20.080 --> 0:34:24.120
<v Speaker 2>far away. Seventy five years. Models say somewhere between point

0:34:24.160 --> 0:34:26.520
<v Speaker 2>two to two meters of sea level rise. That's really

0:34:26.520 --> 0:34:29.080
<v Speaker 2>problematic for Mimi in New York and so first question

0:34:29.160 --> 0:34:31.520
<v Speaker 2>is can we like better answer that question? And that's

0:34:31.560 --> 0:34:33.600
<v Speaker 2>again a place for science, so has to do work,

0:34:33.640 --> 0:34:36.160
<v Speaker 2>and it's not actually that expensive to go go do

0:34:36.280 --> 0:34:38.399
<v Speaker 2>that work. And then the next question is, like, if

0:34:38.400 --> 0:34:41.120
<v Speaker 2>it's as bad as we think, besides building sea walls,

0:34:41.960 --> 0:34:44.280
<v Speaker 2>is there anything we can do just like slow this down?

0:34:44.480 --> 0:34:47.360
<v Speaker 2>And I think that again, it's that's a good scientific

0:34:47.440 --> 0:34:49.759
<v Speaker 2>question ask, and I think it's worth just framing this again.

0:34:49.880 --> 0:34:51.759
<v Speaker 2>Is all this climate stuff can feel really abstract, and

0:34:51.800 --> 0:34:53.680
<v Speaker 2>we talk about models and one see and this, like

0:34:53.880 --> 0:34:55.879
<v Speaker 2>I think about this in terms of people. We're talking

0:34:55.920 --> 0:34:59.359
<v Speaker 2>about islands underwater, we're talking about people being displaced, So

0:34:59.400 --> 0:35:02.960
<v Speaker 2>like I about impacts these things have on people in

0:35:03.000 --> 0:35:05.239
<v Speaker 2>our lifetime. And the question is how do we better

0:35:05.320 --> 0:35:09.160
<v Speaker 2>understand them and better prepare for them and hopefully prevent

0:35:09.280 --> 0:35:11.200
<v Speaker 2>or mitigate them, And like that that is the thing

0:35:11.239 --> 0:35:12.719
<v Speaker 2>that sort of underlies everything I'm doing.

0:35:13.080 --> 0:35:21.000
<v Speaker 1>Thank you, Mike, Yeah, and thank you for listening to

0:35:21.080 --> 0:35:32.239
<v Speaker 1>zero now for the sound of the week. That was

0:35:32.280 --> 0:35:35.480
<v Speaker 1>the sound of a highland cow burping while having its

0:35:35.520 --> 0:35:39.320
<v Speaker 1>hair brushed. Burbs produce the vast majority of methane emissions

0:35:39.360 --> 0:35:42.400
<v Speaker 1>from cow rearing and are one of the many sources

0:35:42.440 --> 0:35:46.000
<v Speaker 1>of greenhouse gases that companies are trying to reduce. If

0:35:46.080 --> 0:35:48.279
<v Speaker 1>you like this episode, please take a moment to rate

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<v Speaker 1>and review the show on Apple Podcasts or Spotify. Share

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<v Speaker 1>this episode with a friend or with someone who loves steak.

0:35:55.600 --> 0:35:58.600
<v Speaker 1>This episode was produced by Oscar Boyd and Eleanor Harrison.

0:35:58.680 --> 0:36:02.600
<v Speaker 1>DNGATEX podcast is Saige Bauman and head of Talk is

0:36:02.600 --> 0:36:06.600
<v Speaker 1>Brendan yunim Our. Theme music is composed by Wonderly Special

0:36:06.600 --> 0:36:10.280
<v Speaker 1>thanks to Jessica beck Soamersadi Moses andm and Schawan Wagner

0:36:10.760 --> 0:36:12.560
<v Speaker 1>I am Akshatrati bak Soon