1 00:00:01,720 --> 00:00:07,040 Speaker 1: Welcome to zero. I'm Aukshatrati. This week kobalt competition and 2 00:00:07,200 --> 00:00:24,800 Speaker 1: high octane capitalism. Let's talk about Warren Buffett, the CEO 3 00:00:24,920 --> 00:00:28,840 Speaker 1: of Berkshire Hathaway. Over a seventy year career, he's become 4 00:00:29,080 --> 00:00:34,000 Speaker 1: an investing icon known as the Oracle of Omaha. Berkshire 5 00:00:34,000 --> 00:00:37,040 Speaker 1: Hathaway has become one of the most valuable stocks in 6 00:00:37,120 --> 00:00:41,000 Speaker 1: history and turned Buffett into a mega billionaire. It all 7 00:00:41,040 --> 00:00:44,320 Speaker 1: started in the nineteen sixties when Buffett bought a textile 8 00:00:44,360 --> 00:00:47,960 Speaker 1: business called Berkshire Hathaway. He used that company as a 9 00:00:47,960 --> 00:00:51,680 Speaker 1: stable source of income to place other bets, eventually turning 10 00:00:51,680 --> 00:00:54,960 Speaker 1: it into a holding company for all kinds of investments. 11 00:00:55,520 --> 00:00:59,680 Speaker 1: Buffett's investments are not climate oriented. Berkshire holds shares of 12 00:01:00,000 --> 00:01:04,080 Speaker 1: any carbon intensive businesses and only some clean energy companies. 13 00:01:05,160 --> 00:01:09,319 Speaker 1: My guest today, Chamat Polyhapithia, is a venture capitalist and 14 00:01:09,440 --> 00:01:13,000 Speaker 1: self proclaimed disciple of Buffet. He wanted to create a 15 00:01:13,040 --> 00:01:16,680 Speaker 1: Berkshire for climate and not because it is a morally 16 00:01:16,840 --> 00:01:19,760 Speaker 1: right thing to do. People ask me like, are you 17 00:01:19,840 --> 00:01:24,440 Speaker 1: motivated to solve the climate problem because of your love 18 00:01:24,440 --> 00:01:27,319 Speaker 1: of the environment. I could give you the virtue signaling 19 00:01:27,360 --> 00:01:29,800 Speaker 1: answer which is yes, but that's not really where my 20 00:01:29,840 --> 00:01:33,800 Speaker 1: motivation comes. My motivation is economic. Chamat made his fortune 21 00:01:33,840 --> 00:01:37,319 Speaker 1: as an early Facebook employee and later with well timed 22 00:01:37,319 --> 00:01:41,080 Speaker 1: investments in the tech industry, including through a venture capital 23 00:01:41,120 --> 00:01:43,880 Speaker 1: firm called Social Capital that he has been running for 24 00:01:43,959 --> 00:01:47,920 Speaker 1: a decade. In twenty twenty, Chamat put out a call 25 00:01:47,960 --> 00:01:52,120 Speaker 1: on Twitter, are you interested in decarbonization, sustainability and climate 26 00:01:52,200 --> 00:01:54,760 Speaker 1: change and want to do something about it? I need 27 00:01:54,800 --> 00:01:57,600 Speaker 1: help allocating a few billion dollars into these areas over 28 00:01:57,640 --> 00:02:01,440 Speaker 1: the next two to three years, so I'm turning to 29 00:02:01,480 --> 00:02:04,440 Speaker 1: you for help. In return, you can work with me 30 00:02:04,520 --> 00:02:07,920 Speaker 1: to implement it. Chamat outlined how anyone could write in 31 00:02:08,560 --> 00:02:11,239 Speaker 1: with a way to create a holding company that bankrolls 32 00:02:11,240 --> 00:02:14,880 Speaker 1: the growth of climate tech companies. I missed this until 33 00:02:14,880 --> 00:02:17,120 Speaker 1: I got a call from a material science professor at 34 00:02:17,120 --> 00:02:21,480 Speaker 1: Carnegie Mellon University, Venkott. With Vanathan Venkott and I often 35 00:02:21,520 --> 00:02:24,560 Speaker 1: talk about startups and investments, and we thought, what the hell, 36 00:02:24,720 --> 00:02:28,880 Speaker 1: let's write in. Our group went pretty far in this competition. 37 00:02:29,560 --> 00:02:32,760 Speaker 1: But since that tweet, Chamat has not created a climate 38 00:02:32,760 --> 00:02:36,760 Speaker 1: holding company, but through his firm Social Capital, he has 39 00:02:36,840 --> 00:02:40,880 Speaker 1: invested in climate tech companies, a residential solar startup, a 40 00:02:40,919 --> 00:02:45,800 Speaker 1: battery manufacturer, a marketplace for farmers. So during a trip 41 00:02:45,800 --> 00:02:48,840 Speaker 1: to Silicon Valley, I arranged for him Venkitt and I 42 00:02:48,919 --> 00:02:51,680 Speaker 1: to talk about why he never created the Berkshire for Climate, 43 00:02:51,960 --> 00:02:55,119 Speaker 1: what companies he invest in and why and how much 44 00:02:55,200 --> 00:03:05,920 Speaker 1: can you teach yourself about batteries. Chamat, Welcome to zero. 45 00:03:06,400 --> 00:03:09,280 Speaker 1: Thank you, thanks for including me. Now let's talk about 46 00:03:09,360 --> 00:03:12,440 Speaker 1: what you wanted to build, which was a barksher Hathaway 47 00:03:12,840 --> 00:03:16,480 Speaker 1: for climate, and you started that out. And one reason 48 00:03:16,520 --> 00:03:20,200 Speaker 1: why Professor Venkats, Nathan and I are here today is 49 00:03:20,240 --> 00:03:24,079 Speaker 1: because you put out a tweet saying, hey, guys, if 50 00:03:24,080 --> 00:03:26,320 Speaker 1: you had a billion or three billion dollars and you 51 00:03:26,760 --> 00:03:29,320 Speaker 1: wanted to put it all to climate in a climate 52 00:03:29,360 --> 00:03:32,880 Speaker 1: holding company, how would you structure the climate holding company? 53 00:03:33,280 --> 00:03:36,360 Speaker 1: And Venkat and I used to talk frequently about batteries 54 00:03:36,360 --> 00:03:39,280 Speaker 1: and startups, and we saw the tweet and we were like, hey, 55 00:03:39,360 --> 00:03:42,720 Speaker 1: that's an interesting challenge should be you know a few ideas, 56 00:03:43,240 --> 00:03:47,400 Speaker 1: and so the deadline comes and closes, you end up 57 00:03:47,440 --> 00:03:53,720 Speaker 1: getting fifteen hundred applicants and end up employing a McKinsey consultant. 58 00:03:54,240 --> 00:03:56,800 Speaker 1: I mean it cost us two million dollars. Truth is 59 00:03:56,920 --> 00:04:00,560 Speaker 1: so expensive. I mean we have to probably the most 60 00:04:00,560 --> 00:04:04,040 Speaker 1: expensive tweet you've put out. I mean no, because I 61 00:04:04,080 --> 00:04:05,720 Speaker 1: put on other twets where I've done deals and I've 62 00:04:05,720 --> 00:04:09,600 Speaker 1: lost hundreds of millions. You know that you can rank them. 63 00:04:10,720 --> 00:04:12,280 Speaker 1: But I wanted to make sure that we were being 64 00:04:12,320 --> 00:04:15,880 Speaker 1: thoughtful and signaling to people that this was something that 65 00:04:15,920 --> 00:04:19,000 Speaker 1: we took very seriously. And I just needed intellect. Like, 66 00:04:19,040 --> 00:04:21,640 Speaker 1: we have a very small organization, and so you know, 67 00:04:21,640 --> 00:04:23,920 Speaker 1: when you have seven thousand pages of content or ten 68 00:04:23,960 --> 00:04:27,599 Speaker 1: thousand pages of content from all very very diverse, smart 69 00:04:27,600 --> 00:04:30,560 Speaker 1: people all around the world, you have a responsibility to 70 00:04:30,560 --> 00:04:33,320 Speaker 1: be thoughtful about that. And so we hired McKinsey to 71 00:04:33,320 --> 00:04:35,279 Speaker 1: help us sort through it all and read them all 72 00:04:35,320 --> 00:04:37,480 Speaker 1: and score them. And yeah, I mean it cost me 73 00:04:37,480 --> 00:04:39,279 Speaker 1: a few million dollars, but it was money while spent. 74 00:04:39,720 --> 00:04:43,880 Speaker 1: Why Because at the end of that funnel, there were 75 00:04:43,960 --> 00:04:47,320 Speaker 1: six or seven groups. You guys were one that really 76 00:04:47,360 --> 00:04:52,480 Speaker 1: helped me in clarifying how to think about this. So 77 00:04:52,520 --> 00:04:55,680 Speaker 1: what did I learn from you guys as a class? 78 00:04:57,000 --> 00:04:59,200 Speaker 1: The first thing I said, if you look back at 79 00:04:59,240 --> 00:05:03,640 Speaker 1: the history of Burke, they have two seminal transactions that 80 00:05:03,720 --> 00:05:07,400 Speaker 1: allowed them the oxygen, if you will, to become what 81 00:05:07,440 --> 00:05:11,280 Speaker 1: they are today. The first transaction was Berkshire itself, and 82 00:05:11,680 --> 00:05:18,360 Speaker 1: this was a business that had incredibly profound, free casual characteristics. 83 00:05:18,600 --> 00:05:20,919 Speaker 1: It was a dying business, you know, this was they 84 00:05:21,000 --> 00:05:23,880 Speaker 1: sold suit linings, right, but it was an incredibly a 85 00:05:23,960 --> 00:05:28,360 Speaker 1: creative casual business, which allowed Buffett to take that money 86 00:05:28,360 --> 00:05:30,880 Speaker 1: and to reallocate it into things that generated higher returns. 87 00:05:31,800 --> 00:05:33,960 Speaker 1: And then the second seminal transaction was that so much 88 00:05:34,000 --> 00:05:36,039 Speaker 1: of his money of that money went into Geico that 89 00:05:36,120 --> 00:05:37,800 Speaker 1: in nineteen ninety six he was able to buy the 90 00:05:37,839 --> 00:05:41,760 Speaker 1: fifty percent he didn't don't. Geico is a large American 91 00:05:41,800 --> 00:05:45,159 Speaker 1: car insurance company. It's a major source of stable income 92 00:05:45,200 --> 00:05:48,440 Speaker 1: for Berkshire. Hath to Weigh. Warren Buffett has called Geico 93 00:05:48,560 --> 00:05:52,200 Speaker 1: a jewel and his favorite investment. So I said, I 94 00:05:52,240 --> 00:05:53,960 Speaker 1: have to go back to the beginning and say, is 95 00:05:54,000 --> 00:05:56,640 Speaker 1: there a Berkshire hath Towagh like asset in climate today? 96 00:05:57,240 --> 00:06:00,440 Speaker 1: And I found some. The problem was I did not 97 00:06:00,560 --> 00:06:03,400 Speaker 1: have the courage to buy them. What were they? I found, 98 00:06:03,400 --> 00:06:07,080 Speaker 1: specifically a coal company in the United States. I was 99 00:06:07,120 --> 00:06:09,800 Speaker 1: in love with this company, in love with it I 100 00:06:09,880 --> 00:06:13,520 Speaker 1: was like, I should buy this company, but when push 101 00:06:13,600 --> 00:06:16,480 Speaker 1: came to shove where I did not have the courage 102 00:06:16,480 --> 00:06:18,120 Speaker 1: to act. And by the way, this was back then, 103 00:06:18,160 --> 00:06:21,480 Speaker 1: which would have been a sickening trade today. Okay, first 104 00:06:21,640 --> 00:06:26,960 Speaker 1: sickening trade that stunning behind the health issues of the people, 105 00:06:27,920 --> 00:06:30,440 Speaker 1: the ability to keep them employed gainfully over a long 106 00:06:30,480 --> 00:06:36,000 Speaker 1: periods of time, the environmental impact. But that coal asset, 107 00:06:37,760 --> 00:06:41,359 Speaker 1: in my mind, was my version of a Berkshire in 108 00:06:41,520 --> 00:06:44,280 Speaker 1: that it was in climate. I mean, let's be honest, 109 00:06:44,320 --> 00:06:47,200 Speaker 1: it creates energy, maybe not in the best way, but 110 00:06:47,240 --> 00:06:49,920 Speaker 1: it does well. You're using the cash flow from the coal. 111 00:06:50,040 --> 00:06:52,520 Speaker 1: It generates enormous cash flow, and I thought I could 112 00:06:52,560 --> 00:06:55,880 Speaker 1: reallocate this cash flow into now building this portfolio of 113 00:06:55,880 --> 00:06:58,840 Speaker 1: assets that I think are quite interesting, batteries, solar, all 114 00:06:58,880 --> 00:07:01,479 Speaker 1: of this stuff. But you didn't that investment because of 115 00:07:01,880 --> 00:07:04,760 Speaker 1: ESG constraints. You don't have any es G constraints. I 116 00:07:04,800 --> 00:07:07,960 Speaker 1: have no ESG constraints, but I have moral constraints. And 117 00:07:08,040 --> 00:07:11,239 Speaker 1: so you know, I sat down and I was thinking, 118 00:07:11,280 --> 00:07:16,360 Speaker 1: like what happens when a person, a parent says, my 119 00:07:16,480 --> 00:07:19,880 Speaker 1: partner has black lung because of the work he or 120 00:07:19,920 --> 00:07:22,840 Speaker 1: she did. In your mind, what do I do well? 121 00:07:23,800 --> 00:07:27,640 Speaker 1: The old line answer was tough health insurance and then 122 00:07:27,640 --> 00:07:29,840 Speaker 1: you're on your own. I can't do that, not based 123 00:07:29,880 --> 00:07:33,840 Speaker 1: on my background. I would feel too much guilt. So 124 00:07:33,880 --> 00:07:37,680 Speaker 1: I went through those practical issues, and I could not 125 00:07:38,720 --> 00:07:40,840 Speaker 1: tell myself that I would make the decisions that I 126 00:07:40,840 --> 00:07:44,280 Speaker 1: would need to to optimize for free cash flow. Do 127 00:07:44,280 --> 00:07:46,640 Speaker 1: you see what I'm saying? Not in that asset. If 128 00:07:46,640 --> 00:07:48,840 Speaker 1: I own a software asset, it's easy. There's nobody's coming 129 00:07:48,840 --> 00:07:51,160 Speaker 1: to you with black lung. And I just didn't have 130 00:07:51,280 --> 00:07:55,480 Speaker 1: the internal stamina to do it. It's not me. So 131 00:07:55,560 --> 00:07:58,760 Speaker 1: then what I came to the conclusion of is there 132 00:07:58,880 --> 00:08:01,200 Speaker 1: is no anchor asset for me today. So no, the 133 00:08:01,200 --> 00:08:03,640 Speaker 1: reason we haven't started a brokeshire for climate is we 134 00:08:03,680 --> 00:08:07,720 Speaker 1: haven't found our gico. Now, let's just start by talking 135 00:08:07,760 --> 00:08:11,640 Speaker 1: about your climate tech investments, perhaps the biggest one. First, 136 00:08:13,200 --> 00:08:15,480 Speaker 1: I think we've put on the order of about a 137 00:08:15,480 --> 00:08:17,960 Speaker 1: billion dollars to work over the last two and a 138 00:08:18,000 --> 00:08:21,320 Speaker 1: half years, and I would say that most of them 139 00:08:21,360 --> 00:08:24,600 Speaker 1: have been really about learning where we think the future 140 00:08:24,640 --> 00:08:27,520 Speaker 1: opportunities are. And then one has really consumed a lot 141 00:08:27,560 --> 00:08:30,720 Speaker 1: of the capital, which is this company called Palmetto, and 142 00:08:31,560 --> 00:08:35,040 Speaker 1: the simplest way to think about it is that Palmetto 143 00:08:35,280 --> 00:08:39,920 Speaker 1: is driving the bottoms up deregulation of energy. And the 144 00:08:39,960 --> 00:08:42,160 Speaker 1: way that it does that is that it helps consumers 145 00:08:42,760 --> 00:08:47,480 Speaker 1: really simply and cheaply get solar onto their roof in 146 00:08:47,520 --> 00:08:51,240 Speaker 1: a predictable way for a predictable price. And then it 147 00:08:51,240 --> 00:08:55,440 Speaker 1: allows them to manage that energy so that they can 148 00:08:55,520 --> 00:08:59,680 Speaker 1: be self sufficient and resilient, and all the access energy 149 00:08:59,720 --> 00:09:01,679 Speaker 1: can be back into the grid and all of that, 150 00:09:01,800 --> 00:09:04,560 Speaker 1: you know, becomes cheaper and cheaper over time. You've made 151 00:09:04,600 --> 00:09:07,280 Speaker 1: not just solar bets, but other bets. Yeah, if I 152 00:09:07,280 --> 00:09:08,679 Speaker 1: can take a step back, like if I can give 153 00:09:08,679 --> 00:09:11,720 Speaker 1: you the framework in which you know, people ask me, like, 154 00:09:12,000 --> 00:09:16,360 Speaker 1: you know, are you motivated to solve the climate problem 155 00:09:17,080 --> 00:09:20,560 Speaker 1: because of your love of the environment. I could give 156 00:09:20,600 --> 00:09:23,400 Speaker 1: you the virtue signaling answer, which is yes, But that's 157 00:09:23,440 --> 00:09:26,240 Speaker 1: not really where my motivation comes. My motivation is economic. 158 00:09:27,040 --> 00:09:30,920 Speaker 1: The economic motivation that I have is that there is 159 00:09:30,960 --> 00:09:35,920 Speaker 1: going to be trillions of dollars of value that will 160 00:09:35,960 --> 00:09:40,400 Speaker 1: be redistributed over the next decade or two. And the 161 00:09:40,520 --> 00:09:45,880 Speaker 1: simplest lens with which to view that change is through 162 00:09:45,880 --> 00:09:48,760 Speaker 1: the lens of energy. So at the highest level, I 163 00:09:48,840 --> 00:09:54,400 Speaker 1: was really fascinated by the geopolitical capital that it gives 164 00:09:54,400 --> 00:09:57,320 Speaker 1: the United States to make better decisions if we're energy independent. 165 00:09:58,120 --> 00:10:00,960 Speaker 1: Underneath that, I focused on two areas that to me 166 00:10:01,240 --> 00:10:03,520 Speaker 1: seem the most practical ways for us to get to 167 00:10:03,600 --> 00:10:07,880 Speaker 1: energy independence. So Number one is this deregulation of energy. 168 00:10:07,920 --> 00:10:13,600 Speaker 1: If you put one hundred million virtual power plants inside 169 00:10:13,600 --> 00:10:18,640 Speaker 1: of every single home in America, you will completely change 170 00:10:18,679 --> 00:10:23,880 Speaker 1: the nature of our need for hydrocarbons to such a 171 00:10:23,920 --> 00:10:26,920 Speaker 1: degree that every time we look at a problem abroad 172 00:10:26,960 --> 00:10:30,199 Speaker 1: and we take that issue off the table, I think 173 00:10:30,240 --> 00:10:32,280 Speaker 1: will be in a much better position to coordinate and 174 00:10:32,320 --> 00:10:35,320 Speaker 1: do the things that we believe in without having to 175 00:10:35,360 --> 00:10:38,080 Speaker 1: make these very complicated trade offs. I wanted to ask 176 00:10:38,120 --> 00:10:40,600 Speaker 1: you about the climate motivations as we talked about you 177 00:10:40,600 --> 00:10:42,480 Speaker 1: want to make money, but maybe there's the peace and 178 00:10:42,520 --> 00:10:45,040 Speaker 1: prosperity lens, which to me was an interesting way to 179 00:10:45,080 --> 00:10:48,160 Speaker 1: think about it as well, which is, if we don't 180 00:10:48,200 --> 00:10:50,439 Speaker 1: solve this problem, there will be less peace in the world. 181 00:10:50,679 --> 00:10:53,199 Speaker 1: If you solve this problem, there will be more prosperity 182 00:10:53,200 --> 00:10:55,079 Speaker 1: in the world, and there will be more peace. The 183 00:10:55,800 --> 00:10:58,160 Speaker 1: correlation is kind of tip to me, is it not. 184 00:11:00,040 --> 00:11:05,320 Speaker 1: I'm pausing. Okay, I'm not sure that that's true. I 185 00:11:05,360 --> 00:11:11,199 Speaker 1: don't know whether. I just think that the United States 186 00:11:13,040 --> 00:11:17,240 Speaker 1: has more freedom. So actually, let's talk about like if 187 00:11:17,240 --> 00:11:20,040 Speaker 1: you look at the Iran nuclear deal and our position 188 00:11:20,400 --> 00:11:24,040 Speaker 1: and our posture with Iran, one could theorize that if 189 00:11:24,080 --> 00:11:28,640 Speaker 1: we were completely energy independent, we would take a much 190 00:11:28,800 --> 00:11:34,080 Speaker 1: harsher stance, not necessarily because of our need for Iranian oil. 191 00:11:34,120 --> 00:11:37,480 Speaker 1: I don't think we have that, but our friends and 192 00:11:37,520 --> 00:11:40,640 Speaker 1: our friends friends who do need Iranian oil is what 193 00:11:40,800 --> 00:11:45,319 Speaker 1: causes that posture to be more watered down. As an example, 194 00:11:46,040 --> 00:11:48,200 Speaker 1: And I'm not saying that that's the right posture to take, 195 00:11:48,960 --> 00:11:51,600 Speaker 1: but you can go through all of these issues and 196 00:11:51,840 --> 00:11:54,120 Speaker 1: actually come to a very different conclusion if you take 197 00:11:54,640 --> 00:11:58,240 Speaker 1: energy off the table because it's a weight off of 198 00:11:58,240 --> 00:12:01,160 Speaker 1: our shoulders, or it's a weight off of our allies shoulders. 199 00:12:01,800 --> 00:12:05,000 Speaker 1: And I think that that that is an important place 200 00:12:05,080 --> 00:12:07,880 Speaker 1: to be. And so this is why I think the 201 00:12:08,000 --> 00:12:11,240 Speaker 1: energy transition really should be understood in this geopolitical context. 202 00:12:11,320 --> 00:12:15,640 Speaker 1: It is a national security and peace and prosperity objective. 203 00:12:17,200 --> 00:12:18,960 Speaker 1: There's a lot of science that has to go into it, 204 00:12:19,000 --> 00:12:21,440 Speaker 1: and a lot of carbon. Maybe that gets eliminated, and 205 00:12:21,760 --> 00:12:24,480 Speaker 1: who knows how much, because those are all guesses. But 206 00:12:24,559 --> 00:12:28,520 Speaker 1: what is practically true is that our foreign policy changes dramatically. 207 00:12:28,679 --> 00:12:31,599 Speaker 1: It changed dramatically when we were energy independent for the 208 00:12:31,679 --> 00:12:33,840 Speaker 1: few years under Bush, and you know, at the beginning 209 00:12:33,840 --> 00:12:36,800 Speaker 1: of Trump or I think it was, Yeah, maybe at 210 00:12:36,920 --> 00:12:40,800 Speaker 1: at the beginning of Trumpet ended. But well, energy independence 211 00:12:40,800 --> 00:12:43,280 Speaker 1: as a concept is a weird one because even when 212 00:12:43,320 --> 00:12:46,080 Speaker 1: there was enough energy that America was producing on its 213 00:12:46,080 --> 00:12:50,000 Speaker 1: own territory, it was still importing oil because the sum 214 00:12:50,040 --> 00:12:51,720 Speaker 1: of the oil that was making it had to explode 215 00:12:51,720 --> 00:12:53,800 Speaker 1: because the type of oil that was being produced here 216 00:12:53,920 --> 00:12:59,200 Speaker 1: was only being refined in other net energy independence, yeah, 217 00:12:59,200 --> 00:13:01,800 Speaker 1: you're absolutely right, but it has implications for our allies 218 00:13:01,840 --> 00:13:04,319 Speaker 1: as well, Like you know, think of how the degrees 219 00:13:04,320 --> 00:13:08,600 Speaker 1: of freedom it gives. I don't know Europe right now 220 00:13:08,800 --> 00:13:10,880 Speaker 1: when it's going through a gas crisis and is dependent 221 00:13:10,960 --> 00:13:15,120 Speaker 1: on USLNG. Yeah, but beyond the solar bed what are 222 00:13:15,160 --> 00:13:17,400 Speaker 1: the beds that we've made that would so at the 223 00:13:17,440 --> 00:13:23,640 Speaker 1: highest level, I was really fascinated by the geopolitical capital 224 00:13:23,679 --> 00:13:25,960 Speaker 1: that it gives the United States to make better decisions 225 00:13:25,960 --> 00:13:29,840 Speaker 1: if we're energy independent. Underneath that, I focused on two 226 00:13:29,880 --> 00:13:32,760 Speaker 1: areas that to me seemed the most practical ways for 227 00:13:32,840 --> 00:13:36,240 Speaker 1: us to get to energy independence. So number one is 228 00:13:36,280 --> 00:13:39,720 Speaker 1: this deregulation of energy, and then the second is that 229 00:13:39,800 --> 00:13:44,520 Speaker 1: if you unbundle that concept of the virtual power plant, 230 00:13:45,280 --> 00:13:49,000 Speaker 1: there are two practical opportunities today. The first is how 231 00:13:49,040 --> 00:13:52,000 Speaker 1: do you actually deploy the physical systems on top of 232 00:13:52,000 --> 00:13:55,280 Speaker 1: one hundred million homes so that they can generate energy. 233 00:13:55,760 --> 00:13:58,520 Speaker 1: That's what Palmetto does. But then the second is, while 234 00:13:58,559 --> 00:14:01,560 Speaker 1: you're always generating energy every day, if you get solar 235 00:14:01,679 --> 00:14:03,600 Speaker 1: on top of your roof, you need to store it. 236 00:14:04,120 --> 00:14:07,040 Speaker 1: So then the next area that I got really fascinated 237 00:14:07,080 --> 00:14:11,079 Speaker 1: by was batteries. And within batteries it's really a matrix. 238 00:14:11,760 --> 00:14:15,079 Speaker 1: There are different chemistries and different use cases. So if 239 00:14:15,120 --> 00:14:18,400 Speaker 1: you talk to a utility, the battery solution that they 240 00:14:18,400 --> 00:14:23,480 Speaker 1: would deploy are these football field size storage solutions that 241 00:14:23,760 --> 00:14:27,880 Speaker 1: you use a very specific iron based chemistry. Perhaps it's cheap, 242 00:14:27,920 --> 00:14:31,600 Speaker 1: it has very different characteristics than the NMC or NCA 243 00:14:31,640 --> 00:14:34,160 Speaker 1: batteries that Tesla would put in a Model X right, 244 00:14:34,200 --> 00:14:38,360 Speaker 1: and that's nickel cobalt manganese or nickel cobalt aluminium exactly 245 00:14:39,280 --> 00:14:42,080 Speaker 1: exactly now, if you did not catch that, I just 246 00:14:42,200 --> 00:14:45,120 Speaker 1: listed out the elements in the batteries that Chama describes 247 00:14:45,240 --> 00:14:48,760 Speaker 1: as being in one of Tesla's more expensive cars. All 248 00:14:48,800 --> 00:14:51,800 Speaker 1: of these batteries are lithim ion batteries. Lithium is the 249 00:14:51,840 --> 00:14:55,600 Speaker 1: element that has enabled the explosion of handheld electronic devices 250 00:14:55,640 --> 00:14:59,640 Speaker 1: we used today and the electric car revolution. But within 251 00:14:59,720 --> 00:15:04,000 Speaker 1: lithi amine batteries there are different formulations, and these formulations 252 00:15:04,040 --> 00:15:07,960 Speaker 1: have meanings beyond just how the battery works. There's cost. 253 00:15:08,280 --> 00:15:12,080 Speaker 1: There's also supply chain and ethical implications related to buying 254 00:15:12,080 --> 00:15:16,720 Speaker 1: the raw materials. Chamat mentioned iron based chemistry. He's still 255 00:15:16,720 --> 00:15:19,840 Speaker 1: talking about a lithiumine battery, one with a formulation of 256 00:15:19,920 --> 00:15:24,520 Speaker 1: lithium ion and phosphorus, the LFB battery. The F stands 257 00:15:24,560 --> 00:15:27,440 Speaker 1: for fee, which is the chemical symbol of iron. This 258 00:15:27,600 --> 00:15:30,280 Speaker 1: chemistry is behind one of the cheapest lithium ion batteries 259 00:15:30,280 --> 00:15:33,040 Speaker 1: you can buy in the market. That's because the components 260 00:15:33,120 --> 00:15:36,960 Speaker 1: of an LFP battery are widely available elements. The other 261 00:15:37,000 --> 00:15:40,680 Speaker 1: type he mentioned NMC or NCA batteries. NMC or NCAA 262 00:15:40,760 --> 00:15:45,600 Speaker 1: batteries are made with nickel, manganese, cobalt and aluminum. These 263 00:15:45,600 --> 00:15:49,400 Speaker 1: metals are more expensive and they have other problems. The 264 00:15:49,520 --> 00:15:53,840 Speaker 1: cobalt supply chain, for example, suffers from abusive labor practices. 265 00:15:54,960 --> 00:16:00,320 Speaker 1: What chemistry a company chooses is a major decision, very 266 00:16:00,360 --> 00:16:03,800 Speaker 1: complicated issues. So I've started to focus on batteries, and 267 00:16:04,200 --> 00:16:07,120 Speaker 1: in batteries there are a handful things that I think 268 00:16:07,160 --> 00:16:12,040 Speaker 1: are practical solutions today. The first is that if you 269 00:16:12,120 --> 00:16:18,200 Speaker 1: look at the choices that Americans make in terms of 270 00:16:18,240 --> 00:16:22,000 Speaker 1: the kinds of cars that they drive, one of the 271 00:16:22,000 --> 00:16:25,120 Speaker 1: biggest takeaways that you can make practically speaking is you 272 00:16:25,200 --> 00:16:28,160 Speaker 1: probably do not need a Cadillac Escalate to go from 273 00:16:28,160 --> 00:16:30,680 Speaker 1: your house to the Safe Way and back. And so 274 00:16:31,600 --> 00:16:38,640 Speaker 1: there are very different power torque, energy profiles of cars 275 00:16:38,640 --> 00:16:41,720 Speaker 1: that you could give a consumer to meet ninety nine 276 00:16:41,760 --> 00:16:45,080 Speaker 1: percent of their everyday use cases. But then that also 277 00:16:45,160 --> 00:16:47,040 Speaker 1: gives them the added value of knowing that they're not 278 00:16:47,200 --> 00:16:50,960 Speaker 1: emitting carbon into the environment. So you want to build 279 00:16:50,960 --> 00:16:54,040 Speaker 1: a car company that is not a Tesla, because a 280 00:16:54,160 --> 00:16:56,360 Speaker 1: Model three will give you all that power and target 281 00:16:56,360 --> 00:16:58,760 Speaker 1: that is the useless. I think Tesla's actually making the 282 00:16:58,840 --> 00:17:01,280 Speaker 1: right decisions. So if you think think about what Tesla did, 283 00:17:01,560 --> 00:17:04,399 Speaker 1: they started at the upper end of the cost but 284 00:17:04,520 --> 00:17:06,879 Speaker 1: also the upper end of the chemistry curve where they 285 00:17:06,920 --> 00:17:10,679 Speaker 1: picked NMC and NCA because they had to. And Elon 286 00:17:10,720 --> 00:17:13,080 Speaker 1: wrote this in his master plan, I have to sell 287 00:17:13,119 --> 00:17:17,720 Speaker 1: a premium car to get these early adopters. The features 288 00:17:17,720 --> 00:17:22,720 Speaker 1: of a premium car are underpinned by performance, always has 289 00:17:22,720 --> 00:17:24,919 Speaker 1: and always will be. But as he moved down the 290 00:17:24,920 --> 00:17:26,760 Speaker 1: cost curve, what did he do? He went to LFP, 291 00:17:27,080 --> 00:17:32,760 Speaker 1: He went to iron phosphate. Ye going to cause power 292 00:17:32,800 --> 00:17:35,720 Speaker 1: and talk to go down. It's just well the energy no, 293 00:17:36,920 --> 00:17:39,040 Speaker 1: all of it changes. The energy density of these batteries 294 00:17:39,040 --> 00:17:41,640 Speaker 1: are different. You you design a different car from here. 295 00:17:42,840 --> 00:17:45,320 Speaker 1: And I got into a debate about the merits of 296 00:17:45,359 --> 00:17:48,600 Speaker 1: different battery chemistries and how they affect the design of 297 00:17:48,680 --> 00:17:53,160 Speaker 1: electric vehicles. It was charged two point three seconds using them? 298 00:17:53,280 --> 00:17:55,600 Speaker 1: Is that true? But you want to elaborate and then 299 00:17:55,600 --> 00:17:58,399 Speaker 1: maybe we can unpack if you if you think about 300 00:17:58,440 --> 00:18:00,400 Speaker 1: like you cannot do it and just guys, just help. 301 00:18:01,880 --> 00:18:03,320 Speaker 1: Can't do it. All you need to do is put 302 00:18:03,480 --> 00:18:05,480 Speaker 1: enough of LP in there. You can't do that. That's 303 00:18:05,520 --> 00:18:07,880 Speaker 1: not true. You don't have a power tool that moves 304 00:18:07,880 --> 00:18:10,280 Speaker 1: a five ton piece of Yeah, So the reason for 305 00:18:10,359 --> 00:18:13,000 Speaker 1: that is because let's okay, how about I give you 306 00:18:13,040 --> 00:18:16,840 Speaker 1: the answer that satisfy you. In the end, we all 307 00:18:16,880 --> 00:18:19,520 Speaker 1: agreed that the supply chain for A left B batteries 308 00:18:19,640 --> 00:18:22,960 Speaker 1: is preferable to the NMC batteries for reasons that have 309 00:18:23,080 --> 00:18:28,199 Speaker 1: more to do with politics than chemistry. Okay, So my 310 00:18:28,280 --> 00:18:30,920 Speaker 1: point is that I've gotten very interested in that idea, 311 00:18:31,000 --> 00:18:35,280 Speaker 1: which is there are practical solutions that require an energy 312 00:18:35,280 --> 00:18:38,560 Speaker 1: profile that's very different than what we source today. You know, 313 00:18:38,560 --> 00:18:40,600 Speaker 1: if you move away from these ternary chemistries and you 314 00:18:40,640 --> 00:18:44,800 Speaker 1: go from instead of three critical you know, inputs like nickel, manganese, 315 00:18:44,800 --> 00:18:48,359 Speaker 1: and cobalt which are difficult to source, complicated, terrible supply chains, 316 00:18:48,840 --> 00:18:51,840 Speaker 1: to LFP, which is basically everywhere. That's something that I 317 00:18:51,880 --> 00:18:54,879 Speaker 1: really am interested in, and and I think that that's worth exploring. 318 00:18:55,640 --> 00:18:59,440 Speaker 1: Both again from the perspective of cheaper, faster, better solutions 319 00:18:59,440 --> 00:19:01,680 Speaker 1: will only have happen on LFP in my opinion, right, 320 00:19:01,720 --> 00:19:05,720 Speaker 1: And that's what your bet on Metricham is doing. In part. 321 00:19:05,840 --> 00:19:09,400 Speaker 1: Metri Kem is a startup that Chamat's Social Capital invested 322 00:19:09,560 --> 00:19:13,080 Speaker 1: at least twenty million dollars into. The startup has plans 323 00:19:13,119 --> 00:19:16,639 Speaker 1: to manufacture LFP the material needed to make the cheaper 324 00:19:16,800 --> 00:19:20,600 Speaker 1: lithiumine batteries in North America. The batteries will be for 325 00:19:20,680 --> 00:19:24,600 Speaker 1: electric vehicles are energy storage. I think metri Cham is 326 00:19:24,960 --> 00:19:30,119 Speaker 1: two pronged. One is we have to first prove that 327 00:19:30,160 --> 00:19:33,040 Speaker 1: we can make the same LFP that China makes. We've 328 00:19:33,040 --> 00:19:35,440 Speaker 1: proven that now at small scale. We have to prove 329 00:19:35,480 --> 00:19:37,439 Speaker 1: that we can make it at large scale. So we're 330 00:19:37,440 --> 00:19:39,720 Speaker 1: you know, at the kilogram scale, we can do it. 331 00:19:39,760 --> 00:19:43,159 Speaker 1: We're as good as anybody else in China. Now we 332 00:19:43,240 --> 00:19:45,520 Speaker 1: need to prove that we can make it at ton scale, 333 00:19:46,040 --> 00:19:49,280 Speaker 1: so that Samsung or sk or Tesla or anybody else 334 00:19:49,320 --> 00:19:53,160 Speaker 1: who needs LFP can call us and say I need 335 00:19:53,160 --> 00:19:57,720 Speaker 1: it from you guys, And as they do that, what 336 00:19:57,840 --> 00:20:01,800 Speaker 1: we will also prove that with the existing infrastructure that 337 00:20:01,840 --> 00:20:04,640 Speaker 1: makes LFP, we will give you our version of LFP 338 00:20:04,800 --> 00:20:07,199 Speaker 1: which actually moves up the energy density curve at the 339 00:20:07,200 --> 00:20:11,240 Speaker 1: same price point. And we have some tricks. We have 340 00:20:11,280 --> 00:20:13,680 Speaker 1: some things that we've been experimenting with our own trade 341 00:20:13,720 --> 00:20:17,800 Speaker 1: secret which, if they bear fruit, will essentially allow us 342 00:20:17,800 --> 00:20:20,199 Speaker 1: to have a recipe that for the same machines, the 343 00:20:20,280 --> 00:20:23,119 Speaker 1: same infrastructure can just give you a better version of 344 00:20:23,160 --> 00:20:25,120 Speaker 1: the product that you were buying before. So that's one thing. 345 00:20:25,880 --> 00:20:28,800 Speaker 1: But the second thing, which I think is on the 346 00:20:28,840 --> 00:20:34,400 Speaker 1: margins slightly more important, is it domesticates this know how 347 00:20:34,480 --> 00:20:44,080 Speaker 1: an ip in the United States. After the break, I 348 00:20:44,119 --> 00:20:48,480 Speaker 1: talked to Chamat about risk SPACs and ESG, which is 349 00:20:48,600 --> 00:20:53,640 Speaker 1: using environmental, social and governance measures, these non financial metrics 350 00:20:53,880 --> 00:21:12,320 Speaker 1: to make financial decisions. The story of Linthiaman batteries is 351 00:21:12,320 --> 00:21:15,000 Speaker 1: stunning in that you know, almost all the components that 352 00:21:15,040 --> 00:21:18,000 Speaker 1: went into making the first commercial one were invented here 353 00:21:18,000 --> 00:21:23,240 Speaker 1: in America, but then it was commercialized by Sony in Asia, 354 00:21:23,359 --> 00:21:27,359 Speaker 1: and then obviously in the twenty first century it was 355 00:21:27,480 --> 00:21:30,320 Speaker 1: China that scale of the industry. And so now we 356 00:21:30,400 --> 00:21:32,800 Speaker 1: are at least here in the US having to by 357 00:21:32,800 --> 00:21:34,879 Speaker 1: the way, they've be sure they've they've done two things. 358 00:21:35,720 --> 00:21:39,440 Speaker 1: They consolidated the industry with respect to the actual specially 359 00:21:39,520 --> 00:21:44,040 Speaker 1: chemical processing. So all of those pipelines are effectively Chinese zode. 360 00:21:44,480 --> 00:21:47,200 Speaker 1: And we need to do a lot of very hard 361 00:21:47,200 --> 00:21:50,520 Speaker 1: work over the next ten to fifteen years to both 362 00:21:50,920 --> 00:21:54,240 Speaker 1: pull in people to train them if they don't exist, 363 00:21:55,280 --> 00:21:57,080 Speaker 1: and then to figure out how to do it ourselves. 364 00:21:57,520 --> 00:22:00,240 Speaker 1: There's enormous amounts of know how and trade secret ad 365 00:22:00,280 --> 00:22:04,040 Speaker 1: into this stuff, which is what allows these duopolies and 366 00:22:04,160 --> 00:22:07,639 Speaker 1: oligopolies to exist. And then the second thing that China 367 00:22:07,720 --> 00:22:12,520 Speaker 1: did brilliantly is they used their capital to go all 368 00:22:12,560 --> 00:22:17,720 Speaker 1: around the world and essentially by the critical inputs. So 369 00:22:17,760 --> 00:22:20,119 Speaker 1: in the United States, because we fell under the spell 370 00:22:20,119 --> 00:22:24,280 Speaker 1: of ESG, you know, we allowed all these random companies 371 00:22:25,160 --> 00:22:28,959 Speaker 1: to get banner of ESG, which that didn't deserve it. 372 00:22:29,080 --> 00:22:32,000 Speaker 1: You know, all of Big Tech is an EESG company, 373 00:22:32,240 --> 00:22:34,800 Speaker 1: which is so stupid because what did it really do. 374 00:22:34,920 --> 00:22:38,800 Speaker 1: It got all these asset managers to divest and move 375 00:22:38,840 --> 00:22:43,199 Speaker 1: away from these hard capital areas of our world that 376 00:22:43,240 --> 00:22:47,680 Speaker 1: we needed investment mining, specialty chemicals. Nobody wanted to touch it. 377 00:22:47,680 --> 00:22:51,359 Speaker 1: It is putting capital allocators in the position to be 378 00:22:51,480 --> 00:22:54,480 Speaker 1: moral judges and arbiters. And I don't think that's the 379 00:22:54,600 --> 00:23:00,600 Speaker 1: job capitalists should be doing. I think capitalists should focus 380 00:23:00,680 --> 00:23:06,760 Speaker 1: on return uninvested capital only. And when they do that, 381 00:23:07,160 --> 00:23:11,360 Speaker 1: and if they do that, well, they would finance some 382 00:23:11,400 --> 00:23:13,439 Speaker 1: of the things that have been ignored. They would have 383 00:23:13,600 --> 00:23:18,960 Speaker 1: financed the lithium exploration around the world, the lithium extraction 384 00:23:19,000 --> 00:23:22,280 Speaker 1: in the United States, which not only, as it turned out, 385 00:23:22,320 --> 00:23:24,920 Speaker 1: would have made us, and it still can, by the way, 386 00:23:25,480 --> 00:23:28,480 Speaker 1: an enormous amount of money for that capital allocator, but 387 00:23:28,560 --> 00:23:32,280 Speaker 1: it would have given a level of national security that 388 00:23:32,400 --> 00:23:35,640 Speaker 1: we desperately need today. But you've also made the point 389 00:23:35,720 --> 00:23:40,520 Speaker 1: that capitalists are chasing, and have been for some time, 390 00:23:40,680 --> 00:23:43,840 Speaker 1: short term returns, and that's because the people who run 391 00:23:43,920 --> 00:23:48,560 Speaker 1: these investment firms, who run asset managers, are trained to 392 00:23:48,680 --> 00:23:50,439 Speaker 1: do that. They go to the same schools, they meet 393 00:23:50,480 --> 00:23:52,160 Speaker 1: the same people, they hang out with the same people, 394 00:23:52,160 --> 00:23:54,520 Speaker 1: they have all the same thesis, and what they want 395 00:23:54,800 --> 00:23:58,560 Speaker 1: is a set amount of return, stable return, all the time. Right. 396 00:23:59,040 --> 00:24:02,199 Speaker 1: So if that's the kind of capitalism that we have 397 00:24:02,359 --> 00:24:04,600 Speaker 1: right now, how do you think that would have funded 398 00:24:04,840 --> 00:24:07,680 Speaker 1: lithium exploration. It's just high. It's not the only it's 399 00:24:07,720 --> 00:24:11,160 Speaker 1: not the only. Look, here's the thing. I think it's 400 00:24:11,280 --> 00:24:15,679 Speaker 1: unfair to cherry pick a set of decisions by a 401 00:24:15,760 --> 00:24:19,040 Speaker 1: plurality of people in a moment as the total set 402 00:24:19,080 --> 00:24:24,199 Speaker 1: of decisions. It has always been the case that the 403 00:24:24,320 --> 00:24:27,720 Speaker 1: riskier the bet, the higher the returns, and it has 404 00:24:27,760 --> 00:24:31,640 Speaker 1: always been the case that there have been people who 405 00:24:31,640 --> 00:24:35,600 Speaker 1: are willing to take those bets. But I think what 406 00:24:35,600 --> 00:24:39,880 Speaker 1: you're talking about is something else, which is after an 407 00:24:39,920 --> 00:24:44,639 Speaker 1: industry starts to become professionalized, then a plurality of people 408 00:24:44,680 --> 00:24:48,240 Speaker 1: do come in, and they neither have the capability to 409 00:24:48,280 --> 00:24:51,040 Speaker 1: make those decisions nor the risk appetite to make those decison. 410 00:24:51,119 --> 00:24:54,480 Speaker 1: The capability, meaning you know, if you're if you're going 411 00:24:54,520 --> 00:24:56,640 Speaker 1: to be a good biotech investor, I think at some 412 00:24:56,760 --> 00:24:59,560 Speaker 1: level you need to have either built a biotech company 413 00:24:59,600 --> 00:25:02,159 Speaker 1: or at least understand biology. If you're going to be 414 00:25:02,200 --> 00:25:04,840 Speaker 1: a really skilled technology investor, I think you need to 415 00:25:04,840 --> 00:25:10,280 Speaker 1: have built a technology company. I think everybody else can 416 00:25:10,359 --> 00:25:12,080 Speaker 1: be good, and some of them have turned out to 417 00:25:12,080 --> 00:25:15,040 Speaker 1: be excellent, But mostly those folks are doing a job, 418 00:25:15,040 --> 00:25:18,360 Speaker 1: and I think that's okay. So I think my retort 419 00:25:18,400 --> 00:25:21,919 Speaker 1: to you would be there are all kinds of people today, 420 00:25:22,200 --> 00:25:24,679 Speaker 1: it's just that there's not enough of them doing some 421 00:25:24,760 --> 00:25:28,240 Speaker 1: of the riskiest work. And I think right now we're 422 00:25:28,280 --> 00:25:34,800 Speaker 1: at a moment where there may be enough wins so 423 00:25:34,960 --> 00:25:38,480 Speaker 1: that people get very excited to follow. So, for example, 424 00:25:39,440 --> 00:25:42,640 Speaker 1: I am pretty sure that when people see the returns 425 00:25:43,680 --> 00:25:46,400 Speaker 1: or that we will generate in some of our companies, 426 00:25:47,359 --> 00:25:50,720 Speaker 1: it will open their mind to consider those kinds of 427 00:25:50,760 --> 00:25:52,520 Speaker 1: companies when they never would have before. I'll give you 428 00:25:52,520 --> 00:25:55,680 Speaker 1: a different example of one. So we made an investment 429 00:25:55,720 --> 00:25:58,240 Speaker 1: in a business that, again this is in the theme 430 00:25:58,280 --> 00:26:04,000 Speaker 1: of climate, but it's helped landhold farmers in India. And 431 00:26:04,200 --> 00:26:06,840 Speaker 1: you guys know this, but there's it's India's a highly, 432 00:26:06,920 --> 00:26:11,760 Speaker 1: highly fragmented farming infrastructure. These folks are in a very 433 00:26:11,800 --> 00:26:14,320 Speaker 1: difficult position. You know, if you look at the suicide 434 00:26:14,359 --> 00:26:17,080 Speaker 1: rates among farmers, it's off the charts. It's crazy. It's crazy. 435 00:26:17,680 --> 00:26:21,639 Speaker 1: And what are the problems underneath that? Yield management, the 436 00:26:21,680 --> 00:26:23,879 Speaker 1: ability to source crops at a reasonable I mean, like, 437 00:26:23,880 --> 00:26:26,760 Speaker 1: these are very simple problems. That it's a coordination problem. 438 00:26:26,800 --> 00:26:32,199 Speaker 1: I mean exactly because of funding farmers on audit right. 439 00:26:32,200 --> 00:26:35,359 Speaker 1: So my point is it's very easy to identify, like, 440 00:26:35,359 --> 00:26:38,240 Speaker 1: it's not a mental health crisis amongst farmers. These are 441 00:26:38,600 --> 00:26:41,000 Speaker 1: capital and coordination problems that can be solved by a 442 00:26:41,040 --> 00:26:44,480 Speaker 1: company with software, et cetera. We've made that bet we're 443 00:26:44,480 --> 00:26:47,080 Speaker 1: seeing some really interesting early progress. What was the company 444 00:26:47,119 --> 00:26:50,440 Speaker 1: called Harvesting Farmers Network. Anyways, I think if I walked 445 00:26:50,440 --> 00:26:53,399 Speaker 1: around Silicon Valley, people would say two things. Moth's a 446 00:26:53,400 --> 00:26:55,879 Speaker 1: great investor. He's made billions and billions of dollars. What 447 00:26:56,000 --> 00:26:57,760 Speaker 1: the hell is farming in India? Who the hell cares? 448 00:26:57,840 --> 00:27:00,480 Speaker 1: They would say both of those two things. If this 449 00:27:00,560 --> 00:27:04,800 Speaker 1: farming and India thing works, I guarantee you, guys, okay, 450 00:27:04,880 --> 00:27:08,440 Speaker 1: that more organizations and local value will say maybe there's 451 00:27:08,520 --> 00:27:11,320 Speaker 1: agriculture based opportunities that we should really be focused on 452 00:27:11,359 --> 00:27:13,919 Speaker 1: that can be improved by software. Because look, Jimals just 453 00:27:13,960 --> 00:27:15,520 Speaker 1: made a billion dollars off this thing. If he can 454 00:27:15,560 --> 00:27:17,680 Speaker 1: do a week into it, I agree with that. You know, 455 00:27:17,720 --> 00:27:21,120 Speaker 1: I don't think we're particularly that special. We're just willing 456 00:27:21,200 --> 00:27:24,040 Speaker 1: to take risk a few years earlier than the plurality. 457 00:27:24,560 --> 00:27:27,639 Speaker 1: If you're talking high risk, let's talk about failures. What 458 00:27:27,760 --> 00:27:30,359 Speaker 1: are the failures that you've had personally and how have 459 00:27:30,400 --> 00:27:33,600 Speaker 1: you learned from them? Tons? Okay, so in general or 460 00:27:33,640 --> 00:27:36,439 Speaker 1: in climate, Well, in climate, let's focus on climate. But 461 00:27:36,520 --> 00:27:39,199 Speaker 1: like if it gives you a bigger lesson, look to 462 00:27:39,240 --> 00:27:43,600 Speaker 1: get to Palmetto. I probably burned a couple hundred million dollars. 463 00:27:43,600 --> 00:27:46,600 Speaker 1: How did I burn it? I made some bad investments. 464 00:27:46,880 --> 00:27:49,920 Speaker 1: I made some investments that were okay investments. I made 465 00:27:49,960 --> 00:27:52,399 Speaker 1: some investments that actually made a little bit of money. 466 00:27:53,040 --> 00:27:55,840 Speaker 1: But All of those things had a capital cost to me, 467 00:27:55,920 --> 00:27:58,240 Speaker 1: the some total of the money I had to spend, 468 00:27:58,800 --> 00:28:01,359 Speaker 1: meaning money in versus money out. I lost a bunch 469 00:28:01,359 --> 00:28:04,240 Speaker 1: of money. So, for example, I invested in the solar 470 00:28:04,280 --> 00:28:07,919 Speaker 1: financing space. I didn't know what I was doing. I 471 00:28:07,960 --> 00:28:10,359 Speaker 1: wanted to learn about it. I thought I could understand it. 472 00:28:10,480 --> 00:28:14,240 Speaker 1: I did understand it. But what I didn't understand was 473 00:28:14,280 --> 00:28:18,280 Speaker 1: how horribly the market valued such companies. They couldn't care less, 474 00:28:18,720 --> 00:28:21,399 Speaker 1: you know they. I thought, wow, here's a great cost 475 00:28:21,440 --> 00:28:23,600 Speaker 1: of capital trade and you know, this makes sense, and 476 00:28:23,960 --> 00:28:26,239 Speaker 1: I talked myself into it, and the market was like, 477 00:28:26,359 --> 00:28:31,679 Speaker 1: this sucks. I invested in a renewable energy business in India, 478 00:28:31,760 --> 00:28:34,320 Speaker 1: and I thought, this is a no brainer. Ninety percent 479 00:28:34,480 --> 00:28:37,040 Speaker 1: ebit to Margins, who's seen a company like this, Everybody's 480 00:28:37,040 --> 00:28:42,440 Speaker 1: gonna love it. It's like great entrepreneur, but you know 481 00:28:42,920 --> 00:28:46,200 Speaker 1: it doesn't have the market characteristics to be rewarded. I 482 00:28:46,240 --> 00:28:49,880 Speaker 1: did electric buses, you know, market didn't reward it. So 483 00:28:49,960 --> 00:28:53,080 Speaker 1: all these signals I take on the way in. I'm 484 00:28:53,120 --> 00:28:55,680 Speaker 1: willing to use my money as risk capital to learn, 485 00:28:56,120 --> 00:28:57,880 Speaker 1: and so I go in thinking, if I have one 486 00:28:57,920 --> 00:29:00,880 Speaker 1: hundred percent impairment on this would I be okay? And 487 00:29:00,920 --> 00:29:04,560 Speaker 1: my answer typically is as long as I am fundamentally 488 00:29:04,600 --> 00:29:08,160 Speaker 1: further along in my understanding of the space, that's the 489 00:29:08,200 --> 00:29:10,480 Speaker 1: cost of doing business for me, you know, because like, 490 00:29:10,560 --> 00:29:14,360 Speaker 1: I am not in the business of hitting a ninety 491 00:29:14,360 --> 00:29:19,160 Speaker 1: seven percent average batting average. That's not my business. It's 492 00:29:19,200 --> 00:29:22,840 Speaker 1: not been my career. It's not what I'm good at. Lose, lose, lose, 493 00:29:22,920 --> 00:29:27,400 Speaker 1: lose one massive giant outcome, a couple of good outcomes, 494 00:29:27,720 --> 00:29:30,640 Speaker 1: and you replenish the pot. And the way that that 495 00:29:30,720 --> 00:29:34,280 Speaker 1: happens iteratively over years can build great fortunes, but it 496 00:29:34,280 --> 00:29:37,200 Speaker 1: can also build great progress. And the way that I 497 00:29:37,240 --> 00:29:39,320 Speaker 1: do it is I just start, you know, honestly, Like 498 00:29:39,560 --> 00:29:42,640 Speaker 1: I started in Wikipedia. I was like what is a battery? 499 00:29:42,920 --> 00:29:44,719 Speaker 1: And then I went to YouTube, like show me how 500 00:29:44,720 --> 00:29:46,960 Speaker 1: a battery is made? What is an anode? What is 501 00:29:46,960 --> 00:29:49,479 Speaker 1: a cathe? And like, look, I mean, I'm being kind 502 00:29:49,520 --> 00:29:52,479 Speaker 1: of phycegious. I have a background in electrical engineering. My 503 00:29:52,560 --> 00:29:54,440 Speaker 1: undergrad was in Doube. You know, I spent a lot 504 00:29:54,480 --> 00:29:56,800 Speaker 1: of time in semiconductors, so I know that world. So 505 00:29:57,920 --> 00:30:00,440 Speaker 1: I was able to short circuit some of the learning steps. 506 00:30:00,920 --> 00:30:03,160 Speaker 1: But to be very honest, with you. It is. If 507 00:30:03,200 --> 00:30:07,160 Speaker 1: you look at my calendar in a week, call it 508 00:30:07,280 --> 00:30:11,640 Speaker 1: fifty hours in the office. I have maybe eight hours 509 00:30:11,680 --> 00:30:14,320 Speaker 1: of schedule time. So what am I doing the other 510 00:30:14,360 --> 00:30:16,720 Speaker 1: forty two hours? You'll see me for all you know. 511 00:30:16,760 --> 00:30:20,520 Speaker 1: I could be sleeping at my desk, but I'm reading constantly, reading, 512 00:30:20,640 --> 00:30:23,320 Speaker 1: reading YouTube, reading YouTube, back and forth, over and over 513 00:30:23,320 --> 00:30:26,680 Speaker 1: and over again. And then at some point I say, okay, 514 00:30:26,720 --> 00:30:28,160 Speaker 1: I jump in with my two feet. I make a 515 00:30:28,160 --> 00:30:30,560 Speaker 1: bet I learned. Sometimes I jump in with ten millions, 516 00:30:30,560 --> 00:30:34,120 Speaker 1: sometimes a jump with fifty, sometimes M one hundred, trying 517 00:30:34,160 --> 00:30:36,640 Speaker 1: to learn, trying to make sure that that you know 518 00:30:36,720 --> 00:30:39,240 Speaker 1: that that was a good investment, trying to reinforce my 519 00:30:39,280 --> 00:30:42,560 Speaker 1: body of knowledge, and over time, for me, that has 520 00:30:42,560 --> 00:30:45,600 Speaker 1: proven to be a successful way to approach the job. 521 00:30:48,040 --> 00:30:50,440 Speaker 1: One of the things that Chamat is most known for 522 00:30:50,760 --> 00:30:54,560 Speaker 1: is popularizing a kind of investment called a spack. He's 523 00:30:54,560 --> 00:30:57,920 Speaker 1: often called a spack king. But what is a spack? 524 00:30:58,440 --> 00:31:00,680 Speaker 1: I'll tell you about it through one of Chat's most 525 00:31:00,680 --> 00:31:03,800 Speaker 1: famous ones. Today, Virgin Galactic, makes its debut here at 526 00:31:03,800 --> 00:31:06,520 Speaker 1: the New York Stock Exchange as a spack, joining me 527 00:31:06,680 --> 00:31:09,440 Speaker 1: in a first on CNBC interview, Virgin Galactic bunder Sir 528 00:31:09,520 --> 00:31:13,560 Speaker 1: Richard Branson, Social Capital CEO Chat Palata. It's twenty nineteen 529 00:31:13,680 --> 00:31:15,800 Speaker 1: and Chamata is on the floor of the New York 530 00:31:15,840 --> 00:31:18,800 Speaker 1: Stock Exchange along with Branson, who is dressed in a 531 00:31:18,840 --> 00:31:22,480 Speaker 1: blue space suit. It's the day that Virgin Galactic, the 532 00:31:22,600 --> 00:31:27,040 Speaker 1: spaceflight company, went public bya as the reporter notes, a spack. 533 00:31:28,000 --> 00:31:33,200 Speaker 1: SPACK stands for special purpose Acquisition company. Two years earlier, 534 00:31:33,280 --> 00:31:36,960 Speaker 1: Chamata and other investors created a special company with no 535 00:31:37,040 --> 00:31:41,280 Speaker 1: operations or employees, just a shell company that was publicly traded. 536 00:31:42,160 --> 00:31:45,239 Speaker 1: It existed solely to find another company that was not 537 00:31:45,400 --> 00:31:48,920 Speaker 1: public to merge with in the process making it public, 538 00:31:49,040 --> 00:31:52,440 Speaker 1: which shares on a stock exchange. They had six hundred 539 00:31:52,440 --> 00:31:55,760 Speaker 1: and ninety million dollars to do it, and they decided 540 00:31:55,800 --> 00:31:59,840 Speaker 1: to acquire Virgin Galactic. What they're celebrating at the Stock 541 00:32:00,000 --> 00:32:04,280 Speaker 1: Exchange is the completion of that merger. Fireworks, literally, it's 542 00:32:04,280 --> 00:32:06,440 Speaker 1: probably the first time I've ever seen fire technics on 543 00:32:06,440 --> 00:32:10,640 Speaker 1: the floor of the New York Stact Exchange splash with 544 00:32:10,720 --> 00:32:14,680 Speaker 1: a conventional IPO or initial public offering, the majority of 545 00:32:14,720 --> 00:32:17,160 Speaker 1: the stock sold on the first day goes straight to 546 00:32:17,280 --> 00:32:22,040 Speaker 1: large banks, investment firms, or rich individuals. With a SPAC, 547 00:32:22,440 --> 00:32:26,400 Speaker 1: many more people can buy shares. They are heavily marketed 548 00:32:26,440 --> 00:32:30,400 Speaker 1: to retail investors, people like you and me. That's largely 549 00:32:30,520 --> 00:32:34,440 Speaker 1: Chamats doing now. It's wonderful tri enable the public recomment 550 00:32:34,520 --> 00:32:37,880 Speaker 1: and invest alongside us. Taking a company public through a 551 00:32:37,920 --> 00:32:41,360 Speaker 1: regular IPO can take over a year because of the 552 00:32:41,520 --> 00:32:46,640 Speaker 1: amount of oversight required by financial regulators. SPACs can be 553 00:32:46,720 --> 00:32:50,479 Speaker 1: rolled out faster, which has its own benefits. SPACs were 554 00:32:50,520 --> 00:32:53,800 Speaker 1: popular with climate tech companies because they're not seen as 555 00:32:53,880 --> 00:32:57,480 Speaker 1: great investments through the lengths of the traditional IPO loot. 556 00:32:58,160 --> 00:33:01,800 Speaker 1: These companies are developing technology that are riskier, and they 557 00:33:01,840 --> 00:33:05,320 Speaker 1: need lots and lots of money to develop those technologies 558 00:33:05,520 --> 00:33:09,800 Speaker 1: before they can turn a profit. Chamatha as an investor 559 00:33:09,960 --> 00:33:11,400 Speaker 1: in this company. Now, I know one of the things 560 00:33:11,480 --> 00:33:13,800 Speaker 1: you've come on CNBC and talked about the past is 561 00:33:13,840 --> 00:33:16,320 Speaker 1: how impressive the girls march. Chamat is a promoter of 562 00:33:16,360 --> 00:33:19,800 Speaker 1: the SPAC. It's a role with compensation. Chamath could go 563 00:33:19,880 --> 00:33:24,560 Speaker 1: on CNBC and promote Virgin Galactic. I generally don't put 564 00:33:24,640 --> 00:33:27,880 Speaker 1: my own principal capital on the table unless I think 565 00:33:27,880 --> 00:33:30,080 Speaker 1: there's a really compelling risk reward and I'm doing that, 566 00:33:30,160 --> 00:33:33,440 Speaker 1: he said Virgin Galactic would have revenues of close to 567 00:33:33,560 --> 00:33:37,680 Speaker 1: four hundred million dollars. By twenty twenty two, SPACs became 568 00:33:37,920 --> 00:33:42,320 Speaker 1: bigger than Chamat. Celebrities like Tiger Woods, Shaquille O'Neal, and 569 00:33:42,440 --> 00:33:46,640 Speaker 1: Serena Williams launched them. Chamat claimed he would create one 570 00:33:46,760 --> 00:33:50,760 Speaker 1: for every letter of the alphabet. Virgin Galactic was spack 571 00:33:50,840 --> 00:33:57,600 Speaker 1: a Chamat ended up stopping at f in twenty twenty one. 572 00:33:58,080 --> 00:34:00,800 Speaker 1: Chamath sold his shares of Virgin Galactic while they were 573 00:34:00,840 --> 00:34:04,840 Speaker 1: still high and made two hundred million dollars. He stated 574 00:34:04,880 --> 00:34:08,840 Speaker 1: his money would go to word flighting climate change. Virgin 575 00:34:08,880 --> 00:34:11,840 Speaker 1: Collected did not make four hundred million dollars in revenue 576 00:34:11,880 --> 00:34:14,719 Speaker 1: as projected. By twenty twenty two, it brought in less 577 00:34:14,719 --> 00:34:17,759 Speaker 1: than two million dollars in revenue and was operating at 578 00:34:17,800 --> 00:34:23,239 Speaker 1: a loss of three hundred and forty six million overall. 579 00:34:23,280 --> 00:34:27,520 Speaker 1: Given the macro environment, etc. But also your specific investments 580 00:34:27,920 --> 00:34:30,840 Speaker 1: climate and non climate, it's a rough time for you 581 00:34:31,280 --> 00:34:35,320 Speaker 1: with SPACs all down. The plan that you had to 582 00:34:35,560 --> 00:34:39,680 Speaker 1: have a spack for every letter of the alphabet. Where 583 00:34:39,760 --> 00:34:43,160 Speaker 1: is that now? I think that that could still be 584 00:34:43,719 --> 00:34:46,440 Speaker 1: something that we do, but it'll happen over a much 585 00:34:46,480 --> 00:34:49,439 Speaker 1: longer period of time. I think like spacks are really 586 00:34:49,880 --> 00:34:52,560 Speaker 1: they're really interesting because I think there are a lot 587 00:34:52,560 --> 00:34:57,480 Speaker 1: of companies that are working in industries that don't fit 588 00:34:57,640 --> 00:35:01,000 Speaker 1: the neat model of how folks have wanted to historically 589 00:35:01,040 --> 00:35:03,880 Speaker 1: invest in technology. In the past, people have wanted to 590 00:35:03,880 --> 00:35:07,680 Speaker 1: invest in software ninety plus percent gross margins, you know, 591 00:35:07,800 --> 00:35:13,960 Speaker 1: ideally recurring revenue. These things are not possible in many 592 00:35:14,000 --> 00:35:17,880 Speaker 1: areas that really matter, and in those the capital markets 593 00:35:17,920 --> 00:35:22,040 Speaker 1: will need different tools in order to bring investors together 594 00:35:22,760 --> 00:35:25,600 Speaker 1: for hundreds and hundreds of millions of dollars billions of dollars, 595 00:35:26,640 --> 00:35:29,359 Speaker 1: and I think Auspact can still do that. I will 596 00:35:29,360 --> 00:35:32,480 Speaker 1: do them from time to time, but it was always 597 00:35:32,520 --> 00:35:34,280 Speaker 1: a tool in my toolbox. You know. You have to remember, 598 00:35:34,320 --> 00:35:36,200 Speaker 1: like in the last couple of years, I think we've 599 00:35:36,200 --> 00:35:41,359 Speaker 1: done like fifty investments you know, eight verspects or sorry, 600 00:35:41,400 --> 00:35:44,600 Speaker 1: six verspects, right, So there's still a lot of our 601 00:35:44,640 --> 00:35:47,200 Speaker 1: body of work is much bigger than that. I think 602 00:35:47,200 --> 00:35:49,120 Speaker 1: people know us for that, or know me for that 603 00:35:49,239 --> 00:35:52,040 Speaker 1: in part, but I would encourage them to, you know, 604 00:35:52,320 --> 00:35:54,399 Speaker 1: read the annual letter to really understand, like we are 605 00:35:54,440 --> 00:35:56,880 Speaker 1: doing a lot of stuff. We've been on the ground 606 00:35:56,880 --> 00:35:59,680 Speaker 1: floor in Silicon Valley for eleven and a half years 607 00:35:59,680 --> 00:36:01,920 Speaker 1: building tech companies. That's what we do. If you look 608 00:36:01,960 --> 00:36:04,480 Speaker 1: at the amount of money that was put into climate 609 00:36:04,560 --> 00:36:08,960 Speaker 1: tech through SPACs, yeah, it's astronomical, astronomical. It would have 610 00:36:09,040 --> 00:36:12,960 Speaker 1: never happened otherwise. A right. That is probably the singular 611 00:36:13,080 --> 00:36:16,480 Speaker 1: moment that has happened for climate right that in twenty 612 00:36:16,520 --> 00:36:21,160 Speaker 1: twenty one there was capital that was ingested at a 613 00:36:21,280 --> 00:36:24,399 Speaker 1: level that was that has never happened happened before. I agree, 614 00:36:24,400 --> 00:36:26,520 Speaker 1: and I'm very proud of that. I think that that's 615 00:36:27,440 --> 00:36:30,799 Speaker 1: that's a very good start. And then I think this, 616 00:36:31,160 --> 00:36:36,080 Speaker 1: you know, the IRA is going to be profoundly impactful, 617 00:36:36,520 --> 00:36:40,839 Speaker 1: profoundly impactful. I think that was an incredible, incredible piece 618 00:36:40,840 --> 00:36:43,840 Speaker 1: of legislation on the whole, and I think Chuck Schumer 619 00:36:43,920 --> 00:36:47,080 Speaker 1: deserves an enormous amount of credit for that. How he 620 00:36:47,160 --> 00:36:49,880 Speaker 1: negotiated that with Mansion, I don't know the TikTok of 621 00:36:49,880 --> 00:36:55,120 Speaker 1: that deal, but that is a transformational piece of legislation. 622 00:36:55,120 --> 00:36:58,640 Speaker 1: This is American government at its best, which is mostly 623 00:36:58,640 --> 00:37:03,040 Speaker 1: getting out of the way, creating very bright line incentives 624 00:37:03,200 --> 00:37:06,279 Speaker 1: and then letting the free market operate. You have a 625 00:37:06,280 --> 00:37:09,040 Speaker 1: billboard outside your house with a message to the world. 626 00:37:09,160 --> 00:37:11,600 Speaker 1: What would it say, Oh, I know the answer to this. 627 00:37:12,000 --> 00:37:14,320 Speaker 1: It's the same billboard that when I first moved tier 628 00:37:15,400 --> 00:37:19,200 Speaker 1: in two thousand, blew me away. It was right as 629 00:37:19,200 --> 00:37:22,440 Speaker 1: you entered Menlo Park and it was on the freeway, 630 00:37:22,640 --> 00:37:24,520 Speaker 1: the one on one south you're going on, and it 631 00:37:24,640 --> 00:37:31,839 Speaker 1: said high octane capitalism ahead. I loved it. I loved it. 632 00:37:31,880 --> 00:37:34,319 Speaker 1: I was like, Wow, I'm home. That's what I thought. 633 00:37:34,360 --> 00:37:39,440 Speaker 1: I was like, I'm home. I've found my people. So 634 00:37:39,480 --> 00:37:42,640 Speaker 1: that's the billboard. It would say, high octane capitalism ahead. 635 00:37:43,480 --> 00:37:45,799 Speaker 1: Be passionate, but don't be emotional. Come to me with 636 00:37:45,840 --> 00:37:48,399 Speaker 1: your best ideas. And did I say, this was a 637 00:37:48,400 --> 00:38:03,360 Speaker 1: lovely conversation. Thanks for having this. Thank you. Chamata is 638 00:38:03,400 --> 00:38:06,040 Speaker 1: one of many venture capitalists trying to make it big 639 00:38:06,040 --> 00:38:10,080 Speaker 1: with climate investments. Given the decline in the stock market globally, 640 00:38:10,360 --> 00:38:13,600 Speaker 1: investors are being more careful about where to put their money, 641 00:38:14,040 --> 00:38:17,880 Speaker 1: but relative to other industries, climate tech continues to get 642 00:38:17,920 --> 00:38:21,640 Speaker 1: a healthy dose of investments. And while we talk about 643 00:38:21,680 --> 00:38:25,359 Speaker 1: Buffet's disciples, if you'd like to learn why Buffett thinks 644 00:38:25,440 --> 00:38:28,399 Speaker 1: an oil company can be a climate bet check out 645 00:38:28,440 --> 00:38:32,360 Speaker 1: our episode in the archive that features Occidental Petroleum CEO 646 00:38:32,840 --> 00:38:36,799 Speaker 1: Vicki Hollob. Thanks so much for listening to Zero. If 647 00:38:36,800 --> 00:38:39,840 Speaker 1: you like this episode, please take a moment to rate, review, 648 00:38:39,880 --> 00:38:43,759 Speaker 1: and subscribe on Apple Podcasts or Spotify, Send it to 649 00:38:43,800 --> 00:38:46,040 Speaker 1: a friend, or send it to someone who wants to 650 00:38:46,080 --> 00:38:49,600 Speaker 1: get rich quick. Get in touch at zeropod at Bloomberg 651 00:38:49,680 --> 00:38:54,160 Speaker 1: dot net. Zero's producer is Oscarboid and senior producer is 652 00:38:54,239 --> 00:38:59,360 Speaker 1: Christine riskoll Our team music is composed by Wonderley. Special 653 00:38:59,360 --> 00:39:03,440 Speaker 1: thanks to Benkuet, viscern Athan Brian Eckhous, Bailey Lipschulz, and 654 00:39:03,560 --> 00:39:07,080 Speaker 1: Kira Bendon. I'm Axtrati back next week.