Act II: Lowercarbon Capital
Because we’ve run the numbers, and shit’s not great.
Four years ago, Crystal and I retired from venture capital to carve out more time for things that matter, with Earth’s climate disaster at the top of the list. Why? The situation is much worse than it seems. The planet is warming faster than experts predicted. Rising temperatures fuel lethal heat waves, year-round fires, destructive storms, and epic droughts that are already killing thousands of people around the globe, displacing millions more, and sowing the seeds of famine, disease, and war. Heavy stuff.
Academic debates about exactly how many degrees the planet will warm, which species will go extinct, how many millions of people will be killed by extreme weather, which wars and refugee crises will result from drought, and whether sea levels will rise 10, 20, or 30 feet all miss the point. The bottom line is the planet is becoming unlivable. If you’re the quantitative type, well, we drew some samples, crunched a few numbers and, according to our exact scientific calculations: A lot of shit will be pretty fucked up.
In simplest terms, more carbon equals more heat, and more heat equals more death. This is an established and unavoidable fact. Today, the levels of CO2 in the atmosphere are higher than at any point in at least 800,000 years (and arguably as far back as 23 million). Pumping all this CO2 into the sky is like locking ourselves in a car on a sunny day.
What will it take to get us out of this nightmare?
Electric cars and solar panels are awesome but only a part of the picture. To bring down CO2 in the atmosphere it will take:
01 Slashing new emissions of CO2 and other greenhouse gases to zero.
02 Sucking up at least a trillion tons of carbon already swirling around the sky.
03 Buying all of humanity, including those most vulnerable, more time by actively cooling the planet.
I am not new to this challenge. Way back when I was at Google, I was tasked with leading many of the company’s clean energy deals, repping execs in meetings with policy groups and think tanks, and exploring innovative ways to use technology to reduce the carbon footprint of a company that was, at the time, rumored to the be the largest individual power consumer in two or three US states. (If saying that violates my Google NDA, then no, we definitely weren’t a massive user of electrical power. Nothing to see here.)
In the years that followed, Crystal and I have been active supporters of legislative and regulatory efforts to address the problems, as well as funders of philanthropy and activism in the climate space. We’ve been poking around academic labs, comparing notes with environmental non-profits, briefing political leaders, cajoling philanthropists, sponsoring research and primers, and advising companies concerned about the climate emergency.
After almost 20 years of this work, here is what we know to be true:
Policy change alone ain’t gonna get us there. High fives to everyone who is working on clean tech regulatory initiatives. This vital work brings down real costs, creates research breakthroughs, and keeps urgent climate issues front and center. But even the most aggressive ideas on the table today fall short of the drastic action needed.
Guilt and shame don’t and won’t change anything at scale. There simply aren’t enough people willing to buy more expensive products nor companies on board with overpaying for sustainable materials just because they feel bad. Cheers to consumers and companies that spend a little more to choose options with climate in mind. You’ve undoubtedly helped create a new generation of climate friendly companies. However, we need about seven billion more of you to get on board before the impact will be meaningful enough.
Philanthropy is way too small and cautious. For the better part of twenty years, climate philanthropy has been overwhelmingly focused on consumer awareness campaigns to persuade people that climate change is real and to turn out their lights. But there’s been too little appetite to invest in hardcore, massive change. Bless you and those paper straws, but unless we zero out the billions of tons of CO2 emissions from huge sectors like aviation, steelmaking, industrial chemicals, building, and farming, we are screwed.
So, policy, philanthropy, and individual behavior do have roles to play, but the real solutions to the carbon nightmare will win because they’re cheaper, better, faster, stronger, simpler, and just plain cooler than what’s available today.
Markets already understand that it’s too damn expensive to keep powering our economy by digging up and burning old dinosaur bones. In most places today, solar and wind are cheaper and scale faster. What you might not know yet is that technologies that grow chemicals in bioreactors or boost crop yields are already outperforming 100-year-old industrial processes that are dirty and dangerous. We see this happening in protein, transportation, chemicals, building materials, and even mining too. This radical shift isn’t just because of some warm and fuzzies. These are real businesses, with insane growth, and some posting nine-figure revenue run rates.
We’re on a clear trajectory to 8.5 billion people on this planet. I’m going out on a limb and predict they’ll want to eat, build houses, go places, buy stuff, and enjoy life. Fair to say? The most profitable companies meeting this demand will be those that sell products and services that use less carbon because they are ultimately the cheapest to offer. In simple terms, cutting gigatons of CO2, mass market adoption, and generating piles of money will go hand-in-hand.
Who knew we would look forward to email?
When the word got out that we were starting to dig into climate tech, our inboxes blew up. Notes came in from very small and unreasonably ambitious teams taking on intimidatingly large projects to slash CO2 emissions and suck carbon right out of the air. Frankly, we’ve never felt so energized reading our email. It was everything we loved about startups colliding with all of the urgency we felt for helping a planet on fire.
There is also a dynamic that makes climate tech today different from clean tech 15 years ago. It reminds me of the dramatic shift in startup economics that made YCombinator and its companies possible. Back then, the rise of open-source coding tools, cloud hosting, and the elimination of legal and financing friction empowered a new type of company and a new type of company-builder. The old way required millions of dollars and a rash of bankers and lawyers to even consider writing the first line of code. Suddenly startups had tiny, ragtag teams, usually without any fancy MBAs on board, raising tens to hundreds of thousands of dollars for services and apps that they built and launched within weeks.
In climate tech, we have seen the same evolution. I appreciate the investors who have been plowing money into this stuff for decades and I admire their passion and commitment to doing the right thing. But, too often low-carbon businesses were among the most expensive to start. CapEx was bonkers right out of the gate, and most companies relied upon government intervention to even approach viability.
Are we excited to see the Biden/Harris administration finally at the wheel? Hell yes. They believe in science and have made climate a priority across the entire federal government. We have the deepest respect for Secretary Kerry and Gina McCarthy, and we admire the depth of expertise and hustle we are seeing across the staffers accepting roles to serve the USA to advance climate work. As members of Climate Leaders for Biden, and as a consequence of our involvement across the industry, we have already been in close touch with the administration and we are beyond heartened to see how serious they are about climate. Multiple times, Crystal and I have spoken directly with President Biden about climate and I can assure you he gets the gravity and urgency of the moment. Yet, despite all that, we aren’t counting on the government’s direct help in our investment thesis. Why?
Today, with shared lab space, massive computing clusters available for rent, proliferation of machine learning, cheap renewable electricity, the discovery of CRISPR/Cas9, breakthroughs in electrochemistry, and more streamlined tech transfer from universities, true seed-stage climate tech startups are possible at scale. Some benefit from grants and government investment, and no doubt healthy public investment in research and science lifts all boats, but barely any of these climate tech companies count on governments for handouts because they increasingly can rely upon free markets to reward them with customers. Add to this what might be the first generation of hard science engineers who, inspired by a prior, similar shift in computer science academia, now go to school knowing from day one they want to graduate to directly become company founders. These teams are taking their innovations straight to consumers and enterprises who may not vote for the same people nor share the same climate values, but who buy their products and services because they are just simply cheaper and better.
We call this thing Lowercarbon Capital.
It wasn’t in the master plan to get back into the investing world full-time. But after a few years of doing this work, we picked up our heads and realized we now have a portfolio of over 30 climate teams and growing.
Our startups straddle a delicate line between, “Whaaa? That’s absolutely bananas!” to, “No way. Are you f’ing kidding me?!” You know, chill stuff like confining plasma that’s hotter than the sun or growing full-on real meat steaks in a vat. Maybe using microbes to make hundreds of millions of dollars of industrial chemicals is your thing, or you’re into kelp-growing robots in the high seas. I’m kinda partial to ocean-wave-powered, Bitcoin-mining, hydrogen generators, but I’m an old-school sentimental kind of guy.
In the timeless words of LL Cool J, don’t call it a comeback, we’ve been here for years. We just finally admitted to ourselves that 60 hours a week has been the opposite of retirement. This time around, we’ve staffed up by bringing on full-time science and sector experts while building a community of advisors and collaborators that keep us learning every day. And, before you ask, I won’t apologize for ripping off the logo from some cowboy’s Lowersomething Blah Blah fund. Call my lawyers!
Make no mistake, this is not charity. Yes, we will continue our donations to non-profit research and advocacy efforts, particularly in the areas of exploring safe ways to actively cool the planet and temporarily buy humanity more time with projects like cloud brightening. But in the meantime, Lowercarbon Capital is backing real companies that have no allergy to making money. The portfolio is already racking up multiples, and we are piling in. We expect even the most heartless and returns-driven investors will soon be following us into this sector because that’s simply where the upside is. When that happens, we all win.
To be clear, Crystal and I, together with our partner Clay Dumas, are making all of these investments with our personal money. If that changes, some well-intentioned laws from the 1930’s that we assume were written after a pre-WWII fever dream about Altcoins and app-based off-shore sports cannabis gambling stocks, would keep us from telling you anyway.
However, if being a superhero and saving millions of lives while growing the global economy seems cool to you, maybe get to know some of our kickass companies, see if there’s a job for you, propose how to partner with us and our portfolio or send us the idea you’ve been cooking up.
In the meantime, stay safe during these exceedingly normal, predictable, and business-as-usual times.