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Ocean Intelligence: Where Climate and Security Converge · The S2G Podcast

• 0:00
  SPEAKER_02: Fisheries are on the front lines of this, insurance is on the front lines of this, navies are line.
• 0:05
  SPEAKER_02: I mean, the ocean is both the lagging and leading indicator of where you know climate slash weather slash planetary systems are going.
• 0:16
  SPEAKER_02: And right now we are um driving in the dark without headlights, and it's raining and we don't have windshield wipers.
• 0:32
  SPEAKER_01: Next week on the podcast, we're sitting down with Aperon Labs whose ocean sensors are used for both defense and climate work, such as weather forecasting and ocean monitoring.
• 0:43
  SPEAKER_01: But before that conversation, we wanted to take a step back and look at the bigger picture: why climate technology and national security are increasingly overlapping, and what that means for the future of ocean intelligence.
• 0:55
  SPEAKER_01: Joining me to unpack all of this are Sanjeev Krishnan and Kate Danaher.
• 1:00
  SPEAKER_01: Please look for important disclosures at the end of this episode.
• 1:03
  SPEAKER_01: Thanks, guys, for joining.
• 1:07
  SPEAKER_02: Excited to be here.
• 1:08
  SPEAKER_02: I'm really here to uh on the coattails of Kate's good work the last time.
• 1:13
  SPEAKER_01: That's great.
• 1:13
  SPEAKER_01: Well, let's start with that actually, Kate.
• 1:15
  SPEAKER_01: You've spent six years at S2G building an ocean's portfolio around climate and ocean health, but now most of your time has shifted to really focusing on NATO and national security.
• 1:27
  SPEAKER_01: So take us through how that shift happened and how your impact work led you here.
• 1:32
  SPEAKER_00: Yeah, I mean, thank you.
• 1:34
  SPEAKER_00: I'm actually excited to have this conversation because we get these questions all the time as national security increasingly converges with our world.
• 1:43
  SPEAKER_00: Um I mean, on the one hand, nothing has changed in the past six years, and on the other hand, everything has changed.
• 1:50
  SPEAKER_00: Um, but I think the what the nothing that has changed is that our ocean thesis has always been the same, which is essentially that you know the ocean is a planet's regulator and it's also the least observed system.
• 2:04
  SPEAKER_00: So if we care about monitoring fisheries, if we care about um better, better weather prediction, if we care about how capital markets and um how capital markets think about the 80 to 90 percent of goods that travel the ocean, or you know, if we care about any of those things, then understanding what is happening in the ocean is an imperative, frankly.
• 2:30
  SPEAKER_00: Um, and so our thesis has always been that unlocking ocean data through low-cost sensing at scale is a prerequisite for prerequisite for managing the ocean.
• 2:40
  SPEAKER_00: Um, we built a portfolio around this over the past six years.
• 2:45
  SPEAKER_00: So far, Ocean Technologies is a distributed ocean sensor network delivering real-time marine weather, ocean data, and maritime wayfinding.
• 2:56
  SPEAKER_00: Unseen Labs, through its radio frequency geolocation from space, helps to track vessels on the water, um, particularly, you know, even when they turn off their tracking systems.
• 3:07
  SPEAKER_00: Apron Labs, which you all will hear from next week, has a low-cost, mass-producible underwater sensing vehicle.
• 3:16
  SPEAKER_00: I think what has really changed is that the world changed around it.
• 3:22
  SPEAKER_00: You know, governments have always been a critical player in commercializing ocean technology development.
• 3:28
  SPEAKER_00: Um, for every company we've invested in and for the entire sector, it has long been the anchor customer across multiple missions at once: science for research, defense and security for undersea awareness and maritime security, uh, and a lot of commercial applications.
• 3:44
  SPEAKER_00: So the same capability that serves all the commercial applications also serves a lot of government applications.
• 3:50
  SPEAKER_00: And govern the government, regardless of the use, was always or often the anchor customer that enabled the RD to be paid for, enabled the scale to happen so that science and research and commercial applications could hopefully have lower cost or more accessible and reliable sensing platforms.
• 4:10
  SPEAKER_00: So government's always been a part of this.
• 4:13
  SPEAKER_00: Again, what's changed is the world around it.
• 4:15
  SPEAKER_00: You know, cable incidents in the Baltic, Red Sea shipping attacks, choke points in Hormuz, you know, every contested environment that we anticipate over the next 10, 15 years will start or will involve a body of water.
• 4:29
  SPEAKER_00: And so the capability we've been backing for impact reasons has become strategically urgent to the world.
• 4:38
  SPEAKER_00: And so it's not really, you know, we haven't migrated from climate to security.
• 4:43
  SPEAKER_00: We just know that the problems we've always backed have dual purposes, and the, and one of those purposes, which is around security, has like a very urgent need, and we have commercial technologies ready to meet that need.
• 4:55
  SPEAKER_02: I think what's interesting about ocean security, it is a public good.
• 4:59
  SPEAKER_02: It does move most of the logistics of trade.
• 5:03
  SPEAKER_02: It's both the lagging and leading indicator of weather.
• 5:07
  SPEAKER_02: Um, and obviously everyone trades the weather, whether you do agriculture or or energy or etc.
• 5:14
  SPEAKER_02: I think so.
• 5:20
  SPEAKER_02: Rative to say food and soils or energy and and feedstock that the various forms here.
• 5:27
  SPEAKER_02: I think the role of sovereigns play a greater role.
• 5:31
  SPEAKER_02: And then to Kate's point, I think what's ex what's interesting because of this desire for security across food, energy, and oceans is it just borrows from a legacy of um, and mainly the air force um has done this, uh, but perhaps other parts of the GPS came out of a lot of the Air Force.
• 5:54
  SPEAKER_02: Um actually the first semiconductor um demand was Air Force into a certain Apollo.
• 6:03
  SPEAKER_02: Clearly, you know, DARPA and the internet.
• 6:06
  SPEAKER_02: But there's a broader, even before then, there's a broader legacy of anchor customers um for problems that you know perhaps um that that create new sort of innovation.
• 6:18
  SPEAKER_02: So synthetic rubber was not an industry until sort of the security was the anchor customer.
• 6:25
  SPEAKER_02: And so I think you know, we're I'm really excited about you know, ocean intelligence and the anchor customer in many cases is security.
• 6:35
  SPEAKER_02: Um, now we would we're investing in a lot of these companies, April being one of them, where it can go beyond synchro customer uh into um weather forecasting, into analytics for reinsurance, into even niche applications like whale monitoring for offshore wind, um, and many, many others.
• 6:54
  SPEAKER_02: But I think it this just is more of a pattern through history um of um the anchor customer really catapulting an innovation like semiconductor, like GPS, like synthetic rubber.
• 7:08
  SPEAKER_01: Yeah, I think we're seeing more and more conversation about the oceans, understanding and desire to understand the oceans.
• 7:16
  SPEAKER_01: Kate, you mentioned in your ecosystem conversations, you get this question a lot about ocean intelligence.
• 7:21
  SPEAKER_01: But could you guys just frame what is the moment we're in with respect to ocean intelligence?
• 7:25
  SPEAKER_00: Yeah, um, I'd say that at the moment there's three things that are converging at once around ocean intelligence.
• 7:33
  SPEAKER_00: Sanjeev, I'd I'd love to hear you'd add or take away any of these.
• 7:36
  SPEAKER_00: But one, unrelated to some of the tailwinds that we will talk about.
• 7:41
  SPEAKER_00: Um, but the gap around ocean sensing, the way it has traditionally been done, at least, is actually growing.
• 7:49
  SPEAKER_00: Um, so despite all the low-cost sensors that we're we are talking about, I think the way that the ocean has historically been monitored uh is is frankly eroding.
• 8:00
  SPEAKER_00: Um I think that the, you know, if you think about the Argo system that right now is like a global scientific float network, it delivered about 15% less data in than it did in 2022.
• 8:13
  SPEAKER_00: And if you've read or keep up with any of the news, like a lot of that is being defunded by the federal government.
• 8:18
  SPEAKER_00: Umly 28.7% of the seafloor has actually been mapped to modern standards.
• 8:24
  SPEAKER_00: And a lot of the sensing systems that, again, we historically relied upon have been funded by governments, some some satellite constellations as well, are being decommissioned or funding is being cut.
• 8:36
  SPEAKER_00: And so that is actually eroding.
• 8:38
  SPEAKER_00: Um those systems, therefore, just can't scale.
• 8:41
  SPEAKER_00: They are both expensive, um, you know, expensive and costly to stand up and manage, but also there's not a lot of this public good, these public um funds want to continue going to supporting them.
• 8:55
  SPEAKER_00: Uh, and that has a lot of consequences for weather systems and uh underwater cables and all kinds of infrastructure that we actually rely upon for public good.
• 9:04
  SPEAKER_00: So that's one.
• 9:05
  SPEAKER_00: Um, the second is um is a tailwind.
• 9:09
  SPEAKER_00: Sensing has just gotten inexpensive.
• 9:11
  SPEAKER_00: I mean, if you think of what's happened in the space industry over the past 10 years, the cost of putting a satellite in space and the payloads to monitor fires or illicit activity at sea, the cost of that has come down tremendously thanks to the unlock of primarily SpaceX, which again, government was their first investor or contractor funded.
• 9:34
  SPEAKER_00: Um, so the cost of sensing has gotten a lot cheaper.
• 9:37
  SPEAKER_00: Uh, and then the third is also a tailwind, which is the threat environment has escalated.
• 9:41
  SPEAKER_00: The geopolitics that have been um dominating our headlines for the past, you know, four or five years now are creating this urgent need to understand what's happening and to monitor our oceans.
• 9:54
  SPEAKER_00: So that's the moment that ocean intelligence is having right now.
• 9:57
  SPEAKER_02: I mean, I think there's an even more fundamental point I would argue, which is I think there are, you know, what's happening with climate is that there's several Hiroshima bombs a second of excess heat going into the ocean.
• 10:12
  SPEAKER_02: And it's creating like nonlinear feedback loops that impact industries, countries, um, markets, like in the insurance market, etc.
• 10:24
  SPEAKER_02: Even things like, you know, as as you have excess heat and warming, even things like sonar don't work as effectively, and acoustics don't work as effectively as they used to.
• 10:34
  SPEAKER_02: And I don't know, Kate, if there I mean that is causing entropy, and that entropy is causing a desire for ocean sensing.
• 10:43
  SPEAKER_00: Yeah, I would almost um to add on to that, because the the geopolitical things that are happening, those are human-driven moments in time, big escalations.
• 10:52
  SPEAKER_00: What Sanjeev is describing is like the stress on the system that nobody notices until it creates creates catastrophic events for the insurance industry or um and so it's like the low, it's the low grade pressure building uh system that is evolving through climate change that is forcing everything to change.
• 11:13
  SPEAKER_01: As government entities, you know, start to fund more of this technology and hopefully help them see, you know, commercialization for other use cases as well along the way.
• 11:23
  SPEAKER_01: Are there any hard questions we kind of need to wrestle with as these worlds converge?
• 11:27
  SPEAKER_01: And could you lay some of those out, Brad?
• 11:30
  SPEAKER_00: I think it's our responsibility to interrogate every side of this.
• 11:33
  SPEAKER_00: I think working in the sectors that we work in with the outcomes we ideally want to see.
• 11:39
  SPEAKER_00: I think it's part of our job to because you know, we're investing in things that you have to play forward, not just like during the investment cycle of three, five, or seven years.
• 11:49
  SPEAKER_00: You need to play it forward if these are technologies or innovations that you hope change the course of some outcome.
• 11:56
  SPEAKER_00: Um, we have to ask what are the potential, what are the intended and unintended consequences of you know proliferating and scaling these types of businesses?
• 12:05
  SPEAKER_00: So I think that the things that we wrestle with, and there's no very clear answer.
• 12:10
  SPEAKER_00: I think you just have to have these honest conversations and um do the best that you can.
• 12:15
  SPEAKER_00: But I think, of course, um when you think about dual use technologies, so government contracts are um famously lumpy, unpredictable.
• 12:26
  SPEAKER_00: I mean, like whether you get into an appropriations bill or there's a continuing resolution or a new administration, like things can really get derailed when you're built, when you're getting government contracts, but they're big.
• 12:38
  SPEAKER_00: Um and for earlier stage companies, even ones that are are scaling, getting a really large cover contract from any customer is going to take a lot of your attention.
• 12:47
  SPEAKER_02: I think one, um, from an investment committee perspective, it's if governments your anchor customer and that's a leap, that's a land and expand into commercial applications, whether it's insurance or shipping or other a milieu of um analytics and use cases, I think that's one like thing we look for.
• 13:12
  SPEAKER_02: I think too, we'd we'd also look for guardrails and not just kinetic work, but even things like you know um deep sea sort of exploration.
• 13:22
  SPEAKER_02: Um when we've been able, we've been successfully been able to guardrail some of that as well.
• 13:28
  SPEAKER_02: And so I think there is a um to the intended and unintended, and the unintended always have patterns, um, in my opinion, and those patterns have to be something that we kind of codify or get clear on from an underwriting perspective, um, so that you know the management team and us are not um surprised when you know we have certain perspectives on it.
• 13:53
  SPEAKER_02: And then third is is you know what is the if the data and the sensing proliferated, what are the you know, what are the positive and negative outcomes that occur.
• 14:05
  SPEAKER_02: I think sensing in and of itself, I don't see a ton of downside because you're you know literally um you know it's dark right now and people are stabbing in the dark.
• 14:15
  SPEAKER_02: And even though stabs in the dark are expensive and short-lived um missions and expeditions.
• 14:22
  SPEAKER_02: And so I think um, you know, there to me it's it's it's a it's really a win-win-win.
• 14:28
  SPEAKER_02: But obviously, you need to have the guardrails in place and you need to um see what the market is beyond your anchor customer market.
• 14:37
  SPEAKER_01: And how does the data collected from the sensors deployed by the government make it to the public good?
• 14:42
  SPEAKER_01: Or is that are is that something you're thinking through with your company?
• 14:46
  SPEAKER_00: That's um that's actually what I wanted to follow on with.
• 14:49
  SPEAKER_00: I think, well, one I'd say um they're not necessarily making it to the public good yet, but I think one of the most interesting questions to ask, and maybe there's a way for us to influence this, is you know, we set out six years ago to make sensing in the ocean cheap and pervasive and constant.
• 15:09
  SPEAKER_00: And because of the proliferation of geopolitics and defense spending and just the urgency for this type of data, there is more data being collected on the ocean than we've ever seen in our lifetimes.
• 15:21
  SPEAKER_00: And hopefully it continues, but we may not see again in the future.
• 15:24
  SPEAKER_00: So, like, how do we seize that opportunity to redirect?
• 15:29
  SPEAKER_00: You know, a lot of these missions that this data is being collected for are classified missions, or the government wants to keep a certain lock and key on how that can be released.
• 15:36
  SPEAKER_00: Now, there's ways that the government historically has made, you know, um, classified information public information, but I feel like there is an opportunity.
• 15:45
  SPEAKER_00: We don't want to look back 10 years and say, man, I wish we'd gotten ahead of this one, of like, there's so much you can do with this much data.
• 15:52
  SPEAKER_00: How can we find ways and channels for it to find its way into the public good so that we can do something, do do more with it?
• 15:59
  SPEAKER_02: But I I I mean, I don't necessarily think the public good is always you know gonna be profitable, right?
• 16:06
  SPEAKER_02: So we have this, we've got it, we have a whole thesis around the theory of change around sort of satellites and sensors for good, right?
• 16:12
  SPEAKER_02: And the good is more, it allows a farmer to understand what's going on in their soil, it allows the grid to understand what's going on and they're gonna do line monitoring, it allows weather forecasts or sensing data so they can plan and maybe underwrite insurance differently or better.
• 16:28
  SPEAKER_02: And so the I think as as as um you know, the IoT in general in our sectors are like very low, like extremely low.
• 16:39
  SPEAKER_02: Manufacturing is like 40%.
• 16:40
  SPEAKER_02: I think ag is less than five.
• 16:42
  SPEAKER_02: I think ocean would be Kate, like a rounding error on a rounding error.
• 16:46
  SPEAKER_00: Yeah, yeah.
• 16:47
  SPEAKER_02: Around sensing.
• 16:48
  SPEAKER_02: But that data should allow you to have some private use cases um as well.
• 16:56
  SPEAKER_02: Like obviously, we've talked a lot in this podcast um about insurance, but even things like if you're gonna do offshore wind development, which I think a lot of Europe's gonna have to do given what's happening geopolitically, you know, they want to be very thoughtful about whale monitoring and make sure that where that sits.
• 17:14
  SPEAKER_02: You need persistent data to make that work.
• 17:18
  SPEAKER_02: Maritime and fuel efficiency, you know, is this is good, this sensing data is gonna be helpful as you do route optimization.
• 17:25
  SPEAKER_02: There are companies already doing that work in our portfolio so far.
• 17:29
  SPEAKER_02: It does a lot of that, but you know, could it be enhanced with uh a trifecta of data?
• 17:34
  SPEAKER_02: So I think, and then the the most interesting stuff will be like what other risk transfers can you attach if you have this data?
• 17:41
  SPEAKER_02: And you're seeing that um across different verticals in the past, you know, where measuring a physical economy thing allows you to de-risk it.
• 17:50
  SPEAKER_02: So you know this is to me an extension of our IoT strategy that we have in agriculture, we have an energy, and we have now an ocean.
• 18:00
  SPEAKER_02: The the the aspect here is you've got an anchor customer um that allows you to to build scale and initial revenue and build the org.
• 18:11
  SPEAKER_02: And then um, and then you can effectively you know continue to prosecute the market beyond that one anchor customer.
• 18:20
  SPEAKER_01: Yeah.
• 18:21
  SPEAKER_01: Well, thank you so much for sharing all of this.
• 18:23
  SPEAKER_01: I think in closing, I'd love to hear, you know, any outlook on the next five, 10 years that you're hoping to see as we continue to invest in these technologies and support our portfolio companies.
• 18:34
  SPEAKER_02: But I think um, you know, fisheries are on the front lines of this, insurance is on the front lines of this, navies are going to be front lines.
• 18:43
  SPEAKER_02: I mean, the ocean is both a lagging and leading indicator of where you know climate slash weather slash planetary systems are going.
• 18:53
  SPEAKER_02: And right now we are um driving in the dark without headlights, and it's raining, and we don't have windshield wipers.
• 19:01
  SPEAKER_02: And so um it is very bad.
• 19:04
  SPEAKER_02: And I think the the risk of significant um events happening as a result of these several Hiroshima bombs a second is gonna be nonlinear.
• 19:17
  SPEAKER_02: And um so I really am hopeful that that you know more sensing occurs so we can at least understand this you know fundamental um public good we have that you know drives a lot of commerce in the world.
• 19:33
  SPEAKER_01: Kate, any closing thoughts?
• 19:36
  SPEAKER_00: I mean, I agree.
• 19:37
  SPEAKER_00: I think if if you can't measure it, you can't see it.
• 19:41
  SPEAKER_00: Um and I think what Sanji said, I mean, we can't see what we're driving into.
• 19:45
  SPEAKER_00: And I don't know that we acknowledge it.
• 19:47
  SPEAKER_00: I would really like to see the all the data, I mean, to the point before, all this data that's being collected, I'd like to see what it can unlock beyond just what it's like specific use case is right now, because I think it really is exponential.
• 20:01
  SPEAKER_01: Thank you both so much.
• 20:02
  SPEAKER_01: I really appreciate your time.
• 20:03
  SPEAKER_01: It was great to hear your thoughts as we lead up to the next podcast on Apron Lab.
• 20:08
  SPEAKER_01: So stay tuned for that coming soon.
• 20:11
  SPEAKER_00: Thanks, Tanya.
• 20:12
  SPEAKER_01: Thank you.
• 20:13
  SPEAKER_00: Thank you.
• 20:14
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• 20:17
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• 20:21
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