Latest / Success Story with Scott Clary / Jim McDermott - Clean Energy Pioneer | Why Smart Entrepreneurs Are Betting Everything on Climate Solutions

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Jim McDermott - Clean Energy Pioneer | Why Smart Entrepreneurs Are Betting Everything on Climate Solutions · Success Story with Scott Clary

• 0:00
  You have to look at the consumption of electricity, whether it's crypto or large language models,
• 0:05
  how much economic value are they producing? Large portion of crypto, I don't think they create
• 0:10
  enough economic benefit to justify why they electricity that they consume.
• 0:15
  He doesn't chase trends, he builds the future quietly, deliberately, and with a mission.
• 0:20
  Jim McDermott is the mine behind over 25 companies from stamps.com, which he took public to ground
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  breaking climate tech ventures that were acquired by giants like LG Kim and Occidental.
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  You need to go solve as an entrepreneur at the problem that you find most interesting.
• 0:34
  I think that climate is the single greatest economic opportunity the next 50 years.
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  And this is one of the things that's really important about climate is there's a lot of people
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  who in the discussion are like, well, it's either wind and solar, which is zero emission,
• 0:46
  or it's natural gas, which is emissions. That's not true. You can make a natural gas power plant
• 0:51
  that emits no CO2, it just costs more money. He's not just a founder, he's an architect of
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  sustainability. Launching startups before the world realized how much they need them.
• 0:59
  Jim's work sits at the intersection of deep science, serious capital, and real world impact.
• 1:04
  Most people talk about saving the planet. He's out here building the tools to do it.
• 1:07
  Find people who are good at taking technologies, deploying them and building them into real businesses.
• 1:12
  Invest with them. The true mark of success is not whether or not you get something right.
• 1:19
  It's what you do when you get knocked down.
• 1:25
  Jim, I find your background very interesting because obviously one of the larger companies
• 1:38
  that you're known for is founding SAMHPS.com. You were an entrepreneur during the first.com boom.
• 1:45
  And now you work with climate and climate tech companies.
• 1:50
  And I'm curious about the through line between those two ventures or between those two ideas.
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  So what connects sort of the old Jim and the .com entrepreneur Jim to climate and what you do now?
• 2:04
  Yeah, it's a great question. I'd buy my picture, have me on.
• 2:07
  Yeah, I think that the three lines for it frankly is energy. I started off my career in New York.
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  I was working actually for a bank first boss in there and I was in what was then called
• 2:20
  energy and infrastructure. So we built freeways, tollways, large power plants, things like that.
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  So I actually started off financing coal and natural gas power plants.
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  And so if you want to think about it sort of as a continuum, what ended up happening was
• 2:33
  essentially that I started off making electrons. And electrons ultimately are the basis of
• 2:40
  all compute and compute is what makes the internet what it is. And so when I ended up starting
• 2:47
  SAMHPS.com while I was still in graduate school, it was one I was really interested in postage and
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  I'd been doing a lot of other interesting things. But but I think the through line was that when we
• 2:57
  went to go do the first installation of our servers, we went to a place called Exodus Communications
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  in Irvine, California, this is 1998, I think, 1998, 1999. And I was standing in this room and
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  there were racks and racks and racks of these were then I think compact PCs or maybe Dell early
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  Dell machines. But there was an enormous amount of heat coming off these things as well as an
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  enormous, you know, the the the the amperage that it was pulling was just enormous. And I was
• 3:26
  standing there thinking to myself, this is all very exciting. We're going to put this thing on
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  the this new thing called the internet. But where does all this electricity come from? And if
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  and if the future is all everything is going to be using computers or we're going to have the internet
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  there's going to be all these problems. You know, all these things are going to happen. What happens
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  upstream of all of that? And and because of sort of happenstance and what not I'd been working to
• 3:51
  build, you know, build the power plants that deliver all the electrons to the data centers. And it hit
• 3:56
  me very hard. I was like, wow, if we're going to have racks and racks and racks of PCs all over
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  the globe connecting everything and everyone communicating all the time, the upstream implication
• 4:06
  in terms of pollution. And in this case, it was predicting from coal plants and from gas plants.
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  And the rule of thumb then and now is that every megawatt hour of power generated using coal plants
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  puts one ton of CO2 into the atmosphere. And every megawatt hour for an after gas power plant
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  is a half a ton. And so I was running these numbers in the back of my head about my gosh, like
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  the amount of pollution that's going to go up as a result of all this new demand is going to be
• 4:34
  profound and at some level unsustainable. And my partner, and I brought this up with my partner.
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  And he was like, look, stop, you know, stop with that. We're we're putting posters on the internet.
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  I don't like, I don't care about that, you know, focus. But it frankly was just sort of this kernel
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  that was like, I couldn't stop thinking about it. I was like, everybody's using the compute and
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  it makes our lives better and more interesting and exciting and it's collaborative and all these
• 4:59
  other wonderful things. But there's a downside to all of this that the general public I think is
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  unaware of. And if they were, they might be more concerned. And that basically flows through to
• 5:12
  today. I know I was going to say, I think that so a couple points. First of all, that's interesting
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  because 1998 was still very early days, internet, subjectively compared to what we have now. And
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  now if I think fast forward, if I think about this, the companies that are enormous, the, you know,
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  the chat GPTs of the world are all the, I've heard this argument with Bitcoin and all the mining
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  that goes on. If you were concerned about that in 1998, I would be interested to understand your
• 5:46
  concerns in 2025, given the fact that the, the size of scale, the scope of internet companies is
• 5:54
  just enormous compared to 98. That being said, I also think that what your partner said is that
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  not, I think that's the general sentiment of most entrepreneurs that are trying to build something
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  that I listen to it hard enough. I can't solve all the world's problems when I'm just getting this
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  company started. I have to focus on, you know, paying rent and getting this thing off the ground.
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  So I think that we'll talk about, we'll talk about what this means for the average person.
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  But I want to frame the problem and sort of show the seriousness of it because again, 1998,
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  you had an idea just because of your background, what, what the problem was or what it was going to be.
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  What does this mean in 2025? And I know there's a lot of other factors outside of just tech companies
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  that contribute to this, but the two that I just mentioned, like cryptocurrency and AI, which
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  seems to take massive amounts of compute, plus all the other companies and all the other startups
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  and all the other things coming out of SF and Y-combinator and everywhere else around the world.
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  What does that mean in 2025?
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  Yeah, it's a great question. And I think depending on how you look at it, right, you can take a very,
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  very, you know, dour, sort of terrible view, which is, oh my gosh, that just means we're consuming
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  more electrons and more electrons means more pollution. And we're not doing anything about it and
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  things are sort of spiraling out of control. I think the more positive thing, or at least the way I
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  tend to think about it in frame, it is, you know, the history of humanity is sort of a race between
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  progress and disaster, right? And I think when I look at chat GPT or I think I look at large
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  language models and sort of what they do and, and the, and the impact that they have,
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  I actually, I take sort of a positive view in that we are, there's, unquestionably, we are
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  consuming more, you know, fossil fuels to do compute. Like, and, and by the way, they're going to be
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  more of that. You see it across, I mean, a joke that for 25 years, it was uncool to be in the
• 7:52
  power business and know anything about the power business in the last 18 months. I'm like the coolest
• 7:56
  guy I know, because power plant building is back and all this stuff that was boring, people are like,
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  wow, you know, and I happen to know something about that. But what I would say is that I think
• 8:07
  crypto, I mean, well, separate crypto from, from, from large language models. I think large
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  language models are profound in that, yes, they consume more electricity and they need a lot more
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  of compute power. But the rate at which innovation, and this is directly related to companies that
• 8:26
  I'm invested in, that it affords people with domain expertise, particularly like I own a company,
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  I'm an investor in a company called Avnos, which is one of the fastest growing direct bear
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  capture companies in the world, the rate at which the company has been able to innovate and find
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  different, different, more effective chemical pathways using large language models has cut,
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  you know, has cut years off the development cycle. So if that company can ultimately get to
• 8:54
  market quicker and be able to remove CO2, you know, years or decades sooner, the fact that large
• 9:02
  language models are consuming more electricity, I think can be offset. So you have to look at
• 9:08
  the consumption of electricity, whether it's crypto or large language models or other forms of
• 9:13
  compute, or really, in my mind is like, how much economic value are they producing? I would tell you
• 9:20
  that I think a large portion of crypto, particularly like mean points and things of that nature, I don't,
• 9:26
  I don't think they create enough economic benefit to justify a lot of why they, the electricity
• 9:33
  that they consume. I happen to think that Bitcoin as an example may actually, there may be an argument
• 9:39
  that says a stored value, like similar to gold, but I think every single one of these things,
• 9:44
  you have to look at them and say, what economic value, you know, are they creating and what benefit?
• 9:51
  Because life is never, you know, you just consume electrons and you get nothing, it's, you consume it,
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  something is produced, some values produced, and in some cases that value is extraordinarily high
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  in other cases, it's low. So I'm not as pessimistic, I think, as some people, in the sense that we have
• 10:07
  there's more CO2 in the atmosphere, that is definitely causing positive feedback loops, right,
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  which are accelerating feedback loops, but I think there's a pathway to use that same technology
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  to innovate at a rate that's potentially faster than the rate of degradation.
• 10:25
  Another thing that I find very interesting, so again, you had that conversation with your partner
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  when you were first starting out, and again, I do believe that that's what the majority of young
• 10:33
  entrepreneurs, that's the sentiment they have, but we can talk about, you know, what should entrepreneurs
• 10:41
  focus on, should there be more purpose driven entrepreneurs, building business hard enough, how do
• 10:46
  you, how do you build a business in environment and tech and clean tech versus building a business
• 10:53
  for a consumer? That's an interesting point, but I'm also, you'd mention something that I think
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  ties back to this idea, because after stamps.com, you exited the internet, quote unquote,
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  exited the internet, because you think the problems weren't fundamental enough. So obviously,
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  your view of problems, when you started stamps.com versus when you exited word different,
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  what do you mean by the problems weren't fundamental enough? Because I think that most entrepreneurs,
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  again, that's why they start internet companies, because they do think that they're solving
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  fundamental enough problems. Right. Right. And let me, let me start by saying I could address
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  part of your question, and then I'll get into the exiting part. I, I don't think that everyone
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  has to spend their lives thinking about climate. I don't, I don't think, I actually don't think
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  that produces a society that's worth anything, right? You need to, you need to go solve as an entrepreneur
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  at the problem that you find most interesting, right? My dad used to always tell me that the success
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  is the intersection of, you know, that which you're good at, that which you'll, you know,
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  people will pay you to do, and that which you love to do, right? And, and I think a lot of times,
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  so, so when people talk about the climate, like if climate is not something that's fundamentally
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  interesting to you, or you're not fundamentally good at it, you probably shouldn't do it, right?
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  And that means that there are going to be people who do all sorts of things using the internet
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  that I don't find interesting, but it doesn't mean they can't do them and be successful entrepreneurs
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  and have a role to play. So I, I think that this idea of like that everyone has to have a
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  climate overlay, you know, I mean, somebody's got to design shoes and fashion and
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  make movies like, you know, because I consume that sort of stuff and I like it. So I don't, I think
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  it's a little, it's sort of a species argument to say that everyone must be a climate entrepreneur.
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  I don't really buy that. Now, for me, I mean, I, part of the, part of the reason I was really
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  interested is I've always been interested in fundamental systems. I actually started off college
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  as a, as a physics and philosophy major, which are sort of, if you take the two bookends, right?
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  And STEM, I believe physics is sort of where the, where the road, you know, you go, that's about as
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  far down the road as you can go and philosophy is the other end of that in, in what I've characterized
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  as liberal arts. So I've always been interested in sort of like, where, what's the end of the road
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  look like? And so for me, once the internet, I mean, I was fascinated by the internet because of all,
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  you know, like, all the switching and the gear and like, you know, how do we connect all this stuff up?
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  And, and stamps was an interesting play in that it was a, you know, it was a government license
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  so I felt like it had a competitive advantage and there were not, but other things. But once it was
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  done, I realized, you know, it's a utility and people need postage and I stopped harming anyone.
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  But it's not really solving anybody's problem. I mean, in the sense, you don't have to go to the
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  post office and that's why I started it. But I was much more interested in, in sort of more
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  fundamental problems like global pollution and things of that nature. And so when I started to see
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  where the internet was headed, which was social networking, I actually, I mean, I built a company
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  called Spoke that was 18 months before LinkedIn existed. I launched this thing and I, I mean, so it was
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  pretty obvious at the time what was going on. But I just couldn't make myself feel that it was
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  really solving, I mean, the social networking problem was something for Jim McDermott. Doesn't mean,
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  you know, reading all the crew went on to make billions and God bless him. I used LinkedIn all the
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  time, but I didn't care enough about it. And so the reason I left was I didn't feel like the problem
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  of social networking, which is basically graphing, you know, figuring out the highest probability
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  across a graph is it's an interesting intellectual problem. I just didn't care about it. And so I was
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  like, I'm much more interested in trying to address something that's further upstream than social
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  networking. So I turned and went back towards sort of power plants, fuel, I mean, stationary power
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  generation, clean fuels and energy infrastructure, because I thought that's an area where I have,
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  you know, knowledge, I care about it. And I think I can get paid to do it. So I'm going to go solve
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  that problem. And I think it's important in for every entrepreneur to feel the meaning of it.
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  Right? I mean, I believe that. And meaning oftentimes, I think people, they let other people put
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  an overlay on it for them, right? They're like, well, that, you know, you want to whatever design
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  skateboards and your parents tell you no. And but you really, if it has meaning for you,
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  you should go do it and never mind what your parents think or what other people think. And so
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  it was purely an individual's decision in that I felt that trying to fix XSEO2 and the atmosphere
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  was a was a problem set worth trying to solve. I completely agree with you that, I mean,
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  that's a much more fundamental. It's a huge problem. It's a beautiful idea to say, hey,
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  this is a problem I'm going to solve. It's going to not just impact the consumer and their ability
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  to sort of save a couple of seconds off or a couple of minutes off a day, but not having to
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  a post office, but now I'm going to, you know, it does have 93% market share, which is kind of true.
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  It does. It's like, that's a, that's a, it's a legit monopoly, which I always like, I was kind of,
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  thought was cool. But to the same token, it's such a big problem that it's hard to wrap your mind
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  around how you can even have an impact. And I think that could also be slightly demoralizing
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  for an entrepreneur, like an entrepreneur wants to define a tab. And, and I know that when you,
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  you know, the Stanford School of Thought is like, is the problem big enough to affect billions of
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  people? And not everybody has that school of thought when it comes to entrepreneurship. Some
• 16:27
  people just want to cash flow and quit at nine to five. And they just want to make a little bit
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  more money and, you know, afford themselves a nice lifestyle. But you just didn't go to the
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  Stanford. How do I disrupt billions of life? You literally went to the peak of the mountain and
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  you said, I want to save the world to a degree, not to, not to, not to joke around with what
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  the goal is, but that's basically where you're heading. How do you even conceptualize the first
• 16:52
  step when you're solving such a massive problem? Because that's enormous. You could build a company,
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  you could almost even say, you know what? I don't even understand how I can impact this. This is
• 17:03
  a government's problem. You could say that easily. So where do you start? So it's actually interesting,
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  the way that I've always started. I actually learned this actually from one of my, one of my,
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  I was actually a physics professor a long time ago was start by doing a systems level analysis.
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  Like what does the end and system look like and then map out all the component parts and then
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  determine, you know, and then then do a secondary analysis, which is what should the system look
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  like? So this is how the system operates today in an idealized world. How would it, how would it
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  look? Then look at the discrepancies between the two and determine, you know, are there places where
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  there, you know, companies that don't exist or products, companies, opportunities? Or are there
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  places where they already existed? They can be improved and then start to basically drill in from
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  there. So you say, like you know, you say, okay, it starts with mining coal and then with somebody
• 17:59
  working on their computer. Let's look at all of the sectors. So there you, okay, well, you know,
• 18:03
  PCs, Michael Dulles got that one covered. We're not going to, you know, thank you very much. We'll
• 18:07
  move on. You know, oh, switching gear, Cisco, those guys are running everything and you just keep
• 18:12
  looking for a spot. And what I realized, one of them was that the, the opportunity to build
• 18:20
  wind and solar, which were an alternative form of, you know, of producing electrons that are zero,
• 18:26
  zero emission, was a really interesting place. There was lots of companies and there was a need for
• 18:30
  developers, like people who'd actually go out and put the projects together, get them financed,
• 18:34
  get the permitting done, all the rest of that. And so what we did is we just systematically went
• 18:38
  through and looked at where can we find that? And we defined, and the good news is,
• 18:43
  it's got to say almost every one of those Tams is gigantic. So you don't, you're like, oh yeah,
• 18:48
  like electricity, like that's a big one, right? You know, water, that's a big one. And so what
• 18:54
  we did then is because you're right, like if you simply say, like I'm going to save the world,
• 18:58
  like that's a frankly, it's a fool's errand, right? You're not going to do it. What you have to do is
• 19:03
  you have to pick a, I mean, that's the macro thought, right? The micro thought is what's the firm?
• 19:08
  And then you apply all the basic things that you apply in any entrepreneurial situation,
• 19:12
  which is, okay, what's needed? What skillsets do I have? What skillsets am I going to have to go buy or
• 19:16
  rent? Is there, you know, is there an intellectual property position that I can obtain either through
• 19:22
  licensing or invention? You know, how much money is it going to take to get me there to the next
• 19:27
  proof point? And, and, and again, that's a, that's a, that part of it is entrepreneurial is
• 19:33
  applicable. I don't know what you're doing, whether it's not on bubblegum or you're trying to,
• 19:37
  you know, remove CO2 from the atmosphere. And so what we did was just do a systems, systems level
• 19:43
  analysis, look at the idealized system, look at the actual system and then start looking for gaps
• 19:49
  and find companies or find companies or ideas or problems that needed to be solved that had a
• 19:55
  tam that was large enough to go after. And this is where, this is where you came up with this,
• 19:59
  I mean, was this the first version of of what you're doing now where you came up with the idea
• 20:03
  that CO2 isn't just waste, but it's valuable? Yes, well, so the first, the first test was to
• 20:09
  simply, or the first sort of incarnation was I started in really 2003. I started a firm called
• 20:14
  the US Renewables Group. And the idea was, look, whenever there's a, there's a structural change
• 20:19
  in technology, the first thing that happens is the infrastructure, right? And this is exactly,
• 20:23
  first you build the rail road lines, first you'd lay down the internet infrastructure,
• 20:28
  then you build the software layer on top of it, right? So until Cisco, like when the internet started,
• 20:34
  right? Everybody's like, oh, we're going to have all this great stuff. Well, everybody had a,
• 20:37
  had a, you know, a, you know, eight, eight, broad K hook up and only half the people have them.
• 20:43
  So the idea of delivering streaming TV, not a thing. And so you had to watch as first the
• 20:50
  dial up guys got rolled up, then Cisco laid the T3 fiber. And then and only then can you have net
• 20:55
  Netflix, right? So when you overlay that type of understanding on the, we'll call it the clean
• 21:02
  infrastructure, which you realize the first thing that was going to have to happen is there was
• 21:04
  going to have to be a lot of lower carbon fuel. So that was ethanol, biodiesel, sort of lower
• 21:10
  emissions per unit per kilojoule of energy and wind and solar. And so we started there. We said,
• 21:18
  let's be infrastructure players that the idea of removing CO2 from the atmosphere came later
• 21:23
  because one of the things that I realized was that as I was building all this stuff and we were
• 21:28
  looking at the build rates, which were getting faster and faster and bigger and bigger,
• 21:31
  but you were looking at the rate at which CO2 was going to the atmosphere became apparent to me
• 21:36
  that we weren't going fast enough to deal with the legacy. And the way to think about that,
• 21:42
  is that if you take, there's 420 parts per million CO2 in the atmosphere today. We're putting
• 21:49
  about three per three parts per million every year of new, so incremental. So and we started at 180
• 21:58
  when the industrial revolution started. So if you take 420 minus 180, right, you basically have
• 22:05
  160 ppm that is legacy and you have 3 ppm, which is new. And what that leads you to is the vast
• 22:14
  majority of the problem with climate is the CO2 that's already in the atmosphere as a result
• 22:21
  of the last 150 years of industrialization. And once you realize that, you're like, okay,
• 22:27
  it's important to continue to decarbonize, but that's going to take a while, right? And now we have
• 22:32
  this new growth factor with, you know, AI and Bitcoin all the rest of that. But we have a legacy
• 22:39
  problem of all of the CO2 that was, you know, for all the steel and the railroads and the aerospace
• 22:46
  age and all the rest that we're all paying for in some format. And so once I realize that that,
• 22:53
  and candidly, that is the, that is, I think, ultimately, it may well be the domain of government,
• 23:01
  right? That the government may need to play a significant role in cleaning that up because
• 23:07
  everyone looks at it and says, well, I didn't do that. Look, I didn't put all that CO2 up, but
• 23:12
  the reality is we're all dealing with it, right? And so oftentimes when you have sort of shared
• 23:19
  common problems, right? That ends up being the, the domain of government, but the private sector
• 23:26
  has to deliver the technical solutions. And so I'm focused on the technical solutions.
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  the terms and conditions apply if you're hiring indeed is all you need. I think that that
• 25:41
  listen, I'm not, I'm not nearly as involved or understanding of climate discourse as you are
• 25:47
  because you live in this space. But it seems like, it seems like the conversation around climate,
• 25:56
  it's like, it turns into like a political weapon. Yes. And when things turn into political weapons,
• 26:03
  that means that they're being used for votes or not being actioned against, according to the
• 26:07
  actual severity of the problem. They're just being used to sway a person this way or that way towards
• 26:12
  who should I vote for. So, where do we stand now in the climate conversation? I mean, we just
• 26:19
  switched administrations. What is the, what is the prevailing view on dealing with legacy problems,
• 26:25
  dealing with this going into the future? Because private industry is going to be private
• 26:29
  industry. They're going to, this is so, they're going to separate themselves from the government,
• 26:32
  they're going to be building regardless. But in 2025, what does the government believe about legacy
• 26:38
  CO2, future CO2 CO2 in the atmosphere, the impact it has? Because I feel like that shouldn't be a
• 26:45
  political talking point. It should be something that we should be trying to collectively
• 26:49
  work together to solve. But objectively, it doesn't feel like that's the case.
• 26:53
  Yes. So, I think, again, I think you got to, you have to tread lightly when you talk about these
• 26:59
  things because there are lots of places where it is sort of politically charged and people, you know,
• 27:03
  and politics exists and people do it. But I think the way to think about it is that there are a number
• 27:12
  of companies and surprisingly, actually many of them are in the oil and gas sector who,
• 27:17
  if you think about CO2, right, you think about gases and you think about what's under the ground,
• 27:21
  and things like that, who knows the most about that? Well, the reality is the global oil and gas
• 27:25
  industry does. And so, they're keenly aware, and there's lots and lots of very smart people in the oil
• 27:33
  and gas industry in chemical engineering, petrochemical engineering, subsurface geology, who understand
• 27:39
  these problems quite well. In fact, I would argue in many respects better than a lot of the people,
• 27:45
  some of the people on the climate side of it, if you will. And it's because they deal with it every day
• 27:49
  and they have for 100 years. So, all of them, in my conversations with them, almost all of them
• 27:55
  understand that this is a problem, but they view it like the way that you deal with NOx or SOX
• 28:01
  or sort of low-Earth Paralutins. It's another gas. It turns out that in excess, you know,
• 28:06
  in large amounts, it's dangerous and it needs to be managed. They don't have a view that we should
• 28:12
  never use hydrocarbons again, which some people who are on sort of the further left end of the
• 28:18
  liberal spectrum sort of have this view of, you know, hey, we can't have any of this. And I think
• 28:23
  the way that the way that the conversation can be useful is to take a scientific approach and say,
• 28:28
  like, look, you know, let's, again, let's look at the system, let's look at where the system started,
• 28:33
  let's look at where it is, maybe let's try to think about idealize things, and then let's view
• 28:38
  CO2 and the infrastructure that will need to be built to deliver or move or repurpose that
• 28:45
  as an economic opportunity and work from there. And there are lots and lots of large corporations
• 28:54
  globally that have made and are continuing to make significant investments in management of CO2.
• 29:00
  That's the reduction of the primary source, finding ways to capture source that's in the ambient
• 29:05
  atmosphere, and then ways to repurpose it. So although, and I'll tell you, like the current
• 29:10
  administration has a much, I think, their view is natural gas is a better answer than say,
• 29:18
  wind and solar, or at least the president's view of that is, I think he's been very clear on that
• 29:21
  point. I think when you talk to people in industry who are thinking about how to run their businesses
• 29:27
  for 20, 30 years forward, all of them have the view that CO2 is, is a real, right? The amounts of it
• 29:35
  are significant and detrimental. And see, you can invest against that thesis, right? You can
• 29:42
  find ways to make money and manage the problem. And so I think that there actually is sort of this
• 29:48
  funny disconnect in the moment in that I think a lot of this discussion, the public discourse
• 29:53
  around CO2 has been very politicized. Like, basically, if you believe in CO2, then you're a leftist,
• 29:58
  you know, calling us to this disco, and if you don't, then you're a freedom loving,
• 30:04
  you know, whatever the nomenclatures are, right? I don't really describe to either one of them
• 30:08
  because I look at it, and I'm like, there's both an opportune economic, I tell people all the time,
• 30:15
  I think that climate is the single greatest economic opportunity the next 50 years.
• 30:21
  And I think, frankly, large language models and compute will be the tool through which we make
• 30:27
  the discoveries around these topics. So I think that although the government, maybe at this point,
• 30:33
  is sort of more right of center or, you know, further right than they were whatever five months ago,
• 30:39
  four months ago, industry has taken a very long-term view on this and continues to do that.
• 30:46
  And they're continuing to invest to find, and this is oil and gas companies. I mean,
• 30:50
  one of the things I think it's really important to highlight if you care about climate is that
• 30:55
  the oil and gas community knows a lot. They have a lot to add, and the idea that you would,
• 31:00
  you know, whatever name and shame them or engage in that type of stuff is counterproductive,
• 31:07
  and should be, you should think of them as a partner who can help you, and while maybe it's
• 31:14
  also true that in the past, they were anti-your climate beliefs. These days, they're actually
• 31:19
  moving pretty aggressively, and I'm invested in companies that work with them and all the rest.
• 31:24
  So I think it's a more nuanced answer is maybe what I'd say.
• 31:28
  Well, first of all, I agree with you. I think it's always a more nuanced answer. It's never oversimplified,
• 31:33
  and it is interesting to understand that some of the quote-unquote legacy companies are probably
• 31:39
  leading the charge on trying to figure this out, and probably for themselves too, because
• 31:43
  if you're a smart executive at a company that's been around for 100 years, you're not stupid.
• 31:47
  You do know that things will eventually change, so you have two options, right?
• 31:51
  And it's so cliche, but you can either be blockbuster or Netflix. You can choose at the end
• 31:56
  of the day who you want to be, and most would rather be Netflix. Most would rather disrupt themselves
• 32:01
  before they get disrupted by someone else. You know, to start to interrupt, the probably the best
• 32:06
  example of this that I can give you is I believe that Vicki Hull at Occidental. I was on the board
• 32:13
  of a company called Carbon Engineering, which is up in actually in Canada that was run by a
• 32:17
  professor named David Keith that's basically the leading director of capture coming in the world.
• 32:21
  They came in, invested, ultimately bought the company from us for 1.6 billion, and then I had a
• 32:27
  joint venture with her called 1.5, which is now the largest director of capture company in the world
• 32:34
  that's in Texas. She bought both of them from us. And here's a woman in the middle of the oil
• 32:42
  gas business who is leading the charge on director capture and transforming oxy into a world
• 32:48
  leading not only oil and gas company, right, but director capture company. And she's a classic
• 32:54
  example in my opinion of someone who saw the future and has been systematically moving towards
• 32:59
  creating that future by repurposing some not all of the cash flows of oxy, so it's still a very
• 33:05
  stable oil gas business, but positioning herself for a world in which we will have to remove CO2.
• 33:11
  And her company is going to have a piece of that. And I think, by the way, being able to navigate
• 33:18
  those types of currents, it's a real skill. Like, to be able to take a legacy company and move it
• 33:26
  in systematically move it into the future, like it's not for kids, you know?
• 33:31
  No, that's not easy. That's not it. But how she's operating is how you do it. It's not easy,
• 33:36
  but that's the job. The job is not easy. And you're, I want to talk a little bit more about some
• 33:42
  of the initiatives and some of the ideas that you've brought to the table, but before that,
• 33:47
  I just want to tee it up for the audience in a perfect future, because then again, the average
• 33:53
  person here is, this is my issue. They hear all the discourse, they hear all the conversation,
• 33:59
  and they don't really understand what's going on. They're not talking to the executives of the oil
• 34:03
  and gas or the clean tech companies. They're just, you know, turning on the news at night,
• 34:07
  and that's the information. So in a perfect future, what is the energy mix? Where does coal,
• 34:14
  wind, solar, nuclear, all of it, just lay it out so people understand where we should be heading,
• 34:20
  and why? Okay, well, let's start with this is my opinion, because I don't know that there is in fact
• 34:26
  a, there is no right answer to that in the sense of sort of an absolutist way of the world.
• 34:33
  My belief in the future is that probably what the most likely scenario will be is that
• 34:40
  you will see right now, I think nuclear is maybe 10% of the global mix. I could see it growing to
• 34:46
  maybe 20 to maybe 25% over the next, called 50 to 100 years. I think that what you will see,
• 34:53
  right, on the wind and solar side is you're going to see continued build out of that.
• 34:59
  That will need to be coupled with batteries, because there's a fundamental problem with wind and
• 35:03
  solar in that wind and solar are intermittent, wind tends to blow in the morning in the evening,
• 35:08
  and when there's a temperature differential, and the sun obviously, you know, generates when
• 35:11
  the sun's up. So, but if you need a steady stream of electrons throughout the day and the night,
• 35:17
  there's always a question of how do I take the maybe the solar, the excess solar that I'm producing
• 35:21
  during the day, stored away, and then delivered back same with wind. So, you're going to see a lot of
• 35:26
  wind and solar, I think maybe 20, 25% globally, that will be paired with storage. And then I think
• 35:33
  you're going to see a lot of natural gas, and this technology again exists today, where you will
• 35:41
  combust natural gas, and you will capture the CO2 in situ. So basically that means during the
• 35:45
  combustion process, you will actually strip the CO2 out, you will compress that CO2, and you will
• 35:50
  push it back underneath the ground. So there will be lots and lots and lots of natural gas power plants,
• 35:55
  where they're combusting, but the CO2 is not reaching the atmosphere. And so the way to think about
• 36:02
  that is it's effectively a decarbonized hydrocarbon. This is a very, very big business. There are companies
• 36:10
  already, there's actually a company that's public called NetPower that was developed by some friends
• 36:14
  of mine in a group called Eight Rivers, and they built a plant. There's one in Louisiana,
• 36:21
  they're building more in Texas, where they combust natural gas, just like a normal natural gas
• 36:26
  power plant, but instead of emitting the CO2 in the atmosphere, they capture the CO2, and then they
• 36:31
  dispose of it. So I think that hydrocarbons will play a significant role, and it might even be the
• 36:38
  largest role going forward, but CO2 will be removed from the equation in terms of emissions.
• 36:47
  And by the way, that will cost more money, right? So that means that you're, you know,
• 36:51
  the an electron that comes from an natural gas power plant will be more expensive, but it will
• 36:56
  have a zero emission profile. And this is one of the things that's really important about climate
• 36:59
  is there's a lot of people who in the discussion are like, well, it's either wind and solar,
• 37:06
  which is zero emission, or it's natural gas, which is emissions. And that's not true. You can
• 37:14
  make a natural gas power plant that emits no CO2, it just costs more money, and it's from an
• 37:18
  engineering perspective, it's a little more difficult. So I think it's probably, you know, call it
• 37:26
  20 to, I mean, somewhere between a fifth and 25% nuclear, call it 25% wind and solar,
• 37:34
  natural gas is probably, if I had to bet, probably 40 to 50%. And then, I mean, and then you'll
• 37:39
  have like hydro and some of these other things, but I hydrocarbons going forward probably will be
• 37:44
  the majority. The question is going to be, or maybe not the majority, maybe the plurality, right?
• 37:50
  Yes. Is how carbon intense will the emissions be? And I will tell you that I think the big
• 37:56
  loser in all of this is coal. Coals going away. And again, this is another one just to give you
• 38:03
  sense of it. When the president says we're going to have lots of big beautiful coal plants,
• 38:09
  that's his opinion. He's entitled to it. But when you talk to the people who finance these plants
• 38:15
  or try to develop them, I want to build an own and operate them, there's nobody out there.
• 38:21
  Nobody. Like coal in America is gone. And I know this because I've been to Campbell County and
• 38:28
  the powder river basin in Wyoming, which is the largest mining area in the world, they all know it
• 38:33
  because they're seeing demand go down. And what are they doing? They're repositioning their assets,
• 38:38
  you know, to do natural gas with CO2 storage. It's very windy in Wyoming. They're market-driven people.
• 38:46
  And so I think you're going to see an energy mix that won't be all one thing. It won't be
• 38:50
  monolithic and that's good. And you're going to see the wind and solar people recognize that
• 38:56
  their intermittency problem needs to be addressed. And you're going to see the hydrocarbon people
• 39:01
  recognize that they need to deal with their emissions problem better. And both both will innovate
• 39:07
  and both will bring products to the market that solve the fundamental issue, which is we just have
• 39:12
  to reduce the amount of CO2 that's emitted. I think that even after speaking to you for a little
• 39:18
  bit and sort of studying your work, you make a very compelling argument for climate not just being
• 39:24
  a feel-good opportunity, but being highly lucrative. And I think that I don't see a lot of people
• 39:33
  really pushing that message and helping people understand that climate isn't just a feel-good.
• 39:38
  It's like, this is how you actually make money in it. When I think about people that have even
• 39:44
  attempted to put money into climate, people that are not in climate, but they're just smart,
• 39:49
  successful people. I want to put a couple of bucks here or there. It's always like, well, you know
• 39:52
  what? This is like the feel-good fund that I put money into. And all the opportunities you're
• 39:58
  talking about, these are real money opportunities. Yeah. And I think, look, it's got one of the things
• 40:03
  that's that is harder about climate is that you're holding yourself to sort of a double standard.
• 40:10
  And the double standard is, I want to make money. I want, I want, you know, above market returns if
• 40:14
  I can achieve them. Because my partner and I used to do that, it's like sustainability that's
• 40:19
  not sustainable is not a business. Right? So it's like, if someone gives you, you know, a hundred
• 40:23
  bucks and you invest it in something and you return them 50, and it's, quote, sustainable,
• 40:28
  what you put it in, it's like, then they don't give you, they don't give you the money again.
• 40:32
  And so your business is not sustainable. So why would you do it? When you're looking at climate,
• 40:37
  you're looking at a sort of through a dual lens. One is, I need to make money full stop.
• 40:43
  And what I need, what I'm also doing has to have a second lens, which is it has to have an
• 40:47
  economic or an environmental benefit to it. And if it has an environmental benefit, but it can't
• 40:52
  make money on it, then it's, then it's a non starter. And if it's only about making money and has
• 40:57
  no environmental benefit, then we're not going to do it either. Which means that you, that you say,
• 41:02
  no, a lot, like a lot. And, and, and there's a lot of people who will come at you when you're,
• 41:09
  when you're looking at these opportunities, I think, well, this is good for the world. It's like,
• 41:11
  yeah, but it's, it's good for the world if we can scale and repeat. Like, and, and, and, and again,
• 41:19
  if you want to give money to people on charitable basis to do things that you think need to be done
• 41:23
  great. But if you want to build businesses, and I, this may be sound a little
• 41:28
  avaricious, but I believe it. I believe when you talk to young people and they get out of school,
• 41:33
  like they need to make money. They need, they need money because they want to have houses and they
• 41:38
  want to put their kids through school. And so one of the jobs that, that you were doing, if you're
• 41:43
  going to be a climate investor, is that you're showing young people with skills and energy, you can
• 41:49
  build a career and make money and have a family and a house and, you know, and you can afford
• 41:53
  healthcare. And if you can't show that in climate, they're not going to do it or set another way.
• 42:00
  I think that probably one of the greatest, the probably the greatest poster boy for climate
• 42:03
  for a long time was a long musk because people could look at him and be like, that guy's building
• 42:07
  electric cars and he's rich. Right? And they, you know, they're like, I want to do that too. I want
• 42:13
  to, I want to have a good life. And so I think climate is a massive economic opportunity. One of my
• 42:21
  things my dad used to tell me all the time is, if you can stay calm when disasters are happening and
• 42:27
  try to look on the other side of the coin, the biggest disasters are always the biggest economic
• 42:32
  opportunities. But it's really hard when people are like pitching all the time, like, oh my God,
• 42:38
  you know, PPM keeps going up. There's forest fires everywhere. I mean, like I live in L.A.,
• 42:43
  everything west of me burned down six weeks ago. Right? I asked Canyon and you can look at that and
• 42:50
  you can say, God, it's terrible. Well, you know, we're down. We're in the midst of putting together
• 42:56
  a company right now that is going to make it possible to do five day, very highly accurate,
• 43:02
  five day smoke forecasts. So when fires light up in the western US and Canada, smoke is effectively
• 43:10
  a new weather event that is being driven by climate. So there are ways to predict and then help
• 43:18
  people adjust to the fact that there's going to be more smoke and that smoke's going to be flowing
• 43:24
  across larger and larger geographic areas. So instead of focusing on it was terrible, which it was,
• 43:31
  what can we do about it? Where is there an opportunity to fix something? Be useful to other people,
• 43:37
  right? And that's, and again, you know, is smoke management going to change the whole world? No,
• 43:44
  but it will make it possible that if a fire starts in British Columbia and the, you know,
• 43:50
  the smoke gets all the way to Iowa that the people in Iowa will know that that smoke
• 43:53
  gloom is coming five days beforehand so that they can close the schools, make sure that as
• 43:58
  mechanics are not on the streets, you know, all of things that are quality of life things.
• 44:02
  That's a way to address a problem in a positive manner, in a positive economic manner,
• 44:10
  then to sort of ring your hands and say, what was me? When you think about it and I agree with you,
• 44:16
  I mean, you started a fund and you, and now you do this for a living and I want you to speak
• 44:22
  about that a little bit, but if you think about where you put your money or where you put LPs money,
• 44:31
  I think that I'm again, layman sentiment is if I put money into climate, even if it does find a
• 44:36
  way to become successful, it's going to take way longer than anything else I could put money into.
• 44:41
  And I feel like it's just going to take, you know, a ridiculous amount of time to see some sort of
• 44:45
  return. So is that true or not? How, what's your sort of investment thesis? Because now you're
• 44:51
  coming from the capital allocation side and I think this will be a lesson for entrepreneurs as well
• 44:56
  if they're thinking about, okay, if I want to build in something that's in climate or climate
• 45:02
  tech or clean tech, if I want to build, you should always be thinking from the perspective of what
• 45:06
  makes this business investable, but from your perspective, what are your expectations when you put
• 45:12
  money into a company and what should other people's expectations be? Yeah. So I think there's a couple
• 45:17
  things there and there's good points that you make. I mean, the first one is when you're thinking
• 45:22
  about capital allocation, you have to think about sort of there's, we'll call it the micro the macro,
• 45:27
  like as an example, as a, as a generic German as an individual, right? I've got a portfolio of
• 45:31
  securities and all these things and all of them are growing at different rates and different and
• 45:35
  have different sort of levels of volatility. So as an example, right? Real estate, which I own,
• 45:41
  if you know, fair amount of, it's relatively low growth, but pretty stable. And then I've got
• 45:47
  stuff, you know, where I'm investing in, you know, very high-vol, you know, I've money with a
• 45:52
  friend who runs a fund up in Seattle that does nothing but like, you know, LLM and cloud computing,
• 45:56
  right? And really, really, yeah. So I think one of the things about climate is it does in fact,
• 46:05
  if climate, the stuff that you're looking at is maybe software driven, then it has the same
• 46:08
  characteristics as any software company, which is, you know, the incremental cost of the next unit
• 46:12
  of distribution is zero. So it can scale super, super fast, very low cost. But if it's hardware,
• 46:19
  right? So if you're building like a plant or, you know, or something like that, these things,
• 46:23
  they look a lot more like real estate, right? Because you got to get them entitled.
• 46:28
  There's like, you know, there's a large component of debt. You mean, you have to use debt and leverage
• 46:32
  to get the returns that you're seeking. So if you're building, if you're an entrepreneur and you're
• 46:36
  thinking about hardware, you probably need to be thinking that these things are going to take five to
• 46:40
  10 years, right? To get the types of returns. Now, I will also tell you, Scott, any software company
• 46:47
  I've ever invested in that really made a lot of money, took seven to 10 years anyway. Like,
• 46:53
  there's this idea that everybody's going to make money instantly. It's like, even the most, I mean,
• 46:58
  it's like, I'll give you an example. Amazon went public. I own Amazon. I bought Amazon in 2003.
• 47:05
  It didn't move for like six years. I mean, it was crazy. And I was like, I was a total believer,
• 47:13
  right? And didn't go anywhere. Same with Tesla, Tesla went public at 19 bucks a share,
• 47:18
  which I bought at that point. It didn't go anywhere for the longest period of time because it took a
• 47:23
  while for him to really get going and, you know, and then it, you know, it took off. So I think you
• 47:28
  have to like any entrepreneur, I believe, when we back companies, we're always like, listen,
• 47:34
  our view is we're going to be in this for seven to 10 years, no matter what. If it turns out,
• 47:39
  takes it off our hands in three, then hurrah, but you can't build businesses that way. I don't
• 47:44
  actually believe in it. So I think if hardware means it's always going to take longer and a lot
• 47:49
  of climate is hardware. That's true. But a fundamental thing that I tell people is, look,
• 47:56
  how do you view your house? When you buy a house, do you think you're, I mean, if you, you know,
• 48:01
  some people are into flipping houses, but most people are buying them for long term holds.
• 48:06
  I think of climate as a long term hold, because it's a problem that's not going away,
• 48:11
  and a five to 10 year horizon is not unreasonable. So if that's, and what I'd say is,
• 48:16
  ultimately, you should have a portion of your portfolio focused on long duration things. It shouldn't
• 48:22
  be 100%. That would be crazy, right? I mean, it's funny. The only person I'm aware of who kind of
• 48:27
  went that way was Musk. I mean, he took all of it. He's always paypal money and within like 90 days
• 48:34
  started Tesla SpaceX and solar city and made them all work. You're like, okay, well, some people
• 48:40
  are just not really like, wow. But for the rest of us, mortals, right?
• 48:45
  Maybe it's 5% is in climate, right? And then 10% in real estate and, you know, 40% in bonds and
• 48:52
  the rest is in public stocks. The reason I think that that's interesting, Scott, is I did a study.
• 48:58
  This is about 2019. I looked at the top. It was basically the top 400,000 ultra high net worth
• 49:07
  people on the planet, basically more than 30 million in net worth. If every high net worth family,
• 49:13
  ultra high net worth family on the globe, tax themselves 10 basis points per year on their
• 49:19
  net worth. And we invested that in direct air capture plants. It's enough capital to build all
• 49:25
  the direct air capture plants globally to take us from where we are today back to pre-industrial levels.
• 49:33
  So if the if the richest people on the planet said, I'll take 10 base for every 100 million of net
• 49:39
  worth, you put in a hundred thousand dollars. If everybody on the planet did that and we used that
• 49:46
  equity capital to build direct air capture plants, we could build all the direct air capture plants
• 49:51
  we need and get ourselves back down. So the point of all of that is you don't they you don't have
• 49:57
  to be all in on climate. That's not a realistic thing. What we need to be doing is allocating
• 50:05
  dollars the same way you allocate to real estate and the same way you allocate to, you know,
• 50:11
  internet, high ball stocks because it's an asset class. It's going to continue to grow and it has
• 50:17
  real returns. It's interesting. You mentioned that if you if you take those individuals 10 basis points
• 50:23
  off each of the individuals and and that would that would, you know, in theory solve the problem
• 50:29
  that's still putting it. It's not like they're just flushing money down the toilet. They're actually
• 50:32
  investing in a profitable business. It's just about the it's the education component that's lacking
• 50:38
  right now. That's really it. I mean, it's funny. One of the one of the exact I was going to say is like,
• 50:43
  to the extent that any of your listeners are in that category, I think, I mean, in a funny way,
• 50:49
  it's sort of like the giving pledge. And in the way that the way that I always talk to people about
• 50:53
  this is it's like, look, let's say you're worth, you know, whatever, 30 million bucks or a hundred
• 50:58
  million dollars or a billion dollars. And you built it all, building a business, whatever it is,
• 51:02
  you've worked very, very hard. You take a lot of risk and you're planning on handing it off to your
• 51:05
  kids. I plan to hand off some of what I've made to my children, right? If and today, you know,
• 51:15
  when I look at all the costs that I have in my life, a huge percentage of it is ensuring things,
• 51:19
  my homes, my cars, my health, right? Wouldn't it make sense that if you were about to hand off say,
• 51:27
  let's say your family was worth a hundred million dollars and you were planning to hand that off
• 51:30
  your children, wouldn't it make sense to send to invest some portion of your net worth to future
• 51:37
  proof the world so that when you hand all that money off to your kids, it's a world worth living in.
• 51:43
  Like you already do that, right? You spend money on ensuring your house, your boats, you know,
• 51:48
  your business interruption, like, you know, on and on and on. And yet there's no mechanism
• 51:53
  that exists for basically buying insurance against the future, right? And like most insurance premiums,
• 52:03
  they run between like 50 basis points and maybe two two percent, right? So for 10 basis points,
• 52:09
  if the top, you know, whatever the global elite or whatever we call them these days, right?
• 52:15
  If they were to do that, we could we could future proof, we could go a long, long way to future
• 52:19
  proofing climate as an idea. I think that's an interesting idea. And it's feasible.
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• 54:02
  wherever you get your podcasts. One thing that you don't like, you don't like climate
• 54:08
  doom and pessimism. You don't think it serves any purpose. You've mentioned before that you
• 54:13
  compare climate action to Pascal's wager. So you're essentially betting on solutions because you're
• 54:19
  not nothing to lose. But you're still betting on solutions. You're still taking an optimistic view.
• 54:24
  So is this just clever optimism? Is it something deeper? Why do you hate the climate glue,
• 54:29
  the gloom and do? Yeah so I mean that's funny because the other part of my college career was
• 54:37
  steady philosophy right? So Pascal's wager is fundamentally right. The question that gets
• 54:43
  posed to Pascal is why do you choose to believe in God? And he says well because if I spend my life
• 54:50
  doing you know good acts and being in service and all these other things and you know and I die
• 54:54
  and I get you know St. Peter's at the pearly gates I'm gonna get in. That's a good deal right?
• 55:00
  I want that. If I get to the end and it's just lights out and I die well then at least I spent my
• 55:06
  life being optimistic and not being depressed but thinking I was gonna get in so that's a good
• 55:10
  mental state to be in. The reason I think climate is quite similar is that the one thing we know
• 55:16
  is that if everybody decides that climate is bad and we're all doomed then nobody does anything
• 55:22
  and then the predicted future is a disaster. So why not choose to engage in a future in which you
• 55:33
  believe and whether or not you will ultimately find out whether or not this is right or wrong
• 55:39
  particularly because these fixes may take well will take longer than our individual lives. Why not
• 55:44
  choose to say I'm gonna be part of the solution I'm gonna take some piece of it and I'm gonna work
• 55:50
  on it and I'm gonna be sort of a happy worker right because that'll make me feel good it feels
• 55:54
  like I'm part of the problem and and the reality is if we collectively all do that and everybody
• 55:59
  takes a little bit of action in their part of the world the likelihood that we do solve the problem
• 56:04
  goes up dramatically and if it gets to the end and it's all you know whatever the world's 10 degrees
• 56:10
  Celsius hotter and we're all gonna die well at least you kind of deluded yourself along the way
• 56:15
  and to be happy about it right and and I will quote the other analogy that I'll that'll give
• 56:20
  you around that one of the reasons I believe this is when I was younger I thought we were gonna
• 56:26
  die at a nuclear holocaust I was terrified of it like might might you know my dad had been in the
• 56:31
  Navy there was all this talk mean we had a bunch of family that was very involved in politics and
• 56:35
  we I thought Chris Chris Jeff or you know all these Russians were gonna bomb the crap out of us
• 56:40
  and that was gonna be it so 1989 comes along I'm in college I decided to go backpacking in
• 56:46
  Europe and I'm in Europe and the wall comes down and I got to tell you it's got to like
• 56:51
  blew my mind I was like wait a second what the hell like I thought these guys were like the
• 56:57
  existential threat what do you mean they're gone and I came home and I like it changed my life
• 57:04
  because I was sort of wandering through life doing what my parents told me to do because I
• 57:07
  started figured what's the point of it all right why get home and I realized that they're gone
• 57:13
  and I realized a I had to completely start thinking about the future because I had no I didn't
• 57:17
  had no future plan but what I also realized in talking to my parents was that my dad was like
• 57:22
  the reason you didn't recognize this is that there were people working for generations starting
• 57:27
  the 1950s you know on the you know the the industrial defense complex building the economy all these
• 57:34
  things all in service of the moment where basically the US you know the USSR couldn't keep up with
• 57:41
  the US and they collapsed but you couldn't see any of those people you didn't know them and I very
• 57:48
  much believe that climate can have the same effect which is if we all do stuff and work individually
• 57:54
  on our piece over time that collective momentum will eventually turn the corner and at some point
• 58:00
  in the future people will there will come a day where all the sudden parts per million is actually
• 58:04
  going down and a whole bunch of younger people will be like but I thought the I thought the future
• 58:10
  was so dark and you're like no it's that there's a bunch of old gray hairs who you don't know
• 58:14
  who spent 25 30 years building businesses that make climate a profitable thing and now it's just a
• 58:21
  thing just part of the background and that's a that's a worthwhile thing to do because you want to make
• 58:27
  money but you also want to hand off a world to the next group that's better than you found it.
• 58:33
  No I was going to say on the flip side of that to the 20 22 23 year old what's your advice to them
• 58:41
  if they're like you said at the beginning not everybody has to be a climate entrepreneur maybe
• 58:46
  some of them want to be maybe some of them have no interest but they just they don't want to live in
• 58:50
  the world that you know is all doom and gloom and is burning up and they're and they're not going
• 58:55
  to have kids so what's the advice what do they do what's the part they can play. I think there's
• 59:00
  a couple things I mean one of them is right don't actively resist the change right because like
• 59:08
  there's lots of it might might dad taught me this right is that there's lots of things in the world
• 59:11
  that you don't necessarily agree with right but as long as they're not harming anybody let people
• 59:18
  go do it like it's okay right and so as as the climate and you know things move forward and
• 59:25
  like you know some of this stuff is going to be more expensive right just don't resist it just
• 59:30
  be like okay that's something we got to do and yeah it's going to you know change my life a little
• 59:34
  bit and I'm going to work on it that's one and two is I think try to think about how you integrate
• 59:43
  these solutions and changes into the businesses that you're already in right I mean like I
• 59:49
  wait you know I was joking people I'm like you know if I could just get a hold of Kim Kardashian
• 59:54
  like if she'd ever call me back I love kinds of ideas about how Kim Kardashian could help could
• 1:00:00
  drive a climate agenda in a profitable way right there's all sorts of things that you know the
• 1:00:06
  cosmetics industry is touching in terms of how they're sourcing stuff all right all of those things
• 1:00:12
  because we live in a consumer economy and so I think the other thing that I would say is it's like
• 1:00:16
  right think carefully about how you consume you know which is give it a little bit of thought like
• 1:00:23
  as an example maybe buying the lowest cost thing is not the answer you know maybe something like if
• 1:00:32
  like the example I often give people is if you actually look at the amount of CO2 in an automobile
• 1:00:38
  the single best thing you could do for climate on an on an emissions basis is not buy an electric
• 1:00:43
  car it's buy a used car because two thirds of the CO2 emitted from in the in the life of an automobile
• 1:00:51
  is from the manufacturing of it well right and I ran a big green climate fund right but I'm just
• 1:00:57
  telling you the math is buy a used car well nobody ever tells you to do that they try to go buy a new
• 1:01:04
  car right by a green by an electric car and so I think it's just trying to be thoughtful about
• 1:01:11
  the world that you inhabit whatever that world is whether you're working at a restaurant or
• 1:01:17
  working at a ski area or you know doing fashion there's some element of what you do that involve
• 1:01:25
  CO2 and CO2 emissions because growth equals CO2 like period and so look at your own businesses and
• 1:01:32
  then and then try to remain open-minded and think careful but you don't it doesn't have to be
• 1:01:37
  everything right you don't just spend your whole life doing it it's like if you're running a
• 1:01:41
  clothing manufacturer go through the supply chain and try to figure out how you can eliminate CO2
• 1:01:46
  or see if you can utilize CO2 or you know all of those things it's just incorporated into your thinking
• 1:01:52
  right and I don't like I said I don't think it's a useful thing to say to people like everyone
• 1:01:58
  must be a climate warrior it's kind of a stupid I'm like who does that like we can't we have to have
• 1:02:05
  teachers and truck drivers and lumberjacks and you know doctors like I don't want to go to the hospital
• 1:02:11
  and be told by my doctor I'm super great at CO2 but I don't know shit on ecology I'm like
• 1:02:18
  no no no no let me let me handle the CO2 you make sure that like you know my knee reconstruction
• 1:02:25
  goes great like I believe in specialization and and and if but if I can find ways or you know
• 1:02:32
  he or she can find ways to to incorporate that into their businesses that's great what would be
• 1:02:38
  one belief about climate solutions that's changed the most radically since you first started
• 1:02:46
  researching understanding things that have changed over your career or belief that you've
• 1:02:50
  held this changed well I'll tell you one that that I when I actually did some research I really
• 1:02:55
  blew my mind um about 60 to 70 percent of the reason that see that uh like if you take cost and
• 1:03:08
  you build up cost the cost reduction in the production of solar panels is directly attributable
• 1:03:14
  to the cost reduction in the price of natural gas really wow and you've manufacturing
• 1:03:22
  solar panels like one of the most energy intensive steps is basically taking the silica and heating
• 1:03:27
  it up when you heat it up you got to burn a lot of natural gas to do it and the fact that see
• 1:03:34
  that see that natural gas in the United States got very very cheap was a function of fracking
• 1:03:38
  and and so through the transitive property cheap frat gas was the single biggest contributor
• 1:03:47
  to low cost solar panels globally and by the way you want to you want to get kicked out of a dinner
• 1:03:52
  party in West LA fast try that one on for size okay but when when when I'll go I was going to say
• 1:04:02
  when that when that's a truth when that's a truth then I mean that that's what's so important
• 1:04:09
  about having like a nuanced conversation about climate because now you understand the whole
• 1:04:13
  supply chain you understand all the components versus just living in a silo which is benefiting
• 1:04:19
  no one and and and what's what what again the interesting thing about that is some natural gas
• 1:04:24
  was the single biggest contributor the reduction so all the guys in Texas who were in the fracking
• 1:04:29
  business really they played a role and it was a big one now it's also simultaneously true
• 1:04:35
  that once you have the solar panel all the years of use that you get are actually very net
• 1:04:43
  reductive you get 25 30 years of useful life we're pursuing zero electrons or zero carbon
• 1:04:51
  so that nets out to the benefit you combusted natural gas which you sort of put you in the negative
• 1:04:56
  and then you ran a solar panel for long enough that it overcame that negative so
• 1:04:59
  both are simultaneously true that the solar the solar business is highly dependent on the
• 1:05:05
  natural gas business and solar is ultimately a great net reducer of CO2 but again that's one of
• 1:05:14
  those ones where you're like you know you bring that up depending on who you're at dinner with
• 1:05:18
  and it can go it can go either way badly you know because people don't want to hear that they're
• 1:05:25
  what do you mean like who side are you on I'm not on anybody's side I'm just telling you where
• 1:05:30
  the where the math and the chemistry took me that's funny yeah that that's one and then another
• 1:05:36
  one I would say is that this is another one that's wildly unpopular but is also true if you look
• 1:05:42
  at the net reduction in CO2 per called megajoule or you know energy unit produced over the last
• 1:05:49
  25 30 years the single biggest contributor to that reduction was closing coal plants and
• 1:05:56
  bringing natural gas power plants online that differential between one one ton and a half a ton
• 1:06:04
  so that half ton the total megawatt hours produced by natural gas dwarfed the megawatt hours
• 1:06:12
  produced by wind and solar so moving from coal to natural gas was the single biggest carbon reducer
• 1:06:22
  across the US economy doesn't mean that wind and solar aren't good things and this is why
• 1:06:31
  one of the things about about climate that I find really hard sometimes is people are like well it's
• 1:06:36
  about wind and solar versus gas no it's about reducing the number of tons of CO2 so any
• 1:06:42
  place that we can reduce the number of tons of CO2 we should do I think it's about holding two
• 1:06:48
  truths at the same time that duality is very important and and and I think that is something that
• 1:06:56
  gets lost a lot if you want to if you wanted to sort of leave the audience with like one last
• 1:07:03
  thought or message you've given a lot steering this away from doom and gloom I think is very
• 1:07:09
  important but if there's anything that I haven't asked that I should of what would be that last
• 1:07:15
  message that you want to to leave people with just as they sort of listen to this they've learned a
• 1:07:20
  lot they're probably going to consume more of your content now because there isn't a lot of
• 1:07:25
  non-partisan information which is actually helpful information and also I'll also say like just
• 1:07:34
  tell people where they can actually find you like websites and social but then I want you to
• 1:07:39
  leave them with a little bit more um I think what I would say is uh consider
• 1:07:49
  the idea of of the what I've characterized is the 10 basis point solution
• 1:07:56
  um and and how you can deploy that capital into something over time and and I give you an
• 1:08:06
  example of it I mean with something that we've been my partner and I've been sort of
• 1:08:09
  toying with is the idea of effectively a perpetual fund um that says look I mean it's kind of like
• 1:08:16
  AOL we always joke but in the early days AOL you set your credit card on AOL and you could never
• 1:08:21
  turn it off they would just keep hitting it and you're like right but the idea of the same way
• 1:08:25
  that people invest in 401k's which is take some percentage of your money and and enough that
• 1:08:33
  doesn't really matter to you and think about where you could put that on a perpetual basis and just
• 1:08:38
  set it into motion um and and or maybe maybe the way that I would characterize this is one of my
• 1:08:45
  favorite expressions is that you know oftentimes you're in climate you're you're planting seeds
• 1:08:50
  for trees under which you will never sit the problem emerged over 150 years it probably isn't going
• 1:08:58
  to be fixed in our lifetime that's okay but if you take a small enough percentage of the money that
• 1:09:05
  you have to invest and think about where you can put it and just put it so it's so it's
• 1:09:09
  effectively once you write the check you just sort of forget about it forever and just let it compound
• 1:09:16
  over time in in with in managers or people that you think are responsible with that type of investing
• 1:09:22
  because it's a problem that will generate massive returns over time they're not going to be a
• 1:09:28
  immediate uh but it's an intergenerational problem and it's sort of like the analogy I use is like
• 1:09:35
  like if you were lucky enough to move to Montana or Idaho or California in the 1880s and you bought land
• 1:09:41
  and you really had you know a 50 year or 100 year time horizon you're rich you're really rich
• 1:09:49
  and that climate is not a problem that will be solved overnight but it's a it's a problem that
• 1:09:57
  the returns to the people who actually do it are going to be accelerating because it's a
• 1:10:04
  it's a problem that's not going away right you can we can job on it we can talk about it but the
• 1:10:10
  reality is CO2 in the atmosphere has no political opinion and so if you can think about ways that
• 1:10:17
  you might deploy some percentage of your net worth whatever it is into and with managers who are
• 1:10:24
  going to take that type of long-term view I think it's a way that you can take a portion of your
• 1:10:29
  portfolio or your net worth or if you want to do it as a business find those types of opportunities
• 1:10:35
  and and they're hard to find I mean we're one group that does it okay so I'm talking my own book
• 1:10:40
  right but you know seek out people who have that type of view that the problem is fixable it's really
• 1:10:48
  I mean maybe the final thing I would say is that I believe climate is really just a question of
• 1:10:53
  political will and money I don't believe it's a question of technology so find people who are
• 1:11:00
  good at taking technologies deploying them and building them into real businesses and and invest
• 1:11:07
  with them or or or if you find an idea that's that good in and of itself start the business and go
• 1:11:12
  and run it because the opportunity is it's economy-wide right it's not going away and the
• 1:11:21
  tam is just beyond imagination I mean right there is no bigger tam than energy it's the biggest
• 1:11:27
  tam it is the biggest and the reason that it's the biggest is that it's the most fundamental right
• 1:11:33
  I think of it as like hot maslow's hierarchy of needs right it's like you have to have electrons
• 1:11:39
  to engage in social media to get people to buy spanks to get people like it's like all the way up
• 1:11:45
  right and you know to watch tiktok videos like all of that is built on energy and energy right
• 1:11:53
  now is submitting too much CO2 and so to the people who can figure out that that bottom layer
• 1:11:59
  they're going to have an impact on everything above them and it'll be positive and it's enormous
• 1:12:04
  and it's ongoing so think about the world that way and then figure out how you can deploy you don't
• 1:12:09
  have to put all your money and this is the other thing is like I don't believe I believe in
• 1:12:12
  diversification take a small percentage of it and figure out how you can do it but commit
• 1:12:18
  don't do it once do it for the next 25 years right I mean I mean maybe I'll finish on this
• 1:12:28
  I had a friend when I was 20 who was like you should buy Berkshire Hathaway I had some money
• 1:12:33
  and I was like I don't know who is this old codger blah blah blah right well you know
• 1:12:39
  my buddy he plowed in I mean he plowed in which at that point in my life was a lot of money he plowed
• 1:12:45
  in like you know a couple fifty thousand dollar bonuses he plowed him in like in his 20s
• 1:12:49
  it's never sold it's got a lot of money wow because Warren Buffett's a great example of like
• 1:12:54
  I'm just gonna I'm relentlessly moving forward I'm always finding good businesses I'm just
• 1:12:58
  gonna keep I'm not in it for a hundred percent return today I'm in it for a compounded 15
• 1:13:06
  yeah it's played it's played the long game I believe the climate offers that opportunity
• 1:13:11
  you got to look around it's not always obvious but great investing never is right it's
• 1:13:19
  I don't know I don't know if that's a great ending or not it's God but where do people actually
• 1:13:22
  connect with you which site I don't think you have a ton of social but where do you want people
• 1:13:28
  to do I'm busy doing that because I turned it all off a long time ago you can actually find me
• 1:13:33
  it's James A.C. McDermott on LinkedIn that's probably right do most of my posting
• 1:13:39
  Roshine www Roshine which is r-u-s-h-e-n dot com is is the site for our firm um and you know if you
• 1:13:52
  want to email me it's gym dot McDermott at Roshine dot com I will tell you I I love I've had some
• 1:13:59
  of the most interesting interactions in my entire professional career people listen to the
• 1:14:03
  podcast and then they just send an email because they're like I I'm thinking about X right I very
• 1:14:09
  much believe that one of the geniuses of the internet is that there are people working on
• 1:14:15
  problems in other sectors that they're running in parallel to you and then they hear you I mean
• 1:14:19
  the essence of creativity in my mind is someone's thinking about climate and some mathematicians like
• 1:14:24
  well but if you apply this to that you'd really fix it or and and so I love it I always tell people
• 1:14:31
  like you should have lots of friends you don't do what you do like if all of your friends with
• 1:14:35
  if all of your friends are in finance you're doing it wrong right it if all of you know and if you're
• 1:14:40
  a musician and all you have is guys who play music wrong move so you know email me if you've got a
• 1:14:47
  great idea and you want to talk about it I have email and I read it I'm not going to give out
• 1:14:51
  my cell phone number because that's too much don't do that don't do that I don't want to I don't
• 1:14:57
  want to self-docs myself no don't do that but yeah I I you know I write a lot I guess what I'd
• 1:15:04
  say is if you're actually interested go read all of my posts on LinkedIn because I've written
• 1:15:08
  probably I don't know a couple hundred of them they tend to be sort of short form but they're
• 1:15:13
  on particular topics usually around climate usually around can we have a more nuanced short
• 1:15:20
  form you know it's whatever LinkedIn has a limit but just sort of talking about trying to think
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  about things in different ways in more practical ways then what is often I think thrown up in the
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  the public the public domain is that guy's an idiot we're winners I'm like I'm not interested in
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  that I'm interested in how do we solve things the last thing that I like to ask because again
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  you've given over a ton of different ideas and wisdom about entrepreneurship about climate
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  you've spoken a little bit about your children and and how we should think about how we want to
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  leave the planet for our kids and I ask everybody the same questions you can take this question and
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  interpret it however you like but if you had to pass on one piece of wisdom to your children and
• 1:16:06
  you could only pass on one piece of wisdom that's the lens it can be about climate it can be about
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  life it can be about entrepreneurship anything what would that piece of wisdom be and why I probably
• 1:16:17
  have many so you'll have to invite me back at some point deal the the true mark of success
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  is not whether or not you get something right it's what you do when you get knocked down
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  because failure is is the mode most often experienced and so if you want to be successful in anything
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  it's totally it doesn't matter what it is it's more about how you rebound from losing
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  than it is that you pick a winner and you need to build that muscle emotionally I mean financially
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  there's a whole bunch of things is that learning how so I'll give you a very concrete example my dad
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  ran for governor of the state of Washington three times and he lost three times he lost in 1972 he
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  lost in 1980 he lost in 1984 and one of the most important thing and eventually he got elected
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  to the United States Congress when I went to college in 1989 and was on the ways and means committee
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  for 30 years but he started off in 1972 wanting to be a public official he was a doctor he kept
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  losing and the third time he lost I went down to the concession speech and I was I think my entire
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  identity was tied up in the sky right because he was my dad and I thought he was going to be governor
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  and he lost and I was in the car and I was crying and he said okay for the next five minutes we
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  have to go into the concession speech and you have to stop crying because it just it looks bad on TV
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  you can't it doesn't doesn't look good so please stop so I made it through the night then I'm
• 1:18:00
  made it through the five minutes went home cried some more went to bed my dad woke me up in the morning
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  and he came in and he said do you know where I'm going and I said no and he said I'm going to the
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  office to see patients and I said oh and he said I lost but I'm not a loser and if you and if you go
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  big sometimes you just lose like effectively if you go big you will go home and then he went out
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  to the office and he kept being a physician and you know seven eight years later he eventually won
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  a congressional seat and he got to do what he wanted to do and it was absolutely seminal in my life
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  because it taught me that if you want big things and you go after them sooner later stuff blows up
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  and it just it's enough I mean no one wins all the time and when you lose if you just give up
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  it's over right but if you choose not to give up as as as much as it hurts and it's ugly and it's
• 1:19:03
  public and you lose money and blah blah blah but if you choose not to give up and so the act of
• 1:19:10
  not giving in to failure is the defining issue for most of the people I know who are highly successful
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  it's that they just they don't give up I mean yeah I have all these analogies in my head I was like
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  they're willing to be dragged behind the boat or one of my favorite ones of all time is
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  Jeff as I said I'm willing to be misunderstood longer than you
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  right so if I had to give any wisdom it's learn how to rebound from failure
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  and just be relentless no matter what happens just be like okay the sucks I gotta get up again
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  do it again because at least my experience has been that's that's the main operating mode
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  is it doesn't work and and if you give up when it doesn't work you get nothing and if you just
• 1:20:06
  keep hanging on um and it looks ugly sometimes right a lot of times you're like it's not working
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  like what's going on and then you have the then you have a big success and that sustains you
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  like the memory of that of of what it feels like to win spray but most of the time is losing so you
• 1:20:23
  have to get used to like how to manage losing