Latest / Climate Cowboys / #295 - The Climate Intelligence Era & The End of Puritanism | Mike D'Aurizio (Bridges)

Transcript

#295 - The Climate Intelligence Era & The End of Puritanism | Mike D'Aurizio (Bridges) · Climate Cowboys

0:00
SPEAKER_00: Because that's so important to me is a puritanism is never going to get us anywhere.
0:06
SPEAKER_00: Being a big financially successful company is the path to impact in our perspective.
0:10
SPEAKER_00: But at the root of
0:11
SPEAKER_00: that, you really have to deliver a successful product or service and obsessively solve
0:16
SPEAKER_00: a problem for a customer.
0:17
SPEAKER_00: So my team and I internally at Bridges,
0:19
SPEAKER_00: we've been talking about this really as the intelligence era of climate.
0:23
SPEAKER_00: It's totally run by humans,
0:25
SPEAKER_00: but they use AI to augment that process and do it much faster,
0:28
SPEAKER_00: often saving 30-40% in project development time.
0:37
SPEAKER_01: Alright, welcome to the podcast, Mike.
0:38
SPEAKER_01: How are you doing today?
0:40
SPEAKER_00: I'm great, pal.
0:40
SPEAKER_00: It's good to see you.
0:42
SPEAKER_01: It is good to see you.
0:42
SPEAKER_01: I have to say this before we get started.
0:44
SPEAKER_01: I think that you are,
0:46
SPEAKER_01: aside from my co-host in the past,
0:47
SPEAKER_01: I think you're the only person I've ever done a pizza review with who's going to be
0:51
SPEAKER_01: on the podcast.
0:52
SPEAKER_00: I do remember that.
0:53
SPEAKER_00: Was that before COVID?
0:55
SPEAKER_01: No, it was definitely not before COVID because I moved to New York two weeks before COVID.
0:59
SPEAKER_01: So there was no time for us to have done it before.
1:01
SPEAKER_01: But I don't remember when that was exactly.
1:03
SPEAKER_01: But I know it was a very good pizza that we had in Jersey City.
1:07
SPEAKER_00: It must have been after everything started opening up again.
1:10
SPEAKER_01: Yeah, I can't remember when exactly, but I remember I was like, man, this guy's a cool cat.
1:15
SPEAKER_01: He's willing to do a pizza review with me.
1:17
SPEAKER_01: He barely even knows me, but it was good.
1:19
SPEAKER_01: I can't remember what we scored it.
1:20
SPEAKER_01: I probably should have looked that up before we started recording.
1:24
SPEAKER_00: I don't remember now.
1:25
SPEAKER_00: Gosh, it was so many years ago,
1:27
SPEAKER_00: but if you ever come back to New York and you want to
1:29
SPEAKER_01: just eat some more pizza,
1:30
SPEAKER_01: let me know.
1:30
SPEAKER_01: I'll have to make a trip out so we can re-score it and see if it still stands.
1:34
SPEAKER_01: But anyways, Matt,
1:35
SPEAKER_01: for anybody who is not familiar with who you are,
1:37
SPEAKER_01: can you give us a quick introduction to who you are,
1:40
SPEAKER_01: where you're working at, and what you guys are up to?
1:42
SPEAKER_00: So yeah, I'm Mike DiRizio.
1:44
SPEAKER_00: I'm based in New York.
1:45
SPEAKER_00: I'm a partner at an investment capital firm called Bridges.
1:48
SPEAKER_00: We're really like the OG in private markets impact investing.
1:51
SPEAKER_00: So it's a multi-asset firm covering everything from small market buyout
1:55
SPEAKER_00: to real estate and now venture capital and growth.
1:58
SPEAKER_00: My team and I focus on that latter bit.
2:00
SPEAKER_00: So we're really interested and invested in backing technology companies
2:05
SPEAKER_00: across climate, which I'm sure we'll get into later.
2:08
SPEAKER_00: But honestly, I've been doing this now for, gosh, seven, eight years.
2:12
SPEAKER_00: Before this,
2:12
SPEAKER_00: I spent the first 10 years of my career working in the energy industry and most of
2:17
SPEAKER_00: that time here in the U.S., in the New York area.
2:19
SPEAKER_00: But I'm actually a native of Toronto, Canada, where I was born and raised and I went to school.
2:24
SPEAKER_00: So, yeah, it's a little bit about me.
2:25
SPEAKER_01: Yeah, the Toronto to New York City pipeline is pretty solid.
2:30
SPEAKER_01: Yes.
2:30
SPEAKER_00: There's a few of us.
2:31
SPEAKER_00: There's a few of us.
2:33
SPEAKER_01: Some of my best friends are actually also Toronto.
2:36
SPEAKER_01: Oh, really?
2:37
SPEAKER_00: Okay.
2:37
SPEAKER_01: Yeah.
2:38
SPEAKER_01: Yeah.
2:39
SPEAKER_01: But no, that's actually interesting.
2:40
SPEAKER_01: You're reminding me that I remember when we had first talked,
2:42
SPEAKER_01: you were still kind of on the job hunt way, way back.
2:45
SPEAKER_01: It's been ages, man.
2:46
SPEAKER_01: So we've known each other for a while then.
2:49
SPEAKER_00: But yeah, so that's cool.
2:51
SPEAKER_01: It's cool to see your trajectory and getting into some of these very,
2:55
SPEAKER_01: very interesting investing spaces.
2:57
SPEAKER_01: So with that...
3:00
SPEAKER_01: Let's start with this.
3:01
SPEAKER_01: Is Climatec dead?
3:03
SPEAKER_01: This episode is brought to you by Layman's Terms.
3:06
SPEAKER_01: In cleantech, it's not enough to build something important.
3:09
SPEAKER_01: You have to explain it clearly when it matters in front of investors, on stage, and on TV.
3:14
SPEAKER_01: Layman's Terms prepares founders and executives for these high-stake moments.
3:17
SPEAKER_01: The focus is simple.
3:19
SPEAKER_01: Tighten the message and pressure test it until it lands.
3:21
SPEAKER_01: That approach is based on preparing leaders for hundreds
3:24
SPEAKER_01: of national media appearances and working in climate communications on Capitol Hill.
3:28
SPEAKER_01: Don't just avoid going viral for the wrong reasons.
3:31
SPEAKER_01: Make sure that your next opportunity actually creates value for you and your team.
3:35
SPEAKER_01: Learn more at ltmediatraining.com.
3:37
SPEAKER_01: That's ltmediatraining.com.
3:41
SPEAKER_00: It's a bold question, Silas.
3:43
SPEAKER_00: And the sentiment,
3:44
SPEAKER_00: you know,
3:45
SPEAKER_00: the sentiment would say today that sort of yes,
3:49
SPEAKER_00: but actually our view is very much no.
3:51
SPEAKER_00: I think that's absurd.
3:53
SPEAKER_00: And so climate tech has always had a branding problem, right?
3:57
SPEAKER_00: I think that's like the center of that issue right there is that Depending on
4:01
SPEAKER_00: who you talk to, unlike, say,
4:02
SPEAKER_00: other investment categories,
4:04
SPEAKER_00: so fintech, crypto,
4:05
SPEAKER_00: if I say that to you or to some layperson,
4:08
SPEAKER_00: immediately to mine,
4:09
SPEAKER_00: they'll generally understand what scope of companies and technologies are covered
4:13
SPEAKER_00: that group.
4:14
SPEAKER_00: But climate tech by definition has been very, very broad.
4:17
SPEAKER_00: And so our view as climate tech investors now is that really
4:21
SPEAKER_00: the green premium trade is kind of dead,
4:25
SPEAKER_00: I think, at least in the United States, at least in North America.
4:29
SPEAKER_00: But that has been one segment of climate tech, right?
4:32
SPEAKER_00: And so we've looked at investing across a variety of different categories of companies.
4:37
SPEAKER_00: In fact,
4:37
SPEAKER_00: most of our portfolio today is actually AI-based companies
4:41
SPEAKER_00: or tech-enabled services companies,
4:43
SPEAKER_00: businesses that are building and selling value propositions for other businesses or
4:47
SPEAKER_00: in some cases,
4:48
SPEAKER_00: consumers that help improve their business in some way,
4:51
SPEAKER_00: either through efficiency and cost savings or improved business outcomes
4:56
SPEAKER_00: or delivering great experiences to customers.
4:58
SPEAKER_00: So the short answer is no,
5:01
SPEAKER_00: I think,
5:02
SPEAKER_00: or rather the short answer is yes,
5:03
SPEAKER_00: but actually the longer answer is no,
5:04
SPEAKER_00: because there's so many different things within climate tech that it really depends
5:08
SPEAKER_00: on how you define it.
5:09
SPEAKER_00: And from our perspective, we still see tons of opportunity that we've been investing in.
5:13
SPEAKER_00: What kind of a moniker we use in our team to think about this whole category
5:17
SPEAKER_00: of different companies,
5:18
SPEAKER_00: and we should get into specific examples maybe later,
5:20
SPEAKER_00: is this intelligence era of climate.
5:23
SPEAKER_00: But it stems from our thinking, which goes back to our first fund that we launched in 2022.
5:27
SPEAKER_00: And there are a few other managers,
5:28
SPEAKER_00: I think,
5:29
SPEAKER_00: that are like-minded on this,
5:30
SPEAKER_00: where it's really the enabling technology companies that we've been backing
5:35
SPEAKER_00: that are helping further renewable energy or further EV charging
5:39
SPEAKER_00: or improve mitigation outcomes,
5:41
SPEAKER_00: for example,
5:42
SPEAKER_00: against catastrophic flooding and wildfire risk,
5:45
SPEAKER_00: using a variety of different technologies or using a variety of different products.
5:48
SPEAKER_00: There are some fantastic,
5:50
SPEAKER_00: really compelling businesses in those types of fields that we continue to see,
5:53
SPEAKER_00: that we continue to support.
5:55
SPEAKER_00: And so that's for us where the trade is, I think.
5:58
SPEAKER_00: And so I very much don't think climate tech is dead as a category.
6:02
SPEAKER_01: Yeah.
6:03
SPEAKER_01: No, I obviously ask it in a little bit of hyperbole
6:05
SPEAKER_01: because otherwise I wouldn't be doing this podcast probably.
6:07
SPEAKER_01: But I just think it's an interesting question because it's still...
6:11
SPEAKER_01: The question was obviously much more...
6:15
SPEAKER_01: Something people are talking about right around the time of when Trump got in,
6:18
SPEAKER_01: the inauguration, just kind of like some of the vibe change there.
6:21
SPEAKER_01: But it seems as though people have just kind of like gone on.
6:27
SPEAKER_01: I'll save some commentary for later, but the show has gone on in a lot of ways.
6:29
SPEAKER_01: There's still great opportunities, great companies building.
6:32
SPEAKER_01: But I always am just like struck with the idea of trying
6:35
SPEAKER_01: to figure out like what it feels like we're just kind of drifting through space,
6:38
SPEAKER_01: kind of orphaned.
6:39
SPEAKER_01: There's some companies that are crushing it,
6:41
SPEAKER_01: but they don't look like climate tech companies or they don't call themselves
6:43
SPEAKER_01: a climate tech company.
6:44
SPEAKER_01: That's part of the reason that prompted our having this discussion today.
6:47
SPEAKER_01: I love exploring the idea.
6:49
SPEAKER_01: Now,
6:51
SPEAKER_01: I guess I do want to ask your perspective on where do you think the boundaries are
6:56
SPEAKER_01: for climate tech companies?
6:58
SPEAKER_01: Because if it's not an industry,
6:59
SPEAKER_01: then what exactly defines something and where is it like, hey,
7:03
SPEAKER_01: after this line is crossed,
7:04
SPEAKER_01: that's really not in our scope of climate technology in general.
7:09
SPEAKER_00: We have some very bright lines we use to think about classification.
7:13
SPEAKER_00: Basically,
7:15
SPEAKER_00: if a company's underlying product,
7:17
SPEAKER_00: technology,
7:17
SPEAKER_00: or service has some enabling benefit to either energy transition,
7:22
SPEAKER_00: whether that's decarbonization or depollution,
7:25
SPEAKER_00: or conversely,
7:27
SPEAKER_00: helps improve adaptation and resilience against climate change,
7:31
SPEAKER_00: broadly speaking, for us, that's fair game.
7:34
SPEAKER_00: So to give you an example, we've looked at many companies in the InsurTech space.
7:39
SPEAKER_00: You think, okay, InsurTech is its own category.
7:41
SPEAKER_00: What does that have to do with climate?
7:44
SPEAKER_00: One of our investments,
7:44
SPEAKER_00: Dallas Insurance,
7:45
SPEAKER_00: uses AI,
7:46
SPEAKER_00: uses cutting-edge data science to help underwrite and price homeowners insurance
7:50
SPEAKER_00: in California.
7:51
SPEAKER_00: It's just an insurance company, right?
7:53
SPEAKER_00: But it's really,
7:55
SPEAKER_00: really good at finding and detecting wildfire risks
7:59
SPEAKER_00: where other insurance companies cannot.
8:01
SPEAKER_00: And so to me,
8:02
SPEAKER_00: that's an absolute adaptation resilience outcome for an industry,
8:07
SPEAKER_00: in this case,
8:07
SPEAKER_00: home insurance,
8:09
SPEAKER_00: that is being really adversely affected by Volatile changes in drought conditions,
8:14
SPEAKER_00: in this case in California, affecting wildfires.
8:19
SPEAKER_00: And this company is able to offer and serve that homeowner's market with affordable,
8:23
SPEAKER_00: reliable insurance products where other large insurers are starting to pull out
8:27
SPEAKER_00: and back out.
8:28
SPEAKER_00: So that's like a perfect climate tech example to me.
8:31
SPEAKER_00: You think it's, oh, it's not capturing carbon or something like this.
8:35
SPEAKER_00: But no, that's like for us fair game in what we consider climate tech.
8:37
SPEAKER_00: So if there's Technology or product that's helping enable the transition
8:42
SPEAKER_00: or having some otherwise adaptation resilience benefit for an underlying industry,
8:46
SPEAKER_00: that's climate tech.
8:46
SPEAKER_01: Yeah.
8:47
SPEAKER_01: So, I mean,
8:48
SPEAKER_01: this is what I've always thought,
8:49
SPEAKER_01: and this is why, again,
8:50
SPEAKER_01: it's hard for me to,
8:51
SPEAKER_01: in some cases,
8:51
SPEAKER_01: explain it to people not in the industry because they're like,
8:54
SPEAKER_01: I guess, am I a climate tech company?
8:56
SPEAKER_01: And I'm like, yeah.
8:57
SPEAKER_01: I mean, I guess it depends on how you stretch it and which way you benefit it.
9:00
SPEAKER_01: But what I'm curious is, I have a question.
9:04
SPEAKER_01: I want to come back to Dallas Insurance.
9:05
SPEAKER_01: Don't let me forget about that.
9:06
SPEAKER_01: Okay.
9:08
SPEAKER_01: What I'm curious is what is the point then of calling ourselves working in climate
9:13
SPEAKER_01: in the first place?
9:14
SPEAKER_01: Do we still say that?
9:15
SPEAKER_01: Should we just say, hey, no, I'm going to work in insurance.
9:17
SPEAKER_01: I'm going to work in industrial.
9:19
SPEAKER_01: We're going to make industrial production in America again.
9:23
SPEAKER_01: Should we even classify ourselves as clean tech people or green or climate tech people?
9:29
SPEAKER_00: That's an even bigger question, I think, Silas.
9:35
SPEAKER_00: I think yes, still, you know, and I suppose it depends on your audience.
9:40
SPEAKER_00: But for me,
9:41
SPEAKER_00: there's that enabling or rather
9:44
SPEAKER_00: that common enablement objective I mentioned around enabling technologies
9:49
SPEAKER_00: that help drive the energy transition, for example, or help improve adaptation.
9:53
SPEAKER_00: So that is a common theme across multiple industries and companies.
9:58
SPEAKER_00: And also there's a passion element to it.
10:01
SPEAKER_00: So Despite what's happened with political sentiment,
10:04
SPEAKER_00: really specifically in the United States,
10:05
SPEAKER_00: if we're being honest,
10:07
SPEAKER_00: not necessarily we see anyway in Europe and the UK and other markets,
10:10
SPEAKER_00: that isn't really the same case.
10:12
SPEAKER_00: But in the US, the sentiment has soured around, let's call it decarbonization.
10:18
SPEAKER_00: But despite all that,
10:20
SPEAKER_00: the entrepreneurs I meet and talk to still think of themselves as part of
10:23
SPEAKER_00: a broader mission in improving the planet.
10:26
SPEAKER_00: So for me,
10:26
SPEAKER_00: it still squarely makes sense to brand myself when I try to segment myself to others
10:31
SPEAKER_00: in the market as a specialist in climate tech.
10:34
SPEAKER_00: There are generalist VCs, there are crypto VCs, there are XYZ VCs.
10:40
SPEAKER_00: And there is a lot of commonality between the companies we invest in.
10:46
SPEAKER_00: We can leverage those experiences and those connections and networks to help
10:49
SPEAKER_00: the companies we invest in.
10:50
SPEAKER_00: But we also have that shared purpose and vision about a better planet.
10:54
SPEAKER_00: And that hasn't gone away from what I've seen,
10:56
SPEAKER_00: at least among many entrepreneurs we've talked to all the time.
11:00
SPEAKER_01: I think that's a fair characterization.
11:05
SPEAKER_01: That resonates with me because the underlying thing across all
11:09
SPEAKER_01: of them that's always true is basically intent or interest, right?
11:15
SPEAKER_01: And this is also when it comes to recruiting people in the space is in many cases,
11:20
SPEAKER_01: like I'm recruiting engineers,
11:22
SPEAKER_01: software engineers,
11:23
SPEAKER_01: hardware engineers,
11:23
SPEAKER_01: salespeople,
11:24
SPEAKER_01: whatever,
11:25
SPEAKER_01: that may be coming from different industries entirely,
11:28
SPEAKER_01: but their skill set can be directly applied to this technology.
11:32
SPEAKER_01: That's clean technology.
11:35
SPEAKER_01: Finding those people who have the motivation or the passion,
11:38
SPEAKER_01: as you said, to work in that space is kind of the hard part.
11:41
SPEAKER_01: That's the hard part is I got to sort through all the people who are just in it for
11:45
SPEAKER_01: the money per se and find people who are basically really bored at work
11:49
SPEAKER_01: and they want to do something that will light them up every day.
11:51
SPEAKER_01: Quick break from the show.
11:53
SPEAKER_01: Because you're listening to Climate Cowboys, you're probably trying to build something massive.
11:57
SPEAKER_01: A company that will create impact that lasts for generations.
12:00
SPEAKER_01: But there's a bottleneck that every founder hits.
12:03
SPEAKER_01: Charting out a new frontier requires the best talent, period.
12:07
SPEAKER_01: No B players alone.
12:08
SPEAKER_01: We aren't your traditional, slow-moving recruitment agency.
12:15
SPEAKER_01: We are uniquely positioned inside this market to track down the elite,
12:18
SPEAKER_01: hard-to-find specialists and executives who aren't even looking at job boards.
12:23
SPEAKER_01: And because we run lean like you, we do it better than anyone else in executive search.
12:28
SPEAKER_01: Stop overpaying legacy firms that don't offer guarantees and don't understand what's at stake.
12:33
SPEAKER_01: Go to roosevelttalent.com today and let's get to work.
12:37
SPEAKER_01: Roosevelt Talent, staff the frontier.
12:40
SPEAKER_00: Yes, I think that's absolutely right, Silas.
12:42
SPEAKER_00: I really do.
12:43
SPEAKER_00: And let me tell you a story about that.
12:44
SPEAKER_00: So I remember now in November, 2024, Going back a year and a half or so, I was at a conference.
12:51
SPEAKER_00: This was just after the election, I think a week or two.
12:54
SPEAKER_00: It was a climate tech kind of sustainability related investment conference.
12:58
SPEAKER_00: Someone stood up who was an investor,
13:00
SPEAKER_00: I can't remember who,
13:01
SPEAKER_00: and basically asked a question to the panel at the time,
13:05
SPEAKER_00: like, what are we going to do?
13:06
SPEAKER_00: The administration is changing.
13:09
SPEAKER_00: We have all these predictions about how awful things will get in our category,
13:14
SPEAKER_00: in our various industries.
13:15
SPEAKER_00: And I just remember thinking to myself, Okay, that's like a totally natural concern.
13:21
SPEAKER_00: But at the same time,
13:23
SPEAKER_00: I was thinking, did you really expect the last administration to save the planet?
13:26
SPEAKER_00: That is not how we're going to save the planet through the changing tides of who
13:31
SPEAKER_00: the president of the United States is in a given period.
13:34
SPEAKER_00: For us, for me personally, I'm a techno optimist.
13:38
SPEAKER_00: I very much believe that in the power of technology to improve outcomes for
13:42
SPEAKER_00: the planet and humanity,
13:43
SPEAKER_00: And that comes down to entrepreneurs,
13:45
SPEAKER_00: engineers,
13:46
SPEAKER_00: scientists,
13:47
SPEAKER_00: just getting up for work every day,
13:50
SPEAKER_00: motivated both by passion in trying to help the planet,
13:54
SPEAKER_00: but also very much in their financial success, which is, we love that.
13:58
SPEAKER_00: And just doing hard work and solving problems,
14:01
SPEAKER_00: that is how we're going to all do better in the future, right?
14:04
SPEAKER_00: Because that's how we got here today,
14:07
SPEAKER_00: collectively as humanity,
14:08
SPEAKER_00: not to get too philosophical about it,
14:10
SPEAKER_00: but when you look at Some of the big technological changes of
14:13
SPEAKER_00: the last few hundred years,
14:15
SPEAKER_00: they have unlocked the general prosperity and size of our civilization on a scale
14:20
SPEAKER_00: that wasn't before possible because of technology, because of science.
14:24
SPEAKER_00: And so that is the root, the principle, the kind of theme that motivates us very much.
14:29
SPEAKER_01: Yeah.
14:30
SPEAKER_01: Yeah.
14:30
SPEAKER_01: It's interesting because I'm just trying to put myself in the shoes.
14:33
SPEAKER_01: We can go back to the insurance example now.
14:38
SPEAKER_01: Depending on what you're doing,
14:39
SPEAKER_01: so in your case,
14:40
SPEAKER_01: you're a VC, you need to attract the people who have that shared passion or mission.
14:46
SPEAKER_01: And that's why you ought to continue that branding of some sort,
14:49
SPEAKER_01: however you call it,
14:49
SPEAKER_01: whatever you want to call it, it has to be something in that vein of branding.
14:53
SPEAKER_01: For me as a recruiter serving this space,
14:54
SPEAKER_01: I need to continue doing that too, so people kind of know what I'm up to.
14:57
SPEAKER_01: However,
14:57
SPEAKER_01: there are instances where there's companies who are very much in
15:02
SPEAKER_01: the clean tech sphere,
15:03
SPEAKER_01: at least in my perspective,
15:05
SPEAKER_01: But they just call themselves an energy company or they're all
15:09
SPEAKER_01: about re-industrialization.
15:11
SPEAKER_01: And the only way they can do that is because it's more sustainable, more efficient, et cetera.
15:15
SPEAKER_01: So there's times where that passion things don't quite line up for me
15:19
SPEAKER_01: when I'm doing business development on my own.
15:21
SPEAKER_01: But the subject matter,
15:24
SPEAKER_01: the reason I'm interested in it is because of the climate and benefits,
15:27
SPEAKER_01: whereas sometimes the founders are not necessarily focused on that.
15:30
SPEAKER_01: So that's probably why I wanted to ask that.
15:32
SPEAKER_01: But going to the insurance example,
15:34
SPEAKER_01: When they went out to raise money,
15:36
SPEAKER_01: are they calling themselves an insurtech company and they're going
15:40
SPEAKER_01: after insurance related VCs and they also went after climate VCs
15:47
SPEAKER_01: or did they primarily focus on,
15:48
SPEAKER_01: hey, we're going to go raise from climate related VCs?
15:53
SPEAKER_00: In the case of Delos, it's really a mix.
15:55
SPEAKER_00: So we're investors in the company.
15:58
SPEAKER_00: I'm on the board.
15:58
SPEAKER_00: Also on the board is an insured tech investor.
16:01
SPEAKER_00: Also on the board or on the cap table and as a board observer is an industrial AI investor.
16:09
SPEAKER_00: So there's a whole mix of different people in there with different maybe motivations
16:12
SPEAKER_00: or views on how you arrive at that market.
16:15
SPEAKER_00: But at the end of the day, these are just labels for grouping things.
16:19
SPEAKER_00: What's important is what is that company What change,
16:22
SPEAKER_00: positive change in the world do we think that company is affecting?
16:27
SPEAKER_00: Are they having a positive change in the world?
16:29
SPEAKER_00: As a climate tech investor, as a sustainability investor, that's very important to us.
16:33
SPEAKER_00: It may be less important to others,
16:36
SPEAKER_00: but in the case of Delos,
16:37
SPEAKER_00: they really got a mixed bag of different investors,
16:39
SPEAKER_00: and that's because they can be different stories to different people,
16:44
SPEAKER_00: and that's okay.
16:45
SPEAKER_01: Yeah, that's okay part is,
16:47
SPEAKER_01: I think, the important component of this, because it seems as though the...
16:51
SPEAKER_01: This is my general characterization is that the founders who are surviving
16:54
SPEAKER_01: and actually crushing it right now are the ones who were open
16:58
SPEAKER_01: to telling multiple stories, right?
16:59
SPEAKER_01: They weren't saying like they're only here for climate purposes because when you do
17:02
SPEAKER_01: that, you also pigeonhole yourself into only raising from climate VCs.
17:07
SPEAKER_01: And in that case,
17:07
SPEAKER_01: then there's going to be a little bit more,
17:09
SPEAKER_01: it's going to be more challenging to raise the amount of money you want.
17:12
SPEAKER_01: You don't have like the competition in the round.
17:13
SPEAKER_01: Whereas in their case,
17:14
SPEAKER_01: they had three major categories that were all probably You know,
17:18
SPEAKER_01: lots of different funds in those spaces and they can pick and choose probably
17:21
SPEAKER_01: the best funds to have involved in their process, right?
17:24
SPEAKER_01: So that allows them as a startup to also have better optionality as long
17:29
SPEAKER_01: as they understand like these are the core things we're doing
17:31
SPEAKER_01: and here's how it applies to your particular thesis.
17:35
SPEAKER_00: Very true.
17:36
SPEAKER_00: I give this same counsel to many of our CEOs.
17:39
SPEAKER_00: You do have to tailor your pitch if you're pitching or your sales pitch
17:43
SPEAKER_00: if you're selling or whatever to your audience.
17:46
SPEAKER_00: Every audience in classic sales 101 has a different motivation,
17:50
SPEAKER_00: has a different buying intent, for lack of a better term.
17:53
SPEAKER_00: Entrepreneurs raising money, no different.
17:55
SPEAKER_00: They have to follow that same principle.
17:57
SPEAKER_00: And so it's about tailoring your pitch or whatever you're trying to sell to that audience.
18:02
SPEAKER_00: And every audience will maybe have a different thing they're trying to get.
18:04
SPEAKER_01: This episode is brought to you by Climate Finance Solutions,
18:07
SPEAKER_01: the firm helping climate tech companies win the major government grants
18:11
SPEAKER_01: that drive their scale and impact.
18:13
SPEAKER_01: Since 2020,
18:13
SPEAKER_01: they've won over $1.6 billion in public funding for their clients,
18:17
SPEAKER_01: with a 90% success rate on the dollars that they've applied for.
18:21
SPEAKER_01: Their team has also helped win more than 500 million euros in European funding
18:25
SPEAKER_01: and managed over $275 million in grant projects.
18:29
SPEAKER_01: With a global team of 27 experts,
18:32
SPEAKER_01: CFS supports climate innovators through every stage of the funding lifecycle,
18:36
SPEAKER_01: from strategy to proposals to project execution.
18:38
SPEAKER_01: They also have a grant identification platform that enables real-time monitoring
18:43
SPEAKER_01: and custom matching of opportunities with alerts as new grants are released.
18:47
SPEAKER_01: If you're a climate investor,
18:48
SPEAKER_01: accelerator,
18:49
SPEAKER_01: or ecosystem builder,
18:50
SPEAKER_01: you can even join their partnership program to unlock pro bono support
18:53
SPEAKER_01: for your portfolio companies.
18:55
SPEAKER_01: Learn more at climatefinancesolutions.com.
18:58
SPEAKER_01: All right, back to the show.
18:59
SPEAKER_01: Yeah, I think the reason why,
19:01
SPEAKER_01: at least this is my speculation,
19:02
SPEAKER_01: the reason why people had a hard time with that initially was it felt sort
19:05
SPEAKER_01: of disingenuine.
19:06
SPEAKER_01: It's like, you know, I'm in it to build for a better, cleaner world.
19:10
SPEAKER_01: Yet I have to work with these other industries that they don't necessarily excite me as much.
19:14
SPEAKER_01: And I think that people have gotten over that now,
19:16
SPEAKER_01: at least the founders that I've seen,
19:17
SPEAKER_01: even the new ones that are popping up,
19:20
SPEAKER_01: they're all very aware that they have to play in this camouflage type of role.
19:27
SPEAKER_00: Let me just click on that too,
19:28
SPEAKER_00: because that's so important to me is puritanism is never going to get us anywhere,
19:35
SPEAKER_00: regardless of what you're doing.
19:36
SPEAKER_00: So I know what you're talking about is that sort of sentiment that was probably
19:39
SPEAKER_00: at peak climate tech, so to speak, in 2021 or 2022.
19:44
SPEAKER_00: But at the end of the day,
19:46
SPEAKER_00: the companies that are going to have the most impact in the world,
19:48
SPEAKER_00: this is our view,
19:49
SPEAKER_00: are the ones that are going to grow up and be big and be financially sustainable.
19:52
SPEAKER_00: But doing something in furtherance of, again,
19:55
SPEAKER_00: like I said,
19:56
SPEAKER_00: enabling the energy transition or improving adaptation,
19:58
SPEAKER_00: for example,
20:00
SPEAKER_00: At a bigger, bigger scale as they grow and become more financially successful.
20:04
SPEAKER_00: That is the path to positive impact, in my opinion.
20:08
SPEAKER_00: I mean, I think, too,
20:10
SPEAKER_00: the world is just,
20:12
SPEAKER_00: can be confusing at times,
20:13
SPEAKER_00: but look at Tesla, great example here, or great case study.
20:16
SPEAKER_00: Sort of,
20:17
SPEAKER_00: I think,
20:17
SPEAKER_00: unarguably the most successful company to come out of Cleantech 1.0,
20:21
SPEAKER_00: if you like, galvanized an entire industry that didn't exist.
20:27
SPEAKER_00: I mean,
20:27
SPEAKER_00: when you look at Byd today or Xiaomi or some of these other competitors or even
20:32
SPEAKER_00: the Korean, the Kia and some of the other automakers that really leaned into EVs.
20:37
SPEAKER_00: The amount of EVs that are now being sold in the world,
20:39
SPEAKER_00: not just in North America,
20:40
SPEAKER_00: but actually much more broadly than that in Southeast Asia and East Africa
20:44
SPEAKER_00: and Europe and many places is growing really, really quickly.
20:49
SPEAKER_00: But that all started because of Tesla.
20:51
SPEAKER_00: And so that is such an important element to remember.
21:00
SPEAKER_01: All right.
21:01
SPEAKER_01: If you guys are watching and you notice that we suddenly had an outfit change,
21:04
SPEAKER_01: that's not because we are magicians.
21:06
SPEAKER_01: It's because we had some technical difficulties.
21:09
SPEAKER_01: The first time we were recording this pod and we had to reschedule for like two weeks later.
21:12
SPEAKER_01: So we are going to pick things up right where we left off.
21:15
SPEAKER_01: We were just talking about what it means to be a successful climate tech company,
21:21
SPEAKER_01: how you need to be financially successful if you want to make a lot of impact.
21:24
SPEAKER_01: So I think that is actually a really good place to put a pin in it.
21:28
SPEAKER_01: So I'll just kind of resummarize this where we are right now.
21:32
SPEAKER_01: We're asking this question really like, Is climate tech dead?
21:36
SPEAKER_01: And the short answer is no, but kind of in a way.
21:40
SPEAKER_01: It's more so,
21:41
SPEAKER_01: you know,
21:41
SPEAKER_01: climate tech is not dead and it's still important for us to use that phraseology
21:45
SPEAKER_01: because it helps us identify each other.
21:48
SPEAKER_01: And it's also okay to tell a different story depending on who you're talking to, right?
21:53
SPEAKER_01: Whether you're,
21:54
SPEAKER_01: you know,
21:54
SPEAKER_01: an insurance company that we've referenced that's,
21:58
SPEAKER_01: you know,
21:58
SPEAKER_01: fundraising from insure tech related organizations or industry organizations.
22:02
SPEAKER_01: You can just tell different stories.
22:04
SPEAKER_01: It doesn't mean just because you are telling other stories that you are not
22:08
SPEAKER_01: a climate tech company.
22:10
SPEAKER_01: We talked about the puritanism.
22:12
SPEAKER_01: It's not that you have to be exclusively only talking about climate and that's
22:17
SPEAKER_01: the only thing you do because at the end of the day, what matters is impact.
22:20
SPEAKER_01: And how do you get impact?
22:21
SPEAKER_01: You get impact by being successful and by serving a lot of customers.
22:25
SPEAKER_01: Anything that you would add to that to summarize the discussion to this point, Mike?
22:32
SPEAKER_00: I want to expand upon,
22:33
SPEAKER_00: and this might sound obvious in sort of hindsight,
22:37
SPEAKER_00: but if you're an entrepreneur,
22:39
SPEAKER_00: I think your comments are really, your framing is aimed at entrepreneurs.
22:43
SPEAKER_00: Ultimately,
22:44
SPEAKER_00: you should be obsessed with a problem and a specific customer type that you want
22:48
SPEAKER_00: to serve and in a market you want to dominate.
22:51
SPEAKER_00: And there is no market called climate tech.
22:54
SPEAKER_00: That is a thematic umbrella that covers a huge landscape of different markets and subsectors.
22:58
SPEAKER_00: So as entrepreneurs, yes,
23:01
SPEAKER_00: be passionate and care about the positive impact that your company,
23:04
SPEAKER_00: your technology may or may not have when it comes to climate change adaptation
23:08
SPEAKER_00: or mitigation.
23:09
SPEAKER_00: But at the root of that,
23:11
SPEAKER_00: you really have to deliver a successful product or service and obsessively solve
23:15
SPEAKER_00: a problem for a customer.
23:16
SPEAKER_00: And if you do that, the rest, the narrative part will take care of itself.
23:19
SPEAKER_01: Yeah, and I think that the whole idea of solving problems, right?
23:22
SPEAKER_01: It's like it's not that when you make a product and put it out into
23:25
SPEAKER_01: the world – I mean every founder has their own idea of how the product will be used.
23:29
SPEAKER_01: But it's always like once you start seeing people use it,
23:31
SPEAKER_01: you're like, oh, I guess I never thought about that, right?
23:33
SPEAKER_01: There's multiple problems that can be solved.
23:36
SPEAKER_01: So there's no reason that you have to only orient towards people who have
23:41
SPEAKER_01: a climate problem specifically or have a climate interest specifically.
23:43
SPEAKER_01: So I think that this – Maturing,
23:47
SPEAKER_01: so to speak,
23:47
SPEAKER_01: of the space,
23:48
SPEAKER_01: I think is interesting because I don't actually, again,
23:51
SPEAKER_01: I may not be an expert at this,
23:52
SPEAKER_01: but I don't really think we truly ever got to that point with Cleantech 1.0.
23:57
SPEAKER_01: It was very focused on the whole kind of like post-Al Gore's movement, right?
24:04
SPEAKER_01: Inconvenient Truth, right?
24:06
SPEAKER_01: All these things that kind of led to this pandemic.
24:09
SPEAKER_01: I guess you could say existentialism about climate specifically,
24:12
SPEAKER_01: that there was people who cared about it and they really cared about it.
24:15
SPEAKER_01: But there's other people who were kind of like,
24:17
SPEAKER_01: you know,
24:17
SPEAKER_01: maybe I care about it, but it's definitely not like my number one or two issue.
24:21
SPEAKER_01: So I'm here for the other benefits.
24:23
SPEAKER_01: So that's good.
24:24
SPEAKER_01: Now, I want to shift this a little bit.
24:25
SPEAKER_01: So in some ways,
24:27
SPEAKER_01: I think that this is probably true of all mission-oriented founders that regardless
24:35
SPEAKER_01: of the situation you find yourself in,
24:36
SPEAKER_01: you have to If you want your mission to be accomplished,
24:40
SPEAKER_01: you have to sort of be a chameleon of sorts and integrate into whatever the era of
24:45
SPEAKER_01: the time is, right?
24:46
SPEAKER_01: And I think climate tech or clean tech,
24:48
SPEAKER_01: whatever you want to call it now,
24:50
SPEAKER_01: is in a very different era than it was 2023,
24:53
SPEAKER_01: 2024 because of AI and all the things we're seeing here.
24:57
SPEAKER_01: But I'm curious to hear what you think that this era of clean tech, what would you call it?
25:02
SPEAKER_01: Is there something that you would kind of refer to it as?
25:05
SPEAKER_00: Yes.
25:06
SPEAKER_00: So my team and I internally at Bridges,
25:08
SPEAKER_00: we've been talking about this really as the intelligence era of climate.
25:11
SPEAKER_00: And this is something that frankly, we've been thinking about really with our first fund.
25:16
SPEAKER_00: So going back to 20, as far back as 2022.
25:20
SPEAKER_00: But sharpening that framing recently into what we're calling the climate intelligence era.
25:26
SPEAKER_00: And for us, Silas,
25:27
SPEAKER_00: that's really all about this sort of overlapping Venn diagram of companies
25:31
SPEAKER_00: that are using or building on top of sort of previous generation
25:35
SPEAKER_00: of infrastructure around clean tech,
25:37
SPEAKER_00: things like solar, things like batteries, smart grids, but also...
25:40
SPEAKER_00: Remote sensing,
25:41
SPEAKER_00: for example,
25:43
SPEAKER_00: combining that with new and also some existing AI methods like machine learning
25:48
SPEAKER_00: to create better outcomes for their customers.
25:51
SPEAKER_00: That is really at heart what we think about when we think about the intelligence era of climate.
25:55
SPEAKER_00: And so it's an era you're asking about eras.
25:59
SPEAKER_00: So there's a natural progression of a timeline.
26:01
SPEAKER_00: So when you think about 20 years ago,
26:04
SPEAKER_00: Cleantech 1.0 is all about the sort of initial building blocks of infrastructure,
26:08
SPEAKER_00: particularly around renewable energy,
26:10
SPEAKER_00: but then later batteries and electric vehicles and motors, et cetera.
26:14
SPEAKER_00: And then we had sort of in the last 10 to 15 years,
26:16
SPEAKER_00: the growing sort of increase of data and interconnected devices,
26:21
SPEAKER_00: particularly mobile data, but satellite data, other remote sensing data.
26:26
SPEAKER_00: And now those things are coalescing in this sort of third era
26:28
SPEAKER_00: that we're demarcating kind of right around now as having started,
26:32
SPEAKER_00: which is the intelligence era.
26:34
SPEAKER_01: So can you say more about that?
26:35
SPEAKER_01: I'm not sure I totally understand why specifically call it intelligence.
26:39
SPEAKER_01: Is it because you're trying to take the existing infrastructure layers
26:42
SPEAKER_01: that have been built and then use that data and then intelligence to identify where
26:48
SPEAKER_01: to create efficiencies or where to build for better futures?
26:52
SPEAKER_01: Whether that's in industrials,
26:54
SPEAKER_01: like making manufacturing more efficient or using the grid more efficiently
26:58
SPEAKER_01: with DERs.
26:59
SPEAKER_01: Is that the reasoning behind that?
27:02
SPEAKER_00: Simply put, yes,
27:03
SPEAKER_00: but if I had to go a level deeper,
27:05
SPEAKER_00: what we're really talking about,
27:06
SPEAKER_00: and remember, we're coming at it from an investment perspective.
27:09
SPEAKER_00: So we need to be contrarian, we need to find alpha in sort of the things we're investing.
27:13
SPEAKER_00: So what we're putting our finger on, Silas,
27:15
SPEAKER_00: is that whether it's in the energy transition or the industrial transition
27:19
SPEAKER_00: or transportation transition,
27:22
SPEAKER_00: There are all these second order effects that come from adopting new infrastructure,
27:26
SPEAKER_00: new technologies,
27:28
SPEAKER_00: the sort of pathway to cleaner energy and cleaner industry
27:32
SPEAKER_00: that we feel that's resolved to an extent in that the core technologies we need more
27:37
SPEAKER_00: or less for the 80% of the battle.
27:39
SPEAKER_00: Let's call it toward decarbonization.
27:41
SPEAKER_00: We know what they are.
27:42
SPEAKER_00: We're building them.
27:43
SPEAKER_00: We're connecting the grids.
27:44
SPEAKER_00: We're using them, right?
27:46
SPEAKER_00: And so now what we're interested in is what are the second order effects,
27:49
SPEAKER_00: the problems created by suddenly having a lot more renewable energy,
27:52
SPEAKER_00: for example,
27:52
SPEAKER_00: where the problems created from having huge electrical loads suddenly show up where
27:57
SPEAKER_00: for the past 20 years,
27:58
SPEAKER_00: grid demand for power has grown maybe 1% CAGR and now it's 3,
28:02
SPEAKER_00: 4, 5% CAGR in some cases, thanks to electric vehicles, thanks to data centers.
28:07
SPEAKER_00: What's that second order effect?
28:08
SPEAKER_00: What's the second order effect of the cost of rocket launches falling?
28:12
SPEAKER_00: By orders of magnitude over the last 20 years,
28:14
SPEAKER_00: and now we have all these remote sensing platforms in space.
28:18
SPEAKER_00: Those are interesting problems and opportunities that we feel are further unlocked
28:22
SPEAKER_00: or enhanced by the use of AI in those fields.
28:25
SPEAKER_00: And companies building with those technologies is what we're really interested in.
28:29
SPEAKER_01: Interesting.
28:30
SPEAKER_01: Okay.
28:30
SPEAKER_01: Yeah, that makes sense.
28:32
SPEAKER_01: So it's the opportunity in what has been built out and then solving.
28:37
SPEAKER_01: I do like that a lot because I will say it makes me think of
28:40
SPEAKER_01: when I first started working in recruitment, it was in the renewable energy space.
28:44
SPEAKER_01: And after a little while,
28:45
SPEAKER_01: because when I started working in like 2020 in the clean tech era, and it was...
28:50
SPEAKER_01: It was at that time,
28:51
SPEAKER_01: like, batteries, like, utility-scale battery storage was becoming a big deal.
28:55
SPEAKER_01: And so I worked in that space two, three years.
28:57
SPEAKER_01: But I got really bored.
28:58
SPEAKER_01: I was like, man, like, it's just wind, solar, batteries.
29:01
SPEAKER_01: Like, I get it.
29:02
SPEAKER_01: Like, show me the new stuff, right?
29:06
SPEAKER_01: I want to work with the newer technology.
29:07
SPEAKER_01: So I appreciate that perspective.
29:09
SPEAKER_01: Can you break down a little bit more about maybe some of
29:11
SPEAKER_01: the specific opportunities you see across, like,
29:14
SPEAKER_01: electricity technology,
29:16
SPEAKER_01: robotics,
29:17
SPEAKER_01: remote sensors, and I think you also consider biomanufacturing as part of that?
29:21
SPEAKER_01: I'm just kind of curious to hear more of your take on each of those and
29:23
SPEAKER_01: where you see some opportunities and maybe where you guys have invested as well.
29:28
SPEAKER_00: Yeah, let me give you some examples that will maybe clarify.
29:30
SPEAKER_00: Because as I mentioned, this is really a strategy we've been working on since Fund 1.
29:34
SPEAKER_00: We're in the middle of raising our second fund now.
29:37
SPEAKER_00: It's going to be a very similar strategy to what I just described.
29:40
SPEAKER_00: But we've been doing this before ChatGPT3 launched.
29:42
SPEAKER_00: So this is not just an AI-only thing.
29:45
SPEAKER_00: A couple of great examples would be,
29:47
SPEAKER_00: two off the top of my head,
29:48
SPEAKER_00: Electric Era,
29:49
SPEAKER_00: which is a next generation EV fast charging company in our portfolio,
29:52
SPEAKER_00: and Euclid Power,
29:53
SPEAKER_00: which is an AI-based project management services company for
29:57
SPEAKER_00: the renewable energy industry.
29:59
SPEAKER_00: And let me tell you exactly how they sort of fit what I just described.
30:04
SPEAKER_00: You mentioned these four broad categories of underlying technology or infrastructure.
30:08
SPEAKER_00: So the electrical tech stack, which includes things like batteries and motors.
30:12
SPEAKER_00: We talked about remote sensing, biomanufacturing.
30:16
SPEAKER_00: And so I think in all of those fields,
30:20
SPEAKER_00: what we've been noticing over the last 10 to 20 years,
30:22
SPEAKER_00: in some cases longer, is rights laws at play.
30:26
SPEAKER_00: As the total sort of manufacturing capacity
30:28
SPEAKER_00: of these underlying technologies has expanded,
30:30
SPEAKER_00: Doubling, they tend to fall by 20, 30% unit costs year over year.
30:35
SPEAKER_00: We really like industries that are built on top of those technologies.
30:39
SPEAKER_00: And then the second order effects come into play when those technologies start
30:43
SPEAKER_00: to proliferate quickly and spread and cause different problems or issues
30:47
SPEAKER_00: and opportunities.
30:48
SPEAKER_00: Electric Arrow, why is that a good example?
30:50
SPEAKER_00: They take batteries, okay, which have now become very cost effective.
30:53
SPEAKER_00: In fact, cheaper often than transformers.
30:57
SPEAKER_00: They combine that with intelligent energy management system
30:59
SPEAKER_00: to build EV fast charging for retailers and convenience stores that want
31:03
SPEAKER_00: to electrify their fuel refill.
31:06
SPEAKER_00: When you think about that problem size of building level three fast chargers for
31:10
SPEAKER_00: the public,
31:11
SPEAKER_00: you're putting a ton of spiky load at a point,
31:15
SPEAKER_00: maybe a store,
31:16
SPEAKER_00: a big box store, convenience store that wasn't designed for that originally.
31:19
SPEAKER_00: The conventional way to build these is to go ahead and deploy them and have
31:23
SPEAKER_00: a big grid upgrade, usually in the form of a large transformer.
31:26
SPEAKER_00: But transformers are bottlenecked because they're expensive,
31:29
SPEAKER_00: they're slow to make, we don't manufacture that many in America, for example.
31:33
SPEAKER_00: Batteries allow you to circumvent that problem,
31:35
SPEAKER_00: get speed to power, and be able to service those EV charging stations reliably.
31:40
SPEAKER_00: So Electric Air combines the batteries.
31:42
SPEAKER_00: They do this.
31:42
SPEAKER_00: They built a ton of very intelligent software using AI and other conventional means
31:47
SPEAKER_00: to make these stations effectively operate autonomously and
31:52
SPEAKER_00: with very high reliability.
31:53
SPEAKER_00: So that's a good overlap in our sort of thesis of the climate intelligence era
31:58
SPEAKER_00: of all these different technologies and things mixing with AI to make
32:01
SPEAKER_00: a better product or a better proposition.
32:03
SPEAKER_00: I mentioned Euclid Power.
32:06
SPEAKER_00: So to build solar,
32:07
SPEAKER_00: to build storage,
32:08
SPEAKER_00: even to build data centers,
32:09
SPEAKER_00: there is a ton of white collar kind of paperwork,
32:13
SPEAKER_00: permitting,
32:14
SPEAKER_00: owner's engineering,
32:15
SPEAKER_00: design studies,
32:16
SPEAKER_00: interconnection studies, tax, contracts, entitlement, land entitlement.
32:22
SPEAKER_00: And so what we've noticed over time is the cost of solar and storage are particularly falling.
32:27
SPEAKER_00: More and more developers want to build these projects.
32:29
SPEAKER_00: They're very economic.
32:30
SPEAKER_00: But that creates a huge backlog of paperwork.
32:33
SPEAKER_00: Okay.
32:33
SPEAKER_00: And so Euclid, our great team, we invested in them last year.
32:37
SPEAKER_00: They're bringing a ton of different AI using a combination of different LLM models
32:41
SPEAKER_00: to basically auto-complete and auto-configure and edit and produce
32:47
SPEAKER_00: the documentation required to speed up Those projects,
32:50
SPEAKER_00: whether they're getting sold, financed, permitted, designed.
32:54
SPEAKER_00: Euclid has different products and services.
32:56
SPEAKER_00: It's totally run by humans,
32:59
SPEAKER_00: but they use AI to augment that process and do it much faster,
33:02
SPEAKER_00: often saving 30 to 40% in project development time.
33:05
SPEAKER_00: It has a huge cost savings for people either buying or selling those big projects.
33:09
SPEAKER_00: So there are two examples that combine different elements of AI and clean tech
33:13
SPEAKER_00: in this case that I think really stand out as to what we're talking about.
33:17
SPEAKER_01: Yeah, so would you say that part of the thesis is characterized by,
33:22
SPEAKER_01: let's say, the hardware light design?
33:26
SPEAKER_01: Side of things where it's like,
33:28
SPEAKER_01: you know,
33:28
SPEAKER_01: in the case of Electric Era,
33:29
SPEAKER_01: they're not like necessarily hugely innovating on the hardware.
33:33
SPEAKER_01: Like they can kind of take off the shelf things,
33:34
SPEAKER_01: repackage them in a way that makes sense and then use the intelligence layer.
33:38
SPEAKER_01: Is that kind of like a core characteristic of it that ideally we're not looking
33:41
SPEAKER_01: at super high like deep tech risk?
33:43
SPEAKER_01: We're looking at primarily like taking things that exist and then using that,
33:47
SPEAKER_01: applying that intelligence to then,
33:49
SPEAKER_01: you know,
33:50
SPEAKER_01: I guess you could close the gap between the idea and actually executing the project.
33:55
SPEAKER_00: You nailed it.
33:56
SPEAKER_00: I mean, that is really the investment thesis we have in some.
33:59
SPEAKER_00: That's not to say that there are great investment cases to be made investing
34:02
SPEAKER_00: in deep tech like next generation, small modular reactors, for example, or fusion.
34:08
SPEAKER_00: But in our view,
34:09
SPEAKER_00: there is so much ground to cover and
34:11
SPEAKER_00: so much good business opportunity doing what you just described,
34:14
SPEAKER_00: which is either optimizing or enhancing a lot of the technologies
34:17
SPEAKER_00: that are already here today.
34:19
SPEAKER_01: Did you really see a lot of this?
34:21
SPEAKER_01: I want the honest answer here.
34:23
SPEAKER_01: Did you see a lot of this before the era of AI just like completely kind of blowing
34:26
SPEAKER_01: the lid off of this stuff?
34:28
SPEAKER_01: Was this something you guys thought a lot about?
34:29
SPEAKER_01: Because it kind of seems a little bit obvious now,
34:32
SPEAKER_01: but if you guys said that you were working on this before,
34:34
SPEAKER_01: you know, GPT-3 came out, like that must have been some, I don't know.
34:37
SPEAKER_01: I want to understand where the insight came from that you thought about that.
34:41
SPEAKER_00: So there's two parts to that.
34:43
SPEAKER_00: Short answer is yes.
34:44
SPEAKER_00: First of all, AI is expansive.
34:46
SPEAKER_00: So when I talk about AI,
34:47
SPEAKER_00: and I think most people mean this today,
34:49
SPEAKER_00: generally speaking,
34:50
SPEAKER_00: I don't only mean large language models or neural nets,
34:53
SPEAKER_00: but there are many sorts of disciplines in machine learning as well that are part of
34:58
SPEAKER_00: the tree of AI.
35:00
SPEAKER_00: And yeah,
35:00
SPEAKER_00: so when you look at our initial investments before,
35:02
SPEAKER_00: I think GPT-3 came out in 2023, if I'm not mistaken, somewhere along those lines.
35:08
SPEAKER_00: Anyway, people have been working on LLMs for much longer than that,
35:11
SPEAKER_00: but really didn't become part of pop culture until then.
35:14
SPEAKER_00: When you look at our early investments that preceded that,
35:17
SPEAKER_00: for example,
35:17
SPEAKER_00: Amberon,
35:18
SPEAKER_00: Omnidian,
35:20
SPEAKER_00: and others like that, yes,
35:22
SPEAKER_00: these are companies that are automating things,
35:23
SPEAKER_00: that are using automation,
35:25
SPEAKER_00: various forms of machine learning or forecasting other AI methods
35:28
SPEAKER_00: to improve outcomes for the grid or other sectors.
35:31
SPEAKER_00: We've been doing that.
35:33
SPEAKER_00: Where that intuition came from I think it was learned and developed over a long time.
35:38
SPEAKER_00: I mean, my first 10 years of my career were spent in the energy industry.
35:42
SPEAKER_00: So I saw firsthand what a large power,
35:45
SPEAKER_00: in my case,
35:46
SPEAKER_00: working for a company like Centrica,
35:48
SPEAKER_00: a large power and gas provider was dealing with in how they actually bought
35:54
SPEAKER_00: and sold power,
35:55
SPEAKER_00: electricity, gas,
35:57
SPEAKER_00: for example,
35:58
SPEAKER_00: how they interacted with large power generators,
36:00
SPEAKER_00: how they interacted with large power users like steel mills and things like this.
36:04
SPEAKER_00: So, yeah, I mean, that was sort of just learned over time through our career.
36:08
SPEAKER_00: My partner Christophe, I think, would probably say the same thing.
36:11
SPEAKER_01: Yeah.
36:11
SPEAKER_01: No, that's interesting.
36:12
SPEAKER_01: I think it's very fascinating how a person's career really shapes the opportunity
36:18
SPEAKER_01: that they can even identify because they have certain exposures.
36:22
SPEAKER_01: I do find it fascinating, though, that you guys are interested in this particular space.
36:26
SPEAKER_01: Andrew Beebe came on a while back,
36:27
SPEAKER_01: and he was explaining his perspective that anything Anything built on top
36:33
SPEAKER_01: of battery technologies is going to be much better than being
36:36
SPEAKER_01: the actual manufacturer of batteries going forward because
36:38
SPEAKER_01: of those costs coming down, right?
36:41
SPEAKER_01: It's always so fascinating that people saw the goldmine opportunity as being
36:45
SPEAKER_01: the battery builders,
36:46
SPEAKER_01: but then they pour all this money into it,
36:47
SPEAKER_01: and then eventually they get drawn down to commodity prices, right?
36:50
SPEAKER_01: And then they just have to get the scale, right?
36:53
SPEAKER_01: And then you can go make a one-wheeler, anything that's built on a battery on top of that.
36:57
SPEAKER_01: That's going to be the next kind of thing.
37:00
SPEAKER_00: So I think that's, it's really an
37:01
SPEAKER_01: interesting insight.
37:03
SPEAKER_01: It also reminds me of the,
37:05
SPEAKER_01: we recently had Coral on the show and they are like taking care of
37:09
SPEAKER_01: the rebate basically process for HVAC installers who want
37:14
SPEAKER_01: to offer heat pumps instead of conventional.
37:16
SPEAKER_01: Okay.
37:18
SPEAKER_01: Instead of conventional HVAC system.
37:19
SPEAKER_01: So it's again,
37:20
SPEAKER_01: it's just a technology layer that allows the deployment to get shortened up
37:23
SPEAKER_01: by blue collar workers in this case who just don't want to have to deal
37:26
SPEAKER_01: with this stuff.
37:29
SPEAKER_01: So there's a lot of those opportunities floating around.
37:31
SPEAKER_01: And I will be,
37:33
SPEAKER_01: maybe this will be a topic for another day,
37:34
SPEAKER_01: but It'll be interesting to,
37:37
SPEAKER_01: you know,
37:37
SPEAKER_01: maybe in a year or so,
37:38
SPEAKER_01: like kind of do a map of those companies out there and see where,
37:42
SPEAKER_01: you know,
37:43
SPEAKER_01: extrapolate that out five years,
37:45
SPEAKER_01: where they're going to start to merge because there's probably going to be a lot
37:47
SPEAKER_01: of these that they were really good at a niche and they could obviously go and,
37:52
SPEAKER_01: you know,
37:52
SPEAKER_01: take over the whole market for that,
37:53
SPEAKER_01: you know,
37:54
SPEAKER_01: paperwork filing process, but,
37:56
SPEAKER_01: you know, they might as well just merge and like bring their industries together.
37:59
SPEAKER_01: So I think there'll be an interesting opportunity.
38:01
SPEAKER_01: Maybe I should go raise a PE fund quick and then take care of that, take care of that later.
38:05
SPEAKER_00: Yes, look at how that goes.
38:06
SPEAKER_00: Do a roll-up.
38:07
SPEAKER_00: No, I'm definitely not going
38:08
SPEAKER_01: to go raise a PE fund.
38:09
SPEAKER_01: That's not for me.
38:12
SPEAKER_01: Okay, interesting.
38:13
SPEAKER_01: So tell me a little bit more about some of the other investments
38:15
SPEAKER_01: that you guys have made in these areas that you are excited about and why.
38:18
SPEAKER_01: Maybe some slightly different categories.
38:21
SPEAKER_00: Yeah, so, and this is actually really important for us.
38:24
SPEAKER_00: We try to be really thoughtful in a portfolio construction,
38:26
SPEAKER_00: not just of having different diversity of companies,
38:29
SPEAKER_00: but one thing I really like to do with the team is look through a company
38:32
SPEAKER_00: before we invest at their underlying customer base and make sure we don't have a lot
38:35
SPEAKER_00: of overlapping customers.
38:36
SPEAKER_00: I think a lot of early climate tech investors ran into that problem.
38:40
SPEAKER_00: So I'll give you two totally different examples of nothing to do with energy per se.
38:45
SPEAKER_00: One is a company called Delos Insurance.
38:48
SPEAKER_00: We led their Series A back in mid-2024,
38:51
SPEAKER_00: and really they're an insure tech,
38:53
SPEAKER_00: but what they do really,
38:53
SPEAKER_00: really well is they use a very powerfully built geospatial model
38:58
SPEAKER_00: to predict wildfire risk at a high spatial resolution,
39:01
SPEAKER_00: so down to like property address type of model.
39:05
[music]