This is Master's in Business with very Rid Holds on Bloomberg Radio.
This week on the podcast, I have an extra special guest, show Meek Data, co founder and managing partner at Overture Climate VC, focuses on all sorts of fascinating startup and climate change technology, from concrete to energy production, to storage, to carbon capture, to material science to well turning the fuels.
This is really a fascinating discussion about some of the latest greatest technology that's going to help the world get to a carbon neutral status and maybe even a carbon negative status to roll back the impact of two hundred
and fifty years of burning fossil fuels. I found this conversation to be absolutely fascinating, not just because show Meek has a little bit of a political background and had worked in both of Obama's campaign where he was frequently fired by the soon to be president but still managed to maintain his job, but because of his deep and
broad knowledge of the technologies behind climate change. He said, this isn't a green investment so much as a money making economic investment, and if you're not paying attention, you're going to miss the opportunity. With no further ado, my conversation with Overture Climate VCS show mc dadda.
Erry, thanks for having me.
So, what was the original plan? Was it politics or finance? Where were you thinking of going?
It was always politics. I grew up a political junkie, worked on Senate races and governor's races, and had the really good fortune of linking up with Barack Obama in two thousand and seven. I was one of the early staffers on that campaign, and it ended up obviously being this incredible rocket ship'll kind of start up in his own right, And it was that experience that convinced me that it's really possible to do big, daring, hard things.
Watching the president sort of go from a US senator who's still paying off his law school loans to stepping into the most important job in the world was an inspiring and crazy experience.
What did you do for the campaign in eight and then what'd you do in twenty twelve?
I was his fundraiser, so I oversaw the mid Atlantic states, about nine states. I was twenty four years old, cocky and a little bit insane. I'd read a lot of books about rom and Manuel, so I thought you were supposed to swear at people and yell and push hard, which I did and proud to say that we outraised Hillary Clinton from the very first day that I joined.
I turned down an offer from Hillary Clinton at the time, which you know, my father's a risk averse immigrant, so his two pieces of advice to me were to work at Lehman Brothers from investment banking, good call, and to work for Hillary Clinton, not Barack Obama. But those are the only two things I've ignored his advice on.
And your dad's O for two.
My dad's one thousand for one thousand and two.
But that's great. So how did you go from working in the campaign to working at both the White House and the FCCI.
You know, you could say a lot of it was political nepotism. Candidly, I was a you know, coffee boy. I was Greg Craig, the White House Counsel's special assistant, and as puffed up and important as I thought I was on the campaign, when it turns to governing, it turns out you need some specialization. So I quickly realized that I didn't have a sort of path to being
the National Security Council Advisor at any point. So I, you know, after serving coffee for about a year working on a Supreme Court nomination, shifted to go work for Julius, who is the FCC chairman. And that's when I realized that a lot of the smartest guys in the room are actually in business more often than not, and got really interested in shifting my career that that direction.
So someone interested in doing work in politics, how do you get a foot in the door?
You know, it really starts with picking a campaign. And a campaign is like a lot like a startup, with's a really flat organization. You have to raise an unbelievablemount of money and spend it in a short period of time, and you have this discrete objective that everyone's nailed towards. And so for a young there's no better experience than working on a campaign, where if you can get something done,
there is a job for you. And so that's where I really cut my teeth, working on campaigns, getting stuff done. And you know, no better boss than Obama.
So venture capitalists are notorious for having this really in depth network of high performing, plugged in people. How similar is that to what takes place in the world of political networking.
It's fine. I heard doug Ley Owne, the founder of the managing partner at Sequoia, have this great phrasing, there's many paths to heaven, And it seems in venture capital there are many paths to heaven. Right. You can have a really well networked media executive, as was Mike Moritz at the time. You can have drilled down operators who have run businesses. There are many different ways venture capitalists
can add value. And it was my observation in climate investing that there were no venture capitalists that deeply understand government and regulatory risk, despite the fact that the government's playing this central casting role in the energy transition. And so I thought this might be a pathway to heaven for us, observing Tusk Ventures in New York doing this
quite successfully for coinbase and draft Kings and Uber. I just don't really care about sports betting, but I really thought that I could add value to these startups as a venture capitalist that deeply understood government, and so that was my path to heaven.
So you grow up in Chicago, you moved to DC after college. Was it for a political campaign or was it just a coincidence? Hey, this local business seems pretty pretty fascinating.
No, explicitly for campaigns, and so, you know, moved around zip codes in a lot of sort of post industrial wasteland places. I lived in Baltimore working for Martin O'Malley's first governor's race. I lived in Rhode Island working for a Senate race, and then in two thousand and seven got recruited into Obama and that's when I moved to DC.
Huh, so your campaign staff during Obama's re election campaign? What were you doing with the Biden administration when they were running in twenty sixteen.
I built an impact venture fund that you referenced called Higher Ground Labs. It was our others that you know, Trump had benefited from a lot of new technology, and Democrats were still campaigning with number two pencils and spreadsheets.
Now, let me ask you. That's I'm gonna interrupt you right there, because I very vividly recall reading a Wired piece from Wired magazine about how cutting edge the Obama campaign was with iterative changes and a B testing and they just were raising more money, faster for more people. You're telling me by twenty sixteen that's already out of date and fallen way behind.
You're exactly right, it's exactly the insight that actually led us to start Higher Ground Labs. Campaigns are like big startups and you raise a billion dollars, as was the case with Obama, you build cutting edge technology, and after election day, the lights go off, everybody leaves, the email addresses go off, and you start anew in four years. As though none of that mattered, and there was no longitudinal,
inherent inheritance of learnings and data and technology. And so we wanted to build for profits startups that could build longitudinally compounding innovation and standing as free standing entities that could be even profitable for investors so that we could raise more capital for them. And so we did that.
We built companies like Mobilized, which ended up shifting all of the volunteer action in the Democratic Party, sold to an Insight backed the private equity fund insights backed company, and so things like that can both compound returns for investors but also compound innovation to the party, so you don't have to start from zero every four years.
So on your LinkedIn, I see you got an NBA from Wharton around the same time as the election. Please don't tell me you would do both at once.
I did both. It is not recommended. It was a lot of pounds and gray hair. But you know, my deal with my dad, who came to this country with you know, a big dream, came his country about two hundred bucks in his pocket. He worked as a security guard at Harvard Business Schools and attended Harvard Business School at the same time. You know, there's that line Obama has that every son wants to be live up to his father's expectations or to be something as father is not.
It definitely fell in the first category. And so my dad would always point out, like, look, I came to this country with two hundred bucks, and he ultimately became the president of the United Airlines and it was like an incredible career.
And so your dad was president of the United Airlines. He was as an immigrant who arrived essentially with a handful of monops.
With working as a security guard at night at HBS, and so you know, those were big shoes to fill. And the thing that I always took away from him was that, look, the thing that inspired him about building big businesses and running them was not power. It was not money, though the money is nice. It's the ability to just help so many people he said, like his heroes were always people that could provide a lot of jobs,
businessmen and businesswomen that can provide jobs. And so it was that narrative that was always in my head and the need to sort of live up to his big expectations at something to business school.
Huh really really interesting? So what'd you study at Wharton? And is any of that appleable to what you do now?
You know, thankfully there was no great disclosure at Wharton. I can't tell you very much of what I don't think any NBA can really tell you what they learned. But what I took away from it was an amazing network in some signaling value to say, hey, maybe this guy has half a brain for business, which I'm not even sure is true today.
Really really interesting. So you have a quote I really like. You said you felt much closer to Governor Martin O'Malley than he felt towards me. Isn't that true? How it is in all campaigns everybody is looking and sponsoring and loving the candidate, but they have to distribuliviate their affection to millions of supporters.
Yeah, you know, there's there's a right and wrong reason to get involved in politics. One of the wrong reasons I think that a lot of people end up doing is that it's a pathway to being closer to power. And I observed it, you know, probably succumbed to some of it myself. But it's the wrong reason to be doing the work. And so I was, you know, kind of making fun of myself for that, but yeah, you're right. You know, these campaigns, you end up liking a lot
of hours with these folks. You know, I was. I was Obama's call time manager and fundraiser.
You're again, you're anticipating my next question. How much time time did you spend with Obama? And did you not feel the love reciprocated or because he seems to be kind of an unusual guy in politics.
A little more removed, a little more ascetic and monkish. You know, yeah, I think he tried to fire me a few times for being too aggressive in fundraising from his friends.
But oh really, I'll just say, you know, wait, you were, you were? Obama said, Hey, that dutt a guy. Can we lose him?
This guy at least at least twice. Though, My favorite moment was in the Dungeons of two thousand and seven when you know, doldrums of two thousand and seven. We were forty points down to Hillary Clinton and I was still producing multimillion dollar fund raising outcomes for him. And so one time we dropped him off at the you know, he'd start event saying, who do I have to apologize to in here for you, Shamik, and I'd be like
that guy, that guy, that guy. So we dropped him back at his apartment and he doubled back to the car and he said, Shimik, keep doing what you're doing. I'll keep apologizing. It's worth it. And it was like the highlight of my career.
Is that your Obama is that as good as a guest? WHOA how are you? I can't help but notice that President Obama was probably the first president to take a very strong stance on climate change. How much of your work with the Obama campaign inspired you to start investing in the space.
I think the experience from the Obama world was that everybody, you know, there's this big, great Bill Gates line, that everybody underestimates what they can do in ten years and overestimates what they can do in one year, and taking a long term path to doing something really big and grinding on it for a long time can produce extraordinary outcomes.
You know, the president was the architect of the Paris Accords, which is the framework that the IPCC now uses to ensure that the world is driving to a net zero future, and so there is a you know, the sparkle I take away from the Obama days was a challenge from him, which is that we should do big things, and if you focus and execute every day for a long period of time, most people probably underestimate what they can accomplish.
So we just kind of wrapped up the Climate Accords. Surprisingly in the Middle East, sponsored by a big oil producing nation. How do you look at those events? Are these just photo ops or does something substantial come out of them?
I think there was a great deal of heart palpitation about this COP in part because, as you correctly note, the head of the largest oil and gas company in Abu Dhabi was the same man in charge of the COP.
And yet all one hundred and eighty countries left with a firm commitment to decarbonize and to transition away from fossil fuels and oil and gas, with an emphatic agreement around that big daring idea that's the first time this has ever come out of a cop and I think the US government's leadership in this, particularly on methane, is going to start reverberating through the market in a really positive way.
So I've been reading a bunch of stuff on mething lately. Not only is it a notorious noxious waste that contribute to the greenhouse effect and all sorts of other issues. We just burn off tons of it in flares. Another thing. Not too long ago, Sixty Minutes had a episode where they showed a company was essentially capturing that flare, using it to generate electrical power and running data service centers right there on the oil field.
Called Crusoe Energy. I'm actually an investor in that company.
Tell us a little bit about that.
That's quite fascinating, you know, the two the twin problems. We're going to realize in the near future that we'll have these stranded energy assets that are often leaking methane. We have oil and gas wells that have sustained casing pressure that are bubbling methane. We need to seal those wells permanently or make use of the methane because the
methane has a great deal of economic value. The second challenge we have is that our next generation compute is going to be incredibly electricity intensive, far more than what we experienced today, and so data centers are going to become opex pain points for a lot of companies. And what CRUSO wants to do is resolve those two challenges. Take strained energy assets, utilize that energy creatively, and also ensure that we can decarbonize data centers, which are increasingly
a large pain point in emissions. There's another company to mention we invested in recently called bio Squeeze, which has invented a new way of permanently sealing oil and gas wells. Some of these operators, like Halliburton, are spending millions of dollars sealing and resealing oil and gas wells with no success.
And so these guys have invented a biomineralization technology that is stronger than cement, that can shoot into these wells and permanently seal them, which may one day even replace cement in all infrastructure one day, is what we hope. There's some exciting things happening around methane.
So this year's cop Conference of Parties about Climate change ends up with governments making a number of commitments and a lot of nonprofits joining in in those commitments to get towards a carbon neutral But it kind of raises the question is that as effective as what you do in entire terms of venture capital and startups that are looking to in the private sector combat climate change for profit.
It's all required. Every single aspect of society will be impacted by climate change, and so every single aspect of society has something to contribute, and every asset class of capital, from private equity to growth to debt, will have to play a role. The reason governments are so centrally important is that it's not enough for us to look at business pain points caused by climate of which there are many,
by the way, supply chain disruption, extreme weather events. But you also need to start creating sticks at the same time to push fossil fuels off a cliff. And so I'm encouraged by the fact, for example, that internal combustion engine vehicles will be banned all together in the state
of California in ten years. Similarly, France has banned all internal combustion flights within its own borders in the next ten years, and so these sticks are also important to intersect with the care that help new technologies mature fast enough to replace them, and there will be a fundamental rewiring of the economy that takes place as a result.
When you think of every single aspect of industry, steel making, fertilizer that you know, ten trillion dollars of ebidel will be at stake in this turnover, and so there's an enormous prize for those that can innovate quickly and help decarbonize.
You mentioned the company that seals up well heads. Bloomberg had an article not too long ago about what a massive carbon footprint concrete manufacturing has. Tell us a little bit about that technology that theoretically you might replace concrete in the future.
You know, one of the central insights here is that industrial heat is the key input to manufacturing just about anything. If you think about steel making from iron, if you think about concrete, if you think about a lot of food and ethanol methanol production, all of it requires in the United States alone, one hundred and forty billion dollars worth of industrial heat, almost all of which comes from
natural gas or coal. And to get really high temperatures from that heat, is sometimes difficult, and so there are breakthrough technologies. We're excited about one called Antra in particular, financed by Bill Gates and Chris Sokka and by Overture, and these three Stanford PhDs have figured out a way to take grid connected renewable electricity and produce industrial heat
above eighteen hundred degrees celsius. And when you think about the hardest to decarbonize industries, you know, about ninety five percent of all industrial manufacturing can be decarbonized with that kind of heat. And what's amazing about this company is they're not going you know, it's called the mister Burns test. I can go to a conglomerate who does not care a lick about climate change and convince them that I
can save them opex with this decarbonized solution. It has nothing to do with climate change in their minds, and.
They just still want investment of money saving opportunity for companies in the space.
So the coke industries is behind this company has taken them to a lot of their conglomerates and it's a really exciting technology because it is just beating natural gas at its own game. And that is you know, a theory of change for us is that if you can beat natural gas at its own game and save conglomerates and big businesses money, they will adopt your technologies. It becomes more challenging when you're bringing them green premiums and things that are a little more expensive.
So correct my ignorance, if you will. I look at natural gas as a transitional energy source from oil and coal to ultimately renewables. Tell me where that thesis is wrong.
It was correct. It was absolutely a better source of fuel than coal, which you know produces black suit and all kinds of problems and diesel.
Now the what about clean coal? The case face.
The key is to now transition from natural gas. You know, natural gas is a is a nice word for methane. It's primarily methane, and methane is about eighty times more warming than carbon dioxide. And so if carbon dioxide is one blanket thick to keep the earth warm, you can think of Lebron James height blanket to trap the molecule traps far more heat and doesn't allow our sunlight to
radiate back to outer space as it should. And so the key now is that renewables have this extensive runway since we thought of natural gas as a bridge fuel, And candidly, the lowest costs of energy today are solar and wind, and so businesses can make rational decisions to adopt them. And the key is to now sort of transition us off this sticky drug that we've been addicted to for some time.
That wasn't true a couple of years ago. Renewable energies like solar and wind were pricier than natural gas and oil. Today, the price of solar and wind just keeps falling and falling. Is it accurate to say on a per kilowatt basis they are now cheaper than carbon based fuel.
They are absolutely the cheapest forms of electricity available in most places in the world today. A staggering statistic. The capex of a new solar plant is today cheaper than the opex the annual opex of a coal plant real and so these things, you know, the human mind is some sometimes bad at tracking exponential change. The logarithmic drop in solar and wind prices continually surprises even the most
bullish analysts. And I think the same is now coming true for lithium ion and a lot of these other technologies and so we are dropping down these logarithmic cost curves.
And what's interesting is I think there's a geopolitical reality today in a global contest for power with China, the countries that are able to have the lowest cost of plentiful energy that does not require any kind of foreign inputs, that has a domestic supply chain underneath it, that can produce that energy on their own, that will be one of the key key drivers to global heged demonic success in this new world, coupled with next generation compute that's
also within our own supply chain. And so the last time we saw a great power struggle like this was in the semiconductor boom, where where Faild, Fairchild, semiconductors, Intel Texas instruments were built. Those were not like the bits that are traded in software today. Those were atoms. It was hardware investing that governments were deeply involved in. So the fifty percent of the revenue of Fairchild in the
early days came from the Pentagon. Similarly, TSMC when it was built, fifty percent of that CAPEX was handled by Taiwan, And when Samsung went into semiconductors, the same proof true of the South Korean government. The same is going to be true of climate investing today. A lot of the innovative hardware must be built today and that will require intense government involvement. And that's why overtures thesis is that investors that deeply understand and can navigate government and regulatory
complexity can actually produce alpha for their investors. Because it's a bit like in World War Two, if you knew what the US government needed, if they were going to need to pay betting manufacturers to make parachutes, you know, that's an important insight to be able to drive the best investments through.
Really really very interesting. So let's talk a little bit about what you look for in a climate investment. Is this about looking for companies that are going to be casual and positive right away or are you willing to be a little more long term in your thinking?
Venture capital is an incredibly patient game, right on average ten to twelve year positions you're taking, as we saw with Union Score Ventures is first fund. I think it took them almost sixteen years from start to finish.
So it's an incredibly that worked out pretty well, didn't.
Worked out great. It's an incredibly patient, deeply liquid game. But you know, to radically oversimplify what we look for. We're looking for visionary, unbelievable founders. Founders are the soul of startups, and we're looking for unbelievable founders with deep expertise in what they're building, coupled with differentiated technology that
can help unlock gigantic markets. And so to give you a couple of examples, we're investors in a company called Dextmat, which has invented a carbon nanotube technology that is stronger than steel, lighter than aluminum, and more conductive than copper. Copper is going to be one of the most important metals in all of electrification. Aluminum is in every aircraft and every airplane, a lot of phone poles and wires,
and steel is steel. This technology might fully decarbonize in a carbon negative way a metal that is stronger, more conductive, and lighter. And so those are our moonshot examples of what we're looking for, and that require a lot of technological and go to market innovation to be successful. But if they are, I think there are trillion dollar rewards on the other side.
So you're looking to replace the skin of aircraft, perhaps the body of automobiles, the wires on interstate or local electronic transmission, electricity transmission, and even things like telephone wires and internet wires or is it am I overstating that that's right?
And the company today is, you know, the production of their of their metal is so expensive that only ultra advanced defense manufacturers and companies testing R and D can afford it. The bet is that they can drive down the cost by one thousand, you know, one one thousandth the cost over time and produce something that is just better than the industrial inputs that have very carbon intensive
emissions footprints, as we've mentioned before. And so if you're an aircraft and can find something lighter than aluminium that can help your aircraft travel farther, that's a money saver for the company.
And so those does material science have the equivalent of a Moore's law.
It does, And interestingly a lot of the materials today are reaching that high point. Right at some point, semiconductors are reaching the theoretical limits of how many transistors you can wedge in. And so that's why innovating with ferro electric materials and using AI to be able to optimize all of the dizzing different kind of material combinations we can consider is what we need to do for this next
layer of industrial revolution. So when you consider just the ten trillion in ebidah, start considering every manufacturing process today as we do it, every food production process, the way we move ourselves with transportation, the way we grow food in agriculture, all of this is going to have to reorient in about fifty years. If you believe the science and old conglomerates, large scale conglomerates aren't usually not the places that drive innovation, and that's what makes venture such
an interesting catalytic. A SI class to me in climate. I am not doing this out of the goodness of my heart. I candidly kind of missed the Internet. I was so involved in politics. And if you consider some of the megacycles software eating the world, China opening up ultra low cost interest rates, I think this is another megacycle coming and I don't want to miss it. And like all megacycles, being early is the same as being wrong.
And so a lot of our job is timing our bets to make sure where can technoeconomics just beat fossil fuels invest behind that right now?
So let's talk about some of those different spaces. I want to throw out some broad topics. You tell me what you think about those and what sort of investments you would be looking at or have already made in those. And let's start with carbon capture. You know, some people have said we can solve climate change by just taking all this excess carbon that's in the air. What do you think about carbon capture?
I think if you believe the science, the IPCC has stated we're going to need to remove ten billion tons of carbon every year by the year twenty fifty. And if you look at what we did last year, we did about six thousand tons. So there's a two million x scale up that has to happen, or a seventy four percent cager, which is twice the growth of software. So there's an enormous undertaking. The question for us is what is the lowest cost, most scalable, more most efficient
version of this. Direct air capture today still pencils around sixteen hundred dollars per ton, enormously electricity intensive. We have drifted a little bit more towards two categories. The first is enhanced rock weathering. We're investors in a company called ion that has pulverized a certain silicate rock called olivine that can help basically grow more crops for farmers. They're
very familiar with it. It's basically a form of fertilizer, while it also sucks carbon out of the atmosphere permanently. Very excited about technologies like that. We're also investors in a company called Climate Robotics that is similarly taking agricultural waste and pyalizing it, basically cooking it in an oxygen free environment and producing something called biochar, which is an
excellent soil amendment. It helps crops grow more, Farmers crave biochar, but it also sequesters carbon for at least a thousand years according to a new white paper. And so we're really excited about companies and technologies like this.
Huh, really interesting. What about just straight up energy production? It seems like it's been mostly incremental improvements in the cost of solar and winds, but not so much the productivity. They've also been very very gradual. Do we need an order of magnitude improvement in the production of energy or is it just something we're going to grind away at for decades at a time.
We need a paradigm shift and energy production. You know, if you're gonna electrify everything, think for a moment about electrifying every form of vehicle transportation. You're not gonna have gas stations anymore. You're gonna have to charge them. And so that estimates are that the United States is gonna have to triple its energy product, its electricity production, and its borders alone over the next fifteen to twenty five years.
An enormous undertaking. Right this we're talking about trillion dollar capex required to be able to reinvent the grid. And at the heart of this is where can you dry drive the lowest cost electricity and have it to be available plentifully and infirm power twenty four to seven and so storage and I think batteries will be there.
That's my next question is, you know, I don't believe lithium ee on is the end game in battery storage. They're just too big and too heavy and they have a fairly short life cycle. What's the next phase in batteries that are going to be lighter, are going to improve range, allow you to use smaller batteries, and aren't gonna start dying after a thousand full charges and discharges, but have a lifespan of ten thousand or one hundred thousand charges.
You know, there are a lot of interesting things happening in fusion right now that we're tracking. We have not made an investment, but I think the rate of exponential improvement and possibility in fusion is coming much faster than people realize.
And in the nuclear fusion like what drives the sun and stars at the universe.
Correct, So commonwealth fusion companies like Avalanches, which are in the lower carbon portfolio, incredibly exciting. In the interim, there's interesting innovation for grid scale storage coming from companies like form Energy and hopefully and Torah in our portfolio is also going to to provide a huge storage buffer. And so, as you correctly note, lithium ion is ill suited for long duration storage, right for forty six hours, If you
need to slam something quickly, it's perfect. And so we think lithium ion will continue to power most electric vehicles, electric aircraft, but for grid scale, long duration storage, you're going to require innovation, and that innovation is going to have hundreds of billions of dollars of reward waiting. On the other side of it.
You mentioned fusion. What about I keep reading about the smaller scale traditional fission nuclear plants. We haven't built a new nuclear plant in the United States for decades. That seems to be changing now there are a few small scale plants coming online. How do you look at nuclear?
You know, I'm a bit of more of a skeptic. I think in the tech communities you get a lot of folks who roll their eyes and say, just build nuclear and you'll be fine. The cost overruns in nuclear have been astronomic, and in building the grid scale plants, everyone is different. Whereas the South Koreans are stamping out units and learning from them increasingly over time, we don't have those learnings here and so on average, a nuclear
plant is taking twenty years to build. Way too, it is going three hundred percent over cost, and so I am excited about the miniaturized nuclear applications. We're going to need a lot of energy to do things like electrolyzed hydrogen, and that's going to be incredibly electricity intensive and potentially
power direct air capture. So I think there's certain use cases there, But again to learn that, you have to modularize and build a factory method that allows you to iterate and improve on your production, not build these one off plants that are all looking different, all running out of money, all over cost.
I remember about a decade ago the Great reactor hope with thorium kind of fell of the off the front pages. What's going on in that space? You know?
I think a big challenge here is that there's real national security issues around building nuclear plants. And if you talk to the national security community, you know they're very worried about being able to take enriched uranium and build
dirty bombs out of it. And so if you couple the amount of intense regulatory scrutiny out of the nuclear regulatory world, which is the most brutal place if you want to talk about regulatory risk, national con security considerations, costs over runs, time, and a lack of deep specialization in this country, I think candidly we're better off investing in wind water through hydroelectric power, solar and batteries. Those
are scaled and ready to be deployed right now. And fusion already happens right We're already harnessing the energy of the sun in our solar panels. And so I am personally more bullish on that as a method of deployment.
What do you think is the most exciting climate innovation that we'll see come out in twenty twenty four.
I think a lot of the IRA incentives, the inflation reduction X incentives, have yet to be realized in the market. There's a provision in the IRA called forty five X, and what forty five X does is, for the first time since World War Two, pays OEMs to make things. So back to my betting analogy, if you are a betting manufacturer and the government wanted you to make parachutes, they would just pay you to make those parachutes before they even bought the parachute, and so you were going
to see a staggering scale of deployment. We're investors in a company called Harbinger, which is an electric mid duty truck, one of the most important vehicles on the road the workhourses that drop off all of our e commerce delivery equipment. There is nobody building a good mid duty truck today. Harbinger is building a mid duty EV truck that is going to beat ice trucks at their own game. Before incentives, and when you factor in things like forty five x
this company Harbinger could have negative cogs. And so when you think about what that means for the scale of deployment, I would say the big surprise is not a particular technology. It's just going to be the speed and scale of deployment is going to singd your eyebrows. It's going to
be incredibly exciting. You know this. We're talking about a trillion dollar wall of money coming from the US government from the Infliction Reduction Act, the Chips Bill, and the Infrastructure Bill to scale the deployment of a lot of decarbonized technologies to remake the world as we've described it. And so that's what gets me really excited.
Yeah, that sounds really really interesting. So one of the things I wanted to ask you about. You had referenced how in a lot of technologies the government is the big mover, and we could talk about everything from railroads
and the telegraph to more recently semiconductors. The one thing we didn't mention is how the government essentially has driven the creation of the Internet through everything they did with DARPA and having a essentially hardened response to a nuclear attack is effectively where the Internet came from.
You know, surprised to learn every single component of the iPhone from the touchscreen on down has an origination story from US government programs.
I mean, if you look at what came out of the moon landings and NASA, it's everything from the microwave oven to arguably tang But I think we underestimate the impact of that private public partnership. Tell us a little bit about what you see in that space and what it's going to mean for climate transition.
You know, I just watched Oppenheimer with my business partner to me, and I don't know if you've seen that. Oh fantastic sensational and it's such a terrific example of how the US government can do things so much faster when it puts its mind to it, and in emergencies, and I believe climate change will be an emergency that every will affect everybody, and we'll all have to spend
the rest of our lives solving together. There is no entity large enough that can scale innovation quickly enough to hit these net zero targets, and that's what makes it such an important place. And you know, these national labs started their origin from the Manhattan Project and they gave
us fission right. Ultimately, our nuclear plants came out of the Manhattan Project, and it's a good example of what happens when you get a lot of buying and a lot of focus from government unlock things, which is what the period of time we're about to enter right now in.
Clim So what other technologies do you find interesting? What types of companies are you looking at?
So the heating and cooling of big buildings is a place of major focus. The built environment buildings are responsible for that.
That doesn't sound sexy and exigning that sounds like it should be basic efficiency and blocking and tackling. But every large you know, you look in a city like New York or Chicago, it's an immense amount of energy consumption.
An immense amount of fossil fuel energy, using natural gas, still using diesel, still using coal in some cases as parts of the world, and yet everybody's urbanizing, we're building bigger buildings, and it's becoming an opex headache in some cases. And so we're investors in a company called Bedrock that
I'm excited to announce. This is a technology founded by Joscelyn Lai and her co founder Sylview, who is a chief scientist of Baker Hughes, and he's basically taken a lot of ultra advanced oil and gas rig technology and invented a miniaturized rig that can drill subsurface to the depth required to unlock heating and cooling for huge buildings. So CI am the largest asset owner America with a million square feet on her ownership invested in this technology.
And this sounds like geothermal, It is geothermal heating and cooling which is previously inaccessible to big buildings because of the depth required to drill would meet a rig that can't operate in urban environments. And so the magic of this company is they can go to companies and say, look, I can beat your heating and cooling bills with a decarbonized solution that will save you money and op X and get you an unbelievable amount of credits from the
US government. And so those are technologies we get really excited about. Built environment is forty percent of global emissions forty percent, So it is not a sexy sounding thing, but it's very important. If you want to think about some of the more interesting sort of risk on parts of our portfolio. There's an unbelievable company called Linean Labs we recently invested in alongside Union's coare Ventures and a bunch of other unbelievable funds. They're building sustainable aviation fuels.
Sustainable aviation fuels can take industrial CO two waste and repurpose it and remake it using a Fisher trough process and a reverse water gas shifter to then produce sustainably aviation fuels. And we think this company can do it cheaper ultimately than what jet fuel a costs in the
market over time. And so when you consider United Airlines, in these companies, all of which have made commitments to use half of their fuel mix for jet for sustainabiliation fuel, there's a software like scale up a thousand x increases we're gonna need to see in the coming years. And so that gets really exciting. If you can beat jet fuel at their own game and produce something cheaper, why wouldn't an airline want to use that?
And so so it's funny funny you mentioned airlines. So when we look at ethanol, they're notoriously subject to they're they're not as stable as petroleum. If you put them in marine engines, especially in a salt water environment, there's a problem with with they tend to gunk up and they don't do well. And the tolerances in aviation fuel
are even more stringent than maritime or or automotive. You can come up with some form of av fuel that is able to fit those demands, and that incredibly high requirements from the aviation industry.
Yes, think of being able to drop something into their existing engines molecularly identical to jet fuel, a that happens to be entirely carbon neutral, something that is actually derived from captured CO two, either atmospherically or otherwise. And so this is what gets us excited, right. Hydrogen aircraft would require you to invent a new aircraft. I think about
how long FAA approvals take. Electric aircraft will be great for short distances, but for long haul aircraft, we don't see a path given the weight and density of those lithium ion batteries that you mentioned. And so if you can provide the multi you know, hundreds of billions of dollars of jet fuel that is consumed every year with something fully decarbonized, it's going to be a much attractive and more easier path for airlines to adopt.
So you would mentioned how complex the regulatory environment is for nuclear How much have the recent legislation the IRA, the same Doctor Acting Infrastructure Bill. How much has that allowed things to happen more quickly than they have in the past in terms of regulatory approval.
It's hard to overstate how staggering and ambitious and exciting the Inflation Reduction Act is. This is the single most comprehensive and aggressive climate bill ever produced by any country anywhere. And what this is doing is allowing OEMs and asset owners to pull forward innovation because it is simply making these things cheaper than fossil fuel alternatives because of these eyewatering incentives. And so interestingly, I'll give you an example.
We actually have a company and a software company called Crux, which is a marketplace for tax credits generated by the IRA. The ITC and PTC tax credits will be about eighty three billion dollars per year according to Credit Suites, which is about seventeen percent of total corporate tax liability. And so this will have to flow from the producers of those credits to big banks, family office places like where you work. That connecttion you monetize those credits and help
their client. Your clients save money today on taxes, and so these software marketplaces will be really an interesting way of demonstrating how giant the IRA opportunity is today.
So, what's the big obstacle that this form of investing faces. This has been pushed back to ESG and the concept of greenwashing. What you're really talking about is innovation on the level of basic science as a physics, chemical chemistry, material science. Tell us a little bit about what sort of skepticism you face.
Well, for one, we can never bend the laws of physics or chemistry, and so we are taking engineering risk, but we don't take science risk as a fund. I think the two hardest things to bet on are sticks that come from the federal government that will actually, you know, put a price on carbon and ultimately ban a lot of fossil fuel alternatives. And second, higher interest rate environments are going to be enormously punishing for capital and teens transitions.
And so I think the two obstacles we face today are thankfully not technology, right, A lot of the technology we need to do this transition is here. The two obstacles are one, what's the regulatory environment that will force fossil fuels off a cliff. And then two, how do
we ensure that this isn't more expensive? Because if you go to working class Americans and a bunch of you know, a feat over educated coastal elites say take this electric vehicle, take this heat pump, it'll be better for you, and it ends up more expensive, that will break the Democratic Party apart. And so we need to really focus on how do we do this as what they call a
just transition. How do you help you know, working class Americans actually save money on their bills, how do you produce give them something that is not just better but cheaper. The median you know, savings account in America right now is four hundred dollars of total savings. And so if you go to someone say I need ninety percent of that for a heat pump today, that's going to be a problem.
What do you think of products like the Ford Lightning one point fifty, which I think the base price is something like forty thousand dollars that looks like a truck that could find it. Did it go up?
It's fifty thousand dollars expensive.
It started originally at forty, maybe it's fifty now, Like the cyber truck started at forty at sixty now, but the lightning seems to be sort of that looks like a regular truck, but you could power your house with it. Are these things going to be useful in our energy transition?
You know? One of the tensions I have, just to speak plainly, is that Americans like to drive big things. But from a climate perspective, ultimately it is kind of a joke to say, like the EV hummer is good. You know, you're actually better off driving a used F one to fifty Ford Ranger than buying a new EV hummer because of the you know, carbon intensity of the manufacturing process. And so that's the thing we need to missauge.
We do need to make this transition. You should probably surprise in the like customers, but buying giant heavy vehicles that are not traveling very far and don't need to be as giant and heavy is not the ideal outcome. Though probably this sort of consumer taste is here and we need to fulfill it.
What we need to do is take like a nineteen eighties era portion nine to eleven and convert those.
To who we're talking. Yeah, that can be my gift after doing this podcast if you wanted to tend that to me.
So let me jump to my favorite questions. We'll only have you for a few minutes, starting with tell us you mentioned Oppenheimer. Tell us what you're watching or streaming, what's keeping you entertained.
There's an unbelievable TV show about the French intelligence service called The Bureau that is a must watch and it's sort of the like what a US allied intelligence service? How they dealt with Syria, how they dealt with a rock, how do they dealt with the United States from their perspective? Must watch.
I just finished The Bodyguard, which was very interesting, and it's the UK. And anytime you get to see how a different country, even the entertainment, how they portray their national security and police, it is always fascinating. Tell us about your mentors who helped shape your career.
You know, my father, who is still the closest person to me in my life apart from my wife, was my earliest mentor and I couldn't be lucky to have had him. And he was the one that always challenged us. Let us said, you can do anything, but whatever you do be the best at you know, push yourself and do something big and help a lot of people. And so that is the sort of challenge that continues to
push me today. I was also really lucky to work for Governor Martin O'Malley, really closely with President Obama and learn from them. And then guys like Julius Genakowski, who is the FCC chairman, who's a partner at Carlisle now an investor in overture, has been a long time mentor and friend to me. And I'm also mentored by my friends. You know, they say, to be happy, make friends that are less successful you to be successful, make friends more successful than you. And all of my friends are more
successful than me. I learned from them all the time. And although you know what's like gorviy doll line, every time a friend succeeds, a small part of me dies, you might still feel a little bit of that.
But such a terror terrible I mean, I'm familiar with the quote. It's such a terrible, terrible perspective. I had a buddy from grad school who was wildly successful, and people always ask me, doesn't it kill you how great Jeff is doing?
I got a root for your friends.
He's one of my favorite people in the world. No one deserves it more, and no one believed me, absolutely absolutely nobody. Nobody believed me. So tell us about some of your favorite books. What are you reading right now?
Books to recommend to the listeners. The Ministry for the Future is the probably the best book on climate I've ever read.
It's Ministry for the Future.
Ministry for the Future. It's a climate dystopia of you know, the first chapter involves twenty million Indians dying in a heat wave and we are going to start seeing thermal temperatures around one hundred and fifty five degrees, which has got clocked in Tehran, and so imagine what happens to human life? How does human life flourish in those temperatures? And then every other chapter is a scientific sort of examination of the underlying sort of science transition. So Ministry
for the Future is fantastic. Just read David Wallace Wells's book The Uninhabitable Earth, which is excellent. You'll need a shot of whiskey after reading it.
Oh, really a little depressing, a little tough.
But you know, he has this sort of line that our kids will look at us in the eye one day and say what were you thinking? Or were you even thinking at all? Which kind of haunts me.
There is a fascinating book that was very early in energy investment called Windfall, and it's really fascinating because it goes to the various investment banks and funds and talks about whatever's hot's going to get hotter, whatever's what's going to get wetter? And here are all these companies and technologies that climate is almost secondary their for profit, and some of them have done exceedingly well. Really, really was a fascinating book. And now we're down to our last
two questions. What sort of unless you have more books? Did I interrupt the book? Fly? All right? What sort of advice would you give to a recent college grad interested in a career in either climate change investing, venture investing, or politics.
I think a startup is the equivalent of a campaign, which is incredibly flat, incredibly labor intensive, and so my advice to anyone that wants to get involved in politics or in climate is go work at a startup, or go work in a campaign, and just be the person they can turn to if you figure that out, if you can be a person that I can turn to, or any leader can turn to and know that they are going to handle that task. Well, you know, there's a really quick ramp.
Rate for you. And our final question, what do you know about the world of venture investing today? You wish you knew ten twenty years ago when you were first getting started.
That it would have been better to get started ten years ago than today.
So that wasn't too early ten years ago.
No, I think ten years ago it was still a little bit more of a cottage industry with ultra low cost interest rates and the zero interest rate environment allows folks to take rewarding bets that you know, delayed revenue recognition for ten years because it was a quick, effectively free and so that was a heyday. I wish I had been doing venture more consciously then.
You know, it's funny I say the same thing about running an investment firm, because I see these firms have been around thirty forty years and it's like, God, if I would have started in you know, eighty two, we'd be a trillion dollars. I can't. I feel like I'm late to the party. I recognize the same thing with you, but it's never too you know, ten years ago was always the best time to do something, and the second best time is right now.
There is a Chinese proverb the best time to plant a tree was one hundred years ago, but the second best time is today. Perfect. But I will say, you know, I do think in climate is one of these mega trends that is going that is just here and it doesn't you know, it is probably the easiest arbitrage investment I can imagine, which is to bet on scientists or you know, an opinions that editor at the wall Stree Journal. And so, you know, I just recommend to the listeners
to really start paying attention to this. Once you start looking at it, the investment opportunity, the opportunity to make money is eyewatering. In addition to being able to sleep all night.
That's great. We have been speaking with show Meek Dutta, co founder and managing partner at Overture Climate VC. If you enjoy this conversation, well, be sure and check out any of the previous five hundred or so we've done over the past nine years. You can find those at iTunes, Spotify, YouTube, wherever you find your favorite podcasts. Sign up from my daily reading list at Ridhelts dot com. Follow me on Twitter or x or whatever you want to call it.
Hopefully it's still around by the time this broadcast. At Ridholt's follow all of the Bloomberg Family of podcasts at podcast I would be remiss if I did not thank the crack team that helps me put these conversations together each week. My engineer this week is Kayleie Lapara uh A tick of Al Brown is our project manager. Sean Russo is my head of research. Anna Luke is my producer. I'm Barry Ritolts. You've been listening to Masters Business on Bloomberg Radio.