The Exchanges

Q You know, this is an investment. This is more than a bridge route, John. This is, uh, this, this seems, are you hopeful? I don't mean that negatively, but like when you listen to that, and then you look at the stances of some of the governments we mentioned, how's this going to work, John?

A I'm going to directly answer your questions. Yes, I am hopeful. I may not be optimistic, but I'm hopeful, and what gives me great hope are the movements which we declare, and this is a subtle point, need to become action. See objective number eight? Greta Thunberg in 2018 was a lone Swedish teenager striking from school on Fridays out in front of the Swedish parliament. By 2019, our school strikes had spread around the world, and four million youth in a hundred cities staged the largest climate strike that we'd ever seen in the planet. And measurably, it resulted in the following change in action. Climate in the Europe, the crisis became a top two voting issue for European nations. Key Result eight dot one says that for voters, we must make the climate crisis a top two voting issue in the 20 top emitting countries by 2025. We have no more time than that to waste. So it's an excellent key result. It's measurable. It's specific. It's time bound. And if we achieve that, we'll find that not only Europe, where she has made it a top two voting issue, but India, the US, and China can develop that public sentiment. But I want to see a detailed plan with the steps that will get us there. That's what we need to get that part of this job done, and it may surprise you, but in this book, I have Doug McMillan, the CEO of Walmart, not as an investor, not as an innovator, But as an activist, b…

AI assessment note: “I'm going to directly answer your questions. Yes, I am hopeful.”

Q book. I read the MIT breath, uh, but what we don't know about climate change, but I'm not well versed like I am in enterprise SaaS. And when I think about it, I'm going, whoa, I'm not as confident investing in climate change as I am enterprise SaaS. Should every fund just be investing in climate? Is there wasted dollars going into climate? Advise me, John, from an investment strategy.

A So every fund should not be a climate fund. That's my first piece of advice. But let me speak to your situation as a SaaS investor. There will be SaaS climate accounting, marketing, marketplace transactions that will depend very heavily, I think, on your insights and success in SaaS-based investing. I believe I've made one of the best of them. I've described it in this book called Watershed. Which is setting out to help people with supply chains manage their carbon equation. Everyone will do carbon accounting. Governments will do carbon accounting. They will score legislation for carbon. It's a new currency, a more important currency, I dare say, than, than Bitcoin is. So take your area of expertise. It might be in materials or robotics or enterprise or consumer applications. And develop a prepared mind. Have a point of view about how this once in a century transition is going to affect that field of human activity.

AI assessment note: “So every fund should not be a climate fund. That's my first piece of advice.”

Q decades, well, a couple of different decades. You saw many different search engines, I'm sure. How do you keep the mental plasticity to see every opportunity as a new opportunity and not be tainted by, oh, we lost money in solar before, so all solar loses money, which is very hard in venture because you do have a tainted mind from the past. How do you keep that fresh mind?

A Well, Mamoun Hamid, who you know is one of the leaders of the Kleiner Partnership, is fond of saying, you must bring a prepared mind to these decisions. And so I, I think it's important to read and learn and bring, ah, curiosity and, and energy, work to, ah, staying abreast of what's important and, and, and, and, and, and why. So it's, it's, it's not enough to know that, um, Bitcoin is, uh, a new means of, of conveying value. You ought to know how Bitcoin works and what the physics are behind it and the technology, because that gives you a better opportunity to understand what the innovators and entrepreneurs are saying and figure out how you might assist them.

AI assessment note: “I think it's important to read and learn and bring, ah, curiosity”

Q Of course it is. I do have to ask, you know, I'm a venture nerd. Why the separate funds? And do you think for funds investing in climate today, we should have the same dedicated climate fund, you know, energy fund strategy in terms of the segregation of funds?

A Well, I, I, I don't have an answer for the industry at large. In the case of Kleiner, we set up a separate fund to focus on pandemic preparedness. And the science told us there'd be a pandemic. Simple observation said we're not well prepared. We invested in nearly 20 companies, I think, one of which Novavax produced better vaccines and other better ventilators. Others pivoted away from that initial mission. And overall, the returns for the fund were not really very good. Uh, we were hoping there wouldn't be a pandemic. That might have increased the returns, but it would have not been the point. Uh, I think that focus is a really powerful advantage when you're trying to serve entrepreneurs and help them succeed in their businesses. It's going to be a lot better if you know more about what they're trying to do and can assist them. But the other Force at work here is building a portfolio, and so the risk of a climate fund in early climate days is that all of the upside of the fund could be decimated by the actions of a nation state like China, which is what happened to the Kleiner solar portfolio. We invested in seven solar companies. The Chinese crushed six of them, all six of which made solar panels. The seventh one made microinverters. It's name is Enphase, and the gains from Enphase made up for the losses across all the rest of the solar investments, so it reminds me of a maxi…

AI assessment note: “In the case of Kleiner, we set up a separate fund to focus on”

Q Of course it is. I do have to ask, you know, I'm a venture nerd. Why the separate funds? And do you think for funds investing in climate today, we should have the same dedicated climate fund, you know, energy fund strategy in terms of the segregation of funds?

A Well, I, I, I don't have an answer for the industry at large. In the case of Kleiner, we set up a separate fund to focus on pandemic preparedness. And the science told us there'd be a pandemic. Simple observation said we're not well prepared. We invested in nearly 20 companies, I think, one of which Novavax produced better vaccines and other better ventilators. Others pivoted away from that initial mission. And overall, the returns for the fund were not really very good. Uh, we were hoping there wouldn't be a pandemic. That might have increased the returns, but it would have not been the point. Uh, I think that focus is a really powerful advantage when you're trying to serve entrepreneurs and help them succeed in their businesses. It's going to be a lot better if you know more about what they're trying to do and can assist them. But the other Force at work here is building a portfolio, and so the risk of a climate fund in early climate days is that all of the upside of the fund could be decimated by the actions of a nation state like China, which is what happened to the Kleiner solar portfolio. We invested in seven solar companies. The Chinese crushed six of them, all six of which made solar panels. The seventh one made microinverters. It's name is Enphase, and the gains from Enphase made up for the losses across all the rest of the solar investments, so it reminds me of a maxi…

AI assessment note: “I think that focus is a really powerful advantage when you're trying to serve entrepreneurs”

Q question to you, John, is like, the world knows it. The consumer feels it. We all want to make a change, and we all want this to happen. My question to you is, what about the governments? What about, you know, Russia, China, um, Brazil, um, some of the less climate-friendly governments? What happens if they don't adopt our same mindset? And how do we think about controlling the uncontrollable?

A Uh, the governments are the biggest problem. And if the governments don't change, if they don't up the level of ambition and urgency, simply put, we're screwed. We will not succeed. And we need all the governments of the world to work on this. And I've especially focused the book on the 20 largest emitters. One of the hard facts about this problem is we are fast running out of time, and so The book is not written to exhort people to take individual action. And in fact, the book warns against being distracted by what I call bright, shiny climate objects. We've got to go for the gigatons. There's 59 gigatons per year of greenhouse gas emissions. That's the UN report from 2019. And that number is growing. It's not declining. We have to drive that number, Harry, To net zero by 20 50, and we have to get halfway there by 2030, which is just eight years from now. In the face of growing human activity, that means This coming year in 2022, to be on track, we need to reduce planetary carbon emissions by eight percent, and then another eight percent in 2023, in 2024, in 2025, to get to a cumulative 50% reduction by 2030. Do you know how many times we've reduced carbon emissions on the planet to date? Never. Never. So what do you think are the odds we're going to pull this off?

AI assessment note: “if they don't up the level of ambition and urgency, simply put, we're screwed.”

Q decades, well, a couple of different decades. You saw many different search engines, I'm sure. How do you keep the mental plasticity to see every opportunity as a new opportunity and not be tainted by, oh, we lost money in solar before, so all solar loses money, which is very hard in venture because you do have a tainted mind from the past. How do you keep that fresh mind?

A Well, Mamoun Hamid, who you know is one of the leaders of the Kleiner Partnership, is fond of saying, you must bring a prepared mind to these decisions. And so I, I think it's important to read and learn and bring, ah, curiosity and, and energy, work to, ah, staying abreast of what's important and, and, and, and, and, and why. So it's, it's, it's not enough to know that, um, Bitcoin is, uh, a new means of, of conveying value. You ought to know how Bitcoin works and what the physics are behind it and the technology, because that gives you a better opportunity to understand what the innovators and entrepreneurs are saying and figure out how you might assist them.

AI assessment note: “I think it's important to read and learn and bring, ah, curiosity and, and energy”

Q into venture, but bluntly we're focusing on climate today and the most important thing. So I want to start there. You backed Google, you backed Amazon, some of the most legendary bets in venture, and then you made the move to invest in energy, climate, Pandemics. Tell me, take me back to that moment. What first gave you that inspiration and transition to focus on energy and climate back then?

A So it was energy and climate, and also, interestingly, the mobile application store, the app store, and the cloud. All of those came together in 2006 and in 2007. And so, yes, we made a major commitment to climate investing. But we also formed the iFund, it was Steve Jobs, and did the crazy thing of backing entrepreneurs who were selling games for a dollar a copy on the iPhone. And it's good that we made both of those bets because the climate investments took a lot longer and more money to produce returns. But over the course of three or four funds, we invested about a billion dollars in 70 or so climate-related investments. Those investments On an as-of-held basis today are worth about three billion dollars. It was hard, but it was not a financial failure, and it set the stage for, ah, a great deal of learning and a boom, really, of investment in climate two dot oh, a second wave, if you will, of innovations around electric vehicles, batteries, wind, solar. Well, that's the story, and, and the basis for this conversation Today.

AI assessment note: “we made a major commitment to climate investing. But we also formed the iFund”

Q the reading, I, I spent the last few weeks reading Speed and Scale. I loved it. As I told you, it made my COVID recovery incredibly, uh, informative, educating, and so thank you for that. But I want to start, though, with the question of, like, how does, bluntly, the innovation and the climate ecosystem today, how does that compare to 2006, 2007, when we had those dedicated KP funds?

A They're dramatically different. Uh, the problem now is evident. It was the subject of some debate in 2006, but you just look around the world, the wildfires, the devastating floods, the hurricanes, the drought, the number of climate refugees, ten million estimated today, and we're just beginning to feel the effects. This is not a new normal. This is a new abnormal, and it's going to get worse In the best of all possible cases. The planet will never be cooler tomorrow than it is today. And so, What's happened from an investing point of view is investors have realized that most of them missed Tesla. Most of them haven't invested in Rivian or Beyond Meat. And so we're seeing big decabillion valued enterprises make real measurable contributions to moving to a new clean energy economy. And I do think that this Climate crisis is, ah, the greatest opportunity of our lifetimes. It'll be the greatest opportunity of, of the coming century. And that's the wholesale transition of every human activity How we produce things, how we consume things, how we move about, how we organize from a fossil fuel based system to a clean energy renewable based system. And so it's, it's, it's both an imperative And an obligation. I think the notion of climate justice I've tried to weave through this book. Uh, the U.S. is historically the world's greatest emitter of greenhouse gases. China is the largest, y…

AI assessment note: “They're dramatically different. Uh, the problem now is evident. It was the subject of some debate”

Q question to you, John, is like, the world knows it. The consumer feels it. We all want to make a change, and we all want this to happen. My question to you is, what about the governments? What about, you know, Russia, China, um, Brazil, um, some of the less climate-friendly governments? What happens if they don't adopt our same mindset? And how do we think about controlling the uncontrollable?

A Uh, the governments are the biggest problem. And if the governments don't change, if they don't up the level of ambition and urgency, simply put, we're screwed. We will not succeed. And we need all the governments of the world to work on this. And I've especially focused the book on the 20 largest emitters. One of the hard facts about this problem is we are fast running out of time, and so The book is not written to exhort people to take individual action. And in fact, the book warns against being distracted by what I call bright, shiny climate objects. We've got to go for the gigatons. There's 59 gigatons per year of greenhouse gas emissions. That's the UN report from 2019. And that number is growing. It's not declining. We have to drive that number, Harry, To net zero by 20 50, and we have to get halfway there by 2030, which is just eight years from now. In the face of growing human activity, that means This coming year in 2022, to be on track, we need to reduce planetary carbon emissions by eight percent, and then another eight percent in 2023, in 2024, in 2025, to get to a cumulative 50% reduction by 2030. Do you know how many times we've reduced carbon emissions on the planet to date?

AI assessment note: “if the governments don't change, if they don't up the level of ambition and urgency, simply put, we're screwed.”