Mar 6, 2023 · 1h 16m · capital-allocators
Tom Steyer – Investing to Save Humanity (Climate Solutions EP.1, Capital Allocators EP. 300)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this premiere episode of Capital Allocators' Climate Solutions miniseries, host Ted Seides interviews Farallon Capital founder and Galvanize Climate Solutions co-founder Tom Steyer about his investing career, presidential campaign, and the commercial imperative of planetary decarbonization. Steyer explains how institutional risk discipline, multi-asset strategies, and purpose-driven leadership can deliver market-beating returns while accelerating global climate solutions.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 20% of the talking time here. How this is scored →
Ted as informed peer 4.4 Guest teaching 3.9 Guest disagreement 2.1 Ted pushing back 1.6
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 42:56 Direct rejection of the host's Ukraine energy premise
Tom immediately and forcefully disputes Ted's framing regarding energy security, stating directly that the lesson people draw from the war in Ukraine is not the one Ted described.
Hardest push from Ted ▶ 56:57 Host challenges lack of infrastructure investingTed directly challenges Tom's decision to bypass emerging market infrastructure despite the massive decarbonization demand Tom previously laid out.
Biggest teaching moment ▶ 43:26 Deep dive into regional natural gas transport economicsTom educates the host on the illiquidity and pipeline dependence of regional natural gas markets compared to oil, showing how high prices accelerated Europe's transition.
Ted holds their own ▶ 58:39 Host connects historical 1970s stagflation to current strategyTed showcases his deep allocator background by asking a sharp, technically grounded question on separating macro beta from idiosyncratic alpha during inflationary regimes.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Early Career and Developing the Investor Mindset | 4 | 3 | 1 | 1 | Ted prompts Tom to reflect on his formative investment mindset. Tom explains his intuitive approach to investing at a young age, including buying tractor stocks while working on a ranch. | |
| Risk Arbitrage and Mentorship Under Bob Rubin | 4 | 4 | 1 | 1 | Ted guides Tom through his time at Goldman Sachs in risk arbitrage. Tom shares core risk management lessons learned from Bob Rubin, emphasizing discipline and avoiding unnecessary complexity. | |
| Leaving Goldman Sachs and Launching Farallon Capital | 3 | 3 | 2 | 1 | Ted inquires about the leap from Goldman Sachs to founding Farallon. Tom details the financial rationale and the firm pushback from Goldman leadership when he departed. | |
| Strategy Evolution and Global Scaling at Farallon | 5 | 3 | 2 | 1 | Ted recalls Farallon's early team setup around a single table. Tom clarifies the structural differences between macro funds and absolute return arbitrage, explaining why scaling globally required specialized local teams. | |
| Hiring for Character and Navigating Market Crises | 4 | 4 | 1 | 1 | Ted asks about Farallon's most difficult operational tests. Tom shares how exogenous shocks like the 1986 Ivan Boesky scandal and the 1987 crash taught him the necessity of extreme integrity and risk management. | |
| Organizational Growth and Leadership Succession at Farallon | 5 | 3 | 1 | 1 | Ted asks how Tom engineered a clean leadership transition at Farallon. Tom outlines the limitations of informal management at scale and explains his deliberate eight-year handover to Andrew Spokes. | |
| Post-Farallon Environmental Focus and Coalition Building | 4 | 4 | 2 | 1 | Ted explores Tom's post-retirement shift to climate work. Tom explains how he built nonpartisan coalitions with figures like George Shultz and Hank Paulson to frame climate action in economic terms. | |
| Running for President and Engaging the American Public | 3 | 3 | 2 | 1 | Ted asks about Tom's 2020 presidential run. Tom counters conventional complaints about the grueling nature of campaigning, describing the experience as energizing and deeply educational. | |
| Founding Galvanize Climate Solutions and the Investment Case | 4 | 4 | 2 | 1 | Ted probes the thesis behind founding Galvanize. Tom compares the transition to the 1990s internet boom, asserting that every modern company will inevitably become a climate company. | |
| Sponsor Message: Ridgeline Investment Management Platform | 4 | 7 | 6 | 3 | Following an ad break, Ted suggests the war in Ukraine demonstrated the impossibility of quickly shutting off fossil fuels. Tom immediately rejects this premise, schooling Ted on European gas pricing dynamics and accelerated decarbonization. | |
| Spectrum of Climate Solutions and Technological Horizons | 4 | 4 | 1 | 1 | Ted asks about capital allocation across technological horizons. Tom outlines the commercial differences between immediate-retrofit technologies, near-term cost crossovers, and long-term bets like nuclear fusion. | |
| Multi-Asset Strategies and Emerging Markets Decarbonization | 6 | 5 | 4 | 5 | Ted challenges Tom on why Galvanize is not pursuing global infrastructure despite immense developing-world demand. Tom playfully teases Ted's institutional background while stressing that entering new asset classes requires world-class specialized teams. | |
| Generating Alpha, Assessing Teams, and Core Investment Truths | 6 | 4 | 2 | 2 | Ted draws comparisons between current macro inflation and the 1970s Farallon playbook. Tom argues that macro beta fluctuations are secondary to identifying structural alpha and adaptable management teams. | |
| LP Engagement, Invest vs. Divest, and Regenerative Agriculture | 5 | 4 | 3 | 2 | Ted asks about LP demand and the shift from zero-sum hedge fund trading to positive-sum climate impact. Tom insists his competitive drive for top-tier returns is unchanged and advocates investing over simple fossil fuel divestment. |
Statements from this episode (23)
Steyer: Ranches exist to generate profits for John Deere, not ranchers
“These ranches are not businesses. They live, as far as I can tell, to buy equipment from John Deere, an international harvester, and I would like to buy stock. In John Deere and International Harvester, because it's very clear to me about who's making all the …”
Steyer: Goldman's risk arb desk was profitable every year in the 1970s
“But the Goldman Arb group managed to make money every year through the seventies.”
Steyer: Investors do not get paid for degree of difficulty
“In investing, you don't get paid for degree of difficulty. Making a straightforward good investment that you have high confidences is good. You don't have to do the triple flip half gainer in investing to make a good decision. You can make a simple decision. D…”
Steyer managed half of Goldman's risk arb but earned 0.1% of profits
“My last year at Goldman Sachs, just to put it in a context of investment, I was running half of the investments for the art group. They paid me one 10th of one percent of the income from the art group.”
Steyer: Hellman & Friedman backed Farallon launch with $8M seed commitment
“When I asked two different people if they would basically back me with limited partner money, one of them was a firm in San Francisco where the number three person was my old roommate. It's called Hellman and Friedman, and I think they guaranteed me eight mill…”
Steyer: Goldman Sachs had zero China staff and two in Hong Kong in 1983-1985
“Goldman Sachs, which was, as I said, I think the premier investment bank in the world, when I worked there in 1983 to 1985, had zero people in China and two people in Hong Kong.”
Steyer: Mediocre hires cannot be trained into performing excellent work
“You can't fake excellence. If you're going to hire somebody, if they're not excellent coming in, they're not going to do an excellent job. That is an overwhelming fact of life, and that is something that I'm not sure everybody believes right now, but that is s…”
Steyer: Organizations over 125 people cannot be managed informally
“If you get beyond a 125 people, you really can't manage informally. You have to have systems and processes and hierarchies and rules.”
Steyer telegraphed Farallon Capital's leadership succession eight years in advance
“One is I was very clear for years before I left at the end of 2012 that the person who was going to take over was Andrew Spokes. And so that was no surprise to anybody. I said it for eight years beforehand.”
Steyer: The US is not going to adopt single-payer healthcare
“The key issue in this primary campaign seems to be whether we're going to have single payer healthcare, which anyone with a brain in their head knows we're not going to have single payer healthcare.”
Steyer: Running for president is not grueling, just get a real job
“People always say it's so grueling. I was like, really? You think this is grueling? Get a job. It's not grueling. It's super fun.”
Steyer: Every company, even ExxonMobil, will eventually become a climate company
“Every company, Exxon, is going to be a climate company. No question about it.”
Steyer predicts long-term energy storage systems will be viable by 2033
“Over the next 10 years, we'll have storage systems that enable us to do long-term storage”
Steyer: Americans Recycle Only 6% of Plastics as Consumption Explodes
“Even though we recycle only six percent of our plastics, the use of plastics is exploding.”
Steyer: Siting and construction delays mean nuclear fusion won't impact until 2040
“And I think people feel as if they can break through on the engineering in the next 10 years, then that would have real impact, because then you have to site, build, plants. That takes a really long time. I'm sure there'd be a lot of pressure to do it faster. …”
Steyer: Real estate retrofits require proving owners will be richer by retrofitting
“For it to really happen, you have to be able to prove that you're going to be richer if you do the retrofit than if you don't do the retrofit”
Steyer: India will generate five times more electricity in 2050 than today
“If you look at India, they're going to have five times as much electricity in 20 50 as they have now.”
Steyer: Only 10% of DRC's 100 million people have access to electricity
“I think the DRC has about a hundred million people, the Democratic Republic of Congo, 10% of those people have access to electricity.”
Steyer: Diesel generator power costs 10 times more per kWh than solar
“A diesel generator, which of course was fossil fuel, and it also emits a lot of not particularly healthful emissions from burning the diesel, but also is obviously a big emitter of CO₂, costs 10 times as much per kilowatt hour as solar.”
Steyer: 10% of US wealth clients request ESG versus 90% in Europe
“In the United States, if you talk to the huge asset gatherers, the Black Rocks, the Goldmans, if they get a new investment client, so they come in and they're going to have an investment advisor, and they're going to allocate their portfolio, 10% of them want …”
Steyer: The climate crisis requires profitable transition investments, not fossil fuel divestment
“This is not the time for divest. This is the time for invest. The answer here is Making profitable investments in the transition to make it happen faster and to ride the wave of demand that is that transition.”