The Exchanges

Q How'd you map out the landscape of the types of opportunities you wanted to look at in the space?

A Well, it's pretty easy. There's just the sources of carbon emissions, so you can just look across them. Energy is obvious, transportation is obvious, but agriculture, our current agricultural practices are kind of a disaster. The built environment, building buildings and running buildings, residential and heating and cooling, industrial chemicals, we can look at all these sources of emissions. Obviously, built environment includes concrete and steel, which are just massive emitters. The sheer process of building Portland cement Releases a bunch of carbon. It's a chemical reaction, not just the energy you need to run the plant. So that was obvious where the sources of carbon were. And if the core thesis is that those are expensive and decarbonized options are cheaper, then you've got your list of opportunities set out for you. One of the things back to hearkening earlier is we did not have a formula for we need to do 20%, 20%, 20% across these areas. We looked at each deal with fresh eyes and just said, is this particular approach one that makes sense? We only looked at deals that would have a material enough impact on carbon to make sure it was worth our time. So we're not doing paper straw bullshit. But at the same time, we didn't have a hard and fast. It has to have a gigaton scale impact. But it turned out the potential carbon offset and decarbonization there correlates real…

AI assessment note: “There's just the sources of carbon emissions, so you can just look across them.”

Q As you look out over the next five or 10 years, you're already back in this working 70 plus hours a week. What are you hoping to accomplish?

A Well, I actually think what we're doing right now, we have a carbon removal fund. So it's a fund that funds companies. Again, that's one where we shifted strategy after we saw a bunch of money actually piling up on the demand side for real carbon removal, not offsets, actual removal, pull it out of the air and back to the ground. We can't save the planet without actually pulling all this pollution back out of the air. We can stop emitting, but there's a bunch we got to get back out. We saw billions of dollars of demand piling up. And we launched a separate fund to go after it to build the supply side. We call that one 7.81 because we believe with that fund, we'll be able to pull 7.81 gigatons of carbon out of the atmosphere. And when we do so, we will reduce the parts per million in the atmosphere by one. So we name all our funds after various atmospheric elements that create global warming. Our first fund was four 11. That was the parts per million of the year we started investing out of that fund in 2018. Our second fund was four 19 a few years later. Our latest fund that we just wrapped up was four 21. We've got funds named for nitrous oxide and methane, but it's a constant reminder. And every piece of swag we ever make, we timestamp with the parts per million on the day it was made. It's a reminder that this is a J curve business. It's going to get worse before it gets bett…

AI assessment note: “we believe with that fund, we'll be able to pull 7.81 gigatons of carbon”

Q Let's go to Buffalo. Let's go way back. What got you really excited when you were a kid?

A I feel really lucky to have grown up in Buffalo. At the time, we were so far off the grid for everybody who is making stuff happen in the world that there was something really freeing about it. There was low expectations, frankly, on everyone except the Buffalo Bills, who still haven't been able to deliver a Super Bowl. It's heartbreaking. But I think there was a certain freedom there. I was a Gen Xer, so I was one of the last of the feral generation, so there's a real freedom growing up there to go out and explore and to try stuff, and as part of that, I was always looking for hustles. I had lots of little side businesses as a kid. When I was six, my parents got a call from the neighbors. I was towing a wagon around the neighborhood, my brother wearing a sandwich board that I'd put on him that said air fresheners, 25 cents, and they were fresh walnuts from the yard that still had that aromatic skin on them, and I'd poked holes with a fork and was selling them. I think I'd clear like five, six bucks, which was real cash, and so I was always looking for hustles. I was just driven by that, and our family was doing fine. We were perfectly middle class, so it wasn't like we had any struggle for money, but I just was attracted to it from the early days. There's no doubt about it. Along the way, I had a ton of little businesses. I sold blow pops in high school. I'd buy them wholesale…

AI assessment note: “I was always looking for hustles. I had lots of little side businesses as a kid.”

Q How'd you spend your time when you were in law school since you weren't going to classes?

A More hustles. Trying to start a company that helped people find class action claims that they might be entitled to called cash action. And I was day trading. I took my student loans and told the school they hadn't shown up and floated them into some online accounts. And I spread it around. I opened up accounts at E-Trade and CSFB and Scott Trade. And back then they hadn't coded reg T into those platforms yet. So you basically had access to unlimited leverage. By the way, let's just be clear. I am not advocating any of this, but you're asking and I'm telling. And so I would buy a million dollars worth of stock with 5000 dollars worth of equity and it would trigger a margin call, but I had seven days to meet the call. And in the meantime, I own the stock and I would sell it on day six. You know, I get a call from a broker. Hey, are you planning on wiring the money in? And I graduated from law school in the 2000. I caught the 99 market. And this is a lesson across my entire career. When things are going up, it's easy to convince yourself you're a genius. And when things go down, it's easy to tell yourself that it was bad luck. And so much of what we do for a living is inverting that. And when things are going up, giving yourself, hey, you caught a wild ride. Your timing was great. And when things go wrong, what did you do? How did you not manage risk? How did you confirm your bias…

AI assessment note: “Trying to start a company... And I was day trading.”

Q Before we dive into Lower Carbon, what did you do in the years in between your retirement and starting Lower Carbon?

A Yeah, we did a lot. So it turns out Crystal and I suck at retirement. We're just not those kind of people. We live mobily, so we're on the road. Our kids have, for the last three years, gone to online school, like a one-on-one Zoom school. So we've tried to raise them in Europe, different parts of the United States. Mexico. We move around. We do a lot of nonprofit and philanthropy work. And by the way, you can't just walk away from a portfolio of a hundred companies. Turns out, like I said, you've made a commitment to them. So all we did was retire from taking on new money, but we still had a lot of work to do. But along the way, we just had this thesis that the cost of building stuff had come down so far as a result of machine learning, shared bioreactors, massive compute clusters, That we just saw all this stuff coming down to where the same stuff that unlocked Y Combinator and that era of software was happening in building hardware and climate, just stuff around ag, transportation, energy, built environment, all that stuff was benefiting. So as a family office, we started quietly dabbling in it and making these investments, but the investments came with, hey, we're showing up to learn about it. We read everything we could read, and then we have a rule, call the author. So we read a book, and if it was compelling, we get in touch with the author. By the way, Turns out authors…

AI assessment note: “We live mobily... We do a lot of nonprofit and philanthropy work.”

Q Which two people have had the biggest impact on your professional life?

A Obviously, I think my mom and dad setting us up to have these diverse career experiences as kids, so we would work construction, and then I would go intern with a lobbyist in DC at age 12, and write position papers for them. I would go with my dad to court at night because we didn't have a babysitter sometimes. So getting exposed to that and literally sitting with him at the table and going to my mom's classes that she was teaching, I would do the work alongside the college students. Crystal, my wife and business partner, who is my friend, and she designed the logo for Salinger Group many years before we ever started dating, I think has not just a higher EQ than me, but is also a better negotiator. She grew up Her parents are diplomats. She grew up all over the world negotiating in the bazaars in India. She's very easy to underestimate because she has a very infectious smile, but she's a ruthless negotiator and also can channel, I think, users of businesses sometimes better than I can. There's no way we could have built this business, any of these businesses without her. And then I just look at Eric, Larry, and Sergey as one combined unit. The formative years of my life, that had more impact on me than the university I went to school at. I had incredible professors who taught me to learn with a capital L instead of train with a T, really dive into those works and study abroad a…

AI assessment note: “Obviously, I think my mom and dad setting us up... Crystal, my wife and business partner”

Q How do you think about working with the team to work with the companies when so much of the brand gets tied into you and Crystal?

A It was Larry and Sergey who taught me, I want to expose you to the entire decision-making process so that you can channel me the next one of these that comes up. Cause Larry and Sergey were just, as the company scales, we can't make all the decisions. So we need to teach people how we think about things. They were wildly transparent and their executive meetings, they had a note taker who would take the notes and then you could subscribe to the notes from that meeting. They would be published after the end of the meeting. And you could see almost like a script, the deliberative process. Larry, Sergey, Eric, Cheryl, Shona, whoever was actually part of that decision, going back and forth and figuring it out. So when we saw that come up in our division, I don't have to run it up the flagpole until further notice. I know the values and the rubric for the company to make this decision. I've tried to do the same thing out of the same selfish interest. As we get bigger, I can't make every decision. The one all hands meeting we have is everyone in the company is invited to our investment committee. The lead on the deal or the co-leads on the deal present the deal, but everyone in the company has access to everything we've done. All the diligence, the deal memo, all the MOIC analysis, everything we're doing on that. And then we debate it openly and everyone, the twenty-two-year-old has a…

AI assessment note: “expose you to the entire decision-making process so that you can channel me”

Q What'd you dream about doing when you were a kid?

A When I was 41, my wife and I were cleaning out our garage in Truckee, and we found an old journal. And it was from a year I was studying abroad in Europe. I was in Ireland. It was junior year abroad. And it was actually funny. It was a notebook that I was not paying attention in a class. There was a girl I wanted to know. We would write five questions in the notebook and pass them back, you know, while we were supposed to be paying attention to modern Irish history or whatever. And write the answers, write five more questions, pass it back and forth. And in there I wrote, what do you want to be when you grow up? And I said, I don't actually know what the job is called. I know it's going to involve a lot of high stakes, high reward. I'll probably do it from a bare bones warehouse. And it'll just be up to me to make the deals happen. It'll all be on me and storytelling and convincing people to do these things. Cause again, I never thought about myself having a team or network or resources. And I said, I'll do it part time from the mountains, part time from the ocean, whatever it is, I'll be the best there's been at it. And at 40, I'll quit and figure out what I want to do with the next chapter.

AI assessment note: “I don't actually know what the job is called. I know it's going to”

Q How did you tackle that problem, making sure you're around the best companies?

A I made sure that I got in front of where those entrepreneurs are hanging out. So I would show up to Y Combinator and volunteer to be helpful and speak at their stuff, but I would go to universities. I'd go to the computer science schools. I just made sure I was in the room and adjacent to those people. We do a lot of work with Bryan Stevenson at the Equal Justice Initiative, who says you can't help people if you're not adjacent to them. And I feel it applies to so many things. You can't find that deal flow if you're not in those realms. But the second part of that is I did build a brand around myself of why you would want to work with me. Here are the ways in which I can be helpful to your company. Because I don't think a founder should ever just take on investment. It's not a charitable act investing in a company. Every time a founder is considering taking money from a venture capitalist, there is the same process they should use when they're considering hiring an employee to whom they're going to give stock options. Every single time you're making the calculus is the amount of the company that I'm retaining Going to be worth more as a consequence of this fund, or this partner, or this new employee owning stock here. That should go through your head every time. Even for the junior employees, is the rest of the stock going to be worth more as a result of this person joining? If…

AI assessment note: “I made sure that I got in front of where those entrepreneurs are hanging out.”

Q When you got to Georgetown, you mentioned just the people around you, broadening your horizons. How did you think about getting exposure to the world beyond where you came from?

A As a kid, I was really good at math, eerily good, and so I started attending the University of Buffalo for math at nights, and beginning in seventh grade. I qualified in sixth grade and started going to class in seventh grade, and I did that for a few years, and it was incredible to really push the envelopes into super advanced math as a kid, but at the same time, it was coming at the expense of hanging out and drinking beer with my friends in cornfields and playing cards on Wednesday night and stuff when I was supposed to be doing homework. And so I kind of had a little math breakdown. I felt like it was getting in the way of real life, so I quit in my junior year. So by the time I went to choose colleges, I really wanted to avoid math, and School of Foreign Service, SFS, has also been called safe from science. Back then, they've changed it since, but there was no real science or math in the curriculum, and that was not an accident that I chose that. It was liberal arts, and I wanted to dive into the great books. I wanted to wrestle with philosophy and theology and sociology and ethnography, and it was a unique opportunity to do that. I signed up for a degree program where study abroad was required, and so was studying foreign languages and a lot of international relations work. I mean, growing up where I grew up without a ton of money, I'd set foot in Mexico once. We crossed …

AI assessment note: “I signed up for a degree program where study abroad was required”

Q When you looked at the companies you were screening through, what was your mix of focusing on the idea itself and the founder?

A I don't have a clean answer to that because I think that question has been through the meat grinder a few times and people have pat answers to it, et cetera. And by the way, I think the biggest risk in this business is starting to believe your own bullshit a little too much and doing things that confirm your own bias. I try to be obsessive about looking at everything with the freshest eyes possible. And that's why you'll see across our lowercase portfolio, there wasn't a single thematic approach to the company, to the product. It was each time, and I think we benefited from that, was Uber and Twilio and Twitter all have nothing in common. And Stripe and Optimizely and Docker, and maybe with Instagram and Twitter, there was some overlap. In retrospect, by the time, one didn't do photos and one was photos only. But most of them were brand new, fresh approaches, and I think that was the key, was that when Jeff Lawson sits down pre-seed at Twilio, I am looking at this with the freshest eyes possible. I had some exposure to the publicly switched telephone network and trying to code for it back building Google talk and some of our chat products, but I was looking at it with completely fresh eyes with Uber. Everybody else was just, it's an impossible business. Even some of the most prolific spray and pray investors in Silicon Valley passed on it. And yet we were looking at it with fre…

AI assessment note: “I really try to avoid any formulaic approach to these things”

Q So everything up to that point, there's a tremendous amount of entrepreneurial drive. You've got operating experience in a massively growing business across all the different divisions. You'd think that that would lead to you starting a company, running a business. How did you turn to investing?

A Within Google, I had the opportunity to start stuff, and so I did. Google was a place where you could start products, and sometimes I would do that by acquiring a team and say, let's go. We acquired what became Google Maps, Google Earth, Google Talk, location-based stuff. The only thread I was on with Steve Jobs ever was where he was telling us exactly how big that blue circle needed to be to tell you where you were on Google Maps. That was amazing to see how he would choose those exact colors and stuff. And then ultimately I founded a division with a couple other partners to push the envelope in the wireless space. We went from zero to within a year bidding six billion dollars on spectrum and attaching openness rules to wireless spectrum. That's why the wireless networks are net neutral. It was because of this big hand of poker we'd played. We had an opportunity to spin that out and make a company, and there were three of us running the group and our third, our technical lead, didn't want to. He was at a different place in his career. Where I was ready to go. So within Google, we had this opportunity to create these businesses without a ton of oversight. I was good at leading deals, identifying teams of entrepreneurs internally and externally, and helping them ship and helping them identify the resources they needed. We wrote an angel check from Google at a company called Mera…

AI assessment note: “I was good at leading deals, identifying teams of entrepreneurs internally and externally”

Q management firms moving to Ridgeline gain a decided advantage. That's why customers call it miraculous, game-changing, and an awakening. If that's not how you would describe your investment management tech, request a demo at ridgeline.ai. And now, back to the show. How do you reconcile the desire to get to know the founders with the speed required to make decisions on companies in a competitive world for what you're doing?

A We do move faster than most, particularly because we don't have a massive investment committee and we don't have any fixed parameters. So we look at every deal with fresh eyes and our team is fast. We do a big Moik analysis and we spread out and we do all kinds of reference calls, et cetera. But right up front, we will go to where those people are and spend that time. Look, I've loved, I've always been distributed. Our workplace has always been distributed, but there is no doubt sharing space with people and breaking bread reveals a lot about who they are. What drives them? And you can't really back somebody until you know their ambition and what's on their personal scorecard. What are they trying to do with this thing? Is it entirely mission driven? Is it just they're looking for a million dollar exit and a base hit? Are they doing it out of anxiety? Are they doing it because other people told them they should do it? When I retired lowercase, it was probably the most bankable I was. We walked away. Crystal and I retired it in 2016 to just say, This doesn't feel as compelling anymore for us personally. We don't love the impact we're having. This doesn't feel like a great trade-off for when we tell our kids why we can't hang out that day. It doesn't feel amazing. I had this moment on Shark Tank where I was looking at a kitchen gadget. Shit, this kitchen gadget's gonna make money…

AI assessment note: “We do move faster than most, particularly because we don't have a massive investment committee”

Q How do you and your team get involved in the companies in this space once you've invested?

A Well, not everybody needs the same things. Some of those teams come from founders who are insane at supply chains already. Maybe they came out of Tesla, and they just know how to ship and build, and that's what they do, but they're not as great at user interfaces. Or we have a team that is basically a bunch of ex-Apple guys who are insane at building a consumer device and It's called mill. It's a trash can that basically composts all your trash in your house. If I were to get rid of our mill, my kids would kick me out of the house. I've never seen a more addictive product in my life. All your food scraps go into it. It eats them all. You no longer have any smell in your house or taking the trash out. Three weeks worth of food, and we cook it at home every day, turns into basically a cubic foot of food waste, maybe two cubic feet. It smells like Thanksgiving, we all say, when you open the thing up. It's just amazing. It dehydrates and compost it quickly. And then it turns into chicken feed. You mail it back into the company, it's chicken feed. Massive impact on carbon. Methane doesn't get released. It's massive. Those guys aren't guys I'm going to counsel on how to build something beautiful. They were the former Nest team, right? I have no feedback for them on how to make something beautiful and easy to use. It's stunning. We were instrumental in the conversations on how do you …

AI assessment note: “We were instrumental in the conversations on how do you charge for it?”