My Climate Journey

Ep 84: Roundtable with Shayle Kann from Energy Impact Partners and Abe Yokell from Congruent Ventures at the 1st SF MCJ Meetup!

Episode Summary

Today’s guests are Abe Yokell and Shayle Kann, respectively Co-Founder and Managing Director at Congruent Ventures and Managing Director at Energy Impact Partners (EIP). This is a special live episode recorded at the first SF MCJ meetup, a great event organized recently by MCJ listeners in the SF/Bay Area. Abe and Shayle are both cleantech 1.0 veterans, and the discussion largely centeres around what happened last time, lessons learned, what is needed now, and the besy ways for us to get there. Founded in 2016, Congruent Ventures invests in early-stage startups in the cleantech space, and Abe and his team have developed a portfolio of 27 companies to date. Prior to that, Abe was an investor at Rockport Capital Partners, a VC firm which was active during the first wave of cleantech in 2007. Shayle started his career in cleantech as a research analyst at Greentech Media. His current firm, EIP, has close to a billion dollars of AUM, much of which from some of the largest energy utilities, and invests in innovative startups across the energy space. This was a great event, and I hope there are many more of them. They are starting to spring up in other cities as well, which is very exciting to me! The audio is a little rougher than normal since it was our first live taping, but it should feel more authentic as well :) Enjoy the show! You can find me on twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.

Episode Notes

In today’s episode, we cover:

• Shayle’s journey from energy transition in the market intelligence space to climate change venture capital at Energy Impact Partners (EIP)

• EIP, a VC with ~$1B in AUM whose LPs are a coalition of utilities

• The sectors EIP invests in

• Abe’s journey from Rockport Capital Partners, a cleantech private equity firm based, to cofounding Congruent Ventures in 2016

• A history of the first cleantech wave

• Lessons learned

• How the current interest in climate tech compares/contrasts with the first cleantech wave 

• What types of innovation is needed in climate tech

• What types of capital are the best for for which types of innovation

Links to topics discussed in this episode:

• Energy Impact Partners: https://www.energyimpactpartners.com/

• Congruent Ventures: https://www.congruentvc.com/

• Rockport Capital Partners: http://www.rockportcap.com/

• Solyndra: https://en.wikipedia.org/wiki/Solyndra

• Thin-film solar cell: https://en.wikipedia.org/wiki/Thin-film_solar_cell

• MiaSolé: http://miasole.com/

• Alpha: https://www.investopedia.com/terms/a/alpha.asp

• National Renewable Energy Lab: https://www.nrel.gov/

• Lawrence Berkeley Lab: https://www.lbl.gov/

Episode Transcription

Jason Jacobs: Hello everyone. This is Jason Jacobs and welcome to My Climate Journey. The show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's episode is a little bit different.

It was recorded live at the San Francisco, My Climate Journey meetup, which was a great event, by the way. There was probably six years, seventy people in the room, and it was more of a round table discussion with Shayle Kann from Energy Impact Partners, a long time analyst in clean tech that turned venture capitalist over the last few years and Abe Yokell who grew up in Rockport professionally doing private equity investing in clean tech, and then is one of the managing partners of Congruent Ventures, an early stage firm doing a wide range of sustainability investing.

So it was a great discussion talking about lessons learned from the first wave, what actually happened, what went right, what went wrong, and what lessons we should apply going forwards. And with all of the money coming into climate tech investing, we talked about how people like Abe and Shayle are feeling about this moment in time and what we can all do collectively to make sure that we don't squander this opportunity and make it a success both in terms of the problem itself and and getting a handle on and, and helping reverse climate change, but also financially.

I'm Jason the host of My Climate Journey. Thanks everyone for coming today. I'm here with Shayle Kann and Abe Yokell.

Abe Yokell: Thanks for having us.

Jason Jacobs: Well, we're all gathered here today because we care about climate change and want to help. And there's a mix of veterans in newcomers in the room, and I'm a newcomer, and you Shayle and you Abe our veterans. So I have a lot of questions on behalf of the newcomers. I'm suspecting they probably have some questions too, and you guys have a lot of experience, so thank you so much for making the time to be with us today.

Abe Yokell: Great to be here. How long do you get to keep the title of a newcomer? Like you're on a tear here? Are you really a newcomer?

Jason Jacobs: First Abe? You need to speak up. Say it like you mean it!

Abe Yokell: Are you a newcomer?

Jason Jacobs: The real reason that Abe is on this panel, if you call it that today, is that it was just going to be me and Shayle; but last night, at dinner, Abe was nice enough. I had never tried a Tesla before, and so he let me drive his car and I was parallel parking in front of a restaurant with a big group of people dining outside. And the rim scraped the curb, as I was parking, and Abe was a good sport about it, but I thought he was too good a sport and I felt bad. So I invite him on the panel, so thank you.

Abe Yokell: It's great to be, this is actually my strategy for getting in every deal I want to get in. I haven't grabbed my car, the crash it a little bit. Then it's like lower pre-money valuation-- win for everybody.

Jason Jacobs: This is good. This is like a human laugh track. I'm enjoying this.

Shayle Kann: The original laugh track actual people laughing.

Jason Jacobs: So maybe for starters, guys, just take a bit, maybe two minutes each on who you are and what you do.

Shayle Kann: I'm Shayle Kann. My whole career has been in one way or another, dedicated to the energy transition, I would say. So climate change, specifically around energy, and that's taken a variety of different forms over the course of the career.

A big chunk of it was I built and ran this market intelligence firm where we were tracking and forecasting the future of the power sector, specifically looking at stuff like what's going to happen with renewable energy and what happens when renewables get cheap. What comes next? All that kind of stuff.

So spent a good chunk of my career building that we sold that in 2016 I left, wanted to spend some time learning to surf and meditate and relax. But soon afterwards came upon this organization where I work now called Energy Impact Partners. We're a venture capital fund, with a little over $1 billion under management, so pretty big fund for this sector.

But the thing that makes us sort of unique is that the vast majority of our capital comes from a coalition of utility companies. So electric and gas, utilities of all shapes and sizes all over North America from like a Vista, which is the utility for Spokane, Washington. Very small up to companies like Southern company and Duke energy and Xcel energy, some of the largest utilities in North America.

So we invest in things that will change the future of the energy sector. And try to bridge this historically extraordinarily challenging divide between these big lumbering incumbents who are the utilities and startups who are innovating in the electricity sector and the gas sector or in sectors adjacent to that, but have historically been somewhat stifled by the challenges inherent in working in that space.

So I'm relatively new to the venture side of this world. Two years into being in the venture capital community. But 15 years or so focused exclusively on like how do we transition this energy sector to make it more resilient, cleaner, decarbonize, more efficient, and so on.

Jason Jacobs: And I don't know if this is actually true, but from my cheap seats, what it looks like is that Shayle was an analyst in this area for a long time, and he started seeing the climate tech dollars.

And so he switched over to venture capital so he could capitalize on the opportunity.

Shayle Kann: That's right. My big lesson was climate tech VC is where all the money is, and so I said, I'm going there.

Jason Jacobs: That's like a nice tweetable component right there.

Abe Yokell: How's that working out for you?

Shayle Kann: Just great guys. It's just great.

Jason Jacobs: Abe, what about you?

Abe Yokell: So, Abe Yokell, cofounder of Congruent Ventures. My co founder, Josh is hiding in the corner over there. Saloni Maltoni one of our other partners and Tina are all in the room as well. This is what we get for being sponsors. We pay our way.

Jason Jacobs: You would've been invited on the panel either way. I'm not coin operated to be clear. He was not invited as a sponsor. He was invited as a clean tech veteran.

Shayle Kann: You're not coin operated yet. I just want to say you're early in your journey and well, let's check back in in a year.

Jason Jacobs: Hey, no, this idyllic, pristine, mission-driven perfection is, I'm going to hold on to that as long as I can.

Shayle Kann: Certainly, certainly.

Abe Yokell: We need capitalism. So on that note, I've been investing in clean tech, what used to be called clean tech. Now we're calling it other things, but we used to be called clean tech now for 16 years. So I was the first junior person that an old clean tech firm called Rockport Capital Partners, which over the years had raised about $850 million dedicated exclusively to clean tech. And I was there for about four years and in 2007 we saw the run up of the first wave of venture interest in the category. Start showing up in like 2006 2007 time period  Kleiner had led a Series B for a Series A we'd done in like 2002 and we started seeing all this Silicon Valley interest and realize that we were missing out.

We realized that we needed to actually extend outreach to make sure that we were bringing kind of the energy expertise and we were combining that with Valley expertise on company building because that was not the history of the firm and move out to Sand Hill. This is a Boston based firm. And so in 2007 I got shipped out here solo to help do that.

We ended up raising another fund after that and I rode the wave up and then I rode the wave down and they asked me to stay as long as I was willing to help manage out the portfolio. In the meantime, most of the talent in venture and frankly in the entrepreneurial community slowly trickled out of the room as the capital dried up kind of post 2008 and really in kind of the 2015 2016 time period, you started getting some, I kind of hate the expression green shoots, but that's the best description for this.

People started orienting back towards climate. People started caring about it and we're talking about the entrepreneurial community and what had happened at that point. Is that there was almost no early stage capital formation capital out there available. And so Josh called me up from his former seat at Prelude Ventures and said, hey, we're thinking about doing this and putting together an early stage fund because we're not seeing enough early stage capital formation.

Are you interested? And so in kind of late 2016 early 2017 we founded Congruent exclusively to focus on early stage venture. We qualify that right now as pre-seed, seed and early series a, our entry sizes relatively small $500K to a million and a half right now. And we like to be the first institutional capital, and we don't need to be, nor are we always, but our real focus is bringing other people and other people's capital and other talent back into the ecosystem. We want to catalyze capital in this world and so the last couple of months in particular and watching Jason do what he's been doing on my climate journey has been amazing because we need the talent.

We need everybody back in the room to try to fix this problem. Venture is a single tool set to address this. It's not the only one. It's probably not the most important, but that doesn't mean we can't have an impact. And that's what it's all about at Congruent. And I think what it's about at everybody over for everybody in this room.

Jason Jacobs: So for those of us that were not around on some of that downward part of the roller coaster that you were alluding to before, what it feel like at the time, and maybe tell us a story or two that stand out for you that was illustrative of that time. I'll ask that to each of you. Shayle...

Shayle Kann: He has the best stories from that time.

Abe Yokell: That I can't tell.

Shayle Kann: I've already made a bet with him about a word that I'm going to get him to say Solyndra. The, um,...

Jason Jacobs: I'm so glad Shayle said that cause aide told me I wasn't allowed to say that before. We came here. Thank you.

Shayle Kann: I'm so sorry. It was a weird time. It was not unrelated to the economic collapse of 2008 and thereabouts, right. These things weren't unrelated to each other. My quick version of the, what happened in that first wave was there was a lot of hype that built up over relatively short period of time. And a ton of that ended up getting channeled into two sectors in particular. Then film solar, of which Solyndra was one, but certainly not the only companies like MiaSolé and a bunch of others raised billions of dollars amongst them to compete with traditional solar panels, crystal and Silicon solar panels.

That was one, and the other was biofuels, and if you add up the total, so peak venture dollars into this sector was like five or 6 billion a year or something like that. A good chunk of it went into those two bets, and both of those bets from a macro perspective turned out to be wrong. The wrong bet took hold.

It was clear that they were wrong around the same time and the financial crisis was hitting right around that same time. So like a lot of money. We, at least from my perspective at that time, I was on the outside of it, but I was running a team of analysts who were trying to track and forecast this market.

It felt like it happened actually pretty fast, and then all of the air got sucked out of the room, and then it was really hard to sort of regain excitement and attention despite the fact that, if you separate out those two big bets, there were a bunch of really exciting things going on around that time and that continued out into the future and some from a venture perspective, even some pretty good outcomes, right?

This was companies like Tesla were getting built right around that time a little bit later. Companies like Nest and like you see there were in the solar world, a whole variety of companies built up around that time. Residential, solar pioneers like solar and Solar City and Sunrun and Vivint Solar. And Sungevity, which unfortunately didn't have a good outcome of its own.

And then technology companies within solar companies like Enphase and Solar Edge, which went public and now a $5 billion market caps as of today, companies that developed projects. So even just within the solar space, we got it wrong on thin-film, broadly speaking, but a lot of things went right. Despite that fact, it was really hard to regain the attention and excitement, especially amongst the entrepreneurial community and the venture community that I think the market warranted. And so it's taken us a really long time to rebuild out of that in my mind. 

Jason Jacobs: Abe...

Shayle Kann: Tell a story.

Abe Yokell:  No stories. You know that feeling when you graduated from college and everybody leaves and you're sitting there and all of your friends are gone and you're like, you're never going to see your friends again.

It was kind of like that for six years post-bubble burst. But in seriousness, I mean, what ended up happening is this, all these people you've built relationships. Well, this whole room and this whole world is all about relationship building, right? Over time and all of these people you've spent years building relationships with have to make a living. They have to do something. The teams have to be funded to keep growing unless they're profitable, which at the time was not the case. And so the teams you back, your co-investors, all of the people you have relationships with slowly trickle out. And I think some were coming back in, but there are a lot of people out there that wouldn't admit that they were in clean tech for a long time.

And it is so exciting to see that coming back. I think the personal kind of punch in the gut. I have like so many stories from this era, but the one that stuck with me personally the most when I knew my career was over was I'm sitting in like 2012 I think I was at my wife's company's holiday party, and I ended up talking to who was then, and maybe now I'm sure this will bite me later, the head of the venture formation group at a large law firm who was one of our colleague's spouses.

And she goes, Oh, what do you do? And I go, Oh, I do clean tech investment. And she looks at me and she goes. I'm so sorry. And she literally just turns around and walks away. It's like, that was my life. I mean, it is personally exciting to see all of this energy and talent coming back into the sector. I don't know where you want to go on the specific stories, but I should probably stay away from some of them.

Shayle Kann: I hit a point where nothing I was doing was ever mainstream. Right. Nothing that I cared about or paid attention to until I started getting in cabs and cab driver would like ask me what I did and I would say something in solar. And then they would start talking about Solyndra. It was like the first thing that broke into mainstream consciousness, which was so unfortunate because there was all this amazing stuff going like, again, not to harp on solar, but because it's a big story here.

What actually came out of that whole wave of time 10, 15 years ago is that now solar is the cheapest resource for new power generation in the world. Full stop. That happened. We got that done. It just turned out to happen during this period of tumult where venture dollars got lost, but that made it into the public consciousness and it's actually still been tough to get the message across today that it is true that your cheapest source of electricity, almost no matter where you are in the world, is going to be either solar or wind as of today.

Jason Jacobs: But I guess coming out of that period, there was a shakeout and you guys stuck it through and the people that stuck it through, it seems like there was this like real kind of collaborative spirit and bond and everyone knew each other and it's really collegial. And now there's this all this new appetite to come in, which I'm sure is very exciting.

But I mean, is there any fear as you look back at some of the mess that was made, that's some mistakes will be repeated in this time. And I guess a kind of a secondary question is, are there key lessons that can be learned from that time and applied as we head into this next wave? Or is it just apples and oranges?

Abe Yokell: So many lessons, but that doesn't mean we have it all right either. I mean, this is the challenge. Venture is kind of a snowflake business, and so it's hard to apply a single set of rules across everything. Where do we want to go here? Should we start going through the lessons learned?

Jason Jacobs: Well, when you see all this new blood coming in, you use the word excitement, but what should all this new blood keep top of mind so that we don't go and make the same messes of yesteryear?

Abe Yokell: The easiest heuristic for me. Is that the venture model works for a lot of things. It absolutely does not work for a lot of things as well. And so there's like 10 sub-bullets to this, but the headline to me is that let's use the venture tool set for things that match the venture tool set in the Valley.

There are many companies that have been funded by venture. It will work for the right kind of company. You also need a capital stack, so we're at the earliest stages. You have to understand how the As are raised, how the Bs are raised, how the Cs are raised, how the SoftBank's function or not. You have to figure that out.

And in our sector, it's been broken and so it is actually fixing itself very quickly. That was our greatest fear when we started Congruent, is that we would end up doing these cool things at the C-level, and then nobody would be around for the party at the Series A and the Series B. And I think there's real traditional venture capital coming in to a lot of the companies in this area, which is terribly exciting, but what we don't want to have happen is $50 million in a single check dumped into something that isn't ready for it, and then it evaporates again. We need good stories to tell. It doesn't mean we're right. It's a very tough balance to say, Oh look, I've been doing it for 16 years.

That doesn't mean I'm smart. It doesn't mean I'm right, but you hope to be able to communicate. Some of the lessons from that time. I think the big sub-bullet from that kind of does it work for venture model to us, is that understanding how much you can reduce risk at the earliest stages of capital formation is incredibly important.

So if it takes you $10 million to do something and you're pretty sure, maybe you budget for five, maybe it takes 10 and you're pretty sure you can go out and raise the next round because you've demonstrated something that somebody cares about. That can fit the venture model. If it's going to cost you $50 million to try to figure out whether it works just don't do it or find a different way to do it. There are funds out there that are not kind of using. We take traditional LP capital. We take venture seeking return capital, and we apply it to these sectors because we think there's actually tremendous alpha opportunities for our LPs, for our investors.

There are funds out there that are less focused on returns and more focused on the impact, and that can be a great solution for some of those companies that take more money up front. That's not how we view venture necessarily functioning properly over time.

Jason Jacobs: What about you Shayle? So for the new blood coming in, speak to them for a moment.

What words of caution, what words of wisdom, what should they know?

Shayle Kann: I guess first of all, this is incredibly exciting. I cannot overstate how exciting this is to me. In the 15 or so years that I have been spending time in and around the sector, I have never seen this level of excitement, enthusiasm from this level of talent.

It just hasn't, at least from my perspective, has not happened before. Even in the first wave, I don't feel like it was happening. It was a different thing at that time. There was some excitement and certainly investors were excited. I didn't see the kind of groundswell of interest. I mean, maybe excitement is the wrong word because it's driven, I think out of anxiety largely, but nonetheless, like this is somebody who's been like watching it happen.

This is. I couldn't be happier about it. First of all, I also think that I've been thinking a lot about this lately because there's sort of like, what are the lessons learned from us, veteran's, thing has come up a lot, and the more I think about it, the less I think the lessons from the first wave apply here.

There's a bunch of things that are true today that just were not true. The first time around, first of all, climate changes continue to pace as become much more acute to many more people. So questions around like, do consumers care about this stuff? I think the answer you would have given 10 years ago and been right is not the answer you would give today and still be right.

We have lots more connected devices in data and the ability to manage large sets of data and like there's just all these things that are different. So I'm trying to be kind of cautious not to overdraw conclusions from the last time. One of the things that I do think is a lesson that I've taken to heart that I do think still applies, especially for folks who are just entering this world.

Cause I think there's a tendency, especially amongst people who are really rationally minded. You want to come at this and say, okay, well, I need to understand the problem and at the contours of it and define it and quantify it, and then I need to figure out, all right, what is the biggest lever of change? What is the biggest solution?

The risk of that, right though, it might be, is that you can result in some like technology fetishism sort of and go down this rabbit hole and not to single out individual technologies. Some of these will play out, but if all the excitement around climate tech wound up in next generation nuclear or direct-air capture or something like that.

These are legit possible components of a solution, but you gotta be really careful not to get overly excited about a technology without acknowledging the real market challenges that it will face getting to scale in the realities of the sector in which it needs to play. And this is one of the things we didn't do a great job of in the first cycle.

Is figuring out, all right, I need to figure out the path to market and the path to scale. And to Abe's point, the amount of capital it's going to require to get to scale for any given one of these technologies. And can that be competitive in an open market because you can't rely on it being cleaner as a reason that it will work.

So for me, that's like the one thing that I am holding on to everything else I'm actually trying to let go of, because I think all of this fresh blood and a fresh set of eyes is actually really healthy here.

Abe Yokell: That's a great point. I actually, I hate panels where people agree, but Shayle and I spend a lot of time together in our office, which we share.

So here we are.

Shayle Kann: I don't agree with that at all.

Abe Yokell: It's perfect. Silicon Valley is exceptionally good at coming up with amazing solutions to system level problems. Generally speaking. You disrupt that value chain. That's how you go after things. You go for the gut, right? The problem with a lot of these old world industries is that exactly what Shayle said.

You think about the system level. You're like, Oh, let's look at the grid and the constituents of power on the grid, right? Nuclear is the answer. Nothing wrong with nuclear. I'm a big nuclear supporter. How do you get there? From a venture perspective, it's all about building the blocks up, and so if you start with $5 million bucks, how do you get there?

If you start with $20 million bucks, how do you get there and understanding the path to market the channel and market. This is one of my other big takeaways from the first time around. Many people disagree with this, but is basically avoid channel businesses early on in your life unless they are dedicated channels.

If you're producing not solar equipment and you're going after the solar installer channel, fine. If you're selling a new building control and you think Siemens, not to pick on Siemens, but some ESCO is going to go and sell your system into a building, you have to think about every person in that value chain who has to say yes, including the incentive structure around the person selling that to the building owner, operator, asset owner.

And you end up in this depth of channel conflict and challenges that never allow you to actually achieve liftoff. And so this whole concept of like disrupting things, it's great, but you have to have a very clear eyed view of how you get your product service to market. If you don't have that, then you have a problem.

Jason Jacobs: But for people coming in, whether they're entrepreneurs or they're in different operating roles, or they might not even be in startups, they might be getting it from some other angle, but one of the things I've found as a non veteran is that there's a steep learning curve. And so what advice do you have other than, of course, pimping the podcast, which let's just assume they're going to say that as part of their answer.

You checked that box, but what are the most effective ways that people can get up to speed and what types of things should they be getting up to speed on to get their bearings and figure out where to anchor?

Shayle Kann: I actually think this is a hard question. I don't know that I have a good answer to this question because I, despite having spent my entire adult life on this question,

Jason Jacobs: Please pimp the podcast once, even if it's quick

Shayle Kann: I don't have a single answer for you. Save for one, climate change is inherently pervasive throughout the entire economy. It touches because unfortunately, we produce greenhouse gases in basically every sector of the economy. So if you're approaching this from the top down, you start with where do emissions come from?

And the answer is freakin' everywhere. So that means there's a ridiculous amount of learning to do. I've spent my entire career basically just on the energy sector, which is not the entirety of climate change, right? Like I don't pretend to know the first thing about agriculture and even within energy.

I still today feel like I don't know anything. There's just so much more. So it's endless. That's one of the things I love about it in some ways is like there's an endless rabbit hole. I can just keep digging myself further into and learning more, and there's always more to figure out, which makes it really exciting for people who are in an intellectually curious.

But on the other hand, it's incredibly intimidating, I think, especially for me, like thinking if I were on the outside trying to get in. And just understand it. I would have a really hard time. My solution to that is to just immerse myself in stuff that relates to this and start to sponge up information.

So actually the podcast is a really good place to do that. I'm sorry, I didn't mean your podcast.

Abe Yokell: Shayle also has a podcast just in case you didn't know. True story.

Jason Jacobs: And truth be told his podcast is a lot bigger than this one.

Shayle Kann: I wasn't actually trying to pimp my podcast, but no stuff like that.

Jason Jacobs: Yet, you still want to sponsor.

I don't know how that works.

Shayle Kann: Anyway, for me, I just read widely. I listen widely. I just tried to pick up the lingo and the language and then I tried to like meet people who are willing to spend some time to teach me things, but I actually don't feel like, and I'm interested to get your take on this too Jason cause you're going through the journey.

Is there a resource or a set of resources that you feel like level you up in a way that other things, reading, listening, don't, does that exist for you? And if not, it should and somebody should build it.

Jason Jacobs: I just may.

Shayle Kann: What resources?

Jason Jacobs: Yes.

Abe Yokell:  Hopefully.

Jason Jacobs: Here's what I've pieced together is that when I look at like the people in this room and whoever, the three people that are probably listening digitally right now, hi mom.

But I think there's kind of a certain spirit and ethos too. This collection of people. And that's also a growing group of people. And so if you look at a podcast, like my climate journey, that's one means through which information is conveyed. And that means if audio might be the thing for some people, there's a high tax on it, but it's really intimate, but it's not interactive.

And so therefore in person works better for others. And some people are talkers, some people are readers. So there's all different, some people like short bursts, some people like long form research papers and things like that. And I don't necessarily think there's a right answer and I don't think it's a climate specific question.

It's like for a certain kind of person, people need to get to know themselves and then seek out the resources that exist. And I think there should be a wide range of resources that exist to help people get up to speed. And there's room for several organizations and tools and services. And initiatives to help build that bridge and connective tissue.

I absolutely want to play a part in that, but I don't think there's one size fits all. And I think the more of that, the better. We're way under on that. We've got expertise, right? But expertise in all these different pockets and all of these different groups need to come together and collaborate in ways that they aren't used to and maybe never have before.

And so connective tissue. I think it's way under, we can't have enough of it, at least from my seat. And that probably leads me to another question I asked you about how to get up to speed, but I have a different question, which is there's these two kinds of, faction is the wrong word, but there's like the veterans who have been steeped in this stuff for a long time, or at least one piece of it.

And then there's all the new blood coming in and those also the veterans in one piece that don't have exposure to the others. So how should we build that connective tissue? What types of initiatives should there be. What types of organizations should exist. So not just in terms of the knowledge, but also in terms of the connections.

If a newcomers coming in and they want to anchor, it seems like they need to be paired with the right domain expertise somehow some way. So how do we facilitate that? And I would say that's a question for you guys, but that's also a question for everybody in this room and a separate listening virtually as well.

To let marinate and think about, which is like why you make it easier for each of you

and Siri. That goes for you too. But what would be helpful and let us know and really us being each other, right? Because there's no one entity that's going to provide that we should all think about not only how to make it better for ourselves, but how to make it better for others that are trying and how to inspire other people to join the fight as well.

Shayle Kann: I have to say what Jason has done here over the last year, year and a half, has been totally inspiring and not just the journey that he is on, but the collective action, which is this is a collective action problem. And you see all of these folks in the same room talking here and virtually, and it's amazing.

And so my big takeaway from that is there's some amazing projects that have come out from this already. If people are poking around that Slack room, which is just awesome to see. But I think one of the things that is worthy of additional attention is just trying to memorialize that and actually bring that into an ongoing community.

I know and hope that Jason continues to do that.

Jason Jacobs: Yeah. But the Slack group was like an MVP and there's no one like MCJ will play a role and I would like it to scale and play a bigger role, but it is not enough. We need so much more and it's got to come from all of you as well. And so I guess the only thing I would ask is if you see ways that MCJ can help give you guys more leverage and give you tools to both be more effective and bring other people in, then let me know. And then if you have initiatives that you want to do and either MCJ or I can personally be helpful or anyone here, because I think that's also something from talking to tons of people.

People respond. If you reach out and ask for help, people are very willing to help. So just reach out, and that's one key takeaway for me. If you're buried in research reports all day, I think there's a role for that, but there's a huge people element and you've got to put yourself out there.

Abe Yokell: And I'd add one more thing.

Which is everybody in this room has a unique skill set, and I think particularly for the new entrance, a lot of people are tentative. They're trying to learn, which is awesome, but they're like, okay, how do I actually take the skillset and apply it to something in climate or sustainability? And I'm looking on the other side and I'm like.

Yeah. All of you. I could literally put you in 10 of our companies right now and we only have 27 companies. There's like hundreds out there. So we have to figure out a way to match make on that. There are people who are interested. The skill sets matter. It may not be linear for you, but it's very linear for people who are looking at the other side of these companies and you know where they need help.

And there's tremendous talent in this room. So I would urge folks just to kind of expose yourself and take action on these things.

Shayle Kann: Can I stand up for research reports for a second?

Abe Yokell: I feel like you could like 10 years of your career. I wouldn't worry about it.

Shayle Kann: You just maligned all this stuff that I love so much.

If you are the kind of person like, absolutely. If you don't want to do this, you don't have to do this. If you are the kind of person who does really want to go deep and understand the actual systems problems and the technologies in the markets and so on. I think that this is a sector that has a lot of that.

There's an incredible amount of publicly available, really good, really deep research. Just in the energy side of this alone, the National Renewable Energy Lab, Lawrence Berkeley Labs, like there's a million places. I go on those sites all the time. I'm like constantly finding new interesting information.

It generates ideas for me. It is relevant to our portfolio companies. I find it actually really enriching. Constantly. So don't totally discount the like sit in a dark corner and read a research report thing. Cause I actually, I think there's an amazing amount, like a really, really deep library of good content that is valuable in the public eye.

Just around this issue, and not to mention all the broader climate stuff. You can read IPCC reports and IEA forecasts and yeah, Saloni was just telling me how she's never read and never going to read an IPCC report. But actually I think it's all really high quality.

Jason Jacobs: So if we had a mic, we would pass it around.

But if anyone is feeling particularly baritone, what questions do you guys have for Shayle or Abe?

Abe Yokell: Or Jason.

Audience Member: I'll start first. Hi guys. I'm Ann. I'm one of the clean tech vets that still has PTSD and trying to dive back in, but like awesome that you kept going. I think for everybody who is newer to help get engaged, what are the companies that you wish existed but don't? White spaces that you see that you want people in this room chasing and exploring?

Jason Jacobs: Okay. Before you answer, let me repeat it for anyone digitally that didn't hear. So what are the areas of clean tech that people should be investing in that aren't, or what are the areas that are most exciting? Did I get that right Ann?

Audience Member: Yep.

Shayle Kann: I'll name a few. I just wanted to say there are companies that exist in each of these. So if any of you are in the room, I apologize in advance. But these are areas where I'd like to see more. I think we haven't solved the problem. So the first one is scalable solutions for commercial and industrial customers to go green in one form or another.

This is a space that nobody particularly to deliver things on site for commercial industrial customers is a different world of like if you're a Facebook and you want to procure large renewable energy contracts to meet the load of your data centers, that's actually a slightly better serve market in my mind right now.

What nobody has figured out. We've got, for example, just with solar, we've got residential solar figured out. We have a lot more of it to build, but the model scales, we've not figured that out in the commercial space yet, and that's just solar and there's a million other things you could do for CNI as well.

I think that is commercial and industrial. Thank you. Yes. This is the one thing, by the way, if a veteran uses an acronym or a term you don't know, you should feel at any point. Totally. Okay to stop us and make us say it out. That also to me is wrapped in with another area where I think there is an emerging bunch of innovation, but I actually think is going to yield big returns, which is there is an enormous amount of pressure on corporate entities right now to be more sustainable or green or make.

Net zero carbon commitments, whatever it might be. Giving them the tools to deliver on that, I think is going to be a big opportunity as well. I'll name two more and then I'll give it to Abe. The third is there is an enormous wave of capital that is interested in flooding into broadly ESG, environmental, social, and governance issues, and I think that ESG capital is increasingly being directed toward climate and sustainability, and I don't think it knows where to go. A lot of it. So there's a third area that I think is an exciting area of innovation, which is trying to find ways to match up large pools of capital with sustainable assets and companies and places to put that money. The final one for me is.

Historically, it was believed to be true, and I think this is a good example of where the first wave and the second wave might be different. Historically, it was believed to be true that you could not rely on consumer action at scale to get anything meaningful done on climate. That people care where they say they care, they don't really care.

They won't do anything based on it. And I'm starting to believe that's no longer true. And it's particularly no longer true amongst younger generations. I think there's a generational divide here, but with younger generations, I think people care. I think they will act upon it, whether with their purchasing decisions or with their behavior.

And so there's a whole new host of things that can be built to unlock that capacity for conscious consumerism or for behavior change. Those are a few ideas for me.

Abe Yokell: Number 18.

Shayle Kann: I have five more.

Abe Yokell: There's a lot of ways to hack of this. I mean, Shayle said something earlier. It's been said that software is eating the world, climate is eating the world.

Everything we do, I'm as guilty as everybody else touches. Greenhouse gas emissions, environmental issues, and so it's easy to pick a couple issues and say, Hey, what's interesting? It's also easy to look at the system level problems and you're like, okay, how do we decarbonize commercial and industrial?

Thermal. So like heating stuff up, industrial processes. How do you do that? That's awesome. I need somebody to solve it. I'm not sure. The venture tool set is always the right tool set to address some of these challenges. So with that in mind, there's some kind of broad categories. There are a lot of companies, one of which is in the room here.

I think that are focused on trying to produce and bring to market a service or product offering for consumers and large buildings and commercial industrial loads that combine the ability to respond to price signals. With what's happening at the wholesale market level, which as you actually get increased levels of penetration of renewables, you have to be more responsive at the edge of the grid.

We have a number of companies that play on this theme within the Congruent portfolio. This is a massive space and there is more to be built there, so there's some fascinating stuff going on. Touching on one of Shayle's points, consumers matter these days. That wasn't true 10 years ago. That doesn't mean you can build a massive business in a short term on consumers who care unless you can find them very inexpensively, which is another digression in the cost of customer acquisition for consumer based businesses, but there is an ongoing trend.

That we're seeing and looking at around understanding the environmental impact of your textiles, of your shirts, and I buy stuff. We get a lot of Amazon boxes at our house. How do you turn these things into a circular system? It actually has a massive input on carbon over time. Another area in general that we're excited about, it's hard to invest in sometimes, but is looking at the ag system and the food system.

Everybody knows the stats about food waste. It's really hard to hack at that problem. There's a lot of different ways to do it, but there's a lot of interesting ways to do it too, where I think the venture tool set can actually apply. So you kind of go through this and you're like, okay, I come from a consumer tech background.

Well, there's a lot to do in consumer. I come from a B2B background. There's a lot to do there. There is every problem out there imaginably that can be solved with entrepreneurial talent. Maybe not 100% of them with a venture model, but that's what gets me excited about this.

Shayle Kann: Can I add one more? I can't help myself because I do really want somebody to figure out a way to solve this at scale.

I don't know whether it's venture backable or not. It might not be. Okay. So my high level heuristic for how do we solve climate change is like very straight forward. Decarbonize, electricity, electrify everything that you possibly can, and then sort of like deal with what's left, which might be stuff like industrial heat.

So level one is decarbonized electricity. So in electricity we have the benefit of having really cheap renewables now. So it's cheaper to build new solar wind than it is to build new thermal, which is really great. But the problem that we face now in decarbonizing electricity sector, apart from what do we do when we get to these higher penetrations of renewables, and that's a whole separate issue.

The problem just in electricity generation is that we still have 2,030 years worth of assets that are operating. That unless they retire early, we'll take a really long time to roll off. So it is true today that for example, this year in 2020 in the United States, we're probably going to build 70% of the new electricity generating capacity that comes online in the U. S. is going to be wind and solar. So it's already winning in new generation. However, it still represents a very small share. Of total electricity generation just because there's so much operating. So the challenge that somebody needs to figure out how to solve is how do we enable early retirement of the existing assets in a way that doesn't then spike electricity prices for consumers?

Because the risk is if you just offloaded all that stuff today, all the natural gas, all the coal, it would cost us a lot of money. So it's easy to say to do that, but those are things that we, the rate payers are still paying off. So if you can accelerate the replacement cycles in a way that is cost agnostic to rate payers, it might actually be the single most impactful thing you could do in terms of greenhouse gas emissions, in my mind, in the long term.

But it's a really tough challenge.

Abe Yokell: Jason, hundred billion dollars to deploy in the sector. You've been at this for a year and a half. Is that right? What do you do with it?

Jason Jacobs: Just because you're a sponsor it doesn't mean you get to commandeer to the podcast, Abe.

Abe Yokell: The sponsor price just went up.

Jason Jacobs: What do I do with it?

Abe Yokell: Yeah, what do you do with it?

Jason Jacobs: So there's been kind of phases to my climate journey where when I first came in, I was like, man, nothing seems big enough. We're so fucked. And then, yeah. And then it was like, well, certain things are, but they need to be huge. Like only the biggest things matter. The trillion gigaton threshold.

And what I'm coming to realize now is that we need to decarbonize our entire global economy. And that is such an immensely complicated thing on the one hand. But also it's like when you try to do anything, when you try to have behavior change, for example, let's say I'm trying to lose weight. Well, food is actually one component of that, but exercise is also one component of that.

But it's not that easy, right. Because if I sleep better, I don't get as much cravings late at night, right? And if I lay off the caffeine, I feel crisper and I like don't feel as inclined to eat the junk. This is hypothetical,  it's not... 

It's a system. My body is a system and many factors that go into that wall.

I really believe that the same is true as it relates to this problem, so consumers caring more really matters. I don't know if I would have thought that when I first came in. Companies stepping up and playing their role really matters. Policy really matters. Our democracy. Really matters. Philanthropy really matters.

Deploying what we've got matters, early stage innovation matters. R and D matters, federal policy and state policy, local everything. Geopolitical stuff, energy poverty, like it's such a complicated thing, so whatever gives you energy and whatever you feel best equipped to do that helps address the problem. That's what matters and then be okay with it and own it.

Shayle Kann: You did a really good job of not answering that question.

Jason Jacobs: Well, someone pull my string and I was just getting really excited. I forgot even what the question was. No, but coming back around to that, then what would I do with the money? I would use it to kind of get more people in the right frame of mind to understand the nature of the problem and what they're uniquely equipped to sink their teeth into. Like I did an episode a while back with BJ Fogg, right? And he's a behavior change expert. He doesn't know anything about climate change, but he knows how to get people to change their behavior. So what does he do? He says, if you're focused on climate action, my expensive consulting and behavior change programs, I'll give them to you for free.

That's doing his part right? If you're a vendor, and you, same way that law firms do pro bono, for example, pro bono clients, it's like if you're working in the climate fight, well, I'll give away my services for free or discounted, or there's so many different ways to help that aren't obvious, and it's just a question of figuring that out.

So I would use that money to help inform more people on what we're dealing with and inspire them to act. I don't know how, but...

I feel the Oscars acceptance speech music is starting to kick in. So maybe we should wrap up. Are there one or two burning questions that people have before we shut it down?

Audience Member: What do you think are the under-supported sectors? What is thin-film solar companies of 2020?

Jason Jacobs: The question from the virtual audience is what is the thin film solar of 2020?

Audience Member: Nothing in their own portfolio.

Shayle Kann: Obviously not.

Abe Yokell: Been funded yet. That's a total Dodge.

Jason Jacobs: And feel free to name names companies.

Abe Yokell: Sure, sure. Backers. Yeah, I can't do that. I mean, I could do it, but I really shouldn't do it, so I'm just gonna keep my mouth shut.

Shayle...

Shayle Kann: I want to give a good answer here. I don't know that I have. Well, I do think there's going to sound like a cop out. Very few things are overfunded because we don't have enough money in this space, so it's actually, I don't think we're at that point yet. As I said before, I think that there's value to be wrought in every facet of this solution set, including the ones that I'm about to mention, but I do worry about too much attention being placed on next generation nuclear.

Carbon capture and sequestration, particularly like as a means to extend the life of operating plants. Though there's some value there too. And direct air capture, direct air capture is tantalizing. That one, I haven't totally made up my mind about that yet, so I should state that with a question mark attached to it.

I worry about it, though, because the economics don't work, then it's nothing where a lot of these other things, they have some value independent of that direct air capture is nothing except just sucking CO2 out of the atmosphere. So worry a little bit about over-indexing toward those. Though, I think there's value in all three of them.

That's the most specific answer I can give you.

Jason Jacobs: All right guys, so one or two sentence parting words for listeners today. What should people leave thinking about?

Abe Yokell: Think about how your skillset can tackle this challenge.

Shayle Kann: This is just so cool. So cool. Think about how cool this is.

Jason Jacobs: Okay, well with that, I think we'll wrap up our first ever live my climate journey broadcast, so thank you very much to our esteemed guests. And let's get back to the thing we wanted to do all along, which was talk to each other.

Hey, everyone, Jason here. Thanks again for joining me on my climate journey. If you'd like to learn more about the journey. You can visit us at my climate journey dot C. O. Note that is dot C O. not dot com. Someday we'll get the.com, but right now dot C O. You can also find me on Twitter @jjacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear.

And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.