This Week in Startups - How VCs view founders with a side hustle + Bringing ESG to VC with Joe Blair | E1557

Episode Date: September 11, 2022

Sunday special! First up, J+M break down how VCs view founders with a side hustle (1:44), and how founders can actually make their side hustles accretive to their startup. (12:45) Then, Molly interviews Bay Bridge Ventures Co-Founder & GP Joe Blair on his ESG-focused VC firm. (28:00) (0:00 Molly tees up today's segments! (1:44 How VCs view founders with multiple roles (11:24) LinkedIn Jobs - Post your first job for free at https://linkedin.com/twist (12:45) How to create side hustles that are accretive to your startup (20:52) J+M tee up today's climate interview (26:56) Vanta - Get $1000 off your SOC 2 at https://vanta.com/twist  (28:00) Joe Blair, Co-Founder & GP at Bay Bridge Ventures, joins Molly to break down his institutional ESG and sustainability-focused firm (36:09) Spokn - Get 3 months free at https://getspokn.com/twist  (37:37) Bay Bridge's thesis, evaluating what qualifies as an ESG investment, diligence on hard tech, and more

Hey, everybody. Welcome to Sunday. We have a great VC Sunday school today. We're talking about founders who have other jobs, the various times that that can work and the many, many times when unfortunately we are unlikely to fund you if you have not quit your day job to focus 100% on your startup. And then I'm going to interview Joe Blair, the co-founder and general partner at Baybridge Ventures for this week in climate startups. He is a climate investor who goes all the way back to the first clean tech wars. And Baybridge is a really interesting firm. It is specifically, focused on ESG and sustainability. And we're going to talk about how they look at that, the metrics that they use to measure that in terms of their investing and just this lens on venture capital. It's going to be a great show. Stick with us. This week in startups is brought to you by LinkedIn Jobs. A business is only as strong as its people and every hire matters. Post your first job for free at LinkedIn.com slash twist. Vanta. Compliance and Secure. shouldn't be a deal breaker for startups to win new business. Vanta makes it easy for companies to get a SOC2 report fast. Twist listeners can get $1,000 off for a limited time at vanta.com slash twist.

And Spoken is a workplace podcasting platform that's loved by startups like Robin Hood and 155. They just launched Spoken Stories, a new way for companies to build connection and community remotely. Get three months free at getspoken.com slash twist. That's G-E-T-S-P-O-K-N-com slash twist. All right, it's Sunday. The longest week ever, Molly, for Jake House. Jesus, Mary and Joseph. But I'm alive. I'm here. I'm going to make it. You're doing it. And he's still teaching. He's still people. Jason is still dropping the knowledge. You cannot stop him. Brian. Interesting conversation today that was sparked by a tweet and honestly like conversations we've had over and over internally. I saw a tweet by Alex Iscold in early stage BC at 2048 BC who said,

and I quote, it is shocking to me how many founders have not two, but three or four currently active roles on LinkedIn, including CEO of several unrelated companies or consultancy or an investment fund. This is a massive red flag for me as a VC. Curious what other VCs think and if this is the new normal. You know, listen, I'm the wrong person to ask about this because I have multiple projects. I try to do the podcast. I have Insight.com and I invest. So I'm doing three things objectively. And, you know, this is not the way to have breakout success, especially early in your career. I would say in your 20s and 30s, you need to be laser focused on one thing and secure the bag and be ultra-focused.

Now, there are three examples at scale of people being able to do this. One is Steve Jobs, who was the owner and chairperson of Pixar and would spend a day there and then spend four days or five days at Apple. And obviously, Pixar and Apple, two iconic companies. Steve Jobs, iconic entrepreneur. And of course, my friend Elon running SpaceX and Tesla concurrently, he did not want to run Tesla. He was very clear about that publicly. so I'm not speaking out of school here.

He went through four CEOs he tried to hire. Just nobody could pilot that fighter jet. And it really is like Tesla is a fighter jet. And there's, I think, one human who can actually handle the controls of it. Now, that doesn't mean in 10 years, like there might be enough controls in place and automation or whatever and a big enough team to do it. But, you know, he's a pretty unique individual in all the world in terms of his energy level and focus level and brain power. And then there's Jack, third example, with Twitter and Square.

And I think everybody believes that was a failure. And Twitter floundered and had chaos and according to all reports, he might not have been in the building enough. And that's really where you start

to see this is listen, if everything's going well and it's Steve Jobs, if it's Elon, in that case, they were firing on cylinders. They had very deep benches. And that really is what it becomes

about. It's like, what's the bench like? And if you look at it companies already established. That's a big piece too. Right. Like, I mean, Apple was already, Steve Jobs had already resuscitated Apple by the time we went to Pixar. It wasn't like, I mean, it wasn't what it is now. He didn't have the iPhone yet. So it was a little, it was a little shaky, actually. You can read the book Creativity Inc. We had Ed Catmill on this

very podcast. And Steve's biography, there were some shaky moments there. So he almost didn't pull off. Fair, fair. But so it did work out after, but I think it's because he had such deep benches at both places. He did have a big talent pool, and he was... Pixar needed him as an investor, and they needed him to push them. They didn't need him to write Toy Story

or to, you know, come up the characters. Right. Whereas in the... In the Elon case, though... In the Elon case, though... Well, hold on. Let me just give the Elon case. In the Elon case, he was writing the story.

He was creating the computer. Like, And SpaceX, he's an engineer. He was literally engineering the rocket and the car concurrently. I witnessed it firsthand. So that was different than Steve Jobs' situation. And so I don't think this works at scale. I don't think it works at low scale. I don't think it's a good idea. And I don't think it's a good idea for investors to invest in companies. I'll just put it straight out there with young, inexperienced, first-time founders trying to do this. It will result in failure. or an increase your failure. It will increase failure by 5 to 10x, I would say. Yeah. Because focus is what it's all about, especially if you're trying to get product market fit. Okay, anyway, continue.

So what about, yeah, I mean, we talk about a lot about this internally. Like, it is considered, I think it's fair to say a red flag if a founder is not full-time at a company. And also, there were plenty of people in the comments. Like, I think clearly this is about a, this is sort of a different thing where he's talking about, like, you know, somebody's already a CEO and they're trying to start a new thing and they've got all these different jobs. like you.

But like, but that's different from at least according to the responses on Twitter, right, founders who are like broke, right? They're trying to bootstrap. They're trying to hustle a thing. And they have to have sort of a day job. And like at what point is it fair to say that it's a red flag as opposed to this is how you try to hustle your way into building a company when you don't have a lot of support behind you? This is this is founders. when we're talking about founders in their 20s, this is founders looking at Elon or other people

and having just too much opportunity and not having enough focus. And it's just a really bad idea. Now, when I was doing Silicon Island Reporter, I was doing nothing else. And when I say I was doing nothing else, Molly, in my 20s, I was not sleeping. I was not going on vacation.

I was not, I didn't drink for, maybe 12 years. I didn't have one drink. I didn't do anything. You just choir boy. Because I literally felt I had to work seven days a week because the magazine business was so competitive in the 90s. I was in my office. I kid you not seven days a week. There were stretches where I probably worked 50 days in a row. And I just took it as a personal pride to get on my scooter every Saturday and Sunday and go to my office. And everybody who worked for me knew I'd be there from 11 to 5-ish. and then I would go to, I would have breakfast, have a slow morning, I go to my office,

then I would go to the gym, where I play basketball in the mornings, and then I would go to the office every day, just trying to be more competitive. And then when I did Weblogsync, that was the only thing I did. When I did Mahalo, the only thing I did. And really, the only thing that really set me off on

to doing multiple things was when Sequoia asked me to be a scout. And that was supposed to be a contained thing. And the problem was I was just too fucking good at it. And, you know, and it just pulled me in. And here I am now, still running inside, doing great, making millions of dollars. But would Inside be doing better if I didn't have all this stuff? Of course it would be. And so, but I have resources.

I take zero dollar salary at Inside so that people don't know that. I haven't taken a salary at Inside for five or six years. So I would as a CEO of a company get paid $200K or something, that's deployed into two other people. And so that's how I justify it. And, you know, and the profile I have helps. me grow other things. So if a founder was 27 years old, and they had sold their company, and they were sitting on, I don't know, $10 million in cash in their bank account, and they didn't take a salary at their startup, and they had a little fund over here, a $10 million fund of which

$2 million was their own money, and they had two partners on it, and they could stay focused, i.e. Raul from Superhuman. He has a little fund on the side. I'm an O.P. in the first of that fund. he has a partner on that. Raul can stay focused on superhuman and then any SaaS person he meets who's like, hey, Raul, can I get advice? He's like, yeah, what are you working on? They tell him, and so that's great.

Yeah, I'm happy to have a phone coffee or coffee with you. Meet my partner, we'd love to put money in. Raul will be a perfect example of somebody. I'm guessing Raul puts 10 hours a month into his venture fund, 20. He's got people over there. He also has resources. He sold his company before. So when you're in your, when you're 35 to,

45 and you got your chip stack, well, people don't see the resources those people have in order to make that happen. I have a lot of resources. You see me. Like when we start a new project, we're like, oh, this is under resource. I'm like, great. I just pick up a duffel bag of cash and I throw it at the project. Great, go.

Here's more resources, right? What do you think Elon does? Like, oh, yeah, this company, boring company, you need stuff. You can just chip off and just throw a bunch of resources at it. And the resources are not just cash. There might be two killers that he's got from one of the other companies. says, oh, okay, two killers, go. And I have that, right?

So I have somebody who worked at Insight Kelly for four years, and she wanted to be an investor. She said, hey, working on an inside, is there any chance I can work as an investor? And I just told the whole Insight team, you put in three good years inside. I'll get you a gig at launch, and you can be an investor,

and I'll teach you how to be an investor. One person has done that. A second person is asking to do it. So I can move people from one company to the other. Elon can do that. Steve Jobs could do that. You know, so you kind of, it really is about resources.

more than it is about the individual's time, but when you're young, you don't have resources. You don't have a huge chip stack sitting there. You don't have an army of people you've worked with. I can pick up the phone. I call Brian Alvey. I can,

call people in my circle who I know are killers and say, I need help on something. Can I get 10 days? Can I get 30 days? Can I get you to work on this for a year? And I can move, you know, talent around, right? And that's, I think, what a young person can't do. If you're a VC, you absolutely should not invest in any founder under 35,

if they have four or five concurrent projects. You can have the conversation. It seems like, honestly. Even two. Even two. As you gear up for Q4 in the fall, you need to have the best people on your team and you need to be firing on all cylinders. You can't have any waste.

And LinkedIn Jobs is here to make it easier for you to find the right candidates faster. And your first job post, if you listen to this week in startups, it's always free. LinkedIn Jobs is the best hiring platform out there. We all know that. And how do we know it? because we post all our jobs there and we consistently, chef's kiss, get our best candidates off of LinkedIn. If you need any more convincing,

it's the world's largest professional network with every couple of weeks, we have to update this number. 810 million people, creating a new job takes just minutes. It's so simple. And you can add that purple hiring frame around your LinkedIn profile. You see that now? So everyone knows your hiring. So if you're active on your feed and you're posting updates,

then people might see it go by. They see your hiring like, I would like to work for that person. boom, you can also add screening questions, which I love. You can filter out all those non-serious candidates. You don't want any drive-by resumes, no. You want people who want the job. LinkedIn jobs helps you find the right candidates you want to talk to faster. You know that.

And did you know every week? Nearly 40 million of the 810 million people on LinkedIn are looking for jobs. So post your job for free at LinkedIn.com slash twist. Again, if you want to get it for free, you go to LinkedIn.com slash twist to post your job for free terms and conditions. Of course, apply because they're getting it. giving you something for free. So if you're a founder and you're coming to raise money, like I understand you might have been bootstrapping, but it's, well, take it off your LinkedIn, but also it sort of seems like if you're, if you've been bootstrapping, you've been sleeping

on the couch, you've been doing another job. When you're coming and asking for a million dollars or more, that's when you got to quit the day job, right? Like you have to. Oh yeah. So if we're just that day job, you're working at Google. I'm talking, now I'm talking day job, right? There's the, you're running something else and you're trying to start a new thing. Sure, that's thing. But if you're bootstrapping with a day job, at what point do you need to clean that up and say, I am going out and pitching to VCs now, and they're going to want me to be full-time on this. If it's a side hustle, you cannot raise money for it. Under no circumstances, we had a company that we really liked. They were three or four partners, two or three, say, I think, let's you

make up a number here, four. Three of the four were still working their full-time jobs at, like, you know, major tech firms. And every time they met with the VC, they're like, well, when are you all going to jump off? And they're like, well, you know, we've got this like rest invest situation over here. We're making a ton of money. So it's like, obviously, this company is not a priority for you. And so you're basically signaling, if this company's not a priority for you, why the heck should be a priority for a venture capitalist who has other options?

And this is what you've learned in the first six months. When you got here, you were like, took the guns out. You're like, I'm going to fire some bows. I'm going to, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa. We don't have that many bullets, Mo, Fomo, FOMO, FOMO, FOMO. FOMO FOMO. I was like, Molly, Molly, we don't have a limited bullets here. I was like, put the guns down.

Here's the sniper rifle. Back away from the chow. Take a deep breath. Put the sights on something and just breathe and slowly squeeze the trigger. And let's, you know, hit it, right? And so you've got to hit the target, you know, and that's the key here is VCs have their choices. Now you have so many choices, right? So I've watched as your book of business has grown, you got all these great founders,

you got all this great opportunity. And you're like, you know what? The same company, you would have been like, we got to do this. Or why aren't we doing it? And it's like, now you're like, you know what? I need to see a little more. I'm going to turn over a couple of cards. I want to see this company get from two pilots to eight paying customers.

And I want to see why people churn and they need to fill these two positions. I'll talk to them in six months. And then that would be the right window for us to invest. And so that's what happens at all these seats, is they think, like, this is the only window to invest. And then you're like, oh, well, this company is going to be going to make it. It's going to be around for 10 years. And I'm an early stage, so I have four years, and it's year two.

So I got two more years to place a bet here. And I'm Molly Wood. I'm Jason Gallaghanes. I, you know, whatever. I have the, they're going to take my money. It's green. They want me involved. I can wait.

And so founders need to understand that dynamic as well. If you're waiting and it's your side hustle, we're going to wait. But why wouldn't we wait? Why would we take more risk than you? You own 80% of the company. We own five. We own 10. You're not committed and you own 80%.

Well, you obviously don't think this is going to be a billion dollar company and we're here to build a billion dollar company. So, okay, if at some point you're sending such a bad signal is what this is about. Now, you know, I met this really nice kid. He's an Indian kid. He sat next to me on the plane. He's like, are you chasing Calacanis? Why are you sitting in coach?

And I'm like, because it's cheap? And I'm cheap. I was like, the heart. $129 and I wanted $1,200 for the seat up there for one hour. I kind of take the $140,000 and save the money. Anyway, I talk to this kid. He's Indian. He's got a lot of Indian friends and he's a developer and he's like, what should I do

my career? How do I like, where should I go? I was like, you should host this stuff. Like I said, if you got all your friends are Indian, why don't you like create a group of Indian developers and you can all get together and share your life and, you know, whatever your culture. because you're all at UCLA and you miss your families wherever so you get to, you know, maybe all, you know, cook a meal or talk about your common interest. And then I said you'll

have a list of a hundred Indian developers at UCLA and you're going to be the person running it. I said, just make everybody dinner and get those hundred emails and you could have your little group. He's like, wow, I never thought about that. I was like, yeah, be the host, be the ringleader. So, okay, now I meet that kid, let's say. And he does this monthly day. And he does this monthly dinner. And it's on his LinkedIn. And he starts a company, which is a dev shop, or it's a dev tools. It's dev tools. Perfect. And I say, wait a second. Every month, you have a hundred, 20-year-old UCLA developers who've immigrated from India and are here and you're making dev tools and you get to show it to those hundred people or you could hire the best ones to work at your company.

All right. Well, this is accretive to the company. This would help the company. This isn't a VC fund to go invest in people and be distracted and try to solve their problems. This is like, oh, wow. So you do need to think about that. So if I have a podcast, if, let's pick a company in our proposal, a sale plan.

Let's pick one of your companies here. So let's say sale plan decided they wanted to do a podcast. And we're like, oh, God, you're doing a podcast? Great. It's going to take 10 hours a month of your life for the CEO. Let's say the founders do the podcast and it's about measuring and metrics in carbon and et cetera

and it's about carbon. Totally understanding. Fuel usage and shipping and shipping and ports. It's a shipping podcast. They start a shipping podcast. It's a shipping podcast. Even better, right? Open the average.

Okay. You're going to do 40 podcasts. It's going to cost you $1,000. It's going to cost you $10,000 per podcast. It gets $400 hours. You're going to split that work between two founders, 200 hours. And then all the shipping people in the world

are going to be listening to you as experts talk about shipping, great, do it. Yeah. So is it in line and how much time? In line and time. It's about resources. And people are resource constrained. So if the project helps the mothership, great.

Great. You know? Fantastic. So just think of- Love it. Yeah. Love it. So founders, if you're going to split your focus, choose wisely.

That's what we're saying. Look at the percentage. Is it 2% of your time or 20%? If it's 2% and it helps the mothership or it otherwise makes your life great, nobody cares. When it hits 20%, yeah. And if your company is your side hustle, that's a deal breaker. I mean, come on, man. It just is.

What are we talking about here? You're working at Google and then you're doing some stuff on the side. Like, I get it. If you're doing it on the side and you're working at Google and making 300 grand and RSUs and comp and your side hustle is making you $100,000 a year, more power to you. But don't ask us to fund it, you know? Like, we need, we need to be all in here to hit goals. That's it.

Very simple. So, but I, you know, Alex, you know, doing this, I know, I know Alex, he had a startup himself back in the day. And he seems like he's a really good investor. He seems like, you know, he would be helpful to a startup. I think what he's trying to say here is, like, he wants to see people succeed. He doesn't say this, but I think this is what, I didn't read his full thread if it's got more points to it.

But I think he's concerned about the founder's success. Is the founder going to see? succeed. And that's really what this is about. We don't want to back founders who have set themselves up for failure. The VCs, and this is where alignment comes in, this is the beauty of the Silicon Valley system, it's the beauty of the American system, it's a beauty of capitalism when it's run properly with the shares in companies. We're all aligned to see these 100 million shares valued at a penny each, or let's just say 10 cents each. You know, 100 million shares valued at 10 cents each. We all want to see them go to a dollar.

and then we want to say we go to $10, and then we're starting to go to $100. Like, we're all in it together. And if you're not focused, the share price doesn't go up, and you know who gets hurt the most is the founders, because they have the most number of those 10-cent shares.

We want to see you succeed. That has been VC Sunday School, and speaking of focus, actually, super interesting this weekend climate startups interview coming up next. I love the algae company last week. I know. When Sunday comes, around, I mean, maybe I shouldn't say this, but I start with your interview and then I go back

to our discussion on VC Sunday school. I don't want to tell people to skip ahead and, but for me, for me it's super interesting. I'm like a fan now because I'm just trying to understand your interview techniques. I told you this privately. Really, you've got the both sides of the blade are sharp here, people. So like Molly's a little bit of a monster here in these interviews, she's just hack and limbs. It's good. The mindset, the mindset's starting to change. I can feel the shift. It's great. I love it. Osmosis, it's working. Osmosis and a learning environment. Our, our shop is a learning environment.

PD is good. We like our PD here, professional development. This is, I think you'll be interested in this because this is actually an investor. I took a little bit of a departure away from like all the cool sci-fi companies with the mushrooms and the algae. And like, although I have this like alternative propulsion fuel thing that I got to do. Anyway, this is a very focused investor. Co-founder and general partner at Baybridge Ventures, which. which is actually new, brand new over in Berkeley.

But he's been a climate tech investor for a long time, like Clean Tech 1.0 scars kind of thing. And has started, co-founded an ESG and sustainability focused venture capital firm. I'm super interested to hear your thoughts on this. He also hosts a podcast called The Epic Human. And it's a really interesting interview about a mission-oriented venture capital firm. Is he E comma S comma G or is he E period S period G? We'll find out.

Listen to this. We'll find out. We'll find out. ESG. There it is, folks. Well, it's actually, and he's, he's separating in some ways and I was kind of interested in digging into this. ESG, one category.

Climate tech, one category. Not necessarily the same. And I think that's actually a really important distinction that the more we, the more we make, the more. We're in a new territory here. Yeah. This is, yeah, exactly. Climate is just totally new.

even though it's been going on for 10, 15 years, those are kind of like the clone wars. It's like this thing that happened before what's happening now. And most of the things, the failure rate of that, whatever we're going to call it, the first 20 years of climate technology,

you know, with Vinokosla and John Doer and a lot of those folks. I mean, they just incinerated billions of dollars to kind of build the setup for what we're doing now. I mean, they planted all the seeds. And even, you know, I was actually saying this last night at an event. I'm like, look, it took 20 years.

That's outside the life of their fund. Their investors are not happy. But some of those early, especially a lot of the solar investments, some of that billion dollars that John Dor put in has returned $2 billion. Yeah, it just not venture returns. It just took a long time. It took a long. It wasn't the time schedule and it wasn't the multiple.

But I think that means that this could be the window. But also, we still could be early, but that's the, yeah, maybe, hey, maybe we're a little bit early, or maybe it's going to have a different return profile, but it does feel primed right now. Yeah. It does feel like a lot of components. We're like one minute too early, but finally we have a healthy ecosystem around this, which is that the government has now said, we will fund basic research, science, and R&D. Got a customer. Then it can become our job to commercialize. Yeah.

And they're customers, too. they? Like, if they're going to say, oh, yeah, the government's a buyer now for our companies, 100%. So if they're, you know, we're starting to see the emergence of buyers and it's not just feel good high-fiving, which I think, you know, is a very important thing. If people have to see an opportunity here, you know, for profits and for return on investment ROI, dare I say.

And the technology, everything that's happened in sensors, happened in cloud computing, the iPhone, you know, all this stuff is kind of becoming the underpinnings it feels like for some change there. So use the sale plan example a bunch, but. And clarity. I mean, both of my first two investments are in the measurement space, which is a really investable and necessary category. And they use a SaaS business model. And so we got 20 years of SaaS software here, you know, since, you know, Benioff said like, hey, you know, no more software. everything's in the cloud.

So cloud computing has been really well established, the business model, the techniques for building the software, the security, all that. So now you get that foundational layer is done. Okay, now we go to sensors. Okay, that's done.

You know, we have tons of sensors and everything, whether it's planes or phones or cars, like the sensors are everywhere, and the sensors are commoditized. So you don't have to build the sensor. The sensors are, you know, in Taiwan and China. Both of them have a cheap hardware component,

which, you know, I think, which we're seeing a lot. Like, a lot of the climate tech unicorns blend some cheap hardware component with the right. They're like hardware as a service or their hardware and their software. But they're not high intensity hardware, if that makes sense. Well, unless, yeah, unless you want to back like an electric airplane or something, you know, or, you know, electric cars. You know, those things are going to be money incinerators.

They're going to be really hard to fund. I start, you'll just, you don't even want to hear it. I started yesterday with a rocket company. I was like, I think we already know a rocket company. And that's going to be a tough one. Anyway. It's hard. It's hard.

It's hard. But hardware enabled SaaS or using hardware to enable something else to happen and that hardware is a commodity and you're not trying to make money from that. The software layers or the, you know, whatever layer is driving the returns. And that's super compelling for me at least. Yeah. So great job. Can't wait to hear it. Enjoy everybody.

I agree. Enjoy your Sunday, everybody. Yeah. We'll see you tomorrow. If you're a SaaS or services company that stores customers. data in the cloud, then you need to be SOC2 verified from a third party if you're going to close big deals. No SOC2 compliance, no closing major customers. No lighthouse customers for you. Oh, no. And Vanta makes it so incredibly easy for you to get and renew your SOC2. On average, Vanta customers

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right now. Joe Blair is co-founder and general partner at Bay Bridge Ventures right across the bridge for me. No wait, same side of the bridge as me. East Bay. East Bay. Berkeley, California. Which is, I'm going to let you describe this better, but which is the first purpose-built institutional ESG and sustainability focused venture capital firm. You also host a podcast, the Epic Human podcast. I want to take a whole bunch of those things like in order. First of all, tell me about the thesis and why would you be the first to do this? Sure, sure. No, thanks for the question, Molly, and great to be here.

So I'm a co-founder and general partner at Baybridge Ventures. As you mentioned, we were the first purpose-built ESG and sustainability focus venture capital firm. I was actually speaking on a panel just last week in Palo Alto and the organizers of the panel called out that we are the first. North American firm that he was aware of that like had ESG, you know, explicitly in our branding. So, um, so that's been, that's been confirmed elsewhere beyond, uh, beyond just ourselves. But, uh, but basically what we're doing is we built a new type of firm that's focused on climate tech, health innovation and inclusive capitalism. And we have a multi-stage strategy where we can invest C through series C. And we actually built our own ESG methodology after a couple of years,

actually of behind the scenes work consulting with some of the world's leading experts around ESG and sustainability to develop this comprehensive, holistic stewardship model that we think is really unique and industry leading. So I can't say too much about it because some of it's proprietary, but I can tell you that it's not simple and it's more than just a kind of a check the box type of exercise. But yeah, we launched the firm in February of 2022. And as you mentioned, were across the Bay Bridge in Berkeley, in the same building actually as Skydeck and just a couple blocks from UC Berkeley. Skydeck, of course, is the incubator that is related to Berkeley, right?

Correct. On the Cal campus, yep. Correct. So it's smart location there, good co-location in terms of snapping up young talent early. Absolutely. I want to, before I ask you more about how this plays out in terms of investing, you have lots of investing experience. Chrysillix,

Chrysallix venture capital, obvious ventures, a principal at Cota Capital. How did all of that kind of get you here? Like certainly obvious I know well as a mission driven, but not impact investing firm. How did your experience lead you to like, okay,

we're going to do this very specific thing with this very specific purpose, raise our own fund, and there will be a market for this. Yeah, I appreciate that question. Perhaps it might be helpful to go like just, one or two steps further backward, just to kind of set the context. How do I, I even ended up in venture capital, which I really never expected to be. So I went undergrad to Lehigh and studied mechanical

engineering. And then I stayed on to do a master's there focused on software to control complex physical systems. So Adams meeting bits. And I actually did my master's thesis on controlling plasma in a nuclear fusion reactor. So that was my first kind of entree into the energy industry. And after that, I went and joined a big Fortune 500 company called Ingersoll Rand as part of their engineering leadership development program, which basically had me moving around the United States, working on different business units, primarily focused on product. And it was a great program, but along the way, I personally became very concerned about climate

change. And so I decided to take a risk and change my path and go join a venture-backed clean tech startup. And when I did that, I realized that, you know, A, I'm definitely a small company startup type of guy. That was my, the world that I wanted to be in. B, I was really fascinated by, you know, technology. So again, kind of tying back to the Adams meets bits of my education. And the third piece is I loved working at a mission-driven organization. All that said, it was a fantastic experience, but I knew I needed to learn a lot more about business. So that's what led me to go to Harvard Business School to get an MBA.

And while there, I started my own company. It was a D-to-C retail tech company focused on sustainability. Ran that for about a year. But then ultimately felt called to venture and specifically going after some of these large kind of fundamental challenges. And so like you said, I. I went and joined a clean tech venture capital firm after graduating business school. And this was 2013, if you remember.

So it was a pretty contrarian approach, at least in the eyes of some of my classmates and a handful of professors, because at that time, clean tech and venture capital were, it was kind of like a contradiction. And it was, it was kind of well understood that that doesn't work. They're having, this is like during the messy breakup. period of clean tech and venture capital, right? Exactly. I mean, we had whole cases about why clean tech for venture capital doesn't work. And we also, and this was post-Sylindra. Yeah. But just going back to me, kind of with this kind of contrarian kind of approach that I have, I felt very strongly that climate change wasn't going anywhere. And it was going to continue to be a worse and worse problem over time. And I also had a thesis that the only thing that was going to get us out of it was

technology. I mean, policy is also important, but my view then, as well as my view now, is that technology is the primary way to solve climate change. So I went and joined this firm. It was a fantastic experience. I got to learn about all the different kind of subcategories within climate tech. And quite frankly, I got to see some of the fallout of Clean Tech 1.0 from a firsthand point of view and got to see all the things that didn't work, the technologies that didn't scale, the products that weren't profitable. And so it was an amazing learning experience. But at the same time, I got to see and invest in the seedlings of what has now become the climate tech 2.0 trend. And so it was an amazing experience. And then as you said,

I got to do some co-investing with obvious ventures who hired me. And that's how I ended up moving down to the Bay Area. And then later I was recruited to, and obvious was great because I got to do not just climate tech investing, but also, health, fintech, and a few other categories. And then I was recruited by a larger firm called Coda Capital, where I was able to continue investing seed through CRIC in all of the same categories with an even heavier emphasis on AI, ML, and scalable enterprise tech. So it was kind of all these experiences coming together in a unique combination that I think put me in a very unique position to launch this kind of a firm. And then tied to that was meeting my two partners.

My one partner, Andrew Karsh, was working at Kalpers. He spent 10 years at CalPERS managing direct investments. Before that, he spent 13 years building investment strategies at Credit Swiss in London as well as New York. And then my third partner, Kim Colt, who built her own VC platform called For Good Ventures, investing in all the same categories that we invest in now, climate tech, health innovation, and inclusive capitalism at the early stage for the last seven years. And then before that, she was Goldman Sachs and Wharton. And so we all came together close to three years ago around this common vision for a new type of venture capital firm that, as you stated, is focused on ESG and sustainability. And then we sort of crystallized our strategy towards

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Sure. Sure. So we are a very standard, typical 10-year lifetime venture capital fund. Part of our thesis is that, you know, historically investing in some of these categories has been viewed as concessionary. Our view is that this, you know, these three themes represent the most promising and exciting investment opportunity of a lifetime, independent of the impact, whether it's environmental or on human or humanity, that these companies will have. And basically what we believe is that these three themes, not only are they very compelling in venture investment opportunities individually, there's also particularly interesting opportunities at the intersection of all three of those themes. We think going after all of those three themes collectively has some additional advantages. And then the other piece that's different now than then is what we've seen is that you have all these foundational technologies, whether it be, you know, AI and ML, robotics and automation, energy storage, semiconductors, advanced

materials that have all evolved and matured over the past five to 10 years in other industries that are now coming together in unique combinations to unlock applications, new applications in all three of these themes. So that for us is why kind of it's the right time. It's the right team. We've been investing and building in these categories for 15 years with a track record of seven exits. And it's the right strategy to go after it. I like the little, I like the mic drop there. Just track record of seven exits. Just saying, NBD. So when you think about these three things, you know, it's fascinating to me how many people like people just say ESG as a shorthand for some whatever they mean at any given time, environmental, social and governance. How does that turn into a,

Like, can you give me an example of a company that you think might encompass all three of those themes? So we're talking about two different things, right? So we're talking about investment themes, right? So for us, that's climate tech, health innovation, and inclusive capitalism. And then on the ESG side, we're talking about environmental, social, and governance. And so those are kind of two different paradigms that overlap in a lot of different ways. But what I would say is that, you know, there's traditionally on the ESG side, it's been primarily used in the public markets, right? primarily as a negative filter for tobacco, firearms, fossil fuels.

And it really is a lot easier in the public markets to track these things because all the data is public. And there has definitely been some ESG washing that I think we've seen in the public markets, which is quite frankly is why there's been some backlash. So there's some work to do, I think, in our industry and trying to educate people as what ESG actually is. But then you take that and you apply that kind of methodology to the private markets. and it's much different, right? Data is not publicly available. What's appropriate for the particular stage of company is different.

What's appropriate for a Series C company is not necessarily what's appropriate for a Series A company. So that's why we had to kind of go back to the drawing board and redefine the way we see ESG on a daily basis and what that means for companies. Not only in terms of how we make the investment, the themes we go after, but also how do we help the companies over time. stay true to their mission and to their values. Right. But it does sound like you're describing, and I think we're seeing this, this is almost the sort of larger philosophical question. We're seeing this split between, like, there may be climate tech companies.

Those are not ESG companies, despite the E. And that in some cases, we might start separating climate and pure climate solutions from ESG, right? And that that might be okay or necessary in some cases? Yeah. again, I view them as two separate kind of frameworks that, you know, also like to be, to be honest, they're very interrelated. So, but it's hard to, you know, completely separate them. And it's also hard to kind of try to map them one to one. But on the governance side, I think that's

kind of a piece of ESG that's actually spoken about, I think, the least, but may actually be the most important, or one of the most important, as you think about companies like we work that lost 40 billion in valuation because of a governance issue, right? And how can you implement the right kind of governance at the right time in a company's life cycle such that they prevent that kind of value destruction? Yep. Does that suggest you intend to be a little more active as a fund in the governance department? Yeah, I mean, absolutely. Like the E.S. And the S and the G are all key parts of our ESG methodology. Yeah.

Tell me about the methodology, which you've called ESG Plus to the extent that you can because you said, you know, it's proprietary, but it's integrated into the investment process. What does that mean integrated into the investment process and what can you tell us about it, how it works? Sure, sure. So there's a little bit of secret sauce in there that I can't necessarily divulge, but because it did take us a very long time to come to what we've built today. But what I can tell you is that on the S side, right?

So if you think about diversity, a lot of people think of that as just sort of a, again, sort of a checklist or a, you know, almost like a like a survey. But the way we think about it is there's diversity in, there's diversity out. So diversity in is who's on the team today, who's going to be on the team in the future, how do you help the companies with the recruiting practices? And then diversity out, who are the stakeholders that are going to be impacted by this, this company and this technology. So those are all kind of incorporated into our methodology.

I'm not trying to pry. I just can't help it in the journalism way. I mean, are you running stuff through a program? Are you scoring investments? I'll plead the fifth on that one. It's just so interesting. What's also interesting is I think is this question of intentionality. You know, we had a little bit of a debate on our show last week as we're recording this

about Franks Lubin of. snowflake saying, you know, I'm not going to like, sure, diversity is great to have, but I'm not going to effectively, I think he was saying slow down for it, right? Or at the words he used, which I think are quite unfortunate, was override merit. And yeah. And the sort of the whole point is that there has to be intentionality and care. And also we're in an industry, venture capital that has failed to make a lot of meaningful progress around. diversity and you could argue governance also. And so I wonder, you know, like according to the Stanford Social Innovation Review, only five of the top 50 BC funds have even mentioned ESG or

commitment to sustainability. Like how important is it to just fly this banner? So I have to chuckle a little bit because I don't know this person that that you referenced, but the reason, so first off to just state the facts and you're probably aware of this and your listeners are too, but some people don't know this. So it's worth repeating is that of the United States AUM that's privately managed, only 1.4% is managed by diverse or female managers. So that, you know, considering females are 50% of the population, 55% of college graduates, it's, it's really a stunning number. And then so, so the way we look at it is that diversity is actually a strength. So if you look at the latest research from Harvard Business School,

what they'll show you is that venture capital teams that have heterogeneous genius makeup will outperform homogeneous teams by up to 32%. So again, this kind of ties back to our earlier conversation about like this historic viewpoint around things being concessionary. If you think about it in the opposite way, it's actually a major advantage. And that's why we launched, you know, our firm is 60% diverse owned and managed and also, you know, have put in place policies and, uh, and value. to ensure that we make sure that our investment team is continuously very diverse from both a female and underrepresented community member point of view. Yeah.

And then on top of that, on top of addressing this already serious issue, that's really complicated and tricky and takes time and intentionality and care, you're going super hard tech, synthetic biology, AI and big data, advanced computing sensors and IoT, obviously, you know, as you said, this is part of your background. Tell me about your research and diligence process and evaluating these really hard tech things that, you know, you're still seeing lots of VCs in the climate space and elsewhere stay away from. Sure, sure. So just to frame it, you know, on one hand, you have, you have, you know, fantastic organizations like Breakthrough Energy Ventures and other types of organizations that do have that longer time frame in terms of the returns that are expected.

And they're really working on those moonshot type of ideas that may take five to 10 years to develop the technology. And then on the other side, you've got, you've got a number of firms that are maybe newer to climate tech that say, hey, we'll just use our Silicon Valley software playbook and we'll just do software. We are more kind of in the middle in that we have deep experience in evaluating and investing in these fundamental technologies that I mentioned earlier. So we're capable of understanding and evaluating the technology. We have industry experience and operating experience in some of these industries. And another thing that's different between now and 15 years ago is that the supply chains

for a lot of these technologies has really evolved considerably, which kind of de-risks a lot of these companies that are putting together unique technologies. in different and unique applications. So it sounds like, and this is probably, this is very wise, in my opinion, it sounds like you're saying, we're not going to throw software out with the baby. Oh, absolutely.

Or with the bathwater. Like, if it's a great solution, we're going to go for it, but we're not going to be scared of hardware or hard tech. Exactly right. Exactly right. There will definitely be amazing climate tech opportunities that are strictly software,

and we are very excited and to invest in those. That said, what makes us a little bit more unique is that we are open to and excited to invest in some of these other harder tech technologies, most of which, by the way, are also enabled by software. Yes, definitely. I think somebody made the point the other day that most of the climate unicorns, if not all, are hardware and software at this point. What are you super into? Like, are there certain categories of all of this that, you know, as you dig down even further that you're really excited about? There's a lot of themes. I get this question a lot. I would say that, you know, I'd almost take the opposite approach at this point where, you know, we've sort of been immersed. All three of us have been immersed in all of these categories for so long that we're not necessarily hunting in any one of them in particular. But when we, but because of our experience, when we see an opportunity in one of those

spaces, that's a step change or a game changer in that specific category, we recognize it right away and we go very aggressively. Is there, well, let me ask you, try to pin you down on the opposite side then. Is there something that you see everybody really excited about that you think we're wasting time on? I will go out on a limb and I will say that I am skeptical. I won't say that we would never look at it or invest, but I am skeptical of this, this investment thesis around the intersection of climate tech and NFTs.

And blockchain. I worry there's, you know, there's just, you know, hype to the square root of hype happening or to the power of hype happening and people trying to, trying to find opportunities where, you know, it's really technology in search of a market where we're really more focused on market opportunities where technology can really solve a major problem. Yeah. Listen, I'm on, you're very diplomatic. I am on record as saying that I think that, you know, every crypto fund is basically my enemy. So we're in good company. No shame in my name about that one.

Yeah. Exactly. So what and then for entrepreneurs who are going to want to come and see you, what's your, what is your stage? So seed through Series C and we are very excited and happy to talk to entrepreneurs who are building. Awesome. Joe Blair, co-founder and general partner at Baybridge Ventures. Thanks so much for the time.

Appreciate it. Thank you, Molly. Great to be here. All right. everybody, thank you for joining us for an amazing week. Jason is off to bed, as he should be. He's going to rest up over the weekend, but we're going to be back tomorrow. Tomorrow is another day, and there will be more to discuss. We'll be with you. Stay tuned.