This Week in Startups - John Doerr of Kleiner Perkins with Ryan Panchadsaram + VC Sunday School: cap table management | E1379

Episode Date: February 6, 2022

John Doerr of Kleiner Perkins joins to discuss his lessons from a career of investing and his new book "Speed & Scale: An Action Plan for Solving Our Climate Crisis Now," alongside his co-author Ryan Panchadsaram.  But first, Jason gives a 10-minute crash course on how to navigate messy cap tables in our latest VC Sunday School segment (1:54). Then John and Ryan join Molly and Jason for a conversation (15:11). In this episode, you will learn: 1. The six objectives and four accelerants to reach zero emissions by 2050 2. Why Nuclear power is an important part of the plan, but cannot be the only solution 3. The biggest blockers to rapid climate progress and why "the climate crisis is under-hyped" 4. Hard-won lessons from funding solar companies 5. How John assesses founders and develops conviction to invest 6. Indications John saw that Jeff Bezos was an exceptional entrepreneur 7. Where investors should focus to drive the biggest output (0:00) Jason and Molly intro the show, John Doerr, saving the climate and cap tables (01:54) VC Sunday School - When is a Cap table too messy? (07:29) Why VCs want founders to maintain more than 50% equity in the seed round (10:02) Odoo - Get your first app free and a $1000 credit at https://odoo.com/twist (11:08) What are the metrics for a red flag? (15:11) Interview - John Doerr and Ryan Panchadsaram, on the path to zero emissions (20:44) Bubble. Get one month free of a no-code plan at https://bubble.io/twist (22:17) Six objectives to reach zero emissions (30:22) The four accelerants needed to cut emissions in half by 2030 and hit the target by 2050 (31:28) Revelo - Get 20% off the first 3 months by mentioning TWIST at https://revelo.io/twist (32:56) Where investors can focus to drive the biggest change, why the time for "individual action has passed" and we need collective action (35:22) Why Nuclear power is an important part of the plan, but will not be deployed in time (42:06) Identifying the biggest blockers to rapid progress (47:37) Lessons from funding solar companies, why they require more capital and more intellectual rigor (51:32) How Kleiner's early climate investment portfolio performed (54:40) How Jason came to own the Roadster that KP Partner Ray Lane had ordered (56:29) How Kleiner invests in Beyond Meat (58:16) How John assesses founders and develops conviction to invest (1:03:52) John spending time with Jeff Bezos, how Jeff actually knew how to pull his own revenue numbers with a UNIX grep command (1:07:49) Why John thinks the Climate Crisis is under-hyped (1:16:13) Where should investors focus? Read Speed & Scale: https://speedandscale.com FOLLOW John: https://twitter.com/johndoerr FOLLOW Ryan: https://twitter.com/rypan FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood

Okay, everybody, we've got an amazing interview for today in our This Week in Climate Startup segment, and I'm going to join Molly for it. VC legend John Doer is back on this weekend startups for his second appearance, and he joins us with his co-authorized to talk about their new book, Speed, and Scale. It is. I mean, there's no other word for it. It's so great. It's such a great interview.

You're going to love it. And before that, we've got another edition of VC Sunday School, where Jason is going to break down cap tables, not a boring, basic part, although I'm still. looking for that perfect spreadsheet to calculate the math, but specifically how cap tables can get messy and then when they get messy, when it's so messy that you just need to walk away, or call in FEMA to clean it up. Yeah, clean up time. Okay, it's going to be an epic great show.

Stick with us. Stick with us. This weekend startups is brought to you by. Odu is a fully customizable and fully integrated suite of business apps that lets you build and scale your stack as you build and scale your business. Your first app is free forever and right now Odu is offering $1,000 off your first implementation pack at Odo.com slash twist. That's ODOO.com slash twist.

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All right, everybody, welcome to my favorite segment and yours. V.C. Sunday School, J. Cal's taking me. me to church on the basics of the business. I can't tell you, like, people are so excited about this segment, which makes me so happy because it's not just me. Yeah, everybody's going to be in the future. Everybody will have a podcast and a venture capital fund. It's incredible.

It's incredible. And we want you to know that VC school is going to go on after this segment where J. Cal and I are talking because we have an incredible interview today. Legend. It's really arguably briefly the clash of. two legends with these two come together. John Doer has a new book out on tackling the climate crisis called Speed and Scale. We talked to him and his co-author together.

And you just let me put it this way. J-Cal and John Doer are dropping some really good origin stories here. Yeah. And please, don't call me a legend. You know, like, I might be like, some people have said like angel, Jesus, but that's not for me to say. It's not for me to say. I mean, in a way, I do give, and I'm selfless about this, and I'm on a mission, very similar to Jesus in that way, but not for me to say. Did you ever see Get Him to the Greek?

But Russell Crow is like, I'm kind of like an electric African Jesus. Russell Brand. Russell Brand. What did I say? Russell Crow. Oh, not Russell Crow is not in Get him to the Greek. He's a gladiator. Anyway, Russell Brand and get him to the Greek is.

amazing where he starts comparing himself to Jesus, but it says it's not for me to say, but I'm kind of like an electric African Jesus. We'll probably have to stop blaspheming at some point here. At some point, but it is Sunday Church. It's Sunday. But give me another 10 years before we- It's Sunday school.

All right. Well, anyway, we're going to talk about this, and then, yes, there's going to be great stuff coming up. So first I want to talk about some basics, and then we're going to talk about, we've got two topics here. Two topics. One of them's going to go quickly.

The fundamental of investing is the cap table. of course, where you figure out how many shares, how much ownership everybody has in a company and at what price. But what is becoming interesting to me about cap tables or capitalization tables is that recently I've been part of a couple conversations where we talked about whether the cap table was too messy. And so I kind of want to understand what are red flags that you can find inside a cap table? When is it too messy?

what can happen that even makes it messy? How does it get messy? Who's throwing their underwear all over the cap table? I don't get it. Yeah. So it's pretty simple. At the early phases of a startup, the equity is precious, and you need to have the founders really incentivized

and the team incentivized to keep building the company because it's going to be a 10-year journey. Now, in a company's public, people can trade the shares freely, and it's a different dynamic. But in the earliest part of the journey, what founders can do is they need money. Maybe they're a bit naive, and they sell the equity very cheap and very often.

And in fact, there was this whole brouhaha is, you know, Y Combinator worth it now that they're adding the second check and they own 10% of the company. And we talked about that on previous episodes. But, you know, 7% to an accelerator doesn't really break the cap table. Because the cap table at the accelerator phase would look like 7% to the folks at Y,

combinator or tech stars or even ours launch, we take 6%. Then you maybe would earmark 10 to 15% for employees. Let's call it 15% really super generous. 15 plus 7, 22% 22 from 100. You know, now you're sitting at 78% of the companies owned by the founders. Okay, how many founders are there? Okay, there's four. They own roughly 20% each.

They, you know, oh, there's two of them. They own 40% each. Great. Now they raise a seed round. They dilute 15% again. Okay. Now you've got 15% taken from 80% or so.

So you're taking off roughly 12 points there. Now it goes down and, you know, maybe the founders are at 70%, 72%. If there's two of them, they own 36% each. Okay, they're still in the game. 20% reduction again. And then another 20% reduction. Okay.

They went from 35% each down 20%. Minus 7, you're at 28%. And another 20% in the next round. Okay. So you start seeing what happens. Five rounds of 5%. funding, three rounds of funding, on average, 15, 20%. You can put this all into a spreadsheet.

And what you'll find in a two-founder company, which is most often, if they split it equally, that by the time you get public, Larry and Sergey own 10%, or Zuckerberg owns 20%, or Elon owns as a solo founder, 15%, whatever it is. Things get diluted, and then hopefully you have a billion or multi-billion dollar company, and you each own 10%. And then sometimes, like, famously Aaron from Box, I think, owned only 4% when it went public. and people were like, oh, it's too low. And I was like, he was like, I'm fine.

It's worth, you know, $5 million, I got $200 million. I'm good. Don't feel bad for me. So now imagine a scenario where somebody sold 20% of the company to, I don't know, their friends and family. And they sold, they gave 25% to a dev shop. Now we've lopped off 45% of the cap table. And the two founders own give 15% to their team.

Now they're at 40% each, 40%, 20%, 20%, each at the start. Right. And then you start doing this 20% dilution. What VCs will do is say, there's not enough equity for them. They need to be over 50%, you know, after the seed round. Some might say 70%. Why is that?

So that they have enough control or motivation or both? Motivation. Because they don't want them to quit. Because what happens sometimes is a founder owns 10% of the company in the series B. And they're like, you know what? I'm going to start a new company. I sold some of my shares in secondary. at $5 million in the bank.

I'll start a new company, and this time I'll do it right, and I'll keep ownership of 60 or 70%. And, you know, I'll be a solo founder, right? And that is why people look at these. And then there's also a little bit of animosity. A VC might look at it and go, why did this person build like the really crummy MVP for the app and take 20%?

Well, when you're a founder and you have nothing and you're like, this dev shop will build my app and I'll just get him 20%. Great, it gets me in the game. So what we do, and other venture capitalists will do, as we'll say, wow, this looks really messy. Here's two choices. One, we'll invest a million dollars,

but we want to do what's called a founder refresh. The founders own 30% now. We want to award the founders 30% more of the company, and we want that to dilute the previous investors, not us. So that will occur before we put our million in. We're going to put our million in to buy 15% of the company, but we want all of you to take a 30% hit. We're going to double the amount of shares for the founders,

but we're not putting our million dollars in. It's a little bit gangster, but it's also a little bit pragmatic. You will see this happen later on. Sometimes, adventure capitalists will use this technique in a nefarious way. I've had this happen two or three times, where in order to win the deal,

they'll say to the founder, hey, you're at 40%. I'll invest, but I'll insist that you get 10% more. You get 25% more. We get you up to 50 points, and it will come out of all those. VCs and Angels and the accelerator that got a better deal than we did. So screw them.

And then the founder's like, okay, I'm going to take the deal with this person because they're giving me free equity. What I always say in that situation is, okay, let's buy for K, let's separate these two moments. Employee comp will be done by the board after we do this financing round. And sometimes I win that argument, sometimes I don't. In other words, if we are going to give the founder 10%, you invest. invest your money, and then you make that decision with your receiving 10% dilution,

which would seem more fair, wouldn't it? Yeah, definitely. If you listen to This Week in startups often, you've heard me talk about Odu suite of business apps a lot. Well, they are going to give you your first app free forever and $1,000 off your first implementation pack at Odo.com slash twist. Here is why Odo is great for startups. Their suite of business apps helps run your entire company.

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which you can get at Odu.com slash twist. That's O-D-O-O-O-com slash twist to get that $1,000 right now. Okay, so among the red flags that you might see in an otherwise promising startup, where does a messy cap table sit? Like, how big a problem is that? Because it actually sounds like it's pretty fundamental. I'd say it comes up in the stage where we invest, you know, the accelerator stage in early,

one out of ten times, one out of five times, you know, it happens. And then it is only so broken if, like, let's say the founder's own under 60%,

under 50% at that earliest stage, that's when it's really broken. And it's pretty easy to fix because the people who invested early, if they did get some crazy deal, we might say to the dev shop, hey, you own 20%, this company's not getting financed

by these famous people, unless you go down 5% ownership and we'll pay you, 250K for that 15%, which is what you would have gotten paid if you had built the app. So now you own 5% of the company and you got made whole.

It would have cost $250 to make the app. We'll give you the $250. And I've seen that actually work. Have you ever been pushed out of a search dog asks, actually, no to gang surge dog? Have you ever been pushed out of a big position by one of these deals? Not a big position,

but I have been diluted significantly when somebody did that. And it was so underhanded that I basically wrote off the company and the founder let it happen so I wrote off the founder too. Wow. You know, the way I look at it, Molly is in this game,

it's about morals, ethics, and I always feel like if I'm going to have your back, you've got to have mine, and if you're going to screw me, I'm just got other companies to focus on. And one of the things I learned in life is the people that screw the people who help them get here,

they just wind up screwing everybody along the way and they're so close-minded, they're so petty, that they wind up failing. because what we do is about making everybody rich and everybody having equity and growing the share price together. What this manipulation is doing is we're saying, you know what? Instead of us all winning together by increasing the share price, we're going to dilute your

shares while giving us more. The better thing to focus on is let's just raise a share price. It's a share price that prices at a dollar. Let's get it to two. So everybody doubles their money. But I can totally see then why a company with a cap table that's has a really low founder ownership percentage is a big red flag because you know that then there's the potential, even if they just made a mistake, right? They just did it wrong because they did it

wrong. Typically they did it wrong. If you invest and you end up in a position where a future investor might come along and try to dilute you, I could see why it's a red flag. Like doing it, this is a case where doing it wrong could cost you an investment from a VC who's like, you know what, this is going to be a mess down the road. Yeah. And I don't want to have that fight. And so VCs are very good at cleaning this up because they have a chip stack and they'll just do a secondary offering, which we talked about in other VC schools. So this is where our secondary comes in. And so we recently were going into a deal. It was a little bit of a messy cap table. We wanted to put a million and a half dollars in. We had that much demand from the syndicate and from our fund. So, but they only

had like a million available to us. And we said, well, what if we gave you 500K and you offered it to the early angels and early employees and did a secondary offering for them? And then we would retire those shares and then issue ourselves, in this case, preferred shares. Would that be of interest to you and they were like, sure. And so those people got liquidity. It was at a nice valuation, maybe $15, $20 million. And so the people who invested at $1 to $4 million

were getting this great return. And they had been in the company for four or five years because it was meandering, trying to find product market fit, a couple of pivots, you get the idea. So you can clean it up, but you need everybody to want to clean it up. Yep, totally.

And there can be bad feeling. So it's a negotiation. I feel like we should leave it there and tossing John Dorr and his wonderful co-author because you were... Listen to it twice. Listen to it twice.

And you're going to get some VC Sunday school out of the interview too on top of all of the other fascinating conversation about, frankly, the freaking roadmap that they put out for how to solve the climate crisis. So, without further ado, John and Ryan and J. Cal and Molly learning.

Chopping it up. Chopping it up. Every year or two, we get to have a legend on the pod. And today, for a second appearance, John Doris here. I mean, to give John Doer an introduction, Molly, is, it's almost disrespectful, but I'm going to do it anyway.

He's the chair of Cloner Perkins. You might know some of the companies he invested in and helped build over the years. Google, Amazon, Intuit, NetScape, Twitter, Uber. I mean, the list goes on and on. And what a storyed history came to Silicon Valley in 1975, got an internship, joined Intel as they invented the 8-bit. Micro processor. I mean, he basically has been here for the entire history. And we're really excited to have him back on because he wrote a book. Another book. And he's got his co-author with us. So, Molly, let's introduce the co-author here. Exactly. Legend in the making, Ryan Panchodzram, the technical advisor to John Dor, also co-founder of the United States, also co-founder of the United States, also co-founder of the United States. We are delighted to have both of you because along with co-author,

Angeli Grover, you have written a new book on tackling, taking John, of course, your legendary OKR methodology and bringing that to the climate crisis in a new book called Speed and Scale. Welcome both of you, first of all, to the show. It's great to be here. Thanks for having us. So let's talk about the climate, I guess, and why you felt we should write the book, John. What is the state of the climate now, and you've been on this for decades, are you more optimistic now, less optimistic?

Obviously, you're believing the power of technology, but, you know, I vacillate sometimes. I see incredible progress, Tesla, fusion, maybe some people are even considering building nuclear power plants again. And then sometimes I see what's happening in the weather and the fires we have in Northern California and the snow receding, you know, in Tahoe. and I get super depressed. Are you depressed, enthusiastic, somewhere in between? Well, the state of the world is our planet is in peril. And so the headline is that what we're doing is not enough. It's not nearly enough. It's not aggressive enough in its ambition or its sense of urgency. Having said that, doing the research for this book, and it involved hundreds of interviews and detailed fact-checking, assembling,

really the best thinking of experts around the world, led me to the view that I'm hopeful. I may not be optimistic, but I'm hopeful. And there's an important difference between those two. What's your view, Ryan? My view is that so much has changed in the past just three years. If we tried to write speed and scale three years ago, so many things wouldn't be true. We are Jason in this environment where you've got incredible publicly traded companies that are in the clean tech space. the end phases, the beyond meets, the Teslas. You've got solar and wind, finally, at, you know, a price that's cheaper than natural gas and coal, right? These are projections that folks like Al Gore were saying

was going to be true, and now they are. And so you've got this momentum on our side. And so for me, that's the hopeful, hopeful side. You're starting to see the signals that so many people have preached were to be coming true at someday, and they're here. Well, and this is, um, such a useful book at this exact time when you have, for example, brand new investors like me trying to build climate tech portfolios at very mainstream funds like launch, helping to normalize this conversation, which I think is really valuable. And here you come with a manual that among other things, you know, to that point about fact checking and the sheer technicality of it, attempts to quantify this problem in a way that frankly makes it less depressing and scary

and more easy to tackle. Like when you give us notes on a napkin, we could do that, which I think John is kind of the whole point, right, of OKRs. Make it first quantify the problem so that you can start to work on solutions. But it's so why is it not that simple all the time? Well, I think we have lots of goals and lots of targets.

And when we set out to write the book, we said what we'd like to contribute is a plan. It's a kind of blueprint. It's a field manual. And the big objective, are really clear, carefully chosen. And they're each supported by a half dozen or so what Andy Grove had Intel called key results,

which are very specific time-bound, measurable ways to tell that we're making the progress that we need to. So all in all, there's six big areas where we can and must reduce emissions. We've got to do that on a timescale. And so there's four, accelerants, ways to go faster. Six objectives for accelerants.

And all in, there's some 55 or so of these measurable key results. For your listeners, this whole plan is available for free right now on the website, speed and scale.com. So if you pause the podcast, download that, you can follow along our discussion about this bold plan to merely transformed society. That's what we've got to do. I want to tell you for a minute about one of the original innovators in no code, and that company is Bubble. Bubble empowers anyone to design and launch their own apps, marketplaces, or any kind of tool, without coding skills or pricey engineers. You heard that right. You heard that right.

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that could be eliminated on our OKR list from electrifying transportation. This feels like, thanks to Elon, and a lot of other people too, but let's face it, he's the tip of the spear here, in terms of making electric cars, you know, sexy for people and desirable. Maybe you could speak to

what he's contributed here, in terms of flipping the script from, you know, people looking at, yeah, the Prius is like kind of a lame car to all of a sudden just young people, older people, just cross-generations, want to own an electric vehicle because it's a better experience and it makes them feel good about, you know, themselves for maybe contributing to solving this problem. Well, Elon made a huge contribution to,

be sure, he's now built a company that's more valuable than the next 10 automobile companies in the world. And so not only did he make one of the most valuable companies in the world, and not only did he popularize the whole notion of electric vehicles, but he put the rest of the industry on notice. And I guarantee you, Mary Barra, who we interviewed for the book of General Motors, the CEO of Ford, they're paying close attention to what the market is saying about it. And honest truth is most people are buying Teslas because they're better vehicles, not for the climate benefits which come from them. So we're very clear in our goal setting that for this transformation of society to occur,

we've got a dramatically lower costs across every technology that is green. Our friend Bill Gates talks about the green premium. Well, Ryan says we've got to turn the premiums into discounts, green discounts, because that's the only way we're going to get this done at scale and at speed. The way I like to put it is we've got to make the right outcome, the profitable outcome, so it's the probable outcome to achieve all of our climate goals. Ryan, why don't you cite a couple of the key results in the electrification of transportation? Sure, of course. So Molly Jason, a lot of your listeners know about OKRs, right?

They have a set of key results that, you know, we've picked. One of them is around price parity, right? We have to get to a point by 2024 where a fossil fuel vehicle, sorry, an electric vehicle is price parity with a fossil fuel vehicle and then continues to get cheaper, right? If that doesn't happen, this green premium exists. and the market, you know, forces don't take control. Another KR that we have as well, too, is tracking the miles driven on the road. Are they fossil fuel? Are they electric? That's the real measure if the gigatons have been reduced. So this price parity one is telling us if we're on track, and then the miles one is truly where the reductions come from. And so we have a handful of key results that capture that six gigaton drawdown. And we've done that for each of the sectors,

not just in transportation, but for the grid, for our food system, for nature. Right. If you run us through those, if you wouldn't mind, the O's in OKR, because you do have six of them and then we can sort of dig into the key results. I wanted to double click just on the Miles question there. Yeah, of course. Is what's happening now is we have a lot of rich people buying Teslas and other electric vehicles and then maybe the cars that are on the road more often, cabs, taxis, trucks,

They're the ones that really need to flip. We need to get every taxi, every Uber, every lift, every door dash to be electric because they're the ones who are putting the high mileage on the roads. You're right about the mileage piece. So the Bloomberg NEF folks have projected out, right? Their best curve show that the number of fossil fuel miles driven today will stay the same till 2040. For that fact, Jason, while the number of drivers will grow on the road, those will buy EVs.

they're still buying fossil fuel vehicles. And so unfortunately, we're still faced with this fact that we won't see a reduction until 2040. And so we need to get to work. But there's hopeful signs as well, too, right? If you look at the pace of EV sales, right, as percentage of all cars sold, you know, in 2020, it was 3%. You know, every year before that, it was just two or one or barely nothing right before 2015. Last year, sorry, 2021, it got to 6%. And then last year, we closed out at 10.5% of cars sold or electric.

Like, that curve looks like something we, worldwide. That's a curve that we're looking for. Exponential growth is real. But you're right, Jason, we got to get these fleets off the road. The turnover is real. One of the recommendations we make in the book is, if you can afford it, right now is the time to switch. Do not buy another fossil fuel vehicle that stays on the road. There's also, yeah, I'll get up to.

You did ask about these six big objectives. Yeah, let's do that. Let's go through the structure for a second, right? We ought to go through those. But I want to preface it by saying any one of these is a world, it's a realm, it's a book, it's a docu-series, all into itself. And they all have to happen in parallel. So this is a mobilization, a transformation for which the best analogy is the mobilization around World War II.

You know, for four years, the U.S. stopped making automobiles and appliances. And in those factories and with that infrastructure, what we made were warplanes, airplanes, and battleships, 280,000 aircraft. That same kind of transformation is required across six big objectives. Number one, electrifying transportation. Number two, decarbonizing the grid. That means powering our electricity through renewable sources, like wind and solar and safe nuclear. Number three, there's seven gigatons to be gained by fixing our food systems. That means lowering the consumption of beef and dairy, not eliminating them, but just lowering them.

and then reducing the emissions that come from how we farm, whether it's rice or other uses of fertilizers, and food waste, 35% of the food we produce is wasted. We need to cut that number down. Objective number four is to protect nature. For example, stop deforesting the Amazon. There's seven gigatons of emission reductions in the plan there. The fifth, one of the hardest, is cleaning up industry. That's how we make steel and cement. Steel and cement are vital to our developing world.

We're not going to stop making them. We've got to find low-carbon ways to do that. The sixth and most ambitious of all these is removing the carbon that we can't eliminate. Whether we do that with nature-based solutions like planting more trees or growing kelp, or engineered removal, we call it, direct air capture, literally sucking the carbon out of the atmosphere, which I want to emphasize today is impractical and un-economic. We don't have a way to do this today, though there's a number of ventures that are funded and vigorously pursuing it. So six objectives, transportation, the grid, food, nature, cleaning up industry and removing carbon. And then four accelerators.

Do you want to touch on those, Ryan? Yeah, of course. So the objectives that John covered get us from the 59 billion tons of emissions down to zero. But we've got to make that happen faster, right? That could happen by 2100, but we needed to happen by 2050. And not just that, we need to cut emissions in half by 2030, right, the end of this decade. And so there are four objectives there. We call these the accelerants.

We've got to win the policy and politics, right? We've got to make sure that policies are passed, not just commitments made, the follow-through and money come from that. We've got to turn movements into action. Everywhere from the ballot box to the boardroom, we need candidates elected that believe in this. We also need CEOs to commit to making their companies net zero by aggressive targets. The third is around innovation, right? How do we get these incredible talk technologies down the cost curve, turning that green premium into the discount? And then, of course, fourth and finally is around investment. We need to deploy more R&D or venture capital and more project finance to see this transition happen. So those are the four

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Well, it seems like two of those are what are directly relevant to us in our audience. And there are, of course, key results around all those things. But, you know, let's bring this home to us in some ways because there are real questions, I think, about how we deploy capital, how we deploy it soon enough, and where we place the big bets. Like, is it the goal of this book to say, if it's not in one of these six categories, if it doesn't meet the filter of one of these six objectives, let alone its key results, keep stepping, don't look at it? You know, like from your investor lens, John, are you saying, this is a filter for you? This is where you can deploy capital to the best possible effect. Well, this may sound harsh, but we're fast running out of time.

And so our mantra is go for the gift. gigatons do not get distracted by bright, shiny objects. We need individuals to change their light bulbs to LED bulbs if they haven't. But the time for individual action, which is necessary and frankly assumed, has passed. We now need collective action. We need leaders in every walk of life to invest or to innovate, or advocate or galvanize or catalyze collective action, because that's the only thing that will get us at scale to cut our emissions in half by 2030. Half by 2030, a 50% reduction in a growing world where growing emissions means per compound numbers, we've got to reduce emissions 8% in this great year of 2022.

And then again, eight more percent in 2023 and 20, and 25 every year between now and 2030. Those are the laws of the compound numbers. Molly, when do you think the last time is that we reduced emissions on our planet? Oh, I mean, it has to be pre-industrial, right? It's never happened. It's never happened. I was going to guess never.

Great. So what do you think are the odds that we're going to cut emissions by 50% by 2030? Yeah. It seems low. we're going to need to really act in unison. And that's, I guess, one thing I wanted to double click on you with you, John, you know, policy movements, innovation investment. Got it.

We look at something like nuclear, right? And I remember when I was nine years old, you were, I think 28, 29, John, the no nukes concert. And I saw Bob Dylan. I didn't go to it, but I remember Bob Dylan and all these folks, Bruce and the East Street brand. They were like, hey, no nukes, this is bad. And they had good intent.

After Fukushima, the Germans started shutting things down. Again, good intent, but I got to think, if we want to think big here, nuclear has to be a major part of this. And we see our guy, Billy G, is putting a lot of money into his nuclear companies. There's a lot of innovation in that space. But policy and movements, it does seem like nobody is anti-nuclear anymore. But what's the policy here in the United States? Why are we not building 25 nuclear power plants? And it seems like China understands this.

France understands it. France is 80, 90% nuclear. Tell me, John, if you could wave a magic wand and make nuclear a major part of this plan, would it be one of these things that could actually reduce 8%? Nuclear is part of the plan. It will not scale just the physics of building new nuclear power plants rapidly enough to have a meaningful impact on climate until 2040. So nuclear has some amazing qualities.

It can be located anywhere. It's available 7 by 24. It's baseload power. And we have starved this sector of the innovation economy for far too long. The book highlights work being done not only in safe nuclear fission, but also nuclear fusion. that we generate heat and therefore electricity in the same way that the sun does. But I think we have to look to solutions that will scale more quickly to get to a 50% reduction by 2030. Ryan, you have any thoughts on nuclear?

I mean, these small modular reactors seem like such a game changer. And I just got to think at some point that people who are anti-nuclear are going to look at this and say, you know what? We've got to put more of these around town. We've got to put more of these around and have essentially free energy. I mean, I don't understand why France gets this. The French do not seem like the most, you know, techno-embracing culture. No offense to my French listeners. But if the French could go 80% nuclear, why can't America go 80% nuclear or Germany or any of these

countries? China seems to be on their way. What do you think, Ryan? I mean, the tides are changing, right? Like 10 years ago, there would still be, you know, all of us on the call might be negative on nuclear. But I think we've learned how safe it can be. This whole category of Gen 4, right?

All the reactors that exist are in this Gen 3 bucket. And so for any of the innovators out there, you go down this halfway of what Gen 4 means. It's all the other approaches that are safer, right? The message we try to push in the book is that we both need the now and the new. Right? So to cut emissions in half by 2030, deploy all the solar, all the wind, all the EVs, get the batteries, like storage pieces out there, but that's only going to get us maybe 70% of the way, right? For that last 30, we need long duration storage that doesn't exist. Jason, we need the nuclear

power plants that you're talking about to exist to fill in that, you know, 10 or 20% part of a grid. And so I think with the urgency that we can is to, one, fund companies that are doing great work in this space, but to really clear up the regulatory hurdles in the United States, right? I do not believe a new style power plant has been approved yet. So I think it's this question of how do you get the U.S. back into the mode of saying yes to these projects and doing it safer? From page 248 of the book, nuclear is the only carbon-free energy source that can reliably deliver power day and night through every season, almost anywhere on Earth that's been proven to work at large scale. Who am I quoting there? Bill Gates.

Bill Gates. What's the obstacle? It's still cost too much. And so we haven't invested in R&D. We haven't invested in deployment. There's monies in the infrastructure bill. We're commencing the building of one of the first new nuclear plants in Wyoming, Terra power with the Bill Gates venture.

So it will be part of the solution. We just have to focus on those that can be done at scale and with speed. I had a crazy idea. for it, which was if any, if the people around the nuclear plan approve it, they all get free energy. Like, you know, like, because that's always been one of things. I don't want it in my neighborhood. So if you just had everybody, regulatory bribe. Just bribe them. Like, it's free, right? Like, if you live near, you get free or even like you get like a tax break, like, and they give essentially a UBI in Alaska for, you know, the oil revenue. I just think economics could also play a role here.

Economics and policy is incredibly important. And as you probably know, we're right now debating a complete revision of the incentives in California, the fifth largest economy in the world, for rooftop solar. The investor-owned utilities and some of the environmental justice advocates have come together and made a proposal which the governors put on hold for further debate that would basically stall that industry, remove the incentives. So you have to be adept not just at inventing and scaling these innovations and technologies, not just at raising more. money for them, but getting all the policy lovers aligned for World War II like deployment. Yeah, and you know, it's so gross because they're all in the pockets of big oil, coal,

and I just don't know how these people sleep at night and how they could look at their kids and their grandkids knowing that just to stay in office, they're willing to take money from an oil company or a coal company? I mean, in the face of all this, how could you fight against solar? How could you fight against Tesla? How could you fight against nuclear? I mean, how do these people sleep at night? It's just so infuriating. Jason and I have this conversation just the other day, actually, about the utilities and these incentives and incumbents and the fact that utility is themselves not to derail us completely because we're about solutions here. But the fact that you do have incumbent interests who, in the case of utilities, could be the ones to turn this on, right? I mean, they could be the ones to just say, we're decarbonizing our grids.

We're turning this on at scale. And we're not. And that makes me wonder when you look at these accelerants, which of the four. could be the biggest decelerance, right? Is public policy the blocker? If you had to pick one of the four that could stop us, not cold, hopefully, but too much. I'll be interested in Ryan's answer. My answer to your question is just what you proposed.

It's that public policy is the biggest impediment. Right now, the innovators, the businesses, the investors, the investors, the importers, the impassioned youth, private sector, are well ahead of the public sector, and for good reason. It's hard for a political leader to make pledges that his population won't support. So key result number 8.1 in the all-important objective of turning movements into action, key result 8.1 says, we're going to make the climate crisis a top two voting issue in the top 20 emitting countries by 2025. What's a good example of that? Greta Thunberg, the Swedish teenager who in 2018 was alone outside the parliament striking from school on Fridays to draw attention to the problem.

A year later, by 2019, she'd sparked a million-person demonstration in 100 cities around the world, and importantly, not just the demonstration, but made the climate crisis a top two voting issue. in the European nations. It is not top two in America. It is not top two in China. It is not top two in India. I say that because it's a challenge, because it's an opportunity. Our plan calls for that to be changed.

Let me just look at coal miners. We're talking about coal miners in every election. And then I looked it up at some point. It's like there's less than 50,000 of them. Like, how about we pay them to, like, like learn another trade, or we just pay them to stop going into coal mines. Like, we're really, that is the issue. Like, we're going to save coal miners jobs. Like, it's 42,000 jobs. Like, we've had millions of people on unemployment during the pandemic. Like, we can absorb 42,000 people

not digging coal out of the ground. But then these politicians get some sort of incentive, and then all of a sudden, they think coal miners have to be protected. Coal miners, if you want to protect coal miners, get them out of the coal mines. That's in their best interest. These politicians, here, I think, I would agree. I'm with you, John. I think this policy and these politicians are the blocker here in America. And it has to be that they don't get an office unless they back clean energy and climate change. I want your audience to know that this is a global plan. And so it's certainly written by co-authors in the U.S., but there's two million coal miners who work in China. And so it's a different tradeoff. Yeah. Those are real numbers.

in other parts of the world. Key result 8.2 says we get a majority of government officials around the world, whether elected or appointed, to support this drive to net zero. That's the mother of all OKRs here. The mother of all objectives

is to take net emissions down from 59 gigatons to zero, and to do that by 2050. Ryan, what's the blocker for you? John had asked, yeah, policy movements, innovation investment?

The blocker will be cost, right? It's that green premium. You know, John is talking about policy being the big decelerant. That is totally true. But the other piece of the coin will be, will these technologies still be too expensive, right? And so that's why for the KR is around innovation, they're all around cost, right? The one for electricity doesn't say pick nuclear or geothermal or solar or wind, we give a cost target. And so we're agnostic. Whichever one of these technologies can work their way down the

cost curve and can beat the fossil fuel equivalent and become cheaper. That's the one that's going to win. To your point, Ryan, you tell me if this is correct, but I was just told by some people in the energy sector that like just in the last 18 months, 24 months, this new solar panels, the cost of putting in a solar power plant just became less than a coal plant. That's right. You look at data from Bloomberg and E.S. as well as IEA, we have finally crossed that threshold. So that means, right, you know, for the power load that's, you know, on top of the curve, you can pull and use solar and wind for that.

But, you know, on-demand power, solar and wind still doesn't fit that completely. There's a big question we get about the developed versus the developing world. Well, Ryan, you know, China emits the most and the developing world is the one that's using coal. I think it's pretty clear. The United States, we are the alpha emitter. We have admitted the most historically, more than double than China has in its history. The Europe is alongside us as well, too.

So our message to the United States is we've got to go first. And we do it also for selfish reasons as well, too. If we go first, we get to innovate and invent and scale the technologies and industries that matter. And by doing that, it drives down the cost curve and makes it more affordable for the developing world to use it and adopt it. And so that's a big charge of speed and scale. We've got to go first.

We've got to innovate and let those industries be ours. John, you have a story from solar, call them the Solar Wars. Well, two stories from the Solar Wars that are in this book, one of which is what a German legislator did when he established something called the Feed-in Tariff, which basically said for a long period of time, 30, maybe 40 years. German utilities would buy solar at a price, a fixed price, so that people could make investments. Herman Scheer is this legislature's name. And Germany became the leading place for solar to be deployed. It coincided with a strategic decision that the Chinese made, which was they were going to supply, be the world's leader in solar panels. And that combination of demand and supply is what led to the fantastic reductions over 90% in the cost of solar.

I described that in the book as Germany's great gift to the world. Well, it became so strategic to China that they viewed it as a jobs program. And they indeed provided national funding so that every region, every province of China would have a local solar panel. manufacturing champion. And that ran headlong into seven different entrepreneurial groups that my partners and I funded to make new innovative solar companies because the Chinese would sell below cost. When they ran out of money, they would reorganize the company, refund it with more state loans so they could continue as a jobs program. Long story short, all seven of Kleiner's solar panel generation companies were crushed.

One, survive. Its name is N-phase, today worth some $30 billion. They make the microinverters that make rooftop solar economic. And so if you take a long view, you understand this requires a lot more capital. You're smart about the incentives or subsidies or national risks that are in place. you can build companies that'll make a difference to the climate and succeed as long-term players in the worldwide economy. But if you're not careful about those things, you can get your head handed to you. Well, I was about to say, you know, the venture window tends to be a decade per fund.

And you have LPs who are, you know, let's face it, based on the industry that you helped create and define, John, they're on this like 10-year, you know, fund cycle. they, when they got into solar, they must have looked at it when you were making these bets year 7, 8 or 9 and said, John, what's going on here? You're the home run hitter and you're not even on base with some of these companies. What was that like for you in terms of a gut check as an investor? You know you're making the right bets, but correct me if I'm wrong, the time horizon was different than investing in Google, which started printing money in year 4 or 5. The time horizons are very different. And so it raises the bar for the founders, entrepreneurs, and backers to be expert at raising money. You're constantly raising

capital is something I like to say. It ups the ante in terms of the amount of capital that you're going to require. And most of all, I think the rigor, the intellectual discipline, to be ruthlessly honest about where the key risks are in any given venture, and make sure that they are up front and removed with the early dollars. And if a venture doesn't fit that formula, it's not appropriate for venture capital, and it ought to be funded some other way. Did you, what was it like for you, though,

on a personal basis as like, listen, what we do is like gambling, we're placing bets and to, like, lose every hand for a little bit, did you start to like wonder, like, do I not have the mightest touch? Or, you know, it must have been a gut check for you at some point. Correct me if I'm wrong. Well, it was...

These were big bets, weren't they? These were meaningful investments, meaningful to me as an investor, but even more meaningful to the founders and the entrepreneurs for whom it wasn't part of a portfolio. It was their careers. It's their mission. It's their passion in life. And so, frankly, I'm a stubborn optimist, and we stood by these companies. and over the course of about a decade put a billion dollars in some 60 or 70 ventures,

those investments today are worth $3 billion. So, yeah, yeah, if we, you know, beyond me is an example of one of those investments, nest a successful investment. end phase, which I've mentioned as another one. I wonder how, never, you know, I don't think very many people know. I didn't know until I read the book that your $1 billion in investments were worth $3 billion because the narrative in Silicon Valley became Clean Tech was a bust. And then there was a lot of fear about reinvesting in this industry for a long time.

And I wonder if you can reflect on that. And also, though, talk to us about the risk as investors now of, I don't know, accidentally bringing a Theranos into the world and setting this industry back all over again, you know? Well, I think there's a very low tolerance for Theranos style investing. Right. But a cylindra? Like, you know, I mean, there could be a high profile failure and we would hate for that to happen and then make Clean Tech have a bad name all over again. You know, you can only lose one times your money. And so, my part of my, Partners and I made a bet on Fisker instead of on Tesla. Tesla was a struggling venture at the time we made the wrong choice.

It wasn't clear where the funding was going to come from. Deposits from prospective buyers were being used to fund development costs. The government came through with a cylindra-style loan for Tesla, which Tesla repaid early. and that single investment, the decision to back Tesla or not, the decision to back Google or not, is transformational for the returns of a leading fund. So we earn good returns for our limited partners, even in spite of having picked the wrong electric vehicle starter. I have a funny story about that. So I'm friends with Elon, obviously, and I'm talking to Elon, and all the hundred

hundred roadsters had sold out. But I guess Ray Lane was the guy you were working with who did the Fisker investment. He had put a deposit down. He had number 16 of the roadsters. And Elon said to me, you know, we're having dinner. So he said, hey, do you want a roadster? He's like, got an email his backberry. And Ray had said, listen, I don't feel comfortable taking the rooster.

We have the Fisker. So he basically said, can you take back my deposit? And I said, yeah, I'll take it. Because there were only 100 available. And sitting in my garage. That's how you got your car? it was Raylan's. I have Raylan's

Roadster. There's a pretty funny story, right? But I mean, those companies, there were so many moments where Tesla went out of Bisker, I mean, it was so dicey, like watching Elon just you know, be on the edge of the cliff

for years. It was brutal. I think people take for granted sometimes how, you know, you look at Tesla, you look at end phase, you look at Beyond Meat, you look at Sun Run, the fragile moments in their history, the amount of grit each of those founders, right? The like how thin of a line they were skating on, right? Like, I mean, we're lucky that today we have these role models of companies that we can point people to to show, look what's possible.

Look at their market cap. Look at what it takes. You know, Mollity or porn about Theranos. It's like, John's right. The appetite for that is low these days. days because it's really about cutting emissions, finding more efficient ways to do things. And then the magic silver bowl of things, those get to the side, at least for the sophisticated investors in here that are like, nope, there's an emission I see, and we've got to cut it.

I got to know how you were able to make that beyond meat bet because I had seen these companies. I was talking to Evan Williams about it because he, like is quasi-vegan and he was back in those companies. And I was like, when I met with them, they said this would be like $16 a hamburger. And I said, wait a second, you're telling me people are going to pay, you're going to charge people $16. Like, well, eventually it'll get down to $8. And I was like, yeah, but you can go to in and out and get a burger from four bucks, five bucks, pretty great. So you're telling me they're going to eat something that tastes like sawdust for $16.

Like, oh, it's going to be better than sawdust. I was like, I still don't get it. How do you make that bet, John? How did you get the firm around people will pay more for this burger than they would pay for a hamburger from, you know, five guys? They'll pay more in transition for a brief period of time. But you described the way we made the bet. The only thing you left out was the passion of the entrepreneur. We saw Ethan Brown.

When I first met him, he said, my vision is to create an animal-free McDonald's Burger. And guess what's available this very month of this broadcast, the McPlan, across the country. Incredible. What's interesting about that story as well, too, sorry, John, to jump in there as well is, you know, not just the passion of the founder, but you have a lot of venture capitalists that listen to this as well, too, right? The passion and fire of an associate. You know, I'm old dishpande, believing that the world was going to be scarce of protein, right? Like, it takes, you know, the two to tango in a venture environment. Sorry, John. You need your internal Greta Thunberg, though, right? At every company. Yeah. Yes. You know, this actually, I got to pause on the book and the whole climate change thing and just ask you a investor, you know, 10-year investor to legend. What have you learned about when you look in the eyes of those founders and you hear them talking? And then, John, at some point, your gut just tells you that's the one. This is the team and you make that bet.

Because you've done it so many times. Is there some signaling you can say to this next generation of investors that like, hey, when you see this, when you feel this, this is when you pull that trigger and you write that check, because you got that signaling. Can't be luck. The first criteria that I have, the question that I'd like to answer as early as possible, is would I mind being in trouble with that founder or not? Because no matter how things unfold, my experience has been, we always get in trouble. Something doesn't work out according to the plan.

Of course. Then there's five factors that I think distinguish. the truly great ventures from those that are just successful. But that's probably a topic for another conversation. No, no, no, no, you've got to give it to us now. No, no, you've got to give them to us now. This is, we'll talk about climate, but I've got to get a little of that investment history here.

Exactly. Or just give me some of them off the top of the head. I'll give you some top ahead. It starts with technical excellence, and I don't mean published papers or PhDs, but the attitude that we're going to have the best technology in the world. And that enables us to recruit and retrain the teams that'll build a really great first electric vehicle. So technical excellence is one.

The second is a commitment to outstanding management. And that's when the co-founders really are determined that it's going to take a team of people bigger than themselves to change the world. The third is strategic focus on a large, unmet, unserved market need. Jeff Bezos had this at Amazon. Books were the very best first item to sell via e-commerce, but his vision wasn't limited to books, I'll assure you. Not long after we invested, he and I were walking the aisles at Fries and answering aloud, what is there here in Fries that we wouldn't ultimately sell in Amazon, whether it's CDs or television sets or refrake.

Well, we wouldn't sell firearms. That's one. And we wouldn't sell live animals. But other than that, this was all really pretty suitable for Earth's biggest store. What else? Reasonable financing, that's an important factor. And then finally, the fifth is sense of urgency. Now, no venture, no founder possesses all five of those in equal

measure. But if you believe you wouldn't mind getting in trouble with her and that we can build the strengths where they need to be added as the venture grows, then you've got a real shot at changing the world. Double click on that reasonable financing. Yes, please. That was my question, because I understand financing is critically important. You've got to put fuel in the tank. These things are not cheap. And you said, you've got to have great management, which costs money. But What is the reasonable qualifier? You can raise too much money as well as too little. I think overfunded ventures lose discipline.

But for sure, you don't want to run out of money. That's when you failed. Game over. Game over. So when you look at the funding environment today, and listen, this has been what, 13, 14 year bull run, we didn't see, I don't think you saw this in any point in your career this long of a bull run. and you see these crazy financing's happening. And, you know, the amount of performance to financing seems way out of whack.

What do you think? Are you appalled? Are you, like, whoa, punk the brakes? I think generalizations don't work here. The specifics really matter. And we can cite a bunch of ventures, for example, we work that were overfunded and undermanaged. One I was involved in is DoorDash, which came. to the local commerce, local delivery competition is maybe the last entrant with a lot of capital,

but deployed it. And today are the share leader with the widest selection, the best financials. And so, sorry to say this, it depends. No, but when you started, when you, because I know Tony from Dordash and then you know this maniac from Wework and you look at your framing, reasonable financings, right? And then you say, oh, the ability to have like a sense of urgency. Like, Tony has a sense of urgency at DoorDash. Like you just see that in that entrepreneur.

Did Adam Newman have a sense of urgency? No, that guy was distracted by everything. He did not seem focused. He didn't have world-class team around him. He broke all your rules. He was the anti-five. I didn't invest in him. Oh, tell me about the meeting.

Please. No, time has passed. You didn't take the meeting? I didn't take the meeting. Oh, okay. Tell me your best Bezos story. Come on. There's got to be like, he wasn't always Bezos or was he always Bezos?

Like, at what point did you realize this guy is just next level? There must have been a moment wearing your brain working with him all those years that you're like, this guy's an alien. He's on another level. Entrepreneurship was. I don't know if it's my best story, but one of my favorites is my first meeting with Jeff, where I headed up to Amazon's first. first office outside the garage, which was in a two-story lock opposite the Free Needle Clinic and a pretty seedy part of Seattle.

And Jeff came bounding down from the second floor to the first floor, greeted me with a great big hug and open arms. He and I are both nerds. He from Princeton and I from Rice University computer scientists. And he took me on a tour around the place. There was one Vax 750, which was being used to do all the software development with one of his early employees chef. We directed, he directed, on top of Sawhorces doors from Home Depot that were used as staging areas to cross-doc the books, which would be ordered the night before from Ingram MicroD, which had a distribution center. And Jeff made, if you'll recall, a very fast, high-performance website that mostly worked over dial-up modems.

That was the way we got to the Internet in those days. But it was fast. And it had the largest selections of books that you could get anywhere in the world. I asked Jeff, so what are the revenue trends? And I could really tell he was the kind of entrepreneur I wanted to work with when he stepped up to his terminal. on the Vax system and typed in a Unix Grep command to get the very answer to my question.

Yeah. That is next level. Like when you don't need to ask somebody, you just have it right there and you just know your business from the beginning to the end. It's, yeah. I mean, I literally was,

to tell another Elon story kind of relates to your philosophy. I was driving with Elon in my model X, or my wife's Model X, and there was some wind noise. He's in the passenger seat. We're driving. He's like trying to do something with the window.

And he's like, I know this problem. Like this thing got displaced and this, it's this washer. And he's literally fixing, trying to fix the window while we're driving up the 280. I said, Elon, I can bring it in for service. I can fix it now. It's like, it's okay, buddy. It's going to be fine. When you first met Elon, did you have the instinct to invest in him?

What was your thinking? I was not an investor at the time. So I was just an entrepreneur, right? And so I was like, I could introduce you. He was like, I'm trying to raise some money with this thing. So I was like, oh, let me email this person, email that person. So I'd emailed a couple people. And they were like a car company, are you crazy, J.co?

Like, that's how people, rich people lose their money, is making movies, car companies, you know, in sports teams. I mean, it's literally in this book. Hard now. Capitalist never invest in something that has wheels. Yeah, it's a conventional wisdom. Exactly. Well, you know, it's all the conventional wisdom until somebody does it. I mean, I think the Uber investment was when I introduced Uber to 21 people, and that's when I just became the first Goya Scout, and I made that investment. And I had a very famous venture capital. Someone would say, who say, you know, Jake Al, I'll invest in this. You just got to convince Travis to make an enterprise software and to sell it to the cab companies because we don't want to be involved with these drivers and the cars. It's like too messy and dirty. And think about how many cab companies are. He could sell this. to like 100,000 camp companies. And enterprise software is like such high margin.

And I was like, you realize cap companies are the enemy in this? Like they're capturing all the money and that's, you could take that out and be better for everybody. He's like, no, no, I never brought it to Travis. I was already on a mission. I didn't want to embarrass his venture capitalist by telling Travis's story. But yeah, that was a crazy story. Well, you'll recall around the launch of the Netscape browser,

I was running around the world shooting off my mouth saying, the internet had been underhyped. And it kicked up quite a controversy. And I have a similar message for today. And that is, I think, the climate crisis has been underhyped. Or at least we are underestimating it in two really profound ways. The first is, it is the greatest economic opportunity of the 21st century. It's going to create more than 25 million new jobs.

The market for advanced, for batteries for electric vehicles is estimated at $400 billion per year for the next 30 years. Just think about the size of that number. That's what it's going to take to transform to electrify transportation. And so there's multiple companies working at it. But the other way to look at this is if we fail at this, the costs are staggering. the human costs, the economic costs, it's already created tens of millions of climate refugees. People who have to change where they live because of climate change. It's wrecking whole economies. Last year, flooding alone costs China $30 billion. Europe, $35 billion.

Hurricane Ida in the U.S. now estimated at $100 billion of damages. And so you've got to ask the question, how much of this devastation are we going to endure before we accept the fact that it's cheaper to save the planet than to ruin it? Yeah. I mean, it's just so well said. The opportunity for entrepreneurs is just so great. And just think about how amazing it is to go to work every day and have purpose. And what you're doing is not only going to make money, sure, that's great, not only going to build a big company, that's fine.

But, you know, you could actually take this. it's not an existential challenge anymore. Like this is like an acute challenge, as you're saying, like cities are going to be underwater. And this whole concept that this is being overblown, I just don't understand how there are still some people holding on to this is overblown. What do you say to those people, Ryan,

when they kind of, there's it, because you did bring this at the beginning of the book, like, hey, there's a lot of facts here to make the OCRs. We need the data. There's people who are denying this is still happening to this day.

What is the, Way that we deal with that, because Molly and I talk about this thing all the time, is the denial, or whether it's not that big of a deal. Well, that's what they shifted to, Jason, right? The denial is kind of shifting on a spectrum. Before it was, it doesn't exist. This warming isn't happening. Now it's, well, it's happening, but it's not going to be as bad as people say.

Or the one that I'm hearing quite often now, it is not worth the economic damage to make the transition, right? Which are all both those two thoughts are, you know, sure, the world. is not going to end, but it is going to certainly be warmer. And with warmer comes global weirding, different weather patterns, economic, you know, migrations of people and areas where, like, there will be a lot of places in the world where life won't be able to continue as normal. That is a truth. On the economic piece, I think the message that John is saying so clearly is there will be more jobs created because of this. Every country needs to see this as a national priority. Because if you don't get ahead of this, you are going to be left behind, right?

If you don't invent the industries of the future, someone else will. You know, one of the things that really struck me is we did the research for the book, and I dive deeper again into the field, is the whole notion of climate justice. And climate change amplifies inequities. It makes them worse. those who suffer the most are those who've done the least to cause this problem, and they're least capable of dealing with it. And so as history's biggest emitter, the U.S. has got to decarbonize first.

We've got to show the world that this is possible, and we've got to drive costs down for everyone else. More broadly than that, the U.S., Europe, and China have got to fund this transition in the developing world's economies because they don't have the money to make it. as we stop using fossil fuels, we're going to see jobs disappear in communities. They're going to be hard hit. They're going to evaporate. And so we've got to get them their fair share of the good paying jobs.

In other words, I love the closing quote of the book, which is an interview with Lorene Powell Jobs. And she says, you know, John, I think this climate crisis is in fact a great gift. it's the best thing that could occur to humankind to let us deal with these longstanding inequities. Yeah, I mean, you talk to anybody who's affluent, oh, yeah, you know, I lose money on my house in Miami. I'll just move to other great plays. I'll buy a place in Costa Rica, Cabo. Like, that's not affecting you as an affluent person with your second home.

It's an inconvenience at best. Although I do like that the book is so pointed about saying that this is unavoidable. This is the thing that we, you know, it is the only imperative that we have and that nobody's going to be immune to it. I don't know, you know, sort of separately. I don't know how big a bunker you think that you can build if society collapses all around you. It's just not going to work. And it does seem to the people who built vibrant economies off of fossil fuels, we are in a way saying to this next group of people,

you don't get that advantage of the cheap stuff you can pull out of the ground. You got to use this more expensive stuff, more complex stuff. And I understand, I don't agree with, obviously, you know, people saying like, well, we got to use the cheapest option. I understand why they're saying that. They're developing economy. They're trying to protect their two million coal miners, whatever it is. But we do have to recognize that as the West

and the people who did admit a bunch to get to, you know, where we are. We're on third base right now. These people are just getting in the game. We have to help them. On the coal piece, Jason, you talked about earlier, right? If you go to West Virginia, there is a different sentiment between the coal miner and the coal mine owner, right? The coal mine owners are the ones that want to drag out their revenue streams just for a bit longer. When you look at the coal worker and you do, you know, there was a recent survey done of the fossil fuel industry.

More than half of the people say they want to. get out and that they see the future is renewables, is the cleaner, greener stuff. You know, if an alien race came to the world, an alien species came here and looked around, they'd be like, you've got the sun, you've also got this really hot ball inside Earth that you can get energy from. And you're relying on this black, tarish gung that, you know, your planet took millions of years to create. Like, get over that, make the transition. And that's actually maybe another message to share too is I think for us in the technology industry, we see transitions every five, 10, 15 years.

The energy transitions that have happened historically, Vaklev-Schmeel categorizes them very well, they take 70 plus years. And so for these leaders in these industries that, you know, sit on top of energy and transportation and others, yeah, that book is a great book. I only have this because of Bill Gates' book. And then now I'm, you know, haven't helped us. The rabbit hole. Down the rabbit hole.

Energy and civilization is the book that Molly held up. And, you know, so for those leadership teams, they're not used to transitions, right? They can't see, they haven't seen one coming. And I think the message now is look at the cost curves, look at what things are getting financed, look at the hunger of entrepreneurs and innovators. These transitions are coming. It's going to happen during our lifetime. All right. If we could give, you could give while I have you, because I'm brand.

new here, right? There are a bunch of people like me, a lot of people getting into the climate tech investment and startup space. Thank goodness, right? That seems like a net positive. What is your advice, though? Where should we focus our energies and where should we not waste our time? Wow, what a great question. I would focus my energies on the plant. These are the gigatons. I wouldn't get distracted by something that won't scale, right? Yeah, planet-sized solutions. Totally. And there's a good lens that the KRs give, you know, focus you on these challenges, right? Where are the cost targets? Does the innovation that you are going after? Can you move it down?

Yeah. Right? People will pay a premium up front, right? If, you know, there are government subsidies. It's a performance product. But you got to work your way down. But there's also a graphic we have in the book. It's on 241, which shows the technical quest that the breakthrough energy coalition, this is the group behind Breakthrough Energy Evaluation. ventures. And these are different technical quests that we haven't solved yet, right? Like next generation nuclear fission all the way to low emission fertilizer. Like there are so many places to disrupt and they're going to take not just incredible scientists and engineers, but they're going to need great operators and people that know how to scale. I'll make a closing offer to your audience, Jason. Yes, sir, please. I'm new in my relationship with Molly, but I really admire the leadership,

the vision, what you've done for entrepreneurs over the decades that I've known you. And let me just invite any of your listeners to write to either Ryan or me. I'm John at speedenscale.com. I'm pretty sure Ryan is Ryan at speedenscale.com. And if you've got an idea or a question or you're looking for an opportunity or a direction, we'll return your mail message. Amazing. That is just the spirit in which Silicon Valley was built.

and John, you help build this place. We're standing on your shoulders, and it's just an honor to have you back on the program. I want everybody to just take a moment, load that Amazon, which John helped put on this planet with Jeff. It wouldn't have been here, you know, capital allocators and entrepreneurs work together. You go do a search for speed and scale right now, and there's a drop down there. I don't want you to buy a copy. I want you to buy two, three, four, five copies, and just hand them out, give them to people

as a gift. This is a serious situation, and we can do it together. And that's, I think, John, the great gift you're giving everybody is, we can get this done together. And you're making it real with the OKRs. You saw those OKRs up close and personal, you know, change companies. And let's do this. Let's change the fate of humanity together. And what a great book.

Everybody go buy it. Ryan, thank you. Great to spend time with you. And John, just good to know you, brother. And thank you for everything you've done. And you've always given me great advice myself. So appreciate you coming back on the pod. Thank you, Molly.

Thanks, guys. All right, everybody. We'll see you next time. Bye-bye. Bye.