We’re here to prove that if you pick the right climate tech companies with the right founders, that can be an amazing business. They’re disrupting trillion-dollar industries, and so you ought to be able to get good returns on that. And that’s what’s going to be required to get a bunch of people to open up their checkbooks and really spend the trillions of dollars we need a year to solve these problems.
So we look for companies with—we’ve jokingly called it at times the “green discount.”
Those trends are freight trains that are going down the hill and are pretty hard to stop.
Mike Schroepfer
Like, “Hey, this is a better product. [whispers] By the way, it’s better for the environment.” Sort of the little asterisk if you read the fine print at the bottom.
The starting point is, the consumer wants it because it provides a lot of benefits; enterprise wants it because it’s cheaper. That is the selling point of all the products we back. And then it also happens to be a lot lower carbon, or zero carbon, compared to whatever alternative it’s displacing.
Your mentioning the green discount reminds me of Bill Gates’s green premium (the Microsoft cofounder’s thesis that it takes heavy investments in climate tech to reduce their cost premium relative to polluting products over time). There are some products, like green steel and green cement, where the alternatives are more expensive. Does that mean that you’re not investing in those areas, or is it just that you would with the hope that eventually they’ll be able to get those costs down?
Technology takes time to incubate, so no new technology out of the gate is better, faster, cheaper. But in the life cycle of the company, in five to 10 years—I have to believe, at scale, you can be cost competitive or have a cost advantage versus the alternatives. So that means that, yeah, we only invest in things that we think can either be cost competitive or have some other co-benefit that is a decision maker.
This is why I very cleanly separated philanthropic work where it’s like, “I get nothing out of this—we’re gonna send money away and hope public good, papers, knowledge gets created.”
And the venture fund is “Nope, this is the capitalistic endeavor to prove to people that if you smartly choose the right solutions, you can make money and fund the low-carbon economy.” That is the bet we’re making.