Entrepreneurs for Impact (EFI) Podcast: Transcripts
#93:
350+ climate startups on a map, Billionaire VC investor “made a mistake,” Texas “bans” 348 ESG funds
Chris Wedding:
Hey there folks, it's Chris. In today's episode, I'm going to go through highlights from three recent newsletters from Entrepreneurs for Impact. We'll cover things in this episode along the lines of a billionaire investor who admits some mistakes in past climate investments as well as comments on whether there's too much hype in climate. In addition to that, we'll go over things like the $2 trillion climate adaptation market. This is perhaps controversial since it's at odds with a pure focus on climate mitigation, where I would argue it's not quite waving the white flag, so more to come on that one.
We talk about the Texas and really Florida and West Virginia attempts to ban various asset managers and investors that include some focus on ESG investment, so this is environment social governance investment. I've got a link to a resource from some friends over in Europe that have a great market map of 350 plus climate startups. There's a calculator I'll point out here that helps you understand maybe how much time you're wasting. Good times. Then some stuff on stoicism from my boy, Ryan Holiday, really important stuff to keep in mind in all the hustle and bustle of building world-changing companies. All right, so let's pick one of these and hop in.
The first, the title I've got here is, Billionaire VC Investor, “We made a mistake.” This is really a series of excerpts from a Bloomberg interview with Kleiner Perkins Chairman, John Doerr. The first part, my summary of this excerpt is, “Even investors get it wrong often with big financial misses.” I quote John here, “Inside Kleiner and it may be different in other firms, you don't have to have everyone agree. Some of our best investments are very controversial. Google is controversial within the partnership and within the industry. It was a $100 million valuation on a company with no revenues and no business plan and founders with no business experience. It turned out to be an epic idea and company.” Humbling indeed.
The second one here, my title, Climate Science, all the cool kids are doing it. I quote John, “Climate science is going to become the new computer science. It's where all the young people want to go work for all the right reasons.” I can tell you looking at my roster for classes I'm teaching on ESG investing and corporate sustainability strategy at Duke and UNC, lots and lots of interest more than ever before in these topics, hallelujah.
Third excerpt here, are climate valuations overblown? Well, maybe or maybe not. Quoting John, “At the start of the internet revolution, I went around and kicked up a lot of controversy declaring that the internet had been underhyped. I say the same thing today about the climate revolution.”
Finally, the fourth excerpt, where I say, “Look, the past does not predict the future.” Quoting John, “There have been 400 new car companies in the US's history. All of them, but one has gone bankrupt, but I was still very attracted to the market and we had the choice of backing a brilliant car designer by the name of Henrik Fisker or an ambitious slightly crazy entrepreneur by the name of Elon Musk at Tesla. Well, we made the wrong decision.” Hence the mistake there. Lots more, by the way, in that article with David Rubenstein, formerly of Carlyle, or maybe still of Carlyle fame.
04:34
The next one here is, again, maybe controversial. I don't think it should be. It says, “Investing in climate adaptation is not surrendering to a bleak future of sorrow and darkness.” I go on, “Climate change is happening. No kidding. It's going to get worse before it gets better, so mitigation that is stopping emissions is not enough. But investing in prevention is still more energizing than adaptation,” at least for me. But I say, “Look, repeat after me, we can do both.” I think that's true. I go on here, “7% of climate related investments are chasing a $2 trillion market, again, around climate adaptation in five years. So, who wants to join this game?”
I'm quoting from a Harvard Business Review article, which has some great stats here, so here's the excerpt. “According to a 2021 report from the Climate Policy Initiative, these types of initiatives receive only 7% of climate-related investment allocated across a vast spectrum of needs, such as flood and wildfire prevention, resilient agriculture, clean water supply, infrastructure modification and population resettlement.”
I continue with this excerpt here from Harvard Business Review, “They deserve far greater business investment, especially because they represent near-term opportunities at lower capital expenditures that offer faster paybacks. Indeed, according to this Bloomberg report,” and there are links to both these reports in the newsletter, “Bank of America analysts estimate that the climate adaptation market could be worth $2 trillion per year within the next five years. Because of their fixed location, real estate assets valued at $200 trillion worldwide are uniquely vulnerable to natural disasters and resource shortages. The insurance conglomerate, Swiss Re, warns,” also in a linked report, “that a global temperature rise of 3.2 degrees Celsius by 2050 would wipe out 18% from global GDP.” Again, in my parentheses, go ahead, tell me this is a purely environmental issue, close parentheses.
Finally, in the excerpt, “A pair of OECD studies point out,” and again, link to that report, “widespread climate adaptation measures can have a positive impact on growth, especially in G20 economies.” I've got a link to that Harvard Business Review article for more details.
Another one here, bring up a blast from the past, it's a movie partly animated with the Sharpie-esque drawings. It's called The Story of Stuff. If you are over the age of 40, maybe you've come across this before. It was originally released in ‘07, 20 minutes long and the other story of fill in the blank videos have received over 50 million views.
Anyway, I think it's just a good reminder of maybe how we tell stories perhaps to reach the largest audiences. I certainly have not been great in years past and thinking, “Oh, well, it's just data. It's just a spreadsheet. Come on, that's so convincing.” Of course, that's super far from the truth. They've gone on to produce other short animated videos about the story of cap and trade, bottle of water, cosmetics, electronics, microbeads, microfibers, and water. So, check that out, The Story of Stuff.
This next one is a little more professional development perhaps than just climate startup or investment. I've got an emoji of a – So, what is that timer there? This is my 11 o'clock, looks like mindfulness moment. I'm now mindful that I did not turn off my mindfulness moment while recording a freaking podcast. All right. What I was saying is for this title, I've got an emoji vomiting. It says, “Your network is your net worth,” in parentheses, vomit.
09:14
Look, when you hear that title, you might want to regurgitate a bit of your last meal. Or you may feel that building and adding value to a community of people with similar goals and interests is pretty exciting and empowering. Certainly, that is true for me most of the time. Either way, I've got a link to a podcast here that is super practical and relevant to this goal. It's from Tim Ferriss, who many of you know. Again, the guy that got me hooked on entrepreneurship slash life hacking, life design. Anyway, it's called How to Build a World Class Network in Record Time, and as a quick flavor for the tone of the podcast and super detailed podcast notes, there are three high level tips if you will.
Number one, don't dismiss people, that's partly just out of humility and respect, partly you just never know how they maybe have similar interests to you. The second one, don't be a dick. That seems pretty obvious, but we've all been there and felt that or maybe acted that way. And the third one, again, a sense of the tone, don't rush and play the long game instead. So, a podcast worth checking out.
We're going to switch a little bit to a perspective on the work that we do each week. I was having a call with the CEO in these peer groups that I run through Entrepreneurs for Impact. A group of 36 amazing CEOs and this one, Doug Willmore, CEO of World Tree, I said, “Hey, look, it's Friday afternoon. How do you feel on Friday afternoons? Because I have certain thoughts on how I feel.” I was like, “Are you exhausted and ready for the weekend or do you feel something else?” And Doug in the way that he does, responded, “Well, at our company, World Tree, the saying is not TGIF. It's instead, thank God it's Monday.”
Look in so many words, they, I think may be true for me and many of you, we love our mission, in their case, their mission of planting the world's fastest growing trees. So, they, and I think I and again, hopefully many of you can't wait to get back to work on Monday. A pretty big mental shift from how millions of folks work, the quiet quitting movement and others.
Let's switch to another newsletter here. I've got some part business, part stoic philosophy, which is relevant to many of you as well. The business one here is Texas banning 348 ESG funds, so funds with some environment, social governance aspect to how they make investment decisions. I start with, “Hey, look, no, this is not a joke.” May sound like one, may sound like something out of the onion if there are any loyal readers in the listenership here. Officials in Texas and West Virginia and actually Florida as well, I'm sure more states will do something like this, but specifically in Texas, the statements suggest that these companies as investment managers are boycotting energy companies. Of course, Texas, West Virginia, big conventional energy states.
Texas, in their announcement, they actually list 10 companies and these 348 investment funds. I've got links to both of these and I'm quoting from an Axios article who I need to give a better shout-out to, but Axios has a great summary. They've got a quote from BlackRock here that says, “Look, this is just not a fact-based judgment. We do not boycott fossil fuels. We've invested over $100 billion in Texas energy companies on behalf of our clients, really as proof of that.”
The Texas official claimed in a statement, “The ESG movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but instead use their financial clout to push a social and political agenda shrouded in secrecy.” We've got a link, however, to a meta study, so a study of many studies, that tends to show the opposite most of the time. That is, companies that excel in ESG performance, teams, policies, et cetera, tend to also show stronger financial performance.
14:10
By the way, most, if not all investment managers are partially compensated by sharing the profit they generate for their investment clients. So, the kinds of statements that you just heard from that state official, that would seem like a perverse motivation to do something not in the financial interest, let alone of their investment clients, which they're obligated to do as fiduciaries typically.
But it would also be shooting themselves in the foot because that would again, according to the state officials claim, lead to lower financial returns and therefore lower performance-based compensation for these investment managers, which is just not how most of them would care to operate.
Next one here, there's a group out of the EU called Startup Basecamp, just incredible resources they provide, some for free, some you join as a member. The newest one is a map and a database of 350 plus climate tech startups. I’d encourage you to become a member of Startup Basecamp, check out this resource as well as lots of others, including great profiles of dozens of, say, women leaders in this space as an example.
This last one from this particular issue says, “We're all dying right now.” It sounds a little grim. I say, “Look, here's a little pick me up from my boy Ryan Holiday at The Daily Stoic.” I'm guessing many of you perhaps listen to his podcast sometimes per week as I do or have enjoyed his books. I've referenced one of those in a prior issue of this newsletter, which was Stillness is the Key. Just an incredible book here.
Anyway, the quote I’m highlighting is from The Daily Stoic and referencing a lot of the thinking of a leading stoic named Seneca, S-E-N-E-C-A. Ryan says, “Look, it's easy to see death as this thing that lies off in the distant future. We think of dying as an event that happens to us. Seneca,” again, this Stoic leader, “felt that this was the wrong way to think about it, that it was a mistake in view that enabled many bad habits and much bad living. Instead,” he said, “death was a process. In fact, it's happening to us right now, even as you read,” in that case, the email or in this case listen to the podcast.
“Time is passing that you will never get back. That time,” he said, Seneca said, “belongs to death.” Back in Ryan's word, “death doesn't lie off in the distance, it's with us right now. It’s the second hand on the clock, it's the setting sun. As the arrow of time moves, death follows, claiming every moment that has passed. What ought we to do about it? Well, seize it while it still belongs to us.”
Now, maybe some skeptical listeners think, “Duh. Let's not get too cheesy on our drive to work, let's say.” But I think if you sit with us for a second, this recognition that death is a process, not an instant, this loss of the passing time, I think for me, as I think about my morning meditations this morning, it was life is short. Live it now and basically help others. It's a pretty motivating way to start the day. It doesn't solve every problem. It solves a few.
Let's go to the last piece I'm going to include from these three newsletters the podcast version. This is also from The Daily Stoic, very different flavor. The title I have right next to a big old beautiful red heart emoji says, “Taxes, why you should give them a big warm hug.” Most of us don't like taxes. We like where some of the tax proceeds go. We don't like where others perhaps go and we'd like to manage perhaps more of those dollars. Alas, not usually a choice.
18:40
The quote here says, “Look, taxes are an inevitable part of life. There's a cost to everything we do.” Again, Seneca, this leading stoic, wrote to Lucilius, “All the things which cause complaint or dread are like the taxes of life. Things from which, my dear Lucilius, you should never hope for exemption or seek escape.” Back in Ryan's voice here, “Income taxes are not the only taxes you pay in life. They are just the financial form. Everything we do has a toll attached to it,” and this is where it gets really more interesting.
“Waiting around,” again, think about vacations, “is a tax on traveling. Rumors and gossip are the taxes that come from acquiring a public persona, or for that matter, being a part of a team, any team,” think the office environment. “Disagreements and occasional frustrations are taxes placed on even the happiest of relationships. Theft is a tax on abundance and having things that other people want. Stress and problems are often, not always, but often tariffs that come attached to success and on and on and on.” “There's no reason or time or in theory at least to be angry about any of this,” Ryan continues, “instead we should be grateful because taxes literal or figurative are impossible without wealth. So, what are we really to focus on, that you owe something or that you're lucky enough to own something that can be taxed.”
As I was lamenting one year to my accountant about the amount of taxes I was going to pay, the accountant said something like, “If you want to switch incomes for the year, we can totally do that.” At that point, I was reminded at least of this kind of thinking.
Alas, hopefully, you enjoyed this mix of both the climate tech startup and investment angles, a little ESG investment controversy thrown in there as well, resources to find more climate tech startups as, who knows, investment targets or partners or whatnot and then a little stoicism thrown in to balance out the work we do at work, if you will, and really outside of work as well. All right. Hey, look, enjoy the walk, the jog, the commute. Talk to you later. Peace.