Entrepreneurs for Impact (EFI) Podcast: Transcripts
#106:
Former Twitter Head of Engineering Now Tackles Climate Philanthropy — Alex Roetter, GP at Moxxie Ventures & Founder of Terraset
Chris Wedding:
Alex Roetter, which rhymes with letter in case you all were curious, hey, welcome to the show.
Alex Roetter:
Thanks for having me, Chris. I'm excited to be here.
Chris Wedding:
As listeners know, I like to start off with a sound bite to make sure they keep listening to these amazing guests, which I have the privilege to chat with on the show. One idea I had revolves around a response I give to folks who say, “Wait a second, Chris, why did you go co-create with this guy, Alex, this new anti-GHG 501(3)(c) called Terraset?” Part of the answer is, “Well, look, we got to have it. Here's the stats,” et cetera, et cetera, but then I also say, “Well, I probably wouldn't have stuck with it, but for the people involved.” And as a sign of character, which hopefully listeners know by now is a pretty important thing for me, I see it, but this guy, we get long, sharp, accomplished, whatever, but let me tell you what he does in his abundant ha-ha-ha free time.
04:51
So, he's a pilot and with that skill, he does these things, which I think is called Angel Flight, where you can correct me, but you'll fly to some often-rural area. Pick up a child with some pretty unfortunate health conditions, take them to one of the best locations, hospitals to treat their specific condition, which otherwise would have been darn near impossible. So, Alex, love that. Did I get it right or how would you elaborate on Angel Flight?
Alex Roetter:
You did get it right. Yeah. Thanks for having me. Thanks for bringing that up. Yeah, Angel Flight’s a great organization. It's nationwide. I'm in Angel Flight West and it pairs people that we forget. I mean, the United States, as we know, it's huge disparity on a bunch of dimensions, economically, but also the types of places in which we live.
Some of us live in cities with major medical centers and other people live very far from type of care that they need and are no less likely to get, unfortunately, very devastating diseases. And so, this is an organization that pairs up people that have ways to transport people around and does that. I work for another group as well that also does similar things and I love it.
I mean, I love being a pilot. It's really fun. I've been doing it for 15 years. I had the childish wonder of flying machines, rocket ships, and airplanes, and I just never grew out of it. So, eventually in life, I had the time and resources to be able to pursue it and it's a hobby of mine.
I also care about the climate. It's not great for the climate and I do my things on the side to try to evade that, but it is a thing that I'm conflicted about. I guess we're all sort of conflicted people at some level, but I love that I could do this. It doesn't affect a lot of people, but the people that it affects, it affects deeply. The organization as a whole does affect a lot of people, so I love that. I love being able to do that. It's just a cool marriage of a really awesome hobby with trying to do something useful. So, it gives me a lot of joy.
Chris Wedding:
Right on. Literally as we're talking here, I'm remembering our first conversation where you came through a friend of a friend, I think Allison Myers at Buoyant. You had said to her, “Hey, I've got a maybe crazy idea. Who do you know that could tell me whether I'm crazy or whether it's got any merit?” For some reason, Allison connected the two of us and we'll get into what it led to, which is Terraset, but in that conversation, I think we extended past our normal calendar slot. We were talking about the physics of air moving around the wingtip. Are you recalling this?
Alex Roetter:
We were talking about wingtip vortices or something.
Chris Wedding:
I think so.
Alex Roetter:
I do remember that. I have no idea why we got on that topic.
Chris Wedding:
I don't either.
07:30
Alex Roetter:
Wingtip vortices, they’re fascinating and beautiful things. If you ever see a plane just skimming cloud tops, you can see them physically, its two rotors spinning in opposite directions of the wing. They're beautiful things. I don't know why we were talking about that, but I can remember talking about that with you. I don't know why Allison connected us, but I'm very glad she did. It's so cool what it's turned into. Like what a fortuitous first conversation about random things.
Chris Wedding:
For sure. Well, let's go there. So, you had this idea that you didn't see this need met in the market. You were experiencing it firsthand, perhaps through an angel investment and a founder of an important CDR, carbon dioxide removal company. So, rather than steal your thunder, Alex, what was this crazy idea? And we'll kind of go from there.
Alex Roetter:
Basically, we've got to get to net zero economy by 2050. Sooner would be better. That requires, first of all, stopping to emit. I mean, every day we're emitting more. The globe emits about 35-40 gigatons a year. That needs to get to zero. The way that's going to get to zero is almost all emissions need to go away. So, we need to stop driving gas-powered cars, stop using gas to heat our homes, a bunch of other things, but there are still going to be some emissions by 2050, call it 5-10 gigatons.
So, we also need negative 5-10 gigatons of emissions by which I mean sucking carbon out of the air to get to a net zero and to make up for some of the extra carbon that's already in the air. We need to do that in a really high-quality permanent way.
Everyone has heard stories of green washing, low quality carbon credits, planting trees that maybe got cut down the day after you left the rainforest and that is all garbage green washing and it's not going to help. It's not going to do anybody any good and it's not going to help the planet. So, we need extremely high-quality permanent carbon removal.
The good news is the world is recognizing this and we're starting to do this. The bad news is it's still very small. I think the total amount of carbon removed from the air every year is something like six tons. We need to get to 5-10 billion tons by 2050. So, that's a growth rate of about 65% year over year over year for almost 30 years, 29, 28 years. In order to do that, we need tons of people willing to pay for these services from the earliest days when they make no economic sense, they're too expensive, they're not scaled yet. But by showing the world that there's real market signal for this that allows this whole ecosystem of providers to exist. That is what's going to allow us to scale to this massive number, 5-10 billion tons of removal a year.
So, I started getting involved with a bunch of companies doing this, a bunch of different providers. There are really cool technologies to do this, direct air capture, giant fans sucking carbon out of the air, massive seaweed farms doing photosynthesis, weathering rocks, having CO2 bond into different types of rocks and then removing it. There are all kinds of cool technologies. We need a bunch of them, but they're very early and they need strong market demand to buy their products and to help them scale it and walk down the cost curve.
A bunch of people are doing this already, but it's not going fast enough and this is fundamentally a charitable activity. And because the problem is that it's too expensive today, I thought, “Why can't we use the great instrument we have, a 501(c)(3)s, in order to fund this good for the planet activity?” In the same way that if you give to the American Cancer Society, you get a tax break for that, that is cheaper for you. Your dollar goes twice as far, let's pretend you're in the 50% tax bracket, twice as far as it otherwise would, because of this favorable tax law that allows us to do charitable activities.
11:11
And so, myself, and then I was poking around with some other people and you and I started poking around on it, and we discovered two things. One, everyone loved this idea. It seems so simple and two, we all just assumed it must exist and we were shocked to find that it didn't exist. In this age where, I don't know about you, but every time I have an idea and I wonder if it's real, you can search online and find it.
Chris Wedding:
Oh, yeah.
Alex Roetter:
Not to say that if you find something in the internet it's real, but at least it exists whether or not it's real. We did it, this just didn't exist. And so, started talking to some lawyers and tried to put this together and now we have a bunch of great early adopter type donors who are very generously giving us money. We are able to make their money go about twice as far as it otherwise would and support these early-stage carbon removal. Start making what today is an inconsequential dent in atmospheric carbon, but over time will be a really meaningful and necessary part of the solution.
Chris Wedding:
Yeah. Hear, hear. A couple of notes I wrote down here. I think on the high-quality aspect of this, mostly we're talking about technology or tech driven, high CapEx, high engineering burdens or innovation, those kinds of solutions are what Terraset is focused on. Permanence of centuries or thousands of years’ time scales. What we found was there are at least a couple of nonprofits that facilitate less permanent, but probably good offsets out there, but nothing focused on this more permanent solution.
In the forestry space, for example, one of the companies that I'm on the board of, World Tree, so reforestation with one of the world's fastest growing trees, but the point is, put that stuff into buildings as finished wood. So, it is sequestered there, but that last piece is pretty important versus allowing it to be burned or consumed.
You referenced this need to bring the cost per ton of these solutions like direct or capture down. I think one analogy which we like is to look at what's happened in say solar power with the power purchase agreement, PPA mechanism. I mean, other things are there as well. That's a business model innovation to prove demand therefore it's easier to get project finance. And a word we like to use, but maybe not everyone is super familiar with it, but AMCs. So maybe walk us through AMCs, their role, and how we contribute to AMCs that benefit these companies.
Alex Roetter:
Sure, so an AMC is an Advanced Market Commitment. It's very much like a power purchase agreement in that we say, “Look, we will be your customer. We will give you a bunch of money upfront for you to deliver something in the future for us,” and that allows these projects to start in the same way that you can go get financing for a solar farm if you can show that you've signed a bunch of power purchase agreements. So, the person financing you doesn't wonder if there's going to be someone to buy the power. You pre-sold all the power.
14:18
A lot of these companies none of them have scaled massively yet, but many of them today are not able to deliver as fast as the demand that they have, but that doesn't mean that the demand is not valuable. That incremental demand allows them to pre-build things out because as you pointed out, these are infrastructure intensive, capital-intensive companies. They're able to make those investments knowing that there are a bunch of people that are going to buy the removals.
So AMCs, I think one of the first early examples of that you may know is with the vaccine move. I think it's with RNA vaccines that people said, “If you develop these vaccines, we will buy X million doses of them.” I think, I may have the details of that wrong, but that's one.
Since we started working on Terraset, Frontier has launched publicly and they're doing something very similar. They are buying AMCs. They're using a different pool of money. So, we're different because we use philanthropic money, but what they're doing is very similar and also extremely valuable. I'm very glad that they exist and are out there so publicly doing this exact same model.
Chris Wedding:
Yeah. I think AMCs were first used, maybe catalyzed by the Gates foundation and some countries to say, look, some of these vaccines that need development, there's less proven market demands so the companies in Big Pharma are less motivated to produce them. But if you can guarantee revenue, long-term revenue of a certain scale, then they build them at an affordable cost.
I think some folks may have heard of Frontier and the handful of tech companies and the $925 million there to support AMCs. Maybe it will be helpful to remind listeners why we're still needed. How would you respond to that, Alex?
Alex Roetter:
So, the scale of this problem is unlike anything we've ever seen. It's not too late, but it's almost too late. We have sat around for quite some time on climate, and it's to the point where we can still solve the problem. We're not going to have no negative effects. We're talking about one and a half, two degrees of warming, not zero degrees of warming. It's going to be not great, but it's not going to be catastrophic. However, if we continue to delay it, it will be really catastrophic.
And because of that, we have to throw everything at this problem. And so, that's corporate money, government money, regulation, policy, private philanthropic capital. If you think very roughly, 5-10 billion tons a year, let's pretend it costs a hundred dollars a ton by the time we're at scale. I actually think it'll be less than that and less is better, but still, that's on the order of a half a trillion to a trillion dollars a year. That is a meaningful expenditure, but it's not impossible. I mean, that's on the order of things like US treasury revenue, military spending, it's in that ballpark. We can do it. It’s not impossible, but it's substantial. So, Frontier is great. They've committed about a billion dollar.
The size of philanthropic capital globally is massive. We were talking about it earlier this morning, I forgot the number, but it's something like a trillion dollars a year or somewhere in there.
Chris Wedding:
Yeah, something like that.
17:15
Alex Roetter:
And so, what we really need is we need a bunch of different providers trying different technologies with different operating teams, with different and non-correlated risks. We also need a bunch of different kind of money, philanthropic, corporate purchasing, debt finance, equity finance, that also all have different risk return profiles, different alternatives they might consider on correlated risks. And by doing all those things, you maximize the probability that enough of them succeed, they were able to hit these attainable, but very audacious goals that we have.
Chris Wedding:
Let’s go back to the donors for a second. So, we have a couple of donors there that are maybe good examples of the kinds of donors who could join the cause, but for those listening who may be thinking about, “Look, is it me? Am I the ideal or who do I know that may be the ideal supporter of Terraset's mission?” how would you clarify that?
Alex Roetter:
I think there are two parts to that. One is, there is tons of concern about climate quite rightly. Obviously, the younger you go demographically, there is more concern and there are only a limited number of things you can do. One thing we hear a lot is, “I don't know what to do. I guess I can stop flying on vacation.” Some people are saying, “I shouldn't use plastic straws.” That all seems fine, but all straws could go away tomorrow and vacation travel could end tomorrow and we're still in trouble. So, there's this untapped people who want to do something and they don't know what to do and this is hard. Figuring out the right projects to fund and purchasing from them and even the mechanics of directly being able to purchase from these companies is impossible for individuals, it's a hard thing to do. So, we do all that work for you.
So, if you care about the climate and you want to do something today to build this long-term future of high-volume, high-quality carbon removal, then you are the right donor for us. There's no criteria. If you care about this and it's important to you, come do it. So, very simply, anyone at any level could just go to terrasetclimate.org and click and there's a little self-serve flow that you can do that. So, that's one part.
Another part is, we target some bigger donors as well. They tend to be people that understand this concept of, we have something that's very important that not yet scaled, but we need to scale it. The way we do this is we create market demand and we purchase the thing that we want to exist in the future, even though today only a little bit of it exists. So, these are early adopter types.
Because of my network, we go after people in Silicon, maybe they made money in Silicon Valley that understand how things scale, understand they want to be early adopters. So, that's another thing too. But the short answer is, if you care about this problem and want to do a small part to build a more sustainable future, we would love to have you, we’d be deeply appreciative and you can do that on our website.
Chris Wedding:
Yeah, hear, hear. We've referenced some of these innovative companies by generic descriptions, but we are supporting two companies right now. Maybe say a bit more about why those companies and I guess the pipeline we're working on.
Alex Roetter:
Sure. So, our goal over time is to have dozens and dozens of companies for a variety of reasons. We need the volume that only a lot of companies can provide. We need uncorrelated risks. Some of these technologies have very low risk associated with their ability to scale. Others have more and we did a diverse portfolio of all these things because the planet needs 5-10 gigatons of supply basically by 2050, as you mentioned before.
20:40
We support two companies today that's just getting started. The first one is called the Heirloom Technologies. They are an enhanced weathering company. So, they put out this chemical on basically what looks like giant baking trays. I was at their headquarters a few weeks ago. It actually is basically a giant baking, like you make cookies on it essentially. It absorbs carbon from the air. You think of there is calcium carbonated, there's a magnesium carbonated and some other things, they absorb CO2 and that chemical acts basically as a sponge. Then you can heat up that chemical later and it will reduce the CO2 and you could do that in a controlled environment so you can bottle up the CO2 and then pipe it underground for permanent storage.
So, what we like about them is the founder, Shashank Samala is a very accomplished founder. He started at software enabled electronics manufacturing firm that's doing very well, so he knows how to execute. He's very passionate about this space. They've brought on, Noah McQueen is his co-founder, who developed all the science for this mineralization calcination loop.
They're exceeding their cost per ton progress, so they have a path to very affordable removal over time. What else about that? That’s off the top of my head. We have a very detailed, as you know, a list of criteria. We analyze them against permanence and other external validation and verifiability and additionality and all those sorts of things. So, that's one.
The other one is Charm Industrial founded by Peter Reinhardt, the Founder of Segment there in San Francisco. They're a bio-oil. They take feedstock basically and convert that using pyrolysis into a bio-oil and bury that underground. We have a strong belief that that will get very affordable over time and they've already done real deliveries for people.
I forget off the top of my head they're an investor. I think Stripe has bought from them. I think Breakthrough Energy may be an investor. I'm not sure off the top of my head or maybe Lowercarbon. Don't quote me on that because I don't know off the top of my head, but that's another one where a very strong founder, execution team, they're actually removing carbon from the air right now. It's expensive and it's low scale of course, but all these things start that way, all new inventions. Solar panels used to be expensive, air travel used to be expensive.
Chris Wedding:
Those are great summaries. I think what I want listeners to hear is, we're not saying we're geniuses in some new method for picking high quality CDR companies. We're saying, look, we're going to rely on others, whether it's Stripe or Frontier or the well-known climate tech VC investors. If they trust and they've done deep diligence on these companies, cool. That meets our criteria. Let’s now funnel a new kind of capital.
I mean, you mentioned roughly a trillion bucks of charitable money's out there and I think Climeworks shows less than 2% of that goes to climate and of that 2%, I think 3.8% goes towards direct or capture or some sort of CDR. So tiny, tiny, tiny numbers, but as we joked this morning on a related topic, any percentage of a large number is a large number. We just need the 2% or the 3.8% of a trillion dollars to be a lot larger and there are financial reasons beyond legacy reasons to do that.
23:50
You've used the word build a couple of times and I think that's a really important aspect for donors here is, it's different than just buying an offset, per ton to offset your travel, which again, great thing to do. But here it's literally like helping to build a new sector that’s going to be mainstream, that has to be mainstream in the decades to come.
Alex Roetter:
Yeah, I mean imagine if you are someone that installed solar panels on your roof 30 years ago when no one else had solar panels, it made no economic sense. It was much cheaper to get your electricity from the grid with whatever, 50% coal or who knows what the mix was depending on where you live. So, you weren't just offsetting the emissions of one house, which is good, but there are a lot of houses, but also in your own way, you were an early signal of demand for this industry, which now it's the cheapest form of power basically. If no one had done that in the early days, we wouldn't be where we are today and this is a virtuous cycle.
Money flows in, there's more demand, more people want to work on this, that unlocks other kinds of capital, venture capital, venture finance because there's money flowing in on the revenue side. That attracts the best scientists and engineers who make the breakthroughs to drive the cost down. Because of the demand, you just scale out the manufacturing, which also drives the cost down. So, all of this requires things that are mature and scale today never would have gotten that way if on day zero no one had interest.
Chris Wedding:
Yeah. Well, I want to switch the conversation to the other major hat you wear, but before I do that, I want to give a shout-out to our Duke University students, our Stanford University students who volunteered for the better part of nine, maybe 12 months to move this ball forward. Lest I forget names here, I would encourage folks to check out LinkedIn where hopefully these ambassadors are wearing their colors, as well as our intern director, Erzsi Sousa who is just crushing it to make sure that we get to market properly.
Alex Roetter:
Strong plus one to that. The early days starting this, it's a lonely place. It's not just that all these students did work, it's also, there was so much passion for this and it reinforced -- You get enough people together and it creates energy in the room or the virtual room and then we all drive forward together. So, Erzsi’s been instrumental in that, all of our students have been instrumental in that and so, very fortunate that a bunch of random, unlikely things happen. Like you and I met and we started talking about wingtip vortices and somehow that got you more excited. Then we worked together and then we met Erzsi and she's amazing and had all these students.
There are a lot of downsides of the internet today. One of the amazing sides is we -- And none of us have met in person and now I feel like I really know you and I know Erzsi and we're connected and we're building this thing together. And so, I feel very fortunate that that all came together.
26:53
Chris Wedding:
Well, and we were so close to meeting in person in Denver over the summer and that night while I was sleeping, I was like, “You know what? I'm feeling some unusual symptoms in my body.” Did the COVID test at whatever, 5 o'clock in the morning, I was like, “Damn, I cannot ruin Alex's trip to Europe.”
Alex Roetter:
We’ll make it happen. It’s going to happen.
Chris Wedding:
It's going to happen. I want to do the students justice here. I am going to call them out. Emily's out, Griffin, Clark, Nick Valby, Saif Ali, Dosser and Kevin Beal, kudos for amazing work. Okay.
Alex Roetter:
Totally.
Chris Wedding:
You wear another really important hat for most of your day, which is General Partner at Moxxie Ventures. So, Moxxie, seed stage, impact, focus, climate is one of those verticals in which you focus. What's the elevator pitch, Alex, for Moxxie Ventures? M-O-X-X-I-E.
Alex Roetter:
Yep, two Xs was founded by my partner, Katie Stanton. As she'll say, it's a nod to the female chromosome and also the domain was available if you missed that. I'm not sure what the relative weighting of those two things were. So, we invest in founders that make life and work better. In particular, we look for really driven, hardworking, excellent founders with a track record of accomplishing something meaningful. It doesn't have to be, “I got into an Ivy League school,” it can be whatever you want. Just track record of being excellent at whatever you can pour your energy into, tackling big meaningful problems. It can be anything. They can be AI problems. They can be health tech. They can be climate tech. We do a lot of both of those spaces. It can be enterprise software, solving big problems for corporations.
So, we're vertical agnostic. We do have some favorites, health tech, AI, applying it to health is a favorite. Climate tech is a favorite because we just feel like it's a massive market and the world's biggest problem. Someone's going to make a ton of money from reinventing the economy to be sustainable and net zero in carbon, but we are a generalist firm. We will look across the spectrum. There are some things that we do less, of course, but we like to invest in exceptional founders solving really meaningful problems.
Then the second part is both Katie, the Founder of Moxxie and my partner, and myself are long-time operators. We both worked in Silicon Valley for more or less 20 years each, so we really like to help. We've made tons of mistakes operating companies ourselves and teams, and we like to share some of those mistakes and help the next generation and help them build what they're building and provide really hands on practical advice and help when that's needed because building things is hard. The more you can learn from other people's mistakes, the better.
Chris Wedding:
Well, hear, hear that investors who have been operators often make better investors, not just for the return, but for the council they give their portfolio companies, CEOs as well. How about staying on the theme of mistakes, tell us a couple of mistakes that you and Katie often bring from Silicon Valley to the startups you're funding.
29:58
Alex Roetter:
Let's see. There's a difference between sharing your experience and then thinking your experience applies to the thing that you're talking about. And so, these founders are extremely hardworking, passionate people thinking about their problem probably 24/7, probably dreaming about their problem at least 100 hours a week. We have a portfolio, we do a bunch of investments and one of the things I like about venture is also it's downfall, which is you're not deep in one area.
So, we have done things, we have examples to share and analogies and some first principles that we've extracted from many examples, but we're not the CEO, it's not our company. And so, I think one thing that's important to remember is, look, learn from people around you, ourselves, your other investors, your advisors, anyone in your life, but at the end of the day, it's your company. And so, you need to figure out what the right thing is for you. I don't know if that's a mistake that we made, but it's an important thing when giving advice that you temper it with. This is just one point of view. You need to do the right thing like you're the CEO. That's certainly one as well.
Another mistake is, I don't think I've ever in retrospect thought, “Oh, I wish I had talked more in that meeting,” but I certainly have thought, “I wish I had listened more in that meeting.” So, that's probably one. Like if you really do need to talk a lot, you can always talk more later, but once you miss the opportunity to listen, it's hard. So, I think that's one.
I think there's a lot of information to be gained and a lot of value for a lot of people to contribute if you just shut up and listen. That moment can often pass, but that's one that I try to keep in mind. Sometimes I'm good at it. Sometimes I'm not.
Chris Wedding:
Yeah. I think there's a quote that I was riffing on in a recent newsletter, which is we have two ears and one mouth for a reason. As in like shut up and listen more. I think the great leadership, Coach John Maxwell has a lot written on how leaders are great listeners, active listeners, abundant listeners by percentage of time spent. Then negotiators will often tell you, “Look, if you want to negotiate well, listen to what are the real needs, maybe underlying what is stated, but you pick up through body cues or tone of voice or facial expression and then solve those versus just whatever terms are on the table.
Alex Roetter:
Yep. Negotiator, a big part of operating teams. Also what you need to be seeing is hiring people, attracting, recruiting talent. You never convince anyone to do anything basically, I think that's approximately true, but you can listen to other people describe why they want to do what the thing is that you also want them to do. So, for example, I can't convince you to join a company, but I can listen to the reasons you have for wanting to join a company and just reflect on them and listen to you and hear yourself talk through it so that you get to the place where we both want to be. But yeah, I think that's true. What’s that bumper sticker? Wag more and back less? I like that.
32:54
Chris Wedding:
That's a good one.
Alex Roetter:
Yeah.
Chris Wedding:
The first part you mentioned where you all as investors, you're giving some advice, but the CEO needs to take that among all sorts of advice and their own conviction or planning to make the decision. Well, sometimes we'll say investors, albeit minority, believe that their opinion is black and white. This is the way things should be versus, “Hey, CEO, take this among other things to make your decision.” I think founders listening, I'm sure enjoyed hearing you clarify where your advice sits. Important, but not the final word.
Alex Roetter:
Yeah, the people that think that should go found their own companies, they shouldn't be investors.
Chris Wedding:
Well said. Is there a climate tech portfolio company or two that you want to brag about? I mean, obviously you love them all.
Alex Roetter:
Yeah, I love them all. Well, we talked about Heirloom already. I love that team. I love the founding team. Very accomplished, great combination of practical scaling software backed company, soft and hard to company. Before it was Shashank and great scientists with Noah. It's a massive market if it works.
BasiGo is another one, electric buses in Nairobi and this is really cool. So, this is a company that when I started researching, I was doing just because I thought it was cool and I figured there was no way that the market is big enough. I was just completely wrong and one of the great things about my job is that I'm almost always out of my depth. So, getting to learn new things and often learn that my initial hypothesis is wrong.
So, East Africa by and large gets around on these buses. These are old, dirty, I mean, you've probably seen them, welded together on the side of the road--
Chris Wedding:
Oh, yeah. I’ve ridden on them. Yeah.
Alex Roetter:
…buses, they’re gross. They're very dirty and they break down a lot. When all the buses were shut down during COVID for a few days, you could see Mount Kilimanjaro from downtown Nairobi, which I guess you can never see. Old timers who had lived there for 30 years, they were like, “Oh, that used to be a frequent occurrence.” And now it's gotten to the point where, depending on the winds, maybe a couple of days a year, you can actually see the mountain from downtown Nairobi and just shutting down the diesel. So, it's not just a climate impact, it's just very acute shorter-term asthma and other respiratory illness diseases from all these buses.
And so, this startup, it's a battery subscription service to enable electric bus replacements to be, not just cost competitive, but actually cheaper. Problem with electric buses is they’re too expensive upfront compared to a diesel. But then once you have them, they're cheaper to operate because electricity is much cheaper than diesel, even before the price of it went insane this summer. Now that's even more true. And so, this is a battery subscription service that fintech software played basically to enable cost competitive electric buses.
35:48
So, I just got a video today of a couple more of them coming off the container ship. They're assembled in China, getting into Nairobi and so they're the first electric bus operator in East Africa. There's so many of them and people get around. Even though the individual fares are pretty low, there's so many of them and this can be a really big business.
One of the things we loved about this company is the founder is the perfect mix of things. His name is Jit. He is American. He ran a venture backed electric motorcycle company in San Francisco. Has raised venture money. He also has done a sustainability finance work and lives in Nairobi. He has lived there for several years. So, his perfect mix of, has been there for a while, hires a bunch of folks from Kenya that know the market extremely well, former bus owner and operators themselves in some cases. But also he comes from a Silicon Valley venture world, so he knows how to operate and execute a scale company. So that's another one that we really got fond of them because literally just this morning I was watching videos of the latest shipment of buses roll off the container ship into the port in Kenya, which is super cool to see.
Chris Wedding:
How do you spell their name, Alex?
Alex Roetter:
BasiGo. B-A-S-I-G-O.
Chris Wedding:
Okay. Yeah, like it sounds.
Alex Roetter:
Then the website is B-A-S-I hyphen G-O.com.
Chris Wedding:
Yeah, okay. You bring up a good point there, which is, it is important that we focus so much on climate change and reducing GHGs. It's also important to realize two other things. This is not the only environmental or public health challenge out there and luckily, they're often related. So, there’s co-benefits from doing one as the primary goal, but getting the other as a secondary benefit is a nice way to have more impact and perhaps attract more investment as well.
Alex Roetter:
Right and that one is more acute too and there's less polarization around it. There aren't two sides of the argument about whether or not living downwind of a coal power plant is great for you or not. That's settled.
Chris Wedding:
The other thing which is interesting is, I understand that this is not a tech play, this is a business model play. Yeah. I'd urge folks for all of us, look, some solutions in climate tech are deep tech, others are business model or financial innovations at scale where it already works.
Alex Roetter:
That's right.
Chris Wedding:
I think for folks who have heard you say nice things about Heirloom, they could also reflect back to catch a podcast I did with Shashank, which is a great one here on this show as well. Where do you see Moxxie, Alex, in, pick your number, five years, 10 years? What do you want Moxxie's impact to look like, whether it's portfolio companies or funds? Think about your metrics that matter to you and your investors.
38:40
Alex Roetter:
Yeah, that's a great question. 10 years is hard to say, that's a long time from now, but I'll tell you how we think about it on a bunch of different dimensions. First of all, to founders, one of our state of customers are founders, I think it's a bit of a cliche in VC to talk about how helpful we are, but both Katie and I have been operators for 20 years and run large teams. We really get personal satisfaction from actually helping founders and the calls that we have where it was really useful, at least we're told it was really useful, that gives us personal satisfaction.
So, we want to be meaningfully helpful for founders working on important things, like not nonsense stuff that it doesn't matter if it exists or not for the world, but really important, meaningful problems that it proves something about life or work. We want to feel like we actually, other than providing the capital, really helped. We're able to leverage our experience to really help. So, that's one thing.
Secondly, obviously to our investors, that's our other set of companies. The side effect of attacking meaningful problems is that they are massive markets. So, first and foremost, we're a financial services corporation. We are at this to make above market returns for our investors and climate is a perfect example. We're not doing that because we're sad about the future, although we are very concerned about the future. We're doing this because climate tech is not a vertical, it's not a type of company, it's a complete retooling of the whole economy. And there is no way you can reinvent the whole economy without someone making a ton of money, so we want that to be our investors, not someone else's. So, that's another thing we think of.
In terms of the structure of the company, in terms of Moxxie, there is a natural tendency for firms to get bigger and bigger and raise mega fund after mega fund and chase the next hot thing. Oh, last week I raised a 2-billion-dollar crypto fund because it was the new hotness. This week I'm raising a 2-trillion-dollar generative AI fund because it's the new hotness, but I actually think of a lot of satisfaction in life probably just comes from knowing where you should play and where you shouldn't play and also doing the same thing over and over again.
Like one of my favorite examples of this is, in medicine, there’s a hospital in Canada that took people after one year of medical school, surgical training, such as surgical intern year. Usually, surgical training is 5-10 years depending on what sub-surgical specialty you do, but they took people with one year of training and they had them do appendectomies all day, every day. Putting aside whether or not you want to do the same surgery every day, just doing that over and over and over again, they were better and have lower complication rates than much more highly trained surgeons that do a variety of things all the time.
And so, we really think of ourselves as the seed stage firm. We're going to go raise a fund three next year. It's going to be the exact same size as fund two, because the strategy is the same and the amount of capital we need is the same because valuations are the same. And so, we're not driven by these mega funds and mega funds and getting rich from fees, but we really just want to do the same thing over and over again and learn and become excellent at that over time. So, that's how we think of the firm.
41:41
Then the longer out we go, the answer is we don't know. We have to learn. The market teaches us things and then we react accordingly. So, we raised the opportunity fund last year only because the market was teaching us, we had so much opportunity from our personal portfolio that we should go do that. We're really trying to be reactive to what we learn in practice versus I have an internal driven ambition to be the largest AUM firm ever or to employ an entire content production team because that's the thing that feeds my ego or blah, blah, blah.
Chris Wedding:
Right on. I think I like to put that in the question of what could you do forever and it kind of looks the same. So, as I think about getting to work with a few dozen growth stage, climate tech CEOs and investors, the pod, the newsletter, the teaching et cetera, at Terraset, I mean those things, if nothing changed, super gratifying what has been the rest of my productive contributions to the world.
Hey, on that topic, let's switch. We covered Terraset, we talked about Moxxie Ventures. Let's go to Alex. So, if you could give your younger self some advice to be more, well, I was going to say more productive, that's okay, happier, more effective, what are one or two tips, Alex?
Alex Roetter:
That's a great question. So, I think one thing would actually probably come as a surprise to people who know me because I probably seem externally like I'm very good at this, but I think that I'm not is, don't worry so much about what other people think. Like you do you, go do you, and where it's the right fit, people will appreciate you for it, and where it's not, it's not, and that's okay. But don't pretend to be someone you're not, and do the right thing where you define that according to your principles. Then as long as you're confident, you're acting that way, don't be so concerned about what other people think.
Like I said, I think I know a lot of people who would laugh at that and think, “You don't give two you know what's about what other people think. What are you talking about there?” But actually that is a thing that I have struggled with and certainly lost a lot of sleep and spent a bunch of time biting my nails, being stressed out about what other people think. But figure out the right way for you to be and for you to act and then do it and then ignore the haters basically.
Chris Wedding:
Nice. Tell us some habits or routines that keep you healthy, sane, and focused.
Alex Roetter:
Definitely the number one is exercise. I'm lucky I live in a place with tons of outdoor options and try to do that as much as possible. I mean, I'm recovering from an injury now, and times when I'm injured, it's really a noticeable effect on mental health. That's one. The other thing too, is, one benefit the life that I lead and the life that you lead is that we get to work on a bunch of different things. But sometimes that means one of them is going poorly and then you switch to something else and I try and fail often, but sometimes I'm okay at it.
44:47
Try to not take stress from one part of your life out in other parts of your life, whether it's at home or some other work thing or something. So, I try to separate that a little bit. That's hard to do, but it's a little bit like the talking thing. You never wish later like, “God, I wish I hadn't been so patient. I should have been like more of a hard ass,” but the reverse always happens. So, try to be patient. That's another one too.
Chris Wedding:
There's a quote from Viktor Frankl's book, Man Search for Meaning, which I say a lot,
I discuss a lot in my one-on-ones with these climate CEOs, which is something like in between stimulus and response, there is space although we don't feel it. And in that space is our power to choose and in our choice is our growth and our freedom. It’s like, man, what if we just paused for like two seconds, three seconds a day, a week between some of our impulse reactions? I know personally, some things would have turned out better if I had paused just a little longer.
Alex Roetter:
I love that. You feel like you don't and you have to respond right away or act right away. I think there's power in that. That would be a great thing to get better at for sure.
Chris Wedding:
Yeah. It reminds me of certain movies, I mean, accurate, inaccurate, don't know of Native American tribes. As they're having these big discussions with the elders, they're smoking the peace pipe, let's say, and the elder just takes what seems like an eternity to respond, but they're processing, right?
Alex Roetter:
Mm-hmm.
Chris Wedding:
That silence should be okay a little more often. I know we're almost out of time here, how about recommendations for books or tools? Maybe give us two or three.
Alex Roetter:
Let's see, books or tools. So, nonfiction great tool book that I read recently was Gates's book on How to Avoid a Climate Disaster. I think that's a really good overview of the scope of the problem and breaking it down. Other books. Oh, this is a fun one that I'm reading now. I just picked up randomly. I think because my son is super into chess and we were watching Alice in Wonderland, I just picked up, Through the Looking-Glass, which I've never read before and just started it over the weekend, which is fun. I don't read that much fiction. I should read more. I just don't. I feel like there's so many things that are real that I don't know about. I never get time to read fiction, but really enjoying reading that right now.
One tool that I really like, which I think is amusing, I'm not a religious person, but I really like the Serenity Prayer. I had it printed out and taped to a monitor of mine at one time in a prior job. Grant me the serenity to accept the things I can't change, the courage to change the things I can, and the wisdom to know the difference. It is something like that. It's so true. It's great. It has nothing to do with organized religion at all. It's about prioritization and focusing on what matters and I love it. That's a good one I like.
Another one is, I don't know if it's a tool, but it's a thing to keep in mind. It's an Eisenhower quote. He's talking about preparing for battle and I think it's something in the effect of like plans are useless, but planning is indispensable or something like that. I think that was a really good one too. Just the exercise to think through things, even if it doesn't plan out, go that way and you're doing something else, I think it's really useful.
47:59
Chris Wedding:
Well, it's also like, why in the world would you create a seven-tab financial model when you know all financial models are wrong, or why would you create a 50-page business plan when all business plans change within the first week? Well, it's because you learn a ton in thinking through all the inputs, every single word that you type out, right?
Alex Roetter:
I have in my head like a proto blog post around how I think seed stage founders should think about and author their financial model instead of the stuff we get, because you're right. While the exercise doing is valuable, I think you could also get that same value from doing an exercise that's more likely to be reflective of something closer of what happens. So, I have this like proto blog post in my head, who knows? Maybe I'll get it together one day and maybe it'll be useful, I'm not sure.
Chris Wedding:
Well, you've now told thousands of people what you're planning.
Alex Roetter:
Now I have to do it.
Chris Wedding:
You have to do it.
Alex Roetter:
Right, that's part of it. I have to be on the hook and hold myself accountable.
Chris Wedding:
Yeah, for sure. Well, hey, listen, I know we're now past time. Great to cover Terraset, super fun to be building that together. Moxxie Ventures, lots of high impact companies. I think founders can check you guys out. Now it's rooting for the success of Moxxie and obviously the world needs more high-quality CDR.
Alex Roetter:
Totally. Well, thank you for having me today. Thank you so much for partnering with me on Terraset. It's been a blast so far. Looking backwards at this point, where we’ve done almost nothing compared to what we're actually going to do, so I'm super excited about that. And yeah, this was super fun. Thanks for the conversation.
Chris Wedding:
Awesome, man. Talk to you soon.
Alex Roetter:
See you.
Chris Wedding:
Hey, there, it's Chris again. If you want more intel on climate tech startups and investors, please join the thousands of other founders, investors, and world changers who have subscribed to our Substack newsletter at entrepreneursforimpact.com. Also, I'd really appreciate it if you took 90 seconds to leave a review on Apple Podcasts or give us a five-star rating on Spotify. This feedback is the number one way to draw more attention to the inspiring climate CEOs and investors I get to interview here. All right, until next time, keep on fighting the good fights.