The Entrepreneurs for Impact Podcast: Transcripts
#139:
VC Investing Over 13 Years in Climate and Sustainability — Devin Whatley and Geoffrey Eisenberg at Ecosystem Integrity Fund (EIF)
Chris Wedding:
Welcome to the Entrepreneurs for Impact podcast. My name is Chris Wedding. As a former environmental private equity investor, four times founder, climate tech CEO, coach and professor, I launched this podcast to share the entrepreneurial journey, practical tips and hard-earned wisdom from CEOs and investors tackling climate change. And if you like what you hear, please leave us a review on your favorite podcast player. This is the number one way that listeners can learn more about the climate CEOs and investors interview. All right, let's get started.
My guests today are Devin Whatley, Managing Partner and Co-founder, and Geoffrey Eisenberg, Partner at Ecosystem Integrity Fund, aka EIF. EIF is a long-time venture capital investor in renewable energy, distributed energy, smart transportation, and sustainable agriculture. On their fifth fund, they invest in companies in the seed, Series A, and Series B stages with a focus on post-revenue companies with no tech risk that are looking to scale. They like to be the lead investor and write checks between three and $10 million.
In this episode, we talked about what has helped them raise capital over 13 years and many cycles in the sustainability, clean tech, and climate tech worlds. Why they sometimes take multiple years getting to know a CEO before deciding to invest. In parenthesis, these are seven to 10-year relationships oftentimes, better get it right. How they think about total addressable market aka TAM today versus the distant future.
02:25
The benefits of disclosing the skeletons in the closet of the company early on because these will definitely be discovered by the investor at some point. That is why not save some time and make sure it's a good fit. Eyes wide open earlier than later. They're focused on CEOs who are obsessed, but not flashy. That is, show, don't tell. Some success stories in their portfolio, such as EV Connect and ZepSolar. Book recommendations to help them maintain humility and perspective on how history shapes the present day and a whole lot more.
Hope you enjoy it and please give Devin, Geoffrey and EIF a shout out on LinkedIn, Slack or Twitter by sharing this podcast with your people. Thanks.
All right, Devin Whatley, Co-founder and Managing Partner and Geoff Eisenberg Hardener at Ecosystem Integrity Fund, aka EIF. Welcome to the podcast.
Devin Whatley:
Hey, Chris. Thanks for having us on.
Geoffrey Eisenberg:
Thanks, Chris.
Chris Wedding:
We were joking before press and record about the power of the hammock. So, those of you who listen, who I've talked to, you'll see in the background I've got a hammock in this cabin that we built. Then Devin went to tell his story about building his office tree fort also with a hammock in the view. And Geoff must be a very tall human because he’s like, “No, hammocks don't work for me, but they do for the important women, daughter and wife in my life.”
Geoffrey Eisenberg:
That's right.
Devin Whatley:
Well said. Yep.
Chris Wedding:
Well, it turns out everyone has a hammock story, but then we get to the important topic of, well, I didn't need too much intro to EIF, we've been friends in the space for a long time. But some of your portfolio companies, CEO is part of our climate CEO program at Entrepreneurs for Impact. But for those listening, a reminder that you are not new to the game, that you're currently on your fifth fund in 13 years, so listeners do the math really quick on that one, with the same team more or less. That says a lot, I think. Now I wonder, Devin, since you and Jamie kicked off this platform, this enterprise originally, what do you think has led to you all sticking together and continuing to have LP investor interest across so much time and so much has changed over 13 years?
05:15
Devin Whatley:
I think one of the key features is a really strong foundational culture that is centered around a passion for sustainability. Jamie and I are the elder members of the team. We've been focused on sustainability for three decades or more, each of us. Geoff and Sasha coming on 20 years now and then everybody we hire on the team, similarly, we look for individuals who have had a really dedicated focus on passion for sustainability. I think when you build an organization around that kind of mission, where we're not newcomers to the space, we didn't just suddenly find religion in recent years. This is an area that we have believed in, passionately about, studied on our own long before it was the hip cool latest thing.
When you have that shared esprit de corps and value system, it really goes a long way to building a cohesive team. This work is a lot of times tough. It's hard. It's stressful. There's lots of ups and downs and maybe more downs than ups and so you need to have something more that you're working towards than just an investment return or making money or something like that. And so, I think that's what has really set us apart and enabled us to hang together and really work together in such longevity.
Chris Wedding:
Yeah. I mean, like in so many words, it's about way more than the numbers, what you just described. Let's go to that part you mentioned of more downs than ups. It's like it's really easy for entrepreneurs or others in the ecosystem to look at those who manage capital and think, “Oh man, what a sweet spot where those folks did it. Life is so easy.”
Devin Whatley:
Yeah, so cushy.
Chris Wedding:
But what you mentioned again before press and record is, but look, you're out raising capital almost all the time given these many funds in a short period of time. How many pitches are you making per year and how many of those go where you want them to go?
Geoffrey Eisenberg:
You want me to take that one, Devin?
Devin Whatley:
Yeah, that's all you. Yes.
07:51
Geoffrey Eisenberg:
It’s not unlike the funnel. It's not unlike finding investments. You start with a big number of potential LPs and your job is to find the ones that are interested in the work that you're doing and hopefully get to a match, but these are long partnerships. We're asking people to trust us with their capital for a decade and not just to produce great returns, but also to produce meaningful impact and do what we said we were going to do from a climate and sustainability perspective.
And so, that takes a lot of time, you have to build a lot of trust. I'd say we pitch the fund, the idea of the fund to a few hundred investors every year and then we get down to meaningful conversations with probably about 50 or 100. From there, it's relationship building and it's trust building and it's really getting to know each other and whether or not it's a good fit. That part, it's time consuming, but it's worth it because it's not in anyone's interest to have a partnership get started and then three years later saying, “Well, we didn't really think that this is what we were going to be investing in.” So, I think it's time well spent, but it is time consuming.
Devin Whatley:
And if I could just add one thing there. Chris, we've been at it for a long time. We aren't a fifth fund, but we bootstrapped this firm. The first fund took us three years to raise, and we eventually got to just under $20 million and that was a lot of pitching and raising money, $100,000 at a time. It was really tough. That is not unlike the experience that almost every entrepreneur that we invest in has. I mean, we have been entrepreneurs with building up this firm, and it puts us in a position where we can really understand the position that CEOs, founders who come to us that they're in, we definitely relate. We've been through lots and lots of hard times.
Chris Wedding:
Yeah, it's really important that you all said that and it shows up again in these peer groups that we run here, where some of us will talk to investors. At first I think, “Well, oh, well, maybe you don't feel like you belong in a room full of aka startup CEOs,” and they said just what you said, “Well, wait a second, what are you talking about?” I am building a company here. Plenty of blood, sweat and tears and you got to hire and maintain great talent. You got to make good strategic and tactical decisions, so super similar. I've also never thought about it until right now. So, since we're recording for thousands of people, hopefully this doesn't sound crazy.
10:35
Your job as a fund manager to go raise capital, I mean, in some ways it's actually a little harder to raise capital because there are far more limited partners you could go to, 500, 1,000, 2,000 potential LPs that could invest in a VC strategy like this. As compared to, if you are a climate tech company, renewable energy company, et cetera, there's a hundred pretty well-known groups perhaps, maybe stretch it to a couple of hundred lesser known or those that are new to the sector. Anyway, you-all's pot is much larger it sounds like, which, again, maybe that's easier, maybe it's harder because there's so much more room to cover. I don't know, any other reaction to, you know?
Geoffrey Eisenberg:
I think what's interesting is, I don't want to say harder or easier. I mean, raising capital for a startup or even a Series A or a Series B company, that is brutal and hats off to those guys who can do it. I think what is maybe perhaps more opaque or complicated about trying to raise capital from LPs for a climate or a sustainability focused fund over the last 13 years is that, there were a lot of LPs that wouldn't look at it for a long time. At a certain point, they decide, “Yes, we do care about climate.”
They see the light, they understand both the importance, but also the economic opportunity, and they flip a switch, but they don't really tell anyone a lot of times. They don't put up an advertisement in Times Square saying, “We're open for you to pitch us.” And so, I have been struck by the inefficiency of the whole system of LPs come to a conclusion over time that, “Yeah, this is a space we want to lead into.” But there's no good way for them to broadcast them so that we know, okay, now is the time for us to talk to them. And so, what ends up happening is, we have to keep a baseline relationship going with a lot of LPs within the anticipation that one day they will decide that what we're doing is interesting.
Chris Wedding:
Geoff, you mentioned this word a couple of times, relationship and I think it's worth reiterating for folks listening, that as they're raising capital from folks like EIF, what you're looking for is not a transaction and therefore what they're looking for should not be a deal to close. It is the beginning of a seven plus or minus year relationship so you better get it right and maybe just related, you said this too, you all and really CEOs, requiring outside capital, you're always raising, therefore you're always maintaining relationships. Yeah?
Geoffrey Eisenberg:
Yeah, and Devin, you can weigh on this too. I think that throughout the arc of EIF, that has been one of the most wonderful and rewarding aspects is building relationships with great CEOs, doing the things that we love. Maybe they're a stage or two early for us, but maintaining that relationship, building it and then when it comes to investing, it really is the culmination of a relationship. Then we really enjoy working with them throughout.
13:44
There was this strange period, from the second half of 2020 maybe halfway through 2022, where it did seem to become more transactional. There was more capital in the space, more fast money in the space, there was the spark, boom, and we started to see some CEOs in the space that maybe had a different approach. It was less about relationship building and more about just a transactional nature which felt maybe a little more Sand Hill Road, a little more Silicon Valley. It infected the space for a little while, but it feels like it has maybe pulled back from that and we're back to a healthier relationship between the investors and the companies.
Devin Whatley:
Well, I would say that from that relationship building standpoint that a relationship between an investor and an entrepreneur is very similar in a lot of ways to the development of a long-term relationship with a life partner, let's say. Where it's easy for the infatuation stage to start off or start off with an infatuation. A lot of projection about how wonderful this individual is and maybe not really fully appreciating some of the less wonderful aspects. Maybe you get your heart broken along the way, but then through all of that, for the really wonderful deep relationships, you get to the other side of all that and you forge what becomes a really strong and powerful relationship that sees you through lots of twists and turns in life.
I always like to say with portfolio companies, that they're all going to face challenges. They're all going to have problems. We don't know exactly the flavor of problems at the outset, but they're all going to face some kind of problems. And we want to be there to help them navigate those problems, be good partners along the way and weather those storms together. Anyway, it requires a really strong foundation to be able to do that.
Chris Wedding:
Well, I like the analogy to a life partner because whether it’s the infatuation or honeymoon period, it doesn't last and then you see where love goes from being a noun to a verb. It's very conscious to love. But the other part is, I've heard some entrepreneurs talk about, “Hey, look, when you're in that honeymoon period,” or just leading up to let's say to term sheets and otherwise, instead of reserving your skeletons, your baggage for the investor to find during diligence, just come on out. Maybe it's your first day and be like, “By the way, here's how we're flawed.” It's atypical, but boy, you could short circuit a lot of time and pain leading with some of that transparency because look, you guys are going to uncover it at some point, but better to get it out early to make sure that everyone knows where the scars and baggage is before seven, 10-year relationships begin.
16:59
Devin Whatley:
That's absolutely right and, look, that takes a ton of courage to just be direct and honest about those things because you're fearful of scaring away someone who you think could be an important part of developing your business. And so, we certainly understand that, but your observation is a really astute one.
Chris Wedding:
So, as you all think about the nature of your conversations with limited partners over 13 years, certainly not really convincing, part of your storytelling has changed. I know there was a period where anything that sounded like clean tech was basically a four-letter word, yet you all continued to raise capital and deploy that capital. I wonder if you could talk about, what's theses, what narrative resonates now with investors that, yeah, some of them would care about environmental impacts and social impacts. Some of them don't care as much and they just seek market rate returns through a venture firm, but maybe tell us how the story changes. Do the drivers change perhaps today versus some of the friction of clean tech losses in the past? Maybe this is a dead horse, but for those new to climate tech, let's hear that update, if you will.
Devin Whatley:
So, Geoff leads our fundraising, so I'm going to let him do most of the talking on this, but I would just maybe kick it off with an observation that there's no single LP type. There's lots of different LPs with different needs and desires and particularly when you look across geographies. So, we have increasingly spent time outside North America fundraising and some of the differences that we find there are quite eliminating and worthwhile. But it is definitely lots of different flavors of LPs with different needs and looking for different outcomes. Geoff, how would you answer Chris's question?
19:10
Geoffrey Eisenberg:
Yeah, it's interesting. What I would say is that in the very beginning, and this is back in 2010, 2011, not long after clean tech 1.0 and the great financial crisis, most of the people who were leading into this were very forward thinking. They had a real belief that sustainability and climate change was going to be a part of the future and I think they saw maybe an undervalued opportunity, but they were few and far between.
Then I think, as we had some financial success and we're going after more institutional investors, the story became more about the economic opportunity and more about their great returns here. It's an undervalued opportunity, an asset class, and there's a better risk adjusted turn here to be made compared to venture capital and other areas. And our strategy is really built around that about great repeatable returns and having impact. It is a have your cake and eat it too kind of strategy. The LPs, they really wanted to hear about the economic drivers and the economic success and the returns here.
I think we have maybe been a little bit surprised by the fact that especially talking to European investors now, they want to hear all about the impact. They want to hear about the kind of carbon reductions that you've had and that you're going to enable. They want you to make promises about the impact that you're going to have in the future and I think personally, we all think that's fantastic, but it's very new.
I mean, that is not what LPs wanted to talk about or think about even three years ago. And so, there has been a shift in the LP community, especially the European LP community, but I would say also in the endowment foundation world in the US, they're not afraid to talk about climate. They think that it's an important part of what all investors need to do and I think that's great. I mean, we're here trying to do that work.
At the end of the day though, I think an investment only passes investment committee if the investment committee though believes that it's going to be a market rate or above market rate return investment. And so, it's our job to be able to speak authentically and not both.
21:21
Chris Wedding:
Yep. Makes sense. Let's switch the angle here a little bit. So, I'm sure some of our listeners want to raise capital from EIF today or at some point over the period of your fifth fund. What advice do you have for those that are trying to, A, get your attention, and B, make sure, once they get your attention, they don't squander it. Whether it's the format or stop boxes to check, a key criteria, if you will, that get them to the next stage.
Geoffrey Eisenberg:
It’s interesting because we have four different partners and we have six members of the investment team and each one of us is seeing opportunities individually. And so, the hook I'd say might be a little bit different for each of us, what gets our attention. But I would say a very well-communicated description of a market problem that you are uniquely set up to solve. Like you have seen a market problem, you've identified it, and you have created a company that is dead set on solving it and solving a sustainability problem at the same time. That is, I think, table stakes for getting EIF to pay attention.
And then if you show a deep understanding of the problem, of the customers, show an understanding of how to efficiently build a company, not waste money, not just throw money at a problem, but intelligently and efficiently build a solution to that problem, that goes a long way to getting all of our attention universally, I would say. Devin, what would you add to that?
Devin Whatley:
My tastes are pretty simple, pretty basic. I like to see companies that can sell something. If you've got a product that people want, a customer wants, and they're willing to pay you a price that you can make an attractive margin on, I'm interested. Of course, that product has to be something that's addressing some kind of sustainability issue. Incumbent with all of that is that you're changing the world, helping change the world, but ideas that are not backed up by what the market actually wants today, where you don't have customers that are willing to buy your product right now for a price that's higher than what it costs you to produce it, those are a turn off to me. I'm pretty basic and simple in that regard.
Geoffrey Eisenberg:
And Chris, I would agree, it's not just an economic question too, I fundamentally believe, and we all fundamentally believe that, an uneconomically attractive business, a business that's not going to be able to produce profits is likely not going to scale. And so, no matter how great their environmental solution is, if you can't scale it, it does not matter.
24:09
Chris Wedding:
Well, that's the truest definition of the word sustainable. Can you sustain yourself to have the sky-high impacts that you're after? But you raised another interesting question about the timing of the opportunity. We've heard the expression of, today's TAM or total addressable market versus future TAM. How big is the market in three, five, seven years versus what is it right now? And I think it's probably true that many companies we know and respect that have grown to where they are today, looking backwards there was not much of a market. Or we knew it was smaller, way smaller at that time. Maybe can one of you all dissect how you think about today's TAM versus future TAM and what in the world is future? I mean, here it's not 20 years, that's for sure.
Devin Whatley:
Well, one thing I would just start off there is that the type of companies that we invest in, the markets that we invest in are by and large really different from what maybe conventional or traditional venture capitalists have invested in. So, software, semiconductors, social media, these industries that have been created from whole cloth, just brand new, where you can't really predict how big that's going to be because you just don't know. We're typically investing in existing industries, energy, transportation, food and ag, what have you. And so, we're not investing in things that are just being created out of thin air.
I think that conversation about existing TAM versus future TAM is maybe not something that we struggle with as much in the companies that we look at, because there is an existing market, by and large, something that you can sink your teeth into and analyze and understand. You can identify what's the pain point in that industry as it is transitioning from dirty to clean. How can we help move that along and what is the market opportunity, the addressable market, with that solution that is being created here?
Chris Wedding:
Yep. Well, let's go deeper then into exactly the kinds of companies that you all invest in and stage and so forth. You mentioned the categories just now, Devin. Maybe stage, how would you describe what stage they're at? What kind of check size that you all like to write? First check versus follow on capital, what does that look like?
26:54
Devin Whatley:
Geoff, you want to take that?
Geoffrey Eisenberg:
Sure. So, it's an interesting stage. It's a little bit of a tweener. We call it early growth or commercialization stage, but essentially, if you have a solution to a problem, to a business problem, sustainability problem, and you started to sell that solution, so you have some kind of revenue, that means you're generally in the IS stage. We don't on the whole take technology risk and we very rarely go pre-rep.
And so, let's say you have half a million, a million, five million of revenue, but you are poised, both from a timing and a maturity perspective to grow rapidly and you need that first slug of, not capital for R&D or capital for capacity building, but real growth cap, we're there to write anywhere from a three to 10-million-dollar check. Typically, that's in a Series A, although sometimes it's a seed, sometimes it's a B, depending upon the funding that was required for, before we get there.
We seek to lead those deals and we do seek to take a board seat. And so, it's the company that's at that stage, that early growth, ready to go vertical on the hockey stick and you need call it a 5 million to 15 or 20-million-dollar round and you need a lead for that. You need someone who's going to set the price and do the diligence and bring the other syndicate members along, that's the role that we play.
Chris Wedding:
Perfect. Devin, anything to add to the kinds of companies that should be knocking on you-all’s door?
Devin Whatley:
Well, I think Geoff articulated the stage really well. I would just add to that, the primary risk that we're looking to take is scale up risk or execution risk and this gets back to earlier part of the conversation, we talk about the things that we expect that every company is going to have. Its share of trials and tribulations as it goes through. It's that growth phase from a startup to becoming a professionally managed organization.
We are really experienced in helping companies navigate those different challenges. We're comfortable with them. We don't spook easily in that regard and look, it's a really exciting place to be operating where you're actually selling things to customers who have a need for your product and figuring out how to scale that up within the immediately available market. So, it’s a really exciting, interesting place to be operating.
29:29
Chris Wedding:
What can you all say about the kinds of founders, CEOs you like to back? Whether that's adjectives, whether that's stories, things you search for or things that are just total red flags.
Devin Whatley:
On my end, I have always been compelled by founders, entrepreneurs, CEOs who are obsessed. This is really hard work. I mean, being an entrepreneur is brutal, but it can be the most exhilarating and exciting, financially, incredible opportunity and you got to be willing to take a lot of risks to do that and be a little bit masochistic maybe. But those founders who have that just kind of obsessive quality, and it's not about just working all the time because you can burn out and you got to be careful about that. But thinking about your business constantly and problem solving, having on a walk or in a dream or whatever you do for outside of the office. Those ideas that come to you because you're constantly ruminating on how you solve those problems, I think that's a really important quality that I look for in entrepreneurs that we back. Geoff, how about you?
Geoffrey Eisenberg:
I think in a lot of the sectors that I cover, whether it's mobility or grid or renewables, it really helps in addition to the focus and obsession that Devin's talking about, to have someone who truly understands the workings and power dynamics within their industry. So, if they're in the renewable energy business, it's a really hard business to come into and be an entrepreneur if you've never been in it before, if you don't understand how to work with utilities or utility commissions.
Similarly in automotive or mobility, if you've never done anything in mobility before or in automotive, there are a lot of really hard lessons that you will have to learn and there are very few shortcuts. And so, I look for people that really know their industry and really understand the dynamics of life.
Devin Whatley:
I think another quality of the EIF prototypical entrepreneur is someone who is maybe not flashy. That's not to say that we don't love charisma. Of course, CEOs who are charismatic can be really successful, powerful CEOs, but a little understated or show, don't tell, that's more important to us. Focused on results, execution oriented, matter of fact, those tend to be the types of entrepreneurs that we back.
32:23
Chris Wedding:
Devin, on your earlier point about sifting out CEOs that are almost always thinking about their business, even if they're playing, hiking, whatever, before bed slash when you get up, it reminds me of the Japanese koan. So, I'm currently reading a book on Japanese, well, it's really Rinzai Zen masters of Japan from ages ago talking about this obsession with these impossible to answer questions like what's the sound of one hand clapping, et cetera, that your rational mind cannot process. That's a kind of obsession I've never thought about it until now. Sounds like super similar to this obsession that they're always thinking about problems to solve in their business.
Devin Whatley:
That's right. Yeah, absolutely.
Chris Wedding:
Let's give two examples of portfolio companies. Obviously, there are many, but maybe pick one each, what they do, et cetera, why you chose them. Then to the last part of our chat, we'll go to the people here, Devin and Geoffrey on habits and routines and maybe some recommendations on books.
Devin Whatley:
Geoff, I suggest starting with EV Connect, not the least of which reason because Chris has worked with Jordan, the founder, CEO.
Geoffrey Eisenberg:
Yeah, absolutely. Happy to and it's a real pleasure and I think you should probably have Jordan on this podcast someday as well. He's got a great story to tell. So, EV Connect, for those who don't know, is a company that developed essentially an operating system for managing large networks of EV chargers, level two public chargers, fast charge networks on the highway, and it was hardware agnostic.
This is a company that came to us through Devin's network and then we got to know for two or three years before we invested as part of our thesis research into electrification of vehicles and the interaction of EVs in the grid. We had done a lot of thinking and a lot of work around what was going to happen when EV adoption exploded, we started having lots of EVs on the road. There were a few conclusions we came to.
34:29
One was that EV charging was going to require a lot of smart management. You couldn't just willy-nilly have everyone plug in their car at 5:00 PM, it would crash the grid. And if you were going to get buy-in and acceptance from utilities and car owners, you're going to have to bridge the gap there and essentially manage charging in a way that made everyone happy.
You were also going to have to be able to take advantage of economies of scale on the hardware side, and essentially let hardware makers make hardware cheaper and cheaper and provide them with the software that would allow them to plug their hardware into any network that was being built. Then one other component we thought was important is, there are natural financial owners of EV charging networks, large infrastructure owners. They're not in the business of writing software and they're not in the business of fixing EV chargers or deploying EV chargers. So, you needed to give them an on-ramp.
And so, we were looking for all of those aspects and EV Connect, very intelligently through Jordan Ramer's work, had been developed essentially to solve all of those problems that we had seen and was doing it in a really smart and efficient way. And so, after two or three years of getting to know Jordan, his business was really starting to scale and so we led the Series A in, I think it was April of 2018. From there, he was a pleasure to work with. The company was a pleasure to work with. He grew the company through a Series B and a Series C round, and then ended up selling the company to Schneider.
It was a natural set for the company and Schneider is a great home for that system and that platform. We'll push it out beyond just what we could do with private capital. I think this goes to another aspect of EIF and our systems-based approach, which is, every solution that we invest in and we push forward, it isn't necessarily going to reach its highest level while it's an EIF portfolio company. These problems are really big that we're trying to solve and many of these solutions that we invest in belong at the largest incumbent players who have the scale and capacity and low cost of capital that they can push these things out into global markets. I think EV Connect is a great example where now Schneider is taking that company global and doing it fast and faster than it ever could have with private capital. We're really proud of what that company has done in the past and what it will continue to do in future.
36:44
Chris Wedding:
Hear, hear. Yeah. Working with Jordan's been awesome. Devin, how about you? What's a portfolio company that stands out?
Devin Whatley:
Yeah. So, I'll go back to the early days of EIF, so think back to 2010 when the world was very uncertain in many ways. At that time, a lot of the money focused on clean technology had gone into solar cells, trying to reinvent the solar panel. Part of our approach to investing is thinking about things, and Geoff talked about this, in a systems-based approach.
In the solar industry at that time, our opinion based on our experience and view was that solar installers and customers weren't really asking for a new type of solar panel. That wasn't really a need. There was a lot of technologists who thought, “Hey, we can create something new.” But what customers and installers were looking for were really everything but the solar panel. So, innovations and balance of system, installation hardware, battery management systems, or sorry, power electronics rather, financing solutions, things like that.
At that time, we invested in a company called ZepSolar that really reinvented the way that solar panels got mounted on a residential rooftop. Came up with a clever engineering solution that cut out a lot of cost in terms of installation, sped up the timed installation and removed a lot of cost. And that was coincident with the growth of a couple of publicly traded solar companies, notably SolarCity and Vivint, subsequently Sunrun.
And so, Zep became a tool for those companies, Vivint and SolarCity in particular, to really accelerate their growth rate, enable them the ability to install multiple systems in a day where previously it might take a couple of days to install one system. Anyway, we invested in Zep when the company had less than a million dollars in revenue, that was in 2010. By 2013, the company had more than $50 million in revenue. It was profitable and at that point, we sold the company to SolarCity, which of course subsequently became part of Tesla.
39:18
Interestingly at the time, SolarCity was saying that they were going to continue selling the product to their competitors, to the industry at large. But not too surprisingly, after the deal closed, they decided, “Well, maybe this is too powerful of a competitive weapon, and so we're going to stop selling it and just use it internally.” But the thesis that we invested in Zep was still a good, viable thesis.
And so, a few years later, we actually invested in another balance of system solar hardware company called Pegasus. Similar kind of story in that Pegasus had less than a million dollars when we invested. They've doubled every year since we've invested. They're now a really quite substantially sized company and have continued to iterate on innovations and balance of system mounting components. Anyway, that thesis has really been working for us for more than a decade, very successfully.
Chris Wedding:
Good one. I think those are good examples of looking in not obvious areas. To not look at the first idea or the sexy idea of the solar panel, let's say, but all the things to support it as a framing for those listening.
Hey, it's Chris. Just a brief message from our sponsors and we'll get back to the show. Just kidding, we don't take sponsors. On the other hand, I do have the privilege of leading the only executive peer group community for growth stage, CEOs, founders, and investors fighting climate change. With monthly group meetings, annual retreats, and one-on-one executive coaching calls, our members help each other boost revenue, impact, capital raise, clarity, confidence, work-life balance, and team effectiveness. Today's 30 plus members represent over $8 billion in market cap for assets under management for climate solutions. If you're interested, go to entrepreneursforimpact.com and join the waiting list today. All right, back to the show.
All right, let's switch to the people running EIF. Maybe Geoff we’ll start with you, what are some habits or routines that keep you healthy, sane, motivated in this process of constantly fundraising, constantly deciding which companies to invest in and then support you during good and bad times?
Geoffrey Eisenberg:
I think Devin probably will have some of these similar comments. I, like most of us, need to keep myself on an even keel and a healthy lifestyle. So, I blow off a lot of steam going for runs and playing tennis and skiing and hiking, being outdoors. A day without exercise is usually one where I'm going to be a little tweaked, a little bit aggravated. I think like some folks or many of us, I do need my sleep, so getting seven hours of sleep a night is usually important . Along those lines, I got to limit myself to one cup of coffee unfortunately. It’s a wonderful thing, but if I have more than that then I don't usually get great sleep and then I start getting grumpy and not the best person to be around. So, keeping myself on that, like balance or even keel I have found is really important.
42:51
Chris Wedding:
Well, today on the podcast, Geoffrey, I'd like to welcome you to the world of decaf coffee.
Geoffrey Eisenberg:
Oh yeah. I like the decaf.
Chris Wedding:
Join the club. Maybe three years ago I was like, “Oh, that's crazy to avoid caffeine. Oh, wait a second, now my hands are shaking.” First thing flavor minus the side effects, anyway.
Geoffrey Eisenberg:
Yep. No, I'm with it.
Chris Wedding:
Devin, how about you, habits or routines that keep you healthy, sane and focused?
Devin Whatley:
The work overall is really intense. Just like I talk about looking for entrepreneurs who are obsessed about their work and the mission that they're on, I fit the bill. Guilty as charged here. So, I think of it as like training as a high-performance athlete in a way, where it's like, you got to do everything. The diet's got to be great. The sleep's got to be great. The physical exercise, every day, all of those things. So, I have my hierarchy of those. The first is sleep. Sleep is the most important. Then the diet and the exercise and they all kind of relate to each other. You can sleep better if you've had good exercise.
I would add on top of all of that is the family time. I've got two kids, a 13-year-old and an almost 10-year-old. It's really important to me to have a strong, healthy, functioning family life. My kids are in lots of sports. I participate in that as much as I can, helping coach or spectate or just being a support position there. It gives me a lot of joy and it's just a fun activity for us all to do together and going on family hikes and trips and all that. Keeping all of that in balance is really, really important.
44:50
Chris Wedding:
Well, I love that you said that. Same for me, three kiddos now almost all teenagers, but I also laugh when you talk about getting them out for hikes. We were making a tour of a lot of the Western national parks and I think a comment from the teenager, the oldest was like, “If I never see a red rock again in my life, I'll be fine.” Then another summer adventure, “Oh, we're going on a hike. Right. Great. Oh, look, a tree, another tree, another tree.” “I just pray this changes when you don't need to rebel and you're older.” Anyway, yes, family time in nature, good stuff.
Devin Whatley:
Absolutely.
Chris Wedding:
By the way, just to round it out, that same 17-year-old loved catching trout in one of the lakes in Olympic National Park last week, so it's still there despite his dislike for Red Rocks. Anyway, let's go to some recommendations. So, Geoff, going back to you, suggested books, podcasts, quotes, et cetera, that listeners may find empowering.
Geoffrey Eisenberg:
It’s interesting. There are a lot of people in this space who are young and energetic and hungry and really want to solve climate problems, but I'm struck by the fact that many of them did not work through the first great financial crisis in 2008. So, I think it would be important for anyone who didn't really live that to go back and read up on it. Not that I think necessarily we're coming up on that, but there are cycles. It can't just be all up and to the right all the time.
I have really been impacted by two books that help you think about that and think about what can happen. The first one is Too Big to Fail, Andrew Ross Sorkin. Just an amazing recap of the inside workings of how the great financial crisis really went down. Then When Genius Failed, which I think is always good to remain humble and remind ourselves that we don't have all the answers and we're maybe not as smart as we think we are. So, those are two books I come back to often and think about.
Then in terms of more on the positive side, I love podcasts I think like a lot of people, including yours, Chris, but others just feeding the brain, I love Radiolab and Odd Lots from Bloomberg, just like great, interesting economic stories. I try to listen to Marketplace every day. Living on Earth is a great podcast just for general sustainability information and science, very informative for understanding the basic environmental problems that we're all working on. I would recommend that watch for anyone. Then anyone who's a total nerd on electrification of vehicles, EVs, Munro Live, this is really obscure, but if you want to get into the guts and the weeds of how EVs work, that'd be a good one to watch.
47:44
Chris Wedding:
Well, plenty of sustainability nerds, self-included, listen to the podcast, so I’m sure they extra appreciate the last one there. Devin, how about you?
Devin Whatley:
So, the book that I have to just give a shout out to, which got me started on my journey here was Natural Capitalism by Amory Lovins and Paul Hawken. That book came to me at a really similar time in my life, in my 20s and it opened my eyes in ways that led me to where I am today. So, I'm sure, a little dated in terms of the stats and figures and whatnot, but I don't think you can go wrong with revisiting that book. Then a more recent book that is not related to anything that we do for work, but was really helpful for me in understanding or having some more perspective on the political environment, the culture wars that we find ourselves in, is an American history book written by Jill Lepore called These Truths.
It traces back the very earliest origins of North America from the time of the conquistadors coming and the birth of the nation, and the history of how this country was founded. I learned things that I had never learned in school, and it just really helped give me a perspective on the deep-seated distrust between different groups in this country. I’m not trying to say one is right or wrong, but just to understand it because there's been so much acrimony in recent years and just trying to wrap my head around, where does all that come from? Anyway, it helped give me a little bit of perspective about this nation that we live in that's been around for several hundred years.
Chris Wedding:
Look, history is not just in the past. It is still very much with us as long as we're aware of it. Unfortunately, let's end here. We could go on for another hour, I'm sure, but maybe by now, our listeners run has finished or the commute has finished or the vacation drive to the park with lots of red rocks has finished. Well, listen, Devin, Geoffrey, thanks a ton. Big fans of EIF and looking forward to what great investments you make in your fifth fund and beyond.
50:30
Devin Whatley:
Thanks Chris. This has been a lot of fun today. Appreciate it.
Geoffrey Eisenberg:
Thank you, Chris and thanks for all the work that you do in our space. It's really important so keep doing it.
Chris Wedding:
Hear, hear. Appreciate it.
Thanks for listening and if you want more intel on climate tech, better habits and deep work, then join the thousands of others who have subscribed to our Substack newsletter at entrepreneursforimpact.com or drop me a note on LinkedIn. All right. That's all, y'all. Take care.
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