Climb By VSC: Episode 28

Vijay Chattha: Hi, everybody. Welcome to another episode of Climb from VSC Ventures. This is a podcast where we talk about helping founders scale companies and Climate Technology. And we're excited today to have a great guest on Mike Jackson of Earth Shot Ventures. Mike is a partner with the fund and has had a long career investing in companies in this vertical. And so with that, I'm just going to turn it over. Welcome to the show, Mike.

Mike Jackson : Thanks for having me. Excited to be here.

VC: Excellent. And really want to just jump into it, so let's start a little bit on your background. So I know you've worked at Westlake group before this, but maybe you just take us back like sort of, When did you get the passion to come into this space? And what those moments were, maybe even from like college up to where you are to get to Arizona?

MJ: Sure. Yeah. So for me, it started when I was a little kid, and I used to donate my allowance money to Greenpeace, and The Nature Conservancy is something that's been a part of me for as long as I can remember. It came from my dad, who was always interested in the environment. And when I got to college, I sort of stumbled across clean energy as this segment of interest in the environment that was pretty clearly going just to grow every year I was employed. I graduated in the early 2000s and did an undergrad Master's, studying clean energy. And that kind of epiphany around clean energy has stuck with me ever since. I spent a couple of years at a think tank on campus and couldn't quite figure out what to do with this kind of interest and passion. But then there's this mid-2000s era in Silicon Valley and sort of the rise of the first wave of cleantech investing. And it became pretty clear that the private sector is probably where this is not going to live by 1020 years earlier, I probably would have gone and gotten a Ph.D. or something. But at that time, I kind of didn't have any self-respecting 24-year-old would do or start up a company. I started up a company with a buddy from undergrad. It was in a way, too early, days of the carbon offset market, and we were in the kind of era of Terrapass and the like when this was emerging in the public consciousness around carbon. Definitely, definitely didn't time the business too well in terms of that broad thought process. And also, the kind of 2008 financial crisis hit and just changed people's perspective quite a bit on how to think about offsets. And at that time, I got introduced to the folks who are in the process of raising the first fund at the West Leaguer, joined them originally as an intern, counted myself a full-time job a couple of months later, and ended up staying there for nine years to full fund cycles. Investing both in the kind of initial rise of clean tech. We were investors in Tesla were investors in amorous a few classes, kind of some of those heavier industry style investments across climate, and then a second fund in 2012 2013 which was much more it was an earlier stage, more software oriented, kind of in the sort of follow on to some of the sort of pullback in the space. After being there for nine years, I went and joined a firm called Generate Capital. I have some project finance investors in the space to generate looked at a lot of the types of companies that were sort of emerging out of the venture and starting to attract and be interested in project finance and also worked in a group called an elemental accelerator, which is the largest accelerator in the space and there as a CEO coach to a bunch of their companies as they went through fundraisers. And out of that, that work with elemental, this idea of putting together a shot kind of spawned up during the kind of very early days of the pandemic, and we spun out a fund of elemental, which is what our chat is about $95 million Fund invests three broadly across the climate ecosystem, energy mobility, food and agriculture, industry, carbon, all those areas. Early Stage everywhere from a person with an idea, we've gone that early in terms of kind of napkin math, and all the way through series being so generally flexible in terms of when we when exactly we come in, and a lot of that is the Montreux we want to work with the most interesting companies. We want to try to figure out ways to be helpful in figuring out ways to collaborate and partner with them. And try not to be super formulaic about exactly what they need to look like and exactly what stage around. They come in. So yeah, so I've been around the block a few times here in the climate ecosystem, and really excited about this kind of next era that we find ourselves in now.

VC: Great. And then let's talk about sort of where you are now with Earth Shot. So as you get, this $95 million fund is like, in terms of flexibility to invest. Is there a particular mandate from the LPs you have to modify, like, I want to do a certain amount of these younger these earlier deals? Like how are you thinking about modeling?

MJ: Yeah, it changes a little bit over time, and some of it is also being cognizant of what's going on in the market. So you know, I think right now, given the ecosystem that we find ourselves in right now we're, we've probably learned earlier in earlier stages over time. It's a really interesting advantage for companies that you sort of burst into a little bit of a more questionable economic climate from a macro perspective. Companies that are now kind of coming out now that a bunch of funds has been put together over the last couple of years and kind of see this space sort of coming together and understanding how and where to position themselves. So we've moved a little bit earlier, and we have with both lead and follow up about 25% of the rounds we've done. And I think a lot of it is just a really strong emphasis on that flexibility. We really have tried to resist the temptation to say that great companies are going to look exactly like this. We have to own this particular amount of the company, we have to have a particular role. And instead, say he's coming here to come from a variety of different flavors they're going to come from and be funded by experienced climate VCs are going to be funded by experienced tech VCs. And we then have to figure out, you know, what it is they're doing, how we can add value, and, but ultimately, trying to be nimble there in terms of how exactly we work together.

VC: Got it, got it. And let's talk a little bit about that sort of adding value. What do you think about the value added to these founders?

MJ: Sure, so probably investin in a couple of different areas. So I think the first is really tactical. So between Don and myself, the other GPs in our chat, we have invested in probably something like about 200 companies. Between the two of us, we've seen several 1000 individual transactions occur. And so just a lot of learning comes from that. I spent a lot of time with companies and elementals in and around their fundraisers, and so we provide a lot of support and help to companies as they go through that. That's kind of a core tactical skill set that we have. We spent a lot of time with companies understanding how to run a board meeting and how to run investor updates. So one of the things that would happen frequently when coaching companies do fundraisers was alright, you just raised your first round of institutional capital U board meeting in a few weeks. Have you ever been to a board meeting before? You're going to need to run lines and what are some of the best practices that you can kind of extend across those areas? So a lot of what we try to do is just be generally helpful and kind of sharing best practices and experiences. The second is around strategy. I think one of the things that's really important across this space and a question I often ask companies, when they're pitching us is, what is it good to be good at in a particular market, you'll see lots of companies targeting a particular opportunity and the alternative protein space and the similar value chain and managed storage value chain. And generally speaking, there's a value that tends to accrue to certain places in that value stack. Some people are really good at reducing the cost of a pretty small amount of the overall cost for example or 90% reduction of 2% of the cost versus a 50% reduction and 50% of the cost. And so really trying to help companies position there. We also help companies think through things like project finance, and how that's going to play into their business over time, and how they can design their company to be able to attract that type of funding. Everybody says they're going to get it. We're not going to build these projects ourselves. We're not going to do it in a capital-efficient way. But there's a whole set of processes, a whole set of ways in which you scale your technology through to the customers you pursue that will affect whether you're actually able to attract that type of money or not. And I think the third is just in and around connections. So between between Don and myself and the rest of the team, again, many hundreds of CEOs who we've worked with, and one of the fun parts now of investing it was very different than you know, investing in 2009 2010 is you can talk to a founder and say, Hey, you're building a product that sells to utilities. We've worked with a number of folks who've done that successfully and unsuccessfully. We're gonna have you to have a conversation with those folks. Just kind of understands the ground truth, your ideas that weren't possible. In 2010. There was nobody who had built a company successfully selling utilities and was definitely getting beaten up by selling for utilities. And so that's just it's kind of a new wave of being able to do that and surround people with folks who've been in the ecosystem for a long time. And then at the end of the day for us, all of those are different approaches. And we try to approach the companies that we work with not as a hammer looking for nails where we always provide the same value, but instead try to understand what this company needs right now, who else is around the table? What are they good at and try to figure out what exactly our role might be. So that we're able to be flexible there, we're able to provide, you know, kind of incremental value rather relative to other folks. And that even can evolve over time with a company so what they need when they're at the seed stage, it's pretty different than what they may need a series B. And I think it's really important as investors are trying to help these companies to be aware of those differences and to be aware that when you're the right person, you kind of have the right expertise at the right time. And sometimes you're not, because, in a portfolio of 30 or 35 companies, it would be kind of weird if we are the ideal board members for every one of these companies from the seed stage through IPO. You know, we have to be kind of mindful of how we surround companies with different skills, different networks as they grow.

VC: Got it. We've been angel investing for about a decade. But one interesting thing, looking at this space, first of all, it's very complex and diverse. But then I'm just super curious, how do you map your time lso you've got 1000s of transactions, all this information you could share with these founders. How much of the time is split up between all the things you have to do as a GP? How much is sourcing, how much is selecting, how much is sort of that service layer?

MJ: Yeah, that's a great question. And for me, it's evolved over time from, you know, our first close on the fund in May to building out our team, building a team of folks to kind of compliment me on our team and, ultimately, that, you know, for us that has changed over time. I tend to say that VCs typically are doing about four main things. The first is sourcing companies and identifying what those opportunities may be. The second is choosing them, the sort of general due diligence process. The third is helping those companies be successful. And the fourth, which happens in a more cyclical fashion is around fundraising and interacting with investors, and engaging them in the overall process. I think it's important for investors to figure out especially, you know, smaller funds, newer funds, you can't get an A plus on all four of those areas. You have to figure out where to prioritize your time or to emphasize where you're going to play. We spend a lot of time on sourcing. That is probably my primary skill set as a VC. This fund has a very strong partnership with the elemental accelerator, which is the largest accelerator in the space and attracts several 100 applications every year. It gives us a huge influx of potential investment opportunities. We do a lot around data-driven sourcing and a lot of proactive outreach to companies. So that's an area that we spend a tremendous amount of time on. Because if you're not looking at the best opportunities across the space, your ability to evaluate and pick is probably not going to be as important. I always like to phrase that from great options come great decisions. And so when you think if you can power your diligence process with incredible deal flow, and incredible companies, incredible founders, the job of evaluating them becomes a little bit easier to gel with how you help them becomes a little bit easier. So it's a thing that feeds into a lot of other parts of the overall process. For us. That has been the primary. It's been the primary initial focus of we've got to get that right. We've got to make sure that we're seeing the most interesting things that have been turned into a read professionalization of our diligence process. How do we ask the right questions? How do we both go through and identify potential weaknesses? But probably more importantly, how do you identify and validate huge strengths? I think there's a school of thought amongst ventures which I subscribe to as well. But great companies tend to not have an absence of weaknesses, they have the presence of enormous strengths. And so there's a temptation in the diligence process to go through a checklist and identify all these issues and problems. etc. But then kind of lose the fat and lose sight of it's incredible founder or the opportunity to market space is amazing traction, whatever it may be, but really try to zero in on that presence of incredible strength. And then for us to help build our capacity. It's figuring out where we are going to be folks who are going to spend time in board meetings and provide great guidance, where are we going to be connecting them to a broader network? How can we build tools to support companies around hiring around fundraising, to give us a greater degree of scale? And so he's probably played in a couple of those different areas, but it's tricky, then it changes, you know, hour to hour in terms of where the focus is. And a lot of it comes from just building up an awesome team of people to work with, who could zero in on these different areas. And become specialists and experts and you know, as if the market has had a correction.

VC: So let's talk about interesting people. So I'm trying to think through why we've worked with about 700 companies and prefer to think through the distance and the successes. Some of the people have been interesting. Like, I mean, when I think about interesting, how do you define it? Let's get into that.

MJ: First, Sure. It's really hard. So I had the mind-blowing experience reading book, Talent, by Todd Cohen and David versus a new book recently, which attempts to start to put some frameworks around this highly recommended to other folks in terms of just starting to think about this more systematically. And, and starting to almost become a student of this question and this problem, just an incredible that started to kind of shift from the subjective you can just kind of feel it in there. Like, let's start to put some structure around this. I've been fortunate for reasons I may not fully understand. You're just back to some absolutely amazing people. Some of them are very technical. Some of them are single founders. Some of them were kind of small teams coming together. In some cases, very different skill sets, and very different personality types. I think some commonalities certainly come to mind and some of these are cliches, but one is they have an insight. They have some unique insight that often comes from some strange combination of skill sets either within the founding team or within, you know, an individual's head. So an example of that was a company we invested in called Trove. The co-founders of Trove, one is a guy named Adam Werbach. Adam was kind of famously the president of the Sierra Club, and I think age 20 The, you know, amazing environmental activist, who then went and ended up going to Walmart and say, hey, if I can green Walmart, if I can make Walmart 1% greener, it is hard to imagine I can have a broader impact on the world. While at Walmart, he met a guy named Andy Rubin, who was a senior executive at Walmart, who said, you know, my whole job was I'm gonna just do more stuff. I have to sell more stuff. People don't need more stuff in this small town. We got to figure out how to sell them more. stuff. And the kind of insanity that caused him to say, how do we unlock the closets and garages of the world and get those products back into circulation? So this is like this very strange combination of two people that ultimately created a company called Trove which now basically powers these use marketplaces for brands. So if you go to Patagonia, Rei, and other brands, the kind of used section trim is powering the entire back end. So that's like a unique insight that comes from the strange combination of folks who you wouldn't necessarily expect to be sitting next to each other at a dinner party. I think we just think I've seen that a number of times. The second is, people are just willing to kick down walls. We've got a couple of founders in our portfolio, who you just know are going to do absolutely everything it takes to be successful. In the early days. That is absolutely a huge advantage. Their chief evangelist, they are going to ensure they hit their first couple of customers, but that's something over time you need to be mindful of. Because I'm going to make this work no matter what mentality, I think it is. It can present itself in Stranger ways as companies grow and mature. So something to kind of think through. And then I think the third is similar thinking about this concept of founder market fit. And this concept of what it is good to be good at. And in some markets, it's somebody who has a technical insight, some technical experience. In other cases, they're phenomenal salespeople. And that's really what the market needs. In some cases. His mark has kind of been held back by a lack of product innovation. And so somebody's gonna kind of step in and build an amazing new product, Nest being the kind of glaring example of that across the climate space. There's just some magnetism around them. But I think it's really important to avoid creating a really specific box in which you think people need to fit in order to be successful.

VC: Let's talk a little bit about funding itself. So that was super helpful. And I think as founders looking at, you know, working with you. What do you think about these companies? How do you help them with that?

MJ: Totally. So it's, it's kind of amazing to me back on the history of investing in the first wave of clean tech and all the investments that went into it. Myself, I didn't understand that project finance worked at all until I started working at Generate, and I had the awesome, fun, incredible experience of getting to work with the three founders to generate shows now running the DOE loan programs, Gibson, Milton Friedman, and all kind of taught me about project finance from different angles. And then when I was able to do it, I went out to companies and tried to teach them how it works. And one of the pieces that I found really almost heartbreaking about it was you would talk to certain founders and ask them questions about things along the lines of who are your customers for how long will they purchase, what your factory or your plant will produce? Can you get it at a fixed price? Can we understand the credit quality of those types of customers? And occasionally people would be like, Why are you asking me these questions? This is, you know, there's a really big idea here and this is very exciting. And essentially what had happened was founders didn't really understand how project finance works and what sets of questions people would ask, think about it like the standard 15 Slide VC deck, everybody kind of understands that they have that context around market competition, margins, etc. People tend not to have in their minds, what are the key high-level questions that project financiers are going to ask them and so part of it for me is just been wanting to be on this almost mission of being sure we teach early-stage founders, what is eventually going to happen at CDC, series D, etc. What sorts of questions people are going to ask because then people can design around it? If people understand what that future test is going to look like, and how different it is from raising venture capital. When you're raising venture capital. It's all about how I can produce this enormous upside opportunity. Oh, yeah, there are lots of ways you can go wrong. When you raise project finance, it's all about how I ironed out every conceivable risk. Not every project is certainly not going to have that in the early phases. But over time, it is your job as the CEO almost to remove as many points of failure as many points of risk as you possibly can, so that you can attract this non-dilutive money to help the company. So for us, and that's something that allows us to work with companies along their journey to help them prioritize how they might customers they might pursue, for example, a slower moving high credit quality customer if you're going to raise projects, finance is great. It's terrible, and you're trying to raise venture capital dollars, and really want people to move very quickly. When you think about market opportunities, sometimes there's the temptation to go into the biggest possible market, which is maybe in a country that's much harder to get people comfortable funding infrastructure, it might be a little easier to build that first project, say in the United States, perhaps doesn't have the same level of upside associated with it, but allows you to prove that you know what you're doing and the technology worked at that larger scale. Now we can bite off another piece of risk in the next phase of the business. And so honestly, it just helps us understand from an investment perspective, which sorts of companies are actually going to be projects and which ones are because everybody says they are going to try to do that and they're not going to be like those crazy folks who built the plant themselves. They're going to use project finance but in many cases, they're not structurally set up to be able to do it. And so we've avoided a number of companies where we think the road, while not necessarily impossible, it's a lot harder. I think we have kind of open eyes about what it's going to take for them to make it to that next stage. Try to find the sorts of companies who invest in hardware that have that really exciting return profile, to have those attributes that yeah, they're gonna have good answers to the questions when they go talk to the folks that generated others about raising money for the first time.

VC: That's super helpful. I want to talk a little bit about some of these areas of investment for you. One thing you mentioned was your first startup was way too early and carbon markets. Now we're here in 2023 Q2. What is still too early, and what is like perfect timing? What are those verticals? Give us some examples, maybe for our audience.

MJ: If people are building projects that are ultimately going to have the primary source of their revenue come from carbon offsets what they will need back to my point on, on sales, for how long at what fixed price, and ideally for as much of what you produce as possible. Right now the buyer market hasn't yet started to say we'll buy carbon offsets from you for 20 years, at this price. And part of that is they have corporate commitments that are maybe a little bit flexible. Nobody really knows what the future prices are going to be. And folks don't know whether they're there. They don't know who's the Fool in the transaction to lock in carbon prices at two $50 a ton for 20 years. That's going to need to come around for project finance to be willing to really step in and fund a lot of current projects. Again, I think this is not a total mystery to folks. In the carbon ecosystem, but it's not yet resolved. And I think it's an area that it's gonna be really important to really unlock that carbon market. We haven't made investments in much in the way of companies that are primarily dependent on carbon offsets. As for their revenue stream in part because I still have some nervousness about how that's going to happen, how the economic climate is going to affect people's willingness to commit to pay, we're gonna continue to pay these carbon prices and lay off 20% of our workforce. I would hate to be the CEO making that case to their shareholders. It's gonna be really tricky. I look through that in 2008 2009, when many of those kinds of initial commitments were kind of shifted to the right side. So those are areas that I think are. We're getting there and we're getting close. But those are two really important things that need to be solved a lot. If successful, try to do whatever we can to be helpful by educating customers and financiers, and startups around this all uncertain needs to come together on things that feel pretty interesting right now. One of the things that I love our we look at four analogies, the companies that we invest in, and say, who's built a company, you know, squint, your eyes are fuzzy your eyes and it looks kind of like that, but this one's now doing an in climate, so as I mentioned, things like computer vision, ai, b2b SaaS companies, and the like,, where we're looking at it from the client lens. You can think of it like we're looking at a house, and you look at the front of the house, and you say that beautiful houses are wonderful. If we invest in a climate negotiator, they're probably standing right next to us, also looking at the front of the house similarly. So it's like a beautiful house. What I like to find are companies where actually there's somebody who's looking at it from a completely different angle. They're looking at the back of the house and say there's a pool here. is awesome, or we avoid somebody who specializes in SAS, who specializes in marketplace-based investments and says, I don't care about climate. What I noticed is this, this marketplace has really interesting marketplace dynamics. And I'm a little nervous about the climate, but I'm really glad that guy said standing in the front of the house and validating that looks pretty good. And so some of the companies in our portfolio that I think the classic example of this in our portfolio was our CRM pulled up by this company called Cobalt Metals, whose Series A was led by Andreessen Horowitz Software is eating the world. And Breakthrough Energy Ventures, which is very far from Software, is eating the world. We need big technical innovations to drive the kind of future economy funds, fusion companies, they fund all sorts of capital-intensive businesses. And so my initial reaction was, what does that company do? I am so curious what these folks are up to, and kind of learned it's AI for identifying the precious metals of the future energy transition. And, you know, love that kind of strange combination of investors. Who can look at it from different angles and say this is a killer it whoa, what there's only there's an enormous opportunity in the climate market. And if you can find these sorts of resources from our perspective, you can raise non-dilutive funding to be able to build those things. You don't need to pick up a shovel yourself and dig it out. You own the resource. That's where the value tends to accrue in these markets. And then you can have, the Rio Tinto of the world or whomever it BHPs it against each other to pull it out of the ground and ultimately commercialize it. And so I love those types of like disciplinary, multi-discipline multidisciplinary companies that are with that kind of complementary investor set around and ideally also complementary teams around them where you have the AI industry folks, collaborating with somebody who maybe is coming from the more traditional energy sector.

VC: Yeah, it totally makes sense. And I think that's one of the things we do with our funders: focus on helping with storytelling. Is this something that we think or the media could drive an outsized awareness for without specializing in some of the other parts of the science of the business? But that's interesting. So then talk to me a little bit more about what you're doing with the founders now in this market. So where do you rate the economic climate right now for your portfolio companies? Are we in sunny days like September or climate, risk everything else is 2021?

MJ: So it's tricky. It's hard to know. I think from the kind of macro, the overall macro perspective, obviously, there's a ton of uncertainty, a ton of uncertainty about what's going to happen with interest rates. Are we going to hit a recession, there's that whole category of risk. I think the second area is the opportunity and all of that is if we have peaked from an inflation perspective, and interest rates come down, you're gonna see all these public companies come roaring back from a valuation perspective. A lot of tech has been damaged in the public domain from high-interest rates. And as that comes down to you know, future prospective earnings of these companies are going to also look rosier. They're going to be more valuable and the kind of interest in tech is going to explode, explode off the page. So that happens, that's pretty interesting. Within the climate as a whole, I think there's this interesting dynamic that a number of funds were put together in a pre-perfect economic climate. We raised our first close in 2021. Turns out that was the best year conceived for a while. That was we probably with the benefit of hindsight, we probably accidentally kicked off our fundraising, you know, within four weeks of the ideal moment in a decade and so a lot of folks particularly fun citizens time, which means a lot of folks are going to go back out to market at a similar time. And it's pretty likely the markets are not going to be as strong. So that may create its own sort of choke point in the industry. I'm pretty mindful of that a lot with that then shifts back to again, this point of complementary investors is companies that can raise from not just climate VCs are dramatically more resilient than those who are entirely dependent on raising VCs. That's always true regardless of what you think of the macro climate. But that's a really important point. And it was something that I think tripped a lot of companies up in, say 2011-2012, where they were fundamentally lean tech hardware, and as VCs pulled out of the space, and climate funds failed to raise followers on phones, it became pretty tricky. So that causes us to kind of double down on this idea of how these companies are kind of at the nexus of these different trends. But, you know, it's always tricky. If the market is going to take off and go really well over the next little while. It's gonna make it easier for folks to raise these follow-on climate funds. Being hesitant right now will have proven to be a really unwise strategy. If we're, you know, heading into a worst macroeconomic climate. Being hesitant right now is probably pretty helpful and maintaining some dry powder, makes sure that you have extra reserves for your portfolio companies. And maybe don't write that last check or two out of the fund as additional funds are available for your existing portfolios to get through some tight spots for the next couple of years. So especially as we get towards the end of our investing period, being really intentional about those trade-offs of one more deal or a little bit more buffer for our portfolio, trying to create that zero-sum and you know, and debate and be very intentional about okay, we've crossed that that line we have perhaps a little bit less than reserved but this opportunity is so compelling. Let's do it.

VC: Yeah, totally makes sense. And in your mind, just personally thinking about it. What if I have a line I'm thinking about when it's sort of time to turn things back up again? Of course, you can look at the public markets, interest rates going down, and public market stocks ripping totally makes sense. There's a cleansing happening with these companies now with costs, right and sure, AI is helping in some ways, right where they can think about what they can automate also the AI they're building right and is that creating more revenue potential but it seems to me the second thing would be IPs. Right? So in anything, whether it's stripes or something and climate, but getting the markets open again, on that side is going to be a bit more, it's going to be another milestone. But are those the sort of ones you see are there I mean, of course, the IRA was huge. But is there one or the other? Are there any other marks you see that would matter?

MJ: Yeah, I mean, I think we want to see some proven successes out of this wave of climate, right, we've got this is a pretty new turn of events. So we're still early in this, this kind of wave. But I think we want to see some big successes happen. I think I'm still trying to figure out what was in the water in 2019. That kind of caused the shift in his interest back to the sector. I'm stuck in one way or the other for my whole career. I've you know, I'm passionate about it. I'm in it, whether it's cool or not at a particular time, but man, it really really turned around. I think one of the reasons for that was the explosive rise of Tesla in the public market and people saying Oh, wow, that was a really big success story. You know, in our republic, it was certainly a nice success story. But you know, it's now one of the most valuable companies on the planet. And people see the cars everywhere and they're absolutely you know, every now and then, automakers have their own Evie programs, and that's been a big shift. I think we need to start to see a couple of those. There are obviously some interesting and high-flying companies right now. But they're still private, they're still getting there. Some of them may have gotten ahead of their skis a little bit in, you know, fundraisers in 2021 and 2022. To see how that kind of shakes out a little bit. But that's going to be you know, seeing some big exits, I think will solidify this trend, and I think there's some pretty cool companies out there and we're gonna help us get there. So I'm pretty hopeful.

VC: So we could put a CNBC hat on here, what are the next three Teslas that we can look out for in the public market?

MJ: They're all in our portfolio of course, you might guess. No, I mean, I think, you know, I continue to be a huge believer in the folks that lilacs solutions are doing. They, for folks who aren't familiar with them, they're a technology and extract some of them much more efficiently from subsurface solid aquifers. I met them many many years ago. There was a first call. We did a first close on the fund Hey is raising anytime soon. There is a company that blips the supply chain for lithium. It is that there's all this lithium around the world that exists in concentrations that are too low to extract using traditional technology. They're typically extracted using these large evaporation ponds. Kind of pump this saltwater out of the ground, evaporate a ton of the water and these gigantic deserts and South America trying to get into concentrated enough to then be able to process which means if you have half the concentration in the brine, you need twice as large twice as many gigantic football field-sized evaporation ponds and a lot of places in the world where you have more coincidence of high medicine want to space to be able to do that. So that's why I continue to just be incredibly excited with the progress that they've made. Been able to watch them since a couple of employees, one I'm super, super excited about. I think we'll see success in the carbon accounting and offset market and watersheds of the world patch and the like. We're looking at some companies in that ecosystem right now. But I think we'll see something pretty cool happen there. I continue to be really excited about what COBOL is working on. But then I think the other piece is to have a little bit of humility that one of the companies is going to end up being really successful. It's probably not someone that people are talking about right now. So when I was at the Wesley group, and we were investors in Tesla, in 2009, Tesla was not a company that people said, oh, man, nice job. Congratulations on being in that. It was all about Fisker. It was hey, I can't believe you guys invested in this crazy Electric Vehicle Company. You know, a sports car for $120,000. Come on. Tesla was not a kind of poster child of success. Even as a fairly late-stage public company, a private company. It was the most shorted stock, I believe, in the history of the US stock market shortly after he went public. And so I think we're gonna see something emerge in a way that you know, it's really not on folks’ radar. So if you've interviewed 10 bases, it would not make anybody's top 10 and I think that's gonna be all surface kind of fun. I love those pics.

VC: So, Mike, I think we're kind of in our time here. But just the last couple of thoughts, sort of an interesting take on the market. I'm not saying about tech, but generally, like things that are being overhyped things that, you know, probably you want to guide you a little bit on the audience and founders on that maybe a myth to bust.

MJ: The big advantage companies have started a company right now is unlike in 2009, there weren't a lot of people you could talk to a lot of folks kind of emerging from the tech ecosystem and investing in climate, you know, a bunch of folks from the oil and gas sector coming in and starting companies. That's so different now. There are people who I kind of grew up in that ecosystem: Ben, Josh, peers of mine, Paul and Harsha wireframe, the T tube up guys, Andrew, Beebee, etc. We've all been doing this for a long time. That's really cool and exciting. Go talk to those folks. Talk to the folks that generated investing in venture and now on the project finance, those mentors throughout the ecosystem didn't used to exist. I think secondarily, there are all these folks now who learn how to learn from the success formula either at tech companies or climate companies, and we see Tesla alum spinning our companies constantly Sunrun along spinning out companies constantly. Go try to learn from the people who have been operating in this space for a long time. And if you're gonna build a hardware company, you know, learn project finance before you start a company. Learn how it works, or whether this makes sense. Don't discover that series. See that oh, boy, I need to make an incorrect decision that's not going to allow me to get there. But then I think the last point, which is kind of the fun piece for folks like myself and Andrew and, and Aiden, etc, is I'm sure we lean pretty heavily on our experience. And I think that's probably pretty pretty helpful to us. And there's gonna be some places where it leads us astray. There's gonna be some places where the world has changed. And we're gonna apply the lessons of the past and say, oh, yeah, we saw this before. It doesn't work, because you're gonna miss those things. And so a lot of what we try to figure out, in our experience, is experienced buyers out of the equation as much as how we empower our team to bring in interesting companies. How do we empower a kind of network of CEOs if somebody's interested in companies so that you know the biases that we have around what will work or not? I'm sure it's gonna be wrong a few times, and I'm sure there's gonna be some really big companies if you're asked me about, try that it's not gonna work. And so I'm just excited to see that kind of combination of new talent interest coming from young folks emerging from school, folks in tech, coming into the climate ecosystem, where those are interacting with a lot of experience. Create some pools, of course, marks and build some really amazing companies.

VC: Yeah, absolutely. Mike, I really appreciate the time you take to republish this. Everybody, please check out Earth Shot ventures. Many ranges in many sorts of levels of funding from the early stage to the beat. And looking forward to staying in touch. Mike, thank you for your time today.

MJ: Thank you. Appreciate it.