Chris Sacca – Hustling to Save the Planet at Lowercarbon (Capital Allocators, EP.321)

23:20So everything up to that point, there's a tremendous amount of entrepreneurial drive. You've got operating experience in a massively growing business across all the different divisions. You'd think that that would lead to you starting a company, running a business. How did you turn to investing? Within Google, I had the opportunity to start stuff. And so So I did. Google was a place where you could start products. And sometimes I would do that by acquiring a team and say, let's go. We acquired what became Google Maps, Google Earth, Google Talk, location-based stuff. The only thread I was on with Steve Jobs ever was where he was telling us exactly how big that blue circle needed to be to tell you where you were on Google Maps.

23:59That was amazing to see how he would choose those exact colors and stuff. And then ultimately, I founded a division with a couple other partners to push the envelope in the wireless space. We went from zero to within a year bidding$6 billion on Spectrum and attaching openness rules to wireless Spectrum. That's why the wireless networks are net neutral. It was because of this big hand of poker we played. We had an opportunity to spin that out and make a company. And there were three of us running the group and our third, our technical lead, didn't want to. He was at a different place in his career where I was ready to go.

24:33So within Google, we had this opportunity to create these businesses without a ton of oversight. I was good at leading deals, identifying teams of entrepreneurs internally and externally and helping them ship and helping them identify the resources they needed. We wrote an angel check from Google at a company called Meraki that ultimately got bought for a couple billion dollars. I think we seeded them$2 million pre or something like that. But I had this moment where this young gal, without any permission to try and get distribution for Google Talk, she flew up to Waterloo, Ontario and camped outside Jim Bell Silly's office, the co-CEO of Research in Motion, who made BlackBerry, and said, hey, I've got a deal for you.

25:13We'll give you some exclusive amount of time to launch Google Talk on your handsets, the OEM deck, and revenue neutral. We just want the distribution. You guys will have this cool new feature to advertise for your new upcoming BlackBerry 7700 or whatever. And they said, okay. She got legal to sign off on the deal, and she brought it home, and she presented the deal, and her expense report. And I was just like, oh my God, this is the stuff that we used to do in the early days that is like, we're a bigger company now. It's not happening. So I sent an attagirl message to the whole executive team, Eric, Larry, Sergey, Cheryl, everybody just saying, hey, I need to call this out to you.

25:50She just went, she didn't ask. She just disappeared from work for three days and got this deal done. And Eric, Larry, and Sergey were like, yes, that is exactly the embodiment of even though there's thousands of people here, that's the hustle. That's the initiative. And then somebody who I like him, so I won't call him out by name, chimed in and said, hey, wait, that's bullshit. My team was supposed to do that deal. That deal's not valid. We're going to tear it up. And I was like, wait, what? It was reviewed by legal. It's totally legit. And he's like, no, no, no. We didn't negotiate it. We're tearing it up.

26:18I'm calling up Jim right now to let him know that's not a valid deal. That was in 2007. And that was the day I knew that I had outgrown that company. And I didn't know what I wanted to do, but I'd been lurking around Y Combinator for a couple of years and watching how because of the way the software industry had evolved now, teams of two and three no longer needed millions of dollars of venture capital to start coding. It was all open source tools. We used to have to pay thousands of dollars a month that connected the internet for very slow stuff. And to start coding, you often had to buy an Oracle environment and a Sun environment.

26:48You had to manage your own rack of servers. The stuff was insane. Suddenly, these young entrepreneurs could cut out this entire layer of business people and lawyers and actually just write code and launch it and see if users cared about it. And that felt like my world. Not asking a lot of permission. I'm not particularly good at committees. I'm on record as saying I knew Sundar would be CEO of Google someday. He just runs a tight meeting. We would do a lot of meetings together. And he always had good ideas too. And I would have good ideas. And there are other people who had good ideas, but he knew how to run a meeting.

27:23Can you know how to put the deck together, build coalitions? I'm like, I break a lot of China. That's my style. I'm too blunt and too candid and not particularly diplomatic. That's what I loved is that in rooms with young entrepreneurs, there were no committees. It was just between them and their users. And I thrived on that. And I built a lot of kinship with Paul Graham and Jessica Livingston in those early days and started to see the rise of these startups, even outside of Y Combinator, that just didn't need that much money anymore. And I felt helpful to them. When I launched Lowercase, I had no prior experience managing anybody else's money.

27:59At Google, I personally did the photo bucket investment using credit card checks. I guess maybe I hadn't learned my whole leverage situation yet. Well, I knew I was sitting on a Google stock grant worth a million or$2 million, but I wasn't liquid yet. So I still had some appetite for risk. But that ended up working out. I wrote a check into Twitter while I was still at Google for 25K. And that was one of the things I needed that money back. So I would show up at the company and work my ass off to try and make it more valuable because that wasn't break off 25 to be polite situation. That was material.

28:30And I needed that money back. When you transition from those one-off seed deals to doing this professionally at lowercase, how do you think about your investment strategy? My quote unquote secret formula for investing these days is you need to know where all the best companies in the world are and done right, they need to want to come to you. You can't see them all. And so you build that brand and you need to help them understand why they should come to you. And the part that goes hand in hand with that, the second step is you need to find the ones that are already great and that you know you can personally make better.

29:06So I can't guarantee the success of any startup, but everything we invest in, I know is already great and I can make better. In the early days, when you come out of a big company, I think the biggest danger to investing is that if Eric Schmidt assigned me something to do, I can't be like, no, thanks. What else you got? Look, Eric might have just handed me the two seven. I got to play the handout. I got to do the best job I can do with this hand. As an investor, most of what you do is muck your cards. Most of what you do is say no. The first few deals I did with my own individual money, once I got out as an investor, were garbage because they would come pitch me and I'm like, oh, I know how I can make this better.

29:43Because that's what I was used to doing at Google was just making things better. But I had to later develop the filter of it has to already be awesome, and I can make it better. And then the third step is make sure we get enough ownership that it's worth our time. And some of the earlier deals I did when I didn't have enough bankroll myself, or I raised a tiny fund, I just didn't own enough of the company that it was worthwhile for me. And so as a result, I would sell something I worked my ass off, and I barely had money to throw the closing dinner. Those are some of the guiding principles we use to this day.

30:15How did you tackle that problem, making sure you're around the best companies? I made sure that I got in front of where those entrepreneurs are hanging out. So I would show up to Y Combinator and volunteer to be helpful and speak at their stuff. But I would go to universities. I'd go to the computer science schools. I just made sure I was in the room and adjacent to those people. We do a lot of work with Bryan Stevenson at the Equal Justice Initiative who says you can't help people if you're not adjacent to them. And I feel it applies to so many things. You can't find that deal flow if you're not in those realms.

30:48But the second part of that is I did build a brand around myself of why you would want to work with me. Here are the ways in which I can be helpful to your company. Because I don't think a founder should ever just take on investment. It's not a charitable act investing in a company. Every time a founder is considering taking money from a venture capitalist, there is the same process they should use when they're considering hiring an employee to whom they're going to give stock options. Every single time you're making the calculus, is the amount of the company that I'm retaining going to be worth more as a consequence of this fund or this partner or this new employee owning stock here?

31:26That should go through your head every time. Even for the junior employees, is the rest of the stock going to be worth more as a result of this person joining. If the answer isn't hell yes, it's a hell no, they shouldn't be joining. But it's the same for evaluating your investor. It's every single time you're asking, does the involvement of this investor make this company more valuable or not? How did you describe what it was that you were going to bring to the companies? A lot of that, I had to make an honest inventory of what am I good at? And by the way, sometimes your superpowers aren't obvious to you.

31:56I remember walking into one room where they had questions about ads. Oh, thank God the Google guy's here. He can do the ads part for us. Do I tell them that by the time I left Google, there were 15 ,000 more people who knew more about ads than I did? And then as the conversation evolved, I was like, oh, in this room right now, I do know the most about ads and I can be helpful enough. And so I started building a brand around myself as somebody who could get you off of zero. I couldn't get you all the way to one, but I could get you off of zero. And then specifically, I could help you tell your story.

32:25So we had a new generation of entrepreneurs who were very talented but sucked at telling stories because that storytelling layer had been eliminated. All the fancy hand-waving bankers and MBAs had been pushed out. So we had better product and worse storytelling. I was pretty good at that. I was somebody who could help you demystify the fundraising process or the acquisition process. I was good at product. I was good at making products simpler. And we all know the simpler the product and the clearer the calls to action, then the more conversion you're going to have. And if you've been coding on something for a while, it's very easy to get lost in the weeds of why there's all these buttons on your front page.

33:02Coming out of Google, we were obsessive about making sure we didn't have a lot of buttons, a lot of distractions, a lot of blinky stuff. So I was pretty good at helping people slim down their products and make sure we knew exactly why they would do this. I was good at helping companies tell users why they should tell other users to install that thing because we didn't have marketing budgets. So the only way you're going to get installs is if a user said, hey, hey, buddy, you should download this. It's amazing. But I also knew that I wasn't particularly great at sourcing new candidates. I'm insanely good at landing a candidate who's on the fence about whether I should join or not.

33:37But I'm not particularly great at identifying, okay, you need a CFO. Who should be a CFO? I remember being in a board meeting with Bill Gurley when I'm sitting like, who could do that? And Bill just calmly opens up a dossier with six public company CFOs, all vetted, all who he'd talked to, who all wanted the job. Okay, that's one of the things Bill Gurley does. And that's why his success is no accident and why he's a perfect complement to what I do and why he's a friend and a mentor to this day. Whereas Bill Gurley is not going to help you with your funnel. He's going to build your partnerships and your pricing strategy, your marketplace stuff, but he is not going to move your logo around the front page.

34:12I think that was an opportunity for me to realize that I can move the needle for these companies. And as a result, I'm playing a rigged game. When you looked at the companies you were screening through, what was your mix of focusing on the idea itself and the founder? I don't have a clean answer to that because I think that question has been through the meat grinder a few times and people have pat answers to it, et cetera. And by the way, I think the biggest risk in this business is starting to believe your own bullshit a little much and doing things that confirm your own bias. I try to be obsessive about looking at everything with the freshest eyes possible.

34:51And that's why you'll see across our lowercase portfolio, there wasn't a single thematic approach to the company, to the product. It was each time, and I think we benefited from that, was Uber and Twilio and Twitter all have nothing in common. And Stripe and Optimizely and Docker, and maybe with Instagram and Twitter, there was some overlap In retrospect, by the time, one didn't do photos and one was photos only. But most of them were brand new, fresh approaches. And I think that was the key, was that when Jeff Lawson sits down pre-seed at Twilio, I am looking at this with the freshest eyes possible.

35:27I had some exposure to the publicly switched telephone network and trying to code for it back building Google Talk and some of our chat products. But I was looking at it with completely fresh eyes. With Uber, everybody else was just, it's an impossible business. Even some of the most prolific spray and pray investors in Silicon Valley passed on it. And yet we were looking at it with fresh eyes and being able to do analysis without any baggage there. And shared economy wasn't a term. We didn't come at it as, hey, it was just, wow, you might be able to do this asset light. I really try to avoid any formulaic approach to these things because I think formulas can be a crutch that skips fresh thinking.

36:05Crystal, my wife and I, we're business partners and we have an informal fund of funds. We're LPs in more than 100 things. But one of the things we are always worried about is when a GP comes to us and says, here's my investing formula. I won't invest unless I own X percent of a deal. And I get a board seat. And at this exact stage and within these valuation parameters, my advice always is, hey, those are good things to have in the back of your mind. But sometimes you get to a company late and that first check is going to be small. But you use that to build a relationship where they might open up the old round and let you in.

36:39Sometimes you're not going to get the board seat, but it's because I've been on companies where I'm like, look, I have the closest relationship with the founder, but I want Rob Hayes from First Round Capital to have the board seat because he's just better at it than I am. And I'll be in the boardroom, but when Rob talks, I'm going to shut up. And so I hate those artificial constructs. So when you have that wide of a fresh look at any situation, how do you decide the things that excite you to invest in? Definitely it has to be team. There's no doubt about it. You're backing founders. You're getting involved with them for a very long time.

37:11Back when I was on Shark Tank, I used to joke about when we make a commitment to a deal on Shark Tank, that's a 10 to 12 year relationship. If you go on The Bachelor, everyone expects you're going to be divorced in 60 days. Marriage on TV seems like a bigger commitment, but it's not. If you commit to a startup, you are going deep with them for a long, long time. Some of it is the no asshole rule. My wife and I used to have one of the factors we would look at is we would invite our entrepreneurs to come stay with us at our house up in Truckee. And we would ski and hike and stay up all night. And we had whiteboards everywhere.

37:47But one of the things we watched for was when we made dinner, would they help prep the food? And would they do the dishes? Would they lift a finger? And there are entrepreneurs who wouldn't lift a finger and they're dead to us. That was it. We just wouldn't do business. If they couldn't empathize with the host, How can I be helpful? Then it just shows somebody who is not equipped to build a startup because a startup is constantly about empathizing with your customer and your user and then showing how can I make it easier for them? How can I be helpful? How can I help my employees? So we would do some of that around the team, but because you're choosing people you want to spend in an order amount of time with, people have written a lot about that with spouses.

38:22I'm lucky. I've known Crystal since we were 18 years old. She friendzoned me for 14 years, finally agreed to date me. And now we're best friends. We have three incredible kids. We're partners in all our business. We spend an insane amount of time together and we bring out the very best in each other. But people write about, hey, when you choose a spouse, how many thousands of hours, how many thousands of meals you're going to spend with that person. It's obviously not as deep a commitment with a founder, but you're going to spend hundreds and hundreds of hours. You're going to be with them for life changes.

38:53Founders who were with them for their marriage, their kids, their divorces, their family members getting sick, and all that comes with that, The breakups within their own teams, their first taste of wealth, the ups and downs of that journey. So a lot of it is about trying to get a sense of that team. It's one of the reasons why, ultimately, as Y Combinator grew to be hundreds of companies, I found it really hard because you had to invest just on a couple of slides. We don't have enough information to know if we're going to invest on those couple of slides. And I don't fault the companies for trying to maximize that, but we try and optimize it by really getting to know those founders.

39:29I'm often asked, what is it that your best entrepreneurs have in common? And this is actually something we try and think about. So if it were just one unicorn, it'd be one thing, but we've had like 15 of them or something now. So let's do some regression analysis. What do they all have in common? When you spoke with them, even as the company was in its earliest days, they spoke with the voice of the inevitability of the growth and success of the company. And they weren't selling you. It wasn't that their heart rate rose and they were trying to convince you of this thing. They just believed it.

40:01I remember sitting with Kevin Systrom. We were in the dark, actually, because it was at a co-working space. And he shows me what he's working on. And I threw out some feature idea or something. And he's like, well, that'll be good to launch when we have 5 million users. And I look around the room, you and what army? 5 million users? Where the hell are you going to find 5 million users? But he wasn't trying to convince me. At that point, I don't even think he was trying to convince me to invest. He just knew that it was going to be that big. I know Travis Kalanick and I have had our ups and downs, but there's still a lot of entrepreneurship lessons to learn from him.

40:35And I remember in the early days when Uber was coming together in our kitchen, I remember Travis talking about the markets he was going to go to. And he's like, and so when we take down Paris, Travis, why would you ever go to Paris? They hate us there. Those cab drivers are unionized, but Travis just knew it was going to work. What kind of maniac goes to China when you're up against a government-supported company that has 100 % share as the outsider? You have to think very differently. And it was the same thing working with Evan Williams at Twitter. Evan just be exasperated by talking to people who couldn't see what was going to happen at Twitter.

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42:05Learn more at srsaquium.com. That's S-R-S-A-C-Q-U-I-O-M dot com. And now, back to the show. How do you reconcile the desire to get to know the founders with the speed required to make decisions on companies in a competitive world for what you're doing? We do move faster than most, particularly because we don't have a massive investment committee, and we don't have any fixed parameters. So we look at every deal with fresh eyes. And our team is fast. We do a big Moik analysis, and we spread out, and we do all kinds of reference calls, et cetera. But right up front, we will go to where those people are and spend that time.

42:46Look, I've loved, I've always been distributed. Our workplace has always been distributed, but there is no doubt sharing space with people and breaking bread reveals a lot about who they are, what drives them. And you can't really back somebody until you know their ambition and what's on their personal scorecard. What are they trying to do with this thing? Is it entirely mission-driven? Is it just they're looking for a million-dollar exit and a base hit? Are they doing it out of anxiety? Are they doing it because other people told them they should do it? When I retired lowercase, it was probably the most bankable I was.

43:16We walked away, Crystal and I retired it in 2016, to just say, this doesn't feel as compelling anymore for us personally. We don't love the impact we're having. This doesn't feel like a great trade-off for when we tell our kids why we can't hang out that day. It doesn't feel amazing. I had this moment on Shark Tank where I was looking at a kitchen gadget. Shit, this kitchen gadget is going to make money. I love these founders. I know I could make it better. But is this really why I want to tell my kids I can't hang out right now? Is it because I'm making a better gadget for your kitchen? And we need better gadgets for our kitchen.

43:48And so everyone should make them. But for me personally, I'd gotten to a point where I was trying to transition from success to impact. And so we walked away and nobody believed us. We were the most bankable ever, but we walked away. So lowercase was by necessity. Lower carbon, what we run now, was by choice. So I think that was the big difference for us is now we certainly look at companies for the product and for the decarbonization effect they're going to have. And for the MOIC, this is not concessionary capital. Crystal and I are the biggest investors in our fund. We are in this to make a lot of money.

44:18We're spending, I don't know, 70 hours a week on this right now. It's an obsession. But at the same time, we are the two most competitive people you know and with each other. Clay, our business partner, worked out of our house for a while. And he would watch us. We are two type A personalities competing with each other while also building this business. And so we're not here to just put up meager returns. We are wildly competitive and aggressive about this. Before we dive into lower carbon, what did you do in the years in between your retirement and starting lower carbon? Yeah, we did a lot. So it turns out Crystal and I suck at retirement.

44:53We're just not those kind of people. We live mobily. So we're on the road. Our kids have, for the last three years, going to online school, like a one-on-one Zoom school. So we've tried to raise them in Europe, different parts of the United States, Mexico. We move around. We do a lot of nonprofit and philanthropy work. And by the way, you can't just walk away from a portfolio of 100 companies. Turns out, like I said, you've made a commitment to them. So all we did was retire from taking on new money, but we still had a lot of work to do. But along the way, we just had this thesis that the cost of building stuff had come down so far as a result of machine learning, shared bioreactors, massive compute clusters, that we just saw all this stuff coming down to where the same stuff that unlocked Y Combinator and that era of software was happening in building hardware and climate, just stuff around ag, transportation, energy, built environment, all that stuff was benefiting.

45:50So as a family office, we started quietly dabbling in it and making these investments. But the investments came with, hey, we're showing up to learn about it. We read everything we could read. And then we have a rule, call the author. So we read a book. And if it was compelling, we get in touch with the author. By the way, it turns out authors like calls because it's validating the work, particularly if you're like, hey, I want to take your work and maybe apply it somehow. If we saw a lab that was doing something interesting, we visited the lab. And Chris and I may have donated to the lab too, to just roll up our sleeves and learn this stuff.

46:18And the same with the nonprofits in this space, the same with regulators. We just tried to get out there and learn as much as we could. And the result was, because we were coming at it without any real bias, without the scar tissue of the past few years, we started writing modest checks into the space. And the thesis was proving out. It was just cheaper and easier to start a business in this space. And the result was that companies were blowing through their milestones faster because they had these new advanced computing tools to help them get there. And they were getting to first revenue way faster.

46:52So they're getting to non-dilutive financing. They're getting to project finance two years from the start of their company. How long does it take a Silicon Valley web company to raise a debt round? That's 10, 15 years before that actually comes into play. So as an equity investor, you know, you're just going to get diluted, diluted, diluted, and hopefully they go public by series G. So we had companies that on a series A extension were then talking with a project financier to build their next four plants because the model was already there. We have a company that in the year, maybe three of the company was doing$120 million run rate selling a commodity.

47:25But because they make it with enzymes instead of oil and gas, they have 60 % margins. And their customer for that thing is the oil and gas industry who only ask, hey, is it the same chemical? And is it cheaper? Well, then, all right, I'll buy it. So we just saw that the cost of these things were coming down. And the demand curve was, we knew the demand curve, because even if you take out the compulsion that so many companies and governments feel right now to decarbonize, we saw that it was just cheaper. Digging up and burning old dinosaur bones is inherently expensive. And using the sun is just cheaper.

48:02So anytime we remove carbon from a process, it just gets cheaper. Carbon has an inherent value. It's necessary for a lot of the stuff we do, and it has a monetary value. And so any way we could take it out of building a product or running a service, we just had the opportunity to make a bunch of money. How'd you map out the landscape of the types of opportunities you wanted to look at in the space? Well, it's pretty easy. There's just the sources of carbon emissions. So you can just look across them. Energy is obvious. Transportation is obvious. But agriculture, our current agricultural practices are kind of a disaster.

48:34the built environment, building buildings and running buildings, residential and heating and cooling, industrial chemicals. We can look at all these sources of emissions. Obviously, built environment includes concrete and steel, which are just massive emitters. The sheer process of building Portland cement releases a bunch of carbon. It's a chemical reaction, not just the energy you need to run the plant. So that was obvious where the sources of carbon were. And if the core thesis is that those are expensive and decarbonized options are cheaper, then you've got your list of opportunities set out for you.

49:05One of the things back to hearkening earlier is we did not have a formula for we need to do 20%, 20%, 20 % across these areas. We looked at each deal with fresh eyes and just said, is this particular approach one that makes sense? We only looked at deals that would have a material enough impact on carbon to make sure it was worth our time. So we're not doing paper straw bullshit. But at the same time, we didn't have a hard and fast. It has to have a gigaton scale impact. But it turned out the potential carbon offset and decarbonization there correlates really well with money because carbon is expensive.

49:36Those two things went hand in hand. The size of the opportunity also correlated with the amount of carbon it was taken out of the air. Our portfolio ends up being pretty balanced. We have stuff across all of those sectors without actually dictating those things. Now, there are areas we have since de-emphasized. We don't really invest in carbon accounting software or anything anymore. And we realized, A, we're not that great at it. there are a lot of other people out there in the world who are better at SaaS than we are. And B, a lot of VCs came out of being locked up in their house for two years.

50:04All right, I want to have some impact on the world now too. That was the easiest on-ramp for them was to start doing the software side of climate. We need that software there. It just wasn't a great investment for us anymore. Whereas we've changed our other calculus, we originally had one investment in nuclear fusion. Fusion seemed a ways off. And the common parlance is that it was every 10 years, it was another 10 years off. But what we saw by virtue of being involved in the fusion industry is that AI and machine learning had so greatly accelerated progress in fusion that it was geometric now, it's a vertical curve.

50:39Because experiments used to take one to two years to run one experiment in a fusion reactor. Now they could run in high fidelity in the computer thousands of experiments per week and then hone in on the ones worth trying in real life. There's a graph that we just shared with our team internally. It basically shows all the attempts of one of our fusion companies over the last few years, and it's incrementally getting better. And in the last 14 days, it went vertical and they had to change the scale of the graph. Without preempting anyone's announcements, that's what's going on in the fusion environment.

51:12And so we saw this happening. We raised a fusion-specific fund. Some people mocked us for it. We called it Q is greater than one. That's the scientific symbol for when net energy is created by a fusion reaction. More comes out than goes in. People teased us for it. Three months later, Q is greater than one was announced as being achieved. And I won't pretend I didn't smile a little bit. Where are you finding where the founders are coming from? Back to my formulas, you have to tell your story so they know to come to you first. And by the way, I wouldn't let the team raise outside money until I was convinced we had the best deal flow in the space.

51:45That was important because I don't think you can succeed if you're not seeing the deals. And the way we would test that in the beginning is we would take a deal we saw, and we would bring it to other big names in the space, and we would watch the reaction. And if somebody like Breakthrough Energy Ventures said, oh, this is cool. Where'd you find it? Okay. They've been at this for a long time. They've got an impeccable brand. They're great collaborators of ours. We have a great relationship with those guys. But if they hadn't seen it, oh, that means we were building some brand for ourselves now.

52:11And I tell our team, we're going to say no to a bunch of stuff and laugh about it later. I told the Dropbox guys that Google was going to crush them because we We already had G-Drive internally. I told the Airbnb guys that somebody was going to get raped or murdered and the blood was going to be on their hands when they were renting out a room in somebody's house. I have a long history of these things where I was embarrassed by them for a while. Now I wear them like a badge of pride to just show how wrong we can be. I want us to have the opportunity to be wrong. But if we miss that opportunity, I don't think you can succeed in this business.

52:38So we track our deal flow and make sure that we're seeing stuff. Now, that means telling people out loud, why should I come to you? That means having your other founders vouch for you. The biggest source of our deal flow is our existing founders. They're the most credible and they can speak with the most detail about how we helped them make their company more valuable. They're the net promoters I care about most. But it means going to the labs and to the schools where people are building this stuff. And sometimes it's as simple as one of our team will go there and talk, particularly our technical team who they can vibe out with somebody like that.

53:11And then it's hosting drinks and pizza afterwards and building those communities so they can find each other. But the more we do that, the more it just compounds and the flywheel of opportunities and high quality opportunities we get come to us. And then I want us to have the luxury of choose the very best of those and make them better. How do you and your team get involved in the companies in this space once you've invested? Well, not everybody needs the same things. Some of those teams come from founders who are insane at supply chains already. Maybe they came out of Tesla and they just know how to ship and build and that's what they do.

53:45But they're not as great at user interfaces. Or we have a team that is basically a bunch of ex-Apple guys who are insane at building a consumer device. It's called Mill. It's a trash can that basically composts all your trash in your house. If I were to get rid of our Mill, my kids would kick me out of the house. I've never seen a more addictive product in my life. All your food scraps go into it. It eats them all. You no longer have any smell in your house or taking the trash out. Three weeks worth of food, and we cook it at home every day, turns into basically a cubic foot of food waste, maybe two cubic feet.

54:21It smells like Thanksgiving, we all say, when you open the thing up. It's just amazing. It dehydrates and composts it quickly. And then it turns into chicken feed. You mail it back into the company, it's chicken feed. Massive impact on carbon. Methane doesn't get released. It's massive. Those guys aren't guys I'm going to counsel on how to build something beautiful. They were the former Nest team, right? I have no feedback for them on how to make something beautiful and easy to use. It's stunning. We were instrumental in the conversations on how do you charge for it and who are your partners for it?

54:50Those are conversations we felt particularly useful to them. Whereas for other folks, we have a company called Minus Coffee. So it's coffee without coffee. It is so absolutely delicious. It beats everything but Blue Bottle now in taste tests. Stumptown, Pete's, it knocks them all out. All the hipster coffee. Blue Bottle is the only one at Cancer Mount. but it's made using no coffee. Coffee is a disaster for the environment. And the flip side is coffee is a victim of the environment. As climate changes, coffee crops are getting wiped out. This stuff is the most delicious stuff you'll drink, but they didn't have a brand for it.

55:21It was called Compound or something. So Crystal, who has a long history and she was an award-winning art director and creative and brander, worked with them and called it Minus. It's Minus Coffee, Coffee Minus Coffee. It was a genius name. And we weren't going to tell them how to make the coffee more delicious. But we put a brand on it and now sales are blowing through the roof and people are buying it for their companies because employees love it and they demand a lower carbon footprint for the company and stuff. So it's company by company. Sometimes it's just coaching that entrepreneur. Maybe they doubt themselves.

55:48Maybe they're not good at telling their own story. I think female entrepreneurs right now have a higher bar because of cultural norms and discrimination against women. And a lot of it is just empowering female entrepreneurs. We've got you. We've got your back and we will be out there to advocate for you. And don't doubt yourself as culture has sometimes taught you to doubt yourself. You're a badass. And part of that is our team has more women than men on it. It is incredibly diverse and powerful team. Because we never thought we'd have a big team, we're 23 people now. We didn't have a DEI hiring plan in place.

56:19I wish I could take credit for our team. We really did set out to hire the best people. And most of them are women. And it's just badass. I'll say one thing selfishly. Our meetings are the most pleasant meetings in the world. They're the least alpha and most chill. We have robust debates where everyone actually pauses and listens to each other and we get more shit done. And we've never had a shouting match and we've never had any drama in our company to date. And we have billions of dollars under management and we're going to make billions, billions more while actually enjoying our meetings. I've never experienced anything like it.

56:51There is no doubt it is a result of diverse voices in the room. How do you think about working with the team to work with the companies when so much of the brand gets tied into you and Crystal? It was Larry and Sergey who taught me, I want to expose you to the entire decision-making process so that you can channel me the next one of these that comes up. Because Larry and Sergey were just, as the company scales, we can't make all the decisions. So we need to teach people how we think about things. They were wildly transparent. And their executive meetings, they had a note taker who would take the notes and then you could subscribe to the notes from that meeting.

57:25They would be published after the end of the meeting. And you could see almost like a script, the deliberative process. Larry, Sergey, Eric, Cheryl, Shona, whoever was actually part of that decision, going back and forth and figuring it out. So when we saw that come up in our division, I don't have to run it up the flagpole. Until further notice, I know the values and the rubric for the company to make this decision. I've tried to do the same thing out of the same selfish interest. As we get bigger, I can't make every decision. The one all hands meeting we have is everyone in the company is invited to our investment committee.

57:58The lead on the deal or the co-leads on the deal present the deal, but everyone in the company has access to everything we've done, all the diligence, the deal memo, all the Moik analysis, everything we're doing on that. And then we debate it openly and everyone, the 22-year-old has a say in it. So everyone in the company gets to weigh in. And we intentionally play devil's advocate to our own deals. And we ask people, would you put your mom and dad's retirement into this company? That's a very revealing one. Are you so convicted on this, you would let your mom and dad who worked their asses off middle-class people, would you let them put their pension into this deal?

58:31Because by the way, that's who our constituencies are. We have pension funds and universities and foundations who are our LPs. We have to take that into account every time. Maybe you don't know those teachers in that particular state, but would you let your mom and dad who are teachers or cops or fire people invest in this deal. Some of those first principles, formative questions like that. But in the end, we make the decision in front of everybody so that they know how to channel that. So now even the most junior people who are doing initial diligence know the questions that matter and the questions that don't.

58:59And so they know how to channel that. I also have this rule. If you get invited on a podcast, accept it. Go on the pod. And as long as you say something that is true and authentic to yourself and accurately represents the values of our company, then you will not get in trouble for saying what you need to say. You may be wrong. I'm consistently wrong on some of that stuff. And we were going to be wrong at least 25 % of the time in terms of portfolio theory. But I want you to go out there and get those reps in and build that brand for yourself. Done right. If those companies come directly to my colleagues and skip me, I win because I would prefer not to spend 70 hours a week doing this.

59:38Whenever we talk about the sources of deals. Whenever I hear that a deal came to one of my colleagues because they met them somewhere or they saw them or they read something written by them, I win. I am in the business of trying to elevate everybody else here. The more I can do to build their reputations, their skillset, their judgment, and deliver my experience so they can benefit from that, the stronger we are as a team. I'm in this business to elevate everyone around me because it makes my life better. As you look out over the next five or 10 years, you're already back in this working 70 plus hours a week.

1:00:13What are you hoping to accomplish? Well, I actually think what we're doing right now, we have a carbon removal fund. So it's a fund that funds companies. Again, that's one where we shifted strategy after we saw a bunch of money actually piling up on the demand side for real carbon removal, not offsets, actual removal, pull it out of the air and back to the ground. We can't save the planet without actually pulling all this pollution back out of the air. We can stop emitting, but there's a bunch we got to get back out. We saw billions of dollars of demand piling up and we launched a separate fund to go after it to build the supply side.

1:00:46We call that one 7.81 because we believe with that fund, we'll be able to pull 7.81 gigatons of carbon out of the atmosphere. And when we do so, we will reduce the parts per million in the atmosphere by one. So we name all our funds after various atmospheric elements that create global warming. Our first fund was 411. That was the parts per million of the year we started investing out of that fund in 2018. Our second fund was 419 a few years later. Our latest fund that we just wrapped up was 421. We've got funds named for nitrous oxide and methane, but it's a constant reminder. And every piece of swag we ever make, we timestamp with the parts per million on the day it was made.

1:01:28It's a reminder that this is a J-curve business. It's going to get worse before it gets better. But we think that with what we're doing, we can actually reduce the parts per million in the atmosphere materially. And if I can look at this bunch of people we have and say with 23 people, we actually took it down by a notch. And in doing so saved tens of millions of lives and countless millions of acres of habitat and livelihood and headed off wars and mass migration and disruption to economies and stabilized supply chains and protected national security. I think we've all seen that energy is increasingly a national security issue.

1:02:06If I can look back and do that, I'll feel pretty good. I still eat beef. I drive an F-150. I fly around in a plane that most people in this industry would not approve of. I am in the business of trying to give myself and everybody else better options that aren't driven. And guilt and shame are only going to get us so far. So as an unapologetic capitalist, I love when I get in the room with somebody like the CEO of Unilever and you've made a bunch of commitments. I'm the guy who can help you meet them while also making your business more profitable. And he gets excited by that. Those are my people.

1:02:38That's what I'm excited about. We have an electric airplane company in Sweden that even Bill Gates said was going to be impossible. It's a 35 seat plane that's got billions of dollars of cash on the barrel orders. And the majors have invested in the company because it's just cheaper to operate. The more I can deliver that stuff, I think I can truly, I can be a lever that truly transforms the planet. And the more people I can invite to do this stuff with me, you had an interview recently with Sam Byrne of Cross Harbor Capital. So Sam's a close friend. I'm a co-investor and a ton of stuff with him.

1:03:08He's a mentor of mine. I really admire him. Sam is an unapologetic developer of real estate, but Sam is a huge champion of the work we do. He's not only supported what we do, but he has turned his properties into playgrounds for experimenting with a lot of what we do. Sam recently bought an 18 ,000 acre ranch. And that has been an absolutely amazing place for us to experiment with some of the climate stuff we're doing. Just skip right past it. And Sam's like, let's go. And when somebody like that, who is an absolute business person, but knows the plight of the planet right now says, hey, let's go, let's try this stuff.

1:03:42I think this can actually be a competitive advantage for our businesses. I think it can bring down OPEX. I think it can appeal to a whole new audience who wants to buy and endorse a lifestyle like this without displacing a bunch of Montana ranch workers. That's amazing. That is what gets me fired up. I live in Montana and Wyoming. And when I see windmills go up on houses that also have a Trump flag in the yard still, okay, that is going up out of self-interest. And that makes me happy. I am very apolitical about this stuff. I'm going to meet people where they are and hopefully appeal to the thing that honors their way of life and gives them more agency and more control over their own destiny.

1:04:19Because I actually think that's what this unlocks. Bless the activists and everybody else who cares about it. But I actually think the market is the most powerful solution to the stuff we're doing. And I think for the very first time in my life, I can have a massive impact on the planet while also making a ton of money. Those things are usually mutually exclusive. You rationalize it to yourself, but right now, they completely overlap. That's the most thrilling part of this for me. Well, Chris, I want to ask you a couple of closing questions before I let you go. What's your favorite hobby or activity outside of work and family?

1:04:51I'm an obsessive skier. I live in the mountains. And so I decided in my mid-40s to learn how to ski race. When I grew up, I didn't have enough money to join the ski racing team. I was one of those guys grinding out mogul skiing in jeans, eking every minute out of that pass we bought that day. Skiing is that. Pickleball, I would say. Our daughter is a competitive pickleball player. When she was 10, she won her first money tournament at the semi-pro level. And now she's a badass. She's 11 now. And it's just a beast. Her favorite hobby, she would say, was beating professional athletes in pickleball.

1:05:25So football players, basketball players, baseball players, she's merciless. But as a family, we play a lot. There's no other game in the world where you and your little kids can play competitively and have a blast against each other. and really be trying hard, everyone around the table. I think that's what we love. What'd you dream about doing when you were a kid? When I was 41, my wife and I were cleaning out our garage in Truckee and we found an old journal. And it was from a year I was studying abroad in Europe. I was in Ireland. It was junior year abroad. And it was actually funny. It was a notebook that I was not paying attention in a class.

1:06:01There was a girl I wanted to know. We would write five questions in the notebook and pass them back while we're supposed to be paying attention to modern Irish history or whatever. And write the answers, write five more questions, pass it back and forth. And in there, I wrote, what do you want to be when you grow up? And I said, I don't actually know what the job is called. I know it's going to involve a lot of high stakes, high reward. I'll probably do it from a bare bones warehouse. And it'll just be up to me to make the deals happen. It'll all be on me and storytelling and convincing people to do these things.

1:06:32Because again, I never thought about myself having a team or network of resources. And I said, I'll do it part-time from the mountains, part-time from the ocean. Whatever it is, I'll be the best there's been at it. And at 40, I'll quit and figure out what I want to do with the next chapter. Talk about a vision board. You're standing in this garage looking at this like, holy shit. And by the way, it's going to sound ridiculous. But if you haven't listened to Matthew McConaughey's Greenlights, his autobiography, highly recommend it. Can't read it. You got to listen to it. It's his voice. But he had a similar thing that blew my mind when I listened to it.

1:07:09But I never knew that about him. That was absolutely amazing. But ultimately, retiring at lowercase was the first chance I had to really ask myself, what do I want to be rather than what everyone else is telling me I need to be or what I need to do to make some money and pay back student loans, etc. This is the first time I really feel like I'm doing what I can do by choice. I admire people who make that decision earlier in life and who get to the point where they can do what they do out of choice. But this is it. I feel like I'm doing my best thing. What's your biggest investment, pet peeve? Confirmation bias, for sure.

1:07:43I hate when our team tells us, hey, we're doing this deal because somebody else is doing this deal. Piggybacking off anyone else, anything that gets in the way of fresh analysis. As a VC, you don't actually do that many deals in your career. I'm a seed stage, early stage guy. So that's a couple hundred deals, maybe something in that realm, and maybe add 50 from time at Google. But that's a few hundred data points in a realm where there's hundreds of thousands of data points. It's way too easy for people to try and extrapolate from very little data. And yet they fall back on it as a crutch. I hope nobody takes this the wrong way, but I don't hang out with other VCs.

1:08:25I feel like they cloud my thinking. And when I do, I get a little bit imposter syndrome. I don't look like you. I don't dress like you. People ask me some very arcane data about our portfolio. I don't manage for IRR. I manage for multiples. So we don't run a line of credit, for instance. That would be a much better way to eke out another point of IRR. But that's not how I want to run the business. I want to return big piles of money. I stay away from the financial engineering part of it. And I focus on the company building part of it. So when I meet other entrepreneurs or other investors who are a little too cute with the financial engineering part, it drives me a little bonkers.

1:08:59I'm in the home run grand slam business. And so that's what I'm managing for. I also hate when things are too small. This might be perfectly big or perfectly cool and a great idea, but it's too small. Is it worth our time? We've got very limited time left on this planet for ourselves. I don't even just mean climate. I mean, I'm 48. hey, actuarially, I'm not going to be around that much longer. I have no time for small projects. That's another big pet peeve of mine. It's so easy to get caught up in the moosha. Your inbox is everybody else's minutia, but it's not your to-do list. Our team has to submit by Sunday night at five their to-do list for the upcoming week.

1:09:41And they answer a few other questions. What big picture questions are they wrestling with? What's going on outside of work? What have you learned? Is anything blocked on you or blocked on somebody else? I encourage the entire team to write out their to-do list for the week ahead before their Monday morning inbox gets polluted with everybody else's to-do list. What's one investment mistake you made that you would never make again? So the one mistake that I think has cost me billions of dollars is focusing on the negative case for an investment and not the positive likelihood. It's way too easy, like I said, to tell the Airbnb guys, I can imagine how people are going to get hurt.

1:10:17And it's true. People get hurt by Airbnbs, but not compared to the tens of millions of people who use it and all of the insanely positive culture that comes out of it. All these incredible hosts and how they bend over backwards for people and they meet friends and people they marry and all that. It's way too easy to get stuck on the tunnel vision. The other thing is something that Tim Tim Urban in his latest book, particularly in the era of AI and machine learning, is that it's very hard for humans to comprehend geometric acceleration when a curve goes from horizontal to vertical. I mentioned it as we talked about fusion, and Tim does a great job of illustrating this in his book.

1:10:55But the human instinct when you're looking at the rate of progress is to turn around and look backwards and see the prior rate of progress. So when you're standing on a vertical curve, it's hard to see ahead and realize how vertical it's going to be. GPT-5 will be trained this year and it'll be six to eight times better than four, maybe, maybe more. I think in our business, we run into naysayers all the time who say this space has been slow. I understand why that's your instinct, but you have to see how fast it's moving now. And even me, I'm constantly having to remind myself, traditionally, you raise a seed round and then 18 months later, you go back for the yay.

1:11:33Oftentimes, the ambitious milestones we set for our companies are being blown through in seven months. And so the Series A is happening in the same year. And not because there's an abundance of capital. Even right now, there's a dearth of capital in the space as everyone's clutching their pearls and trying to figure out what's happening. It's because that company is worth many times more in seven months because of what they've achieved. It's mind-blowing. That's something that I think we all have to adjust to is what geometric curves look like. When I see people saying that ultimately AI might replace jobs 15 to 20 years from now, I laugh out loud because already I am using GPT-4 to do a financial model.

1:12:11I just typed it into GPT-4. It wasn't confidential lower carbon data and I didn't put any identifying. I was just, if these are the numbers, how do you think about valuing this business? What revenue multiples are we using these days? After the markets reset, I found those out there via perplexity AI. I threw all this stuff together. I don't know why I'd hire a financial analyst again. It's a job I value. But at the same time, this thing in moments spit back compound annual growth rate analysis. Here's how to value it on EBITDA, revenue blended. Here's how to think about these multiples. Here's the sensitivities.

1:12:46I started tweaking with a few of the variables and spitting out this entire analysis. I sent it to someone on my team who works on finance and they said, did we hire somebody? They were a little threatened. But I think that is the overall is that we have underestimated the rate of progress now. And it's scary, but humans aren't built for it. I worry about that. In every single business we look at, I ask about how will AI accelerate this or how will AI obviate this business? How will it destroy this business? Which two people have had the biggest impact on your professional life? Obviously, I think my mom and dad setting us up to have these diverse career experiences as kids.

1:13:25So we would work construction. And then I would go intern with a lobbyist in DC at age 12 and write position papers for them. I would go with my dad to court at night because we didn't have a babysitter sometimes. So getting exposed to that and literally sitting with him at the table and going to my mom's classes that she was teaching, I would do the work alongside the college students. Crystal, my wife and business partner, who is my friend, and she designed the logo for Salinger Group many years before we ever started dating, I think has not just a higher EQ than me, but is also a better negotiator.

1:13:59Her parents are diplomats. She grew up all over the world negotiating in the bazaars in India. She's very easy to underestimate because she has a very infectious smile, but she's a ruthless negotiator and also can channel, I think, users of businesses sometimes better than I can. There's no way we could have built this business, any of these businesses without her. And then I just look at Eric, Larry and Sergey as one combined unit, the formative years of my life that had more impact on me than the university I went to school at. I had incredible professors who taught me to learn with a capital L instead of train with a T, really dive into those works and study abroad and meet people who aren't like you and volunteer and be among those people who help you build a worldview that makes you lethally effective in anything you do, from friendships and relationships through business.

1:14:45But I think growing up with Eric, Larry, and Sergey, I was in my 30s, but I consider growing up there. I learned so much about product, ambition, communication, empowering those around you, building an org, management, the autonomy for the org. There are countless people. We're working right now on an acknowledgments page where everyone on our team will be able to add names for anyone who's helped them along the way. The draft is already thousands of names long. I am in a period of reflecting on that. And so it's hard to say just a couple. I think the one thing I would say is that something I struggled with for a long time is that I could see these single points of failure in my background where, shit, if this guy didn't introduce me to this other gal, none of this would have happened.

1:15:26And it can be really humbling and it can lead to a lot of imposter syndrome sometimes because, wow, what were the odds of me running into that person and making an impression? Man, if they hadn't signed up and supported us, there's no way we'd be able to move forward. And that can be a little crippling sometimes. And over the years, I had to believe, okay, yes, if Jerry Murdoch had introduced me to Richard Branson, who introduced me to Suhail Rizvi, who introduced me to whoever, this wouldn't have happened. On the other hand, I have to believe in myself that there was a reason that Jerry Murdoch thought I was particularly interesting and wanted to introduce me to Richard Branson.

1:15:58And there was something that I did that caught Richard Branson's eye where he's like, hey, I want to get into business with you. And that even if those forks of the tree hadn't panned out, other forks would. And it took me a long time in my life to realize that. And it's something I try and share. So yeah, I can point to the individual people who are wildly influential and unlocked a lot for me. But my catchphrase for my entire life is, it may be lucky, but it's not an accident. There's no doubt. I can look at how luck and coincidence and serendipity played into this. But I'm not going to just chalk it all up to that.

1:16:26I'm pretty fucking good at some things. And I created a lot of opportunity. And I'm not going to apologize for that either. Chris, last one. What life lesson have you learned that you wish you knew a lot earlier in life? I think it took me a long time to learn to be my true authentic self and to find my self-worth and value internally rather than externally. Growing up without a lot of money and trying to find a way into a career world without a network, I never wanted to offend any of my potential hirers. In college, I never talked about politics. I can't piss off half of my potential employers someday.

1:17:03So I need to keep that to myself. And then as I moved on through my life, I felt I was trying to be what everybody else around me wanted to be and appease each of them. And it's easy to lose yourself from that. I've met a lot of very rich household names, successful people who still don't know who the hell they are. And they've built a character and that character can be self-reinforcing by everybody else around you. And it's taken me a long time. And this is another thing I'm very grateful to Crystal for, someone who's known me since I was a kid to help me unlock who am I really? What are my actual values?

1:17:34What's the authentic thing I want to say? Unfortunately for me, it took until I was already successful to figure that out. And it took that crutch of being like, well, I'm not dependent upon anybody for it anymore. So I can be who I am. And now I'm very proud of who I am. But I deeply admire those people who were able to get there earlier in their life and who aren't depending on someone else to make them feel attractive, somebody else to make them feel smart, somebody else to validate their idea. I am drawn to people who have figured that out early, without lots of resources, without a crutch to fall back on, without a title or a resume, who have just built that authentic self.

1:18:12I don't know how to raise our kids for what employment might exist. They're 11, 9, and 7. God knows what the jobs are going to be or if there's going to be any. But I do know that I I consider it a mission to raise our kids to be self-reliant and good humans who will leave the world a better place than they found it, but will have a positive impact on that. And who will know how to move through the world with authenticity. If I knew how to teach that, I would. But that's the thing I wished I had earlier, was a real sense of who I am and how to be the real me without depending upon anyone else to validate that.

1:18:49Chris, thanks so much for spending the time and sharing this incredible journey you've been on and continue. Man, this has been really fun. I really appreciate it. So thank you. I hope folks found it worthwhile. I think you ask really unique and insightful questions and let the opportunity for a real story to come out where we aren't just talking about specific returns on a fund or capital, but instead who we really are and the actual parts of this business and this life that get overlooked so much, who we are as humans and what drives us and what's rewarding and what's scary and all that. So I appreciate the way you approach these as such meaningful conversations.

1:19:22Thank you. Thanks, Chris. Thanks for listening to the show. If you like what you heard, hop on our website at CapitalAllocators.com where you can access past shows, join our mailing list, and sign up for premium content. Have a good one and see you next time.