Steve Jurvetson and The Metals Company on Ocean mining, EV market growth, and AI's tech impact | E1959

0:00Yeah, let's ask the guy who's broadcasting from his bathtub about this. I just want to point out how we're about half an hour into this. This is deep sea, baby. He's just doing a soak. A deep soak. He's soaking in a tub right now. There's no water in it, but I don't know about your investment here, Steve. Either this one's going to the moon or you've... I know. I think it's the eccentric ones. Steve Jobs probably did an interview from his hot tub at some point. Yeah, barefoot with some carrot oil. Eating fruit with no deodorant for three years. Yes. This Week in Startups is brought to you by 8sleep.

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1:25Start your business fast and secure with Northwest Registered Agent. In just 10 clicks and 10 minutes, set up your entire business identity, name, address, mail service, phone, email, website, and domain. Everything you need to launch your business in minutes. For$39 business formation, visit northwestregisteredagent.com slash twist. All right, everybody, welcome back to this week in startups. As you've probably heard, the global transition to EVs is well underway. EV sales up 52 % year over year. Tesla and BYD in China, they're battling for market share. And obviously, US and China are the leading markets for these electric vehicles, but it's stressing this massive growth is stressing the global mineral market.

2:14It's causing geopolitical tensions, as you probably know, not to mention an environmentally heavy race to dig the required materials out of the ground. And so it's no good to help the planet by moving EVs if we wreck the planet while transitioning. So we need a new way to get minerals out of the earth and into our evs today's guest is working on solving that problem and they are looking somewhere under the ocean to find these minerals so that we can keep these evs flowing and save the planet the metals company wants to collect polymetallic nodules from the ocean floor company calls them a battery in a rock i found out about this company because my bestie steve jervison the founder and managing partner future ventures is absolutely over the moon about this startup.

3:00And I asked him to bring the founder so we can talk all about it here on This Week in Startups, Gerard Barron, the CEO of Metals Company. Welcome to the program. Welcome back to the program, Steve. Thank you. Great to be in. All right. Tell me about this investment, why you're so excited about it, Steve. And then Gerard, maybe we'll ask you to just explain technically, operationally, how you found this opportunity. Sure. Thanks, Jason. Yeah. So I, as you know, was on the board of Tesla for like 11 years and am a true believer in the future of sustainable transportation. So one of Elon's early statements that all vehicles would be electric is just the question of when, not if, with the ironic exception of rockets, is something I believe truly to my core.

3:43And as you look at that landscape at large, clearly energy generation and storage is one of the key factors. But really, batteries, it all comes down to batteries. You know, grid storage, vehicle storage. We have the capacity to generate the energy we need, but we need to be able to store it and make it transportable. So, as you double-click on that and say, why, you know, what, if anything, is going to hinder this vision of a sustainable, carbon-free energy future? It's, you know, raw materials like metals that you need to make these batteries, to make the vehicles efficient, to make the design close.

4:17um and so and when you look at that around the world there's been some pretty profound shifts that have occurred even in the early fledgling days of the um automotive industry's transition in the use of materials like nickel and cobalt and you'll hear about copper you'll hear about a lot of materials manganese that are uh parts of the cathode of these batteries that are in short supply relative to earth's resources and so they you know let me jump to a conclusion you know as you look at where you can get these things from, we're currently mining the most environmentally sensitive and valuable resources on earth, tropical rainforests in Indonesia and Africa and elsewhere.

4:57There's been a massive sea change in the last five years to do that. And it's just terrific, right? As someone who cares about the earth and its stewardship, the alternative, picking these rocks off the bottom of the sea, like lifting golf balls that are freestanding, not attached to anything and available for us. It's almost like, I don't know, it's almost like the dinner menu has been laid out before us, but we're just not picking those rocks up. And it is environmentally the opposite end of the spectrum. It's like the second least environmentally rich area on Earth. I think only Antarctica is more barren to life, and the life is primarily bacteria down there by biomass far and away.

5:35So, to make a long story short, you have the resources we need. geopolitically america and the west would like to have sources that aren't china and you'd like to do so in a way that isn't going to further you know climate change and environmental species degradation um as is currently happening in spades uh in indonesia all right gerard explain to us and maybe you could show us here uh how this all works i am based on what steve said there are nodules rocks on the bottom of the ocean just waiting to be picked up when did we find out about these rocks you know in the bottom of the ocean how deep are they how do you collect them and why haven't we doing this why haven't we been doing this all along i guess is a an obvious question yeah so thanks jason well we've known about these nodules that lie on the bottom of the ocean floor since the 1870s and they were discovered by the british actually who sailed around the world curious to know what lie lay on the bottom of the ocean floor and so for four years, H &S Challenger sailed around the world with a dredge or a basket off the back.

6:43And they, after four years, were coming home down from Japan across the Pacific and came across this patch about a thousand miles off the coast of Mexico. It's now known as the Clarion Clipidon. And it is by far the world's largest deposit of nickel and cobalt and manganese. In fact, there's around 70 % of the known reserves of those three metals in this one deposit that covers about 1.5 % of our ocean floor. And you couldn't wish, as Steve was saying, to have these nodules at a better place. Because if we take it all back to first principles, it makes sense that we carry out extractive industries in parts of the planet where there is the least life, not the most life.

7:32And in the abyssal plane, about half of our ocean is categorized as the abyssal plane. This picture here is around 4 ,200 meters below sea level. You'll notice there are no plants and there's not a lot of large megafauna either because there's not much food down there. In fact, if you measure the amount of biomass, there's around 10 grams of biomass per square meter, and more than 80 % of that is bacteria living in the sediment. And so, what we've been doing for the last 12 years now is studying this part of the ocean floor. There was a window also after being discovered in the 1970s when the industry almost got started.

8:18You had Shell and BP and Mitsubishi and Lockheed Martin were all involved building the systems to go collecting these very same rocks. Rio Tinto had built a processing plant, and they wanted to move it into commercial production. But the United Nations stepped in because 50 years ago, the world had not agreed who owned the oceans and where do your borders begin and end. And that was finally resolved when UNCLOS was signed in 1982. Basically, what UNCLOS says is that as a sovereign, you own everything within 12 miles of your coastline, and you have an economic right to everything within 200 miles.

8:58But beyond that, it's owned by everybody. They set up a group called the International Seabed Authority that is made up of 168 countries plus the European Union. They regulate this part of the ocean. And so they are the people that we have applied to and been granted our exploration licenses. And later this year, we'll be lodging our application to move from the exploration phase to the exploitation phase. So it's a really exciting time for the industry. And so, you know, to your question, Jason, about, well, why hasn't it happened before? It's because of that regulatory hurdle. And, you know, one of the bad things about having a regulator that represents 168 countries is it's a little bit slow.

9:44But that's also one of the good things as well, because one of the biggest challenges and risks in the mining industry is sovereign risk, because countries can change the rules, they can nationalize assets and so on. So it's a really interesting time right now. And we've been on this journey as the metals company since 2011. And we expect to be commercially picking these nodules up in 2026. steve you have a nodule there maybe you just hold it up here it's essentially a rock yeah um now how are these formed is it because the ocean is so chaotic with tides and all that that they just break apart from the floor or there are like mountains down there that have just over thousands hundreds of thousands of years just broke apart yeah explain to us how these things formed?

10:39Well, there are three different types of metals in the ocean. And this slide shows you, if you can see it, it's on the left-hand side of polymetallic nodules. And that's what we at the metals company are exclusively focused on. And the amazing thing is they just happen to have the mixture of metals that we're going to need billions of tons more of, nickel and copper and cobalt and manganese. And how they form is they precipitate the metals that are in the seawater or the sediment. And so, they grow a little bit like a pearl grows. And the reason why this field of nodules is so interesting is because if you look to the east, you have the Rockies and the Andes, which were covered in nickel and copper.

11:22And so, over millennia, these metal tops eroded into the Pacific Ocean and you had currents pick them up from the north and the south, and then And they met together and headed west in this area, now known as the Clarion-Clippidin zone. But there are other types of metals in the ocean as well, seamounts and also hydrothermal vents. And we are not focused on those. They form in much shallower waters. And they also do have a lot more biodiversity in life around them. And so we think that polymetallic nodules in the first instance is absolutely the right place to be focusing this new industry. How do you collect them?

12:05I mean, is it as and how far down are they? It's as simple as just sending a net down there. You have to send submersibles. Because, Steve, this, you know, as capital allocators, it seems to me just from the outside, you tell me if I'm correct, that we needed to have more demand for people maybe to see this opportunity. And obviously, Gerard's sort of a long time ago, but, you know, the massive number of EVs being made makes this, I guess, like oil. You know, if you take oil from Canada where there's sand in it, at a certain dollar per barrel, you know,$80,$90, it becomes viable to take that oil and take the sand out of it.

12:45Other times, it's just not worth it. If oil was$10 a barrel, it wouldn't be worth it. So, is it a similar kind of thing that happened here? Yeah. Yeah, there's enough of the essential metals for the NMC batteries, as they're called, in this sort of plot that the metals company has to electrify the entire North America fleet. So all vehicles becoming electric just off this one first field. And it's not their only field. And to your other question, yeah, it's a robotic vessel. I'll let you go through exactly what it's like. But you got to have robots to go out of the ocean just to make it cool and make it efficient.

13:19And the pricing is, as you say, you have to be competitive. There are a whole bunch of marginal projects where you enter the market at better price economics. You can have shutdown economics for the others as well so that you're not destroying these ecosystems the way they have in the past. So that's the ideal goal. But right now, we're not meeting supply. In other words, if all the automotive companies were to be serious about the commercial electrical conversion, you know, vehicles and conversion, you just would not have enough metals from current mechanisms of mining. You would need more. And so, this is, we come online to provide that, especially in the West.

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16:17And it provides the power. You connect it with something called a riser, an air riser, which is basically the vertical transport mechanism. And then with an electrical cable connected to a robot on the sea floor. And basically, because the nodules are a two-dimensional resource, so they lie unattached on the ocean floor. So we don't have to dig or drill to find them. We just have to go down there and pick them up with the greatest efficiency and the least impact. And so our robot crawls along the seafloor and we fire a jet of water at the nodule, which creates an inverse pressure. And you'll see it on this video if you're able to.

17:01Yeah. What effect that does is it lifts the nodules so you can see them lying on the ocean floor. And if you look closely, you can see them being lifted. So we don't go down there and scour and tear up the ocean floor. What we do is we pick them up with the greatest efficiency. And in fact, this next slide shows you what it looks like once we've been through. This is that same field, 4 ,200 meters below sea level, where a collector has gone through and picked up these rocks. and it's literally what you leave behind are a set of tracks. And so in 2022, we were out on our license area as part of our permitting program and we were, with our first production vessel, pilot collecting.

17:47And so for six months, we were at sea. We collected, bought home thousands of tons of these nodules. We had a second boat out there, which you can see in the background of this picture, which was filled with scientists because what we were doing is testing our equipment, if you like. That boat in the middle, the hidden gem, is production ready for 2026. What we wanted to do was study the impacts as we were collecting it because environmental groups have been having an opinion on this industry. Of course, we founded this company with a heavy thought around the environment because, you know, going back to that first principle discussion, I said, if you really stop and think where are our metals coming from, then it will keep you awake at night because we're pushing into some of the most biodiverse carbon sinks known as our tropical rainforests to get the supply of these materials now.

18:52and people are going but there's no alternative so we've got to keep doing that but there is an alternative there's a much better alternative but we've got to provide the scientific evidence and that's what we've been focused on we've spent 500 million dollars over the last decade much of it on that scientific research to show the impact so we we've established baseline studies um over the last five years of what the environment looks like how it changes let me ask you a question about these environmentalists are they looking at this from a logical way or are they just any disruption is bad and they're purist in that way can they keep in their mind um steve or gerardo i'll open up to you and steve i know you have a lot of experience with this with tesla can they keep in their mind that you know there is cost to all of these solutions and that you know there are pros and cons and getting electric vehicles and stop burning fossil fuels yes it requires removing minerals uh you know from different locations but that will stop global warming and will stop pollution so are they extremists or are they logical these environmentalists or is it a range because i when i see environmentalists hopping the fence at the german tesla factory i'm perplexed because they care about the environment the forest around around the Tesla factory I guess is their beef you know like we got to keep this like little forest perfect but uh the bigger picture is we don't want to burn the entire planet alive Steve so maybe you could speak to this uh I'll say something but also let you're a group of people yeah I and I've seen what this is actually part of what got me really interested in the story is the possibility that it's a you know in some ways similar story to ones where we've had more years to reflect on the wisdom or folly of our environmental stance.

20:48And so, the answer to your question is there is a gamut. There are enlightened environmentalists like Stuart Brand who say, what is the most environmentally beneficial or benign way to extract the resource to generate energy and let's do that. It's pretty common sense, you would think. And then there are some on the other end of the spectrum who are, you know, just say no at all costs, don't talk to me about the alternatives. They're just noists. And part of what drives them is donations. They're not being sincere about actually analyzing the pros and cons of whatever it is they're shutting down because they are, in fact, trying to shut down the most environmentally beneficial way of doing something on planet Earth.

21:25You might look at nuclear energy the same way. But shutting that down now with 50 years of hindsight was a huge mistake. The carbon crisis we have and the climate crisis we have, the environmental crisis we have, is partially thanks to, you know, just an ignorant resistance to use the most carbon neutral energy source we had, which was nuclear. Same for GMOs and food production with European regulation. And, you know, Stuart Brand, we were the first to tell you that in both cases, we were just dead wrong. We were, you know, we did more to harm the environment than anything else. So, the framework I like to use and the one that makes sense, the one that Stuart Brand and others would use, even James Cameron, a lover of the ocean would use, is to say, what is the best way to do something?

22:08Not A versus nothing, it's A versus B. If you're not going to do A, you're going to be doing B, which is better, right? And knowing that we can't just say no to energy, you can't say no to batteries. You'd be promoting the worst health of the ocean if you just said, let's just keep burning oil and gas and have ocean acidification and warming, bleaching the reefs globally. Let's just continue business as usual and forget about getting off oil and gas, right? You know that's going to kill the oceans. It's such a good point, Steve. Right? You have the Great Barrier Reef, which I dove maybe five or six years ago, and the dive masters were almost, and Gerard, I know you're from Australia, they were almost embarrassed or heartbroken to show us the white antler coral that had been bleached and was broken and floating at the bottom of the ocean.

22:56and taking these nodules out of this area helps that problem and I think you have to have like a little bit of a wider aperture here, the no nukes concerts did more damage to the environment than actually having nukes. That's right. The World Health Organization concluded in a study of Chernobyl, for example, and I'm paraphrasing what they said, but the conclusion of what they said was that the human dialogue on nuclear energy has killed more people than nuclear energy. Meaning the fear, kind of like when the Scud missiles are coming to Israel and people die from heart attacks more than from the missiles themselves.

23:30It's kind of a crude analogy, but it's the same idea. Our anxiety over this is worse than it is itself. And that, I mean, back to, you know, fundraising. Anything that can stir fear-mongering in the emotions of the people is a source of fundraising. It's not a source of truth and it's not the best policy. Rod, maybe you could talk a little bit about what you're up against, yeah. Yeah, I will say that it does come in pockets. We have some very well-meaning scientists who care a lot about this part of the ocean. Now, of course, going back to your point, we need to take a planetary perspective. And so, there are some people who care so much about some of the neofauna or megafauna that has been discovered that they don't want to think about what's happening on land.

24:17However, I can report that we're making some good headway with some pretty well-known NGOs about finding some common ground. And I think the reason why we're able to achieve that now is because of the hundreds of millions of dollars that we've spent on independent scientific research. And those results are conclusively showing what the impacts are. So, for example, years ago, when our robot crawls along the seafloor, it kicks up dust like you would if you drive your car down a dirt track. The question is, how far will the dust travel? How much of it will there be? And some NGOs would say that the dust will travel for thousands of miles, but we always knew that it wouldn't.

25:04What our test in 2022 have done, and MIT have now reported on this off the back of another collector test, is conclusively proven that the sediment only rises 2 to 3 meters above the seafloor and up to 98 % of it resettles in the same area. Because 4 ,200 meters in this zone of the ocean is very different to the currents in the midwater column and the top of the column. So, once you carry out that robust, independent scientific research, that disarms people. And let's give them the benefit of the doubt. I think those great scientists who do care about it are like, okay, well, this is showing that your argument seems to be dispelling some of the things that our desktop study was worried about.

25:57And we have to approach it from a positive sense. We can't bulldoze our way through opposition, unfortunately. We have to get to the flag on the hill, and that's absolutely what we're doing. But social license is important to us. And I think that eventually, we're going to be measuring every single impact that we make when we make these metals. And we want to do that because we've already done the lifecycle analyses with independent third parties. Benchmark Mineral recently completed one for us where we look through the lens of an LCA. and we compress the impacts by between 90 % and 100%. So, for example, when we move this nodule to shore and process it, we generate no waste and no tailings.

26:39We use 100 % of the mass. We'll generate up to 90 % less CO2 per kilogram of nickel, for example, compared to the land-based alternative. And so we know that measuring all of this is going to be really meaningful to car companies because eventually they're going to have to pay for that, whether it's through carbon adjustment mechanisms or whatever it's going to be incredibly generous of you gerard i mean the lunacy of these people at times i'll say this i know you're not going to i steve you gave i think the middle of the road gerard you're you're incredibly gracious about this i'll take the other side these people are lunatics to to take a rainforest being ripped down bulldozed and then the earth with giant you know uh gas powered trucks and and moving all that around compared to lifting up some nodules and and and a little bit of sediment moving around is not even comparable it's not even in this this is the what about ism and the sort of uh you know showing both sides any objective person looking at both of these options would clearly say this is the better option and it is exactly to your point steve about nuclear the germans turned off all their nuclear power and what are they doing now they're burning coal and oil from russia it's nuts it's nuts when people try to make these you know insane uh comparisons.

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29:29So apply in minutes at mercury.com. Join over 200 ,000 ambitious startups that trust Mercury to simplify their finances and perform at their best. Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank and Trust members, FDIC. While I see some movement in some of the NGOs, I see also a lot of really uninformed people who don't care about. And so we don't bother talking to them, right? At the end of the day, there's a sector of society that we don't spend any energy on because there's nothing that we can say. They want to degrowth their way to success.

30:07And we know what the impact of degrowth would be. It would be civil unrest and who knows what society would look like. Steve, let me ask you about this as an investment of your precious time and capital. We're both capital allocators. Hundreds of millions have been put into this. Is this a venture investment? And I know when you and I talked privately, you had explained to me last year at my NAPA conference with LPs and GPs, just how future ventures your firm is taking a longer portfolio approach to deep science and tech. Is this a venture investment? Could this possibly be done with venture dollars?

30:47and how do you look at capital allocation when you're trying to solve these type of problems informed by you know working on tesla spacex and other you know and also your work on um computing um quantum computing right you've got a history here of working on multi-decade projects yeah yeah multi-decade let's say yeah yeah exactly nuclear fusion would fall on this as well yeah so we you know as you as you mentioned we like to invest in big bold audacious companies that if they succeed, history books will be written about them. And so, in some sense, if this seems like a brave new world, if it seems like, wow, it sort of captures the spark in the imagination, at least it does for me, that's part of what feels like a venture opportunity.